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TMI Blog2015 (10) TMI 2257X X X X Extracts X X X X X X X X Extracts X X X X ..... ry auditor thereupon proceeded to value the shares. The valuation was thereafter challenged by the Respondents herein by filing a company application in the disposed of company petition. By the impugned order, the valuation report prepared by the statutory auditor of Appellant No.1 company was set aside and a fresh valuation was ordered. So also, cancellation of 25000 shares held by Respondent No.1 in the company in pursuance of the order disposing of the company petition, was set aside. The order is challenged basically on the grounds that the CLB, having disposed of the company petition, had no jurisdiction to entertain the company application and secondly, the order of disposal of the company petition had merged with the appellate order passed by this Court, which had since been complied with by the Appellants. 2. On 21 November 1983, Appellant No.1 ("company") was incorporated with the object of carrying on business of transportation of tourists and local citizens on mono-bio cable car system by Appellant No.2 Sabir Rashid and others of his group (hereinafter referred to as "Rashid group"). In April 1988, Respondent No.2 - Pune Municipal Corporation ("PMC") issued a tender not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny and Rashid group. By an order dated 8 December 2000, the CLB disposed of the company petition inter alia directing Rashid group to surrender to the company 5,830 shares, which were to be reissued to Jain group on its paying the consideration for the shares after adjustments of its loans / advances. The CLB further directed that as and when the suit of Appellant No.3 (Suit No.2493 of 1998) was concluded and if a decree were passed in favour of Jain group, the company would purchase 50% shares held by Jain group at a valuation to be done by the statutory auditor of the company as of 31 March 1999. The company was authorized to reduce its share capital to the extent of such shares. The CLB also issued certain directions pending the valuation exercise. This matter was carried in appeal by Rashid group before this Court. The appeal (Company Appeal No.4 of 2003) was dismissed by this Court confirming the impugned order of the CLB and directing the statutory auditor to carry out the task of valuation of shares in accordance with the directions of the CLB in the impugned order. This Court also accepted an undertaking given by Rashid group not to press prayer clause (a) in Suit No.2493 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... embers in respect of those shares. The CLB held that as and when an award is made by the new sole arbitrator, the same would have to be taken as the one available on 31 March 1999 for determination of the value of the shares. Considering the fact that it was too difficult to foresee the time that may be taken for conclusion of the arbitration proceeding, Jain group was given an option to receive a sum of Rs. 100 per share as a fair value (aggregating to Rs. 25 lakhs). Aggrieved by this order, the Appellants have preferred the present company appeal. 3. It is submitted by Mr.Doctor, learned Senior Counsel appearing for the Appellants, that the CLB, by its order of 8 December 2000, had disposed of the original company petition filed by Jain group under Sections 397 and 398 of the Act. He submits that that order has since been fully implemented. The CLB, which had thus become functus officio, had no jurisdiction to thereafter interfere with the steps taken by the parties in pursuance of the order of 8 December 2000. Besides, it is submitted that the original order of the CLB had merged with the appellate order passed by this Court and after such merger, it was not permissible to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... side of transfers, deliveries of goods, payments, executions or other acts relating to the property of the company and other matters for which orders are necessary on the ground that it is just and equitable to do so. No doubt, as submitted by Mr.Bulchandani, these powers are wide and extensive. It is also correct that the object behind the powers comprised in Section 397 read with Section 402, which are a code by itself, is to put an end to the grievance of the oppressed. But these powers must be exercised by the CLB only when it is in seisin of the matter and not after it becomes functus officio. Once the CLB disposes of the petition complaining of oppression and mismanagement finally by making a final adjudication of the rights of the parties and ordering final relief under Section 402, it ceases to exercise any jurisdiction. Regulation 29(6) of the Regulations provides that the bench may make such order or may give such direction as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure ends of justice. These orders, in the context of Section 397 read with Section 402, have to be passed as part of the orders that the bench may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or doing complete justice in any cause or matter pending before it. In the case of Supreme Court Bar Association, the Court held that this power extends even to enforcement of its orders or directions. It extends to matters in which orders, though passed by the Supreme Court, are yet to be implemented, particularly when the orders sought are necessary for doing complete justice between the parties. In that sense, the Supreme Court cannot be said to have become functus officio after passing any order. This is a special jurisdiction of the Supreme Court and is part of the plenary powers of that court under Article 142 of the Constitution. These powers are inherent in the Supreme Court and are complementary to those powers which are specifically conferred on that court by various statutes and are not limited by those statutes. These powers are said to exist independently of the statutes which provide for the powers of the Supreme Court with a view to doing complete justice between the parties. It is preposterous to invoke this special constitutional power belonging to the Supreme Court for jurisdiction to be exercised by a tribunal such as the CLB in the matter of passing orders under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the chairman in permitting certain shareholders to vote and also for declaring certain resolutions as having been passed in that meeting. At this stage, an objection was taken by the Respondents that the Bench had no jurisdiction to entertain this company application, since it had become functus officio. It was submitted that when the rights of the parties were at stake, such rights should not be a subject matter of an interlocutory application in a matter which had already been disposed of. The argument on behalf of the opponents was that the application, under Regulation 44, which corresponds to Section 151 of the CPC, could only be filed in a pending proceeding and the same should not be a subject matter to investigate the rights of the parties in a disposed of proceeding. It was submitted that once an order had been passed in the main application, the Bench had ceased to have any power to pass a subsequent order and that too far in excess of the relief that was granted in the main petition. On these facts, the CLB came to a conclusion that it had powers to issue the necessary directions; that it had retained seisin over the matter in particular reference to the convening ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter and had not become functus officio. These facts are clearly distinguishable from the facts of our case. In our case, the CLB had not retained any seisin over the matter. In the original order passed on the company petition finally disposing it of, the Bench had directed as follows: (i) Rashid group to surrender 5,830 shares being 50% of the shares of 11,660 shares issued / allotted to that group and these shares to be reissued to the Petitioner (Respondent No.1 herein) on its paying the consideration for such shares; (ii) Considering the strained relationship between the parties and their association in the board would only escalate the strained relationship, with a view to put an end to the grievances, as and when the proceedings of the suit were concluded (where the shareholding of the Petitioner was under challenge), the company to purchase 50% shares held by Jain group "at a valuation to be done by the statutory auditor of the company", the date of such valuation being 31 March 1999 being closest to the presentation date of the petition (filed in November 1998). (iii) Upon purchase of these shares, the company to be authorized to reduce its share capital to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... award, granted by the sole arbitrator on 31 March 1998, was for a sum of about Rs. 3.07 crores,. This award was in challenge as at 31 March 1999 and was subject to the final outcome of the case. The outcome was uncertain both in terms of the result and time. The award was clearly a contingent asset and called for the application of the principles of valuation applicable to contingent assets. There are two important considerations, as noted by the valuer, for valuation of contingent assets. In the first place, the assessment has to be on a "conservative basis" and the "time frame" ought to be considered. Secondly, for the purpose of valuation of contingent liabilities as well as contingent assets, the events occurring after the date of valuation should also be taken into account. The valuer has, thereafter, noted that the award was set aside by this Court on the application of PMC on 3 March 2005 and a special leave petition of the company challenging that order was dismissed by the Supreme Court. The events post 31 March 1999, thus, showed that the value of the declared award was zero as of date. The valuer, however, proceeded to consider various other factors, such as the possibil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t once a trial court order is affirmed with or without modification by an appellate court, it merges with the order of the appellate court and it is thereafter the order of the appellate court which holds the field and which the parties have to abide by. In the present case, the original order of the CLB disposing of the company petition was challenged before this Court. This Court, by its order dated 13 January 2005, dismissed the appeal and passed an order not just affirming the impugned order of the CLB but inter alia recording and accepting an undertaking of the Appellants Rashid group in respect of prayer clause (a) of the suit filed by Appellant No.3 (Suit No.2493 of 1998) and also for disposal of the suit as against Jain group after transfer of shares. This Court, after confirming the impugned order of the CLB, directed the statutory auditor to commence the task of valuation in accordance with the directions given by the CLB in the impugned order. This Court further directed that upon such valuation being completed and shares being ultimately transferred in favour of the Appellants Rashid group in accordance with the impugned order, the undertaking of the Appellants to withd ..... X X X X Extracts X X X X X X X X Extracts X X X X
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