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Judgment
(Hybrid Mode)
Oral Judgment : Justice Sharad Kumar Sharma, Member (Judicial):
These are set of 7 Company Appeals in which a common set of parties are in conflict with regards to their interest, which was subject matter of dispute in the proceedings those were held before the Ld. Tribunal, being the proceedings under Section 111, 397, 398, 402 & 403 of the Companies Act, 1956.
Even before the Ld. NCLT, the following Company Petitions were decided together by a common order 03.08.2018, which is impugned in the instant Company Appeals. The details of Company Petitions filed, are as follows:-
CP No. 6 / 2008 (TP No. 08 / 2016) – Smt. M. Leela & Ors. V. M/s. Chandra Spinning & Weaving Mills Private Limited & 11 Ors.
CP No. 7 / 2008 (TP No. 9 / 2016) – Smt. M. Leela & Ors. V. M/s. T.R. Mills Private Limited & 11 Ors.
The above two Company Petitions were decided by the Order of 03.08.2018, which is under challenge in Company Appeal (AT) No. 361 / 2018 challenging the order that was passed in TP No. 9 / 2016.
Company Appeal (AT) No. 259 / 2018 (TA (AT) No. 12 / 2022, challenges the Order passed by Ld. NCLT in CP No. 6 / 2008 (TP No. 8 / 2016) and CP No. 7 / 2008 (TP No. 9 / 2016) dated 03.08.2018.
Company Appeal (AT) No. 258 / 2018 (TA AT No. 13 / 2022), it puts a challenge to the impugned order that was passed on 03.08.2018 in CP No. 6 / 2008 (TP No. 08 / 2016) & CP No. 7 / 2008 (TP No. 9 / 2016).
Company Appeal (AT) No. 310 / 2018 (TA AT No. 16 / 2022), challenges the impugned order of 03.08.2018 as it was passed in CP No. 6 / 2008 (TP No. 8 / 2016).
In Company Appeal (AT) No. 360 / 2018 (TA AT No. 19 / 2022), the challenge given by the Appellant is to the impugned order of 03.08.2018 as passed in CP No. 6 / 2008 (TP No. 8 / 2016).
In Company Appeal (AT) No. 277 / 2018 (TA AT No. 21 / 2022), the Appellant challenges the order dated 03.08.2018 passed in CP No. 6 / 2008 (TP No. 8 / 2016); and lastly;
In Company Appeal (AT) No. 309 / 2018 (TA AT No. 23 / 2022), challenge by the Appellant is to the impugned order of 03.08.2018 as passed in CP No. 7 / 2008 (TP No. 9 / 2016).
That means, in all these Company Appeals, the set of parties who were in contest before the Ld. NCLT happens to be the common set of parties as they were arrayed in CP No. 6 / 2008 and CP No. 7 of 2008, they are being detailed hereunder:
In CP No. 6 of 2008 (TP No. 8 / 2016), following were the parties: ``Between:
Smt. M. Leela, W/o. Late Madhusudhan, No.22, 16th Cross, J.P. Nagar 5th Phase, Bangalore-560078
Ms. M. Aarthi, D/o. Late Madhusudhan, No. 22, 16th Cross, J.P. Nagar, 5th Phase, Bangalore-560078
Ms. Kiran Nagar, D/o. Late Madhusudhan, No.307, 11th Main, BEML Layout, 3rd Stage, R.R. Nagar, Bangalore-560098
Mr. M. Avinash, S/o. Late Madhusudhan, 47th 'A' Cross, 8th Block, Jayanagar, Bangalore-560011
Mr. O. Arumugasamy, S/o. Olaikaragouder, No.213, Téa Estate Compound, Race Course, Coimbatore-18 --- Petitioners And
M/s. Chandra Spinning & Weaving Mills Private Limited
Mr. M. Manohar
Mrs. Chandraprabha
Mr. M. Krishnamurthy
Mr. M. Nagaraj
Mr. M. Srinivas Prasad
Mr. M. Chaitanya
Mr. R. Krishnamurthy
Mrs. K. Nagaratna
Mr. K. Balachandra
Mr. K. Shamsunder
Mr. K. Purushotham --- Respondents In CP No. 7 of 2008 (TP No. 9 / 2016), following were the parties: ``Between:
Smt. M. Leela, W/o. Late Madhusudhan, No.22, 16th Cross, J.P. Nagar 5th Phase, Bangalore-560078
Ms. M. Aarthi, D/o. Late Madhusudhan, No. 22, 16th Cross, J.P. Nagar, 5th Phase, Bangalore-560078
Ms. Kiran Nagar, D/o. Late Madhusudhan, No.307, 11th Main, BEML Layout, 3rd Stage, R.R. Nagar, Bangalore-560098
Mr. M. Avinash, S/o. Late Madhusudhan, 47th 'A' Cross, 8th Block, Jayanagar, Bangalore-560011
Mr. O. Arumugasamy, S/o. Olaikaragouder, No.213, Téa Estate Compound, Race Course, Coimbatore-18 … Petitioners And
M/s T.R. Mills Private Limited, A Private Limited Company within the meaning of Companies Act, 1956, 5th Main Road, Chamarajpet, Bangalore-560 018
M. Krishnamurthi (died), No.73/1, 5th Main Road, Chamrajpet, Bangalore 560018
Mr. M. Nagaraj, No.71, 5th Main Road, Chamrajpet, Bangalore-560018
M. Manohar (died), No.71, 5th Main Road, Chamrajpet, Bangalore-560018
Mrs. Chandraprabha, 71, 5th Main Road, Chamrajpet, Bangalore-560018
Mr. M. Srinivas Prasad, "Adityodaya", 63, 5th A Croşs, MCHS Colony, 16th Main, BTM Layout, 2nd Stage, Bangalore-560076
Mr. M. Chaitanya, 71, 5th Main Road, Chamrajpet, Bangalore-560018
R. Krishnamurthy, S/o. Ramasamy Gounder, No.69, Karumarampalyam, Uthukuli Main Road, Tirupur-641607
Mrs. Nagarathna, W/o. Late M. Krishnamurthi, No.73, 5th Main Road, Chamrajpet, Bangalore-560018
Mr. K. Balachandra, S/o. Late M. Krishnamurthi, No.73, 5th Main Road, Chamrajpet, Bangalore-560018
Mr. K. Shamsunder, S/o. M. Krishnamurthi, No.73, 5th Main Road, Chamrajpet, Bangalore-560018
Mr. K. Purushotham, S/o. M. Krishnamurthi, No.73, 5th Main Road, Chamrajpet, Bangalore-560018 … Respondents
Consequent to the Order as it was rendered by the Ld. NCLT on 03.08.2018, the Ld. Tribunal, while exercising its powers under Section 111, 397, 398, 402 & 403 of the Companies Act of 1956, to be read with Section 241 & 242 of the Companies Act, 2013, the Company Petitions were disposed of with the following directions:
``a) The Respondents shall transfer the entire shareholding of the Respondents to the Petitioners at the agreed price vide Impugned Agreement dated 22.12.2004 to the Petitioners No. 1 to 4 which are extracted below:
Mr. M. Krishnamurthy (& his legal heirs) Rs. 14,00,00,000
Mr. M. Manohar & Smt. Chandra Rs. 20,00,00,000 Prabha Manohar (& legal heirs of M. Manohar)
Mr. M. Nagaraj Rs. 8,00,00,000 ============ Total Rs. 42,00,00,000 ============= b) The Petitioners shall be entitled to reconstitute the Board of Directors upon compliance with the foregoing formalities. In the meanwhile and until such reconstitution of the Board, there shall be an injunction restraining the Respondents from alienating or encumbering their shareholding or the properties of the Companies.
The parties are directed to implement the above directions within 3 (three) months from the date of the receipt of the copy of the order.
The 5th Petitioner is not entitled for any relief in the instant company petition since he is not a Member of the Companies.’’
These are the respective Company Appeals that are preferred, challenging the impugned orders, which are common in almost in all the Company Appeals on the respective grounds, as it has been agitated by the Appellants of the respective Company Appeals. However, it has chanced so that during the pendency of the proceedings of the aforesaid Company Petitions, Mr. M. Krishnamurthi had met with a sad demise, and who has been arrayed as a party in Company Appeal (AT) No. 361 / 2018 (TA (AT) No. 6 / 2022) where he has been described as Respondent No. 2. in another Company Appeal being Company Appeal (AT) No. 360 / 2018 (TA (AT) No. 19 / 2022) and therein too, he has been described as Respondent No. 4, as a ``Deceased’’. Hence, we would not be much concerned for, on the issue of substitution of his Legal Heirs, as its no one’s case regards the effect of sad demise of Mr. M. Krishnamurthi.
The Respondent No. 3 Mr. M. Nagaraj in TA (AT) No. 6 / 2022, who is Respondent No. 7 in TA (AT) No. 12 / 2022; Respondent No. 6 in TA (AT) No. 13 / 2022; Appellant No. 1 in TA (AT) No. 16 / 2022; Respondent No. 5 in TA (AT) No. 19 / 2022; Respondent No. 11 in TA (AT) No. 21 / 2022 and Appellant No. 2 in TA (AT) No. 23 / 2022.
Mr. M. Nagaraj, had met with the sad demise on 25.11.2022, his heirs have already been directed to be brought on record by an Order passed by this Appellate Tribunal on 10.07.2025 and accordingly, the heirs of late Mr. M. Nagaraj have already been substituted in TA (AT) No. 6 / 2022; TA (AT) No. 12 / 2022; TA (AT) No. 13 / 2022; TA (AT) No. 16 / 2022; TA (AT) No. 19 / 2022 & TA (AT) No. 23 / 2022. But, he couldn’t be substituted in TA (AT) No. 21 / 2022, in which Mr. M. Nagaraj was appearing as Respondent No. 11. For which, the Counsels for the parties agreed that, upon reference of the dispute to the Mediator as agreed and requested by them they will be taking the necessary steps to substitute the heirs of Mr. M. Nagaraj, before the Mediator in TA (AT) No. 21 / 2022 to which, none of the Counsels for the parties have any objection.
Mr. M. Manohar, the Respondent No. 4 in TA (AT) No. 6 / 2022 is shown to have met with a demise.
In TA (AT) No. 12 / 2022 his legal heir Mr. Chaitanya Manohar has already been substituted as Appellant No. 3.
In TA (AT) No. 13 / 2022, Mr. Chaitanya Manohar, the heir of late Mr. M. Manohar shown has to be Appellant No. 4.
In TA (AT) No. 16 / 2022, the heir of Mr. M. Manohar, had shown to be Respondent No. 10 as Mr. Chaitanya Manohar.
In TA (AT) No. 19 / 2022, Mr. M. Manohar (Respondent No. 2), is shown as deceased and Mr. Chaitanya Manohar has been impleaded as independent Respondent No. 7.
In TA (AT) No. 21 / 2022, heir of Mr. M. Manohar, Mr. Chaitanya Manohar, is shown in the array of parties as Respondent No. 10.
In TA (AT) No. 23 / 2022, Mr. Chaitanya Manohar the heir of Mr. M. Manohar is arrayed as Respondent No. 9.
Hence, in all these Company Appeals, so far as the issue of substitution of Mr. M. Manohar who met with the sad demise will not be of much concern, as, his heir Mr. Chaitanya Manohar had, already been made one of the Appellant or the Respondents as the case may be in the above Company Appeals.
Another controversial and necessity of substitution would be in relation to Mr. K. Purushotham, who is shown as Respondent No. 12 in TA (AT) No. 6 / 2022, who is shown to have met with the sad demise on 12.08.2021 and by an order passed by this Appellate Tribunal on 10.07.2025 his heirs were allowed to be substituted.
Similarly, in TA (AT) No. 12 / 2022 & TA (AT) No. 13 / 2022 Mr. K. Purushotham, who is shown as Respondent No. 12 and Respondent No. 10 respectively had met with sad demise on 12.08.2021, and his heirs have already been substituted.
In TA (AT) No. 16 / 2022 Mr. K. Purushotham has been substituted and in his place his legal heirs i.e. Sudha and Aditi has already been substituted as Respondent Nos. 15 & 16 by an order passed by the Ld. Tribunal on 10.07.2025.
In TA (AT) No. 19 / 2022 legal heirs of Mr. K. Purushotham (late) have already been substituted as Respondent Nos. 12A &12B.
However, in TA (AT) No. 21 / 2022 (Appellant No. 4) & TA (AT) No. 23 / 2022 (Appellant No. 5), the substitution of Mr. K. Purushotham is yet to be carried, for which parties agree they would be taking necessary steps before the Mediator as per law.
The Hon’ble Mediator will have to ensure that, the heirs of Mr. M. Nagaraj are duly substituted in TA (AT) No. 21 / 2022, and the heirs of Mr. K. Purushotham are duly substituted in TA (AT) No. 21 / 2022 & TA (AT) No. 23 / 2022, before the Mediation proceeds on merits.
When the proceedings of these Company Appeals were taken up on the previous date i.e. on 05.12.2025, invariably in all these Appeals, the Ld. Counsels representing the cause of the respective litigants, whom they represented made a unanimous statement contending thereof that, they extend their consent for referring this dispute to be settled through Mediator and in relation thereto in TA (AT) No. 16 / 2022, the Counsels have filed their Memo on 25.09.2025 expressing their willingness to get their dispute settled through Hon’ble Mr. Justice V. Gopala Gowda (Rtd. Judge), Supreme Court of India.
In order to ensure, before the matter is referred to Mediation, we thought it apt that, the appropriate substitutions may be carried, so that, the records may be complete in all sense, before the Hon’ble Mediator takes a call on these set of Company Appeals.
But today, when the proceedings have been taken place, the respective Counsels representing Mr. Chaitanya Manohar and the Heirs of Mr. K. Purushotham, submitted that they will ensure to get themselves substituted in the Company Appeals in which they have not been substituted by filing an appropriate substitution application before the Hon’ble Mediator, to which, the Counsels for the parties have raised no objection. Hence, they may proceed to file an appropriate substitution application in regard to substitution, upon reference of the dispute to be settled by the Mediator.
Because, the parties have agreed to settle their dispute through the Hon’ble Mediator Mr. V. Gopala Gowda, the Former Judge of the Hon’ble Apex Court. All these Company Appeals are being closed and any of the findings recorded in the impugned order under challenge will have no bearing and all rights and liabilities of the parties are to be agitated and independently decided by the Hon’ble Mediator.
Subject to the aforesaid, the Company Appeals being Company Appeal (AT) No. 361 / 2018, Company Appeal (AT) No. 259 / 2018, Company Appeal (AT) No. 258 / 2018, Company Appeal (AT) No. 310 / 2018, Company Appeal (AT) No. 360 / 2018, Company Appeal (AT) No. 277 / 2018 & Company Appeal (AT) No. 309 / 2018, would hereby stand Closed and if any decision which is rendered by the Hon’ble Mediator is unsatisfactory to any of the parties, it will be open for the parties to the Company Appeals to resort to a appropriate recourse, if at all required, in accordance with law before an appropriate Forum.
After conclusion of today’s proceedings, we called upon his Lordship Justice Mr. V. Gopala Gowda, on his Mobile, in order to solicit His Lordship’s consent to deal with the Mediation. His Lordship has informed that one of the parties have already taken his consent and for which he has agreed.
But, since in the court’s proceedings today, all the parties have arrived at a consensus to accept Mr. Justice V. Gopala Gowda as a Mediator, he is accordingly appointed to conduct the Mediation in these Company Appeals. The Mediation shall be proceeded in accordance with the provisions of Companies Act, 2016, to be read with Companies (Mediation & Conciliation) Rules, 2016.
So far as the Fee of the Mediation and other expenses are concerned, that is to be settled by the Mediator himself, which are agreed to be borne in equal proportion by the parties to the Mediation, or as to be directed by the Mediator.
The Registry is directed to send the records on the email address i.e. [email protected] of his Lordship.
Parties are directed to appear before Hon’ble Mediator on 23.02.2026 at 4.00 P.M. at the following address: