2015 (3) TMI 688 - HC - Companies Law

Valuation of shares - Valuation by independent valuer - Binding nature of valuation - Held that - This apprehension of the respondents is misconceived. When the Company Law Board says it is binding on both the parties then it is binding on them, if they do not challenge the said finding. If they are aggrieved, they are at liberty to challenge it. Nowhere in the order it is said that the respondents have to purchase or sell at the rate to be fixed by the valuer. The Court has made it clear that it will proceed with the matter if the valuation made by the valuer is agreeable by both the parties. -Appeal dismissed.

Summary

Issues:
1. Dispute over valuation of shares before the Company Law Board.
2. Concerns regarding the binding nature of the valuation on both parties.
3. Applicability of the valuation determined by the independent valuer.

Analysis:

1. The judgment involves a dispute before the Company Law Board regarding the valuation of shares. The respondents sought to set aside an order suggesting an amicable settlement. The respondents offered Rs. 92 per share, while the petitioners counter-offered Rs. 245 per share. Due to the disagreement on valuation, an independent valuer was appointed to determine the fair value of the shares.

2. One of the key issues raised was the concern of the respondents regarding the binding nature of the valuation on both parties. The respondents feared that once the valuation was submitted, it would be final and binding on them, potentially causing harm to their interests. However, the Court clarified that the valuation would only be binding if not challenged by either party. The order did not mandate the respondents to sell at the determined rate, emphasizing that both parties had the liberty to challenge the valuation if aggrieved.

3. The judgment emphasized that the valuation determined by the independent valuer would be final and binding only if both parties agreed to it. The Court made it clear that it would proceed with the matter based on the valuation only if both parties found it acceptable. Therefore, the Court dismissed the appeal as premature, stating that there were no grounds to interfere at that stage to decide the rights of the parties, highlighting the importance of mutual agreement on the valuation for it to be binding.

Overall, the judgment underscores the significance of mutual agreement on the valuation of shares determined by an independent valuer and clarifies the rights and obligations of both parties in challenging the valuation if necessary.