9911796707
TMI Blog1995 (7) TMI 284X X X X Extracts X X X X X X X X Extracts X X X X ..... al was finally heard. A short question centering round clause 21(3)( a ) of the consent terms filed by parties in Company Appeal 2/94 before the learned Company Judge, Bombay High Court falls for determination. The said clause reads as under: "... the valuation per share made by the expert shall be deemed to be the valuation per share made under the consent order (including the consent terms) dated 5-3-1993 passed by the CLB." 3. A few facts leading to this appeal may be noted at the outset. Respondent No. 1, Patel Engineering Company Limited, is a public limited company registered and incorporated under the Companies Act. The shares of the company are closely held between two groups who are contesting parties before us. Appellants nos. 1 to 5 represent one group and Respondents nos. 2 to 8 represent the other one. We shall refer to the respondents' group as Pravin Patel group and the appellants' group as K.Y. Patel group for the sake of convenience. K.Y. Patel group filed Petition No. 28/91 in October 1991 before the Company Law Board under the provisions of sections 397 and 398 of the Companies Act, 1956. They contended that the affairs of the company were conducted in a m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Board his decision as to the valuation per share and forward copies thereof to the company as also to M/s. Mulla Mulla Craigie Blunt Caroe, Advocates for the K.Y. Patel group and M/s. Bachubhai Munim Co., Advocates for the Pravin Patel group. As per clause 23 it was agreed that on the company making full payment with interest for the said shares the said shares shall be delivered by the Company Law Board to the company and shall stand cancelled. Thus on the payment being made by the company as per clause 21 K.Y. Patel group, that is the appellants' group had to walk out of the company. However, there was a default clause provided by clause 28( a ) in the consent terms which reads as under: "In the event of the company failing to make payment of the full purchase price, or of any two of the instalments of price on the dates fixed by clause 21 above, the company shall lose its rights to purchase the shares of the K.Y. Patel group and the petitioners shall automatically be entitled to purchase the shares of the Pravin Patel group ( i.e. , shares listed in part I of Schedule II and such shares listed in Part II of Schedule II in respect of which written confirmations and u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2/94 under section 10(F) of the Companies Act against the order of the Company Law Board. The appeal was admitted by the learned Company Judge of the High Court and interim orders were made protecting the interests of both parties. The amount of Rs. 1,77,92,128 tendered by the company was permitted to be invested. At the time of final hearing of the appeal the contesting parties came to further consent terms pursuant to which a consent order was made whereunder Shri N.V. Iyer of C.C. Chokshi Co. was appointed as an expert to examine whether the valuation made by Shri M. Vatsaraj on 30-9-1993 was proper and correct. The order provided that if Shri Iyer came to the conclusion that Shri Vatsaraj's valuation was not proper and correct, then he should himself make the valuation. The expert was requested to decide before 13th June, 1994. As noted earlier clause 21(3)( a ) of these consent terms provided that valuation per share made by the expert that is Shri Iyer shall be deemed to be the valuation per share made under the consent order dated 5-3-1993 passed by the Company Law Board. 7. On 21st October, 1994 Shri Iyer held that Shri Vatsaraj's valuation was not proper and correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been arrived at on 30-9-1993 itself. Conse-quently, 15 per cent interest on the purchase price as per valuation of shares will have to be interest from 30-9-1993 and not from the date on which Shri Iyer gave his valuation report on 29-10-1994. If that is so, the respondents' company was in default in not paying interest on the additional amount to the tune of Rs. 66 lakhs. As a sequel to the aforesaid submission Shri Nariman further contended that once that happened the default clause 28( a ) of the consent terms got attracted and therefore automatically the appellants got a right to purchase the shares of the respondents' group and that the High Court had patently erred in holding that the interest on the additional amount was payable only from the date of Shri Iyer's valuation dated 29-10-1994. Refuting these submissions Shri Soli Sorabjee, the learned counsel for the respondents contended that clause 21(3)( a ) of the consent order of 29-4-1994 provided that the valuation of the shares as made by Shri Iyer will be deemed to be the valuation per share made under the earlier consent terms. But it had nothing to do with the interest amount payable on the valuation of the share pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t clause, there is no provision made for any adverse consequence flowing from the alleged non-payment of full amount of interest and that the default clause would operate only if the company fails to make payment of full purchase price or any of the two instalments as fixed by the Company Law Board under clause 21 of the consent terms of February, 1993. 9. Having given our anxious consideration to rival contentions we find that there is substance in what Shri Nariman submits to the effect that clause 21(3)( a ) of the consent terms dated 24-4-1994 will have to be read in conjunction with clause 21 of the consent terms of February, 1993. Therefore, the valuation of shares at Rs. 450 per share as made by Shri Iyer will have to be treated to have been made under the consent order dated 5-3-1993 passed by Company Law Board. As the other clauses of the consent terms have remained untouched, it may prima facie be felt that 15 per cent interest would become payable on the valuation per share as made by Shri Iyer on 21-10-1994 right from 30-9-1993, the date on which Shri Vatsaraj made lower valuation and which got superseded and substituted by the later valuation of Shri Iyer. Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the report of the valuation they filed Company Application 411/94 for clarification. It was that application which was rejected by the learned Single Judge and which resulted into the appeal from which the present proceedings arise. It cannot be therefore said that the respondent company had deliberately and knowingly defaulted in payment of interest which attracted default clause 28( a ) of the consent terms. The second contention canvassed by Shri Nariman therefore stands rejected. 11 . In the result this appeal is disposed of subject to the direction to the respondents as agreed to by them that they will pay to the appellants an additional amount of Rs. 66 lakhs in the manner provided by the consent terms of February, 1993 and as laid down by the consent order dated 5-3-1993, within a period of eight weeks from today. The amount of Rs. 11 lakhs already deposited by the respondent will also enure for the benefit of the appellants. On payment of this additional amount of Rs. 66 lakhs the directions contained in the judgment under appeal shall become operative and shall be carried out by all concerned. There will be no order as to costs. - - TaxTMI - TMITax - Corporate Law ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
