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TMI Blog2015 (10) TMI 2657X X X X Extracts X X X X X X X X Extracts X X X X ..... per. The direction given by the Board to Nafan and Lesaffre to transfer their shareholding to Muthu Group is not sustainable and has to be set aside. Nafan is entitled to a buyout as prayed for in its petition. However, it will be in the interest of SAF yeast that the litigation ends and if Muthu group agrees to withdraw the suit and undertake not file further proceedings based on the MOU then the dispute can be put an end to by holding a forward competitive bid. If Muthu Group is not agreeable then buyout in favour of Nafan will follow. For overseeing the two options, as suggested by the Board, Justice J.N.Patel is appointed as an Administrator. M/S Ernst and Young is appointed as Chartered Accountants to carry out the valuation. A regards the modalities for holding the auction and the buy out, the modalities suggested by Nafan are proper and can be adopted. ORDER A. The declaration by the Board that the MOU dated 23 January 2009 is valid, effective and enforceable document and the terms thereof are binding upon the Petitioner and Lesaffre Group, is quashed and set aside in light of what is observed above. B. The declaration by the Board that the Valuation Report prepared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assed by the Company Law Board, Mumbai Bench, Mumbai, on 28 March 2013, in Company Petition No.62 of 2009 filed by M/s. Nafan B.V. The Company Law Board, by the impugned order, has directed Nafan B.V. and Lasaffre Et Cie, to transfer 80722 shares i.e. 51% of shareholding to the respondents in that petition, referred to as Muthu Group. 2. Company Appeal No.21 of 2015 (Company Appeal (L) No. 30 of 2013) is filed by M/s.Nafan B.V.; Company Appeal No.22 of 2015 (Company Appeal (L) No. 33 of 2013) is filed by M/s. Sharp and Tannan, Chartered Accountants; Company Appeal No.23 of 2015 (Company Appeal (L) No. 34 of 2013) is filed by Mr.Arunachalam Muthu Ors.; Company Appeal No.24 of 2015 (Company Appeal (L) No. 35 of 2013) is filed by M/s. Lesaffre Et CIE. Company Application No.11 of 2015 (Company Application (L) No. 37 of 2013) is taken out in Company Appeal No.21 of 2015 and Company Application No.12 of 2015 (Company Application (L) No. 43 of 2013) is taken out in Company Appeal No.23 of 2015. All these appeals and applications were filed in the year 2013; however, regular numbers were given in the year 2015. INTRODUCTION 3. The dispute pertains to the control and management ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oris Lesaffre, Mr.Alain Laloum, and Ms. Corinne Wisniewski. Mr.Arunachalam Muthu (referred to as Muthu) worked for Shaw Wallace Co. from 1965 to 1980. He was working as a Senior Manager in yeast and brewery division in Shaw Wallace Co. He was involved in setting up a yeast factory and a plant at Uran, Maharashtra. A.M. Arunachalam is the son of Muthu. A.M. Muthiah is the second son of Muthu. M/s. Helios Food Additives Pvt. Ltd. is owned and controlled by Muthu and his family members. Arunachalam Muthu, when referred to individually, is referred as Muthu. When Arunachalam Muthu, his two sons and Helios Food Additives Pvt. Ltd. are referred together, they are referred as the Muthu Group. M/s. Sharp Tannan are Chartered Accountants, having its office at Ravindra Annexe, 194, Churchgate Reclamation, Dinshaw Vaccha Road, Mumbai - 400 020. M/s. Sharp Tannan are the statutory auditors of SAF Yeast. FACTS Pleadings 6. Muthu group has made a grievance that Nafan did not disclose various facts and they were brought on record by subsequent affidavits and rejoinder. Hence, the facts are narrated as per the pleadings placed on record by way of petitions, reply, rejoinder, addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' notice was required under Article 7.10(b) for every meeting of Board of Directors to be given in writing to every Director in India or outside India. Under Article 13, it was a duty of Muthu to ensure that all relevant documents were open to inspection for Lesaffre. (ii) The Government of India in an around January/February 1992 brought a change in policy. With the approval of Government of India, on 17 January 1992, the shareholding of Lesaffre was increased to 51% and subsequently around the year 2000 Nafan B.V. became owner of 51% shares and relevant entries were carried out in Members Register. Nafan was the owner of the shares as an assignee of Lesaffre. (iii) SAF Yeast was functioning smoothly, with substantial technological and financial assistance from Lesaffre however, Muthu Group started acting oppressively to take over the powers of the Board of Directors and fraudulently and illegally usurp Nafans shareholding. Pursuant to a transaction, sometime in the year 1997, involving SAF Yeast and Credit Agricole Indosuez (Calyon Bank) and another Company NCS Estate Pvt. Ltd., the Calyon Bank filed cases against SAF Yeast and SAF Yeast also filed criminal case No.238 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of Calyon Bank, clearly trying to make out a case against Nafan. Nafan never attempted to order Muthu in this regard and acted only to ensure that the decisions were taken in the best interest of SAF Yeast. Muthu purportedly held a Board meeting on 26 July 2005, without any notice to the nominee Directors of Nafan where he sought to approve his own version of minutes of meeting of 14 April 2005. When requests were made to make the copies of minutes available, Muthu refused and did not provide the same. A request made for holding an annual general meeting for the year ending 31 March 2005, but was not heeded to, and when Nafan carried out inspection of documents, it found that the meeting was purportedly held on 23 November 2005. No notice was given to Nafan. (vii) Nafan was instrumental in SAF Yeast's initial survival. It became a success due to Nafan and Lesaffres financial and technical contribution. In spite of benefiting from this substantial financial and technological assistance, Muthu attempted to discredit Nafan, as a part of a design to take control of SAF Yeast. Muthu indulged in various acts of oppression and mismanagement against Nafan in relation to SAF Yeas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be held on 23 May 2006 at Paris, as Lucian Lesaffre's health did not permit him to travel to India. It was for appointment of alternate directors and company secretary. On 10 May 2006, Muthu informed that he was unable to attend due to his father's ill health and the atmosphere was not conducive because of the disputes. On 11 May 2006, Alain Laloum informed Muthu and other Directors to attend by telephonic conference. By letter dated 17 May 2006, Muthu threatened that the action of Nafan was a criminal contempt, as it was an interference with judicial proceedings. By letter dated 22 May 2006, Alain Laloum made it clear that the meeting was only for alternate Directors and Company Secretary and it had nothing to do with the dispute with Calyon Bank. In spite of the same, SAF Yeast, upon instructions of Muthu, filed a criminal contempt petition against the nominee Directors of Nafan. The petition was filed by one employee of SAF Yeast and not by Muthu. There was no order of restraint by any Court and the meeting of the Board of Directors was held as scheduled on 23 May 2006 at Paris. Four nominee Directors of Nafan attended the meeting and unanimous resolution was passed fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng on 29 May 2009 at Paris, alleged meeting of Board of Directors was shown to be held in Mumbai on 25 May 2009, without notice. It was alleged that the deposit was made with SAF Yeast for alleged value of shares in accordance with Article 18 of Articles of Association and Nafans name was struck off from the Members Register and the name of someone from Muthu Group was entered. Each share was valued at ₹ 4315/-. Such valuation was fraudulent and ridiculously low and the true and fair valuation would be at least 18 million to 20 million Euros. The valuation was clearly fraudulent and arrived at in collusion by Muthu with Sharp Tannan. Nafan was willing to straightway pay double of the alleged fair value of ₹ 4,315/-. (xv) The deletion of Nafans name from members register was fraudulent and void ab initio and the alleged M.O.U. had no sanctity. Muthu Group could not unilaterally take law into its own hands. Muthu Group committed fraud, mismanagement, and oppression by deleting the name of Nafan from the statutory records. (xvi) The Board meeting dated 29 May 2009 as scheduled was held at Paris. Denis Lesaffre and Ms. Corinne Wisniewski were appointed as Additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnished a copy of the MOU dated 29 January 2009 to the statutory auditors. It was recorded in the memorandum that Muthu Group would buy shareholding in Nafan and SAF Yeast and fair valuation is to be done by the auditors. Since Sharp Tannan were the statutory auditors, after request was made to carry out the valuation, Sharp Tannan issued certificate of valuation on 9 February 2009. Since there was an urgency, the valuation report was prepared expeditiously. It was forwarded to Laloum under cover of its letter dated 10 February 2009. 10. In response to the query raised by Foreign Exchange Department of Reserve Bank of India, Sharp Tannan confirmed that it had followed Controller of Capital Issues ( CCI) guidelines for valuation of equity shares of the Company. It is incorrect to state that the valuation is a scrap of paper, without sanctity and validity. It is denied that the valuation is fraudulent or ridiculously low or there has been any collusion. It is denied that the valuation was carried out to cause wrongful loss to Nafan and give advantage to the Muthu Group. 11. Sharp Tannan has nothing to do with the dispute, as it was never a party to any decision for del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spite of this position, the decisions were accepted. This was because Articles of Association clearly stipulated that for Board meeting held in India, there is no requirement to give notice to the Directors based outside India. (iv) The valuation of equity shares of SAF Yeast was carried out by M/s. Sharp Tannan in January 1992 and fair valuation as on 31 March 1991 was ₹ 237 per share. The shareholding of Lesaffre was increased to 51% around 1992-93 pursuant to further issue of the capital by SAF Yeast. Consequently, shareholding in SAF Yeast underwent a change and share of Muthu Group was reduced to 49%. A financial and technical collaboration agreement was executed on 19 March 1993 in furtherance of the agreement dated 19 October 1981. This agreement dealt with dividend by SAF Yeast to Lesaffre Group. The Government of India through Ministry of Industries approved increase of the shareholding of Lesaffre in SAF Yeast from 40% to 50% and certain conditions regarding foreign exchange dividend payment were laid down. Sometime in the year 1996, Lesaffre requested SAF Yeast to obtain molasses from one Ganesh Benzoplast for exporting it to Lesaffre Group. Certain dispute ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isappropriation. Chief Judicial Magistrate, Hardoi (UP) issued process and F.I.R. was also registered pursuant to orders of the Magistrate and after investigation, the police filed a charge sheet against the officials of Calyon Bank and the Chief Judicial magistrate took cognizance thereof. (ix) The appeal came up for hearing before the Debt Recovery Appellate Tribunal on 14 July 2003. The appeal was filed against the interim order passed by the D.R.T. in the application filed by the Calyon Bank against SAF Yeast. The Debt Recovery Appellate Tribunal passed strictures regarding the conduct of Calyon Bank, terming it as blameworthy. Thereafter the Debt Recovery Tribunal, on 1 April 2004 decided the proceeding against the Calyon Bank. (x) On 14 April 2005, a meeting of the nominee Directors of Nafan and Muthu was held to discuss the dispute between Calyon Bank and SAF Yeast. Thereafter, in the Board meeting held on 26 July 2005, the minutes of the meeting dated 14 April 2005 were confirmed. In the meeting of 20 September 2005, the minutes of the meeting dated 26 July 2005 were confirmed. Again, a meeting was held on 30 October 2005, Alain Laloum attended it. Even in this meetin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mix shareholders issues and should separately address them to Nafan. Lucien Lesaffre differed from Muthu regarding the minutes and sought to prepare a new draft reflecting the correct proceedings and the decision taken. Alain De Gouy also wrote to Muthu that shareholders of SAF Yeast must take up the issues independently. He mentioned that Calyon Bank was also willing to increase the amount of compensation. Alain De Gouy stated that they would wait for Muthu's response as regard the deed of settlement. Muthu again wrote on 3 January 2006 to Alain De Gouy stating that in the dispute of SAF Yeast with Calyon Bank, Lesaffre was taking the side of Calyon Bank. (xiv) On 2 March 2006, Muthu set out his grievance in a letter. He stated that Nafan was trying to force SAF Yeast in accepting the Calyon Bank's settlement proposal. Muthu reiterated that the minutes of the meeting dated 14 April 2005 were correct and they were confirmed in the subsequent meeting. Muthu placed on record the intimidation on the part of Nafan's Nominee Director to force Muthu for signing the deed of settlement with Calyon Bank. It was pointed out that though the Calyon Bank may address a letter to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lties to attend the Board meeting at Paris, the Directors of SAF Yeast in France decided to go ahead with the meeting. It was pointed out that meeting by teleconferencing is not permitted in Indian law. He also pointed out that, such meeting would be illegal and it would be nothing but an attempt to force a settlement with Calyon Bank. (xvi) SAF Yeast, on 29 May 2006 filed a contempt petition in Allahabad High Court, Lucknow Bench, against Calyon Bank and the nominee directors of SAF Yeast from France. Alain Laloum on 22 May 2006 informed Muthu that the Board meeting to be held on 23 May 2006 would not be illegal. Muthu Group replied to Alain Laloum placing on record their disapproval in respect of appointment of Company Secretary and an appointment of alternate directors. The vote of disapproval was communicated without prejudice to their stand that the meeting itself would be illegal. On 19 June 2006, Muthu Group received the copies of minutes of meeting dated 23 May 2006. In the minutes, the Indian directors were shown as absent and it was stated that even if the votes in respect of the resolution were four in favour and four against that the resolution, Laloum who occupied t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived at Geneva Airport and was taken to Montreux Palace Hotel. At around 7.30 p.m. Laloum telephoned Muthu, and came to Muthu's room for dinner and agreed to meet next morning. On 23 January 2009 Laloum and Muthu had a meeting in the hotel. Before the meeting, Muthu spoke to J.L. Meurant on Laloum's phone. Muthu reiterated that Muthu Group is not interested in selling its shareholding. Laloum stated that Lesaffre Group should make an offer of sale of their shares in SAF Yeast. It was agreed that, to arrive at a fair value of shares, Articles of Association would be considered. Articles were faxed from the head office of SAF Yeast to the Conference Department of the hotel. After the Articles were read, Muthu agreed to suggestion made by Laloum that Muthu Group would pay Lesaffre Group a price of shares as determined by the Auditors in accordance with Article 17. At the instructions of Laloum, Muthu wrote the MOU. Laloum carried out corrections to the document in his own handwriting and initialed them. Immediately on signing the MOU, Laloum informed Meurant who also spoke to Muthu and thanked him for long association with the Lesaffre Group. Alain Laloum also forwarded a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk on 14 May 2009 and the matter was remanded to the Lucknow Bench, High Court of Allahabad. On 14 May 2009, Corrine Wisniewski wrote to the Directors of Muthu Group forwarding a notice dated 30 April 2009 calling for a meeting of Board of Directors at Paris on 29 May 2009. On 16 May 2009, Muthu wrote to SAF Yeast informed about the default of Nafan in respect of transfer of the shares pursuant to the MOU. Muthu called upon SAF Yeast to act according to the relevant provisions of the Articles of Association of SAF Yeast, particularly, Article 18 of the Articles of Association. He also called upon SAF Yeast to proceed to accept the consideration based on the certificate of valuation issued by Sharp Tannan and complete the transfer. A legal opinion was obtained and the meeting of Board of Directors of SAF Yeast was held on 23 May 2009. It was resolved that SAF Yeast would create a separate bank account title M/s. SAF Yeast Co. Pvt. Ltd. Shares Account and the consideration in respect of transfer of shares would be deposited. K. Narsimhan, Vice President Finance of SAF Yeast was authorized to execute share transfer forms in terms of Article 18 upon receipt of consideration of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that permission of Reserve Bank of India has been obtained and called upon Nafan to nominate a bank account for transfer of purchase consideration. (xxiv) The petition filed by Nafan suffers from suppression of various materials and vital facts especially regarding execution of MOU and on this ground alone the petition requires to be dismissed. The petition is not maintainable, as the Nafan is not qualified to file the petition in terms of provisions of Section 399 of the Act. The petition is not filed bonafide. It lacks particulars of so-called inducement, fraud, and fabrication. The suppression of material facts in the petition cannot be covered in a rejoinder, the MOU dated 23 January 2009 is valid and binding, and Muthu Group pursuant to the MOU in accordance with the Articles of Association takes steps. The Board meeting held on 29 January 2009, 23 May 2009 and 25 May 2009 are valid and the resolutions passed are binding. No notice was required to be given to the nominee directors. Reply by SAF Yeast 13. On behalf of SAF Yeast, reply was filed by Muthu being the Managing Director and authorized signatory, briefly as under: (i) Petition ought to be dismissed, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny contempt, Muthu kept boasting about his connections with judiciary and considering the fact that some of the employees of Calyon Bank were prosecuted with, could not be taken lightly. (iii) Laloum was to undergo hip surgery on 30 January 2009 and was unable to travel. Thereafter a meeting was fixed at the instance of Muthu at Montreux. Laloum met Muthu at Montreux Palace Hotel, which was close to residence of Laloum. It was agreed at the start of the meeting that it would be a final attempt to explore the settlement. As Muthu had travelled, long way to meet Laloum, Lesaffre felt obliged to Muthu. Muthu insisted on calling upon Articles of Association and got them faxed. He insisted on explaining all the terms on which he would purchase the shares of Nafan. Muthu suggested that, while relevant pages of Articles were arriving by fax, they should sign a memorandum so that whatever is to be put before Denis Lesaffre would be clear. Laloum suggested that Muthu should take lead in writing the document. Muthu wrote out the document. Laloum did not pay much attention to it, as it was his understanding that it was only his proposal to Denis Lesaffre. In that, light Laloum signed the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f arrest. In view of these proceedings initiated by Muthu, the French Directors thought it would be beneficial to settle the dispute than to take risk of proceeding. Therefore, pursuant to this, a meeting was held in London and Heads of Agreement were drawn on 14 August 2007. The Heads of Agreement recorded the material terms and it was decided that in order to reach settlement the shareholding would be 50:50 which was expressed between Lesaffre and Muthu Group. Muthu however started stalling and resiled from his obligation to conclude the Shareholders Agreement. When the hearing was coming up before the Apex Court in November 2008, Laloum convinced Muthu to agree to postponement of hearing to give more time from the perspective of Nafan to settle differences regarding shareholder agreement. During this period, Muthu came to know that Laloum's decision would be placed before Lesaffre family that he had not agreed to any settlement and he had not been authorized to enter into any settlement. (iv) When the meeting took place at Montreux, Laloum was not well. He had travelled in a wheelchair to Algeria. Muthu insisted upon a meeting as a condition for postponement of hearing be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009, and 25 May 2009 were suspicious. No reference was made regarding these meetings even in the Court proceedings earlier and suddenly several Board meetings have emerged in reply. The notice supposedly issued for the alleged meeting of 29 January 2009 was stated to have been addressed to Muthu, A.M.Arunachalam and Muthiah. Even the minutes of the alleged meeting are suspicious. In any way, no meetings could have been held as no notice was given to four nominee directors of Nafan. Even if any meeting was held, the meetings were void. It applies to the other meetings held on 23 May 2009 and 25 May 2009. No request was made by anybody for issuance of duplicate share certificates. Nothing was placed on record regarding the so-called request of Laloum. Even the meetings did not give 14 days' notice period nor the agenda. (viii) The MOU is not a contract and is incapable of being enforced. There is no entity called Muthu Group or Lesaffre Group. Neither Nafan, nor Lesaffre were party to the MOU. Laloum was not specifically authorized to enter into such transaction to the knowledge of Muthu. There was no shareholding or Board resolution of Nafan to authorize transfer of shares. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments is not given. (ii) The MOU is valid and binding contract and the shares have been transferred in accordance with Articles of Association and full consideration has been paid. Only basis to discredit the MOU is that Laloum was induced to sign some papers. The record would clearly show that Laloum did dine with Muthu in his room. Laloum did not appear to suffer from any physical incapacity. He had travelled to Algeria clearly indicating that he had no health issues. Meurant was fully aware of the meetings between Laloum and Muthu. The Articles of Association were specifically called for. Thereafter the MOU was executed. Laloum did not appear to be in any physical discomfort. After the shares were transferred, there was no question of withdrawing the proceedings before the Allahabad High Court since transfer of shares was subjudice in the Company Petition. Laloum had full authority to execute the MOU. The valuation done by Sharp Tannan was proper and after considering all the relevant material. No capital can be made of the fact that valuation was prepared in a short time span. The Sharp Tannan are auditors for around 27 years and therefore they were fully aware of the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Petitioner ? If so, its effect. (vi) Whether the alleged transfer of shares between member to member is covered by the first part of the Article 14 of the Articles of Association of the Respondent No.1 and the Articles 15, 18 and 19 have no application in respect of the transfer of shares as contended by the Petitioner ? (vii) Whether the impugned MOU dated 23 January 2009 amounts a transfer notice as contained in Article 15 of the Articles of Association of the Respondent No.1 ? If not, its effect. (viii) Whether the Board meeting purportedly held on 29 January 2009 is non-est, illegal and invalid and the Resolutions passed in the said meetings are ineffective being contrary to law and oppressive in nature ? If so, its effect. (ix) Whether the purported Board meetings held on 23 May 2009 and 25 May 2009 are non-est illegal and unlawful for the reasons stated in the pleadings of the Petitioner and the resolutions passed in the said meetings are invalid and ineffective and thus liable to be set aside ? (x) Whether the purported valuation report is a manufactured/got up document prepared by the Respondent No.7 in connivance with the Respondent No.2 to Respondent No.6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eetings were held without notice to Nafan and Lesaffre and their nominee directors in terms of the Participation Agreement. The meeting therefore was bad in law. The Board also held that, even assuming that participation agreement was not binding, it was obligatory to give notice when entire 51% shares were transferred. The meetings were therefore illegal for want of notice. Board however held that the meeting dated 29 January 2009 was not oppressive because it was in terms of the MOU. The Board held that the meetings held on 23 and 25 May 2009 were bad in law since no notice was served and no agenda was circulated, and they were oppressive The Board came to the conclusion that the valuation prepared by Sharp Tannan was not reliable. Valuation report was a got up document and biased. The valuation report deliberately used CCI Guidelines though they were inapplicable. The Board held that there was no request in writing by Laloum regarding the duplicate share certificates and that Article 18 did not authorize the Company to carry out any transfer in absence of original share certificates. The Board further concluded that the act of issuance of duplicate share certificates was part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel appearing in these appeals. The parties also filed voluminous written submissions. 24. Nafan and Lesaffre are broadly challenging the findings that the MOU is a valid and binding and it can be looked into for passing any order under Section 402 of the Act. They also challenge the direction that Nafan and Lesaffre Group should transfer their shareholding to Muthu Group. The Muthu Group is broadly challenging the findings that the Board meetings held in the year 2009 are illegal and oppressive, the resolutions and transfer of shares in favour of Muthu Group are illegal and should be set aside. The Muthu Group has challenged the direction that duplicate share certificates issued in favour of A.M.Muthiah is cancelled and the shareholding of Nafan and Lesaffre is restored and the rectification of register accordingly. The Muthu Group has also challenged the findings regarding the interpretation of the articles and valuation. Sharp Tannan have challenged the observations made by the Board in the impugned order regarding the valuation report being biased, partial, non-transparent, and deliberately based on wrong guidelines. DISCUSSION 25. I have heard Mr. Fredun De' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... member as defined under Section 41 of the Act. He further contended that, even assuming Nafan held share for benefit of Lesaffre, it ought to have been disclosed as specified under Section 187-C of the Act and no such declaration has been made. He relied upon the decision of the Delhi High Court in the case of Vinod K. Patel v. Industrial Finance Corpn. of India Ltd. [2001] 103 Comp. Cas. 557. He submitted that the concept of aggrieved person must be determined in the context of the Companies Act. Accordingly, as per his contention, the appeal deserved to be dismissed as not maintainable. 28. These submissions cannot be accepted. The operative portion of the impugned order specifically directs the 'Lesaffre Group' to sell its shareholding. It declares that the MOU executed by Laloum on behalf of 'Lesaffre group' is valid, effective, and enforceable document. The impugned order directs Nafan as well as Lesaffre to transfer the impugned shares to Muthu Group. The entire impugned order specifically contains references and directions to Lesaffre. It declares that the MOU which is executed by Laloum, which mentions 'Lesaffre Group', as valid. Any person aggrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 10-F of the Act. The jurisdiction under Section 10-F to entertain an appeal against a decision of the Company Law Board, is not unlimited. The appeal is maintainable on questions of law. Findings of facts cannot be interfered with like a first appeal under the Code of Civil Procedure. Interference in findings of fact is not possible if the findings are not perverse. If there is a material on record to justify a factual finding, which is arrived by applying appropriate legal principles, then merely because another view is possible, the Court under Section 10-F will not reverse the finding. A mere erroneous finding of fact will not lead to a question of law. 30. I need to prefix the discussion by reiterating the basic test. This litigation is given various shapes, shades and hues of complex of legal positions, but the concept of Oppression lies at the core. The underlying principle in the concept of oppression, is fairness. This dispute , and the solution to be arrived ,has to be adjudicated on the touch stone of fairness and probity. Instead of making this adjudication more complex, as sought to be done by the Muthu Group, the correct approach will be to deconstruct and simplif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Act indisputably is of wide amplitude. It is also beyond any controversy that the court while exercising its discretion is not bound by the terms contained in Section 402 of the Companies Act if in a particular fact situation a further relief or reliefs, as the court may seem fit and proper, is warranted. (See Bennet Coleman Co. v. Union of India ors. and Syed Mahomed Ali v. R. Sundaramurthy). But the same would not mean that Section 397 provides for a remedy for every act of omission or commission on the part of the Board of Directors. Reliefs must be granted having regard to the exigencies of the situation and the court must arrive at a conclusion upon analyzing the materials brought on records that the affairs of the company were such that it would be just and equitable to order winding up thereof and that the majority acting through the Board of Directors by reason of abusing their dominant position had oppressed the minority shareholders. The conduct, thus, complained of must be such so as to oppress a minority of the members including the petitioners vis- -vis the shareholders which a fortiori must be an act of the majority. Furthermore, the fact situation obtaining in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t relate to the manner of management of the affairs of the company and must be such so as to oppress a minority of the members including the petitioners qua shareholders. The court, however, pointed out that that law, however, has not defined what oppression is for the purpose of the said Section and it is left to court to decide on the facts of each case whether there is such oppression. 192. In Scottish Cooperative Wholesale Society Ltd. v. Meyer and Anr., it was categorically held that the conditions precedents contained in Section of the Act of 1948 must be satisfied before any relief can be granted. 193. Yet again in H.R. Harmer Ltd., In re, the Court of Appeal held that 'the section does not purport to apply to every case in which the facts would justify the making of a winding up order under the 'just and equitable' rule, but only to those cases of that character which have in them the requisite element of oppression'. It was observed:(All ER p.701 A-B) It is not lack of confidence between share- holders per se that brings S. into play, but lack of confidence springing from oppression of a minority by a majority in the management of the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re being conducted in such a manner the petition will disclose no ground for granting any relief and must be dismissed in limine. It was observed:(All ER p.247 B-D) Those who are alleged to have acted oppressively must be shown to have acted at least unfairly towards those who claim to have been oppressed. In Scottish Cooperative Wholesale Society, Ltd. v. Meyer (a case under s.210) Viscount Simonds adopted a dictionary definition of the meaning of oppressive by, it is said, burdensome, harsh and wrongful . In Elder v. Elder Watson, Ltd., also a case under s. 210, the Lord President (Lord Cooper) said: ....the essence of the matter seems to be that the conduct complained of should at the lowest involve a visible departure from the standards of fair dealing, and a violation of the conditions of fair play on which every shareholder who entrusts his money to a company is entitled to rely. Lord Keith said: oppression involves, I think, at least an element of lack of probity or fair dealing to a member in the matter of his proprietary rights as a shareholder. 196. The Court in an application under Sections 397 and 398 may also look to the conduct of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judice to one party in an application under Section of the English Companies Act was answered in the affirmative. 204. When a decision is taken on a business consideration, it is trite, the court should not ordinarily interfere. [See Maharashtra Power Development Corporation Ltd. v. Dabhol Power Co. ors.: 2004(3)Bom. CR 317.' With these principles enunciated by the Apex Court, the controversy at hand can be looked at. 33. Since the Board has determined the points of consideration and as the learned counsel for the parties also made their submissions centering on these points for determination for the sake of continuity, it will be appropriate to follow the same pattern. The issues for determination therefore will fall under five broad heads, (a) Maintainability of the company petition and whether there was any suppression facts; (b) The controversy surrounding the Memorandum of Understanding and its legal effect; (c) legally and/or oppressiveness of the decisions taken in the Board meetings held in the year 2009; (d) The correctness of the valuation and the imputations against the valuer for the valuation report; and (e) the relief to be granted. Maintainability o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the petition can be filed through an authorized representative. It has not been put in dispute that Mr. Siraj Ahmed is not an authorized representative. In the decision in the case of Enercon Gmbh v. Enercon (India) Ltd. ors .[2009] 91 SCL 60 (CLB-New Delhi), relied upon by Mr. De'Vitre, this Court held that Code of Civil Procedure is not applicable in the proceedings before the Board and Company Law Board Regulations govern them. In said decision, the Court noted that the deponent thereon had relied upon documents available and submissions were made on advice. In the present case, Laloum and Lesaffre have filed their affidavits and have taken a stand on oath regarding the events that had transpired. Therefore, even assuming there is some irregularity in the affirmation made by Mr. Siraj Ahmed, it will not be sufficient to dismiss the Company Petition on this ground alone. In the case of Enercon Gmbh (supra), the Court relied upon earlier decisions to hold that such objections would be merely procedural objection. As regard the reflection on the bonafides of the case of Nafan is concerned, it is not that it has rested only on the verification of Mr.Siraj Ahmed. In the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that these documents would have clearly shown the falsity in the case of Nafan that it had substantially contributed to set up SAF Yeast. He submitted that Directors' Reports would have also shown that the new products were developed using indigenous technology and the technology not of Nafan. He submitted that even notes of accounts for the year 2001 to 2003 have not been produced which clearly show that the Muthu Group were the key management personnel. He further submitted that e-mails sent on 4 January 2006, 30 January 2006, various letters, text messages sent on 24 October 2007, 29 October 2007 and from December 2007 to November 2008 have been suppressed, which would have clearly demonstrated the events within the knowledge of Nafan. He submitted that if the MOU had been properly disclosed, it would have destroyed the case of oppression. So also, the text message dated 7 February 2009 sent by Laloum stating that he is waiting for the valuation report. He further submitted that the certificate of valuation, e-mails dated 11 February 2009 and 12 February 2009 and Articles of Association were not produced. He submitted that if these documents were produced, the case made ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .Alain Laloum to Mr. J.L. Meurant. (vi) The Petitioner further suppressed the following vital and crucial facts, events, correspondence and communication between the meeting at Montreux on 23rd January 2009 and the email of 30th April 2009 (when the Petitioner by its actions of purporting to call a Board of Directors meeting of the Company at Brussels or Geneva Airport sought to resile from the MOU). The obvious and deliberate reason for not referring to the following facts / documents is that the Petitioner attempts to mislead this Hon'ble Board as to matters relating to the MOU (which was not annexed to the Petition), the circumstances surrounding its execution and the Petitioners full knowledge about facts over which they claim ignorance in the Petition (such as the existence of the MOU and the Valuation Report), During this period of three months, the following significant events have been suppressed by the Petitioner (with not even a fleeting reference made to any of them in the Petition): (a) Alain Laloum by a text message sent around 7th February 2009 to Respondent No. 2 inquired about and sought the valuation report by the Statutory Auditors; (b) The Statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in April 2005 and the Minutes of the said Meeting as prepared by Respondent No. 2, which is one of the charges of oppression in the Petition. In this regard, the Petition suppresses the following facts and e-mails: (a) The Petition totally omits to mention the fact that in October 2005 Alain Laloum traveled to India (Mumbai) and attended a Board of Directors Meeting at which meeting the Minutes of the Meeting of 20th September 2005 (which in turn confirmed the Minutes of the Meeting of 26th July 2005) were confirmed. This establishes that the Petitioner had express knowledge of the July 2005 Board Meeting held in Mumbai, despite which in the Petition filed four years later, the alleged failure to give notice of the July 2005 Board Meeting has been made a ground of oppression in the Petition; (b) The Petition suppresses two crucial emails of 4th January 2006 and 30th January 2006 which were sent by Mr.Alain Laloum to the Respondent No. 2 seeking certain additions (and not any alterations or deletions) to the Minutes of the April 2005 Meeting. These emails completely destroy the cause of action in the Petition, which is founded on the alleged inaccurate recording of the Minute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... position. (xi) Although the Petition alleges that three Alternate Directors were appointed by the Board of the Company at a meeting held in Paris on 23 May 2006, at which none of the Muthu Groups Directors were present, inexplicably, a copy of the alleged Board Resolution of the said meeting has not been annexed to the Petition. In the Reply, the Respondents have disputed the validity of this appointment. Despite this and despite relying upon the same, even in its Rejoinder Affidavit, a copy of the Minutes of this Meeting has not been annexed. It is therefore clear that the Petitioner is steadfastly holding back from the Hon'ble Board a document, on which, strangely enough, the Petitioner places reliance. (xii) The Petitioner alleges, as a charge of oppression, the Respondents failure to give notices to the Petitioner for Board Meetings of the Company held in Mumbai. In particular, the meeting of July 2005 held in Mumbai for which no Notice was given to the Petitioner's nominee Directors on the Board of the Company, is a made a charge of oppression. Conscious of the fact that this charge of oppression would fail in the plain sight of Article 55 of the Articles of Asso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he petition itself. He submitted that rejoinder can only deal with the defence in the reply and cause of action cannot be founded in the rejoinder. Mr. Dwarkadas submitted that the averments in the rejoinder bring-forth new grounds of oppression, such as, the MOU being not a proposal, Laloum had no authority, Muthu has played fraud, no notices of Board meetings were given, and there were fabrication of minutes of meetings. Mr. Dwarkadas relied upon the decision in the case of Sangramsingh P. Gaekwad (supra) of the Apex Court and Calcutta High Court in the case of Mohta Brothers (P.) Ltd. v. Calcutta Landing Shipping Co. Ltd.,[1970] 40 Comp. Cas. 119 (Cal.) decision of the Madras High Court in the case of S. Seetharaman v. Stick Fast Chemicals (P) Ltd.,[1998] 18 SCL 399 (Mad.) and decision of this Court in Sambhaji Waghoji Asole v. State of Maharashtra 2006 (1) Mh. L.J. 392. Relying on these decisions, he submitted that acts of oppression must be pleaded in full particulars in the petition itself and unless that is done, same cannot be enquired into by the Court. Even assuming certain facts became known of the petitioners subsequently, petition at the most can be amended which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of holding Board meetings without notice, failure to provide documents regarding litigation and how in spite of the attempt to settle the dispute settlement did not come through. Thereafter Nafan has mentioned how Lucien Lesaffre received a notice from the Registrar of Companies to show cause regarding non-filing of returns. It has then mentioned that Laloum informed Lesaffre and Corinne that he has been induced to sign some papers by Muthu and he has received some valuation addressed to SAF Yeast, which shows that the valuation had no sanctity. Then Nafan refers to a MOU stating that Nafan was not a party and cannot be aware of the same. Then it stated that around 28 May 2009, Muthu sent a letter stating that shares are transferred relying on the MOU. It is stated that Nafan never agreed to sale its shares. It is further stated that if the MOU is produced, Nafan will raise and plead all its objections thereto. It is then stated that when the Board meeting was held at Paris on 29 May 2009 and the agenda was sent to Muthu, Muthu fraudulently called alleged meeting on 25 May 2009, made deposit of some amount, and in accordance with Article 18 struck off the name of Nafan. This wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Nafan that the way the meetings were held in which share transfer took place without notice to them amounts to oppression. It is the Muthu Group, which is seeking, relies on the binding effect of the MOU. The contention of Mr. Dwarkadas is that the MOU is a binding contract and non-disclosure of events surrounding the transaction amount to suppression amongst others. 46. For the purpose of examining the charge of suppression, even assuming the MOU was binding, the action of Muthu Group to transfer the shares without notice to them still could be questioned by Nafan, which they did in the petition. For that purpose, it is enough to assert that the MOU had no sanctity. There is no complete omission to mention the MOU. It is mentioned and it is stated that it is invalid. Nothing further needed to be pleaded. Whether it is binding or not would be the case of Muthu Group. Nafan had reserved its rights to make comments on the MOU. The MOU is in fact is relied upon in defence of the actions taken by Muthu Group to transfer the shareholding without notice. The primary grievance of Nafan holding a meeting without notice remains. It is, therefore, not possible to uphold the contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spose of the matters based on affidavits. Appeals came to be filed before the Division Bench of the Gujrat High Court and the Division Bench allowed the appeal. The matter was thereafter taken to the Apex Court. The Apex Court determined the points for consideration. They were as regard the fiduciary duty of the Company Directors towards the shareholders and on facts whether there was any oppression, mismanagement and whether the transfer of shares was valid. The Apex Court took a review of the law regarding oppression and stated that case for grant of relief under Sections 397 and 398 case must be made out in the petition itself and the defects cannot be cured by evidence, oral or documentary. The Apex Court noted the decision in the case of Shoe Specialities (P.) Ltd. v. Standard Distillaries Breweries [1997] 1 Comp. LJ 243. It held that the Court considers not only the relief but also the nature of the complaint and how it is to be rectified. The Apex Court in paragraph 205 observed as under. 205. The burden to prove oppression or mismanagement is upon the petitioner. The Court, however, will have to consider the entire materials on records and may not insist upon the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal with these decisions arising under different jurisdictions, as in the case of SangramSingh P. Gaekwad (supra) itself, the Apex Court has emphasized the jurisdiction of the Board under the very provision in question, in the cases of oppression and mismanagement and has indicated that totality of the evidence must be looked at by the Board. 50. As I have held earlier, sufficient cause of action was pleaded by the Nafan in its petition. According to them, the meetings were without notice and transfer of shares was gross act of oppression and other acts of mismanagement. Relevant particulars concerning the MOU were pleaded and that the MOU had a no binding effect. Nafan had already stated that in case the MOU is put-forth, they reserve their right to make their submissions, which they did in their rejoinder. It has come on record that no notice was issued by the Muthu group regarding the meeting when the entire shareholding of Nafan was transferred. According to Nafan, they knew the details about the meeting only through the replies and inspection of documents. 51. It will be a failure of justice if the petition is thrown out only on the ground of suppression of facts, when t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um had no authority to execute the MOU; whether the MOU is mere offer or expression of desire; whether the MOU is a contingent contract; whether Muthu failed to fulfill his obligation contained in the MOU; whether the MOU is bad in law for uncertainty; whether the Board is competent to enforce the agreement for sale; whether the MOU can be treated as a transfer notice. 54. The Board held that the MOU was not obtained by fraud or inducement, Nafan, Lesaffre wanted to sell the shares, and they agreed to do so through the MOU. Muthu fulfilled his part of obligation. The Board is not competent to enforce the contract but is entitled to take note of the intention of the parties and the MOU did not constitute a transfer notice. In short, the Board held that the MOU is binding and though it may not be enforceable as contract, the intention of the Nafan and Lesaffre to sell shareholding was clear, but at the same time MOU could not be treated as transfer notice. 55. It has to be noted that the Muthu Group has filed a Suit No.S/2457 of 2012 in this Court for the following reliefs. (a) That this Hon'ble Court be pleased to order/declare the said Memorandum of Understanding date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Board or any other Court holds that the MOU is only executory. 56. Therefore, a suit for specific performance of the MOU is pending in the Civil Court. The Board has also taken note of the position of law that it has no power to specifically enforce the MOU but what the Board has done is to give effect of the supposed understanding of the parties in the MOU, while passing an order under Section 402 of the Act. Mr. De'Vitre and Mr. Khambata have seriously objected to this submitting that this is indirectly giving specific performance of the contract as the suit itself stands decreed by the order of the Board. On the other hand, it is the contention of Mr. Dwarkadas that the MOU is valid, legal, binding, it constitutes a transfer notice, and therefore there was no act of oppression committed at all. 57. As I will elaborate later, the entire case hinges not on the validity of the MOU but on whether the act of Muthu Group to transfer the shareholding of Nafan and Lesaffre without notice to them, even when they had made it clear that they were not abiding by the MOU, amount to oppression. The appropriate course of action when the Muthu Group came to know that Nafan and Les ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed on the MOU, in spite of the fact that they have filed a civil suit. 59. On the other hand, Mr. Dwarkadas submitted that, in the petition itself it is ascertained by Nafan that the shares were transferred based on non-existing and non-binding MOU. He submitted that since having put up the case that the MOU was not binding, Nafan could not be heard to say that the Board had no jurisdiction to deal with their submission. He submitted that the case pleaded by Nafan is that they were entitled to set aside the transfer of shares on the allegation that the MOU was not binding. In view of this assertion, the Board had to consider whether the MOU was non-existent as alleged and whether Muthu Group was justified on relying on the MOU. He submitted that the suit was filed only to save the limitation and as a precautionary measure and there will be no contrary reliefs. Mr.Dwarkadas submitted that since Nafan had invoked the power under Section 402, it was open for the Board to take into account all relevant factors for ordering a buyout to do substantial justice. According to him, the Board did not exceed its jurisdiction as MOU and the events leading to the MOU were made part of cause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed a contract without their authority. He submitted that the entire conduct of Nafan in respect of this MOU is fraudulent. Mr.Dwarkadas therefore, submitted that the primary object of Nafan to file the petition was to resile from the MOU and the Board has correctly rejected the submission that MOU is not a binding document. 60. I have considered the arguments. The Board has rendered a finding that the MOU is not an invalid and unenforceable document, it is not obtained by playing fraud on Laloum, and Laloum was authorised to sign the MOU. The Board also concluded that the MOU was not vague and Muthu fulfilled his obligations. It also held that the MOU is made by free consent. The Board relied upon the decision of Bihar State Electricity Board v Green Rubber Industries -AIR 1990 SC 693 to hold that even though the party is ignorant of precise legal effect, it is bound by the terms of contract it signs. The Board distinguished the decision cited by Nafan to hold that the Board can take note of intention of parties and pass appropriate orders. The Board also took note of the argument on behalf of Muthu group that the agreement has already been implemented and therefore, question of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nafan was not ready. The MOU did mention that there should be a fair valuation of shares. The fair valuation of shares therefore was one of the preconditions of the MOU. Naffan had made it clear that the valuation was not fair. Therefore, dispute arose even within the terms of the MOU as to whether the valuation carried out was fair. The amount of consideration for transfer was not fixed in the MOU. It was to be arrived at upon a fair valuation. Once Nafan insisted that the valuation was not fair, the consideration could not be termed as fixed. A clear civil dispute therefore arose even assuming that the MOU was binding. Muthu was fully aware that there was a dispute as regards the valuation and that Nafan was not ready for the valuation. In spite of this position, meeting was held without notice and shares were transferred. 64. It was contended by Mr.Dwarkadas that Nafan itself put the validity of MOU into issue and therefore it cannot complain that the Board adjudicated upon the same. He submitted that it is case of Nafan itself that the MOU is not a valid and binding and therefore the Board had to adjudicate upon the same to hold that it is valid, binding, and properly execu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he MOU was not to be acted upon and that theory is reasonably possible then appropriate course of action for Muthu group would be to pursue their rights in the Civil Court. 68. I have already concluded that there is no suppression on the part of Nafan and the entire material on record is to be considered. The MOU therefore, is now on record. According to Muthu Group, the MOU was a culmination of series of meetings. Laloum had the authority to sign the MOU and therefore, it is complete in all respects. The explanation of Nafan and Lesaffre regarding the events surrounding the MOU is through the affidavits of Denis Lesaffre and Laloum. According to Laloum, the document i.e. MOU was only initiation of negotiation talks. Both parties were to take it forward. According to both Laloum and Mr.Lesaffre, this was at the best, a rough proposal to end the dispute. Mr.Lesaffre has put on record that when they came to know about the valuation they immediately concluded that the price indicated in the MOU was so ridiculous that the proposal could not be taken forward. Muthu had also not withdrawn the contempt proceedings. Laloum has stated that Lesaffre being a family business, the conse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by a contract and the binding effects etc, but any reasonable man would say, in today's age of commercialism and professionalism, this is not the way of two business groups of this level ,dealing with such high stakes, will conclude the transaction. The theory put-forth by Laloum that MOU was just document to explore possibility of further negotiations appears to be more in tune with normal course of business and therefore cannot be rejected outright; more importantly, no unquestionable intention can be culled out from it. Laloum also stated that final decision would not be taken unless Lesaffre family decides. This also cannot be a fanciful version, as Lesaffre is a family business. 71. Therefore, it could not be said that the petition was filed by only to resile out of the clear binding contract. They had placed their stand on record that they have no intention to take the MOU forward. Since the same MOU was interpreted to derive an intention to order a buyout, it was nothing but indirectly granting specific performance of the contract by the Board. It cannot be that Board concludes that it has no power to grant specific performance of the agreement yet it will enter into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Laloum signed the MOU and Laloum had an authority to sign the MOU it is not possible to conclude that the MOU was complete in all respects and was at such a stage that even notices of its execution was not necessary. In addition, there is one aspect that is more important. The MOU is being discussed in the context of oppression. One thing was clear was that when the board meeting on 25 May 2009 took place, Muthu was fully aware that Nafan was not ready for the valuation and for going forward with the transfer of shares. Therefore, as far as Muthu is concerned Nafan was not ready to act as per the MOU. It is with this knowledge that MOU is taken forward by Muthu. Though it is contended by Mr.Dwarkadas that in spite of sending the MOU there was no response and it must be presumed that Nafan and Lesaffre had no objection, it is too na ve to believe that in spite of the acrimony that existed at that point of time between the parties, Muthu would innocently believe that Nafan and Lesaffre were ready to go by the valuation prepared by M/s Sharp Tannan and all that remained was formality of transfer for which no notice was necessary. Therefore, MOU did not spell out a clear and unequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts of the law particularly, the Articles of Association .. In these circumstances, the Company is required to act in terms of Articles 18 by causing the name of Mr. A. M. Muthiah of the Muthu Group to be entered in the Register as the owner of these 51% shares and also to hold the payment by Mr. A. M. Muthiah of the Muthu Group in Trust for the Lesaffre Group for payment to the Lesaffre Group and the receipt of the Company for the purchase money shall be good discharge to the purchasing member and after his name is entered in the Register in purported exercise of the aforesaid power, the validity of the proceedings shall not be questioned by the person . After discussion it was: RESOLVED THAT the written opinion dated 20th May, 2009 from Mr. Shanthi Bhushan, Senior Advocate to the Company be and is hereby taken on record and that the Company act in terms of the same 6 PURCHASE BY THE MUTHU OF THE SHARES IN THE COMPANY HELD BY LESAFFRE GROUP THROUGH NAFAN B. V. PURSUANT TO THE MOU DATED 23RD JANUARY 2009 OPENING OF CURRENT ACCOUNT TO HOLD THE PURCHASE MONEY The chairman informed the Board that the Company is already having a Current Account with the Axis Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... President Finance, be and is hereby authorized to execute the Share Transfer Forms / Transfer documents in the name of the proposing Transferor Nafan B. V. in favour of Mr. A. M. Muthiah, Purchasing Member of the 80,772 Shares from Nafan B. V. , on the Company receiving the Purchase Money /relevant consideration of ₹ 27,49,38,822/- for the 80,772 Shares, net of TDS on capital gains from Mr. A. M. Muthiah. RESOLVED FURTHER THAT Mr. A. Muthu, Managing Director be and is hereby authorized to inform Mr. K. Narasimhan in this regard. Mr. A. M. Muthiah being interested in the matter, disclosed his interest and did not participate in the discussions. 8. Vote of Thanks There being no other Business, the Meeting terminated with vote of thanks to the Chair. CHAIRMAN ** ** ** MINUTES OF THE MEETING OF THE BOARD OF DIRECTORS OF SAF YEAST COMPANY PRIVATE LIMITED HELD ON 25TH MAY, 2009 AT THE REGISTERED OFFICE AT 419 SWISTIK CHAMBERS, MUMBAI 400 071 AT 4.00 P.M. IN ATTENDANCE: 1 Mr. A. Muthu 2 Mr. P. B. Thatte 3 Mr. A. M. Arunachalam 4 Mr. A. M. Muthiah 1 CHAIRMAN OF THE MEETING Mr. A. Muthu was elected Chairma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued by the Company to Mr. A. M. Muthiah . RESOLVED FURTHER THAT the purchase money of ₹ 27,49,38,822/- be and is hereby transferred from the Company's Current Account with Axis Bank Ltd., Chembur Branch to the designated Account SAF YEAST CO. PVT. LTD. SHARES ACCOUNT with Axis Bank Ltd., Chembur Branch till repatriation to Nafan B. V. Mr. A. M. Muthiah, being interest in the matter, disclosed his interest and did not participate in the discussions. 5. PURCHASE BY THE MUTHU GROUP OF THE SHARES IN THE COMPANY HELD BY LESAFFRE GROUP THROUGH NAFAN B. V. PURSUANT TO THE MOU DATED 23RD JANUARY 2009 - ISSUANCE OF DUPLICATE SHARE CERTIFICATES The Chairman tabled before the Board a letter dated 23rd May, 2009 from the Company as the Agent of the proposing Transferor Nafan B. V. requesting the issuance of duplicate Share Certificates for the 80,772 Shares held by Nafan B.V. of Lesaffre Group in view of Mr. A. Laloum, Lesaffre's nominee Director having verbally informed Mr. A. Muthu sometime around the 20th February, 2009 that Nafan B.V. had lost the original Share Certificates and were unable to locate the same. The Board discussed in detail all the aspect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10000 19 40 75001 85000 10000 20 41 85001 95000 10000 21 42 95001 105000 10000 22 43 105001 113772 877 RESOLVED FURTHER THAT Mr. A. Muthu, Managing Director and Mr. P. B. Thatte, Director be and are hereby authorized to sign the duplicate Share Certificates of the Company under reference . RESOLVED FURTHER THAT the Common Seal of the Company be affixed on the duplicate Share Certificates . Mr. A. M. Muthiah, being interested in the matter, disclosed his interest and did not participate in the discussions. 6. ADJOURNMENT OF MEETING At this moment the Chairman inform the Board that the duplicate Share Certificate need to be prepared as per law before proceeding with the transfer and hence requested the Board to consider an adjournment of the meeting by forty five minutes. After discu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been to the extent of 100 per cent. It was contended that Muthu group was not required to give notice to the directors outside India as per Section 286(2) of the Companies Act and the Articles of Association. Reliance was placed on the decision of Apex Court in the case of Vodafone International Holdings BV v. Union of India [2012] 6 SCC 613, to contend that a shareholder agreement is a private contract between shareholders compared to Articles of Association, which is a public document, and the Articles of Association did not contemplate any notice to the Directors outside India. Mr.Dwarkadas contended that there was a consistent past practice of not giving notice even to nominee Directors of Nafan, which was continued for the meetings in question. No alternate directors were appointed and notice was irrelevant because Muthu group would have carried the votes in terms of their majority. He submitted that there was quorum for the meeting and Section 299 and 300 of the Act were not applicable. He further contended that there was no challenge to the meetings by Nafan nor there was any prayer to set aside the same. 77. I have considered the submissions. As regards the argument of N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court observed as under: ' 32. Following the English cases referred to in Kalinga Tubes Ltd., similarly in Needle Industries (India) Ltd. v. Needle Industries Newey (India) Holding Ltd., their Lordships concluded as follows : The utmost good faith is due from every member of a partnership towards every other member; and if any dispute arises between partners touching any transaction by which one seeks to benefit himself at the expense of the firm, he will be required to show, not only that he has the law on his side, but that his conduct will bear to be tried by the highest standard of honour. 35. In M/s. Madhusoodhanan and Anr. v. Kerala Kaumudi (P) Ltd. and Ors. reported in [2004] 9SCC204 , it was found that notice not less than 21 days was not given by personal service or service by post and on facts it was found that requirement of Section 189 of the Act was not complied with. Under Section 53 of the Act, service of notice of the Board's meeting by post and by certificate of posting were not found to be reliable when the relationship between the parties was already bitter. In this case, on evidence it was found that the entries in the register were not suffic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the company; the Director is not usually a trustee for individual shareholders. Thus, a Director may accept a shareholder's offer to sell shares in the company although he may have information, which is not available to that other, and the contract cannot be upset even if the Director knew of some fact, which made the offer an attractive proposition. So in Percival v. Wright a person who had approached a Director and sold him shares in the company, afterwards, upon discovering that the Director had known at the time of the contract that negotiations were on foot for the purchase by an outsider of all the shares in the company at a higher figure, could not impeach the contract. In his judgment Swinfen- Eady,J. said' there is no question of unfair dealing in this case. The Directors did not approach the shareholders with the view of obtaining their shares. The shareholders approached the Directors and named the price at which they were desirous of selling'. 43. In Pennington's Company Law, 6th Edn. At pp.608-09, it is stated Directors owe no fiduciary or other duties to individual members of their company in directing and managing the company's affairs, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80. The Board has held that the Participation Agreement required notice to be given to the directors present in India for the time being and to the directors residing outside. That the Participation Agreement provides so is not disputed and that no notice was given. The debate is whether the Participation Agreement is contrary to the Act and the Articles of Association, and whether the Participation Agreement was acted upon and is binding. Article 55 and Section 286 of the Act are reproduced as under : Article 55 : A Director may at any time convene a meeting of the Directors. A director who is at any time not in India shall not during such time be entitled to notice of any such meeting. Section 286 of the Act : 286. Notice of meetings. Section 286 : Notice of Meetings (1) Notice of every meeting of the Board of directors of a company shall be given in writing to every director for the time being in India, and at his usual address in India to every other director. (2) Every officer of the company whose duty it is to give notice as aforesaid and who fails to do so shall be punishable with fine which may extend to one hundred rupees. Neither Article 55 nor Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aj v. V. B. Gopalakrishnan and Ors. [1992] 1 SCC 160. In that case, an agreement was entered into between shareholders of a private company wherein a restriction was imposed on a living member of the company to transfer his shares only to a member of his own branch of the family, such restrictions were, however, not envisaged or provided for within the Articles of Association. This Court has taken the view that provisions of the Shareholders' Agreement imposing restrictions even when consistent with Company legislation, are to be authorized only when they are incorporated in the Articles of Association, a view we do not subscribe to. 263. This Court in Gherulal Parekh v. Mahadeo Das Maiya [1959] SCR Supp (2) 406 held that freedom of contract can be restricted by law only in cases where it is for some good for the community. Companies Act 1956 or the FERA 1973, RBI Regulation or the I.T. Act do not explicitly or impliedly forbid shareholders of a company to enter into agreements as to how they should exercise voting rights attached to their shares. 264. Shareholders can enter into any agreement in the best interest of the company, but the only thing is that the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n note of the following events. (i) In 1992, after the Participation Agreement, the paid up capital of the Company was increased and the shareholding of the Petitioner/Respondent No.8 was increased from 40% to 51% as provided In Clauses 5.2 and 5.3 of the Participation Agreement Respondent No. 2's rights in the additional shares were offered to Lesaffre, resulting in Lesaffre owning 51% of the paid up capital; in doing so, the Parties acted as per Clause 5.3 of the Participation Agreement. (ii) The AOA mentions that Mr. Muthu would be the Managing Director of R1 for a period of 15 years only (Article 48 of AOA @ page 79 of Volume 1), acting under Article 7.6 of the Participation Agreement page 108 of Volume 1), Muthu has continued as the Managing Director of R1 even after the expiry of 15 years; (iii) After, the retirement Mr. B.B. Paymaster, as chairman only the Respondent No.8/ Petitioner's nominee Directors acted as the Chairman of the Rl acting under Article 7.6 of the Participation Agreement page 108 of Volume 1; (iv) The AOA do not provide for Board of Director meetings to be held outside India; by Article 7.10 (a) of the Participation Agreement page 111 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal shares were offered. Muthu continued beyond the expiry of 15 years. Though Articles of Association did not specify that meetings to be held outside India, they were so held under Article 7.10(a) of Participation Agreement and pointed out the circumstances in which steps were taken pursuant to Participation agreement. 84. I do not think it is not possible to re-evaluate the entire evidence in the limited jurisdiction under Section 10-F, to find out the exact manner and which circumstance can be attributed to Participation Agreement. Suffice to note that, it cannot be said that the parties in terms of the Participation agreement took no steps at all. The Participation agreement existed. Both the parties entered into it. Some steps were taken pursuant to the Participation agreement and it did not remain only a dead letter. The Muthu group knew that the Participation agreement required notice to the directors outside India. The stand of Muthu group that neither Articles of Association nor the Act required that notice be given, apart from not being tenable, is not reasonable. The argument that in the past no such notices were given is also not tenable. The decision of exit of on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is an additional ground. 86. The Board has held that the meetings of 23 May 2009 and 25 May 2009 were illegal and oppressive. As regards the meeting dated 29 January 2009, the Board has held that it is illegal but not oppressive as it was as per MOU. This finding is not correct. The meeting of 29 January 2009 cannot be read in isolation. The series of acts of Muthu constituted ground of oppressive. It was a larger scheme of things. If notice had been issued, Nafan would have either placed their version regarding MOU or agreed on some basic principles of valuation. Muthu seem to have in hurry to call for valuation as the events unfolded, which have been discussed subsequently, such as, the role of Sharp Tannan. The meeting of 21 January 2009 also has to be held as oppressive apart from being illegal. The finding of the Board to that effect will have to be modified. 87. Next heads of debate are whether the MOU could be treated as a transfer notice, issuance of duplicate shares and the manner of valuation of shares by the valuer. I have already held that the holding of these meetings without notice to the Nafan and Lesaffre was illegal, unfair, and oppressive and the finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fair value to transfer the shares to the purchasing member. 17 In case any difference arises between the proposing transferor and the purchasing member as to the fair value of the share, the Auditors of the Company may certify the fair value and the same shall be binding on the proposing transferor and the purchasing member. 18 If in any case the proposing transferor after having become bound as aforesaid makes default in transferring the shares, the Company may receive the purchase money and shall thereupon cause the name of the purchasing member to be entered in the Register as the holder of the shares, and shall hold the purchasing money in trust for the proposing transferor. The receipt of the Company for the purchase money shall be good discharge to the purchasing member, and after his name is entered in the Register in purported exercise of the aforesaid power, the validity of the proceedings shall not be questioned by any person. The Company may authorise any person to execute the necessary transfer document in the name of the proposing transferor. 19 If the Company shall not, within the space of sixty days after being served with the transfer notice, find a me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) every instrument of transfer in the prescribed form with the date of such presentation stamped or otherwise en- dorsed thereon shall, after it is executed by or on behalf of the transferor and the transferee and completed in all other respects, be delivered to the company,- (i) in the case of shares dealt in or quoted on a re-cognised stock exchange, at any time before the date on which the register of members is closed, in accordance with law, for the first time after the date of the presentation of the prescribed form to the prescribed authority under clause (a) or within [twelve months] from the date of such presentation, whichever is latter; (ii) in any other case, within two months from the date of such presentation. 89. The Board held that the first part of Article 14 is the separate, distinct, and all independent of latter part of Article 14. The Board has held that even if all the Articles constitute a scheme, the transfer notice must satisfy both the conditions stipulated in Article 15, that it must be a specific notice of the member desiring to transfer the shares and it must appoint a Company as the agent. The Board has held that the MOU did not satisfy the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osely held and the entry of outsider is not easily possible. It was submitted that under Section 27(3) of the Act, restrictions might be imposed if the shareholder is put to notice of the restrictions and there cannot be an absolute prohibition on transferability. Reliance was placed on the decisions of Greenhalg v. Mallard [1943]2 LL ER 234 (CA) and V.B.Rangaraj v. V.B.Gopalakrishnan AIR 1992 SC 453. It was argued that a private company might impose restrictions on the transferability only if the shareholder is put to express notice of the restrictions in the Articles, in the language of sufficient clarity. Referring the decision in the cases of Chiranji Lal Jasrasaria v. Mahabir Dhelia AIR 1996 Assam 48 and Shyamdhan Chakraborty v. Presidency Nursing Homes (P.) Ltd.[1975] ILR 2 Cal. 219, it was submitted that restrictions on transferability in the Articles could not provide for any absolute prohibition against transferability. Even the right of pre-emption does not constitute an absolute fetter on transferability. It was submitted that generally Court should lean towards transferability of shares keeping in mind pre-emption clause with sufficient latitude. Reliance is placed on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese Articles, no share shall be transferred to a person who is not a member so long as any member, or any person selected by the Directors as one whom it is desirable in the interest of the Company to admit to membership is willing to purchase the same at the fair value mentioned in Article (15) hereof.' (Emphasis supplied) 93. Discussion on this aspect needs to be prefixed by two fundamentals. First, the articles will have to be read as a document drafted by businessperson to conduct their affairs. Second, any restriction in the articles must be spelt out with sufficient clarity. If we read Article 14 plainly, first part says that a member may transfer the shares or other person is entitled to transfer to any member selected by the transferor. This part covers a contingency of a transfer of share by a member entitled to transfer to any other member. In case of a public limited company listed on the stock exchange, the shares are generally freely transferable. In a private limited company share transfers can have restrictions. However, normally there is no absolute bar to transfer the shares. As a broad proposition, generally law does not recognize an embargo on transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the Company or person selected as aforesaid at a fair value to be agreed upon between the proposing transferor and the purchasing member and in default of such agreement to be fixed by the Auditors of the Company provided in Article 17 hereof. The transfer notice may include several shares and in such case shall operate as if it were a separate notice in respect of each share. The transfer notice shall not be revocable except with the sanction of the Directors.' Article 15 states that any person proposing to transfer his shares shall give notice in writing to the Company and the notice shall constitute a Company as an agent, which will then step in and undertake further acts as provided in subsequent Articles. The person giving notice to the Company must have a clear and unequivocal intention that he desires to transfer the shares. Further, the notice must specifically appoint the Company as the agent. The words 'Notice shall constitute' does not mean the factum of notice to transfer itself will automatically constitute the company as agent. 'Notice shall constitute' means notice 'must' constitute the company as an agent. There cannot be a notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansferring the shares. Question therefore is, whether the articles were so clear in their purport that even no notice was necessary. For any businessperson reading these articles, the interpretation placed on the articles by Muthu group will not be reasonable. Muthu group has deliberately gone ahead and transferred the shares without notice and now are arguing all possible interpretations of the articles. To my mind therefore, as stated earlier, the finding of the Board that the first part of Article 14 is regarding member-to-member transfer is a distinct provision, and not subject to other restrictions, cannot be termed as perverse. 98. This view also finds support in the observation of the Apex Court in the case of Smt. Claude-Lila Parulekar v. Sakal Papers (P) Ltd.[2005] 59 SCL 414 (SC). In this case, the Apex Court analyzed the Articles of Association of Sakal papers, which was put in issue. The Apex Court held that there were four categories in the hierarchy - first: the pre-emptors; second: any member willing to purchase the shares at a fair value; third: any person selected by directors; fourth: the person to whom transferor may choose to sell the shares. The Apex Court h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acting as an expert. 62. If in case the proposing transferor, after having become bound as aforesaid, makes default in transferring the share, the Directors may receive the purchase money and shall there upon cause the name of the purchaser to be entered in the Register as the holder of the share and shall hold the purchase money in trust for the Transferor. The Directors may appoint any person to execute a transfer of the said share on behalf of the defaulting transferor. The receipt of the Directors for the purchase money shall be a good discharge to the purchaser and after his name has been entered in the Register in purported exercise of the aforesaid power the validity of the transfer shall not be questioned by any person. 63. If the Directors, shall not, within the time prescribed as aforesaid after being served with the Notice, find a purchasing member or select a person as aforesaid willing to purchase the shares or any of them and give notice in manner aforesaid, the transferor shall at any time within 30 days thereafter be at liberty subject to Article thereof to sell and transfer the shares to any person and at any price. 64. Every share specified in the Notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of a default in such agreement being reached that the company's Auditors step in and fix a fair price . The third distinctive feature of these two categories is that upon refusal/default of the preemptor, the transferor is required to give a notice in writing of his desire to transfer. Giving of this notice must necessarily be subsequent to the failure of Article 57-A for whatever reason, as the Directors are required to find a willing person either in the 2nd and if not the 3rd category within a period of 30 days. There is no time limit specified for the completion of the preemptive transfer under Article 57-A. Therefore unless the transferor gives a separate notice of the failure of Article 57-A how would a willing member know whether he/she has a right or when the period fixed for intimating their willingness to purchase was to lapse? Article also requires the Directors to give a notice to the transferor after finding a willing purchasing member or selected under Article Giving of this notice is important because if 30 days expires without such notice by the Directors, Article would come into play and the transferor would be at liberty to sell the shares to any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the factum of transfer was considered. 99. Next question thereafter is, even assuming Article 15 and the scheme as is sought to be interpreted applies, whether this MOU constituted a transfer notice and the agency. According to Mr.Dwarkadas there is no particular format provided for a transfer notice. He submitted that all that is required is the intention. Once there is a desire to transfer the shares, it will constitute the Company as its agent. It is also contended that the agency is created by the Articles and not by a transfer notice per se. It was also contended that the MOU was handed over to Muthu who was Managing director of SAF Yeast and therefore, it constituted valid notice of transfer. Mr.Dwarkadas submitted that any document which shows that there is an intention to sell can constitute a transfer notice. Reliance was placed on the decision of the English Courts in the case of Lyle Scott Ltd. (supra), Mannai Investments Co. v. Eagle Star Life Assurance Co. Ltd. [1997] CA 749 and Re Ringtower Holdings plc., In re [1989] 5 BC 82. It was submitted that there is no specific need to address any separate notice to the Company. It was submitted that Laloum was fully a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n two groups of shareholders as to their shares held. It is absurd to suggest that since Muthu is a managing director, even though what Muthu signed was regarding his shareholding, will constitute a notice to the Company. Further MOU does not state a word of expressly authorising the Company as an agent. Such specific authorization is required and is totally missing in the MOU. In the present case, not only there is no separate and specific notice, but also the fact that the MOU was being treated as notice and was placed before the Board of directors, was not informed to Nafan and Lesaffre. The case of Lyle Scott Ltd. (supra) did not arise from the case of oppression and mismanagement but arose from civil suit for specific performance based on the pre-emptory clauses. Furthermore, as has been rightly pointed out by Mr.De'Vitre, the concerned articles in that case only envisaged an intention to transfer and did not provide for a formal notice. Furthermore, the action of treating the MOU as a transfer notice in the present case is not to be considered as an isolated incident but in the larger scheme of things. In the case of Ringtower Holdings Plc (supra) the Court concluded th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xecute share transfer forms in the name of Nafan. Mr. K.Narasimhan was requested to act as a seller for Muthiah. Mr.Narasimhan was authorized to execute the share transfer forms on receiving the purchase money of ₹ 27,49,38,822 for 80,772 shares. Thereafter the meeting ended. The next meeting was held on 25 May 2009 at 4 p.m. The minutes of meeting dated 17 May 2009 were confirmed and signed. Thereafter the letter received from Mr.Muthiah, dated the same day i.e. 25 May 2009, that the money has been transferred into his account was taken. The advice received by the Company on the same day was tabled. The resolution was passed to transfer the purchase money to Company's current account. Mr.Muthiah placed the letter dated 23 May 2009 from the Company as an agent of Nafan requesting the issuance of duplicate share certificates in view of Laloum, having been informed to Muthu on 20 February 2009 that Nafan had lost original share certificates. The meeting was adjourned at 4.30 p.m. for preparation of duplicate share certificates and was re-assembled at 5.15 p.m. on the same day. On re-assembling, the resolution was passed, the transfer was completed, and the meeting ended. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been informed to be lost by Nafan B.V. to comply with the requirements of law. Yours faithfully, Sd/- A. Muthu (For Saf Yeast Co. Pvt. Ltd., Agent of Nafan B.V.) When Muthu wrote this letter on 23 May 2009 to SAF Yeast for issuance of duplicate certificates as an agent of Nafan, there was no authorisation in writing in favour of Muthu to make such a request. 107. Section 84 of the Act enables a company to issue duplicate share certificate if it is proved that it is lost. Therefore, the Company must satisfy itself that the share certificates are lost. Section 84 of the Act reads as under: [1] A certificate, under the common seal of the company, specifying any shares held by any member, shall be prima facie evidence of the title of the member to such shares. [2] A certificate may be renewed or a duplicate of a certificate may be issued if such certificate- a. is proved to have been lost or destroyed, or b. having been defaced or mutilated or torn is surrendered to the company. [3] If a company with intent to defraud renews a certificate or issues a duplicate thereof, the company shall be punishable with fine which may extend to ten thousand rupees a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company for another certificate in place of the one lost. The articles of association of most companies and Table A provide that if a share certificate is lost or destroyed the shareholder may obtain another on payment of a fee and on supplying such evidence and giving such indemnity as the company may require. When a shareholders loses his share certificate he should at once write to the company stating clearly the loss or destruction of the certificate and request for the issue of a duplicate certificate. On receipt of the letter the company will ask the shareholders to fill in an indemnity form in which the shareholder will agree to indemnity the company against any claim that may be made by any person on the original certificate. He is also required to prove a guarantee by way of double security. In Palmer's Company Precedents, it has been noted as under : The company incurs a serious responsibility by issuing a new certificate unless the old one is cancelled, and it ought not to be done except on very satisfactory proof of loss or destruction, or on a satisfactory indemnity being given. Taking note of these passages, the Division Bench observed thus - Befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up in a meeting, without a single notice to Nafan. What further is needed render a finding of gross impropriety? The manner in which the entire meeting has been pushed through and the manner in which the duplicate share certificates have been secured is nothing but a clear and calculated design to usurp the shareholding of Nafan. Mr.Dwarkadas tried his level best to justify the act as of Muthu group. Most of the events narrated by Mr.Dwarkadas are nothing but internal discussions amongst the Muthu group starting from 16 March 2009 till 25 May 2009. The argument that the agency created in favour of the Company and the MOU itself impliedly gave the power to grant of duplicate share certificates, is sought to be raised with no foundation in law. Language of Section 84 clearly speaks to the contrary for any such implication. It was also submitted that the case in Shoe Specialties Ltd. (supra) is distinguishable on facts. It was also contended that not every conduct need be considered as oppressive. I am not impressed by any of these submissions. The conduct of issuance of duplicate certificates was clearly a part of a design to remove Nafan and Lesaffre from the Company. Once it is hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is concerned with inter-se disputes. Mr.Subramaniam submitted that M/s.Sharp and Tannan carried out their duty of preparing a valuation report as per rules and needless aspersions have been cast upon it. Mr.Dwarkadas submitted that the valuation report was fair and proper and reflected the correct value of shares. According to Mr.De'Vitre the valuation of the shares is so ridiculously low that Nafan and Lesaffre were immediately prepared to pay double the valuation and even higher. 112. The valuation report by M/s.Sharp and Tannan has valued 80,772 Shares of SAF Yeast at ₹ 4315 per share as on 31 March 2008, the total value of ₹ 27,49,38,822. Mr.Subramaniam submitted that the auditors examined the audited accounts for the years ending 31 March 2004, 31 March 2005, 31 March 2006, 31 March 2007, 31 March 2008 and after applying methods of valuation as per guidelines issued by Controller of Capital Issue Guidelines (CCI guidelines) for valuation of Equity Shares of the Companies and the Business and Net Assets of Branches. The valuation was done by capitalising value of average of the profits of the past for the accounting year and Net Assets Value (N.A.V) method. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to ₹ 4315 per share. The same valuer had carried out the valuation earlier. In the year 1998, when Lesaffre sold its shareholding to Nafan the shares were sold at ₹ 1070. Therefore, since 1998 there has been 400 per cent increase in shares. He submitted that unless the valuation is vitiated by fraud or fundamental mistake the same could not be challenged. The particulars of fraud need to be specifically pleaded. He relied upon decisions of the Apex Court in the case of Sangramsinh P. Gaekwad (supra), Bishundeo Narain v. Seogani Rai AIR 1951 SC 280, National Textile Corporation Ltd. v. Nareshkumar Badrikumar Jagad [2011] 12 SCC 695 to contend that specific pleadings are required. He also relied on the decisions in the case of Organon (India) Ltd., In re [2010] 101 SCL 270 (Bom.), and G.L.Sultania v. SEBI [2007] 76 SCL 473 (SC). He reiterated that merely because CCI guidelines have been followed it could not be said that the valuation is fraudulent. He submitted that contention that there is no basis for valuation as of 31 March 2008 as incorrect as MOU required sale consideration to be paid immediately. He submitted that as laid down by Chancery Division Company No: 004 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e need not be taken, in the present case but M/s Sharp and Tannan were fully aware of the implications of their valuation, having been associated with the SAF Yeast for several years. The manner in which the valuation was done in 24 hours, when there was apparently no need for such urgency without following well known methods which has given rise to charge of oppression by the Nafan and Lesaffre. Therefore, the entire issue of valuation has to be viewed in that perspective. There is no doubt, as held by the Apex Court in the case of Miheer H.Mafatlal, Hindustan Lever Employees Union , Organon (India) Ltd. and G.L.Sultania, cases (supra) that Court need to be slow in interfering with the correctness of the valuation and substituting the wisdom of valuer. It is also settled that latitude must be given to the expertise of the valuer and merely because another valuer by adopting some other method can achieve different valuation that the valuation in question is not fraudulent. However, the issue has to be approached in the context of charge of oppression. The entire line of argument of Mr.Subramaniam and Mr.Dwarkadas has been to show that how M/s.Sharp and Tannan followed particular pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceeds to examine the grievance of the objector that the exchange ratio has not been properly worked out. The objector is a shareholder in Alembic Ltd. with 30 shares of ₹ 10 each. The objector, who is himself a chartered accountant by profession, is not in a position to indicate as to how the exchange ratio is detrimental to the shareholders of Alembic Ltd. The exchange ratio of six shares of Alembic Ltd. (resulting company) in lieu of 100 shares of Darshak Ltd. has been proposed in view of the report of M/s. Sharp and Tannan Associates, chartered accountants. In their report dated April 17, 2001, the chartered accountants have referred to the following valuation techniques which are generally used in ascertaining the fair value of a business : (a) Net asset value (NAV) ; (b) Profit earning capacity value (PECV) ; (c) Combination above ; (d) Valuation based on discounted cash flow technique (DCF). The chartered accountants have then discussed the merits and demerits of the different techniques and thereafter suggested that since the DCF method captures all the elements of the value of a business compared to the other methods, the DCF method comprehends the differe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. There is no gain saying that the valuation conformed to the parameters laid down in the RBI Circular of 2004, when the Circular was not for fair value but for completely different reasons. In fact, the Circular dated 4 May 2010-RBI has emphasized for DCF as is the most relevant method for the valuation of shares. 120. The arguments advanced by Mr.Dwarkadas and Mr.Subramanian that the valuation conformed with Circular of 2004 indicate the way Muthu group and Sharp Tannan have acted. Reliance is placed on valuation methods, which are not for fair valuation is required for completely different purpose under the RBI guidelines. The entire attempt is not to put forth the fair value of shares. M/s Sharp and Tannan based its valuation report on Net Asset Value and profit earning capacity value. Even these methods do not comply with RBI circular of 2004. Reliance of the letter dated 19 February 2009 is misplaced. This letter from Reserve Bank of India is a routine letter which only directs that Company to carry out transactions in terms of the circular. It is far-fetched to suggest that the RBI itself applied its mind and approved the valuation carried out treating it as a fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll uphold the valuation. This argument is difficult to accept. What the MOU stated was the parties would part ways on fair value and not upon valuation, which is not fair. Can it be said that even if the valuation is arrived at ignoring well-established methods and it is at ₹ 1, still Nafan must accept the same since it agreed that a statutory auditor would carry out the valuation. The proposition cannot be stretched to an absurd limit. Because a party agrees to a valuation by the statutory auditor it does not mean it relinquish all the rights. Various decisions were cited at the bar on this proposition by Mr.Dwarkadas, mostly of the English Court. It is not necessary to burden the record by referring to all the cases as the Delhi High Court, in the case of Mihir Chakraborty v. Multi Tech Computers (P.) Ltd. [2001] 32 SCL 257 (Delhi), has taken review of the English decisions. In the case of Mihir Charkraborty (supra), the learned Single Judge noted the rival contentions as under : A preliminary point has been taken on behalf of the respondents to the maintainability of the challenge mounted by the petitioner to the valuation report. Mr. P.C. Khanna, learned senior counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r v. Jones (RR) and another. 4. Arenson v. Arenson and another . The learned Judge then took review of the entire case law in respect of challenge to the report of the valuation and observed as under :- Be that as it may, the position in law seems to be that a valuer cannot claim immunity any more if he acts negligently in making his determination and can be sued for tort or negligence but action against the valuer for damages cannot come in the way when the court is considering the validity of the valuation itself. The fact that the parties may have agreed that the valuation arrived at by a valuer would be binding on them, the agreement does not imply that they will be bound even by a valuation which is erroneous. In this country the courts cannot be bound to accept the determination or opinion of an expert which is erroneous as otherwise it would amount to perpetuating the mistake. Mr. Khanna contended that the compromise recorded by the court constitutes a decree and if this is so the valuation arrived at by the valuer cannot be challenged in these proceedings. I regret my inability to accept the submission of the learned senior counsel. While it may be true that the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collusion . In P. Ramanatha Aiyar's The Law Lexicon, reprint edition 1987, at page 216-i, collusion is defined as a secret agreement for a fraudulent purpose; a secret or dishonest arrangement in fraud of the rights of another; a secret agreement by two or more persons to obtain an unlawful object, an agreement between persons to obtain an object forbidden by law, or to obtain a lawful object by illegal means . The petitioner's case is that there is secret and dishonest arrangement between the directors of respondents Nos. 1 and 2, in fraud, which has affected their right. In Wharton's Law Lexicon, 14th edition (1993), at page 212, collusion is defined as to unite in the same play or game, and thus to unite for the purposes of fraud of deception; an agreement or compact between two or more persons to do some act in order to prejudice a third person, or for some improper purpose. In Shrisht Dhawan v. Shaw Bros.,[1992] 1 SCC 534 , their Lordships considered a similar question as to how far fraud and collusion invalidate any decision or action. In paragraph 20 of the judgment, their Lordships said thus (page 553) : Fraud and collusion vitiate even the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clude interested members of the public if it deliberately chose to hold the meeting in a small room. The intention may be to promote another public interest or private interests. A power is exercised maliciously if its repository is motivated by personal animosity towards those who are directly affected by its exercise. In Administrative Law by justice C.K. Thakker, (1992) edition, at page 328, the learned author has stated thus : Sometimes, an authority entrusted with a power does not exercise that power but acts under the dictation of a superior authority. Here, an authority invested with the power purports to act on its own but 'in substance' the power is exercised by another. The authority concerned does not apply its mind and take action on its own judgment, even though it was so intended by the statute. In law, this amounts to non-exercise of power by the authority and the action is bad. In Equity and the Law of Trusts by Philip H. Pettit, fifth edition (1985), at page 148, the learned author says that there is no distinction between the words fraud and dishonest . Both of these mean the same thing and the use of the two together does not add to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave direct evidence of fraud and collusion and inference has to be drawn. The question that arises is whether the conclusions drawn by the Board from the circumstances can be termed as perverse. 125. The Board took note of the pleadings on record and viewed that it was sufficient to constitute pleadings of collusion. The relevant pleadings are reproduced in para 265 of the impugned order. For sake of brevity, they are not reproduced again. Thus, what was contemplated was a fair valuation by statutory auditor, which owed a duty to both Nafan, Lesaffre and Muthu group to arrive at a fair valuation. M/s Sharp and Tannan with no apparent explanation simply omitted DCF method from consideration even though it has gone on record to say that it is the best method. M/s Sharp and Tannan produced a report in one day and then justified the omission of DCF method on the ground that there was a hurry to prepare the report. There was no such hurry and nobody had called for such immediate report within 24 hours. Though it is stated on behalf of Muthu group that Nafan and Lesaffre were insisting on valuation nothing is shown on record that 24 hours valuation was insisted upon. The learned couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in facts and circumstances of the case, to discard the valuation report and make the observations it made. M/s Sharp and Tannan, knowing the responsibility casts upon them and the consequences thereof, ought to have been more careful and ought not to have prepared a report on the basis completely different than the acceptable norms. The total lack of explanation as to why there was need to prepare report in 24 hours and that DCF method was not even contemplated justifies the observations made by the Company Law Board, I do not find that the observations were unwarranted. The Company Law Board having seen the entire record was constructed to make the observations and it was justified in doing so. I therefore, agree with the conclusion of the Board that the valuation report, the meetings, and transfer of shares amounted to acts of oppression on the part of Muthu group, and the report was biased. Relief 128. Now coming to the point of grant of relief. The Board, even though it has held that Nafan succeeded in proving the case of oppression, concluded that the ultimate relief should be that Nafan and Lesaffre must sell its shareholding to Muthu group. The Board concluded that two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... buy out in favour of Muthu group because Lesaffre and Nafan have entered into joint venture for money, which they have received. They are not based in India and their personnel rarely visit the unit established in India. It is better that the Indians run the Company. Government may not allow Lesaffre and Nafan to acquire 100 per cent shareholding. Muthu group has given guarantees. Muthu has vast experience in the business and has successfully managed the Company. Actions taken in the meetings were taken on apprehension and legal advice. One aberration should not deprive Muthu group of the Company. If Muthu group is directed to exit, they will have no other source of livelihood. If Lesaffre and Nafan are directed to exit, they will not suffer any prejudice in their Multi-national Company and run various other companies in other developing countries. 130. I have considered the issue. Firstly, the Board has rightly held that two groups cannot go together and parting of ways is imminent. The Board has also rightly discarded the rival contentions of regarding contributions. SAF Yeast is a joint venture. It was created together. Nafan and Lesaffre held 51 per cent shareholding and Mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, the primary stand of the Muthu group is that since there is no oppression by them there is no question of any buyout of their shares and without prejudice, they are willing to buyout the shares at the valuation fixed by this Court. 132. I have already concluded that the findings of the Board regarding oppression by Muthu group are correct. Therefore, question is regarding the validity of the direction to order buyout in favour of Muthu group even if they committed act of oppression. In earlier paragraph, I have mentioned the grounds on which Board has ordered buyout of the shares of Nafan and Lesaffre. The grounds given by the Board as to why there should be a buyout of the shares of Nafan and Lesaffre are on the face of it, erroneous. The Board has stated that Muthu and his family will have no source of livelihood. The manner and the level at which the litigation is fought in the Board as well as in this Court and it will be na ve to assume that the family will be on streets. Furthermore, if a buyout is ordered, it is not that Muthu group will be thrown out on the streets without any money. The buyout will be of the value of their shareholding, which will be substan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of Lesaffre and Nafan and if the share of Nafan and Lesaffre drop below a particular limit, the word 'SAF' will be deleted. It is the contention of Muthu group that the phrase 'SAF' is not derived from Lesaffre but from a Hindi term and it is not much of importance. However, the clause in the Participation Agreement cannot be ignored. The Board has also noted that Lesaffre is a world leader in manufacturing of yeast. Phonetically SAF does seem to have been derived from Lesaffre. The name, which indicates that SAF Yeast is a part of one of the world leaders in the yeast business, will be no doubt create substantial goodwill. This aspect is important while deciding buyout. 135. One more aspect is about the technological and financial assistance. There is no finding by the Board that Lesaffre did not extend any technological support at all. What the Board has emphasized is that since Muthu has vast experience in the field of market relating to the business of SAF Yeast, the Muthu group should be allowed to buy out the Nafan and Lesaffre. However, this finding is contrary to the Board's own finding earlier that it is not inclined to accept contentions of eithe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led by virtue of his majority to control, manage and run the affairs of the company. This is a benefit or advantage which the member enjoys and is entitled to enjoy in accordance with the provisions of company law in the matter of administration of the affairs of the company by electing his own men to the Board of Directors of the company. 25. A majority shareholder should not ordinarily be directed to sell his shares to the minority group of shareholder, if per chance through fortuitous circumstances or otherwise, the minority group of shareholders comes into power and management of the company. The majority shareholders by virtue of their majority will usually be in a position to redress all wrongs done and to undo the mischief done by the minority group of shareholders, as it will always be possible for the majority group of shareholders to regain control of the company so long as they remain in majority in the company by virtue of the majority. Except in unusual circumstances the majority group of shareholders, in my opinion, should never be ordered, or directed to sell their shares to the minority group of shareholders. An order directing the majority group of shareholder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs without informing Nafan and Lesaffre and they can transfer their share holding in an unfair manner. It is not a matter of legal niceties but a matter of basic fairness in dealing with somebody who was once a long-standing partner, and the association was almost that of a quasi partnership. 140. The Board noticed decision of the Apex Court in the case of Kamal Kumar Dutta (supra), but has not given effect to the underlying principle laid down therein. Out of various decisions cited by the learned counsel for the parties, the case of Kamal Kumar Dutta (supra) comes closest on the terms of factual situations and therefore, the most relevant. The review of law on fairness taken by the Apex Court is already reproduced. In this case, two non-resident doctors, Dr.Kamal Kumar Dutta and Dr.Binod Prasad Sinha along with an Indian entrepreneur Sajal Dutta who was the younger brother of Kamal Kumar Dutta, (supra) incorporated Ruby General Hospital Limited, Calcutta as a Company in the year 1991. The hospital was set up with 88 per cent shareholding. 88 per cent were NRI shares and balance by the resident Indian. Dr. Kamal Kumar Dutta contributed 4.26 crores while his brother Sajal Dutta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was known to the respondent- Sajal Dutta who is the brother of appellant No. 1 that whenever his brother comes to Calcutta he does not stay in his house yet the notices were sent to Jodhpur Park, Calcutta. This shows lack of probity on the part of Respondent No. 2 to somehow or the other oust his brother from the majority shareholding. Similarly, on the basis of such resolution, Dr. Binod Prasad Sinha, the appellant No. 2 was ousted from the directorship under Section 283(1)(g) of the Act on the ground that he has not attended the meeting and he has no interest whatsoever. Similarly, the appellant No. 1 was also ousted in the meeting which was held on 7.2.1996 when another meeting scheduled to be held on 16.2.1996 and it was within the knowledge of Sajal Dutta that his brother was likely to attend the meeting to be held on 16.2.1996. But suddenly the meeting was held on 7.2.1996 and the appellant No. 1 was stripped off his chair as the Managing Director of the company. Hence, Sajal Dutta became the Managing Director in place of Dr. Kamal Kumar Dutta and the minutes of the said meeting dated 7.2.1996 were not brought forward in the meeting of 16.2.1996 in which Dr. K.K. Dutta wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of these arguments have any substance. As regards the MOU and the Articles, I have already rendered my findings. The question is of probity and fairness. Muthu group fully knew that meeting is to be held in Paris. Muthu group consciously did not give notice to Nafan and Lesaffre as they wanted to transfer their share holding behind their back and a clear plan was hatched for that purpose. Even assuming that they did so as a pre-emptive action that does not excuse taking law in their hands. They could have approached the Board or the civil court for necessary action. With full knowledge that Lesaffre and Nafan are not agreeable to abide by the MOU a meeting was held, duplicate share certificates were issued and shares were transferred at the valuation, which was not acceptable and fundamentally wrong. This is not a onetime aberration but a clear calculated act of grossest oppression. It may be that in the past notices were not given but never before stage of exit in the company had arisen. It was the most important decision to be taken in the entire existence of the company. After having successfully gone through the plan of usurping the share holding of a majority group, detailed j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t companies. The division bench of Delhi High Court echoed similar sentiments in the case of SRM Exploration Pvt. Ltd. v. N S N Consultants S.R.O., as under : 12. .. The world is a shrinking place today and commercial transactions spanning across borders abound. We have wondered whether we should be dissuaded for the reason of the transaction for which the appellant Company had stood surety/guarantee being between foreign companies. We are of the opinion that if we do so, we would be sending a wrong signal and dissuading foreign commercial entities from relying on the assurances/ guarantees given by Indian companies and which would ultimately restrict the role of India in such international commercial transactions. This is the larger public interest which goes beyond the interest of trying to protect the Respondent Company on the ground of repercussions of the admission of the admission of the petition. 67. Before I conclude, I must state, shorn of all legal niceties, that there is no manner of doubt that amounts were guaranteed to be repaid to the Petitioner by the respondent company. Respondent has resolutely refused to pay it back inspite of assuring to do so man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmance of an agreement is discretionary. Therefore, the right in favour of Muthu Group has not fructified yet to defeat the right which has accrued right now in favour of Nafan. 146. There is however one more aspect. I must also keep in mind the interest of SAF Yeast. If future uncertainties are avoided it will be good for SAF yeast. If future of SAF Yeast can be made litigation free, then I will explore that option first. That option I will rank higher that the right of Nafan for buyout at present. However, if that is not being secured then right in favour of Nafan will have to given effect to. I say so because after buyout is granted in favour of Nafan, litigation will not end as the will suit go on. Nafan has shown that it is not averse to a competitive bid, though it is their alternate submission. Therefore, if Muthu group withdraws the civil suit and undertakes not to rely on the MOU, then the litigation can be put an end to by a bid. Then if a competitive bid is held, litigation free future can be secured for SAF yeast. However, if Muthu group is not ready and this object is not being achieved then buyout in favour of Nafan will have to follow. I am, therefore, of the opin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be sustained as it is beyond the jurisdiction of the Board, and needs to be agitated in the suit, which is pending. Prima facie, no unquestionable intention can be culled out from the MOU. The Board meetings held on 29 January 2009, 23 May 2009, and 25 May 2009 and the resolutions passed therein, are invalid, illegal, and oppressive, so also the issuance of duplicate share certificates. The Board has rightly discarded the valuation report and the reliance upon the same by Muthu Group is an act of oppression. The comments made by the Board on the valuation report, were justified. The direction of the Board to Muthu Group to rectify register of SAF Yeast by restoring the shareholding of Nafan and Lesaffre is valid and proper. The direction given by the Board to Nafan and Lesaffre to transfer their shareholding to Muthu Group is not sustainable and has to be set aside. Nafan is entitled to a buyout as prayed for in its petition. However, it will be in the interest of SAF yeast that the litigation ends and if Muthu group agrees to withdraw the suit and undertake not file further proceedings based on the MOU then the dispute can be put an end to by holding a forward competitive bid. If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the registry of this court that they will not take any proceedings on the basis of the MOU in question, then Part-I of this order will come in operation. If the above mentioned steps are not taken by Muthu Group within the stipulated period as above, Part-II of the order will come into effect forthwith and prayer clause (a) sought for by Nafan in its company petition will stand granted on the terms mentioned in Part II. J. Interim orders operating in these appeals shall continue for period of six weeks from today. PART - I a. The Board of Directors, including the powers of the Managing Director, is immediately and completely suspended. b. Mr. Justice J.N. Patel, Retired Chief Justice of Calcutta High Court is appointed as an Administrator on the same emoluments and immunity, as directed by the Board with the powers of the Chairman of the Company's Board of Directors, and the Managing Director, to supervise the functioning of the Company on an interim basis until the process of sale/purchase is complete; upon appointment of the Administrator, Respondent Nos.2-6 in the petition (Muthu Group) shall forthwith deposit with the Administrator signed, duly filled in but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... party bidding the highest cash amount for 100% of the shares under the auction shall be entitled to buy 100% of the shares of the Company with the successful bidder getting credit for its own shares (either 51% for Nafan or 49% for the Muthu Group-Respondent Nos.2 to 6); the process of auction shall be conducted under the supervision of the Administrator. i. The successful bidder will deposit in Court by Bankers cheque (Demand Draft) the amount payable, along with all applicable taxes, within fifteen business days after being declared by the Court as the successful bidder. j. On such payment, the shares will be transferred to the buyer, the Register of Members of the Company shall be updated accordingly, the Administrator will be replaced by the board of directors appointed by the successful bidder, and payment will be released by the Court to the seller. k. If the successful bidder does not deposit in Court the amount payable within fifteen business days after being designated as the successful bidder, the other party will be entitled to buy the shares of the defaulting party for a price equal to the higher of either Euros 28 Million (i.e. ₹ 196,83,79,380/- at the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Directors, including the powers of the Managing Director, is immediately and completely suspended. f. Mr.Justice J.N. Patel, Retired Chief Justice of Calcutta High Court is appointed as an Administrator on the same emoluments sand immunity as directed by the Board, with the powers of the Chairman of the Company's Board of Directors, and the Managing Director, to supervise the functioning of the Company on an interim basis until the process of sale/purchase is complete; upon appointment of the Administrator, Respondent Nos.2-6 in the petition (Muthu Group) shall forthwith deposit with the Administrator signed, duly filled in but undated share transfer forms along with the original share certificates in regard to all the shares held by them in the Company. g. Until the process of sale/purchase is complete, the powers of the Board of Directors shall be vested in an equal number of Directors/alternate directors nominated by Nafan and the Muthu Group (as one group) with the Administrator holding the casting vote, the Directors/alternate Directors nominated by Nafan and the Muthu group shall be entitled to attend meetings of the Board and/or general meeting of the SAF Yeast; ..... X X X X Extracts X X X X X X X X Extracts X X X X
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