2019] 151
JUDGMENT
Arun Mishra, J.-
The
appeal
arises
out
of
the
judgment
dated
31. 5. 2013
passed
by^
the
High
Court
of
Delhi,
setting
aside
an
order
dated
31. 1. 2006
passed
by
the^
Company
Law
Board
in
Company
Petition
No.
64 / 2005.The
backdrop
facts
indicate
that
the
Government
of
India
took
a
policy
decision^
on
5. 7. 2002
to
disinvest
its
shares
in
the
Indian
Tourism
Development
Corporation^
(in
short,
‘the
ITDC’)
which
owns
various
hotel
properties;
one
of
them^
being
Indraprastha
Hotel,
formerly
known
as
Hotel
Ashok
Yatri
Niwas,
(hereinafter^
referred
to
as
“the
hotel”).In
terms
of
an
approved
scheme
of
Arrangement
of
Demerger
the
hotel
was
transferred^
to
the
Respondent
No. 1- Hotel
Queen
Road
Pvt.
Ltd.
(in
short,
‘HQRL’)^
which
was
created
as
a
Special
Purpose
Vehicle
to
enable
disinvest
ment. -
The
paid
up
capital
of
HQRL
was
Rs. 90
lakhs
comprising
9
lakh
equity
shares^
of
Rs. 10
each,
of
which
the
Government
of
India
held
97 %
shares.
Indian^
Hotels
Co.
Ltd.
(IHCL)
held
10 %
shares
and
the
balance
shares
were
held
by^
the
employees
of
hotels
of
ITDC
under
a
Voluntary
Retirement
Scheme.
Pursuant
to
its
decision
to
disinvest,
the
Government
invited
bids
for
sale
of^
shares
in
HQRL.
The
appellant
No.
3- Moral
Trading
&
Investment
Ltd.,
in
short^
hereinafter
referred
to
as
‘Moral’,
a
public
limited
company,
was
declared
the^
successful
bidder.
By
a
share
purchase
agreement
dated
8. 10. 2002
Moral
acquired
the
shares
of^
Government
of
India
and
IHCL
in
HQRL
for
a
sum
of
Rs.
45
crores.
Out
of
this,^
Rs. 33. 37
crores
was
obtained
by
way
of
loans
from
banks.
99. 97 %
shares
of^
HQRL
being
held
by
Moral,
HQRL
became
Moral’s
subsidiary.Appellant
No. 1 ,
Mr.
R.P.
Mittal,
and
the
appellant
No.
2 ,
Mrs.
Sarla
Mittal,
who^
held
the
controlling
interest
in
Moral,
and
the
Respondent
No. 3 ,
Mr.
Ashok
Mittal,^
younger
brother
of
the
Appellant
No. 1 ,
Mr.
R.P.
Mittal
were
appointed
as^
Additional
Directors
of
HQRL
on
8. 10. 2002 ,
and
later,
regular
Directors
at
the^
Annual
General
Meeting
of
HQRL
held
on
28. 12. 2002.On
30. 9. 2002
HQRL
passed
a
resolution
in
its
Extra
Ordinary
General
Meeting
(EOGM)^
to
change
its
status
from
‘private
limited’
to
‘limited’
company.
The
said^
resolution
was
rejected
by
the
Registrar
of
Companies
on
the
ground
of
late^
filing
and
according
to
the
appellants,
HQRL
had
not
filed
it
again
with
the^
Registrar
of
Companies
nor
had
removed
the
defects.On
21. 12. 2002
a
Board
meeting
of
HQRL
was
held.
Moral
transferred
13
equity^
shares
valued
at
Rs. 10
per
equity
share
of
HQRL
to
7
persons,
i.e.2
shares^
to
the
appellant
No. 1 ,
Mr.
R.P.
Mittal,
3
shares
to
the
appellant
No. 2 ,
Mrs.^
Sarla
Mittal,
one
share
to
the
respondent
No. 3 ,
Mr.
Ashok
Mittal
and
7
shares^
to
4
daughters
of
the
appellant
Nos. 1
and
2 ,
R.P.
Mittal’s
family
thus
held^
99. 97 %
equity
shares,
as
against
one
equity
share
held
by
his
brother,
Mr.
Ashok^
Mittal.Ram Parshotam Mittal
v.
Hotel Queen Road (P.) Ltd. (SC)