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TMI Blog2018 (7) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... credit limit or loan is not enough. For such reasons, we find that the reasonings recorded by the learned NCLT in upholding allotment of 95,500 equity shares to Respondents 4 and 5 cannot be upheld by us. NCLT did not also look into the correctness of issue of convertible debentures on 28.02.2011. The debentures issued were soon converted into shares by the Respondents 2 and 3, to the extent of 80010 equity shares which was done on 19.04.2011 in Board Meeting. We find that the NCLT wrongly held POD 9 in favour of the Respondents. The EOGM called suffered from sufficient Notice to the Appellants, who are majority shareholders and thus, the decisions taken for increase in authorised share capital cannot be upheld and deserve to be set aside. Respondents 2 and 3 are guilty of oppression and mismanagement. Winding up of the Company, however, we find will not be in interest of Members. We agree with NCLT on this count. To conclude:- We note NCLT has already set aside 80010 equity shares by conversion in Meeting dated 19.04.2011 and 80010 shares issued on 25.07.2012. a) We set aside the allotment of 95,500 equity shares to Respondents 4 and 5 and the decision to issue c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra, Ahmedabad – 380009 is appointed as “Independent Valuer” to value the shares of the 1st Respondent Company as on the date of filing of petition. The Respondents 2 and 3 will have the first right to purchase the shares of the Appellants – original Petitioners in 1st Respondent Company, but not below the fair value fixed by Valuer, and in case Respondents 2 and 3 fail to purchase the shares of the Petitioners – Appellants at the value fixed by the NCLT, the Respondents 2 and 3 must sell their shares at the fair value determined by the Independent Valuer to the Petitioners – Appellants. After filing of the Report by the Independent Valuer, the Appellants and Respondents 2 and 3 would be at liberty to file application before the NCLT within two weeks from the date of service of the Valuer Report on them, to determine the mode and manner in which the transfer of shares shall take place. NCLT may, if necessary, extend the above date fixed for Audit Report and date fixed for Report of Independent Valuer, if necessary. NCLT will ensure carrying out of these Orders and if Auditor/Valuer have any difficulties, or for any other reasons it becomes necessary, may pass such further and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Appellants which made it impossible for them to attend such meetings. The Respondents 2 and 3 did not provide copies of minutes of various meetings. Only on 5th January, 2013 when Respondent No.2 filed affidavit in NCLT, the Appellants came to know that the Respondents 2 and 3 (hereinafter referred as Respondents ) had held Board Meeting on 28th February, 2011 and allotted 45,500 equity shares to Respondent No.4 and 50,000 equity shares to Respondent No.5. This was confirmed when they took online search on the portal of Ministry of Corporate Affairs on 3rd March, 2014. In Board Meeting dated 28th February, 2011 by another Resolution, the Respondents had issued fully convertible unsecured debentures of 22,86,000 divided into 2,28,600 debentures of ₹ 10/- each to Respondent No.4. 2. The Appellants claimed that the Respondents (2 and 3) convened Board Meeting on 19.04.2011 vide purported Notice dated 12th April, 2011 which was not received by the Appellants and passed the Resolution converting 35% of the total value of debentures into equity shares and allotted 80,010 equity shares to Respondent No.4. 3. It is claimed that the Appellants were shocked to know that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he NCLT erred in putting blame on the Appellants regarding non-working of machine supplied by sister concern of Appellant No.1 and it failed to appreciate that the order placed itself was for an used machine. NCLT wrongly upheld EOGM dated 18th June, 2011 on the basis of quorum and failed to appreciate that there was no adequate Notice to the Appellants. 8. The Appellants thus want that part of the Impugned Order which is not in their favour should be upset and the increase and issue of all shares in disputed meetings should be set aside. 9. Against this, the Respondents claimed that the old Act is silent regarding the minimum time period to be given for sending of Notice to Directors of the company for Board Meeting. Article 25 of the Articles of Association of Respondent Company requires 7 days clear Notice for General Meeting . Thus according to Respondents, the Appellants cannot claim that there was short Notice for the various Board Meetings and Extra Ordinary General Meetings and Annual General Meeting. It is claimed that Section 81 of the old Act did not apply to private companies and further issue of capital can be made in any manner as deemed fit by the Directors. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e regarding technology, expertise, machinery supplies and funding of the Company. The AGM, EGM and BM were validly and lawfully held. The Respondents want the appeal to be dismissed. 10. The learned NCLT in its Impugned Order has reproduced the cases as were put up by respective parties before the NCLT and the submissions made by the parties in Paragraphs 1 to 15. In Para 16, NCLT formulated points for determination. Para 16 reads as under: 16. Basing on the pleadings of both the parties and the rival contentions, the following points emerge for determination; ( 1) Whether the amendments carried out in view of the order of the Company Law Board dated 22.8.2014 made in CA No.146 of 2014 cures the technical defects pointed out by the Respondents in filing the Petition; ( 2) Whether the Letter of Intent dated 3.10.2008 and draft Shareholders Agreement of August 2010 are binding on the parties in respect of the shareholding pattern of 1st Respondent Company as 51% : 49%; ( 3) Whether Petitioners are entitled to file this Petition claiming reliefs under Section 397 and 398 without taking recourse to arbitration as provided in the draft Share Purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quity shares to Shyam Group (Respondent No.4 and Respondent No.7) on 25th July, 2012 is invalid for want of notice to the Petitioners; ( 16) Whether Respondents failed to provide inspection of books of accounts and records to the 1st Respondent Company and failed to provide copies of Minutes of Meeting to the Petitioners; ( 17) To what relief. 10.1 The learned NCLT then proceeded to record reasonings and findings with reference to the points for determination which NCLT had framed. In Para 38, NCLT observed as under: 38. In view of the above discussions and the findings on Points No.7 and 15, it can be concluded that 35% of the debentures which were converted into equity share capital by issuing 80010 equity shares to Shyam Group (Respondent No.4) on 19.4.2011 and another 80010 shares which were allotted to Respondent No.4 and 7 on 25th July, 2012 are held to be illegal and liable to be set aside. The very fact that shares were allotted to Respondents only to the exclusion of Petitioners amount to act of oppression, although it is made for the requirements of 1st Respondent Company. The winding-up of 1st Respondent Company is not in the interests of Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to how there were applications received for issuance of shares. Nothing was shown as to how pricing guidelines as mandated by law were followed. The service of Notice of this meeting was also not proved. In Para 38 of the Impugned Judgement with reference to another point, NCLT observed that issuing of shares to the exclusion of Petitioners amounted to act of oppression but did not apply the same analogy while dealing with POD 6 relating to meeting dated 28th February, 2011. She submitted that on 28.02.2011, the Respondents confirmed the earlier minutes of meeting dated 29.09.2010 which was about 5 months earlier meeting. According to her, the alleged E-mail Notice does not show complete address of the Appellants when the address mentioned is compared with other documents where receipt of Notice is not in dispute. She submitted that with incomplete address, the E-mail would not go. According to her, even if the Notice was to be considered the Agenda was totally vague and suddenly the Board had taken up further issue of shares and also illegally issued convertible debentures. She submitted that even if it was to be stated that on 22.02.2011 a Notice was issued, it would be hopele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the Appellants invested ₹ 1.82 crore as initial investment and subsequently did not bring in any more funds although the Company was in financial distress. The Appellants did not join the bank guarantees in respect of loan raised by the Respondents to run the business and they also refused to invest funds. According to them, the sole test relating to liability of issuance of shares is whether it was done in the larger interest of the Company even if incidentally it benefited the Directors in any manner. It has been argued that the Companies Act does not specify any time period for sending Notice relating to Board Meetings of the Directors. The Articles of Association of Respondent Company are silent with regard to Notices for the Board Meetings but Article 25 specifies that for General Body Meeting, it can be called with 7 days Notice. Thus according to Respondents, the Notices issued for the various Board Meetings, EOGM and AGM could not be faulted with. It is also argued that Section 286 of the old Act which deals with meetings of the Board of Directors does not say that every item which is to be discussed at the Board Meeting must be specified in the Agend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al. It was held by Respondent Nos.2 and 3 as Managing Director and Director. The minutes confirmed previous minutes of Board Meeting held on 29th September, 2010. The first issue taken up appears to be allotment of shares. The Minutes record that a list showing share application money received for allotment of equity shares has been placed before the meeting. The Resolution proceeds to resolve issue of 95,500 equity shares to be allotted to the applicants as shown in the Allotment Statement. The Allotment Statement is not part of the Minutes or on Record. However, it appears that 45,500 equity shares were allotted to Respondent No.4 and 50,000 equity shares were allotted to Respondent No.5. The contention of the counsel for Appellants is that these are sister concerns of the Respondents 2 and 3. This is not disputed. The Minutes dated 28th February, 2011 further show that Respondent No.2, the Managing Director in the meeting informed the meeting that fully convertible 11% debentures are to be issued to the following persons; details of whom have been placed before the meeting . The Managing Director thus informed and the other Director who is his brother appears to have agreed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te address - [email protected] . The argument of the learned counsel is that if this document of e-mail purporting to forward the Notice of Board Meeting dated 28.02.2011 is compared with other documents like at Page 150, 380 or 365 which relate to other correspondence, it is clear that this e-mail did not contain the correct and complete e-mail address of the Appellants. Her argument is that in other correspondence where complete address is there like [email protected] or [email protected] , the e-mail reached. The counsel submitted that looking to the technology, if there is even a dot less or space more in writing the e-mail address, the e-mail would not go. The argument is that the Appellants had not received the Notice of Board Meeting dated 28.02.2011 in which apart from the fact that the Agenda was vague, major decisions were taken regarding further issue of shares and issue of convertible debentures. 21. We find that it is for the Respondents to prove that Notice was duly sent and served on the Appellants who were majority shareholders. The document at Page 295 regarding address of the Respondents in the e-mail is quite vague and even the Agenda relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions and at par, at premium or at discount [subject to the provisions of the Act] as they may from time to time think proper. 22.2 The above Clauses of Article 3 and Article 6 when they are kept in view and spirit of these Articles is considered, it can be seen that the shares at the disposal of Directors also were under the control of the Directors subject to the provisions of the Act. There was prohibition to accept deposits from persons other than members, Directors or their relatives. We do not think that sister concerns of the directors could be included in the meaning of Relatives . However, in the present matter, the Respondents 2 and 3 issued convertible debentures to Respondent No.4 who turned out to be their sister concern. The learned counsel for the Appellants has relied on the Judgement in the matter of Needle Industries (India) Ltd. vs. Needle Industries Newey India Holdings Ltd. reported in 1981 SCC (3) 333 to submit that when the matter related to private limited company between closely held groups, even if Section 81 of the old Act did not apply, still the principles of Section 81 were required to be followed and Respondents 2 and 3 who were in posito ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of machineries arrived from Italy has a special priority on the discussion that will follow. Both party agreed to go ahead on this solution after investigating on all different ways to work it out. Both parties are agree to wait for CA Mr. Mehta suggestions offered by the Indian law. Both parties are agree to update this meeting after we will receive all options from company CA, anyway not later than 12 days from today. 22.4 Learned counsel for the Appellants submitted that when such Meeting took place between the parties because of which the Minutes (as seen at Page 266) were sent, the Appellants were not aware and did not know that the Respondents 2 and 3 had already brought about a Board Meeting as claimed on 28.02.2011. 22.5 The learned counsel for the Respondents referred to document at Page 237 which is dated 20th May, 2009 from the Bank of Baroda to the Company. It is submitted that the Company was in need of funds and when Bank of Baroda was approached, they had laid down terms and conditions as can be seen from the Annexures. According to him, the Respondents 2 and 3 had given security of their personal property to raise the funds. In answer to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Respondents 4 and 5 cannot be upheld by us. NCLT did not also look into the correctness of issue of convertible debentures on 28.02.2011. The debentures issued were soon converted into shares by the Respondents 2 and 3, to the extent of 80010 equity shares which was done on 19.04.2011 in Board Meeting. 24. While dealing with Point No.7, which was relating to issue of 80010 equity shares to Respondent No.4 by way of conversion of 35% debentures into equity shares in the purported Board Meeting on 19th April, 2011, the learned NCLT in Para - 29 referred to the Agenda to find that it had no mention about allotment of equity shares to Shyam Group by way of conversion. The NCLT thus held the point against the Respondents and set aside such conversion. The Respondents have not filed Appeal against such setting aside of 80010 equity shares on 19.04.2011 and thus the Impugned Order to this extent becomes final and no further discussion regarding this Meeting is called for except for the mention that regarding this Meeting also, the case of the Appellants is that they did not receive Notice dated 12.04.2011. Just one day after the said Notice dated 12.04.2011, there appears correspond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectors representing the Appellant No.1 did not attend Board Meetings on 28.02.2011, 19.04.2011 and 18.05.2011 and so there was deemed vacating of office of Director and that is why E Form 32 which is at page 339 in the record of appeal had been filed with ROC. We have already held that it is not proved that Appellants were served with the Notice dated 22.02.2011 for the Board Meeting dated 28.02.2011. The NCLT itself has held while discussing Resolution dated 18th May, 2011 in POD 8 that no material had been placed on record by the Respondents to show that Notice of Board Meeting held on 18th May 2011 was sent to the Petitioners and that it was received by the Petitioners. When the Respondents were counting even the meeting dated 18th May, 2011 to rush to submit E Form 32 (as at Page 339), the alleged claim of vacating of office of Director by the Appellants 2 and 3 cannot be upheld. The finding of the learned NCLT below POD 8 against the Respondents has not been challenged by the Respondents by filing any appeal. When Notice was not proved the Resolutions of Board Meeting dated 18.05.2011 will have to be held as invalid. 27. The Minutes of the Board Meeting dated 18th May ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... May, 2011, the Minutes dated 18th May, 2011 must be held as not binding on the Appellants as no Notice of the same was given to the Appellants. To recall, NCLT has held the Resolutions passed in the purported Board Meeting dated 18th May, 2011 as invalid for want of Notice to the Petitioners and this is not challenged by the Respondents by filing Appeal. This would also take away the base for the EOGM called on 18.06.2011. EOGM dated 18.06.2011 29. The case of the Appellants regarding this EOGM is that there was short Notice. Respondents claimed that Notice dated 24th May, 2011 was sent to the Appellants. Copy of the Notice dated 24th May, 2011 is at Page 359 of the record. Typically, what purports to be e-mail (as at Page 358) forwarding the Notice does not show complete e-mail address of Appellants 2 and 3. However, it appears that this time hard copy had also been sent and the Appellants received the same on 13th June, 2011. The Appellants reacted by sending e-mail and also writing letter dated 15th June, 2011 (copy of which is at Page 362). Portion of the letter is reproduced below:- Subject : Notice of Convening of the Extraordinary General Meeting o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ussed above and the e-mail dated 13.06.2011 concluded as under:- Therefore, the letter dated 15.6.2011 and the E-mail dated 13th June, 2011 sent by Belfin Spa to the 2nd Respondent clearly show that they have got knowledge of the EOGM scheduled to be held on 18th June, 2011 and the Agenda of the Meeting on 18th June, 2011. The Company informed the Petitioner that EOGM was scheduled to be held on 18th June, 2011 and to complete the directions given in the EOGM they are calling for the Board of Directors meeting on 2nd July, 2011. It appears that there was sufficient quorum for the EOGM held on 18th June, 2011. 30.1 The learned counsel for the Appellants rightly criticised this finding that it was not a question of sufficient quorum for EOGM but the question was whether there was sufficient Notice for the Appellants to attend the EOGM. The discussion of the learned NCLT does not show that it discussed the alleged forwarding e-mail of 24.05.2011 and the incomplete e-mail addresses as seen at Page 358. 31. From the reasons above, we find that the NCLT wrongly held POD 9 in favour of the Respondents. The EOGM called suffered from sufficient Notice to the Appellants, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07.2011, on 07.07.2011, the Respondents appear to have held Board Meeting and issued 3,83,334 shares to Shyam Group. 34. Coming back to the Board Meeting Minutes dated 02.07.2011, the Respondents 2 and 3 recorded that the Appellants 2 and 3 had been absent from all the Board Meetings continuously for a period of 3 months without availing leave and so as per Section 283(1)(g), their Office of Directorship stood vacated. In the same Resolution, however, there is also Resolution by the Respondents 2 and 3 to appoint the Appellants 2 and 3 as Additional Directors. This Board Meeting dated 02.07.2011 was confirming the previous Board Meeting Minutes dated 18th May, 2011. When it has been found that the Appellants had no notice of the Board Meeting dated 18.05.2011, such Resolution passed on 2nd July, 2011 resolving that the Appellants 2 and 3 vacated by operation of law cannot be upheld. 35. The case of the Appellants with regard to this meeting dated 02.07.2011 is that they did come down to India and had gone to attend the Board Meeting but they were kept waiting outside and later on it was declared to them that the Meeting is already over. In this regard, the Appellants sent pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt. Your driver then picked up our lawyer at the airport. At 11:40 a.m., you personally came into the waiting room at where we were seated and asked us to be seated in the office of your father, Mr. Girish Patel. We note that, in addition to yourself and Mr. Girish Patel, Mr. Hemal Patel and Mr. Mankind Patel were also present. We were seated in the office of Mr. Girish Patel until our lawyer, Mrs. Viswanathan, arrived at 11:50 a.m. Immediately on her arrival, we asked you to commence the board meeting. We note that your consultant, Mr. Shah, was present at the meeting as an invitee although you had never informed us of his presence. However, instead of starting the board meeting, your consultant, Mr. Shah, an invitee, started demanding that we turn off our mobile phones and refused to let us use our laptops to take notes. In the interests of being polite, we agreed to do the same although it is not required by law or common courtesy. Despite our courtesy, your consultant started various dialogues which were not relevant to the agenda for the board meeting. In a further attempt to have a constructive board meeting, we requested you several times to commence the bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cussed, while the Appellants 2 and 3 were kept out waiting, the Respondents 2 and 3 were resolving inside that Appellants 2 and 3 are absent and cessation under Section 283(1)(a) is attracted. This is shocking behaviour. The Meeting has to be held to be illegal and acts of Respondents 2 and 3 were oppressive of Appellants. 36. The learned NCLT discussed POD 10 and 11 referred above in Para 32 of the Impugned Order. If the reasonings and findings recorded by the learned NCLT with regard to POD 10 and 11 which had been framed, are perused, what can be seen is that the learned NCLT discussed the case which was put up by the Appellants and their letter dated 4th July, 2011. The Appellants had argued before the NCLT that the Respondents did not reply to their letter dated 4th July, 2011 (which letter is at page 377). The NCLT then proceeded to discuss the fact that the Appellants 2 and 3 had a Board Meeting on 02.07.2011 at 2.00 p.m. at Welcome Hotel and referred to the Resolution they had taken and referring to such events concluded that it was not necessary to give weight to the letter dated 4th July, 2011 even in the absence of reply by the Respondents. The learned counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... participating in the Board Meeting dated 02.07.2011. EOGM dated 11.08.2011 38. It appears that the Appellants had given requisition for calling EOGM vide requisition dated 28.06.2011. Respondents 2 and 3 in view of the requisition appear to have issued Notice dated 28.07.2011 (copy of which is at Page 381) calling EOGM on 11th August, 2011. The Appellants have questioned the acts of Respondent referring to e-mail dated 01.08.2011 (copy of which is at Page 380) submitting that there was short Notice for this EOGM. According to the learned counsel for the Appellants, the NCLT has itself while dealing with General Body Meeting dated 27.09.2011 observed that one week s Notice for AGM to the Petitioners is short Notice. However, for the EOGM dated 11.08.2011, the NCLT held that the Petitioners (Appellants) cannot canvas that there was short Notice for EOGM called on 11th August, 2011. Looking at the e-mail Notice dated 1st August, 2011 for EOGM fixed for 11.08.2011, keeping in view Article 25 of the Articles of Association of the present Company (copy of which is at Page 110), we do not interfere with the conclusion drawn by the learned NCLT below POD 12 that the Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice of such Meeting had been filed before the Tribunal. NCLT concluded that the allotment could not be held as valid. It set aside the allotment in Para 38 of the Impugned Order which we have reproduced earlier. There is no appeal on this count and we need not discuss this aspect any further. 42. It has been argued by the learned counsel for the Respondents relying on the Judgement in the matter of Sangramsinh P. Gaekwad and Others vs. Shantadevi P. Gaekwad (DEAD) Through LRS. and Others reported in (2005) 11 SCC 314 that the Hon ble Supreme Court in this Judgement referred to the earlier Judgement in the matter of Dale Carrington Invt. (P) Ltd. and Another vs. P. K. Prathapan and Others (2005) 1 SCC 212 and observed in Para - 61 of the judgement that the Judgement in the matter of Dale Carrington Invt. (P) Ltd. and Another vs. P. K. Prathapan and Others is not an authority for the proposition that the purported fiduciary duty of a Director towards the shareholder is absolute although the transaction in question may not have a direct co-relationship with the affairs of the Company. The learned counsel referred to Para 63 of the Judgement to submit that the Direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ests of the company. But if the power to issue shares is exercised from an improper motive, the issue is liable to be set aside and it is immaterial that the issue is made in a bona fide belief that it is in the interest of the company. 42.2 Hon ble Supreme Court observed in Para 20 of the Judgement in the matter of Dale Carrington that the principal deduced from the cases was that when powers are used merely for an extraneous purpose like maintenance or acquisition of control for the affairs of the Company, the same cannot upheld. In the facts of that matter, Hon ble Supreme Court upheld the setting aside of allotment of additional shares in favour of one Ramanujam who was found guilty of oppression and High Court had found that Ramanujam had played fraud on the minority shareholders by manipulating the allotment of shares in his favour. We keep in view the principles laid down by the Hon ble Supreme Court in these Judgements. 42.3 Learned counsel for the Appellants has referred to the Judgement subsequent to the Judgement in Sangramsinh P. Gaekwad and Others vs. Shantadevi P. Gaekwad and Others which has been considered in the matter of Kamal Kumar Dutta and Anoth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 16-2-1996. But suddenly the meeting was held on 7-2-1996 and Appellant 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 was present. 42.4 The Hon ble Supreme Court discussed the issues raised in that matter and allowed the appeals setting aside the Order of Single Judge of High Court passing limited direction that all the Resolutions which had been passed by the Board of Directors or in the Annual General Meeting or Extra Ordinary General Meeting with regard to raising of funds of ₹ 40 lakhs in the meeting of 19.4.1995 and the meeting dated 16.2.1996 whereby the Appellant No.1 was stripped off his powers as Managing Director, the Resolution by which Dr. Binod Prasad Sinha was removed from the office of Director and other Resolutions by which the shares were allotted to the subsidiary company of Sajal Dutta or other persons were bad and Hon ble Supreme Court restored the position on 19.4.1995 in that matter. Hon ble Supreme Court recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that Mr. Alessandro Cuomo who was sent down to India by the Appellants admittedly as their Representative set up this Company in Goa. On the basis of this document, the argument raised is that this Company set up in Goa also was for the purpose of manufacturing springs for machines which was similar to the business of the Respondents Company and thus, the argument is that the Appellants had set up rival business. The learned counsel for the Appellants has countered this by submitting that Mr. Alessandro Cuomo was their Representative and had come down on behalf of the Appellants to look into the affairs of the Company. If at subsequent stage he incorporated any such company, that cannot be ground against the Appellants to hold that they have set up a rival business. We find that before such incorporation of the said Company at Goa, much developments had taken place between the present parties to show that the Respondents were oppressing the Appellants and there was already talk regarding buying out. There is also no material to show business done by the Company at Goa and any effect on Respondent No.1 Company. Thus, we will not attach any undue weight to this argument of the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich were converted into equity shares on 19.04.2011 and set aside the 80010 shares which were allotted to Respondents 4 and 7 on 25th July, 2012, discussed that the situation in the Company was such that the possibility of Belfin Spa and Respondents working together was not possible. NCLT considered the dispute between the parties regarding amounts actually invested and dispute over the assets of the Company and found it expedient to direct accounts of the Company to be audited by Chartered Accountant since the date of incorporation till the Impugned Order. NCLT further appointed Chartered Accountant to do the needful and laid down fees etc. It has then directed that on receipt of the report of the Chartered Accountant, fair value of the equity shares will be assessed by Independent Valuer and as to the date of valuation what is just and equitable in the facts and circumstances of the case is the date of filing of petition. According to the learned counsel for the Appellants, this date should be from the date of Order. However, we do not find any reason to interfere regarding this aspect as the NCLT has given reasons that ordinarily it has to be date of filing of the petition and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1st Respondent Company but later on to be shared by the parties in proportion to their shareholding. The Chartered Accountant is at liberty to claim further amount in the same proportion from the parties after his work is completed and before filing of the Report. The 1st Respondent Company shall bear all the necessary expenses of the Chartered Accountant for the purpose of carrying out the works of auditing the accounts of the 1st Respondent Company. 48.3 After the Report of the Chartered Accountant is finalized, the fair value of equity shares of the 1st Respondent Company shall be assessed by an Independent Valuer. As directed by the NCLT, the date of valuation is the date of filing of the Company Petition in NCLT. 48.4 M/s. A.R. Gaudana Associates, at 502-D, Shaily Complex, B/h. Old Gujarat High Court, Opp: Loha Bhavan, Navrangpura, Ahmedabad 380009 is appointed as Independent Valuer to value the shares of the 1st Respondent Company as on the date of filing of petition. His fee is fixed at ₹ 50,000/- initially payable by 1st Respondent Company but later to be shared by the parties in proportion to their shareholding. The 1st Respondent Company shall bear all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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