JUDGMENT 1. - The petitioners, having 25% shares in Ms Lake Shore Palace Hotels Pvt.Ltd. have filed present Company Petition No.32/2005 before the Company Law Board (for short CLB ), Principal Seat, New Delhi under Section 397/398 of the Companies Act and prayed that (a) the Board of Directors of the respondent-Company be superseded and an Administrator and/or Receiver and/or Special Officer be appointed to forthwith take over the management and administration of the respondent company on such terms as the Board may deem just and proper,(b) if necessary, a scheme of management be framed for running the management and administration of the company on such terms as the CLB may deem just and proper and (c) the Board of Directors of the Company be reconstituted. The petitioners further sought declaration that the business conducted at and/or the proceedings of the meetings of the Board of Directors attended by respondent no.3 are bad in law in view of the Department's Circular No.14/51/62-PR and as such, the same cannot be acted upon and/or implemented. In addition to above reliefs, the petitioners prayed for (a) injunction restraining the respondents from issuing any shares or from increasing either the authorised or paid up share capital of the Company, (b) injunction restraining the respondents and each of them from dealing with or disposing of or alienating or encumbering or transferring any of the assets of the company in any manner whatsoever and (c) permanent injunction restraining the respondents and each of them from expending any funds of the company in any manner whatsoever including for the purpose of contesting the present proceedings. The petitioners then prayed for direction for an independent audit of the accounts of the respondent-company. 2. The company petition was contested by the company and the private parties, the Directors of the company. 3. The company petition was allowed by the Company Law Board vide order dated 14.12.2007. Present three Company Appeals have been preferred, one by petitioner before the Company Law Board and two company petitions by non-petitioners before the Company Law Board. To avoid any confusion in this judgment, the petitioners who preferred company petition, inter alia, are referred as the petitioners and non-petitioner in the company petition are referred as respondent. 4. Present three Company Appeals have been preferred, one by petitioner before the Company Law Board and two company petitions by non-petitioners before the Company Law Board. To avoid any confusion in this judgment, the petitioners who preferred company petition, inter alia, are referred as the petitioners and non-petitioner in the company petition are referred as respondent. 4. It will be appropriate to mention here that the appellants (Company petitioner No.1) earlier preferred S.B.Company Petition No.1/1991 under Section 397/398 of the Companies Act, 1956 before the Rajasthan High Court in the year 1991 with the allegations and on the grounds that respondent no.2, the real brother of the petitioner and appellant no.1 was having 10% shareholding in the respondent-Company in the year 1984 and was able to increase his share holding in the respondent-Company to 56%. The respondent no.2 also controls another 23% of the shareholding in the respondent-Company belonging to the Estate of Maharana Bhagwat Singh of Mewar(father of appellant no.1 and respondent no.2), which he controls as an Executor of the Trust created by Maharana Bhagwat Singh which is Maharana Mewar Institution Trust. The respondent no.2 also controls another 23% of the shareholding in the respondent-Company belonging to the Estate of Maharana Bhagwat Singh of Mewar(father of appellant no.1 and respondent no.2), which he controls as an Executor of the Trust created by Maharana Bhagwat Singh which is Maharana Mewar Institution Trust. According to the petitioners-appellants, respondent no.2 attempted to oust the petitioners from the management and control of the respondent-Company and, therefore, prayed in the the Company Petition No.1/1991 that:- (1)A Scheme be framed for management and control of the affairs of the company so that the respondent No.2 is divested of his powers to control the company and so that the controlling interest in the company vests in the Maharana Mewar Institution Trust when the Will is administered; (2)An interim scheme be framed for management and control of the affairs of the company till such time the Will is administered so that the interest of the Maharana Mewar Institution Trust and that of the petitioner are secured; (3)The respondent No.2 be removed from the Board of Directors of the company and an independent Director be appointed in his place; (4)The allotment of 1409 shares in favour of the respondent No.2 (which were offered to and ought to have been accepted by the Executors of the Will) be declared as void, in the alternative, the said 1409 shares out of 1712 shares standing in the name of respondent No.2 be transferred to the Executors of the Will and ultimately to the Maharana Mewar Institution Trust so as to maintain the original ratio of shareholding as at the time of death of H.L.H. Maharana Bhagwat Singh of Mewar; (5)It be declared that the present Executors of the Will (Respondent No.2 and Shri A. Subramaniam) shall not be competent to represent the interest of the Estate of H.L.H. Maharana Bhagwat Singh of Mewar in the company and a committee comprising of the trustees of the Maharana Mewar Institution Trust be constituted for the exercise of all rights in respect of the shares in the company transmitted to the said Executors; (6)A new additional director be appointed in place of the resigning Director-Mr. Ashwani Chaturvedi as per nomination by all the Trustees of Maharana Mewar Institution Trust (as was done in the case of Mr. Ashwani Chaturvedi as per nomination by all the Trustees of Maharana Mewar Institution Trust (as was done in the case of Mr. Ashwani Chaturvedi also) so that the interests of the Maharana Mewar Institution Trust are not prejudiced; (7)Respondent No.2 be directed to account for and make good the funds syphoned off from the company and/or misutilised for his personal gains; (8)The notice dated 26.2.1991 in respect of the meeting of Directors which was to be held on 9.3.1991 be cancelled and any meeting held in pursuance thereto be cancelled; (9)An injunction restraining the respondent No.2 from holding, attending any future meeting of the Board of Directors of the company; (10)An injunction restraining the respondents and in particular respondent No.2 from issuing and/or allotting any further shares beyond the 3027 shares already allotted; (11)An injunction restraining the respondent No.2 from exercising any right or voting right in respects of 1409 shares allotted to him which were originally offered to the Executors and which ought to have been accepted by them, till the said 1409 shares are cancelled or transferred in terms of prayer (4) above; (12)An injunction restraining the respondent No.2 from appointing anyone else as a Director in the company other than as prayed for in prayer (6) above; (13)An injunction restraining the respondent Nos. 2 and 3 from operating the Bank accounts of the company; (14)A Receiver or Special Officer be appointed to take custory and/or possession of the books of accounts, Directors Minute Books, Minute Books of the Meetings of Shareholders, Share Registers and other statutory and accounting records and books of the company and to permit the petitioner to inspect and take copies of the same; and (15)Pass such other and/or further order(s) and/or direction(s) as may be deemed fit and just with a view to bringing to an end the matters complained of. 5. Said Co. Petition No. 1/1991 was allowed by the learned Single Judge of this Court vide judgment dated 23.11.1994 in the following terms:- (i)Company Petition is partly allowed with costs which are assessed at Rs. 50,000/- (Rupees Fifty Thousand only) payable by the respondent No.2 only. (ii)All resolutions passed and decisions taken by the Board of directors of the Company in its meetings in which the respondent No.2 only was present are declared void and nonest. 50,000/- (Rupees Fifty Thousand only) payable by the respondent No.2 only. (ii)All resolutions passed and decisions taken by the Board of directors of the Company in its meetings in which the respondent No.2 only was present are declared void and nonest. (iii)Maharajkumar Raj Singhji son of HH Maharaja Laxman Singhji and Maharajkumar Samar Singhji son of late Maharaja Veerbhadra Singhji, both resident of Dungarpur, are appointed as directors of Lake Shore Palace Hotel Pvt. Ltd, with immediate effect. In case the or any of them do not/does not wish to act so, any of the parties may move this court for appointment of any other person as director/directors. (iv)The respondent No.2 Arvind Singh is directed to repay the Company all amounts spent by it in connection with his foreign tours, Bombay Flat (spent after April 1, 1988) and present litigation, with interest @ 15% per annum. The amounts of dividends payable to the respondent No.2 will not be paid to him till the aforesaid amounts with interest stand fully paid to the company, if not paid earlier. 6. Against above judgment dated 23.11.1994, three D.B. Special Appeal Nos.3/95, 4/95 and 5/95 were preferred by Lake Shore Palace Hotel, Arvind Singh and by present appellant no.1. Before the Division Bench, the parties decided to settle the matter amicably and memorandum of understanding was entered into between petitioner no.1 and respondent no.2 and it was agreed that in place of two Directors appointed by the learned Single Judge, Shri T. Narayan Unni be appointed as Director of the respondent-Company. In view of the above settlement, S.B.Company Petition No.1/1991 was withdrawn and the Special Appeals filed by both the parties were also dismissed as withdrawn. 7. Now in present petition, the petitioners contention is that amicable settlement referred above and filed before division bench of this court was based on unequivocal understanding that the respondent no.2 would transfer equity shares already allotted in his favour to petitioner no.1 and with clear and unequivocal understanding that the respondent would cease and desist to acquire further shares in respondent-Company. The allegations in this petition are that respondent no.2 did not honour the compromise in its true spirit and continue to mismanage the respondent-Company as its Managing Director. The allegations in this petition are that respondent no.2 did not honour the compromise in its true spirit and continue to mismanage the respondent-Company as its Managing Director. The respondent no.2 in collusion with Shri T.N. Unni, the third Director of the respondent-Company, who though, was appointed with the consent of petitioner no.1-appellant no.1, is attempting to increase the paid up capital of Rs. 30,27,000/- to Rs. 3,30,27,000/- by issuing 30,000 equity shares of Rs. 1000/- each. The said shares are purportedly offered to the existing share-holders on pro-rata basis depending on their entitlement based on the existing shareholding, the petitioner-appellants' contention is that respondent has illegally acquired control of 52% of share holding and further controls 23% shares in his capacity as the executor of the estate, the proposed increase and allotment on prorate basis (of shares) would reduce the petitioners to a helpless minority in the respondent-Company. The petitioners-appellants apprehended that respondent no.2 acting as the Executor of the Will executed by late Maharana Bhagwat Singh founder of the Company would refuse to accept the share offered to the estate which would then be offered to the other shareholders, i.e. the petitioners and respondent no.2. Respondent no.2 is well aware that the petitioners are not in favour of increasing the share capital of the Company and would not accept the shares offered, giving respondent no.2 an opportunity to corner all the shares. In sum and substance, the contention of the petitioners is that the increase of share capital by issuing 30,000/- equity shares of Rs. 1000/- each and offered to existing share holders on pro-rata basis is an act of oppression. The contention of the petitioners is that as per the amicable settlement and looking to the nature of the Company and its share-holders, and appellant no.1 and respondent no.2 real sister and brother and in view of the amicable settlement, the percentage of shares held by the appellants-petitioners cannot be reduced nor respondent no.1 can increase the shareholding and further allegation is that all it is being managed by respondent no.2 with collusion of respondent no.3 who is one of the Directors in the Company though initially appointed with the consent of the petitioner no.1- appellant no.1 but, he then indulged in unethical and improper acts to favour respondent no.2. 8. 8. Then appellants-petitioners in Company Petition also submitted that respondent no.2 under the guise of requirement of capital has once again embarked on a plan to increase his shareholding in the company and instead of making attempts or efforts to look for alternate sources of funds for the respondent-Company, either by way of loans from banks and financial institutions or by way of unsecured borrowings, has adopted mode of issuing shares on right basis as stated above. The appellants-petitioners in company petition further asserted that MOU dated 25.8.1999 between the petitioner and respondent no.2 was premised on the understanding that there would be no further issue of capital to reduce the holding of petitioner no.1 or the estate of Late Maharana Bhagwat Singh and it was because of this reason that 145 shares were transferred by respondent no.2 in favour of the petitioner. The respondent, in breach of MOU is attempting to increase the paid up capital of the respondent-Company and, therefore, the proposed increase of share capital is not bona fide and is motivated with the object of reducing the petitioner to a minuscule minority and diminish the value of the estate of Late Maharana Bhagwat Singh. The appellant further submitted that the petitioner has effectively been excluded from the business of the respondent-Company and respondent no.2 has marginalized the petitioner from the functioning of the company and, therefore, the petitioner expressed her willingness to consider selling her interest in the company at a fair price and thus sought various details regarding the assets and liabilities of the respondent-Company including financial of the respondent-Company so that the fair value of the shares held by the petitioner could be ascertained. In the sequence, respondent no.2-called the petitioner to Delhi for a meeting in the month of November, 2004 wherein he offered to buy out the petitioner's group holding for Rs. 1 crore. The petitioner no.1 refused to accept the offer stating that it was necessary that a valuation of the shares to be carried out first. Respondent no.2 deliberately did not provide the information sought by the petitioner from time to time. The petitioner also alleged that the price offered by respondent no.2 was not true and fair price of the shares. The petitioner no.1 refused to accept the offer stating that it was necessary that a valuation of the shares to be carried out first. Respondent no.2 deliberately did not provide the information sought by the petitioner from time to time. The petitioner also alleged that the price offered by respondent no.2 was not true and fair price of the shares. In sum and substance, the respondent no.2 when failed to buy shares of petitioners, to force them out from the company evolved this procedure of increase in share capital knowing it well that the petitioner is not in favour of increase in share capital of the company and will not invest more in the company and in that situation the respondent will be able to acquire these unscribed shares. 9. Respondent no.2 issued a notice dated 13.12.2004, calling for a meeting of Board of Directors to be held at Udaipur on 29.12.2004. According to the petitioner, she attended the Board's meeting wherein she recorded her dissent on the proposed increase of authorised share capital of the respondent-Company from Rs. 50 lacs to Rs. 50 crores. Then respondent no.2 gave another notice dated 5.1.2005, wherein agenda was to consider to increase authorised share capital of the Company from Rs. 50 lacs to Rs. 50 crores by creation of 45,000 equity shares of Rs. 1000/- each, ranking pari passu with the existing equity shares and that clause V of the Memorandum of Association and Articles of Association of the Company be altered accordingly. According to the petitioner, she also received a document purporting to be a valuation report prepared by respondent no.3 T.N. Unni, which has been shown to have been prepared at the instance of petitioner no.1, whereas petitionerno.1 never asked respondent no.3 T.N. Unni or any body else to prepare any valuation report. It is alleged that it was done with a view to create a false valuation report so that the same may be used to bargain the price of shares in the event of a buy out. Petitioner no.1 immediately protested it and denied preparation of the valuation report by T.N. Unni at the instance of the petitioner and also submitted that action of respondent no.3 was illegal. Petitioner no.1 immediately protested it and denied preparation of the valuation report by T.N. Unni at the instance of the petitioner and also submitted that action of respondent no.3 was illegal. The petitioner also alleged in the Company Petition that respondent no.3 received substantial amounts from various group concerns and other entities under the control of respondent no.2 and thus is no longer an independent Director. It has also been alleged that the Lake Palace Hotels & Motels Pvt. Ltd., of which company, respondent no.3 is the Auditor and as such, he should not have undertaken the said exercise of preparing the valuation report referred above and further respondent no.3 being the Auditor of the Lake Palace Hotels & Motels Pvt. Ltd., ought not to have agreed and/or ought not to continue as a Director of the respondent-Company which has about 50% shareholding in the Lake Palace Hotels & Motels Pvt. Ltd. The petitioner submitted that appointment of respondent no.3 is bad in law and void ab initio. 10. The petitioner's contention is that all the transactions and decision taken in the meeting of the Board of Directors of the respondent-Company, in particular, in the meeting dated 29.12.2004 convening to holding of EGM dated 29.1.2005 and consequently the resolution passed at EGM on 29.1.2005 are also bad in law and void. The petitioner submitted her protest vide letter dated 27.1.2005 which was replied by respondent no.2 on 7.3.2005. The petitioner no.1 sent a letter dated 27.1.2005 to the Company Secretary of the respondent-Company requesting him not to proceed with the proposals to increase the authorised share capital of the Company in view of her letter dated 27.1.2005. In sum and substance, petitioner no.1 objected to increase in the share capital referred above. 11. The Company Petition was contested by the respondents on all counts, details of pleas are not necessary to avoid repetition as they will come in defence arguments and at relevant places. 12. In sum and substance, petitioner no.1 objected to increase in the share capital referred above. 11. The Company Petition was contested by the respondents on all counts, details of pleas are not necessary to avoid repetition as they will come in defence arguments and at relevant places. 12. The CLB by its order dated 4.12.2007, after holding that the petitioners failed to establish that there is financial mismanagement in the Company and the Board has no jurisdiction to remove Shri Unni, the Director of the Company, as his appointment was on account of consent terms approved by the High Court in earlier round of litigation between the parties and considering the financial position of the company, it does require funds to carry out renovations. The CLB rejected the allegations of the petitioners that the full project details for the investment to be made had not been disclosed and instead of projects, the one sheet project report reflects only renovation and that the estimates are overstated etc. and held that the objections are mostly technical. The CLB observed that the CLB does not found either in the pleadings or during the arguments that the renovations proposed in the project report are unnecessary or unwarranted and in a hotel, upgradation of the facilities and also constant renovation is a standard practice. The CLB from the accounts of the Company found that there was an addition to the fixed assets of a sum of about Rs. 40 lacs in 2002-03 and about Rs. 85 lacs in the year 2003-04. Even after finding the need for the funds for the company genuine, the CLB examined whether the Company was justified in raising the funds and the only source was by way of issue of right shares and whether in terms of the agreement entered into between the parties and submitted before the High Court in the earlier round of litigation, whether there could be no issue of further shares and that share-holdings should remain, all times to come, as it stood after the agreement before the High Court. The CLB held that any attempt to disturb the percentage of shareholding, without the consent of the petitioner, could be an act of oppression. The CLB held that forcing the shareholder to invest such a substantial amount of money without any returns only to maintain their percentage shareholding is harsh, burdensome and therefore, is definitely oppressive. The CLB held that any attempt to disturb the percentage of shareholding, without the consent of the petitioner, could be an act of oppression. The CLB held that forcing the shareholder to invest such a substantial amount of money without any returns only to maintain their percentage shareholding is harsh, burdensome and therefore, is definitely oppressive. 13. From the order of the CLB dated 4.12.2007, it appears that looking to the relationship of the sister and brother (petitioner no.1 and respondent no.2), for amicable settlement some suggestions were exchanged at the instance of the CLB to resolve the dispute and both the parties gave some suggestions without prejudice. Unfortunately, there was no settlement between the parties so as to accept the amicable settlement. The CLB observed that the petitioners desired to go out of the company on receipt of fair value determined on asset basis including the assets of the Lake Palace Hotels and Motels Private Ltd. (The Lake Palace Hotel is a separate Company registered under the Companies Act and was not party in the company petition, and the petition was in relation to the Lake Shore Palace Hotels Pvt. Ltd. which is a separate Company registered under the Companies Act, 1956). The respondents were unwilling to consider the suggestions of the petitioners on the ground that neither respondent no.2 nor the Company has funds to acquire the shares on the basis of asset value. The CLB opined that in closely held companies where unreconcilable differences have arisen among the parties, the Board has always directed parting of the ways. Then the CLB held that the same is not possible in the present case in view of the inability expressed by the second respondent-the company on the ground that they do not have sufficient funds to purchase the shares held by the petitioners. The CLB held that certain other relief which does not require valuation of shares has to be evolved. 14. The CLB, therefore, instead of granting reliefs or the relief as claimed by the petitioners in the company petition, gave four options to the petitioners with liberty to the petitioners to choose one of them out of four options. Then the CLB held that any of the options chosen by the petitioners shall be binding on the company and the second respondent. Then the CLB held that any of the options chosen by the petitioners shall be binding on the company and the second respondent. The CLB directed to petitioners to intimate to the Company-second respondent, in writing by 10.1.2008, the option that they have chosen. In case, the petitioners elect the fourth option, the parties shall be at liberty to apply to the Board for deciding on the terms of payment. In case, the petitioners do not choose any of the options, the petition shall be deemed to have been dismissed and all interim orders shall also be deemed to have been vacated. The petition was disposed of in terms referred above. 15. Following options are given to the petitioners: 1. I had passed an interim order allowing the company to go ahead with the rights issue keeping the shares offered to the petitioner and the Estate intact. It was pointed out by Shri Mookerjee that in terms of the said order, while the 2nd respondent has subscribed to his entitled shares, the Estate has also subscribed to 2000 shares and the entitlement of the petitioners and those unsubscribed by the Estate are kept intact. He further mentioned that because of increase in the capital base, the company could avail additional loan facilities from the banks of about Rs. 2.5 crores and with these funds renovation work has been completed. The money spent on the renovation from 2005 till date can be quantified and deducting Rs. 2.5 crores funded by the Banks, the petitioner can fund 25.1% of the balance amount byway of long term loans carrying an interest at the rate of 10% (which is more or less the bank rate for long term fixed deposits). Since they would share the actual expenses, this would also allay the apprehension of the petitioners that the project estimate is overstated. The investments of the 2nd respondent and the Estate in the shares shall be treated as loans carrying the same rate of interest. The right shares already issued shall stand cancelled. If the petitioners choose this option, the same will not affect the company in any manner as the loans shall form part of long term funds. (2) The company will go ahead with the right issue and the 2nd respondent is at liberty to acquire the shares unsubscribed. The right shares already issued shall stand cancelled. If the petitioners choose this option, the same will not affect the company in any manner as the loans shall form part of long term funds. (2) The company will go ahead with the right issue and the 2nd respondent is at liberty to acquire the shares unsubscribed. Since it would reduce the shareholding of the petitioners substantially, the company shall pay a sum of Rs. 20 lacks per year (including Rs. 6 lacs now being paid) with an increase of Rs. 1 lakh every three years thereafter. This amount will include dividends, if any, declared by the company in future. The petitioners will continue to hold the shares that they currently hold and the 1st petitioner will continue as a director as long as the said shares are held by the petitioners. This would be more or less in line with the agreement between the parties before the High Court when company agreed to pay Rs. 6 lacs for the 2nd respondent to acquire majority shares in the company. Since in the present case, the petitioners will lose their special right in respect of 25.1% shares, they should be entitled for adequate compensation which I have fixed at Rs. 20 lacs. (3) During the hearing, it appeared that the petitioners were mainly concerned with the shares held by the company in Lake Palace Hotels which is one of the main assets of the company. As this Board did in James Fedrick's case, the company will transfer 25.1% of the shares held by it in Lake Palace Hotels as face value to the petitioners and the petitioners will surrender all their shares to the company at face value and cease to be members of the company and the company shall reduce its paid up capital to this extent. Difference, if any, in the value of shares surrendered/transferred, the same shall be adjusted by payment in cash. The 1st petitioner shall cease to be a director of the company and there shall be no payment of Rs. 6 lacs as hereto before. (4) The forth option is parting of ways. The petitioners demanded that their shares should be valued on real estate price taking into consideration the assets of the company as also that of Lake Palace Hotel. 6 lacs as hereto before. (4) The forth option is parting of ways. The petitioners demanded that their shares should be valued on real estate price taking into consideration the assets of the company as also that of Lake Palace Hotel. The 2nd respondent not only objected to the inclusion of the assets of the Lake Palace Hotel in the valuation, he also expressed his inability to mobiles funds to purchase the shares of the petitioners on a real estate price basis. Considering the fact that the company is a family company and that after a full round of litigation, the second round is going on and that future litigation can also not be ruled out, I am of the view that the petitioners should go out of the company for a reasonable consideration for their shares. Purely on an equitable ground, I am fixing the price for their shares at Rs. 5 crores (Rupees five crores). Either the company or the 2nd respondent, at his option, shall purchase the shares at this price. The 1st petitioner shall cease to be a director of the company effective from the date of surrender/transfer and on receipt of consideration and the petitioners shall not be entitled for Rs. 6 lacs as hereto before. I make it abundantly clear that this amount of Rs. 5 crores is not based on any valuation but has been fixed on equitable consideration taking into consideration, the interests of both the sides. 16. It is pertinent to mention here that the petitioners were given option to choose one of the options out of four and non-acceptance of any of the options out of four, shall result in dismissal of the company petition of the petitioners and it is also pertinent to mention here that the respondents had not been given any option except that what the petitioners will decide which itself shall be final-either relief to the petitioners or dismissal of his Company Petition and that shall be binding upon the respondents. 17. The company petitioners being aggrieved against the order dated 4.12.2007 have preferred S.B. Company Appeal No.3/2008, whereas Arvind Singh Mewar, who was respondent no.2 before the CLB, has preferred S.B. Company Appeal No.2/2008. The Lake Shore Palace Hotels Pvt. Ltd. which was party before the CLB in Company Petition NO.32/2005, has preferred S.B. Company Appeal No.1/2008. All these appeals have been heard together. 18. The Lake Shore Palace Hotels Pvt. Ltd. which was party before the CLB in Company Petition NO.32/2005, has preferred S.B. Company Appeal No.1/2008. All these appeals have been heard together. 18. The appellants in Company Appeal No.3/08- Yogeshwari Kumari ors. also submitted an Company Application No.15373/08 seeking permission to raise three more legal points that whether the CLB under Section 402 of the Companies Act, 1956 has the authority and jurisdiction to remove a Director from the Board of the Company where the continuation of such a Director is prescribed by law and whether the CLB was correct in law in not setting aside the rights issue despite holding the same to be oppressive and improper and whether a party which has been held to be guilty of oppressive and improper conduct can be permitted to enjoy the fruits of such oppressive and improper conduct and/or act. The said application was allowed by order dated 2.12.2008 and in this judgment the above issue will also be decided. 19. The appellants in Company Appeal No.3/2008 submitted one application,i.e. S.B.Company Application No.15707/08 seeking order of rejection/dismissal of S.B.Company Appeal No.1/08 filed on behalf of respondent company and seeking directions against respondent no.2 to provide the statement of account in respect of all expenses incurred by respondent-company towards the cost of litigation before the CLB during pendency of the company petition as well as before this court since the filing of the S.B.Company Appeal Nos.1,2, and 3/2008. The appellants further sought order of injunction against respondent nos.2 and 3 preventing respondent no.2 and 3 from incurring any further expenses towards the cost of litigation in respect of Company appeal. Said application No.15707/08 was dismissed by this Court vide order dated 2.12.2008. So far as prayer for injunction against respondent nos. 2 and 3 against incurring any expenses towards costs of these appeals after holding that the company is bound to incur expenses for conducting the appeals before the High Court. However, by order dated 2.12.2008 it was held that the prayer for dismissal of the Company Appeal No.1/08 will be considered while deciding Company Appeal No.3/08. These grounds are also considered. 20. However, by order dated 2.12.2008 it was held that the prayer for dismissal of the Company Appeal No.1/08 will be considered while deciding Company Appeal No.3/08. These grounds are also considered. 20. It has been contended by learned Senior Counsel Shri Sandipto Sarkar that the CLB in its order dated 4.12.2007 held that the actions of respondent no.2 are harsh, burdensome and oppressive, yet the Board erroneously not granted reliefs to the petitioners as prayed by them in the company petition and further erred in not granting consequential reliefs. It is submitted that once a definite finding has been recorded by the Board in favour of the appellants that the actions of the respondent no.2 are oppressive then it was imperative upon the CLB to grant reliefs and by not granting reliefs, the Board instead has put a premium on the oppressive acts of the respondents by directing inter alia that the appellants shall sell their shareholding in the Company to the respondent no.2 at an arbitrary price of R.5 crores without directing independent valuation of the Company. The learned counsel vehemently submitted that the order of the CLB directing the appellants to choose from one of the four options suggested by the Board is arbitrary, vague and was incapable of any finality. It has also been submitted that the CLB failed to exercise jurisdiction vested in it when the CLB refused to remove respondent no.3 as a Director on the ground that his appointment was on account of the consent terms accepted by the High Court in an earlier proceeding. It is submitted that merely because the appointment of respondent no.3 as Director in 1999 was made in terms of the consent terms accepted by the High Court in the earlier proceeding, it does not take away the power and jurisdiction of the CLB under Section 402 of the Companies Act, 1956 to grant reliefs for any subsequent act of the Directors, which is prejudicial to the interest of the Company and its shareholders and is oppressive to some members of the Company. 21. The learned counsel for the Company petitioners assailed the conduct of the respondent no.3. 21. The learned counsel for the Company petitioners assailed the conduct of the respondent no.3. It is submitted by the learned counsel for the petitioners that respondent no.3 being auditor of the Lake Palace Hotels & Motels Pvt. Ltd, in which respondent no.1-Company owns 49.5.% shares ought not to have agreed to and/or ought not to continue as a Director in the respondent no.1-Company. Serious charges have been levelled against respondent no.3 that he has compromised with the integrity/credibility of his role as a Director of respondent no.1-Company during his tenure in his dual positions and capacities by accepting direct and indirect assignments from respondent no.2. It has also been alleged that respondent no.3 at the behest of respondent no.2 prepared and sent a valuation report to the appellant no.1 with incorrect allegation that the same had been prepared at the instance of appellant no.1 and that was done with intention of creating a false valuation report to bargain with the price of the shares in the event of a buy out. It has been submitted that respondent no.2 ought not to have prepared the valuation report because said exercise of valuation of shares of respondent no.1-Company necessarily entailed the valuation of shares of the Lake Palace Hotels & Motels Pvt. Ltd. of which respondent no.3 is auditor. 22. With these allegations it has been submitted that continuation of respondent no.3 on the Board of Directors is without any authority and competence and is bad in law and consequently, all the decisions taken and resolutions (to increase the authorised share capital from Rs. 50 lacs to Rs. 5 crores) passed in the Board meeting held on 29.12.2004 convening and holding the EGM on 29.1.2005 were also bad in law and void. The learned counsel for the appellants company petitioners also assailed the finding of the CLB that having signed the annual accounts of the Company for the year 2003-04, without any written protest, the petitioners cannot allege financial mismanagement in the company in 2005 and that finding has been recorded by the CLB without considering that the petitioners' contention that her objections were not deliberately recorded by the respondents in the Board's meetings and AGM and further even failure to raise objections on the accounts does not necessarily mean that there is no irregularity in the accounts of the company. The CLB ought to have directed an independent audit to find out the correctness or otherwise in the averments of the appellants against respondent no.2 regarding financial mismanagement of the Company. 23. The learned counsel for the petitioners drew my attention to the gradual increase of share holding of respondent Arvind Singh. As per the petitioners, on 26.12.1979, Smt. Yogeshwari Kumari had 25 shares out of 125; in 1980, 100 shares out of 300 and the respondent up to the year 1983 had no share in the company. In the year 1983, the petitioner had 100 shares out of 300 whereas respondent no.2 had 75 shares on 3.11.1984. The petitioner had 200 shares out of 1000 shares whereas petitioner had 100 shares at the time of death of late Maharana Bhagwat Singh. On 20.1.1986, the petitioner had 400 shares out of 1300 and respondent no. 2 had 200 shares; on 1.6.1987 the petitioner had 615 shares out of 2000 shares and respondent had 685 shares and on 15.1.1990 the respondent no.2 had 1712 shares out of 3027 shares whereas petitioner had 615 shares. In the year 1999, because of right issue and thereafter settlement between the parties in earlier round of litigation, the respondent no.2's shareholding reached to 1567 shares out of 3027 shares whereas petitioner had 760 shares. 24. According to the learned counsel for the petitioners, in view of the settlement referred above, 145 shares were transferred by respondent to petitioner Smt. Yogeshwari Kumari and it was to ensure 25.1% share holding of petitioner Yogeshwari Kumari. It has been alleged that in the year 1989, respondent no.2 illegally created a majority by refusing to allot shares to petitioner Yogeshwari Kumari according to her proportion. On the other hand, respondent no.2 acting as executor of late Maharana's Will refused the shares offered to the Maharana Mewar Institution Trust and thereafter bought these shares in his individual capacity, thus further increased his proportion of share holding. The learned counsel for the petitioner vehemently submitted that looking to the constitution of the company, it is clear that in fact company is a family company and there are only two groups in the company and that too belonging to brother and sister. The learned counsel for the petitioner vehemently submitted that looking to the constitution of the company, it is clear that in fact company is a family company and there are only two groups in the company and that too belonging to brother and sister. The learned counsel for the petitioner with the help of these facts submitted that the respondent systematically to oust the petitioner from the company, acted prejudicial to the interest of the member, company and public now again resolved for right issue with the connivance of the another Director Shri T.N. Unni, knowing it well that it will be not possible for the petitioner to invest amount of Rs. 75 lacs more in the company which failed to give dividend and thereby created a situation for petitioner to lose her special right which she had because of her having 25.1% share holding in the company. Therefore, it is not a case of simplicitor issuance of right share but it is tainted with malafide object. It is also submitted that the respondent wanted to purchase the petitioner group's entire shareholding for a petty price of Rs. 1 crore only and when the petitioner refused to sell her shares at a low price of Rs. 1 crore then the respondent opted for this modus operandi to oust the petitioner from the company. At this juncture, the learned counsel for the petitioners also submitted that the resolution for increase in the share capital was passed on 29.12.2004 without even circulation of even project report for expansion and in fact one page project summary circulated with notice agenda dated 14.3.2005 was not available on 29.12.2004, as it was circulated only with the notice of agenda dated 14.3.2005. It is also submitted that the accounts of the company would show that Rs. 10 crores was available to the company as quasi-equity at the time of right issue was proposed and the quasi-equity would have been the cheapest and best way to raise funds more so when the fund requirement according to Arvind Singh Mewar was only to the extent of Rs. 3 crores. 25. 10 crores was available to the company as quasi-equity at the time of right issue was proposed and the quasi-equity would have been the cheapest and best way to raise funds more so when the fund requirement according to Arvind Singh Mewar was only to the extent of Rs. 3 crores. 25. The learned counsel for the petitioners also assailed the finding of the Board wherein the Board held that there was no financial mismanagement in the company and according to the petitioner, the Board failed to take into consideration of the allegations of the petitioners that fund was drained out from the company by respondent no.2 and at the cost of company, respondent no.2 is inviting his personal guest from all over the world to stay free in the hotel of the company and respondent no.2 is financially supporting some of the hotels, owned by his relatives and taken on lease by the Lake Palace Hotels and Motels Private Limited. 26. The learned counsel for the petitioner submitted that the petitioner has submitted an application i.e. Company Application No.11857/08 seeking permission to withdraw her consent to the initial appointment of Shri T.N. Unni as Director of the Company before this Court in view of the observations made by the CLB. The petitioner also moved Company Application No.11860/08 praying for setting aside of Board's resolution dated 31.3.2008 appointing Shri MS Kapoor as Director of the company, as this appointment was made while appeal was pending and the appointment was made to ensure that respondent no.2 continues on the board of the company in the eventuality of Shri T.N. Unni being removed. The learned counsel for the petitioner also submitted that the petitioner is entitled to order for recovery of all the cost spent by the company to contest the present litigation. 27. To oppose the company Appeals No.1/08 and 2/08 preferred by Lake Shore Palace Hotels Pvt. Ltd. and Arvind Singh Mewara respectively, it has been submitted by learned counsel for the petitioner that Section 397 of the Companies Act, 1956 envisaged only one enquiry and not two separate enquiries and that one enquiry is on the question whether the member complaining oppression and prejudice to the public interest is entitled to relief and that enquiry is the enquiry as provided under Section 397. The finding of oppression under Section 397(1) automatically leads to the conclusion that it is just and equitable to wind up the company but doing so, will unfairly prejudice the members. In addition to above, it has been submitted that even if no oppression is made out, the member complained of oppression is still entitled to relief under Section 402 of the Companies Act. However, necessary finding of the Board that act is oppressive and prejudicial to the public interest is necessary. The learned counsel for the petitioner relied upon the judgment of the Hon'ble Supreme Court delivered in the case of M.S.D.C. v. Chandrasekara Raja, (2008) 6 SCC 750 , and submitted that the view taken by the Calcutta High Court in the case of J. Chakraborty v. Power Tools & Appliances, 79 CC 505 , giving a restrictive interpretation to the provisions of Section 397, has been expressly rejected by the three member Bench of the Supreme Court in the case of Needle Industries(India) Ltd. v. Needle Industries (Newey) India Holding Ltd., (1981) 3 SCC 333 the Hon'ble Supreme Court upheld the liberal interpretation given to provisions of Section 210 of the English Act (Akin to Section 397 of the Companies Act, 1956). The learned counsel for the petitioner relied upon the case of Kalinga Tubes, AIR 1965 SC 1535 . The learned counsel for the petitioner submitted that Needle Industries case has been considered in the subsequent judgments and it has been approved that in case where two sets of shareholders cannot do business together and have been fighting litigation for years and there is lack of probity amongst the parties and the Court is of the view that a permanent solution has to be found, then equitable orders granting reliefs can be passed by the CLB. 28. The learned counsel for the petitioner also relied upon judgments: the House of Lords in Scottish Co-op. Wholesale Society Ltd. v. Meyer, (1958) 3 All.ER 366 and submitted that Meyer's case has been followed by the Supreme Court in the case of Shanti Prasad Jain v. Kalinga Tubes, AIR 1965 SC 1535 , whereby restrictive interpretation given in other judgments stands rejected by the courts in India. 29. Wholesale Society Ltd. v. Meyer, (1958) 3 All.ER 366 and submitted that Meyer's case has been followed by the Supreme Court in the case of Shanti Prasad Jain v. Kalinga Tubes, AIR 1965 SC 1535 , whereby restrictive interpretation given in other judgments stands rejected by the courts in India. 29. The learned counsel for the petitioner, in support of his contention that even in case where rights of the members of the company were affected equally by the alleged unfair prejudicial conduct, the interest of some part of the members may be affected in a way that that was unfairly prejudicial to them and with the help of above plea, submitted that asking the petitioner to invest substantial amount just to maintain her proportion of shareholding without any realistic possibility of return on investment whereas under the same rights issue , the respondent no.2 would have not only increased his shareholding but also control the company with all its attendant benefits, this act of respondent is prejudicial to complaining member and is also unfair and oppressive. Therefore, the right issue if it has the effect of being unfairly prejudicial to the party complaining of it, then the said rights issue would be oppressive. The learned counsel for the petitioner also tried to distinguish the judgments relied upon by the learned counsel for the respondent which are (1). J. Chakarborty v. Power Tools & Appliances, 79 CC 505 , (2) Lalita Rajya Lakshmi v. India Motor Co., AIR 1962 Cal. 127 , (3) Ruby General Hospital v. Kamal Kumar Dutta, (2008) 129 CC (Cal.) 1 , (4) Hanuman Prasad Bagri v. Bagri Cereals, (SC) (2001) 4 SCC 420 and (5) (2008) 143 CC 837, Haldia Petrochem ), (6) V.S. Krishnan v. Westfort Hi-Tech Hospital Ltd., (2008) 3 SCC 363 , (7) Maharashtra Poser Development Corporation Ltd. v. Dabhol Power Co. and ors., (2004) 3 Company Law Journal 58 (Bom.) , (8) Westfort Hi-Tech. Hospital Ltd. and anr. v. V.S. Krishnan and ors., (2007) 137 Comp.Case 151 (Ker.) and (9) Government of West Bengal v. Chatterjee Petrochem & ors., (Mauritius Company (2008) 143 Company Cases 837 (Cal.) . 30. and ors., (2004) 3 Company Law Journal 58 (Bom.) , (8) Westfort Hi-Tech. Hospital Ltd. and anr. v. V.S. Krishnan and ors., (2007) 137 Comp.Case 151 (Ker.) and (9) Government of West Bengal v. Chatterjee Petrochem & ors., (Mauritius Company (2008) 143 Company Cases 837 (Cal.) . 30. The learned counsel for the appellants vehemently submitted that in view of the finding of fact recorded by the CLB, the petitioners proved the fact of oppression, then that fact need not to be examined by this Court even in the appeal preferred by respondent no.2 as well as in the appeal preferred by the Lake Shore Palace Hotels Pvt. Ltd, because the appeal against the decision of the CLB before the High Court lies only on question of law and so far as issues raised by the petitioner appellant in Company Appeal No.3/2008 is concerned, they are the questions of law and, therefore, the order of CLB dated 4.12.2007 denying the relief to the petitioner, is liable to be set aside and the appropriate order in terms of the reliefs prayed for in the Company Petition No.32/05 filed before the Company Law Board, Principal Bench, New Delhi be allowed to the petitioners. 31. The learned counsels for the respondents countered the submissions of the learned counsel for the company-petitioners appellants and at the same time assailed the order of the CLB dated 4.12.2007 in Company Appeal No. 1/2008 and prayed that the Company Petition was liable to be dismissed and after setting aside the CLB's order dated 4.12.2007, the Company Petition be dismissed. 32. It has been vehemently submitted that the condition precedent specified in Section 397(2) of the Companies Act, 1956 not having been fulfilled, therefore, the CLB had no authority to grant any relief to the petitioners and learned counsel Shri M.S. Singhvi also submitted that the Company Petition should have been dismissed on the ground that even no foundational facts and grounds to maintain the petition are in the petition. According to the learned counsel for respondents, before passing any order under Section 397 of the Companies Act, 1956, it was duty of the CLB to record finding as required both under sub-clause (a) as well as sub-clause (b) of sub-section (2) of Section 397 of the Act of 1956. According to the learned counsel for respondents, before passing any order under Section 397 of the Companies Act, 1956, it was duty of the CLB to record finding as required both under sub-clause (a) as well as sub-clause (b) of sub-section (2) of Section 397 of the Act of 1956. It is submitted that it is mandatory requirement that the petitioner should prove his case that the company's affairs are in oppressive manner to any member or members and particularly in this case, oppressive to the petitioners and the petitioner is further required to prove that to wind up the company would unfairly prejudice such member or members, but that otherwise the facts would justify the making of a winding-up order on the ground that it was just and equitable that the company should be wound up. It is submitted that the Section 397 is clear in its language and there cannot be any reason for not giving true meaning to the section particularly when there is no ambiguity or inconsistency in the language of section. In the present case, the petitioners miserably failed to prove that the facts have justified the making of winding-up order on the ground that winding up would be just and equitable. When petitioners will first prove this fact then the Board can decide that in spite of the fact of making of the case of winding up of the company, the order to wind up the company would unfairly prejudice the member or members including the petitioners then only any appropriate order can be passed under Section 397 of the Act of 1956. It is submitted that the Tribunal has not recorded such findings, rather say, the findings recorded on question of facts like; there is no financial or other mismanagement in the company and company was in need of funds, are in favour of the respondent-company. Therefore, the petition was liable to be dismissed. 33. It is submitted that the Tribunal has not recorded such findings, rather say, the findings recorded on question of facts like; there is no financial or other mismanagement in the company and company was in need of funds, are in favour of the respondent-company. Therefore, the petition was liable to be dismissed. 33. The learned Senior Counsel for the respondent submitted that when the CLB came to the conclusion that there was no financial mismanagement in the affairs of the Company in question and the Company does require funds to carry out the renovations, obviously in the hotel run by the Company, then how the Company should raise the funds, can be decided by the Company and Company's decision is required to be accepted and in the affairs of the business of the Company, unless the law permits, there cannot be any interference. The CLB proceeded on absolutely erroneous assumption that the petitioners are being asked to invest a substantial amount of money without any returns and are being asked to invest to only to maintain their percentage shareholding and committed serious error of law in holding that this act of the respondent is oppressive. 34. The learned counsel vehemently submitted that once the CLB held that the company was in need of funds, could not have held that the right issue was oppressive particularly for the reasons that: (1) unlike a loan funds raised by a company pursuant to a right issue do not have to be repaid, (2) There is no requirement to make payment of interest of funds received pursuant to a right issue, unlike a loan and (3) increase in the share capital of a company will result in improving its debt equity ratio and permit the company to raise further funds on the basis of an improved debt equity ratio. 35. The learned counsel for the respondent-company pointed out that the CLB, after hearing the parties on 26.4.2005 passed the impugned order on 4.5.2005 issuing direction to the Company to go ahead with issue of right shares with directions that if the petitioners do not subscribe to the share to the extent of their entitlement, then those shares shall be kept intact and shall not be allotted to any one and the entire issue of right shares shall be subject to final order on the petition. After said interim order dated 4.5.2005, respondent No.6-and Ms. After said interim order dated 4.5.2005, respondent No.6-and Ms. Bhargvi Kumar Mewar, Ms. Padmaja Kumari Mewar and Shri Lakshya Raj Singh Mewar ,the executor of the Will accepted 2000 shares out of 6938 shares offered to them and as such the company was able to raise a sum of Rs. 1,75,30,000/- as equity by allotting 15,362 shares to the appellant, 49 shares to Ms. Bhagwati Kumari Mewar, 49 shares to Ms. Padmaja Kumari Mewar, 70 shares to Shri Lakshya Raj Singh Mewar and 2000 shares to executor of the Will of His Late Highness Maharana Bhagwat Singh Mewar. The learned counsel appearing for the respondent-Company pointed out that on the basis of raising of such equity, the banks also lent a sum of Rs. 1,50,00,000/- as loans to the Company and the company was able to undertake urgently required renovation/modernisation of its hotel property. Therefore, according to the learned counsel for the respondent company, the right issue was in the interest of the Company and its share holders and by no stretch of imagination, it can be said to be an oppressive act of the company against the petitioners. 36. The learned counsel for the respondent-company vehemently submitted that the reliefs granted by the CLB are not in the best interest of the company and it seeks to either increase the liability of the company or result in dissipation of its assets without any corresponding benefit to the respondent-company and as such is contrary to well established principle that the reliefs granted in the proceedings under Sections 397 and 398 of the Companies Act, 1956 should be for the benefit of the Company. By granting reliefs to the petitioners, the CLB ignored the basic principle of protecting the interest of the company which is a paramount consideration. 37. The learned counsel for the respondent vehemently submitted that the CLB had no jurisdiction to direct the company's investment in Lake Palace Hotels and Motels Private Limited to be divested in favour of petitioner no.1, particularly when the entire holding of the respondent company is in Lake Palace Hotels and Motels Private Limited was the subject matter in challenge in a prior suit filed by Maharana Mahendra Singh, elder brother of the petitioner and Arvind Singh Mewar which is pending before court of the Addl. District Judge(FT), Udaipur, being Civil Original Suit No.242/2004(3/1986). District Judge(FT), Udaipur, being Civil Original Suit No.242/2004(3/1986). It is submitted that Lake Palace Hotels and Motels Private Limited was not a party before the Company Law Board and as a private company having its Article of Association, wherein there is restriction against any transfer of shares to non-member unless conditions referred in said Article of Association are fulfilled. Therefore, the company Lake Palace Hotels and Motels Private Limited is not bound by decision of CLB. It is submitted that in the present case, the petitioners are admittedly non-members and were thus not entitled to acquire any share in the Lake Palace Hotels and Motels Private Limited without compliance of the Article of Association of Lake Palace Hotels and Motels Private Limited. 38. The learned counsel for the respondent, while assailing the ultimate directions given in the impugned order passed by the CLB, giving option to the company petitioners, submitted that the CLB had no basis to arrive at the payment of Rs. 5,00,00,000/- to the petitioner for parting of shares when there was already a valuation report placed on record which was prepared at the instance of the petitioner herself and that too by one of the Directors and wherein valuation of the petitioner's shares have been assessed to only Rs. 3,00,00,000/- which too was not acceptable to the respondent-company, therefore, fixing of Rs. 5,00,00,000/- for this purpose is absolutely arbitrary decision of the CLB. It is also submitted that CLB has given four options to the petitioner to accept one of the proposals given by the CLB so as to effect the interest of some persons who were not parties before the CLB in the company Petition. It is also submitted that if the company petitioner would exercise for first option, it would lead to the bank recalling of the loans as the same had been advanced on the basis of increase of the capital of the company. The CLB also misinterpreted and misconstrued the order dated 22.10.1999 passed by the Division Bench of the High Court in D.B.Special Appeal No.3/1995 and the memorandum of understanding and terms of settlement dated 25.8.1999. It is submitted that right issue was not intending to disturb the percentage of shares holding of the petitioner in any manner. 39. The CLB also misinterpreted and misconstrued the order dated 22.10.1999 passed by the Division Bench of the High Court in D.B.Special Appeal No.3/1995 and the memorandum of understanding and terms of settlement dated 25.8.1999. It is submitted that right issue was not intending to disturb the percentage of shares holding of the petitioner in any manner. 39. In addition to above, the learned counsel for the respondent-company vehemently submitted that though the petition of the petitioners deserve to be dismissed as the petitioners failed to prove the ingredients as required under Section 397 of the Companies Act and petitioners themselves wanted to go out from the company, then virtually they are claiming premium for their ouster instead of claiming reasonable and equitable compensation for ouster from the company. 40. It is submitted that the result of the decision of the CLB would result into creating a dispute in another company which is running smoothly, peacefully and in profit and the relief granted by the CLB do not bring to an end the matter complained off which is the main object shown in the impugned order by the CLB for passing the order impugned. 41. The learned counsel for the respondent relied upon several judgments in support of the contention that the requirement under sub-clause (a) and (b) of sub-section (2) of Section 397 are mandatory and without proving above ingredients, no relief can be claimed under Section 397 and further even if the CLB has decided to grant relief by exercising its inherent powers which cannot be contrary to the statutory provisions of law even then the relief has been granted for purported object that it will bring an end of dispute which in fact will not and will give birth to a larger dispute as the petitioner would have right to interfere in another company's management. The learned counsel for the petitioner also tried to distinguish the judgments wherein issue relating to lifting of veil in family knit company has been considered and reliefs have been granted of parting with by the family members by taking shares in different companies and submitted that those authorities have no application to the facts of this case. 42. The learned counsel for the petitioner also tried to distinguish the judgments wherein issue relating to lifting of veil in family knit company has been considered and reliefs have been granted of parting with by the family members by taking shares in different companies and submitted that those authorities have no application to the facts of this case. 42. The learned counsel Shri MS Singhvi appearing in Company Appeal No.2/2008 for appellant-Arvind Singh Mewar, in addition to above pleadings taken by the learned counsel for the respondents, drew this Court's attention towards the pleadings as well as the reliefs claimed by the petitioners and submitted that the petitioners did not plead that funds sought to be raised by respondent-company were not needed. The petitioner even did not plead since when the alleged financial mismanagement begin which was material and relevant fact because the petitioner signed the balance-sheets without any objection. Once the petitioner herself accepted that the petitioner had occasion to look and examine the financial affairs of the company and she herself put her signatures on the balance-sheet, she firstly had no right to assail the statement of financial activities of the company after admitting them to be correct and secondly, any allegation in relation to the earlier act or oppression which complained in the earlier round of litigation, the petitioner cannot rely upon those facts to substantiate her allegation of any alleged oppressive act of the company or Arvind Singh Mewar. According to the learned counsel Shri MS Singhvi, the CLB should have dismissed the company petition on the ground of non-discloser of cause of action and for want of any allegation constituting any cause for filing petition under Section 397 of the Act of 1956. It is also submitted that the petitioner did not seek any relief of removal of Director of the Company Shri T.N. Unni but sought declaratory relief that respondent -T.N.Unni is not a Director of the Company which could not have been granted by the CLB as T.N. Unni was appointed as Director at the instance of the petitioner herself, that too, that offer was made before the Division Bench of this Court wherein the Division Bench passed the order accepting the appointment of T.N. Unni as the Director. Therefore, the CLB could not have declared that the appointment of Director, made decade ago, at the instance of petitioner herself and with the approval of Division Bench of this Court, was wrong and illegal. Therefore, in view of the relief claimed by the petitioner, it was beyond the jurisdiction of the CLB, and the CLB should have dismissed the petition on the basis of the averment made in the company petition itself. It is also submitted that the petitioner never objected to raise the funds by the company and so far as the valuation report given by one of the Director T.N. Unni is concerned, that was only an opinion and it was given at the instance of the petitioner herself and if it is not so then also the petitioner had a right to rebut this opinion by obtaining opinion from any financial expert, which she did not choose to do and the report given by respondent no.3, who is financial expert, is not controverted by any evidence nor the CLB rejected that report, rather say, the CLB found that the valuation report was based on well known formulas which are recognised method of calculation and, therefore, there was no misconduct of third Director T.N. Unni. 43. The learned counsel also drew my attention to the fact that T.N. Unni was already attached with the affairs of lake Palace Hotels and Motels Private Limited before he was taken as Director in the respondent-Company at the instance of the petitioner herself and raising of her objection after decade itself shows that the objection has been raised with ulterior motive to get unnecessary sympathy from the CLB/Court, therefore, in fact, the company petitioner share holder wants to take premium of her position. 44. The learned counsel Shri Vikas Balia supplemented the arguments on this point by stating that Shri T.N. Unni was co-auditor since 1973, therefore, every fact was in the knowledge of the petitioner herself about T.N. Unni and, therefore, the allegations against T.N. Unni, on the face of it, are only result of afterthought. 45. I considered the submissions of the learned counsel for the parties and perused the record and also gave thoughtful consideration to the judgments cited by the learned counsel for the parties which includes the judgments rendered by the CLB, the High Courts as well as by the Hon'ble Supreme Court. 46. 45. I considered the submissions of the learned counsel for the parties and perused the record and also gave thoughtful consideration to the judgments cited by the learned counsel for the parties which includes the judgments rendered by the CLB, the High Courts as well as by the Hon'ble Supreme Court. 46. In the light of arguments advanced by all the counsels appearing for the company petitioners, or the respondents in the company petition and after going through the reasons given in the impugned order dated 2.3.2007 passed by the CLB, this Court is of the view that the ultimate directions as given by the CLB cannot be sustained as it will not achieve the object for which the options were given to the petitioners to choose one out of four options given by the CLB. The reasons for challenge to the impugned order of giving option to the petitioners by both the parties may be different but so far as challenge to the ultimate direction giving option to the petitioners to choose one of the options with no option to the respondents with compulsion for petitioner to choose one of the options out of four options lest resulting into dismissal of the company petition of the petitioner, is neither end of the dispute between the parties nor the options proposed by the CLB to the petitioner stand to reason. The petitioner's own contention is very specific in ground (c) in Company Appeal No.3/2008 that FOR that the approach adopted by the CLB in directing the Appellants to choose from one of the four options suggested by it, is arbitrary, vague and/or incapable of any finality. 47. I examined the options as given by the CLB to the petitioners. The CLB ignoring all other facts and legal position that once it is held that if money is required by the company, then primarily and basically it is for the company to take a decision how the fund be arranged, directed unwilling petitioners to give long term loan carrying interest @ 10% and in this eventuality, the investment of respondent no.2 and the estate in the shares can be treated as loans carrying the same rate of interest. The CLB in this eventuality passed the order that the right shares already issued shall stand cancelled. The CLB in this eventuality passed the order that the right shares already issued shall stand cancelled. The CLB thereby issued directions against the very specific wishes of the petitioners and respondent no.2 as well as passed the order burdening the company with liability of interest without meeting with the objection of the respondent that loan will burden the company more than the burden of right issue and this loan would be disadvantageous to the respondent company's financial credibility and worth in taking loan from the financial institution which have already advanced to the respondent company. Further more, it is against the wishes of the petitioners by which the petitioners' wished to part their ways looking to the continuity of the dispute and the allegations levelled by the petitioner against the remaining Directors of the company. It appears that the CLB was influenced from the offer made by the petitioner that the petitioner is ready to provide funds to the company as observed in para 28 of the impugned order but, as stated above, the CLB ignored the impact of taking loan by the company and gave no reason for permitting the petitioners to dictate her terms upon the company, of taking loan from the petitioner instead of generating funds of increase in share capital. 48. The option no.2 given by the CLB to the petitioner provides that the company will go ahead with the right issue and respondent no.2 is at liberty to acquire the shares unsubscribed and result of which would be reduction in the share holding of petitioner substantially, therefore, the company shall pay a sum of Rs. 20 lacks per year (including Rs. 6 lacs ) with an increase of Rs. 1 lakh every three years thereafter. This amount will include the dividends, if any, declared by the company in future. The petitioners will continue to hold the shares that they currently hold and petitioner no.1 will continue as a Director as long as the said shares are held by the petitioners. The CLB was of the view that this second option would be more or less in line with the agreement between the parties before the High Court when company agreed to pay Rs. 6 lacks for respondent no.2 to acquire majority shares in the company. The CLB was of the view that this second option would be more or less in line with the agreement between the parties before the High Court when company agreed to pay Rs. 6 lacks for respondent no.2 to acquire majority shares in the company. The CLB at this place, failed to give any valid reason for holding the petitioners entitled to sum of Rs. 20 lacs per year (including Rs. 6 lacs) with an increase of Rs. 1 lakh every three years thereafter. The only reason given by the CLB for quantifying Rs. 20 lacs per year is that that will be the compensation for loss of special right of the petitioners because of losing their share holding below 25.1%. Neither the quantification can be justified nor it can result into the first claim of the petitioners that petitioners are entitled to retain their specific position by keeping their share holding percentage to 25.1% nor this will be parting way for petitioner who shall be loosing her special rights as 25.1% share holders, in proportion which she is holding and her continuation of Director may not be so advantageous to the petitioner so as it would have been by keeping shareholding of 25.1%. Be it as it may be, this Court is not concerned if the petitioner feels satisfied with this option and that she can accept offer no.2 and it is suitable to her but award of compensation of Rs. 20 lacs per year with increase of Rs. 1 lakh every three years thereafter, as compensation, cannot be justified as there is no reason to hold the company guilty for liability to pay damages/compensation to the petitioner and further unless it is held that the determination of the amount is just, reasonable and adequate compensation for the petitioner and is the just, reasonable and adequate penalty for the respondent-company and its members. At this juncture, it will be appropriate to mention here that in the earlier round of litigation, Rs. 6 lacs have been determined, not as compensation but as a consideration for the services to be rendered by the petitioner to the company and, therefore, the CLB virtually treated Rs. 6 lacs which are paid to the petitioner in terms of the earlier settlement as compensation to the petitioner for reduction in her shareholding. 6 lacs have been determined, not as compensation but as a consideration for the services to be rendered by the petitioner to the company and, therefore, the CLB virtually treated Rs. 6 lacs which are paid to the petitioner in terms of the earlier settlement as compensation to the petitioner for reduction in her shareholding. Another aspect of matter is that if the company will start paying more dividends due to heavy profits then all benefits will go to the respondent no.2 only.The option no.3 involves another company which is Lake Palace Hotels and Motels Private Limited. The CLB in option no.3 noticed that the petitioners are mainly concerned with the shares held by the company in Lake Palace Hotels and Motels Private Limited which is one of the main assets of the company. The CLB relying upon James Fedrick v. Mrs. Minnie R. Fadrik, 101 CC 294 CLB , declared that the company will transfer 25.1% of the shares held by it in Lake Palace Hotel at face value to the petitioners and the petitioners will surrender all their shares to the company at face value and cease to be members of the company and the company shall reduce its paid up capital to this extent. Difference, if any, in the value of shares surrendered/transferred, the same shall be adjusted by payment in cash. Then the 1st petitioner shall cease to be a director of the company and there shall be no payment of Rs. 6 lacs which is paid to the petitioner in pursuance of the earlier settlement in earlier round of litigation. The objection of the respondent-company to this offer is just and valid that firstly it will not a parting of two family members and in fact this offer may result into a major dispute in another company-Lake Palace Hotel, which will be of more serious nature and will certainly effect the working of the Lake Palace Hotels and Motels Private Limited, then the object for which the CLB passed the order itself will not only frustrate but consequence will be grave. The CLB further assessed the company's share held by it in Lake Palace Hotel to be equal with the value of the shares of the petitioners to the same percentage held in respondent-company without noticing that the share holders are not the owners of the properties of the company and without noticing the difference between the values of the shares of the two companies, passed the impugned order. The contention of learned counsel for the respondent that the option no.3 is also absolutely arbitrary direction which cannot be complied with by the respondent-company, as it is not necessary for the Lake Palace Hotels and Motels Private Limited to accept the transfer of the shares in favour of the petitioners who are not members, as defined in the Article of Association of Lake Palace Hotels and Motels Private Limited, need not to be decided in view of the reason that this issue can come for consideration only when the order of CLB is found justified. However, broader aspect can be considered. Clause 81 of the Article of Association of Lake Palace Hotels and Motels Private Limited provides that shares may be transferred by member or other persons entitled to transfer to any member of members selected by the transferor or transferors but no share shall be transferred to a person who is not a Member unless the proposed Transfer or Transfers is/are approved by the company either by a resolution passed at a General Meeting or by consent of all the share holders expressed in writing. The learned counsel for the petitioners submitted that the respondent is in control of the affairs of the Lake Palace Hotels and Motels Private Limited, therefore, for taking a resolution in terms of clause 81 of the above Article of Association, there is no difficulty and otherwise also, the petitioners are successors in interest of share holders, became members automatically with the death of late Maharana Bhagwat Singh and since they may not be registered as share holders in the company, therefore, as per clause 94 of the Article of Association, they may not have right to receive notice of meeting of the company and may not be entitled to exercise any right conferred by the membership in relation to meeting of the company, but nevertheless they are members in the company Lake Palace Hotels and Motels Private Limited. 49. 49. Be it as it may be. So far as option no.3 is concerned, this option made the share value of petitioner's shareholding in the company equal to the value of shares of Lake Palace Hotels Pvt. Ltd. There is no basis for this equalization. The share value of the company is equal to the share value of share of equal number in Lake Palace Hotels Pvt. Ltd. is not the case of the petitioner. The offer is prejudicial to respondent-company and is absolutely arbitrary and cannot be justified. Further, even according to facts stated in company petition in para 24 the Indian Hotels Limited had guaranteed a minimum revenue to Lake Palace Hotels and Motels Pvt. Ltd. whereas, admittedly, the respondent-company had no such assumed revenue. Be it as it may be. There is no reason and basis for treating share of two companies equal in valuation. The petitioner's learned counsel informed and it is also mentioned in the Review Application No.18/2008 that the petitioner has exercised her option for offer no.3 but that is not of much relevance for the purpose of all these appeals including the appeal preferred by the petitioner as even after such exercise of option by the petitioner, the petitioner's and respondent's challenge to impugned order is with full force. Further, by exercising this option, there cannot be any parting of brother and sister or family members so as to give an end to the dispute in any manner, rather than there is likelihood of increase in dispute between the family members. The option no.3 further suffers from arbitrariness as there is no proper value of the benefits of holding of shares and disadvantage of holding of shares in two companies and these relevant facts have not been considered by the CLB. The option no.3 in view of above reasons that this will not achieve the object of parting the way of petitioner from the company and if petitioner can continue as member in another company, then why present position may not be continued by finding out another solution, has not been examined by the CLB. The option no.3 in view of above reasons that this will not achieve the object of parting the way of petitioner from the company and if petitioner can continue as member in another company, then why present position may not be continued by finding out another solution, has not been examined by the CLB. At this place, it will be relevant to mention here that if the petitioner can be treated to be member in the definition given for members in Lake Palace Hotels and Motels Private Limited as they are descendants or successors of original share holder and resolution can be carried by respondent no.2 in the Lake Palace Hotels and Motels Private Limited even then there cannot be any justification for ouster of the petitioner from the present company and her induction in another company upon which the petitioner(s) has/have her/their eyes, as observed by the CLB in option no.3. On this ground also, option no.3 cannot be justified. 50. By option no.4, the CLB again opined that other ways for parting may be by giving adequate share value to the petitioners by taking into consideration the assets of the company as also that of Lake Palace Hotel. The respondent objected to the inclusion of the Lake Palace Hotel in the value as well as expressed inability to mobiles funds to purchase the shares of the petitioners on a real estate price basis. The CLB observed that considering the fact that the company is a family company and that after a full round of litigation, the second round is going on and that future litigation can also not be ruled out, I am (CLB) of the view that the petitioners should go out of the company for a reasonable consideration for their share. The CLB observed that purely on an equitable ground, I am fixing the price for their shares at Rs. 5 crores . Either the company or the 2nd respondent, as his option, shall purchase the shares at this price. The 1st petitioner shall cease to be director of the company effective from the date of surrender/transfer and on receipt of consideration and the petitioners shall not be entitled for Rs. 6 lacs as hereto before. I make it abundantly clear that this amount of Rs. The 1st petitioner shall cease to be director of the company effective from the date of surrender/transfer and on receipt of consideration and the petitioners shall not be entitled for Rs. 6 lacs as hereto before. I make it abundantly clear that this amount of Rs. 5 crores is not based on any valuation but has been fixed on equitable consideration taking into consideration the interests of both the sides. From the above reasons given by the CLB in option no.4, it is clear that the CLB knowingly quantified the amount of Rs. 5 crores without any basis but on equitable consideration. How it is equitable, is not given out in the order impugned. The equities cannot be without any reason. The fair calculation of any compensation/amount is foundation for the equity. The equity cannot be arbitrary. For doing equity, there must be application of mind to the material facts and in the case where it is matter of quantification in terms of money then quantification is the root basis for arriving at equitable decision. The option no.4 absolutely failed to take into account the basic facts for reaching to the conclusion that Rs. 5 crores will be value of the shares held by the petitioners. In the facts of the case, this offer cannot be justified, where both the parties are seriously contesting the question of fair value for parting of the petitioners from the company. The CLB also has not rejected the valuation report submitted by Shri T.N. Unni. It was not material at whose instance valuation report was prepared, if valuation given is correct and fair valuation. The learned counsel for the petitioners while assailing the impugned order before this Court again submitted that fresh valuation be ordered. This contention I will consider latter in this judgment. 51. Therefore, from above four options, first two options are not for parting of ways by the petitioners and the respondent and from the third option, there cannot be end of dispute and there is likelihood of more disputes and this fact has already been taken note of in option no.4 itself that this is second round of litigation then giving shares of Lake Palace Hotels and Motels Private Limited to the petitioners certainly will not achieve the object of parting of ways of the parties nor it will serve the purpose to end the litigation. The option no.4, on the face of it, is based on arbitrary decision of determination of the value of the shares of the petitioners. 52. In view of the above reasons, the order passed by the CLB deserves to be set aside. 53. Now coming to the merit in the claim of the petitioners independent of the options given by the CLB to the petitioners. The present company petition before the CLB was submitted on 12.4.2005. Before that and after death of Maharana Bhagwat Singh, father of petitioner no.1 and respondent no.2 on 3.11.1984, first time a dispute between the petitioner and respondent came in this Court by filing Company Petition No.1/1991 under Sections 397 and 398 of the Companies Act, 1956 which was decided in favour of the petitioner on 23.11.1994. Three appeals were preferred against the said judgment wherein dispute was resolved in terms of the settlement dated 25.8.1999 and S.B. Company Petition No.1.1991 was withdrawn. Both the parties agreed that Shri T.N. Unni, Chartered Accountant be appointed as Director of the company. Respondent Arvind Singh Mewar would transfer 145 shares from his existing share holding to Smt. Yogeshwari Kumari - petitioner, at face value but for that equal consideration be paid by said Smt. Yogeshwari Kumari. Both petitioner Smt.Yogeshwari Kumari and respondent - Arvind Singh Mewar were free to transfer their shares to their immediate children. It was agreed that service of proprietary business concern of Smt. Yogeshwari Kumari which is equipped with expertise in the field of tourism and travel related business such services to the company would be engaged for the purpose of company's business on a regular basis for a reasonable consideration. It is stated that for this, the company regularly paid Rs. 6 lacs per annum to Smt. Yogeshwari Kumari. The petitioner Smt. Yogeshwari Kumari agreed in Company Petition No.1/1991 with specific averment in terms of the settlement that in view of above, the allegations/charges in the company petition do not survive and the amount withheld dividend becomes payable to Arvind Singh Mewar upon completion of said formality in Hon'ble High Court. Once the petitioner agreed to withdraw all the allegations and charges levelled in Company Petition No.1/1991, she cannot re-open all those issues which were in existence before 25.8.1999. Once the petitioner agreed to withdraw all the allegations and charges levelled in Company Petition No.1/1991, she cannot re-open all those issues which were in existence before 25.8.1999. The petitioner after signing this agreement/settlement dated 25.8.1999, cannot use any of the allegations levelled in the company petition because of the plain and simple reason that after signing of terms of settlement dated 25.8.1999 and submitting it before the High Court, the petitioner took away respondent's right to challenge the finding recorded in the judgment of the learned Single Judge delivered in S.B.Company Petition No.1/1991 and further, the petitioner accepted reduction in her share holding in the company without any condition that the respondent shall be under obligation to maintain the petitioner's shareholding percentage to 25.1%. The condition which is not mentioned in the deed, cannot be inserted with the help of any sort of plea/pleadings because of the reason that it is settled law that if the language in the deed is clear and unambiguous then nothing can be added or subtracted from the language of the deed. Therefore, petitioner's contention that from the settlement dated 25.8.1999, an inference can be drawn that 145 shares were transferred to Smt. Yogeshwari Kumari, was with condition that shareholding percentage shall be maintained by respondent no.2, cannot be accepted. 54. Even if above legal position is liberally construed then we may look into the facts leading to the present dispute, which as stated above, came before the CLB in the month of April, 2005. If we dilute the above legal position and look into the facts of this case, then after 25.8.1999, the petitioner had 25.1% shares and rest were with respondent no.2 and the trust/estate etc. The petitioners in their company petition, after narrating the facts, leading up to signing of the agreement dated 25.8.1999, straight-way stated in para 23 of the petition that respondent no.2 in collusion with Shri T.N. Unni, third Director of the respondent-company is attempting to increase the paid up capital of the respondent-company from its existing paid up capital of Rs. 30,27,000 to Rs. 3,30,27,000 by issuing 30000 equity shares of Rs. 1000 each. It is not in dispute that shares were offered to the existing share holders on pro rata basis depending on their entitlement based on shareholding on relevant date. 30,27,000 to Rs. 3,30,27,000 by issuing 30000 equity shares of Rs. 1000 each. It is not in dispute that shares were offered to the existing share holders on pro rata basis depending on their entitlement based on shareholding on relevant date. This trigged the dispute between the petitioner and the respondents and petitioner in para 24 levelled allegation of mismanagement in the affairs of the company by respondent no.2 and alleged that final accounts of the company for the year ended 31.3.2004 indicates that the company has spent substantial funds of real estate and thus even though has made cash profits, has declared only 5% dividend. It is alleged that despite spent of significant amount on building of respondent no.1- company, the company disclosed for the year ended 31.3.2004 that it has made profits before depreciation and thus is able to meet its cash-flows. Therefore, before this company petition was filed, admittedly, the company came in position to give dividend, may it be 5% only, but that was the position when company petition was filed, then the petitioner challenged the manner in which the relevant resolutions were passed for right share issue. However, there are no allegations of mismanagement in the company's affairs since 1999 and, therefore, the CLB was right in holding that the petitioner failed to prove any financial mismanagement in the company, however, on other ground that the petitioner herself signed the accounts of the company in the month of September, 2004 which were approved by the AGM on 30.9.2004 and in the original petition she did not plead that she objected to the accounts, therefore, having signed the accounts in the month of September, 2004, the petitioner cannot object to the accounts and level allegation of financial mismanagement in the month of April, 2005. As stated above, the reasons given by the CLB are sufficient and further may be read in the context referred above that the allegation financial mismanagement in the company's affairs was not levelled by the petitioner since 1999 up to April, 2005. Allegations of allowing private guest of respondent in the company's hotel and ancillary benefits taken by respondent without material particulars cannot be reason for grievance of the petitioners. Same benefits if are taken by Directors of the company because of their position in the company are normal wear and tear for the company and cannot be avoided. 55. Allegations of allowing private guest of respondent in the company's hotel and ancillary benefits taken by respondent without material particulars cannot be reason for grievance of the petitioners. Same benefits if are taken by Directors of the company because of their position in the company are normal wear and tear for the company and cannot be avoided. 55. At this juncture, it will be worthwhile to mention here that the petitioner in para 26 of the company petition stated that in the month of September, 2004, respondent no.2 approached petitioner no.1 and offered to buy the shareholding of the petitioner in the respondent-company at a price suitable to respondent no.2. The petitioner expressed her willingness to consider selling of her interest in the company at fair price and thus sought various details regarding the assets and liabilities of respondent-company including finances of the respondent-company so that the petitioner may assess fair value of shareholding of her. The petitioner, thereafter, did not disclose what effort she made for getting the value of shareholding by her and how much she assessed the value of her shares but pleaded that respondent no.2 called the petitioner to Delhi for meeting in the month of November, 2004 and he offered to buy out the petitioner's group holding for Rs. 1 crore. The petitioner no.1 refused to accept the offer stating that it was necessary that a valuation of the shares to be carried out first. Up to this, there cannot be any objection as respondent no.2 offered to buy the shareholding by the petitioner's group and petitioner's group was willing to sell their shareholding in the company to respondent no.2. If the offer given by respondent no.2 of Rs. 1 crore as consideration for the sale of the shareholding by the petitioner's group was not accepted by the petitioner then that was within their domain to not to accept that offer. The petitioner connected this offer of respondent no.2 to buy the shareholding of the petitioner's group and unwillingness of the petitioner to sell their shareholding for sum of Rs. 1 crore alleged that the respondent , therefore, evolved this mode of right issue and respondent no.2 pushed the petitioner to the corner so that either she may sale her group shareholding to the respondent at no price or may lose percentage of her group shareholding. 1 crore alleged that the respondent , therefore, evolved this mode of right issue and respondent no.2 pushed the petitioner to the corner so that either she may sale her group shareholding to the respondent at no price or may lose percentage of her group shareholding. At this juncture, it may be noticed that both the learned counsels cited judgments referred above as well as the decision of the CLB given in other cases in support of their contentions but the ratio which can be accepted is that the right issue per-se may not be oppressive in nature. In some cases it has been held that even proportionate offer of benefit may amount to disadvantageous to the minority group and that may be oppressive against the minority group, upon which finding the CLB may pass appropriate order on equitable ground if not necessary under Sections 397 and 398 then under Section 402 of the Companies Act, 1956. The issue may not detain us because of the reason that in the light of the above decisions, this Court is also of the view that issuance of right shares by the company perse is not oppressive. However, if it is proved that the issuance of right share is not bona fide and tainted with object to put burden upon minority resulting into unnecessary burden upon the minority and on other equitable grounds, the Board/Court may hold that the right issue in the facts of the case amounts to an act of oppression against the minority and the Board/Court may pass an appropriate equitable order to do justice. The court can certainly lift the veil to find out the real nature and constitution of the company for granting equitable relief. This Court is also conscious of the fact that the founder of the company was the father of petitioner no.1 and respondent no.2. The CLB was right in holding that initially none of the party invested money to acquire the shares in the company. There is increase of shareholding of respondent no.2 gradually in the knowledge of the petitioner up to the time of filing of Company Petition No.1/1991. Increase in the shareholding of respondent no.2 up to the year 1999 was accepted by petitioner no.1 by signing the MOU dated 25.8.1999. There is increase of shareholding of respondent no.2 gradually in the knowledge of the petitioner up to the time of filing of Company Petition No.1/1991. Increase in the shareholding of respondent no.2 up to the year 1999 was accepted by petitioner no.1 by signing the MOU dated 25.8.1999. The company till did not declare dividend, the petitioner did not raise any objection that company is financially mismanaged by respondent no.2 and respondent no.3 for a long period of almost six years and raised dispute when company decided to offer shares in proportion to the shareholding of the shareholders. These are relevant facts for the purpose of finding out whether the act of the respondent in offering the shares on right basis, has some other object than generating the funds of the company, The CLB, as stated above, held that there is no financial mismanagement in the company, the company was in need of funds then petitioner's allegation that right issue is tinted out as decision to issue right issue had other object than to raise funds for need of company cannot be accepted. There is no assessment that the petitioner's share percentage, in any case, shall be maintained and, therefore, there was no corresponding obligation of respondent to maintain the share percentage of petitioners in the company. Therefore, the finding of the CLB that attempt to disturb shareholding of the petitioner in the company without her consent could be an act of oppression is illegal. 56. The CLB held that the company was in need of funds. The company's position, as noticed by the CLB, is that there was an addition to fixed assets of sum of about Rs. 40 lacs in the 2002-03 and about Rs. 85 lacs in the year 2003-04. The contention of the respondent is that the petitioner could not declare dividend before 2004, was due to the fact that tourism as a whole in the world and particularly in India suffered a jolt and when things started improving, more investment was needed for running the hotel business and, therefore, the company was required to generate the funds. The contention of the respondent is that the petitioner could not declare dividend before 2004, was due to the fact that tourism as a whole in the world and particularly in India suffered a jolt and when things started improving, more investment was needed for running the hotel business and, therefore, the company was required to generate the funds. The CLB held that even if it is assumed that the assessments given by the company are over stated even then considering the financial position of the company, it does require funds to carry out the renovation, though the petitioner objected to the project of renovation etc, but those objections are neither serious nor in the fact of the case can be justified, particularly in view of the fact that there was addition to fixed assets of the company of a sum of Rs. 40 lacs and Rs. 85 lacs in preceding two years only and the company declared dividend for the year 2004 and according to the company, to get more business, some work was required to be done in the properties of the company. In view of the above reasons, how right issue can be linked with the offer of purchase of shares by respondent no.2 of the petitioner's group? It may be co-incidence in timing of offer of purchase of shares of the petitioner's group by respondent no.2 and its subsequent failure before a decision was taken to offer right shares. In the facts of the case, it is too remote to connect the right issue with respondent no.2's endeavour to purchase the share of the petitioner's group. 57. Once the CLB held that there was no financial mismanagement in the company then the CLB should have been more conscious in reaching to the conclusion that present action of the respondent-company of offering right share to the share holders, that is solitary act was with a view to corner the petitioner's group to disinvest their shares on throw away price or with only object to reduce shareholding of petitioner's group. The company and respondent no.2 when do not mismanage the company financially for six years then all of sudden, how such serious allegations can be accepted that they decided to increase the share capital of the company, only with object to oppress the petitioners ? 58. The company and respondent no.2 when do not mismanage the company financially for six years then all of sudden, how such serious allegations can be accepted that they decided to increase the share capital of the company, only with object to oppress the petitioners ? 58. The observation of the CLB that the face value of the shareholding by the petitioner is about Rs. 7.6 lacs and to subscribe to the right shares with the view to maintain their existing percentage and protect their special rights, they have to invest over about Rs. 75 lacs, i.e., nearly 10 times of the face value of the shares. The CLB then observed that even after such huge investment, the petitioners are not likely to get any return in near future. The above observation of the CLB that the petitioners are not likely to get any return in near future, appears to be an assessment of the CLB but not based on facts and by taking lightly the submission of the respondent that that respondents were also required to invest proportionately to maintain their percentage of shareholding. Meaning thereby, if the petitioners are to invest 10 times of the face value of their share then respondent no.2 was also required to invest to the same proportion, the proportion in which the petitioner was require to invest. The CLB refused to accept the above proportion only on the ground that investment by a majority share holders is different from the investment from minority shareholders, as majority share holders has advantage of controlling the company and thus being in a position to derive various attended benefits while the minority share holders does not. The reasoning given by the CLB, even on face value, cannot be attractive and if we go in deep then that advantageous position of the majority was already there without there being any further investment by the majority shareholders, by not going for right issue. Further in the facts of this case, it is difficult to draw an inference that for some advantage to the majority holder like allowing guest to stay in the hotel or like benefit, which is otherwise available to the respondents, they will invest in company of huge amount as compared to petitioners further investment. Further in the facts of this case, it is difficult to draw an inference that for some advantage to the majority holder like allowing guest to stay in the hotel or like benefit, which is otherwise available to the respondents, they will invest in company of huge amount as compared to petitioners further investment. It appears that the CLB accepted the plea of the petitioner on face value that the petitioner will have to invest 10 times to the face value of the shares if the petitioner would subscribe to the right issue and that will be harsh and burdensome offer to the petitioners and will be oppressive act of the respondent. The CLB at this place, virtually accepted that in non-dividend giving companies, if right issue is offered then that will be act of oppression against minority shareholder in spite of the fact that need of fund for company is genuine. That is not correct position of law. 59. In sum and substance, after settlement between the parties on 25.8.1999, the respondent-company was managed by respondent no.2 without there being any financial mismanagement as held by the CLB and approved by this Court and company's fixed assets increased in the year 2002-03 and 2003-04 and the company was in need of the funds and financial institutions advised improving the debt equity ratio and because of the action of the respondent of issuing shares on right basis incredibility increased for getting financial support from the banks. When need of funds could have been met by the company appropriately by issuing right shares, then the petitioner's grievance only, basically on this ground, is not founded on valid facts nor legally justifiable. 60. AT this juncture, it will be appropriate to mention here that serious allegations have been levelled against one of the Director respondent no.3-Shri T.N. Unni. Shri T.N. Unni was a known person to petitioner no.1 even before his induction in the present company. He is Chartered Accountant and could have given a valuation report as he was qualified to give valuation report. From the report, it is clear that he valued the shares held by the petitioner from various methods and as per P/E Ratio method, the value of petitioner's share holding came to Rs. 78 lacs. On Income Capitalisation Method, it was found to be Rs. From the report, it is clear that he valued the shares held by the petitioner from various methods and as per P/E Ratio method, the value of petitioner's share holding came to Rs. 78 lacs. On Income Capitalisation Method, it was found to be Rs. 75 lacs and on break up value, it was found to be Rs. 311 lacs. The CLB rightly held that the petitioner did not question the principles adopted for valuation. The allegation against said Shri Unni is that he projected that the report has been prepared at the behest of petitioner no.1, whereas that was not correct. The allegation in other way can be of a serious nature of creating evidence against the petitioner and in favour of respondent no.2. As the seriousness and its consequences increases, the burden to prove becomes heavier upon the person levelling the allegation. The allegation levelled by the petitioner upon Shri T.N. Unni was of serious nature of professional misconduct and particularly in view of the fact that Shri Unni was also connected with another company-Lake Palace Hotels and Motels Private Limited and connected with the respondent-company for several years. Therefore, this serious allegation had two consequences, one action against said Shri Unni by the Institute of Chartered Accountants of India and other observations by the Board/Court against said Shri Unni. Some times, such nature of charge may have quasi criminal nature and on proving the charge, it is serious stigma for the guilty person. So far as professional misconduct is concerned, the CLB was right in holding that the action could have been taken only by the Institute of the Chartered Accountants of India (and that complaint against has been dismissed by the Institution of Chartered Accountants of India). There may be case where no fit case is made out for taking action under the relevant Act or the Rules of disciplinary authority, but yet the court can take into account the conduct of such person while deciding the issue relating to the relevant dispute having the conduct of such person is relevant factor. From the facts, it appear that in this case, so far as complaint against Shri T.N. Unni of professional misconduct is concerned, that has already been rejected by the competent body and that issue need not to be and cannot be opened here. From the facts, it appear that in this case, so far as complaint against Shri T.N. Unni of professional misconduct is concerned, that has already been rejected by the competent body and that issue need not to be and cannot be opened here. However, otherwise also this Court is of the view that allegations against Shri T.N. Unni are quite vague and I do not find sufficient material from the evidence available on record on the basis of which the finding can be recorded against Shri T.N. Unni that he wrongly projected that report has been prepared at the behest of the petitioner. I am holding so by strictly following the principle that case is to fall if party alleges fails to prove the allegations. At the cost of repetition, we may recapitulate that Shri T.N. Unni whose conduct was not questioned by the petitioner for decades, gave his valuation report by calculating valuation from various methods and gave reasons for adopting the methods recommended by law and the principles which have been adopted, are not in challenge and further if valuation was not acceptable to the petitioner, she also could have obtained another valuation report as the opinion of even expert is only an opinion and to prove that opinion wrong, she could have obtained another opinion of another expert. Therefore, looking to the facts of the case, this Court is of the view that the petitioner failed to make out any case of misconduct by Shri T.N. Unni which may be less than the misconduct of the Chartered Accountant. In view of this finding as well as looking to the totality of the facts of the case, this Court is of the view that the petitioner was not entitled to relief against Shri T.N. Unni and more particularly the petitioner was not entitled to relief as claimed in the petition of declaration that respondent no.3 is not Director of the Company. There is substance in the submission of the learned counsel for the respondent that for such relief there is no fact foundation in the entire company petition nor such declaration, as sought by the petitioner in the petition, could have been given by the CLB and there is no prayer of the petitioner that the respondent no.3-Shri T.N. Unni be removed from the Board of Director.From above discussions, it is clear that the petitioners miserably failed make out any case u/s 397 of the Companies Act, 1956. 61. Now next question is, whether in this case, the petitioner could make out a case for any relief on the ground of equity and even if petitioners failed to make out a case u/s 397 still they are entitled to any relief u/s 402 of the Companies Act, 1956. The petitioner's claim for relief u/s 402 is on equitable ground and is based on the facts that none of the party initially invested in the company that the company was incorporated by father of petitioner No. 1 and respondent No. 2. The petitioners and respondent no.2 got/inherited the shares from their father. Initially the petitioner had shares whereas respondent no.2 had no share then gradually shareholding of the petitioner No. 1 stand reduced and shareholding of respondent No.2 increased. The contention of the petitioner is that intention in incorporation of the company was to see that the company should remain as family company with majority shareholding of the petitioner (which was reduced to minority with special rights by virtue of holding 25.1% shareholding of petitioner in the company) and she was supposed to have due say in the management of the company but gradually her shareholding was reduced and she has been marginalized and likely to be reduced to virtually non entity in the company. Another company of the petitioner family is Lake Palace Hotels and Motels Private Limited wherein the estate has shares and respondent no.2 is executor of the Will of late Maharana is not executing the Will fairly and virtually ousted the petitioner from that company and getting the profit of that Lake Palace Hotels and Motels Private Limited, indirectly as well as directly, therefore, while passing the appropriate order, the shareholding of the Lake Palace Hotels and Motels Private Limited also can be taken into account which has rightly been taken note by the CLB. It is submitted that respondent No.2 was willing to purchase petitioner groups share and petitioner to give an end to the dispute also wished to sell the shares to the respondent No.2. The petitioner is, therefore, entitled to fair price of her interest in the company. The valuation of petitioners share/interest in the company is condition precedent. The valuation given by the one of the director is not acceptable to the petitioners. Therefore, the court may pass appropriate order and obtain fair and impartial valuation report from competent person and may direct the respondent and/or to the company to purchase the petitioners shares/interest in the company. According to learned counsels for the petitioners, the real nature of the dispute and constitution of the respondent company is similar to the facts of various cases relied upon by the petitioner wherein for parting ways even companies were distributed in a manner so that a person who had no shares in a company, got company itself out of sister companies. It is also submitted that the petitioner is yet seeking a fair valuation of her shares and after valuation of her shares, the court may direct the respondent No. 2 and/or the respondent Company to purchase petitioners group shares willingly or may be unwillingly, by the order of the court to give an end to all disputes. 62. The contentions of the respondents are that equitable relief also can be granted only when company petition is found maintainable. From the facts of this case it is clear that the petitioner's company petition was not maintainable and the company petition was liable to be dismissed on the ground of non discloser of cause of action. Further the petitioner is not entitled to equitable relief as the non-issue has been sought to be made an issue by the petitioner to get the premium for her shareholding because of her position, may be because of her being sister of respondent no.2 or may be because of the reason that origin of the company belongs to the father of petitioner no.1 and respondent no.2. The petitioner, who levelled false allegations against her brother and one of the Director of the company of serious nature and who was willing to sell out her shares in the company at the price fixed arbitrarily by her and when she failed to get unreasonable price from the respondent, then after some time, started dispute when company was in need of funds to meet with urgent requirements and now she wants premium. 63. As already observed that even if equitable relief can be granted by the CLB/Court even then that can be granted only when any case is made out for the relief on equitable grounds. When complained act is only of issue of right shares by the company with malafide intention and object with vague allegation of siphoning of the funds from the company and further vague allegation of motive then those allegations if can be made foundation for equitable relief then that will be in fact would be a premium to the person complaining without any basis. Mere fact that the company is in fact a family company itself is no ground for passing orders even on equitable ground when grounds are not in existence. The share-holders in company in minority are protected by law and their interest cannot be compromised but, at the same time, while granting equitable relief, the conduct is relevant of both the parties and when dispute raised by the person complaining appears to be a dispute non-existent or is not bona fide or raised because of a trivial act then the Court may refuse to grant any relief even in family company. Otherwise it will be premium to the minority share-holders who may ask for money for their minority shareholding which may not be suitable to the majority shareholding and may not be in the interest of the member, company and other share-holders. For seeking relief on equitable ground it is not sufficient to prove that the company is family company. It is true that for seeking relief in family company it is not necessary that person complaining should prove his/her case to the full extant as required u/s 397 as that would entitle the person complaining to obtain appropriate order u/s 397 itself of the Companies Act, 1956. It is true that for seeking relief in family company it is not necessary that person complaining should prove his/her case to the full extant as required u/s 397 as that would entitle the person complaining to obtain appropriate order u/s 397 itself of the Companies Act, 1956. Language as used in section 397 is used purposefully so that companies may work without unnecessary fear of winding up of company and also interference by shareholders on some minor disputes and differences. Reason may be that in the affairs of a company decisions are taken by the share holders and work is executed by the decisions of the Board of Directors. Looking to large activities of any company there is always possibility of differences of opinions amoung not only shareholders but may be between shareholders and management as well as it may be between directors of the company. Every dispute in company cannot be made ground for winding of company and even if ground for winding up is made out by the person complaining even than unless court is satisfied that winding up is just and equitable and there is no other way than to wound up the company and further that winding up of the company wound not prejudicial to the member complaining than only order of winding up of the company can be passed. If case for winding up of a company is made out but the court is of the opinion that the winding up of the company will unfairly prejudice such member or members than the court can pass appropriate order but not of winding up of the company. It appears law framers were conscious to the fact that provision of winding up of a company and provision for appropriate order u/s 397 & 398 may not serve the purpose completely; therefore section 402 has been enacted. The Section 402 is only extension of power of the court so that the court may pass appropriate order as per the demand of facts and may not confine its order directions within the ambit of Section 397 of the Act of 1956. Any order u/s 402 also can be passed for valid reasons and not arbitrary. Under sub clause (b) of Section 402 order can be passed to purchase of shares or interests of any members of the company by other members of the company or by the company. Any order u/s 402 also can be passed for valid reasons and not arbitrary. Under sub clause (b) of Section 402 order can be passed to purchase of shares or interests of any members of the company by other members of the company or by the company. In this case, except on the ground of sympathy that the petitioner is sister of respondent No. 2 and both got the shares initially from their father, the very foundation for raising a dispute is right issue of shares for which the finding of fact recorded by the CLB is that the company was in need of the funds and there was no mismanagement in companys affairs and this court is of the view that once it is held that company needed funds than the company can decide the mode and manner by which it should raise funds and in this case the respondents successfully demonstrated that raising of funds by other ways would be not in the interest of the company than, in the facts, Therefore, the company petition for equitable relief is also liable to be dismissed. 64. The petitioner moved Company Application No.15707/08 in S.B.Company Appeal No.3/2008 and Company Application No.11604/08 in Company Appeal No.1/08 substantially praying that the statement of accounts in respect of all expenses incurred by respondent company towards the cost of litigation before the CLB during the pendency of Company Petition No.32/2005 as well as before this Court since the filing of the S.B. Company Appeal Nos.1,2 and 3 of 2008 be called from respondent no.2, obviously so that that cost incurred by the company be recovered from the other respondent other than the company. The contention of the learned counsel for the petitioner is that it was a dispute between the petitioner and the respondent no.2 and substantially relief was not against the company and looking to the nature of the dispute, the company could not have incurred and paid for the cost of litigation from beginning to the cost of appeal as none of the interest of the company was involved in defending the company petition or appeal preferred by the petitioner nor there was any reason for the company to challenge the order of the CLB. The learned counsel for the petitioner also submitted that earlier the court passed the order praying the Director of the Company to pay the cost and in other cases where it was found in case where there was no reason for company to indulge in the litigation then the cost be recovered from the Director. 65. In the facts of the case, I do not find any reason to hold that the company, whose shareholding in other company could have affected and the company in its wisdom found that the company should contest the appeal wherein the petitioner was under obligation to implead the company as party in the company petition and appeal then the company should not have put forward its own case before the court. The act of company can not be condemned to the extent of holding that the company committed wrong and for that wrong the other director and respondents are liable. 66. At this juncture it will be relevant to mention here that counsel for the petitioners vehemently submitted that respondent no.2, executor of the Will of the trust, created by late Maharana Bhagwat Singh is not executing the Will though probate has been granted several years ago and counter allegation of respondent no.2 that the petitioner has put hurdle against the execution of the Will and there was reference of a civil suit filed by the brother of the petitioner and respondent no.2. Those allegations are not very much relevant because of plain and simple reason that the duties and obligations of executor of the Will are well prescribed under the Indian Succession Act and further the beneficiaries have been given rights under the said Act to take steps for redressal of grievances and this Court, while exercising jurisdiction over the judgment/order of the CLB need not to comment either on the execution of Will or in pending civil matter. It is for the parties to protect their own rights in accordance with law. 67. Therefore, the petitioners are not entitled to any relief as prayed in the application No.15707/08 and 11604/08. Hence both the applications for above prayers are dismissed. 68. Consequently, the Company Appeals No. 1/2008 and 2/2008 are allowed and the impugned order of the Company Law Board dated 4.12.2007 is set aside. The Company Appeal No.3/2008 is dismissed. The Company Petition No.32/2005 is dismissed. No order as to costs. *******