Page 1 SLP(Crl.)No. 6873 of 2010

REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

SPECIAL LEAVE PETITION (CRIMINAL) NO. 6873 OF 2010

Mr. Vikram Bakshi & Ors. …. Petitioner (s)

versus

Ms. Sonia Khosla (Dead) By Lrs. …. Respondent (s)

With

SLP(C)No. 23796-23798/2010

Contmt. Pet. (Crl.) No. 4/13 In SLP (Crl.) No. 6873 of 2010

J U D G M E N T

A.K. SIKRI, J.

1.A spate of litigation between the two groups depicts a severe fight between them

where settlement appears to be a distant dream, at least as of now, with tough

positions taken and on each and every facet/ nuance of the disputes, they have

joined issues. However, we are happy to find consensual approach on one aspect at

least viz. the future course of action that needs to be adopted in these matters which

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have landed in this Court (albeit against interim orders) as the proceedings are still

pending at different levels either in the Company Law Board or in the High Court.

This much positive stance, aimed at cutting the corners and edging out the niceties

for early resolution of the main dispute between the parties needs to be

commended. For this reason, apart from stating the controversy involved in each of

the matters, our purpose would be served in stating the course of action which

needs to be adopted, as agreed between the parties, without going into the nitty

gritty of the issues involved. With this introduction we describe hereinbelow the

nature of the dispute in these petitions.

SLP(Crl) No. 6873 of 2010

2. When the two parties joined together for collaborative business venture, it is but

natural that the relationship starts with mutual trust and faith in each other. At the

time of fostering such a relationship, they expect that with joint efforts in the

proposed business venture, they would be able to achieve unparallel milestones,

which would otherwise be impossible with their individual efforts. The joining

together is with the aim of making one plus one as eleven and not two. However,

over a period of time, if due to unfortunate and unforeseen circumstances/ events,

the relationship becomes bitter and the two collaborative partners fall apart, it

results in a position where one minus one is not only reduced to zero but becomes

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negative. That perhaps is the story of the present litigation and if the disputes are

not resolved early, either by adjudicatory process or amicably between the parties,

the negative factor will keep growing and keep widening its fangs which may not

be conducive to any of the litigants before us.

3.The respondents herein (hereinafter referred to as the Khosla Group) are the

owners of the prime lands in Kasauli, District Solan, Himachal Pradesh. Legally,

this land is owned by Montreaux Resort Pvt. Ltd. (MRL, for short) and share

holding of the MRL was earlier exclusively held by the family members of the

Khosla Group. It was their vision to develop this real estate into a tourist resort of

repute. The Khosla group needed requisite finances and administrative expertise for

this purpose. The petitioners (hereinafter referred to as the Bakshi Group) extended

its helping hand. In fact it was conceived as a dream project of both the groups. For

this purpose MOU dated 21.12.2005 was entered into between Mr. Deepak Khosla,

Mr. R.P. Khosla, MRL and Mr. Vikram Bakshi. The project was joint venture

between the Khosla Group and Mr. Vikram Bakshi wherein the Bakshi Group was

to pump in the necessary finances and to take charge of administration by

managing the entire project. MRL was the special purpose vehicle for the execution

of the project. The MOU envisaged transfer of shareholding in MRL by Khosla

Group to Vikram Bakshi on certain demands made by the latter to the former.

4.Pursuant to the MOU dated 23.12.2005, Mr. Vinod Surah and Mr. Wadia Prakash

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(nominees of Mr. Vikram bakshi) were appointed as Additional Directors of MRL.

An agreement dated 31.3.2006 was entered, for executing the proposed project,

between the respondent, Ms. Sonia Khosla, wife of Mr. Deepak Khosla, Mr. R.P.

Khosla, MRL and Mr. Vikram Bakshi. The agreement recorded that 51%

shareholding in the company had been transferred to Mr. Vikram Bakshi. The said

agreement, inter alia, provided that:

(a) Land for the project shall be purchased in the

name of MRL.

(b) The responsibility of development of lands,

managing the project and arranging finances would be that of

Mr. Vikram Bakshi.

(c) Khosla's would be paid a total consideration of Rs.

6.44 crores on completion of different milestones of which an

amount of Rs. 3.30 crores was to be as a loan bearing interest

@ 12% per annum.

(d) Khosla's would sell their entire shareholding in

MRL to Mr. Vikram Bakshi.

5.For some reasons (both the groups have their own version in this behalf with

blame game against each other) the project did not kick off and ran into rough

weather with the sowing of the seeds of mutual distrust and lack of faith. It led to

filing of a petition under Section 397 and 398 of the Companies Act by Ms. Sonia

Khosla against Bakshi Group, though in that petition she impleaded some of the

members of Khosla family also as respondents (may be performa respondents). Her

allegation was that she held 49% shares in the Company which had been further

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reduced to 36% and that the affairs of the Company were being managed in a

manner oppressive to the minority shareholders. In this petition she admitted that

majority shareholding was with Mr. Vikram Bakshi.

6.The relief prayed for in the said petition, inter alia, was for passing an order for

removal of the petitioners from the Board of Directors of the Company. Various

miscellaneous applications came to be filed in the aforesaid petition. Notably

among those was an application under Section 8 of the Arbitration and Conciliation

Act filed by Mr. Vikram Bakshi. Mr. Vineet Khosla also filed an application

claiming himself to be the Director of the Company and alleging that Mr. Wadia

Prakash and Mr. Vinod Surah had ceased to be the Directors of the Company on

30.9.2006 since they were not confirmed in the AGM of the Company and,

therefore, the subsequent appointment of Mr. Vikram Bakshi by the Board was bad

in law.

7.Another significant development which took place was that on 18.12.2007

purported meeting of the Company was held by Ms. Sonia Khosla and Mr. Vinay

Khosla wherein Mr. Deepak Khosla and Mr. R.K. Garg were appointed as the

Directors of the Company and in this meeting the Board of the Company allotted

6.58 lakhs equity shares to eleven persons of the Khosla Group. It hardly needs to

be mentioned that the Bakshi Group contends that this alleged meeting on

18.12.2007 was of illegally constituted Board. The Bakshi Group also taken the

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position that Mr. Wadia Prakash and Mr. Vinod Surah continue to be legally

appointed Directors and likewise appointment of Mr. Vikram Bakshi by the Board

of the Company was also as per law.

8.The Company Law Board (CLB) passed orders dated 31.1.2008 directing the

maintenance of status quo with regard to the shareholding and the Directors of the

Company as it existed on the date of the filing of the petition i.e. 13.8.2007.

Observations were made in this order that the respondent-Sonia Khosla had tried to

overreach the CLB by changing it composition and to increase the share capital of

the Company.

9.Aggrieved by this order of the CLB, Mr. R.P. Khosla filed the appeal in the High

Court of Delhi. However, he sought permission to withdraw the appeal. On

11.4.2008, noticing that the parties had agreed that C.P. No. 114/2007 is to be

withdrawn and the status quo as on the date of filing of the said petition would be

maintained, the said C.P. was dismissed as withdrawn. Sonia Khosla had also filed

appeal against the same very order dated 31.1.2008 of the CLB. This was also

dismissed by the High Court on 22.4.2008, albiet on merits. Both Mr. R.P. Khosla

as well as Sonia Khosla filed Review Petitions seeking review of orders dated

11.4.2008 and 22.4.2008 respectively. These Review Petitions were also dismissed

on 6.5.2008.

10.As the things stood at that stage, the effect of the aforesaid proceedings was that

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the order dated 31.1.2008 passed by CLB continued to operate. It is at that stage,

the litigation started taking a different turn altogether.

11.Ms. Sonia Khosla filed an application under Section 340 of the Code of

Criminal Procedure (Cr.PC) before the CLB alleging that forged documents were

filed before the CLB. However, while this application is still pending before the

CLB, in October, 2008 she filed another application under Section 340 Cr. PC in

the High Court of Delhi on the same very grounds which were taken in the

application before CLB. She sought prosecution of the petitioners under Section

195(i)(b)(ii) read with Section 340 Cr. PC alleging that the minutes of the AGM of

the Company allegedly held on 30.9.2006 were forged. The reason given therein to

approach the High Court was that she was forced to file the petition in the High

Court as there was a complete inaction on the part of CLB on her application

before it. She sought to rest her application on sub-section 2 of Section 340 Cr. PC

for its maintainability in the High Court. In this application orders dated 15.2.2010

are passed by the High Court and that order is the subject matter of challenge in the

present proceedings. As can be easily discerned, the petitioners' main contention is

that application u/s 340 Cr. PC is not maintainable.

SLP(C)No. 23796-98 of 2010

12.As mentioned above, in the Company Petition filed by Ms. Sonia Khosla

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interim orders dated 31.1.2008 were passed by the CLB directing the parties to

maintain status quo with regard to shareholding and the Directors of the Company

as it existed on the date of filing of the Company Petition i.e. 13.8.2007. The

consequences thereof was not to give effect to the purported Board meeting of the

Company on 14.12.2007 wherein Mr. Deepak Khosla and Mr. R.K. Garg were

inducted as Directors and there was also an allotment of 6.58 lakhs equity shares to

the persons of Khosla Group. Further, as mentioned above this order was

challenged both by R.P. Khosla as well as Ms. Sonia Khosla by filing appeal in the

High Court. Whereas appeal filed by Mr. R.P. Khosla was dismissed on 11.4.2008,

the appeal of Ms. Sonia was dismissed on merits on 22.4.2008 and the Review

Petitions filed by both of them were also dismissed on 6.5.2008. However, Mr.

R.K. Garg who was taken as Director in the purported meeting held on 14.12.2007

also felt aggrieved by the order of the CLB. The effect of the status quo ante order

was that he could not be treated as the Director of the Company during the

subsistence of the said order. Mr. R.K. Garg challenged this order by filing a writ

petition in the High Court of Delhi on 26.2.2008. In that writ petition orders of

status quo were passed on 7.4.2008 However, on 9.4.2009, Mr. R.K. Garg

(Respondent No. 1 herein) withdrew this petition as alternate remedy of filing

appeal against the impugned order of the CLB is provided under Section 10 F of

the Companies Act. After withdrewing the writ petition the Respondent No. 1 filed

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Co. Appeal No. (SB) 23 of 2009. In this appeal the company judge of the High

Court has passed orders dated 13.4.2010 issuing notice in the said appeal, in the

application for condonation of delay as well as in the stay application.

Simultaneously, the High Court has also stayed the operation of the orders dated

31.1.2008 passed by CLB in so far as it has cancelled the shareholding and

Directorship of Respondent No. 1. The instant present Special Leave Petition

impugns the aforesaid order dated 13.4.2010 passed by the High Court, primarily

on the ground that since the appeal is time barred till the delay is condoned there is

no appeal in the eyes of law and, therefore, the High Court could not have passed

interim orders.

13.Though the aforesaid two SLP's are the main proceedings before us, even in

these proceedings Contempt Petitions and petitions under Section 340 Cr. PC are

filed. Moreover, narration of the events disclosed above would demonstrate that

main proceedings are the Co. Petition filed by Ms. Sonia Khosla under Section

397-98 of the Companies Act before the CLB where issues relating to the affairs of

the Company are to be thrashed out. However, from this on case, number of other

proceedings have sprung up. In fact, as of today more than 80 cases are pending

between the parties. Most of these do not even touch the main dispute as they are in

the nature of either Contempt Petitions, (Civil or Criminal) or petitions under

Section 340 Cr. PC etc.

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14.As stated in the beginning of this order, though it was going to be collaborative

efforts of the two groups in developing a dream project and for certain reasons the

parties have drifted apart, one legal action which was triggered with the filing of

the Company Petition by Ms. Sonia Khosla before the CLB, has today swollen into

an acrimony of gigantic proportion. With all these incidental and peripheral

proceedings, which are allowed to take centre stage, the main dispute which is the

subject matter of company petition before the CLB has taken a back seat. There

have been attempts made on different levels, during court proceedings, to see

whether there could be amicable resolution of the disputes between the parties.

However, as on date these attempts have been of no avail.

15.According to us it would have been more appropriate for the parties to atleast

agree to resort to mediation as provided under Section 89 if CPC and make an

endeavour to find amicable solution of the dispute, agreeable to both the parties.

One of the aims of mediation is to find an early resolution of the dispute. The

sooner dispute is resolved the better for all the parties concerned, in particular, and

the society, in general. For parties, dispute not only strains the relationship but also

destroy it. And, so far as society is concerned it affects its peace. So what is

required is resolution of dispute at the earliest possible opportunity and via such a

mechanism where the relationship between individual goes on in a healthy manner.

Warren Burger, once said:

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“The obligation of the legal profession is… to serve as healers of

human conflict… (we) should provide mechanisms that can produce

an acceptable result in shortest possible time, with the least

possible expense and with a minimum of stress on the participants.

That is what justice is all about.”

MEDIATION is one such mechanism which has been statutorily brought into place

in our Justice System. It is one of the methods of Alternative Dispute Resolution

and resolves the dispute in a way that is private, fast and economical. It is a

process in which a neutral intervener assists two or more negotiating parties to

identify matters of concern, develop a better understanding of their situation, and

based upon that improved understanding, develop mutually acceptable proposals to

resolve those concerns. It embraces the philosophy of democratic decision-making

[Alfin, et al., Mediation theory & Practice, (2

nd

Ed. 2006) Lexis Nexis.

16.Thus, mediation being a form of Alternative Dispute Resolution is a shift from

adversarial litigation. When the parties desire an on-going relationship, mediation

can build and improve their relationships. To preserve, develop and improve

communication, build bridges of understanding, find out options for settlement for

mutual gains, search unobvious from obvious, dive underneath a problem and dig

out underlying interests of the disputing parties, preserve and maintain relationships

and collaborative problem solving are some of the fundamental advantages of

mediation. Even in those cases where relationships have turned bitter, mediation

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has been able to produce positive outcomes, restoring the peace and amity between

the parties.

17.There is always a difference between winning a case and seeking a solution. Via

mediation, the parties will become partners in the solution rather than partners in

problems. The beauty of settlement through mediation is that it may bring about a

solution which may not only be to the satisfaction of the parties and, therefore,

create a win win situation, the outcome which cannot be achieved by means of

judicial adjudication. Thus, life as well as relationship goes on with Mediation for

all the parties concerned and thus resulting into peace and harmony in the society.

While providing satisfaction to the litigants, it also solves the problem of delay in

our system and further contributes towards economic, commercial and financial

growth and development of the country.

18.This Bench is of firm opinion that mediation is new dimension of access to

justice. As it is one of the best forms, if not the best, of conflict resolution. The

concept of Justice in mediation is advanced in the oeuvres of Professors Stulberg,

Love, Hyman, and Menkel-Meadow (Self-Determination Theorists). Their

definition of justice is drawn primarily from the exercise of party self-

determination. They are hopeful about the magic that can occur when people open

up honestly and empathetically about their needs and fears in uninhibited private

discussion. And, as thinkers, these jurists are optimistic that the magnanimity of the

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human spirit can conquer structural imbalances and resource constraints.

Professor Stulberg, in his masterful comment on the drafting of the Uniform Model

Mediation Act, Fairness and Mediation, begins with the understated predicate that

“the meaning of fairness is not exhausted by the concept of legal justice.” In truth,

the more pointed argument advanced in the article is that legal norms often diverge

quite dramatically from our notion of fairness and the notion of fairness of many

disputants. Legal rules, in Stulberg’s vision, are ill-equipped to do justice because

of their rigidity and inflexibility. Professors Lela Love andJonathan M. Hyman

argue that mediation is successful because it provides a model for future

collaboration. The authors state that the process of mediation entails the lesson that

when people are put together in the same room and made to understand each

other’s goals, they will together reach a fair resolution. They cite Abraham

Lincoln’s inaugural address which proposed that in a democracy, “‘a patient

confidence in the ultimate justice of the people’ to do justice among themselves . . .

is a pillar of our social order.”

Professor Carrie Menkel-Meadow presents a related

point of view in making the case that settlement has a political and ethical economy

of its own and writes:

“Justice, it is often claimed, emerges only when lawyers and their

clients argue over its meaning, and, in turn, some authoritative

figure or body pronounces on its meaning, such as in the canonical

cases of the late-twentieth century… For many years now, I have

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suggested that there are other components to the achievement of

justice. Most notably, I refer to the process by which we seek

justice (party participation and empowerment, consensus rather

than compromise or command) and the particular types of

outcomes that might help to achieve it (not binary win-lose

solutions, but creative, pie-expanding or even shared solutions).”

Justice in mediation also encompasses external developments, beliefs about human

nature and legal regulation. Various jurists are drawn to mediation in the belief that

litigation and adversarial warring are not the only, or the best ways to approach

conflict. And how optimistically and skeptically mediators assess the capabilities of

individual parties and institutional actors to construct fair outcomes from the raw

material of human conduct.

Mediation ensures a just solution acceptable to all the parties to dispute thereby

achieving ‘win-win’ situation. It is only mediation that puts the parties in control

of both their disputes and its resolution. It is mediation through which the parties

can communicate in a real sense with each other, which they have not been able to

do since the dispute started. It is mediation which makes the process voluntary and

does not bind the parties against their wish. It is mediation that saves precious

time, energy as well as cost which can result in lesser burden on exchequer when

poor litigants are to be provided legal aid. It is mediation which focuses on long

term interest and helps the parties in creating numerous options for settlement. It is

mediation that restores broken relationship and focuses on improving the future not

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of dissecting past. It is based on an alternative set of values in which formalism is

replaced by informality of procedure, fair trial procedures by direct participation of

parties, consistent norm enforcement by norm creation, judicial independence by

the involvement of trusted peers, and so on. This presents an alternative

conceptualization of justice.

19.We have purposely stated the aforesaid advantages of mediation process in

a hope that if not now, in near future the parties may agree on exploiting this

mechanism to their advantage.

20.In this backdrop, Mr. Dushyant Dave, the learned Senior Counsel who

appeared for Bakshi Group in SLP (C) No. 6873 of 2010 made a fervent plea

before this Court to invoke the provisions of Article 142 of the Constitution and put

an end to the entire litigation between the parties pending in various courts by

putting the parties to such terms, which this court finds to be equitable for both the

parties. On behalf of Bakshi Group he also gave the offer to surrender/give 50% of

land to the Khosla Group and also an amount of Rs. 6.40 Crores, He even

submitted that if this Court finds the said amount to be inadequate the Court would

be empowered to fix higher amount. However, that was not acceptable to the other

side as according to them not only they are entitled to get the entire land which

belongs to them but the amount of compensation which Bakshi Group is liable to

pay to them would be many times more than the amount offered. Lest we be

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misunderstood, we are not blaming either side. We have indicated this, just to give

a hint of the magnitude of imbroglio that has occurred between the parties. At the

same time, as there are many cases of different nature pending in different courts it

is not possible to exercise powers under Article 142 of the Constitution and to

resolve all those cases. However, we feel sad about the state of affairs. The dispute

which has arisen, out of MOU/ collaboration agreement between the parties is not

unique or unprecedented. Such type of differences do arise. Day in and day out

there are litigations of the kind which is filed in the CLB by Ms. Sonia Khosla.

However, what is unprecedented is the monstrous proportions which this litigation

has assumed with the multiplication of proceedings between the parties today

which arose out of one petition before the CLB.

21.In fact, though the learned Senior Counsel for the parties had argued the

matters before us at length on the previous occasions, at the stage of conclusions of

the arguments, the learned Senior Counsel Mr. Cama appearing for Khosla Group

suggested for an early decision of the Company Petition before the CLB as a better

alternative so that at least main dispute between the parties is adjudicated upon at

an early date. He was candid in his submission that the issues which are subject

matter of these two Special Leave Petitions and arise out of the proceedings in the

High Court, have their origin in the orders dated 31.1.2008, which is an interim

order passed by the CLB. He thus, pointed out that once the Company Petition

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itself is decided, the issues involved therein namely whether Board meeting dated

14.12.2007 was illegal or whether Board meeting dated 30.9.2006 was barred in

law would also get decided. In the process the CLB would also be in a position to

decide as to whether minutes of AGM of the Company allegedly held on 30.9.2006

are forged or not and on that basis application under Section 340 Cr. PC which is

filed before the Company Law Boared would also be taken care of by the CLB

itself. Learned Senior Counsels appearing for the Bakshi Group immediately

agreed with the aforesaid course of action suggested by Mr. Cama. We are happy

that at least there is an agreement between both the parties on the procedural course

of action, to give quietus to the matters before us as well. In view of the aforesaid

consensus, about the course of action to be adopted in deciding the disputes

between the parties, we direct the Company Law Board to decide Company

Petition No. 114 of 2007 filed before it by Ms. Sonia Khosla within a period of six

months from the date of receiving a copy of this order. Since, it is the CLB which

will be deciding the application under Section 340 Cr. PC filed by Ms. Sonia

Khosla in the CLB, High Court need not proceed further with the Criminal Misc.

(Co.). No. 3 of 2008. Likewise the question whether Mr. R.K. Garg was validly

inducted as a Director or not would be gone into by the CLB, the proceedings in

Co. Appeal No. (SB) 23 of 2009 filed by Mr. R.K. Garg in the High Court, also

become otiose.

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22.The only aspect on which some directions need to be given are, as to what

should be the interim arrangement. The Bakshi Group wants orders dated

31.1.2008 passed by CLB to continue the interregnum. The Khosla Group on the

other hand refers to orders dated 11.4.2008 as it is their submission that this was a

consent order passed by the High Court after the orders of the CLB and, therefore,

this order should govern the field in the meantime..

23.After considering the matter, we are of the opinion that it is not necessary to

either enforce orders dated 31.1.2008 passed by the CLB or orders dated 11.4.2008

passed by the High Court. Fact remains that there has been a complete deadlock, as

far as affairs of the Company are concerned. The project has not taken off. It is

almost dead at present. Unless the parties re-concile, there is no chance for a joint

venture i.e. to develop the resort, as per the MOU dated 21.12.2005. It is only after

the decision of CLB, whereby the respective rights of the parties are crystallised, it

would be possible to know about the future of this project. Even the Company in

question is also defunct at present as it has no other business activity or venture. In

a situation like this, we are of the opinion that more appropriate orders would be to

direct the parties to maintain status quo in the meantime, during the pendency of

the aforesaid company petition before the CLB. However, we make it clear that if

any exigency arises necessitating some interim orders, it would be open to the

parties to approach the CLB for appropriate directions.

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24.Both these petitions are disposed of in the aforesaid terms. All other

pending I.As including criminal contempt petitions and petitions filed under

Section 340 Cr. PC are also disposed of as in the facts of this case, we are not

inclined to entertain such application. No costs.

…......................................J.

[Surinder Singh Nijjar]

…....................................J.

[A.K. Sikri]

New Delhi

May 08, 2014

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