TMI Blog2005 (6) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... of the further opinion that the valuation report prepared by the said valuer must be as of the date fixed as 31-3-2005 and the valuation must be taken into consideration as on the date of 31-3-2005. I am of the aforesaid opinion because the petitioner is a 40 per cent shareholder in the company. His shares have remained stagnant in the said company. Furthermore if the assets of the company have appreciated then the value of his shares must necessarily and correspondingly appreciate and therefore it is necessary that the valuation of the said assets must take place as on 31-3-2005 which is the end of the closest financial year. The said Chartered Accountant appointed by the Company Law Board as valuer shall hear both the parties and thereafter arrive at his own valuation. The respondent-company will provide all documents and papers, vouchers and any other material which is in their custody and possession as and when called upon by the said valuer. In an event if the valuer finds any difficulty in obtaining any of the material documents necessary then in that event the valuer will approach the Company Law Board for further necessary directions. Fees of the valuer will be shared by bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complete the exercise of valuation of the said shares. The said Chartered Accountant shall file the valuation report in sealed cover with the Company Law Board in Company Petition No. 12 of 1998. (ii) Fees of the Chartered Accountant shall be shared by both parties, 40 per cent by the petitioner, 60 per cent by the respondent. (iii) Before finalising the report the said Chartered Accountant will give opportunity to both the parties to give their facts and figures pertaining to the valuation of his report and shall make the final valuation keeping in mind the submissions made by the parties. (iv) The said report shall be filed before the Company Law Board by the said Chartered Accountant within a period of two weeks from the date he has completed the said valuation. On the said report being filed, the Company Law Board will give notice to both the parties and furnish a copy of the valuation report to both the parties and thereafter invite objections from either of the parties within a stipulated period of time. If the objections are received then the Company Law Board will consider the same by itself without remanding back to the valuer and pass appropriate order on such valuation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Companies Act, 1956 before the Company Law Board. He has alleged in his petition that there is an oppression of his group of shareholders by acts of majority of shareholders and there is a rampant mismanagement in the affairs of the first respondent-company. In support of the aforesaid contentions various allegations and counter allegations have been advanced by both the parties. However, after hearing in detail the said company petition, the Company Law Board passed an order being order dated 20-8-1999. By the said order the Company Law Board gave two options to the petitioner. Under the first option it was provided that the petitioner can chose to continue to be part of the company and retain his 40 per cent shareholdings. In that event he can continue to be a director of the company with remuneration. However, he cannot participate in day-to-day affairs and management of the said company. The second option given to him was that he can sell his shares to the other group of shareholders at a price to be determined by an independent valuer. A time period was prescribed within which he was entitled to exercise anyone of the aforesaid options. 5. It has been further provided under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wards the arrears of remuneration and perquisites to the petitioner. 7. On 1-3-2001 M/s. Price Water House (COOPER) was appointed as valuer and on 13-12-2001 the said valuer has submitted its report. Thereafter a Company Application being No. 107 of 2002 was heard by the Company Law Board on 25-6-2002. On the said date the Company Law Board has passed an order that both the parties agree that the Company Law Board will determine the final value of the shares and also decide objections raised by the parties to the said valuation report, whether the petitioner is ( sic ). It was provided in the said order that the decision of the Company Law Board will be final and binding on both the parties. However, it seems that another order was passed in respect of the very same hearing on the very same day, i.e., 25-6-2002 without recalling the earlier order passed by the Company Law Board. The Company Law Board thereafter passed another order on 26-8-2002 in respect of the aforesaid hearing, inter alia, providing that the objections raised by the original petitioner will be heard by the valuer himself. 8. Pursuant therein it seems that the M/s. Price Water House (COOPER) has considered the ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that even if the said plots are to be included as the assets of the company then still the ratio of premium fixed by the valuer of 50 per cent each between the respondent-company and MIDC is totally erroneous. It has been contended that the said plot of land ought not to have been included in the valuation report and the same being severable the Court must severe the said part of the report from the said valuation and reduce the valuation and, consequently, reduce the price of the shares as fixed by the valuer. 13. On the other hand, the learned counsel appearing for the petitioner has whole heartedly criticised the said valuation report. It has been contended that this Court for the reasons stated hereinafter should reject the said valuation report in its entirety and not in part as suggested by the learned counsel for the respondent-company. Firstly, it has been contended by the learned counsel for the petitioner that the valuer has by his own conduct has lost the independent character and merely acted as an agent of the respondent-company. He has relied upon a letter dated 1-3-2001 which has been issued by the Price Water House (COOPER) to the company as private and confidentia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the original petitioner both before the valuer as well as before the Company Law Board. In my opinion the independent valuer must have its own approach and method for valuing the assets of the company. The letter dated 1-3-2001, inter alia, indicates that the valuer appointed by the Company Law Board has ignored the fact that he is appointed by the Tribunal in exercise of quasi- judicial power and thus required to act independently. He has purportedly proceeded on a footing that the respondent-company has appointed them as a valuer for valuation of the assets. It is not only that but the letter indicates that parameter for valuation of the assets were not fixed by the valuer but by the company. The entire approach of the valuer I find is totally erroneous and lacks bona fide in the present case. The learned counsel for the company has however relied upon a judgment in the case of Burgess v. Purchase Sons (Farms) Ltd. [1983] 2 All. ER 4 and has purportedly contended that if the valuation report is not a speaking valuation report giving reasons in support of its conclusion than neither the Company Law Board nor the Court has jurisdiction to go into the validity and or otherwise of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. The Company Law Board was duty bound to determine the said objections and could not have abducted the said duty by sending the objections to the valuer for determination. It has been further urged on merits by the learned counsel for the petitioner that the approach of the valuer in determining the valuation of the various assets is totally wrong and erroneous. Plainly speaking for me as a judge it is not possible to substitute the facts and figures pertaining to the valuation of the various assets of the company. Furthermore, I am neither equipped nor an expert in determi-ning the valuation of the various assets and principles on which the various depreciations and or reductions are required to be given on various assets of the company. I find that the valuation report prepared by the valuer lacks basic principles of independence. The said report is also the subject- matter of challenge by both the parties. I am unable to accept the contention of the learned counsel for the respondent-company that I must accept the part of the report and reject part of the said report. It is not possible for me to do so especially while deciding the matter under the jurisdiction under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oportion of 40 per cent and 60 per cent, i.e., the original petitioner will pay 40 per cent and the respondent- company will pay 60 per cent of the fees charged by the valuer. The said valuation report once filed before the Company Law Board, the Company Law Board will hear the matter expeditiously and dispose of all objections thereto expeditiously as possible but in any event within six months from the date of filing of the valuation report. 16. Now turning to the second question of law about the remuneration of the director it has been contended by the original respondent-company that the petitioner is not entitled to payment of any remuneration once he exercises the second option. It has been contended that the remuneration shall be available to the petitioner only if he exercises first option, i.e., to continue to remain with the company as shareholder and as a director he would not exercise the option of sale of his shareholdings. It has been contended that the directions given by the Company Law Board in his original order dated 20-8-1999 to pay the remuneration to the petitioner as a director would cease to be operative as soon as he exercises the second option. He has ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent has drawn remuneration or not but second respondent has been enjoying all the facilities. I am therefore of the opinion that the ratio of two-third to the remuneration drawn by the second respondent fixed by the Company Law Board cannot be altered at this stage but the petitioner will be entitled to the said remuneration and or perquisites throughout the period till and until the shares are evaluated and payments are offered in respect of the shares. Thus, I direct the original respondent-company to make payment of the arrears, remunerations and of the perquisites up to the date of 31-3-2005 within a period of two months from today to the original petitioner in the ratio of two-third of the total remuneration and perquisites drawn by the second respondent. The said payments will be made by the respondent-company with interest at the rate of 12 per cent per annum to the petitioner herein since he has been deprived of the same all throughout. The remuneration as directed by the Company Law Board has also not been paid. In view thereof I pass the following order. 17. Both the company appeals are disposed off as per the following directions : (i) Insofar as the first question of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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