Mr.Kandimalla Bhaskar vs M/s.Amaravathi Textile Private Limited & Ors.

[Oral Judgment: Justice Sharad Kumar Sharma, Member (Judicial)]

The Appellant in the Instant Company Appeal, being Company Appeal (AT)(CH) No.26/2025, is a petitioner in Company Petition No.184/241/AMR/2019, which has been the proceedings held under Sections 59, 241, 242, and 244 of the Companies Act, 2013. The proceedings thus taken by the Appellant before the Learned NCLT, the Learned NCLT has proceeded to pass a judgment on 14.12.2024, consequent to which the Learned NCLT had dismissed the Company Petition.

Briefly, stated the facts, which had emerged for consideration before the Learned NCLT, which were emanating from the company dispute, was with regards to the allocation of shares and also regards the aspect of mismanagement and oppression, which has chanced in relation to the affairs of the firm namely, M/s. Amaravathi Textiles Private Limited, which stood incorporated as back as on 20.08.1983 under Companies Act. The Appellant claims that he was having a share of 2,45,000 of Rs.10/- each, which constituted to be 15.31% of the shareholding. It is based upon the said dispute, which the Appellant had inter-se with the respondent. The company petition was preferred, and the same was dismissed with the following observations: -

When the Company Petition was taken up as fresh before this Appellate Tribunal on 19.03.2025, the Appellant had since failed to place on record certain relevant documents, they were granted time, which was further extended by an order of 26.03.2025. This Appellate Tribunal has passed an order on 28.03.2025, whereby the request was made to the parties to venture to settle the dispute and find out the avenues so that the controversy may be laid to rest and for which they were directed to complete the instructions.

When the Appeal was taken up next date i.e. on 01.04.2025 in compliance of the order dated 28.03.2025 passed in this Appeal, the parties to the Appeal submitted that they are open for mediations subject to certain conditions and restrictions, that they had in settling the controversy among themselves, for which both the parties have sought three days’ time to place the terms of settlement on record.

In compliance of the order of 01.04.2025 the Learned Counsel for the Appellant had filed a memorandum wherein, the terms of the memorandum, was proposed that the proceedings of C.P.No.184/241/AMR/2019, may be referred to mediation, accordingly, in para 6 of the said memorandum the Appellant has modulated the terms and conditions under which the settle for mediation was required to be proceeded with, Para 6 which is extracted hereunder: -

In accordance with the terms contained in para 6, as extracted above, the mediation was supposed to be held between the parties in relation to the controversies, which were the subject matter of the Company Petition and in continuation in the Appeal too, arising out of the personal relationship between the parties and the entire process of mediation was settled to be concluded within a period of two or three months and the Mediator was required to submit his report before the Learned Tribunal, upon conclusion of mediation. The controversies inter-se between the parties were to be settled based on the memorandum as submitted by the Appellant. The Respondents were apprehensive with regards to the conditions contained under Clause C of para 6 pertaining to the cost payable towards the mediation, which was observed to be borne by the 1^st Respondent Company. The same has been vehemently objected by the Respondent’s Counsel, though they had kept themselves open for mediation, but the cost aspect was not acceptable by them. During the course of the proceedings, the parties have expressed their unanimity that both the parties would be bearing the 50% of the cost of mediation”.

Another issue, which was not acceptable by the Learned Counsel for the Respondent was with regards to the reservations which has been made by the Appellant that at the end of the mediation, if it fails all the contentions, which is being agitated in this Company Appeal, would be left open to be challenged and to be pursued when challenge is given to the mediation order. It is quite logical to that, when the parties have arrived at a conclusion to venture into process to settle the dispute based upon the decision to be taken by the Mediator. Obviously, both the parties are venturing to settle the dispute by virtue of consent, as graciously extended by them and hence, the cost of the mediation is to be borne by 50% by each of the parties to the Appeal. Secondly, we are of the view that the Appellant cannot be left remediless after the decision of the mediation. It will be open for either of the parties to the Appeal that in case if they are aggrieved by any of the observations or the decision itself, which is taken by the Mediator, their right to judicial remedies cannot be curtailed.

Hence, while carving out an exception to settle the dispute through mediation, and while leaving it open to the parties to the Company Appeal, to resort to the legal recourse available under law if need so arises as against the decision of the Mediator, which is otherwise too a right available to the parties under the law for their redressal of their grievances involved in the company Appeal.

Thus, the Company Appeal would stand closed subject to the aforesaid terms and conditions, except for that either of the parties to the mediation who is party to the Appeal too will have the right to judicial remedy as available to them under law as against the decision of the Mediator.

Subject to the aforesaid, the Company Appeal (AT) (CH) No.26/2025 stands ‘closed’ on the basis of the consensus arrived at between the parties.