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TMI Blog2022 (7) TMI 1038X X X X Extracts X X X X X X X X Extracts X X X X ..... fer. The Petitioner had already been made an offer of Rs. 125 per share and subsequently the Exit Offer was only of Rs. 18.42 per share are significant and sufficient enough grounds to cast doubts about the veracity of the valuation of shares got done by the Company for its Exit Offer. Therefore, in the interest of equity, justice and fair play for the Applicant and other public shareholder a revaluation of the shares by an independent valuer is necessitated and the independent valuer should also take into account under-valued transactions or bogus expenses if any, incurred, before the earlier valuation was done. Whether the present petition comes within the ambit of Section 59 of the Companies Act? - HELD THAT:- The Petitioner has claimed that the promoters have purchased shares during the period of the Exit Offer and that for the purpose of Section 59, rectification is not limited only to 'public shareholders', but includes promoters and Members of the Company. Be that as it may, such rectification would only follow consequentially and be contingent upon the findings of a fresh valuation in respect of the fair price of the shares - the matter needs to be considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares of the Respondent No. 1 Company within a period of 3 months from the date of his appointment - The Respondent No. 1 Company will take all further necessary action on the basis of the valuation of shares arrived at by the independent valuer. The Applicant will be at liberty to approach the appropriate authority or legal forum for any grievance necessitated on the basis of the valuation report. - 879/59/ND/2019 - - - Dated:- 1-7-2022 - P. S. N. Prasad , Member ( J ) And Rahul Bhatnagar , Member ( T ) ORDER Authored By : P. S. N. Prasad , Rahul Bhatnagar P.S.N. Prasad, Member (J) and Rahul Bhatnagar, Member (T) 1. This is an application filed by the Applicant under Section 59 of the Companies Act, 2016 seeking following reliefs: i. That one or more Independent Valuer(s) be appointed to valuate the fair price per equity share of the Respondent Company in terms of Section 247 of the Companies Act, 2013 and the costs of which be borne by the Respondent No. 1 company. ii. In the event such Fair Price as determined by the Independent Valuer in terms of prayer (i) above is higher than that of the Respondent No. 7, necessary orders be passed against the Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petition, no case is made out that any members name has been entered in the register of members without sufficient cause or omitted or there is a default or there has been an unnecessary delay in entering a name in the register of members. iii. The main allegation made by the Petitioner to invoke Section 59 of the Act is regarding authenticity of a valuation report prepared by Respondent No. 7, M/s. Vivro Financial Services Pvt. Limited, Respondent No. 7 herein is an independent valuer, registered with the Designated Stock exchange viz. National Stock exchange of India Limited and BSE Limited to determine the fair value of equity shares of the Respondent No. 1. Company for providing the exit offer to the public shareholders in compliance with SEBI circular dated 10.10.2016. The Petitioner has alleged that the fair price determined by Respondent No. 7 is incorrect and on that basis has inter alia sought for a prayer of revaluation and in the event the fair price as determined is higher than that determined by Respondent No. 7, has sought rectification of register of members by cancellation of shares acquired . iv. It is further submitted that neither any public sharehold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of Rule 54 and 11 of NCLT Rules, 2016 and Section 247 of the Companies redundant, The Standing Committee of Finance in its 57th Report on the Companies Bill 2011 has placed its comments on Section 247 of the Companies Act 2013: ..... These provisions are relevant for arriving at value of consideration for issue of securities for consideration other than cash and for right offer/exit offer etc. The intent behind these provisions is to ensure fair valuation of such shares/assets/properties and to protect interest of non promoter shareholders.... v. The Respondents are attempting to mislead this Ld. Tribunal and project the present petition, as if the same is simplicitor under Section 59 of the Act, whereas 'rectification of register' is only a consequential relief contingent on the findings of the Independent Valuer. Please refer to Prayer (a) and (c) of the Petition. vi. That the Petitioner has prayed for reliefs under Sections 447 and 448. However, the same are in the nature of consequential reliefs. The main relief that the Petitioner has pressed is merely to get an independent valuer appointed to determine a fair price to tender shares in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 of the NCLT Rules, it is submitted that the Petitioner has admitted that the present petition has been filed under the wrong provisions and has relied on the inherent powers of this Hon Isle Tribunal. It is submitted that if the Petition itself is not maintainable under a substantive provision of the said Act, inherent powers provided for in Rule 11 of NCLT Rules cannot be invoked in a vacuum. iii. That the Petitioner cannot base its contentions merely on apprehensions as has been done in the present case. It is settled law that a suit or a petition cannot be filed on the basis of an apprehension or anticipation. It is paramount for a petition to evidence the cause of action leading to it. A cause of action is every fact, which if traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the court. In other words, it is a bundle of facts which taken with the law applicable to them gives the plaintiff a right to relief against the defendant. Therefore, by way of the present Petition, the Petitioner is seeking a roving and fishing inquiry by levelling baseless allegations with ulterior motives based on apprehensions alongwith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the earlier valuation was done. 11. The issue which has been strongly contended by the Respondents is that the Petition does not come within the ambit of Section 59 of the Companies Act and therefore should be dismissed. The Respondents have, contended that no 'public shareholder' has availed of the Exit Offer and hence there is nothing to be rectified in the Register. The Petitioner has however claimed that the promoters have purchased shares during the period of the Exit Offer and that for the purpose of Section 59, rectification is not limited only to 'public shareholders', but includes promoters and Members of the Company. Be that as it may, such rectification would only follow consequentially and be contingent upon the findings of a fresh valuation in respect of the fair price of the shares. We are therefore of the view that the matter needs to be considered on the strength of the factual position apparent from the oral and written submissions of the parties. 12. While considering the options available to the Petitioner for seeking redressal to his grievance it is pertinent to mention that the Petitioner could not have approached this Tribunal under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... These provisions are relevant for arriving at value of consideration for issue of securities for consideration other than cash and for right offer/Exit Offer etc. The intent behind this provision is to ensure fair valuation of such shares/assets/properties to protect interest of non-promoter shareholders. So while specifically, valuation for an Exit Offer may not be provided for under the Companies Act, the intention as set forth in the report of the Standing Committee is amply clear that in order to protect the interest of non-promoter shareholders (as in the instant case) fair valuation for Exit Offer is also required to be done. In the light of the above, we are of the view that in the present case, where there is sufficient cause to show that the valuation of shares done earlier was suspect and its veracity is doubtful, a fresh valuation by an independent valuer needs to be done in the interest of justice and in order to protect the interest of non-promoter shareholders. This Tribunal is convinced that in such a matter it will be in the interest of justice and fair play to invoke the powers of the Tribunal under Rule 11 of NCLT Rules, 2016 and direct the Respondent No. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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