Oppression and Mismanagement - Corporate

Oppression and mismanagement – whether terms of settlement are binding between parties – Held, Yes

Companies Act, 1956, Sections 397 and 398 – oppression and mismanagement – settlement between parties, the parties consented to and participated voluntarily in the process of mediation and agreed to the terms of settlement dated October 12, 2009, relating to the valuation of the share. The Petitioner filed applications seeking implementation of the terms of settlement signed and recorded before the mediators. The respondents contended that the terms of settlement were only interim in nature and it contained only a brief outline of issues and it was not a final settlement.

Decision: Application allowed.

Once the parties and the mediators sign the terms of settlement and the settlement reports were submitted to the Company law board, no further correspondence in any manner would change the nature of the concluded mediation and the terms of the settlement. The terms of settlement were binding on the parties and legally enforceable.

[Ashok kumar Aggarwal V Gopal Corporation Pvt. Ltd., before CLB]

Prepared by: S. Hemanth

Advocate at Hemanth & Associates

Labour

Payment of gratuity Act – Sick Industrial Company – suspension of legal proceedings – payment of gratuity – Appeal from controlling authority – pre-requisite  condition of deposit of gratuity amount – whether appeal can be accepted without depositing the gratuity amount – Held, No.

The Petitioner Company declared sick and a scheme for revival had been framed. The employee of the Petitioner’s contractors had filed applications before the controlling authority seeking gratuity from the Petitioner and the Authority had directed payment of gratuity. Petitioner preferred appeal against the order of the controlling authority, seeking waiver of the pre-requisite condition of deposit of gratuity amount determined by the controlling authority.

Decision: The application was rejected and the Petitioner was directed to deposit the amount which was a condition precedent for preferring an appeal under section 7(7) of the 1972 Act.  

Section 7(7) of the Payment of Gratuity Act, 1972, is mandatory in nature and the provisions of sections 22(3) and (4) of the Sick Industrial Companies (Special Provisions) Act, 1985, will not have any effect. The Payment of Gratuity Act, 1972 and Sick Industrial Companies (Special Provisions) Act, 1985 are Independent Acts operating in different fields. To entertain appeal under section 7(7) of the 1972, Act the Appellant is required to deposit the gratuity amount.

[Cement Corporation of India Ltd V Regional Labour Commissioner (Central), Karnataka High Court]

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HEMANTH & ASSOCIATES, ADVOCATES