TMI Blog2005 (6) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... s under : 3.1 The petitioner Mr. Vinod Kumar who is holding 40 per cent of the shares in the respondent No. 1 company preferred a petition under sections 397 and 398 of the 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 det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5-2000 the Company Law Board directed that the valuation of the shares will be as on the date of 31-3-1998 and further directed the original respondent-company to pay Rs. 6,35,91.61 towards the arrears of remuneration and perquisites to the petitioner. 3.4 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said properties do not form part of the fixed assets of the company and, therefore, the said properties ought not to have been included in the valuation report prepared by the valuer. In the alternative he contends 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. 8. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrespondence the original petitioner has raised no objections to the said letter and thus they are not entitled to raise the grievance at this stage. However from the record I find that the objections were raised to the said letter by 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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Price Water House (COOPER) was erroneous. The valuer who has prepared the valuation report cannot definitely go into the objections raised by the parties to the same. It has to be before the Board and/or the authority who has appointed the valuer. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 both the parties in their proportion 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. 11. 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 shareh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the benefits and managing the affairs of the company. It has been contended by the learned counsel for the respondent-company that even the second respondent has not drawn any remuneration/perquisites. It is not possible to ascertain whether the second respondent 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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