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2023 (4) TMI 1141 - AT - Companies LawOppression and Mismanagement - Order for the Exercise of Valuation - infringement of Rights and Liabilities of the Appellant or not - relevance on the Issue of Valuation, between the Parties - It is the version of the Appellant, that the 1st Respondent, had entered into unilateral discussions, with the Valuer, without the Appellant s knowledge. HELD THAT - It transpires that the Appellant/Petitioner Company/2nd Respondent company, had preferred an IA No. 1169 of 2020 in CP No.285/241/HDB/2020 (under Rule 11 of NCLT Rules, 2016) against the 1st Respondent / Petitioner (in CP No.285/241/HDB/2020), mentioning that the 1st Respondent / Petitioner, had filed main Company Petition and that he has 10% of Shareholding, in the 2nd Respondent/Company (M/s Hyde Engineering and Consulting India Pvt Limited, Telangana and one of the reliefs, is for Valuation of Shares, of the 2nd Respondent company / 1st Respondent company - In fact, being a Majority Shareholder, the Applicant company/2nd Respondent company, intends to buy the Shares of the 1st Respondent / Petitioner (in Main Petition), who is having 10% of the total Shareholding in the 2nd Respondent company / 1st Respondent company. The 1st Respondent, had in para 6 of the counter to IA No.1169 of 2020 in CP No.285/241/HDB/2020, had proceeded to significantly point out that, he would be glad to settle the matter amicably if he is paid his rightful valuation for his 10% Shareholding in the Respondent No.2 / Respondent No.1 Company, along with accrued interest and legal costs incurred by him. - The First Respondent / Petitioner, had pointed out that the Application under Rule 11 of NCLT Rules, 2016, may be admitted by the Tribunal, and appoint a Registered Valuer, to fix a Fair Value, for the Equity Shares of the 1st Respondent / Petitioner, based on the audited financial 1st Respondent / Company for the fiscal year financial year 2017-18. Besides the above, the 1st Respondent / Petitioner, had stated in its Reply, that the Tribunal, may grant the prayer of Applicant Company / 2nd Respondent, to buy out the Equity Shareholding of the 1st Respondent / Petitioner at a fair and proper value of the company, in respect of the Financial year 2017-18, along with the accrued interest and legal costs, incurred by the 1st Respondent / Petitioner and on payment of the same, within a time bound manner - In the instant case, this Tribunal, pertinently points out in the Counter Affidavit filed by the 1st Respondent / Petitioner (vide page 65 in Diary No.791 dt. 23.8.2022 in CA (AT) CH No.76 of 2022) to IA No.1169 of 2020 in main CP No.285/241/HDB/2020, wherein at paragraph 6, the 1 st Respondent / Petitioner, had stated that, he would be glad to settle the matter amicably, if he is paid his rightful valuation for his 10% Shareholding in the Respondent No.2 / Respondent No.1 Company along with the accrued interest and legal costs, incurred by him. It is an axiomatic Principle in Law that, an Admission is the best piece of evidence, against the Maker and it conclusively binds the Party. Looking at from that perspective, the averments of the 1st Respondent / Petitioner at paragraph 6 and 8 of the Counter to the IA No. 1169 of 2020 in main CP No.285/241/HDB/2020, are tacit Admissions and that the 1st Respondent/Petitioner, is bound by the same in true Letter and Spirit, without any deviation, whatsoever, as opined by this Tribunal. Coming to the plea taken on behalf of the Appellant in the Memorandum of the instant Appeal, to the effect, that there was No such Consent, between the Parties, regarding the Appointment of the Valuer, and further, there was no occasion or basis or material to allow, the prayer for Appointment of an Valuer, and the same was done only in the garb of allowing the Appellant s IA 1169 of 2020 in main CP No.285/241/HDB/2020, this Tribunal, keeping in mind of the Hon ble Supreme Court decision in Central Bank of India v. Vrajlal Kapurchand Gandhi and Anr. 2003 (7) TMI 708 - SUPREME COURT , is of the earnest opinion that, it is for the Appellant, to take necessary steps, in contradicting the Statements of Fact, during the hearing recorded in the impugned order of the Tribunal, (which are conclusive of facts so mentioned / recorded, as a matter of judicial record), stating that the order was not correctly reflecting the happenings, before the Tribunal. On a careful consideration of divergent contentions advanced on either side, on going through the Impugned Order, dt.29.7.2022 in IA 1169 of 2020 in main CP. No.285/241/HDB/2020, on the file of NCLT, Hyderabad, Bench - I, and also taking into account the surrounding facts and circumstances of the present case in a holistic manner, without any simmering doubt, comes to a resultant conclusion that the Order, assailed by the Appellant, does not in any manner affect his Rights and Liabilities, and in any event, no prejudice is caused to him, by the issuance of direction, by the Tribunal, to the Valuer, to submit a Valuation Report, to be considered after submission of a Report, by the Valuer, of course by the NCLT, Hyderabad, Bench - I. This Tribunal , pertinently points out, that the Impugned Order of the NCLT, Hyderabad, Bench I, dt. 29.07.2022 in IA 1169 of 2020 in main CP. No.285/241/HDB/2020, does not in any way infringe the Rights and Liabilities of the Appellant and hence, the instant Company Appeal is not per se maintainable. Viewed, in that perspective, the instant Appeal, sans merits and it fails. Appeal dismissed.
Issues Involved:
1. Validity of the order for the appointment of a registered valuer. 2. Relevance of oppression and mismanagement findings for valuation orders. 3. Alleged consent and procedural fairness in the appointment of the valuer. 4. Impact of the impugned order on the rights and liabilities of the appellant. Summary: 1. Validity of the Order for the Appointment of a Registered Valuer: The Appellant challenged the impugned order dated 29.07.2022 by the National Company Law Tribunal (NCLT), Hyderabad Bench-I, which appointed Mr. Mallikarjuna Setty Nethi as the valuer for the valuation of shares of the 2nd Respondent Company. The Tribunal directed the valuer to submit the report within one month, with the fee to be borne equally by both parties. The Appellant contended that the Tribunal could not order valuation without a finding of oppression and mismanagement under Section 241 of the Companies Act, 2013. 2. Relevance of Oppression and Mismanagement Findings for Valuation Orders: The Appellant argued that an order for valuation could only be made if the Tribunal found the Appellant's conduct to be oppressive under Section 241. They also contended that the impugned order was premature, as it determined matters pertaining to final relief without addressing disputed questions of fact and entitlement. 3. Alleged Consent and Procedural Fairness in the Appointment of the Valuer: The Appellant maintained that the impugned order erroneously presumed their consent and lacked reasoning for the appointment of the valuer, rendering it an unreasoned order. They highlighted that the Articles of Association stipulated that valuation must be conducted by the company's auditors, M/s. Italia and Associates, and not an external valuer. The Appellant also pointed out procedural irregularities, such as the 1st Respondent's unilateral discussions with the valuer without their knowledge and the payment of the valuer's fee by the 1st Respondent. 4. Impact of the Impugned Order on the Rights and Liabilities of the Appellant: The Tribunal noted that the impugned order did not affect the rights and liabilities of the Appellant and that no prejudice was caused by the direction to the valuer. The Tribunal emphasized that valuation is an approximation based on an expert's judgment and that it would not interfere with the expert's views unless there was manifest unreasonableness or fraud. The Tribunal concluded that the impugned order was not appealable as it was an administrative order that did not affect the rights or liabilities of the parties. Disposition: The Tribunal dismissed the Company Appeal (AT) (CH) No. 76 of 2022, along with the connected pending applications IA No.722 of 2022, IA No.723 of 2022, and IA No.752 of 2022, with no costs.
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