9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (5) TMI 606 - AT - Companies LawOppression and mismanagement - transfer of entire shareholding to the original Respondents or their nominees as per the Valuation Report dated 20.07.2012 - fair value of shares - HELD THAT - It is clear that the learned NCLT was not articulate when it directed the Petitioners to sell their entire shareholding held in the Respondent No.1 Company to the Respondents . It was necessary for NCLT to clearly identify the Respondents as Respondent No.1 was a Company and the other Respondents were shareholders. Rights and Procedure for Company to buy back its shares and Rights and Procedure for sale of shares inter-se shareholders are different. The Impugned Order nowhere even slightly or in the passing indicates that the learned NCLT had in its mind to order buy back of shares by the Company. Learned Counsel for both the sides tell us that in a case of oppression and mismanagement, NCLT has a right to even direct buy back of shares without the powers being circumscribed to rely on decisions of the Company in that regard. There is no doubt that in the facts of a given matter when case of oppression and mismanagement is there and NCLT finds it just, it can direct Company also to buy back shares. It has the authority to do so. But then that should be stated. There is not a word even remotely stated in the Impugned Order that NCLT found it appropriate that it should direct the Company to buy back its shares. It is settled law when a matter is before NCLT or before this Appellate Tribunal, arising under Sections 241 and 242 of the new Act, read with Rule 11, irrespective of what the parties plead, say or do, the paramount consideration of the Tribunal is to keep in view as to what is in the interest of the Company. The interest of parties is subservient to interest of Company. It is necessary for the Tribunal to first consider interest of the Company. The health of the Company reflects on the health of economy and that is what matters - CLB had found that the parties do not see eye to eye and found it appropriate to get valuation done so that original Petitioners could go out of the Company. As such, they should be able to leave but with fair value and fair interest. The Petitioners are directed to sell their entire share holding held by them in Respondent No.1 Company as on the date of filing the Petition to the Respondents 2 to 9 either jointly or severally at the fair price of ₹ 10.35 per share as arrived at by the independent valuer upon consent appointed by CLB - appeal disposed off.
Issues Involved:
1. Validity of the Valuation Report. 2. Objections to the Valuation Report. 3. Grant of Interest on the Share Value. 4. Authority of NCLT to Modify Consent Orders. 5. Applicability of Section 634-A of the Companies Act, 1956. 6. Rights of Shareholders vs. Company in Share Buyback. 7. Procedural Fairness and Equity in Tribunal Orders. Detailed Analysis: 1. Validity of the Valuation Report: The National Company Law Tribunal (NCLT) had appointed an independent valuer to determine the fair value of the shares of the company as of March 14, 2007. The valuation report dated July 20, 2012, was submitted, valuing the shares at ?10.35 each. The NCLT rejected the objections raised by the original Petitioners to the Valuation Report and directed them to sell their shares at this fair price. 2. Objections to the Valuation Report: The original Petitioners raised objections to the Valuation Report, claiming undervaluation of the company's immovable properties and insufficient opportunity to present their case. The NCLT considered these objections but found no fault with the valuation done by the independent valuer. The objections were deemed bona fide but ultimately not persuasive enough to alter the valuation. 3. Grant of Interest on the Share Value: The NCLT awarded interest at 9% per annum (simple interest) on the share value from April 1, 2007, until the actual date of payment. The NCLT justified this by stating that the company had utilized the Petitioners' funds during this period. The Appellate Tribunal, while upholding the grant of interest, reduced the rate to 6% per annum to balance the equities between the parties. 4. Authority of NCLT to Modify Consent Orders: The Appellant argued that the NCLT acted as an executing court and could not vary the consent order dated April 1, 2011. However, the Tribunal found that the order was not a final decree but an interlocutory order requiring further application of mind by the NCLT. The NCLT had the authority to accept or reject the Valuation Report and make necessary modifications in the interest of justice. 5. Applicability of Section 634-A of the Companies Act, 1956: The Appellant contended that under Section 634-A, the NCLT could not go beyond the consent order. The Tribunal noted that the corresponding provision in the new Companies Act, 2013, does not exist, and even under the old Act, the NCLT had the authority to ensure fair and equitable outcomes, which included the power to grant interest. 6. Rights of Shareholders vs. Company in Share Buyback: The NCLT's order directed the Petitioners to sell their shares to the Respondents, which included the company and other shareholders. The Appellate Tribunal clarified that the order should specifically direct the sale of shares to the Respondents 2 to 9 (shareholders) and not the company, as the procedural requirements and rights differ significantly. 7. Procedural Fairness and Equity in Tribunal Orders: The Tribunal emphasized the need for procedural fairness and equity. It was noted that the original Petitioners had bona fide objections and were not merely delaying the proceedings. The NCLT's decision to grant interest was within its equitable jurisdiction, ensuring that the Petitioners were compensated for the delay in receiving their dues. Final Order: - The Petitioners are directed to sell their entire shareholding to Respondents 2 to 9 at ?10.35 per share. - The Respondents 2 to 9 shall pay the Petitioners the share value along with 6% per annum simple interest from April 1, 2007, until the payment date. - The compliances shall be made before the Bench Officer of the Tribunal within two months. - The appeal is disposed of with no order as to costs.
|
