Kanthi Narahari, Member (Judicial)

1. The present petition is filed by invoking various provisions of the Companies Act, 1956 (the Act) alleging certain acts of oppression and mismanagement in the affairs of the company and sought declaration that:

(a) and (b) All the Board resolutions and shareholders resolutions passed by the respondents 2 to 6 from September 2003 are illegal, null and void.

(c) R1 is quasi-partnership between the petitioner No. 1 family and respondent No. 2 family with 50 : 50 ratio and the same to be maintained in future.

(d) Equity share capital of R1-company will not be increased without express consent of petitioners.

(e) and (f) Any agreement to sell, transfer, alienate or any purported lease agreement entered into the R1-company and R8 in respect of fixed assets situated at Plot at MIDC Andheri without consent of the petitioners to be set aside.

(g) Non-sending of notices and non-holding of the Board and general meetings are illegal.

Shri Sanjay Maria, learned counsel for the petitioners, narrated the brief facts. He submitted that R1-company was incorporated as a private limited company on 27th April, 1976 by Late Shri Parmeshwar N Sadh along with petitioner No. 1, respondent No. 2 and Basudev Sadh. It was registered with the Registrar of Companies (RoC), Maharashtra. The petitioner Nos. 1, 2 and 3 hold 25,000 equity shares of Rs. 100 each out of total of 50,000 equity shares of Rs. 10 each representing 50 per cent of the issued, subscribed and paid-up share capital of R1-company. The respondent Nos. 2 to 6 hold 25,000 equity shares of Rs. 100 each out of total of 50,000 equity shares of Rs. 10 each representing 50 per cent of the issued, subscribed and paid-up share capital of R1. It is further submitted that R1 is a quasi-partnership between the petitioner No. 1 family and the R2 family on 50 : 50 basis. It was agreed upon between the petitioner No. 1 family and the R2 family that the same ratio will always be maintained in future as well. Petitioner No. 1 and the R2 had signed the annual accounts for the year ended 31st March, 2003 and after that the R2 has not sent any annual accounts for the years ended 31st March, 2004, 2005, 2006, 2007 and 2008, respectively. Petitioners requested R2 to 6 to provide the progress report of business of the R1 and the use of the property at Andheri (East) Mumbai owned by the R1 but the R2 to 6 always postponed the matter on one pretext or the other and never provided the report of the same. Petitioners requested the R2 to 6 to provide inspection of the property situated at Andheri (East), Mumbai of the R1 but the R2 to 6 never allowed the petitioners to enter the property at all. Petitioners also requested the R2 to 6 to provide the notice of Board meetings and general meetings and minutes of the same but the R2 to 6 never provided any statement while understanding well that the petitioners are 50 per cent partners in the quasi-partnership.

2. It is further submitted that the petitioners decided to inspect the records of the R1 with the RoC and inspected the records of the R1 on 10th April, 2008 and shocked to know that further 49,960 equity shares have been allotted by R1-company and the paid-up share capital has been increased to 50,000 equity shares. The petitioners have also come to know that R2 to 6 are using the property of R1 situated at Andheri (East), Mumbai for their own personal use and not for the purpose of the business of R1; and it is found that there is no revenue generating for R1 which is clear and unambiguous case of diversion and siphoning off the funds of R1-company. The petitioners have also come to know that the R2 to 6 have given the property of R1-company situated at Andheri (East), Mumbai on lease to. R7 without the knowledge and consent of the petitioners. The petitioners requested the R2 to 6 as well as the R7 to produce the copy of the lease agreement entered into between the R1 and R7. The petitioner No. 1 has come to know from the correspondence exchanged with the R7 that the said purported lease agreement was approved in the alleged Board meeting held on 15th December, 2005 while the fact is that the petitioner No. 1 never received any notice of the said alleged Board meeting of the R1-company. The respondents are using the R1-company as a vehicle for their personal enrichment. The petitioners have now also learnt that as a part of their design to deny and deprive the legitimate rights and expectations as shareholders, as also of the fruits of their labour and vision, the R2 to 6 have been siphoning away valuable assets and rights of the R1-company. The sole motive of R2 to 6 is to exclusively take over the R1 and its management to the exclusion of the petitioners, with the ultimate aim and objective of converting the company into their personal business for their personal benefits and enhancement. It is further submitted that R2 to 6 are not interested in the welfare and well being of the R1 but is actively engaged in illegalities and misconduct and misappropriating assets to their personal accounts under his control which is prejudicial to the R1 and the petitioners as the 50 per cent shareholder of R1. Such actions are bound to result into winding up of the R1. The learned counsel further submitted that the respondents admitted the fact that the petitioners and the respondents are equal shareholders. After September 2003 the petitioners were excluded from the management and the respondents are only in the management. The R2 appointed R3 as director. He contended that there must be clear denial in respect of pleadings if there is no admission either denial or admission it amounts to admission of fact and in support thereof he relied upon the following citations : (i) Badat & Co. v. East India Trading Co. : AIR 1964 SC 538 at paras 11 and 13 and (ii) Sushil Kumar v. Rakesh Kumar AIR 2004 SC 230 .

3. The respondents have filed detailed reply to the petition. Shri Madon, learned senior counsel narrated the brief facts and submitted that the present petition proceeds on the basis of totally false and/or misleading allegations to the effect that the petitioners are the shareholders and are entitled to act as directors and have an interest in the property and asset owned by the Gyandev Sadh Co. The petitioners have also suppressed from this honble Bench that in fact and on the contrary, by and Under a family arrangement arrived at, inter alia, between the petitioners and the respondents, on 30th August, 2004 and 11th September 2004, it has been, inter alia, agreed between the parties that the shares held in the name of the petitioners belong to Mr. Bazzardev Sadh and the petitioners shall resign as directors of the respondent No. 1-company. The said family arrangement/settlement has been substantially implemented and pursuant to such implementation, inter alia, the possession, of the property held in the name of the Gyandev Sadh Co. has been handed over to the respondents and they are in exclusive use, occupation, possession and enjoyment. The respondents are receiving and appropriating the income and profits as well as making payment of the outgoings in respect of such properties. Since the petitioners have failed and/or neglected and/or delayed completing the remaining part of the implementation, the respondents have filed a suit in the honble High Court being Suit No. 1937 of 2008. The petitioner No. 1 and R2 are brothers and sons of late Mr. Parmeshwar Narain Sadh. The Bazzardev Sadh group and the Gyandev Sadh group are parties to the family arrangement/settlement and accordingly the division has taken place in the following manner. Ananya Fashions (P.) Ltd., Arsh Fashions (P.) Ltd., Parmeshwar Exports (P.) Ltd. (the Bazzardev Sadh group companies) and one Club-3 Apparels (P.) Ltd. (the Gyandev Sadh group company) wherein the Bazzardev Sadh group and the Gyandev Sadh group held more or less 50 per cent share each. The properties held in the name of the Bazzardev Sadh group companies, by and under the family arrangement/settlement have been allotted to the Bazzardev Sadh group and the property held in the name of the Gyandev Sadh group company, has been allotted to the Gyandev Sadh group. As per such family arrangement/settlement, the shares held by the Gyandev Sadh group in the Bazzardev Sadh group companies belong to and have to be formally transferred in favour of the Bazzardev Sadh group and similarly, the shares held by the Bazzardev Sadh group in the Gyandev Sadh group company belong to and have to be formally transferred in favour of the Gyandev Sadh group.

4. To resolve the disputes and differences between the petitioners and the respondents, the above family arrangement came to be arrived at. It is an admitted fact that the Bazzardev Sadh group and the Gyandev Sadh group held certain, inter alia, immovable properties, either in the individual names of the members of the family or in the name of partnership firms or limited companies. Certain disputes and differences arose between the parties, inter alia, in respect of such immovable properties. The parties referred such disputes and differences to the mediation of their family advocate and solicitors and their family chartered accountants for division and/or segregation and/or separate allotment of such properties, among the said 2 brothers and their respective family members. Pursuant to such mediation, family arrangement/settlement was arrived at between the Bazzardev Sadh group and the Gyandev Sadh group, whereby six immovable properties were divided and/or segregated and consequently allotted to the Bazzardev Sadh group and the Gyandev Sadh group. The heads or main features of such family arrangement/settlement have been recorded in writing by memorandum duly signed by the parties and such family arrangement/settlement has been substantially implemented. Pursuant to such family arrangement/settlement and in implementation thereof, inter alia, the possession of the properties coming to the share of each group has been handed over to each group and each of the said groups are in exclusive use, occupation, possession and enjoyment of the properties coming to their respective share. The concerned group is also in complete control and management of such company/companies and is enjoying the income, profits and assets of such company. Virtually the only part of the implementation that remains pending of such family arrangement/settlement, being that the parties are required to execute certain formal documents to formally convey title in respect of such properties coming to the share of respective groups and/or to execute documents, inter alia, necessary for formal retirement by the concerned members of each group, as partners of the concerned partnership firm and/or formally transfer the shareholding held by the concerned members of each group. Most of the documents required to be signed by the Bazzardev Sadh group in respect of the properties coming to the share of the Bazzardev Sadh group, have in fact been executed by them. The Gyandev Sadh group, however, with mala fide intention and ulterior motive, have failed and/or neglected and/or avoided to execute such documents and consequently to complete the implementation of the family arrangement/settlement arrived at between the parties and is now appear to be interested in resiling and/or wriggle out of the family arrangement/settlement already arrived at and not implementing the remaining part of the same. The Bazzardev Sadh group, therefore, was constrained to file the said suit before the honble High Court. Needless to state that the respondents, i.e., the Bazzardev Sadh group have always been ready and willing to fulfill their part of the obligations under the family arrangement/settlement and to implement the same as agreed including by executing appropriate documents for formally conveying the title in respect of the properties coming to the share of the petitioners, i.e., the Gyandev Sadh group.

5. In or about November 2007, to the shock and surprise of the said respondents, viz., the Bazzardev group, the said respondents learnt that the Gyandev Sadh group, and in particular the concerned members of Gyandev Sadh group indulged into several acts of oppression and mismanagement in respect of the income and properties of and belonging to another private limited company of the Sadh Family group, viz., River Technoplast (P.) Ltd., not forming a part of the said family arrangement/settlement already arrived at. In the circumstances, the Bazzardev Sadh was constrained to file a petition being CP No. 6 of 2008 under sections 397 and 398 of Act, before the Company Law Board (CLB), Principal Bench at New Delhi. The honble CLB has passed appropriate order granting protection to the petitioner therein.

6. The learned senior counsel made his submissions to the specific allegations made in the petition. He submitted that Mr. Varundev Sadh, i.e., R3 is not a director of R1-company although R4 has been appointed as director of the company on or about 29th September, 2007. Similarly, R6 is not a shareholder of R1. It is Parmeshwar Fashions, a partnership firm who is the shareholder of Parmeshwar Exports (P.) Ltd. It is also incorrect that R7 is the licensee of any premises owned by the R1-company. The Licence in favour of R7 has been terminated long ago and from December 2007 onwards Global Travel Solutions (P.) Ltd. is the licensee in respect of the basement, ground and first floor and thereafter the premises on the second floor has also been given on licence to the said licensee, pursuant to agreement dated 7th November, 2007 and 17th December, 2007. It is reiterated that in view of the said family arrangement/settlement no question arises of the shareholding pattern of the R1-company remaining the same and under the said family arrangement/settlement the said company and the properties and assets held in the name of the said company solely and exclusively belong to the Bazzardev Sadh group and the shares formerly held in the name of the members of the Gyandev Sadh group are formerly liable to be transferred in favour of Mr. Bazzardev Sadh. After the said family arrangement/settlement the petitioners are not concerned with the said company or its management and/or its affairs. However, the staff of the company as in a routine manner sent all necessary accounts to all the shareholders including the petitioners as their names continue to be shown as shareholders of the company, save and except in respect of the year 2007-08, as the accounts for the same are not yet audited and finalised. The R6 is one of the shareholders of the R1-company. It is false to state that the respondents are using the property of the company for their personal use and the same is being used for the purpose of the company as set out in the books of account of the company. In any event, it is none of the business of the petitioners as under the said family arrangement/settlement the said company, the management, control thereof as well as the properties, assets and income solely and exclusively belong to the Bazzardev Sadh group and the Gyandev Sadh group have no right, title or interest of any nature whatsoever in respect of the same. When the property was given on licence to the respondent No. 8, the same was appropriately recorded in the minutes of the meeting of the Board of directors.

7. The learned senior counsel further submitted that petitioner admitted at para 2.5 of the petition that the R1 is a family business and quasi-partnership between the petitioner No. 1 family and respondent No. 2 family. The family settlement dated 30th August, 2004 and 11th September, 2004 are binding upon all the parties. It is also pertinent to note that all the properties/assets reflected in the family settlement have been purchased out of a common pool of funds/assets jointly owned by the Sadh family. On this point he relied upon the decision of the Apex Court reported in

(i) Kale v. Dy. Director of Consolidation : AIR 1976 SC 807 . It is held :

Family arrangements are governed by principles which are not applicable to dealings between strangers. The court, when deciding the rights of parties under family arrangements or claims to upset such arrangements, considers what in the broadest view of the matter is most for the interest of families and has regard to considerations which in dealing with transactions between persons not members of the same family, would not be taken into account. Matters which would be fatal to the validity of similar transactions between "strangers are not objections to the binding effect of family arrangements.

(ii) Shambhu Prasad Singh v. Phool Kumari AIR 1971 SC 1337 para 9.

(iii) Maturi Pullaiah v. M Narasimham AIR 1966 SC 1836 para 17.

(iv) Harishankar Singhania v. Gaur Harisinghania AIR 2000 SC 2488 paras 43, 44.

(v) M S Madhusoodhanan v. Kerala Kaumudi (P.) Ltd. [2003] 55 CLA 372 (SC)/[2004] 9 SCC 204 paras 137, 139.

He further contended that the petitioners sought declarations and no relief can be granted in view of section 34 of Specific Relief Act and relied upon the following decisions : (i) In the matter of Kombi v. Aundi Vol. XIII Madras Series p. 75, (ii) Chhabi Dushadh v. Bhuneshwar Pandey AIR 2004 Jha. 92 para 16. The learned counsel further submitted that the petitioner obtained ex parte orders from this Bench which he is not entitled to and relied upon the decisions : (i) S P Chengalvaraya Naidu v. Jagannath : [1994] 1 SCC 1 para 5, (ii) Hamza Haji v. State of Kerala : [2006] 7 SCC 416 para 24, (iii) A V Papayya Sastry v. Government of AP : [2007] 4 SCC 221 paras 21, 29.

8. While rejoining to the submissions of the respondents, the learned counsel for the petitioner submitted that memorandum of understanding cannot be part of Corporate Governance and not binding on shareholders or Company and relied upon the following decisions :(i) V B Rangaraj v. V B Gopalakrishnan [1991] 6 CLA 211 (SC)/: AIR 1992 SC 453 paras 7 and 9, (ii) Mrs. Bacha F Guzdar v. CIT : AIR 1955 SC 74 , (iii) Rolta India Ltd. v. Venire Industries Ltd. : [2000] 100 Comp Cas 19 (Bom.), (iv) Radheshyam Tulsian v. Panchmukhy Investments Ltd. [2003] 113 Comp Cas 298 (CLB) is to show that "the CLB will not consider private agreements between parties. Memorandum of understanding between shareholding groups will not be considered and (v) Reliance Natural Resources Ltd. v. Reliance Industries Ltd. [2010] 98 CLA 495 (SC)/[: 2010] 7 SCC 1 para 329.

9. The learned counsel for the petitioner relied upon the following citations during the course his arguments : (i) Ajit Kumar Nag v. General Manager, IOC : [2005] 7 SCC 764 para 44, (ii) Smt. Vijay Khanna v. V K Kapoor & Associates (P.) Ltd. [2007] 1 Comp LJ 437 (CLB) para 5, (iii) Sardar Associates v. Punjab & Singh Bank [2007] 78 CLA 108 (CLB)/[2010] 94 CLA 61 (SC)/: [2009] 8 SCC 257 para 27, (iv) Motiram v. Ashok Kumar : [2011] 1 SCC 466 , (v) Grasim Industries Ltd. v. Agarwal Steel : [2010] 1 SCC 83 para 6, (vi) B L Sreedhar v. K M Munireddy : [2003] 2 SCC 355 paras 13 and 5 and (vii) State of Orissa v. Haripriya Bisoi : [2009] 12 SCC 378 para 40.

10. Heard the learned counsel appearing for the parties and perused the pleadings, documents and citations relied upon by them. After analysing the pleadings the following issues are felt for consideration and the same are needed to be addressed.

(1) Whether the R1-company is run on the basis of principles of quasi-partnership

(2) Whether the respondents denied the inspection of records and registers to the petitioners

(3) Whether this Bench has any power to direct the parties to enforce the family arrangement/settlement

(4) To what relief

Now I deal with the issue No. 1

11. The R1-company was incorporated 27th April, 1976 as a private company and the transfer of shares are restricted. It is an admitted fact that the R1-company consists of only family members of the petitioner No. 1 and respondent No. 2 and there is no other outside person. The petitioners contended that they are holding 50 per cent and the respondents also holding 50 per cent of the paid-up capital and the R1-company is a family business and quasi-partnership between the petitioner No. 1 family and respondent No. 2 family and also averred that the same ratio of 50 per cent each will be maintained in future as well. However, from the articles it is seen that there is no such clause or provision with respect to the understanding that the 50 per cent ratio will be maintained in future between the petitioners and the respondents. The respondents in their reply have stated that in view of the family arrangement no question arises of the shareholding pattern of R1-company remaining the same and contended that according to the family arrangement, properties and assets held in the name of the R1-company belong to the respondent group. The respondents in their rejoinder to the reply filed by the defendants to the Notice of Motion No. 2487 of 2008 in Suit No. 1937 of 2008 before the honble High Court of Bombay at para 5 wherein it was averred that "it is also pertinent to note that all the properties/assets reflected in the family settlement have been purchased out of a common pool of funds/assets jointly owned by the Sadh family." Thus, the respondents clearly admitted that all the properties/assets have been purchased out of a common pool of funds jointly owned by the Sadh family. The petitioners have filed search report dated 10th April, 2008, it reflects that the petitioner No. 1 and the respondent No. 2 and other two persons are directors of the company and 1st petitioner and respondent No. 2 still continuing as directors. According to the shareholding pattern of the company, the petitioners group holds 25,000 shares and the respondents group holds 25,000 shares. There is no denial to this report and it further strengthens the stand that the petitioners group and the respondents group hold 50 per cent each. Moreover the respondents have neither specifically denied nor admitted with respect to the averment made by the petitioners that the R1-company is a family business and a quasi-partnership except stating that in view of family arrangement the question of 50 per cent ratio does not arise. The learned counsel for the petitioners contended that there must be clear denial in respect of pleadings, if there is no admission either denial or admission it amounts to admission of facts and relied upon the judgments cited supra. I agree with the submissions that the respondents have not denied neither admitted the fact of family business and quasi-partnership. Therefore, I am of the view that the R1-company is a family run company and the principles of quasi-partnership will apply since the petitioners and the respondents hold 50 per cent each and there is no change in the shareholding pattern. Accordingly the issue is answered.

Now I deal with the issue No. 2

12. The petitioners contended that the respondents have not provided the inspection of the records and registers to them. It is their case that they had signed the annual accounts for the year ended 31st March, 2003 and after that the R2 has not signed any annual accounts for the year ended 31st March, 2004 to 2008. The respondents contended that the petitioners are not concerned with the management or its affairs after the family arrangement dated 30th August, 2004 and 11th September, 2004. However, they sent necessary accounts to all the shareholders including the petitioners as their names continue to be shown as shareholders of the company. The respondents along with their reply produced documents wherefrom it is seen that there is correspondence between the respondents solicitors and the petitioners. It is relevant to mention that the respondent No. 2 filed before the CLB Principal Bench, New Delhi in the month of January 2008 and the petitioners have filed CP Nos. 15, 16 and 17 of 2008 before this Bench in the month of May 2008. After filing of the petitions the petitioners solicitors and the respondents solicitors have addressed letters to each other. The petitioners have sought inspection of the documents vide their letters dated 23rd June, 2008 and 26th June, 2008 addressed to the company. The respondents through their solicitors have replied vide para 10 wherein it is stated that "in the circumstances aforesaid kindly let us know how you claim to make or maintain any request for inspection of documents pertaining to the said company After receipt of your response we shall thereafter deal with your request on merits". From the correspondence it is seen that there is no clear intention of the respondents to provide inspection of the documents to the petitioner. It is an admitted fact that the petitioners are 50 per cent shareholders of the company and they are entitled to inspect the records and registers in the capacity as shareholders and directors. Therefore, it is hereby directed the company to provide the inspection of registers and records to the petitioners in accordance with law. The petitioners are also entitled to the notices for the Board and general meetings as per the articles of association and the law. Accordingly the issue is answered.

Now I deal with the issue No. 3

13. The respondents in their counter dated 18th July, 2008 heavily relied upon that under a family arrangement arrived at between the 1st petitioner and the 2nd respondent on 30th August, 2004 and 11th September, 2004, according to which the properties were divided between them. The respondents enclosed the said family arrangement along with their reply. The family arrangement dated 30th August, 2004 wherefrom it shows that the petitioner No. 1 and respondent No. 2 and solicitor and chartered accountants present and shown the immovable properties divided and distributed between the petitioner No. 1 and respondent No. 2. The family arrangement dated 11th September, 2004, is in continuation of the earlier arrangement dated 30th August, 2004. However, it is captioned as Sadh Family Business Separation and signed by the petitioner No. 1 and respondent No. 2. The petitioners have not mentioned about the said family arrangement in the petition and no relief to that effect has been sought. The respondents in their reply stressed that the family arrangement has been substantially implemented and pursuant to such implementation the possession of the property held in the name of the 1st petitioner has been handed over to the respondents and the respondents appropriating the income and profits. It is also stated that since the petitioners failed and neglected and delayed in completing the remaining part of the implementation, the respondents filed Suit being No. 1937 of 2008 before the High Court of Bombay. It is further stated that in view of the family arrangement the present petition is not maintainable and the petitioners have no subsisting right, title or interest of any nature in the shareholding and the management of the property which belongs to the respondents. The respondents have detailed out the properties/companies which belong to the Sadh family in the reply. The petitioners have filed rejoinder on 23rd September, 2008 and stated that the suit was filed by the respondents herein as a counter blast to the petition. It is stated in the rejoinder that the R1-company is an artificial legal entity and has nothing to do with any alleged family business separation between the shareholders. The petitioners also filed an additional affidavit dated 12th April, 2010 by enclosing affidavit in reply filed by the defendants (petitioners herein) to notice of Motion No. 2487 of 2008 dated 13th January, 2010. In the said reply it is stated that the suit filed by the plaintiffs (respondents herein) seeking specific performance against the independent entities and the same cannot be enforceable. The stand of the petitioners has much bearing on the stand taken by the respondents with regard to the family arrangement before this Bench in their counter affidavit. The letter dated 15th September, 2006 addressed by the 2nd respondent to Kuwait Petroleum Corporation, Mumbai wherein it is stated that "we regret to inform you that we have not reached any family agreement with Mr. Gyandev Sadh as yet. If he has informed you so he is misleading you." The petitioners have relying upon this letter and contended that the respondents also have admitted the fact that they have not reached any agreement with the petitioner. Whatever may be the reason, whether this Bench can go into the merits of the family arrangement/settlement in a petition under sections 397-398 of the Act when such family arrangement is sub-judice and subject-matter of the honble High Court of Bombay. In this regard the relevant provision is necessary to emphasise. Any member of the company who complains that the affairs of the company are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members, may apply to the CLB by invoking the provisions of section 397 of the Act and in case of mismanagement in the affairs of the company the member can invoke the provisions of section 398 of the Act, provided they qualify the required criteria as enumerated under section 399 of the Act. The proceedings before the CLB are summary in nature and the Bench upon adjudicating the matter after completion of its pleadings can pass orders as vested under section 402 to put an end to the affairs complained thereof to avoid winding up of the company in equitable manner. It is well settled law that if there is conflict between law and equity the law as such must prevail as held by the honble Apex Court in the matter of Vijay Narayan Thatte v. State of Maharashtra : [2009] 9 SCC 92. The legislation vested the powers to CLB, to deal with the oppression and mismanagement in the affairs of the company complained by any member or members. In the present case there is no controversy/conflict in respect of law and equity. The provision of the Act is very clear on this aspect. But even though the petitioners have not sought any relief seeking enforcement or implementation of family settlement in the petition, however, taking into consideration the law of equity, the stand of the respondents that the petition is not maintainable on the basis of family arrangement arrived between them, is necessary to be addressed. Admittedly the respondents have filed suit before the honble High Court of Bombay for specific performance of family arrangement/settlement. Even otherwise this Bench sitting under the jurisdiction of sections 397-398 cannot decide the private agreements, contracts and settlements, more particularly when the company is not a party to it. I am Of the view that this Bench has ample power under section 402 to pass an order in regulating the affairs of the company in its best interest avoiding winding up provided that the facts to do the equity shall emerge from uncontroversial facts and bare truth. As stated supra the family settlement is not the subject-matter of oppression and mismanagement and this Bench has no jurisdiction. The learned counsel for the respondents relied upon various citations contending that the parties have acted upon the family settlement and the petitioners have received the monies and have not expressed any grievance after the family agreement and it is binding on them. On the other hand the learned counsel for the petitioner relied upon various citations on the point that the MoU is not binding on the shareholders. The honble Apex Court in the matter of V B Rangaraj (supra) the Apex Court held that the private agreements which are contrary to the articles are not binding either on shareholders or on the company. The CLB in the matter of Radhe Shyam Tulsian (supra), is of the view that the CLB will not consider private agreements between parties. The recent judgment of the Apex Court in the matter of Reliance Natural Resources Ltd. (supra) at para 329 held that MoU is a private pact between the members of Ambani family which is not binding on RIL. I follow the law laid down by the Apex Court that the private agreements between the parties, however, will not be considered by the CLB. The private agreements can neither be sought to be enforced nor their breach give any cause of action to file a petition under sections 397-398 of the Act. The said provisions are the exclusive domain of the members and shareholders of the company against acts of oppression and mismanagement in the affairs of the company, but cannot seek any specific performance of private agreements. Since I hold that the family arrangement/settlement is not within the purview of this Bench, therefore, the citations relied upon by the respondents will not apply squarely to the core point. Accordingly, the issue is answered.One of the allegations in the petition is that the property of the R1-company situated at Andheri (East), Mumbai is used by the respondents 2 to 6 for their own personal use and not for the benefit of the R1-company. It is also contended that the said property is given on lease to the respondent No. 7 without the knowledge and consent of the petitioners. The respondents have denied the misusing of the property, however, admitted that it was given on license to respondent No. 7 and the same was recorded in the minutes of the meeting of the Board of directors. From the sequence of documents filed by the petitioners it is evident that the property which is referred by the petitioners was allotted to the R1-company and in that regard a letter was addressed by the Clothing Export Processing Zone on 21st June, 1983. Thereafter the R1-company became a member of the Society. The petitioner vide his letter dated 26th August, 2006 addressed to the chairman, WICEL stating that the property is owned by the R1-company and he is the chairman of the company and also 50 per cent shareholder of the same and endorsed that they have a family dispute on all the properties including the R1. They also stated that the property has not been transferred in anybodys favour and nobody remains the sole owner. The 1st petitioner vide his letter dated 29th August, 2006 addressed to R7 asking them to vacate the premises occupied by them. In turn the R7 vide their reply dated 13th September, 2006 clarified that the R1-company in their Board meeting held on 15th December, 2005 resolved and authorised the R2 to enter into an agreement and to execute the said agreement and in exercise of the said power the R2 had entered and executed the agreement of lease on behalf of R1-company and handed over the peaceful possession to them. They vehemently denied that the property was occupied illegally. From the reply of the respondents and the reply of the R7 to the letters addressed by the petitioner it is apparent that the R1 entered into agreement with R7 as an independent entity and not in individual capacity. Therefore, addressing the letters by the petitioner No. 1 as shareholder is not correct. The R1-company is only competent to take decision with R7 in respect of lease according to the terms and conditions of the lease agreement. Be that as it may, the respondents stated that lease agreement has been terminated with R7. In view of the statement I am of the view that it is a closed controversy with R7. The petitioners in their prayer prayed this Bench to declare all the Board resolutions and shareholders resolutions passed by the respondents 2 to 6 from September, 2003 are illegal, null and void. It is seen that except the prayer no documents/copies of the Resolutions have been produced before this Bench showing that the respondents have taken decisions which prejudiced the petitioners. In absence of any evidence, the prayer of the petitioners seeking declaration is vague and the same is rejected. The petitioners also sought declaration that any agreements to sell, transfer, alienate the property of the R1-company to be set aside is concerned, except prayer in the petition they have not given any documentary proof to show that the respondents are trying to sell or alienate the property. Therefore, I am of the view that the prayer is vague and baseless hence, rejected. The learned counsel for the petitioners during the course of arguments orally submitted that the petitioners are willing to exit the company on receipt of fair value determined by the independent valuer whereas in the petition the petitioner prayed this Bench at para 8.3 that the 50 : 50 ratio by the petitioner No. 1 family and the respondent No. 2 family should be maintained in future in all respects. Since I hold that the R1-company is a family business and quasi-partnership, the ratio of 50 : 50 should be maintained as it was prior to family arrangement/settlement if it is not implemented with free will, conscience of the parties. I am of the view that the interest of the company is paramount. Irrespective of above, if the parties, i.e., petitioners and the respondents act in good faith to resolve their differences and disputes permanently, it would not be an impediment to any of the observations/views in this order to part ways by amicable means of settlement if necessary by appointing an independent valuer to value the assets of the company. This observation is not obligatory. With the above the CP is disposed off. No orders as to cost. All applications stand disposed off. All interim orders stand vacated.