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TMI Blog2018 (8) TMI 1482X X X X Extracts X X X X X X X X Extracts X X X X ..... 017. It was in the interest of all the parties that the Tribunal should have given an opportunity to the parties to make their submissions on the said affidavit complying with the principle of natural justice. The said affidavit was not considered while pronouncing the judgement which was filed with the Tribunal before the pronouncement of judgement on 4.10.2017. In view of the above discussions, we are not giving our judgement/decision on the other various issues/counter issues raised by the parties in the appeal. The impugned order dated 4.10.2017 passed by the Tribunal is set aside. The matter is remanded back to the Tribunal to re-hear the matter, NCLT shall take into consideration the affidavit dated 18.9.2017 of Respondent No.3 and after giving due opportunity to all the parties to argue on the same, decide the Company Petition expeditiously in terms of Section 422 of the Companies Act, 2013. Earlier evidence will also be evidence in the cause. The parties are also given opportunity to argue on the other issues as well before the Tribunal. - Company Appeal (AT) No.337 of 2017 - - - Dated:- 17-4-2018 - Mr. A.I.S. Cheema, Member (Judicial) And Mr. Mr. Balvinder Singh, Mem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the company, as a part of the reduction in the share capital of the company. The company despatched notices, explanatory statement, resolution for reduction of capital by cancelling 641962 shares out of 1076809 shares and paying a sum of ₹ 107/- for each cancelled share of face value of ₹ 10/-each to the shareholders. As the amount paid per share was more than the face value of the shares, the remaining amount is to paid from the securities premium account and also from the general reserves of the company for which a special resolution of the company was passed in which 89.56% shareholders cast their vote in favour of the special resolution for reduction of capital. Therefore, the Respondent No.1 filed an application under Section 66(1) of the Companies Act, 2013 before the Tribunal praying for reduction of share capital resolved on by the special resolution. 3. Mr. Dilip Kumar Surana, being a shareholder, alongwith four other shareholders have filed the objections stating therein that the SEBI circular dated 10.10.2016 prescribed the procedures for giving exit opportunity to the public shareholders of the exclusively listed companies of De-recognised/Non-operati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FORM No.RSC-6 as per the National Company Law Tribunal (Procedure for Reduction of Share Capital of Company) Rules, 2016 and issue to the applicant. 5. Being aggrieved by the said impugned order the shareholders/objector, Mr. Mahendra G. Wadhwani has filed the present appeal under Section 421 of the Companies Act, 2013. 6. Notices were issued to the Respondents as per order dated 17.10.2017 of this Appellate Tribunal. The Appellant Tribunal further ordered as under: In the meantime, no payment be made to any of the shareholders pursuant to the impugned order dated 4th October, 2017 passed in Company Petition No.21/66(1)/CB/2017 7. Learned counsel for the appellant submitted that the SEBI Circular dated 29th December, 2008 provided that the Exclusively listed company are required to either seek listing at other stock exchange with nationwide trading facilities or promoters to provide exit option to the non-promotor shareholders as per SEBI Delisting Guidelines after taking shareholders approval for the same within a time frame to be specified by SEBI, failing which the companies shall stand delisted through operation of law. 8. Learned counsel for the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares held by non-promoters stood cancelled. 16. Learned counsel for the appellants further stated that the non-promoters shareholding is being paid at ₹ 107 per equity shares as share price which is much less than the Fair Market Value (to be determined as per the Exit Circulars and the Delisting Regulations), shall be liable to pay capital gain tax on the difference of FMV being much higher to the aforesaid sale consideration of shares and cost of acquisition. This would lead to an absurd situation of outflow of income tax more than the sale consideration actually received. 17. Reply on behalf of Respondent No.1 has been filed. Learned counsel for the Respondent No.1 stated that the present appeal has been filed by the appellant is an attempt to mislead and misdirect the Appellate Tribunal. Learned counsel further stated that notice was issued to Regional Director and three months time was fixed for filing objections by all concerned including Regional Director. Respondent No.1 despatched copy of notice through speed post on 15.3.2017 and the said notice was also published in newspaper on 15.3.2017. The appellant sent his objection to Regional Director, southern Reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Learned counsel for the Respondent No.1 has further argued that the appellant is a habitual litigant and has filed various cases before appropriate forum against unlisted companies and the Courts have termed such a litigant as a cantankerous litigant attempting to frustrate and delay the results of judicial determination. Learned counsel further argued that when e-voting/ballot papers were forwarded to the shareholders of the company, the appellant was having originally 6200 shares but since the company gave exit option the appellant acquired another 5487 shares during the period 31.12.2016 uptil 24.2.2017 from 6 shareholders even though the shares of the company were not traded. Learned counsel for the Respondent No.1 has stated that this Appellate Tribunal should take note of this and take such action as it may deem fit and proper. 22. Learned counsel for the Respondent No.1 submitted that it has complied all the provisions as laid down in Companies Act, 2013 in respect of reduction of share capital and further stated that Section 100 of the Companies Act, 2013 nowhere states that the promoters of the company will have to bring in their own funds, if any shares of non-pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble Supreme Court decision in Hindustan Lever Employees Union Vs Hindustan Lever Ltd, (1994) 2 SCL 157 (SC) stating that the Hon ble Supreme Court rejected the argument that merely because some other method could be resorted to, which could possibly be more favourable to the objector but that alone cannot militate against granting approval to the scheme propounded by the company and the Court s obligation is to be satisfied that valuation was in accordance with law and it was carried out by independent body. The Court s jurisdiction is not to ascertain with mathematical accuracy the valuation of shares. 27. Learned counsel for the Respondent No.1 stated that National Stock Exchange gave its no-objection to the proposal of the Respondent No.1. 28. Learned counsel appearing on behalf of the Respondent No.2 during the arguments submitted that the Circular dated 10.10.2016 is applicable retrospectively. Learned counsel drew out attention of said circular at para 7 which states that The provisions of this Circular are applicable to the exclusively listed companies of all de-recognised/non-operational stock exchanges which are exited/in the process of exit in terms of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot done the valuation by an independent valuer selected from the panel of valuers empanelled by SEBI as per its Circular dated 10.10.2016 and hence it is against the SEBI mandated regulations. f) The complainants has requested that notice of the scheme may be given to SEBI. 31. Respondent No.3 has given his views/opinion/observation on each of the complaint. As regards complaint (a) above the Respondent No.3 has stated that as per SEBI regulations the valuer should only recommend which valuation should be adopted by the company for the exit scheme. In this case the valuer states that the company may take valuation of the shares on the basis of either the DCF method or the NAV method. Respondent No.3 has stated that the action of the valuer is incompatible with the SEBI regulations and guidelines. Respondent No.3 has further stated that as per NAV method the value of the share is ₹ 351/- per share. In the DCF method the valuer has not taken the Cash and Bank Balance of ₹ 22.40 crore, Non current investments of ₹ 49.91 lacs and liabilities of ₹ 65.91 lacs. Respondent No.3 further stated that the valuer has himself admitted that if the above figures are t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... empanelled valuers list then the valuation could not be said to be done as per the SEBI regulations and for this reason also the scheme of reduction of capital could not said to be validly offered. 37. As regard complaint No.(f), Respondent No.3 has stated that the submission of complainant-shareholder is reasonable as the company is stating that it is exiting the non-promoters as per SEBI circulars, therefore, provision of Section 66(2) of Companies Act, 2013 requires that wherever necessary notice to SEBI should also be given. Respondent No.3 also stressed that it is a fit case for giving notice to SEBI and SEBI may also be heard. 38. Respondent No.3 further stated that as per SEBI guidelines dated 10.6.2009 Chapter II Clause 4(4) that no promoter shall directly or indirectly employ the funds of the company to finance an exit opportunity provided under Chapter IV or an acquisition of shares made pursuant to sub-regulation (3) of the Regulation 23. Respondent No.3 further stated that on the other hand the promoters are enriching themselves at the cost of the company i.e. utilising the share premium account and part of the General Reserve to exit the non-promoters shareholder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Hon ble NCLT Chennai Bench not mentioning about the Regional Director s affidavit dated 18.9.2017 in the impugned NCLT judgement and order dated 4th October, 2017. However, the Answering Respondent would like to mention that since the Regional Director (Southern Region) in his time-barred affidavit dated 18.09.2017 had referred to and incorporated the objections of the complainants, including those of the appellant, the Hon ble NCLT, Chennai Bench, during the arguments considered all the objections and examined them on their merit and thereafter rejected the same by a reasoned order .. 43. Going through the impugned Judgement, we do not find that the important issues as raised by Respondent No.3, Regional Director were considered and discussed. When affidavit by an important authority like Respondent No.3 had been filed public interest required to consider it and not ignore it on technicalities. We need to have that views of NCLT on the points raised by Respondent No.3. 44. From the above it is clear that the Tribunal has not considered the observations/opinion given by the Respondent No.3, Regional Director, Ministry of Corporate Affairs. 45. Respondent No.3 f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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