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TMI Blog2018 (3) TMI 1436X X X X Extracts X X X X X X X X Extracts X X X X ..... e and the same is to be rejected. We find ourselves in complete agreement with the learned NCLT in holding that nothing has been brought on record to establish that the transfer of shareholding by Appellant no. 3 in favour of Appellant no. 2 was not enforceable in law. No financial irregularity has been brought to our notice and there is no proof of oppression or mismanagement. There is nothing on record to arrive at a finding that the transfer of shareholding by Appellant no. 3 Company in favour of Appellant no. 2 Company was legally unenforceable. Contention raised on this count is accordingly repelled. There is no legal infirmity in the impugned order in so far as direction to Appellant no. 2 to accept the offer of transfer of 500 shares by the Respondent is concerned. As regards valuation, it has rightly been noticed by the learned NCLT that the valuation report dated 16th February 2015 has been drawn up merely for purpose of payment of stamp duty and not with the intention to determine the transfer price of shares. Be it seen that in terms of first valuation report dated 1st February, 2014 fair and reasonable price for transfer of shares was determined at ₹ 2064.74 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the grounds mentioned therein. 2. The case set up by the Respondent herein before the National Company Law Tribunal, Mumbai Bench (hereinafter referred to as NCLT ) may shortly be adverted to. The Appellant no.1 M/s Span Biotronics Private Limited was incorporated under Companies Act 1956 on 8th November, 2006. Respondent herein was appointed as Vice President (Research Development) in Appellant No.1 Company on 22nd January, 2007. On 10th August, 2008, 500 equity shares having face value of ₹ 100 each were allotted to him. While Respondent herein held 5% shares, remaining 95% shares of Appellant No.1 Company were held by Appellant no.3 Span Diagnostic Limited. Respondent herein claimed that as Vice President, he played a key role in activities of the company looking after the administration and promoting the research and development business of the company. Appellant no.1 executed royalty agreement with Appellant no.3 under which Appellant no.3 was granted the right to possess, manufacture and sell off the instruments developed by Appellant No.1 Company, for a consideration of a royalty. Respondent herein was given entitlement of 10% of the gross royalty received by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activity w.e.f. 27th June, 2015. This was followed by one more letter relieving the Respondent herein. Respondent herein addressed letters to the company raising his grievance that the entire transaction was carried out without consulting him. On 31st March, 2015, Chairman of Appellant no. 2 Company informed the Respondent herein that it was decided to windup the operations of Appellant no. 1 Company. Respondent herein objected to the same on the ground that the same was prejudicial to the interest of the company. Respondent herein also shot a letter to the company detailing his vital role in growth of the company. He further emphasized that he was not consulted despite being the minority shareholder of the company. He also claimed compensation for his wrongful termination and royalty besides the value of his 500 shares. 4. Appellants, while denying the allegations of oppression and mismanagement in their reply pleaded that the Respondent herein was one of the employees of the company and very small royalty income constituted the share of Respondent. It was further pleaded that acquisition of Appellant no. 3 Company by Appellant no. 2 Company was under due process of law and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore so as no instances of financial irregularity had been brought to its notice. Referring to letter dated 17th July, 2015 written by Appellant no. 1 Company to Respondent herein when the Respondent herein had expressed his intention to transfer his shareholding in favour of Appellant no.2 Company, NCLT observed that it was beneficial to Respondent as also Appellants 1 and 2 to accept exit plan of the Respondent. It was further of the view that it would be proper to direct the Appellant no. 2 to accept the offer of transfer of 500 shares by the Respondent. Rejecting valuation report dated 16th February, 2016 on the ground that the same was drawn up only for purpose of payment of stamp duty, the NCLT acted upon valuation report dated 1st February, 2014 determining the valuation of shares at ₹ 2064.74 per share for arriving at the consideration amount of 500 shares to be transferred by Respondent herein. 6. In so far as claim for a sum of ₹ 5 Lakhs towards royalty due on the Appellant no.1 Company and claim for severance pay of ₹ 26,75,000/- set up by the Respondent herein is concerned, NCLT deemed appropriate to allow a sum of ₹ 20 Lakhs to be disbursed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... illegal. 9. Heard learned counsel for both the parties and scanned through the material on record. Findings recorded by the NCLT have been assailed as being erroneous. Following issues are raised in the appeal: I:- Whether the Respondent was not entitled to sum of ₹ 20 Lakhs in lieu of his past services rendered as Vice President when he had been paid salary, allowances and gratuity pursuant to his resignation in terms of letter of his appointment. II:- Whether the Appellant no.2 was under no obligation to purchase the shares held by Respondent at a price of ₹ 2064.74 per share when the shares were earlier purchased by Appellant no. 2 at a price of ₹ 1165 per share. Issue No. I 10. It is the admitted position in the case that the Appellant no.1 Company comprised of two shareholders. While Appellant no. 3 - M/s Span Diagnostics Ltd held 95% shares, Respondent was the minority shareholder holding 5% share. It was in deference to the professional qualification of the Respondent that he was invited to join the Appellant no. 1 Company with his designation approved as Vice President (Research and Development) in terms of his letter of appointment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf without leave or remain absent beyond the period of leave originally granted or subsequently extended, you shall be considered as having voluntarily terminated your employment without giving any notice unless: i) return to work within 8 (eight) days of the commencement of such absence and ii) give an explanation to the satisfaction of the management regarding such absence. 6.3 Should you desires to resign, you will be required to give one month s notice in writing or amount equivalent to one month s salary (i.e. Basic salary plus all allowances) in lieu thereof. In case the company desires to relieve you from the services, the company shall also give one month s notice in writing or amount equivalent to one month s salary (i.e. Basic salary plus all allowances) in lieu thereof. The condition of one month s notice as aforesaid may be waived or may be reduced by the management at the sole discretion of the management. 12. A bare perusal of the provisions contained in the aforesaid clause makes it abundantly clear that the employment of Respondent was terminable on one months notice from either side which could be waived or reduced by the management at its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in lieu of his professional qualifications utilized during the initial days of establishment of company. There is no justification in allowing this sum of money, as the Respondent has been duly compensated and paid all benefits in terms of his contract of employment. The utilization of professional qualification of Respondent during initial days of establishment of the Company would not entitle the Respondent to any additional benefits beyond the scope of contract of employment and the financial benefits like remuneration/ salary agreed upon by the parties. Respondent has allowed his professional qualification to be exploited strictly in adherence to the terms of contract of employment for which he cannot be held entitled to some further amount in addition to the amount paid towards full and final settlement of his claim on account of service benefits admissible in terms of contract of service. May be, the Respondent, by engaging in research devised products initially providing company to gain foothold in the market but that was expected of him as an employee of the status of Vice President who also held 5% shareholding. The contribution made by him for emergence of the company dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en considered as beneficial to both the parties by learned NCLT and we take no exception to such finding. There is no legal infirmity in the impugned order in so far as direction to Appellant no. 2 to accept the offer of transfer of 500 shares by the Respondent is concerned. As regards valuation, it has rightly been noticed by the learned NCLT that the valuation report dated 16th February 2015 has been drawn up merely for purpose of payment of stamp duty and not with the intention to determine the transfer price of shares. Be it seen that in terms of first valuation report dated 1st February, 2014 fair and reasonable price for transfer of shares was determined at ₹ 2064.74. Same was adopted by the concerned parties. In the face of same, the subsequent valuation report dated 16th February, 2015 has rightly been held as farce and undervalued to evade proper stamp duty. We accordingly find no infirmity in the finding recorded by learned NCLT that valuation report dated 1st February, 2014 at the rate of ₹ 2064.74 was to be taken into account for arriving at consideration amount of 500 shares to be transferred by the Respondent. This finding is accordingly upheld. 17. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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