2005 (1) TMI 403 - HC - Companies Law

Summary

Issues Involved:
1. Appeal under section 10F of the Companies Act, 1956.
2. Implementation of the Company Law Board's order.
3. Transfer and valuation of shares.
4. Pending suit and its implications.
5. Objections by the respondent regarding the statutory auditor and valuation date.

Detailed Analysis:

1. Appeal under section 10F of the Companies Act, 1956:
The appeal was filed against the Company Law Board's order dated 8-12-2000. The appellant did not press the substantial challenge to the impugned order. The court noted that since the appellants were not pressing the appeal, the question of whether the appeal raised a substantial question of law under section 10F did not need to be addressed.

2. Implementation of the Company Law Board's order:
The Company Law Board directed that the company would purchase the 50% shares held by the Jain Group at a valuation done by the statutory auditor as of 31-3-1999, contingent on the conclusion of the Bombay proceedings in favor of the Jain Group. The appellant accepted the order and undertook to withdraw the suit's prayer (a), which sought specific performance of the Finance Agreement. The court held that the order of the Company Law Board should be implemented as the appeal was not pressed and the respondents had not challenged the order.

3. Transfer and valuation of shares:
The appellant argued that the order for the transfer of shares should be implemented immediately. The court noted that the order aimed to resolve disputes by transferring the shares from the Jain Group to the Rashid Group, which would end the management disputes. The respondent's objections regarding the statutory auditor and valuation date were dismissed as they had not challenged the Company Law Board's order.

4. Pending suit and its implications:
The suit filed by the appellant included several prayers, with prayer (a) being the most relevant for the transfer of shares. The appellant undertook to withdraw this prayer, which the court accepted. The court held that once prayer (a) was given up, there was no obstacle to implementing the Company Law Board's order. The remaining prayers in the suit would become infructuous once the shares were transferred.

5. Objections by the respondent regarding the statutory auditor and valuation date:
The respondent argued that the statutory auditor was biased and that the valuation date of 31-3-1999 was incorrect as it would not consider the arbitration award. The court rejected these objections, noting that the respondents had not challenged the Company Law Board's order. The court suggested appointing an independent chartered accountant as the valuer, but the respondent did not accept this. The court held that the valuation process should proceed as directed by the Company Law Board, with the respondents having the option to challenge the valuation if they disagreed.

Conclusion:
The court dismissed the appeal as not pressed, accepted the appellant's undertaking to withdraw prayer (a) of the suit, confirmed the Company Law Board's order, and directed the statutory auditor to commence the valuation of shares. The court emphasized that litigation must come to an end and that the Company Law Board's order should be implemented to resolve the disputes. The appeal was disposed of with no order as to costs.