2022 (1) TMI 1137 - AT - Insolvency and Bankruptcy

Approval of fair value of Equity share - applicability of Jantri rate - allegation of unrealistic valuation report - buy back of shares - amicable settlement between the parties - Section 421 of the Companies Act, 2013 - HELD THAT - It is an admitted fact that the MoU was never implemented as seen in para 53 of the final Order dated 13.04.2017. The Impugned Order dated 16.10.2020 has only given an opportunity to the Appellant to sell, have option, quote a face value. As the Order dated 27.09.2019 has attained finality and the Original Order which was appealed to by the Appellant, was dismissed by this Tribunal, we are of the considered view that the contention of the Learned Counsel for the Appellant that the NCLT was traversing behind the decree, is untenable. It is clear from the submissions that the Appellant was ready to accept the Order given by the first Respondent and a direction was issued to both the parties to file a Joint Affidavit indicating the terms of which they seek to settle the matter jointly. As no settlement was arrived at, despite the fact that the first Respondent wanted to put an end to the dispute, being a Senior Citizen filed an Affidavit that he was ready to sell the share at an average value of the shares as per the Order dated 27.09.2019 and ready to purchase the shares at 5% higher value than the average value of shares as per the Order dated 27.09.2019. Despite an opportunity given to the Appellant to submit their offer in a sealed cover before NCLT, the Appellants refused to do so. Dissatisfied with that direction, they had approached this Tribunal and further delayed the proceedings on the ground that settlement talks were going on . Taking into consideration the factual matrix of the matter and that 3 years has lapsed, since the Impugned Order was passed,5 years has passed since the main petition dated 13.04.2017 has attained finality, to avoid any further delay, to put an end to this family dispute, and further having regard to the fact that the Appellant has challenged a reasonable, fair and a judicious Order passed by NCLT; in the interest of justice, we do not find it a fit case to remand the matter back to NCLT for any further evaluation - Mean Value as specified in the Order dated 27.09.2019 means average value and the Respondent is ready to sell the shares at this average value or purchase the shares @5% higher than the average value. The Appellant is bound by the NCLT Order dated 27.09.2019 which has since attained finality. The Appellant is at liberty to choose either of the options of purchase/sell given by the first Respondent and shall file an Affidavit of compliance before the NCLT within 4 weeks from today. Appeal disposed off.

Summary

Issues Involved:
1. Determination of fair value of equity shares.
2. Compliance with previous orders and execution of the sale/purchase of shares.
3. Appellant's locus standi and procedural objections.
4. Finality of previous orders and their implications.

Issue-Wise Detailed Analysis:

1. Determination of Fair Value of Equity Shares:
The core issue revolved around the determination of the fair value of equity shares of the Respondent No. 1 company. The NCLT had earlier appointed an Independent Valuer, M/s. Alpa Bhavesh Shah & Co., who determined the value at ?426.38 per share based on the Jantri rate. The first Respondent objected, claiming the Jantri rate undervalued the shares and proposed a higher valuation of ?1900 per share. The NCLT considered multiple valuation reports, including those from government-approved valuers appointed by both parties. Eventually, the NCLT directed both parties to submit their offer prices in sealed covers, allowing the higher offeror to purchase the shares.

2. Compliance with Previous Orders and Execution of the Sale/Purchase of Shares:
The NCLT's order dated 13.04.2017 directed the parties to mutually agree on the share value or appoint an independent valuer if no agreement was reached. The order dated 27.09.2019, which was not challenged and thus attained finality, mandated that the Appellant either purchase the shares at the mean value or sell their shares to the first Respondent. The NCLT's subsequent order on 16.10.2020 reiterated this directive, emphasizing the need to execute the prior orders and avoid further delays.

3. Appellant's Locus Standi and Procedural Objections:
The first Respondent argued that the Appellant lacked the locus standi to file the appeal, as it was filed by a company without proper authorization from a Board Meeting. The first Respondent also highlighted that the appeal was essentially against the order dated 27.09.2019, which had already been dismissed by the Tribunal. The Tribunal found these objections significant but ultimately focused on the substantive compliance with the previous orders.

4. Finality of Previous Orders and Their Implications:
The Tribunal underscored that the order dated 27.09.2019 had attained finality and was binding on the parties. The Appellant's appeal against the main petition order dated 13.04.2017 had been dismissed, and thus, the Appellant was bound by the NCLT's directives. The Tribunal emphasized that the Appellant's refusal to comply and subsequent appeal were delaying tactics. The Tribunal directed the Appellant to comply with the order by either purchasing the shares at the mean value or selling them to the first Respondent at 5% above the mean value, as stipulated in the final order.

Conclusion:
The Tribunal concluded that the Appellant must comply with the NCLT's final order, either purchasing or selling the shares as per the agreed terms. The Tribunal dismissed the appeal, directing the Appellant to file an affidavit of compliance within four weeks, thus aiming to resolve the prolonged family dispute and execute the sale/purchase of shares as previously ordered.