2019 (5) TMI 824 - AT - Companies Law

Buy Back of shares - restoration of appellant as Director in the Company - HELD THAT - It was for the respondents to make the initial offer within time specified on a rate for which they had to take their own risk as the appellant would have then got a chance to make counter offer on a discounted price. This is clearly from the order dated 21.7.2017. Annexure A-7 filed by the appellant shows that the valuer has given report on 21.7.2017 itself (which incidently happened to be the date of judgement passed by this Tribunal) giving valuation (as at page 158) of Rs/1322.60. The respondents appear to have offered @ ₹ 1440/- per share. When we peruse the order dated 21.7.2017 passed by this Tribunal, there is nothing that on offer being made by Respondents, petitioner would be entitled to claim that his objections should be heard on the valuation and only then he would take a call whether or not he wants to purchase at the value made/offered by the respondents. The claim that the appellant wants to see the accounts so as to decide whether or not to buy or be bought out, such options were not left open by the order passed by this Tribunal on 21.7.2017. The appellant has not challenged the order dated 21.7.2017 in Supreme Court. Thus that order is final for the purposes mentioned. Restoration as Director in time - HELD THAT - The impugned order shows that the NCLT looked into the claim made by the respondents that in August 2017 they had decided in the Board Meeting to restore the appellant and ROC in court pointed out difficulties regarding filing on the portal of the MCA. This is in para 18 of impugned order. In any case the NCLT has recorded in para 15 of the impugned order that the claim of the appellant regarding non restoration is already filed before the High Court by way of COCP . It is seen that petitioner raised this and other grievances in NCLT only when Respondents sought to buy his shares. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Compliance with NCLT and NCLAT orders.
2. Valuation of shares and the right to raise objections.
3. Restoration of the appellant as Director.
4. Drawing of remuneration by the respondents.
5. Implementation of acquisition value per share and purchase rights.

Detailed Analysis:

1. Compliance with NCLT and NCLAT Orders:
The parties are in the second round of litigation. Initially, the NCLT disposed of the Company Petition on 19.1.2017. The matter was appealed to the NCLAT, which modified the order on 21.7.2017, allowing the contesting parties to buy out each other. The Original Respondents Nos. 2 and 3 filed applications claiming compliance with the Tribunal's orders and sought permission to tender an amount for acquiring the shares of the original petitioners.

2. Valuation of Shares and the Right to Raise Objections:
The appellant argued that the first NCLT order required a valuer to report, to which the original petitioners were entitled to raise objections. The appellant claimed he was not given this opportunity and wanted access to the accounts to verify the valuation. The NCLAT order dated 21.7.2017 directed the respondents to restore the appellant as Director, which was not done timely, affecting his ability to check the accounts. The NCLT had appointed an independent valuer to determine the fair value of the shares as of 31.03.2015. The valuer was to supply a copy of the report to the parties, allowing them to file objections within two weeks.

3. Restoration of the Appellant as Director:
The appellant contended he was not restored as Director in time, which was only done on 31.8.2018. The respondents argued that the decision to restore the appellant was taken in August 2017, but formalities of filing online forms could not be completed on the MCA portal. The NCLT noted that the ROC pointed out difficulties in online filing and permitted physical filing. The NCLT found that the claim regarding non-restoration was already filed before the High Court by way of "COCP."

4. Drawing of Remuneration by the Respondents:
The appellant argued that despite the NCLT's direction, the respondents continued to draw remuneration and lease the factory land. The NCLT's order dated 19.1.2017 directed that respondents shall not draw remuneration until the exit is provided to the petitioner, and the amount of remuneration shall form part of the Company's income to be distributed among shareholders.

5. Implementation of Acquisition Value per Share and Purchase Rights:
The NCLAT's judgment on 21.7.2017 directed the respondents to quote the acquisition value per share within one month, giving the appellant the right to purchase the shareholding of R2 and R3 at a 10% discount. The respondents complied by quoting the acquisition value per share at ?1440/- and offered to purchase the appellant's shares at this rate. The NCLT found that the respondents made compliance within the stipulated period, and the appellant's objections regarding the valuation report could not be sustained. The NCLAT noted that the appellant did not challenge the order dated 21.7.2017 in the Supreme Court, making it final.

Conclusion:
The NCLAT dismissed the appeal, stating that no grounds were made out for interference. The appellant's claims regarding the valuation process and restoration as Director were addressed, and the respondents' compliance with the orders was upheld. The appeal was dismissed with no order as to costs.