TMI Blog2007 (1) TMI 619X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions 397/398 of the Companies Act alleging oppression and mismanagement. 2. Before I proceed further, it is necessary to note that the pleadings in the proceeding ran to a number of volumes and the documents referred to by the counsel were scattered in various volumes and a number of documents were also tendered across the Bar. The petition was heard for nearly 25 days spreading over 15 months. In view of this, when the counsel expressed their desire to file written submissions, I requested them to annex all the documents relied on by them with the written submissions and accordingly they have done so. Therefore, in this order, where ever relevant, I have referred to various documents as per the annexures to the written submissions. Since a large number of cases were also cited, I have referred to only important of those cases. 3. The facts of the case, in brief, are: M/S Haldia Petrochemicals Limited (HPL) was incorporated in the year 1985 for setting up of a green field petrochemical complex in Haldia ( West Bengal). It was envisaged to be implemented by West Bengal Industrial Development Corporation,(WBIDC) and R.P. Goenka group. Their nominees were the subscribers to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in relation to the project cost so far would be treated as interest free loans to the company. 7. Disputes in relation to the agreement to be resolved through arbitration before ICC. 8. The parties be entitled to seek for specific performance in terms of Specific Relief Act. 9. The JVA was to remain in force as long as the parties held the prescribed percentage of shares. 5. Thereafter, four side letters were exchanged dated 30th Sept. 1994, 6th Oct. 1994, 30th Sept. 1994 and 5th Jan. 1995. In terms of these letters, within 24 moths of commencement of commercial production or within 60 months from the date of JVA, whichever was later, at least 60% of the shareholding of WBIDC would be offered to CPMC at ₹ 14/- per share. The Government had agreed to grant several exemptions to the company as also to provide contingent financial support to the company on occurring of certain events. It was also provided that the role of the Government in the company would be limited to promotion and guidance during the initial phases of the project and that the nominee of CPMC would be Managing Director. The Articles of Association of the company were altered in March, 1995 to brin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... key executives. 11. The composition of the board would be changed to reflect revised share structure and WBIDC would vote along with CPMC on all issues in the shareholders meeting and its nominee directors would vote along with the nominee directors of CPMC; 12. All the rights and obligations of CPMC in terms of the earlier agreement would remain till CPMC acquired majority shares in the company. 13. With this agreement, GOWB would be absolved of any responsibility for providing any further funds. 14. The terms of the agreement were to be implemented in entirety in sequential steps. Any failure on the part of either of the parties would give the right to the other party to terminate this agreement. 15. In case of failure on the part of WBIDC/GOWB, they will refund the entire money invested by CPMC. 16. CPMC will have the right to induct a strategic partner. 8. The main recitals of another agreement among the 1st, 4th petitioners and WBIDC on 8th March, 2002 are: (Annexure WS 3) 1. In terms of the agreement dated 12th January, 2002, 15,50,99,998 equity shares of WBIDC had been transferred and delivered to the 4th petitioner on 8th March, 2002. 2. WBIDC ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r allotment of shares as contemplated in this agreement. After allotment of shares to the 2nd petitioner, the collective shareholding of the petitioners is shown as 58.62% with a note that 155 million shares transferred by WBIDC to CPMC was subject to registration and lenders approval. 11. Another Agreement between Dr.PC and GoWB represented by the 8th respondent, on 14th January 2005 provided for: (Annexure WS-5) 1. Government of West Bengal shall sell its entire shareholding in HPL to CPMC. 2. The price of the shares shall be determined by an independent valuer selected by GOWB from amongst a panel of firms prepared by CPMC. 3. The recommendation of the valuer shall be binding on the GOWB and CPMC. 4. Both the parties shall endeavor to complete the process expeditiously. 12. In Janauary/February 2005, HPL had approved the issue and allotment of equity shares for ₹ 150 crores at par to Indian Oil Corporation Ltd-the 6th respondent (IOC). Making various grievances on the proposed allotment of shares to IOC and also on the ground that WBIDC/GoWB had failed to comply with their commitment to transfer their balance 36% shares to the petitioners, the petitioners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the company so that the company did not become a Government company. In the JVA entered into on 20th August, 1994, pre-emption right was given to the petitioners to acquire the shares of WBIDC in the event of its disinvesting the shares. Therefore, when the petitioners entered the company, there was a clear understanding that the company would remain in the private sector. In addition to the JVA, 4 side letters were exchanged between the petitioners and WBIDC/GoWB providing for the petitioners acquiring at least 60% of the shares held by the shares held by WBIDC at ₹ 14/- per share on occurrence of certain events within a particular time frame. ₹ 14/- per share was agreed to only because of the risk that was being taken by the petitioners in implementing the project. In one of the side letters sent by the petitioners, it was indicated that the role of the Government would be limited to promotion and guidance during the initial stages where after the control of management would be in the private sector and that the nominee of the petitioners would be the MD of the company. This was accepted by the Government. Thus, the management control of the company was agreed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... main as a non government company. 16. Therefore it is evident that right from the time when the petitioners joined the company by entering into an MOU on 3rd May, 1994 and JVA dated 20.9.1994 an thereafter in terms of the other agreements, that the petitioners had some definite legitimate expectations in joining and continuing with the company. The petitioners are not referring to these agreements with the view to seek specific performance in the present proceeding but they rely on these agreements only to show the intention of the parties giving raise to legitimate expectations. A combined reading of the MOU, JVA, Agreement dated 12.1.2002, 8.3.2002, supplemental agreement dated 30.7.2004, share subscription agreement dated 30.7.2004 and agreements dated 14th January, 2005 would reveal that the petitioners had/have the following legitimate expectations: 1. The company would be controlled by private sector and it would not become a government company 2. The WBIDC would be a minority shareholder 3. The petitioners were to hold majority shares and management control. 4. The WoGBwould make available to the company exemptions and concessions and also contingent financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ners relate to: 1. Allotment of shares to IOC 2. Non registration of 155 million shares already transferred by WBIDC to the petitioners 3. Refusal of the WBIDC/GoWB to transfer the balance shares to the petitioners. 4. Non handing over of the management to the petitioners and 5. Appointment and continuance of the 16th respondent as the managing director 19. Allotment of Shares to IOC: The allotment of shares to IOC is vitiated on various grounds. First is the non disclosure to the petitioners and/or to the Board of HPL, of certain understandings between IOC and WBIDC/GoWb behind the back of the petitioners, the second is that the petitioners were induced to support allotment of shares to IOC on certain promises by GoWB without the intention of fulfilling the promise and the third is that the allotment is void as being in violation of the provisions of Article 47 of AoA of HPL and the fourth is the manner and mode of allotting the shares by a circular resolution. Right from the beginning, the petitioners had reservation about induction of IOC as a portfolio investor. As a matter of fact, by a letter 20th September, 2004 addressed to GoWB, the petitioners had indica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iscussions with WBIDC and GoWB regarding the purchase of the shares on a number of occasions between April, 2005 and 25th July, 2005, during which period he submitted 8 draft share purchase agreements to WBIDC/GoWB in terms of the discussions that took place during that period. By a letter dated 5th July, 2005 addressed to the GoWB, the petitioners expressed their readiness and willingness to purchase all the shares held by WBIDC provided the proposal to allot shares to IOC was abandoned. Similar letter was written on 15th July, 2005. During the discussion on 22nd July, 2005, WoGB indicated its desire to conclude share transfer transaction as soon as possible preferably by 25th July, 2005. Accordingly, by a letter dated 25th July, 2005 addressed to the 3rd respondent, the petitioners forwarded a confirmation letter from Deutsche Bank indicating their willingness to make available to the petitioners a sum of ₹ 11.10 Billion for purchase of the shares held by WBIDC. However, by a letter dated 27.7.2005, WoGB informed Dr.PC that GoWB had decided not to divest the shares in favour of the petitioners on the ground that to the Government, the petitioner did not appear to be in a po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out that the right of first refusal vested with the petitioners in terms of the Articles. It was also indicated that in case IOC could not get control of the company, the shares worth ₹ 150 crores proposed to be allotted to IOC would be purchased by the WBIDC at par. When IOC was informed of the pre-emption rights vested with the petitioners, by a letter dated 19th October, 2004 (Annex P-20) addressed to the 8th respondent, IOC desired that WBIDC should try to get the pre-emption rights vacated by the petitioners. This would indicate that the idea of IOC was not that of a portfolio investor but with a view to take full control of the shareholding in and management of HPL. In reply, by a letter dated 19th October, 2004, (Annex P-21) the 8th respondent informed IOC that even though the pre-emption rights cannot be vacated, yet, on going through the established procedure, the WBIDC would be willing to transfer all its shares to IOC. This letter would indicate that even GoWB/WBIDC were in favour of handing over the entire shareholding and management of the company to IOC, even though, right from the beginning, the intention was that the company would remain in the private sector ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2005 3 CLJ 139, CLB has held that when Government nominees are directors in a joint venture company, they should act with utmost care with regard to the affairs of the JV company as they owe fiduciary duty to the same. In the present case, 8th and 9th respondents had failed to comply with this requirement by their non disclosure on the clandestine agreement with IOC. When the Chairman of HPL - the 7th respondent wrote to IOC on 2.11.2004 inviting it to subscribe to the shares for ₹ 150 crores, the 9th respondent wrote to IOC on 5th November, 2004 (Annex P-25) advising IOC to accept the offer as per the terms given by HPL without any modification giving an assurance that the shares held by WBIDC would be offered to the petitioners within two months (which was modified to 30 days by a subsequent letter) on a price to be determined by an internationally reputed accounting firm selected by IOC on the price mutually agreed by IOC and WBIDC on the basis of valuation and in case the petitioners did not accept to acquire the shares at that price, the same would be offered to IOC. The grievance of the petitioners is that IOC carried out due diligence in the guise of investing ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a portfolio investor but to take control of the company. Therefore, even assuming that the petitioners had given their consent for allotment to IOC, yet, the consent being not a valid consent, the petitioners cannot be bound by the said consent. Once it is found that the consent was obtained by concealment of material facts, the meeting held could be declared as invalid and the allotment made pursuant to the decision in that meeting could be cancelled. This was done in Jadabpore Tea Co Ltd v. Bengal Dooars National Tea Co Ltd. 55 CC 160. Further, In terms of Section 10 of the Contract Act, free consent is necessary to bind one to his agreement. Petitioners consent to the allotment to IOC was on the premises that IOC would be a portfolio investor limited to ₹ 150 crores and that WBIDC shares would be transferred to the petitioners. If either of the two is found to be flouted, there could be no free consent. It was only an inducement. When the basis of the consent is gone, the question of free consent does not exist. In equity and fairness , the petitioners should not be held to be bound by their consent as there is no legal consent in the eye of law. 22. The learned couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to IOC immediately. It is on record that the legal notice and other reminders issued by IOC regarding allotment of shares were placed before the board in its meeting on 28th May, 2005 and board opined that the issue should be resolved expeditiously. Therefore, in the normal course, the matter should have been placed before the board before the final allotment. As a matter of fact, a board meeting had been fixed on 29th July, 2005 but the same was postponed on the ground of non availability of many board members. The legal opinion from the former ASG was obtained on 27th July, 2005 and on 28th July, 2005, the Chairman issued the circular resolution by fax to all directors. The resolution by circulation was initiated by the Chairman which is contrary to the practice in the company as, all through, circular resolutions were initiated by the company Secretary and from the registered office. However, in the present case, it was the Chairman, who sitting in Gurgaon, initiated the circular resolution under his own signature which is highly unusual. No satisfactory explanation has been given for doing so. The Chairman being non executive, his role is limited to chair board and general me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any submitted that the shares had been allotted in the morning on that day. In terms of the circular resolution, the shares were to be allotted on encashment of the cheque. The admitted fact is that the cheque was encashed only on 3.8.2005. The return of allotment was filed on 2.8.2005 showing as if the allotment had been made as fully paid up. In terms of proviso to Section 75(l)(a). no company can show in the return of allotment that shares had been allotted for cash if cash had not been actually received. In this case obviously, cash had not been received on the date of allotment and therefore the return of allotment showing as if cash had been received is invalid. The cases cited by the counsel for the respondents that receipt of cheque is equivalent to receipt of cash cannot be sustained in view of the provision of Section 75 according to which shares could be allotted only on receipt of actual cash. (Re Calcutta Stock Exchange AIR 1957 Cal 438). On this ground alone, the allotment made to IOC on 2.8.2005 has to be declared as invalid. Further, when the circular resolution was specific that the shares were to be allotted on encashment of the cheque, , even the allotment, befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f in regard to the same in the petition. Only when the respondents, in their replies, contested the factum of transfer of shares, the petitioners have sought a relief for a declaration that the shares stood transferred in the name of the 4th petitioner. Therefore the respondents cannot contend that without a prayer having been made in the petition, the same cannot be sought thereafter especially when in terms of Sections 397/398 of the Act, the CLB has powers to mould the relief taking all circumstances into consideration. Approving the judgment of Madras High Court in Syed Mohamad Ali v. R Sundaramurthy AIR 1958 Mad 587, in Gaekwad case , in paragraph 186, the Supreme Court has held The jurisdiction of the Court to grant appropriate relief under Section 397 of the Act indisputably is of wide amplitude. It is also beyond any controversy that the court while exercising it discretion is not bound by the terms contained in Section 402, if in a particular act situation a futher reliefer reliefs as the court may seem fit and proper . After the petitioners had invested ₹ 107 crores in pursuant to the agreement dated 12.1.2004, , another agreement was entered into on 8th March, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r formal registration by the company, all steps including approval from lenders had been received and therefore the petitioners have acquired indefeasible rights over the shares. In Vasudev v. Pranalal the Supreme Court has held that once share certificates with blank transfer forms is given to the transferee with the intention to confer upon him a right or title to become a shareholder, this right is enforceable. In Maneckji Pestonji Bhamcha v. Wadilal Sarabhai AIR 1926 PC 28 it has been held: In cases of sale of shares, sale of share contract, as soon as the seller hands over the certificates and blank transfers and the buyer accepts them and gives the seller the cheque, the goods become ascertained good, the sale is complete and the property passes. From that time onwards, the seller can only sue the buyer on the cheque or the price of the shares unpaid in respect that the cheque had not been honoured . Therefore, on no account, WBIDC/GoWB could claim that they are the owners of the shares on the ground that they have repudiated the contracts. 28. The respondents have contended that the matter of transfer of shares is not in the affairs of the company and is between two shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company and denial of legitimate expectation of a shareholder are all affairs of a company. 1. Buckley on Companies Act: A shareholders agreement to give rise to expectations on the parties to it so that where the expectations are thwarted, this could constitute conduct relating to affairs of the company 2. In Re: The Gread Outdoors Co. Ltd. ( Law Reports of the Commonwealth 1986 549): While considering the allegations of oppression, it is appropriate that a dispute over the contractual rights should be dealt with in the context of the relevant section relating to oppression. 3. Dilip Kumar Chandra v. Chandra Sons Pvt. Ltd. CP 32 of 2001 CLB: Non registration of transfer of shares is an act of oppression. 30. Appointment of R-16 as the Managing Director: He was allegedly appointed as the MD in the board meeting held on 29th March, 2005. In terms of Article 73 of AOA, there cannot be more than 15 directors. On 29.3.2005, the company already had 15 directors and therefore there was no vacancy to appoint the 6th respondent as the managing director who has to be necessarily a member of the board. As a matter of fact, the company had applied to the Central Government for i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ares to IOC as proposed in the circular resolution. But at the same time, having given the approval for transfer of 155 million shares of WBIDC to the petitioners, IDBI withdrew the same during the pendency of the present proceeding by a letter dated 10.1.2006. Thus, it is evident that IDBI has played an active role in the affairs of a company concerning promoter issues and has sided with GOWB notwithstanding the fact that it was the petitioners who effectuated the CDR package by investing ₹ 127 crores. Having denied the rights of a petitioner, IDBI is seeking to have shares worth ₹ 135 crores allotted to the lenders which allotment would alter the status of the company from private sector to public sector and would also concert the petitioners from majority into a minority. It is evident therefore that IDBI has over stepped its role as a lender and has sought to create a rift between the main promoters of the company instead of finding out a solution which would be not only in the interest of the company, shareholders but more particularly to the lenders. In Dr. Kamal Kumar Dutta v. Ruby General Hospital 108 CC 312, the CLB has observed that financial institutions shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment company, only the equity share capital has to be taken into account and not the preference share capital. 33. The learned counsel sought for the following reliefs: 1. the EOGM held on 14.1.2005 should be declared as invalid and and the resolution passed thereat should be set aside. 2. The resolution passed by circulation dated 28.7.2005 should be set aside. 3. The allotment of shares worth ₹ 150 crores to IOC should be cancelled and the company should be directed to refund the money. 4. 155 million shares transferred by WBIDC to the 4th petitioner in terms of the agreement dated 8.3.2002 should be dematerialized and registered in favour of the 4th petitioner. 5. The 7th and 16th respondents should be removed from the board and the expenditure incurred by the company in the present proceedings should be recovered from them. 6. The Articles of Association should be amended to reflect the terms of the various agreements. 7. The lenders be allotted shares worth ₹ 128 crores ( reduced from original ₹ 135 crores) as per the CDR package. 8. The balance shares held by GOWB/WBIDC should be directed to be sold to the petitioners on the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a director has knowledge in relation to affairs of the company, his knowledge could be imputed to the company Therefore, these respondents have breached their fiduciary duties in allotment of shares to IOC without disclosing material particulars. Even though the petitioners are in the majority, WBIDC/GOWB is trying to gain control over the company with the help of IOC. When two groups of shareholders have some disputes, the company cannot be used to settle scores and the company should not be used by one against the other and therefore, the expenses incurred by the company should be recovered from the 7th and 16th respondents. The learned counsel relied on the following cases: Re: A Company 1992 BCLC 701: In a petition under Section 459, the company is purely a nominal party since the substantive dispute is normally between the shareholders. Therefore, it would be misfeasance on the part of the directors to use the company's money to pay the legal expenses in connection with such proceeding. Re: Crossmore Electrical Civil Engineering Ltd. 1989 BCLC 137 ChD: It is a general principle of law that company's money should not be expended on disputes between shareholders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y before IOC allotment is not correct. The collective holdings of the petitioners work out to only 48.9%. The claim of the petitioners that they are in majority arises out of their claim for shares worth ₹ 155 crores allegedly transferred by WBIDC. The transfer has not been registered by the company and the very fact that they are seeking relief in this regard, would indicate that the petitioners are obviously are not owners of these shares. By seeking the prayers to cancel the allotment of shares to IOC, and to direct the company to register the transfer of 155 million shares and to direct WBIDC to disinvest 36% shares in favour of the petitioners, they are trying to take complete control of the company, which cannot be permitted. 37. The learned counsel further submitted: Since, through the petition, the petitioners are seeking to enforce specific performance of various agreements, the petition itself is not maintainable. It is a settled law that only when the statutory rights of a shareholder are affected, he can allege oppression. Even in a suit for specific performance, the grant of relief is discretionary and order for specific performance need not necessarily be mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nevitable dismissal of the suit. Prem Raj v. DLF and Latulal v. Phool Chand : In considering whether a person is willing to perform his part of the contract, the sequence in which the obligations under a contract are to be performed must be taken into account and if there is a failure in performance of the contract, the same cannot be enforced. 38. The learned counsel further submitted: The main complaint of the petitioners in the petition relate to the refusal of WBIDC to transfer 36% shares to the petitioners and that the allotment of shares to IOC is bad. It is a settled law that the alleged acts of oppression should be in the conduct of the affairs of the company and not in relation to interse disputes between two groups of shareholders. The entire petition deals only with the alleged default/failure of WBIDC/GoWB in discharging their obligations in terms of various agreements and not in the conduct of the affairs of the company. There is not even an averment as to how the company is concerned with these disputes. In other words, private disputes between shareholders cannot be a ground for filing a petition under Sections 397/398 of the Act. There is no averment in the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n shares has to be agitated in a civil suit. 6. Shoe Specialities Ltd. v. Standard Distilleries Breweries Pvt. Ltd. 1997 1 CLJ 243 Mad.: While exercising the powers under Sections 397 and 402 of the Act, the court is considering not only the reliefs that is sought for but also considers as to what is the nature of the complaint and how the same has to be rectified. It is the interest of the company that is being considered and not the individual disputes between the petitioner and the respondent. 7. Hungerford Investment Trust Ltd. v. Turner Morrison Co. Ltd. ILR 1972 1 Cal. 286: (This judgment has been set aside by the Division Bench): Section 397 of the Companies Act is not intended to feed every private grudge or differences between shareholders and is not intended to be exploited for any difference of views between members which could be largely and substantially redressed by invoking specific provisions of the Companies Act dealing with such claim. The proceedings under Sections 398/398 of the Companies are intended to be in public interest largely or in the commercial interest of the company concerned and not a kind of provision to feed the private grudge between the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st a shareholder, In terms of Section 397, one can complain only against oppression and not on the ground of denial of his legitimate expectations.: In Vaishnav Shorilal Puri v. Kishore Kundan Sippy 131 CC 690 Bom the Division Bench of Bombay High Court has held that the term unfairly prejudicial as in Section 459 of English Companies Act, is different from oppression in Section 397 of the Indian companies Act and has held that unless there is illegality in the conduct of the affairs of the company Section 397 can not be invoked. Therefore the question of legitimate expectation, which concept is applied under English Act. cannot be imported in a petition under Section 397. Therefore, no relief can be granted on the basis of legitimate expectations. 41. On merits, the learned counsel submitted: All the agreements relied on by the petitioners are linked to one and another and they all form a composite transaction arising out of the agreement dated 12th January, 2002. Due to changes in circumstances, the same was modified by other agreements dated 8th March, 2002, 30th 2004 and 14th January, 2005. The intention of the parties has to be gathered from the agreements and not from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... funds by getting a strategic investor as provided in the agreement. In terms of JVA dated 12.1.2002, the petitioners were to bring in ₹ 107 crores as advance of which ₹ 53.5 crores were to be paid within 5 working days and thereafter they were to bring in further ₹ 393 crores. Instead, the petitioners only arranged a loan of ₹ 107 crores from HSBC over a period of one year from March, 2001 to Feb. 2002 in the name of the company and the interest of about ₹ 3.5 crores had to be borne by the company. Only in the month of Jan. 2004, the petitioners cleared the loan and in lieu thereof shares worth ₹ 107 crores were allotted to the 3rd petitioner. In terms of clause 2 of the agreement, the petitioners were to produce a letter of comfort within 30 days which was not produced at all. In terms of clause 5, WBIDC was to transfer further, shares up to ₹ 360 crores to make the petitioners as 51% shareholders only on production of the letter of comfort. In spite of the failure of the petitioners to comply with the terms of agreement, WBIDC transferred shares worth ₹ 155 crores in good faith. It would be highly inequitable on the part of the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfuse ₹ 200 crores with a representation on the board of HPL. However, in a meeting that Dr.PC had with the Chief Minister, Dr. PC preferred IOC in place of GAIL and accordingly he requested the State Government to take up the matter with Government of India ( Annexure W-36). Dr. PC confirmed in writing by a letter dated 24.9.2004. ( Annexure WS-37) that there was urgency in concluding the induction of funds. Thereafter, GoWB/WBIDC held discussions with IOC which according to the petitioners led to a clandestine agreement. In a board meeting held on 2nd November, 2004 (Annexure WS-43), it was decided to invite IOC to participate in the equity investment of ₹ 150 crores and it was also decided to convene an EOGM to pass a resolution in terms of Section 81(1)(A) of the Act. Accordingly, the Chairman issued a letter of invitation to IOC on 2nd November, 2004 (Annexure WS-44) and by a letter dated 10th November, 2004 ( Annexure WS-45), IOC agreed to invest ₹ 150 crores. In the EOGM held on 14.1.2005, with the participation of the petitioners, a unanimous resolution was passed for offering, issuing, and allotting 150 million shares of ₹ 10/- each at par to IOC (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms and therefore the IOC is bound by the terms of allotment and it cannot have any recourse to its earlier claims. Therefore, the allegation of the petitioners that there was a secret/clandestine agreement of IOC, the non disclosure of which is fatal to the general body resolution to allot shares to IOC has no basis. Even assuming that there was a secret agreement, it was a private agreement and it has nothing to do with the affairs of the company. In view of this, IOC allotment cannot be set aside on the basis of this allegation. The petitioners' allegation that the discussion/correspondence with IOC should have been disclosed either to the board or to the petitioners concerned, as a shareholder, WBIDC did not owe any fiduciary duty to them nor there is any such stipulation in any of the agreements with the petitioners or in the Articles of Association. Section 173(2) of the Act does not require a shareholder to disclose reasons for either supporting or opposing or moving a resolution. (LIC v. Escorts Ltd. 1861 SCC 264 Therefore, everything ended at this stage and IOC subscribed to the shares only on the terms and conditions proposed by HPL with the active participation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28.5.2005. In terms of Article 102 of AOA, Circular resolution passed by the board is valid as if it had been passed in a meeting of the board. The petitioners have further contended that the WBIDC directors should have voted along with the petitioners in terms of Clause 6 of the Agreement dated 12.1.2002. In view of the fact that there is no such provision in the articles and since in terms of the judgment of Supreme Court in V.B. Rangaraj case AIR 1992 SC 453, the terms of private agreement nor incorporated in the Articles has no validity. In Rotla case 2002 2 Bom. Cr. 241, the Bombay High Court has held that directors in discharge of their fiduciary duties have to vote for the benefit of the company and are not bound by private agreements. The other contention that 10 days notice had not been given is also not sustainable as this requirement is only in respect of regular board meetings and not in case of circular resolutions which has been specifically permitted by Article 102. The petitioners have also claimed that shares could not have been allotted without amendment to Article 47 especially when the company itself had informed the ROC by a letter 11.7.2005. The said letter o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivil court in this regard. Even otherwise, the original transfer instruments signed by WBIDC have become stale and therefore cannot now be lodged. Therefore, the question of the company either rejecting or approving the registration of transfer of shares does not arise. There are two parts in regard to the impugned ₹ 155 crores shares - one is the agreement to sell and the other is actual sale. Even though, the company was aware of the agreement to sell dated 30.7.2004, it was not aware of the actual sale as no transfer instruments had been lodged with the company. What the petitioner seeks through the petition is that WBIDC had promised to make the petitioner a majority and therefore direct WBIDC to comply with its commitment. Thus, on their own showing, the company is not concerned with the issue. Further, the petitioners have not paid any consideration for the shares. They have so far paid only ₹ 30 crores as against ₹ 155 crores and therefore even if it is assumed that CLB has the power to direct registration of transfer of shares, it could be only with reference to ₹ 30 crores and nothing beyond that. Even otherwise, the transfer of the said shares was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lion is ordered, then even without purchasing the balance shares held by WBDIC, the petitioners would become majority shareholders, the position which was never envisaged. Therefore in terms of Section 52 read with Section 54 of the Contract Act, the petitioners cannot seek performance of WBIDC's obligation as they have not fulfilled their obligation. In view of this, even in a civil suit, they would not get any relief which definitely they cannot get under the equitable jurisdiction of this Board. Since in terms of the agreement between the lenders and the company, without their approval, company cannot register the transfer, even CLB cannot direct the company to register the transfer, as it would place the company to act in breach of its agreement with a third party viz;, the lenders. In terms of Section 39 of the Contract Act, when a party refuses to perform its/his obligations under the contract, the other party can rescind the contract as such a contract has become voidable. In such cases, the only course available is either to claim damages or seek for restitution in terms of Section 64 and 65 of the Contract Act. Since in the present case, due to the failure of the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Deutsche Bank's letter dated 15th July, 2005 (Annexure WS-29). Now the petitioners' claim that no price had been agreed upon and the same has to be determined by a valuer. The claim of the petitioners that they had been induced to support the allotment of shares to IOC on the promise of disinvesting the shares of WBIDC in favour of the petitioners is wrong. It is evident from the letter of Dr.PC dated 6.7.2005 (Annexure WS-32) wherein he has specifically mentioned that as a pre condition for acquiring the shares of WBIDC, a confirmation should be obtained from IOC that it would not subscribe to the shares worth ₹ 150 crores. This stand, he has reiterated in subsequent letters also and also in the various draft agreements that Dr.PC had sent to GOWB/WBIDC and the Chief Minister. It would mean that if IOC were to continue, the petitioners are not willing to acquire the shares of WBIDC. Therefore it is crystal clear that induction of IOC and disinvestment by WBIDC are independent of each other. In view of this contradictory stand taken by Dr.PC , GoWB decided not to go in for disinvestment. A perusal of various agreements would indicate that WBIDC/GOWB agreed to transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an have is that whenever WBIDC decides to disinvest, in terms of the Articles the petitioners would have the pre-emption rights. Further, whether the agreement dated 14.1.2005 is capable of enforcement is a triable issue as the same is contrary to the previous agreements. Even assuming that it was an agreement, by his own conduct of stipulating various pre conditions thereafter, Dr. PC has repudiated the said agreement which has also been accepted by GOWB/WBIDC by a letter dated 27.7.2005 in terms of Section 39 of the Contract Act (Annexure WS-28). Thus, as of date, the petitioners have no right or legitimate expectations to require GoWB/WBIDC to divest their shares in the company. The leaned counsel relied on the following cases: Sikkim Subba Associates v. State of Sikkim : He who seeks equity must do equity and when the condonation or acceptance of belated performance was conditional upon the future could conduct and adherence to the promises of the defaulter, the so called waiver cannot be considered to be for ever and complete in itself so as to deprive the State in this case, of its power to legitimately repudiate and refuse to perform its part on the admitted fact that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the offer was made to IOC and it accepted the offer by sending a cheque for consideration, the company was obligated to allot the shares. Since IOC had made complaints relating to non allotment and the ROC had also called for comments and the legal opinion also advocated allotment of shares to IOC at the earliest, to avoid impending legal action the allotment of shares to IOC was move through a circular resolution as a matter of abundant caution. As a matter of fact when the board had resolved to allot shares in 2004, even the circular resolution was unnecessary. The claim of the petitioners that the company could not have allotted the shares before encashment of cheque is not correct. It has been held that receipt of cheque is equivalent is receipt of cash and therefore time and date of encashment is irrelevant. The petitioners have alleged that prior to the encashment of the cheque, shares should not have been allotted as the same is in violation of Section 75. It has been judicially held that payment by cheque is equal to payment by cash. In K. Saraswati v. P.S.S. Somasundaram : it is held that unless it is specifically mentioned that payment must be in cash, there is no reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Committee constituted by the company to finalise the CDR package includes Dr. PC and another of his nominee. The Committee had passed a specific resolution for implementation of the CDR package which stipulates issuance of ₹ 140 crores equity shares at par to the lenders. The Master Restructuring Agreement dated 16.12.2004 signed by Dr. PC himself provides for allotment and issuance of shares worth ₹ 135 crores to the lenders and as such contractual right has been created in the lenders and as such the petitioners cannot oppose allotment to them. The CDR package has already been implemented by the lenders by sacrificing an amount of ₹ 289 crores and the rate of interest has been reduced from 14% to 10.5%, thus, resulting in enormous saving to the company. If the allotment of ₹ 135 crores is made to the lenders, the company would save about ₹ 15 crores per annum by way of interest. In addition, the lenders have also agreed to reduce the rate of interest from 10.5% to 8.75% once the shares are allotted and refinancing proposal submitted by the company to the lenders is approved. Therefore, it would be in the interest of the company that the earlier rest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company has complied with the provisions of the Act, the question of alleging oppression in this regard does not arise. Further, in the petition, there is no allegation in this regard and as such even this allegation cannot be looked into by the Company Law Board. 55. Shri Chagla, Senior Advocate, appearing for the WoGB submitted: Private rights cannot be sought to be enforced through a petition under Sections 397/398 of the Act. The CLB is not concerned with manner of doing something but only to examine whether the act done is oppressive or detrimental. When Dr.PC had participated in the EOGM and voted for allotment of shares to IOC, he cannot impugn the resolution on the ground of misrepresentation for which the remedy by way of damages will have to be before a civil court. Misrepresentation of a private promise does not make the resolution of the General Meeting bad. A resolution can be set aside only if there is some infirmity in holding the meeting. The allotment to IOC and the sale of shares of WBIDC to the petitioners are two independent and unconnected actions. The challenge of the petitioners to allotment of shares to IOC is mainly on the ground that certain discuss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n support of his arguments. S.P.Chengalvaraya Naidu v. Jagannath ; Non disclosure of relevant and material documents with a view to obtain advantage amounts to fraud. Hence decree obtained by non disclosure amounts to fraud on the court and hence decree is liable to be set aside. S.P. Jain v. Kalinga Tubes Ltd. :The haste in the particular circumstances of the case in allotment of shares cannot therefore lead to any inference of oppression but arose out of the circumstances brought about by the appellant's conduct; When the real basis of the petition is not a case of oppression as a minority shareholder but on the feeling that the hope of getting control of the company on the basis of agreement had been thawarted, there is no cause of oppression. Needle Industries case 1981 3 SCC 333; As isolated act cannot lead to a presumption of oppression and even a resolution in contravention of law may be in the, interest of shareholders and the company. 56. Shri Anil Diwan, Senior Advocate, appearing for the 7th respondent submitted: The main allegation against the 7th respondent is that even though he was in the knowledge of the alleged clandestine agreement with IOC, he had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to ₹ 150 crores. The board also approved constitution of a committee with Dr.PC as a member to finalise and issue the letter of offer to IOC. Thereafter, the 7th respondent sent an offer dated 2.11.2004 to IOC indicating the terms and conditions. The EOGM with the participation of all the petitioners, unanimously approved the allotment of shares to IOC on 14.1.2005. In the Empowered Committee meeting on 20.1.2005 chaired by CPMC, a resolution was passed to issue 15 crores shares to IOC and to allot the same on receipt of full payment from IOC. The resolution further authorized the company management to do all acts, deeds and other things necessary and incidental including filing of returns with ROC. Along with the letter of acceptance, IOC sent a cheque for ₹ 150 crores which was received on 18.2.2005. However, the company could not encash the cheque as CPMC somehow stalled the allotment of shares to IOC. Various reminders received from IOC including legal notices were placed before the board in its meeting on 20.8.2005 which was attended by Dr. PC wherein the board expressed its desire that the issue should be resolved expeditiously. Since no shares had been allotted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectors. In view of the legal notice received from IOC, notice from ROC and the legal opinion received, the 7th respondent had no option but to get board's approval for issuance of shares to IOC by a circular resolution and accordingly he did so on 28.7.2005. In terms of Article 102 of AOA, it is permissible to get approval of the board through circular resolutions. As far as the argument that necessary documents did not accompany the circular resolution is concerned, all the connected documents were sent to the members of the board even before the circular resolution was sent and therefore every board members is aware of the circumstances in which the circular resolution was proposed. On receipt of approval from all the directors except 4 from the petitioners' group, the 7th respondent by a letter dated 2.8.2005. directed the Deputy Company Secretary to take requisite action to implement the decision including encashing the IOC cheque by 3.8.2005 since 10 days time stipulated in the legal notice dated 19.7.2005 by IOC had expired on 29.7.2005. Thus, it will be evident that the 7th respondent had acted bonafide and in the interest of the company. Even otherwise, in view of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This averment is false as there are no contemporaneous records that at any time thereafter the petitioners had questioned the correctness of the minutes. A perusal of the minutes of the board meeting on 2.11.2004 would show that the Chairman had been authorized to invite IOC for participation by way of equity investment of ₹ 150 crores and a Committee including CPMC was authorized to do the needful. Accordingly, the Chairman issued a letter on 2.11.2002 to IOC inviting it to subscribe to shares worth ₹ 150 crores. The fact of issue of letter by the Chairman was to the knowledge of Dr PC as is evident from his letter dated 10.12.2004 wherein he has referred to the said letter. In the same resolution it was also proposed to call for an EOGM to approve the allotment of shares to IOC. The minutes of the meeting was circulated on 17th December, 2004. Even then, petitioners did not protest against the contents of the minutes. On 21st Dec. 2004, notices convening the EOGM on 14th January, 2005 were issued along with an Explanatory Statement as also a copy of letter of IOC dated 10.11.2004. Only by a letter dated 30th Dec. 2004, for the first time, Dr.PC contended that the mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, in the rejoinder, the petitioners took a different stand alleging that the WBIDC/GoWB had breached the terms of the agreement entered into on 14.1.2005 prior to the EOGM. IOC is not a party to the alleged agreement on 14.1.2005 nor it was aware of the same before it agreed to subscribe to the shares. The petitioners have impugned the circular resolution as being malafide etc. It is to be noted that in the Empowered Committee Meeting held on 20.1.2005, it was specifically resolved that on receipt of full consideration for the shares from IOC, shares could be issued either in physical form or dematerialised form. Therefore, there was no need to have followed the circular resolution route for issuance of shares as the same was unnecessary in view of the resolution passed in the Empowered Committee meeting. 58. The leaned counsel further submitted: The petitioners have raised another argument that in terms of Article 47 of AOA, the allotment to IOC was bad as it would alter the ratio of shareholding provided in the Articles. In this Article, it is specifically provided that the shares are to be issued in accordance with general body resolution. In the present case, in the EOGM he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yanarayan v. Virendre , it has been held that when an absolutely new case has been set up at the time of hearing, the same cannot be considered. In Trojan Co. v. Nagappa Chetdar it has been held that decision of a case cannot be based on the grounds outside the pleadings of the party and it is the case pleaded that has to be found. Without any amendment to the plaint, the plaintiff is not entitled to grant any relief not asked for. In Deisein Pvt. Ltd. v. Elektrim India Ltd. 2001 3 CLJ 459- CLB, it has been held that in the exercise of the equitable jurisdiction, the CLB has to take into consideration the conduct of the parties and if a person who has been a party to the decisions, he cannot impugn those decisions later on, on the ground that such decisions amount to act of oppression. Finally, since IOC is a bonafide allottee of the shares for valuable consideration, without the knowledge of any alleged breach of terms of agreements between the petitioners and WDIDC/GoWB, the allotment made to it cannot be cancelled. 59. Shri Dave, Sr. Advocate appearing for IDBI submitted: In the order dated 5.8.2005, this Board has restrained the company from allotting shares worth ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d obtained any relief by suppressing material documents. In every one of the cases cited by the learned counsel for the respondents, the plaintiff therein had obtained a decree or award or a judgment in his favour either by suppression of material documents or by misrepresentation. In the present case, the petitioners have not obtained any favourable order from this Board by suppression of the alleged material documents. In Binod Kumar Aganval v. Ringtong Tea Co P Ltd. CLB has held that as long as no favourable order had been obtained by non disclosure of material documents, no fraud can be alleged. Now that all the documents, which according to the respondents are relevant, are available on record, the Board could consider all of them in deciding the issues raised in the proceeding. It has also been contended by the respondents that many of the allegations and the reliefs sought thereat do not form part of the petition and as such the same cannot be considered. In Ramashankar Prosad v. Sindri Iron Foundry (P) Ltd. , it has been held It is true that there are no proper averments appropriate to the relief asked. However, what was lacking in the petition has been filled up by subse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ram argued that since GOWB has lost confidence in the petitioners and as a matter of Government policy, it has been decided not to divest the shares in favour of the petitioners. At no time, loss of confidence in the petitioners nor change of policy of the Government was communicated to the petitioners. As a matter of fact, right from January, 2005 to 25th July, 2005, discussions were going on between the petitioners and GOWB in this regard. If according to GOWB, till 25.7.2005, the petitioners were trustworthy, then the sudden change of mind on 27.7.2005 is inexplicable. Shri Sundaram pointed out that the petitioners had not brought in ₹ 500 crores and had not produced a letter of comfort. Letter of comfort was not only produced and the same was accepted and thereafter only the transfer of 155 million shares was effected. At not time, the issue relating to ₹ 500 crores was raised. Shri Sundaram also contended that since the petitioners were insisting, as a pre condition, that no shares should be allotted to IOC, the sale of shares to the petitioners could not fructify. This contention is not based on facts as after series of discussions between the petitioners and GoWB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lying upon which a citizen has altered his position to his prejudice . The petitioners objected to induction of IOC only because in the guise subscribing to the shares are an industrial portfolio investor, it has tried to acquire the shares of WBIDC and thus gain control of the company. As far as allotment to IDBI is concerned, the petitioners are aware that allotment of shares to IDBI and other lenders would be in the interest of the company and therefore on principle, they have no objection to the said allotment provided the shares of WBIDC are transferred to them including the registration of 155 million shares. 62. I have considered the pleadings, arguments and the written submissions of the parties. This petition was mentioned ex-parte at 10.30 AM on 3.8.2005 seeking for restraining the company from allotting shares worth ₹ 150 crores to IOC. I adjourned the matter to 4.00 PM with the direction to the petitioners to issue notices to the respondents to enable them to enter appearance. At 4.00 PM, the counsel appearing for the company submitted that shares had already been allotted to IOC and return of allotment had also been filed. In view of this, I directed the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also for seeking for varying/modifying order dated 5.8.2005 by allowing the company to allot shares to IDBI. This application was heard on 23.1.2006 and I passed the following order on 10.2.2006: At the out set I record that in this order I have noted only a summary of the elaborate arguments advanced by the counsel for the parties, as at the conclusion of the hearing on the application, with a view to explore the possibility of resolving the disputes amicably, I gave a suggestion to the to the learned counsel for the petitioners. Since the main bone of contention between the parties is the allotment of shares to IOC, I suggested that the petitioners should write to the Govt. of West Bengal that in case the WBIDC was willing to transfer its shares to the petitioners in terms of the various agreements, the petitioners would not have any objection to the allotment of shares to IDBI and IOC. In terms of the said suggestion, the petitioners have written to Government of West Bengal with a copy to this Board. In view of this, even though I fully agree with the contention of Shri Dave that any ex-parte order should be subject to review at the earliest, I am of the opinion that passi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal with the various objections raised by the respondents on the maintainability of the petition. Their prime objection is that petitioners are trying to seek enforcement of private contracts through this petition which is not permissible. They further submitted that even assuming this Board has the power to consider the same, yet, it cannot override the provisions of Specific Relief Act under which grant of relief is discretionary. Shri Sundaram vehemently contended that since the petitioners had breached many of the terms of the contracts and had/have never expressed their readiness and willingness to perform their obligations, they cannot seek any relief as sought for in the petition. He further contended that in view of the failure/default of the petitioners in performing their obligations, WBIDC/GOWB have already rescinded the contracts and therefore even the question of considering the terms of the contract does not arise now. His further contention is that the matters of breach of contracts/recision etc require evidence and therefore, cannot be decided in a summary proceeding. On the above propositions, a number of cases were cited as recorded as a part of his argument in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition against oppression. Even though over a dozen cases were cited by the counsel by the counsel for the respondents relating to the powers of civil courts in granting reliefs under the provisions of Specific Relief Act inter alia including judgments on readiness and willingness to perform, recession/avoidance of acts etc., I am not dealing with the same since, I will be examining, with reference to the conduct of the parties, only the issue whether the petitioners have established that they had and still have legitimate expectations while joining and continuing with the company. While doing so, inevitably, reference may have to be made to the terms of the agreements, not with the view to enforce the terms but only limited to see whether the terms have bearing on the claim of legitimate expectations. Even in Gaekwad case which was referred to by Shri Sundaram, in paragraph 162 of its judgment the Supreme Court while observing that in case of violation of contractual or statutory violation, one should approach a civil court, it also held that in extraordinary situation, the same can be considered in a petition under Section 397. Shri Sundaram vehemently argued that the doctrine of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, as per the own admission of GoWB/WBtDC, the petitioners, GOWB/WBIDC and Tatas were the promoters of the company. Tatas had not been active participants in the affairs of the company, leaving only the petitioners and GOWB/WBIDC to implement the project and manage the company. Till 2004, there were no other shareholders. Even though the petitioners are incorporated companies and WBIDC is a government company, the personal relationship and interaction of DR.PC with the Chief Minister and the officials of GoWB brought in their association with the company. These two collectively hold substantive shares viz of over 95% of the equity in the company (exclusive of IOC) and even though it was envisaged that 40% shares could be held by public, yet, as of date, there are the only two dominant groups of shareholders. Each has 4 nominees on the Board. All the major decisions are taken in consultation and with the consent of each other, and as a matter this is the main defense of GoWB/WBIDC in relation to various allegations made in the petition. Further, from the terms of the various agreements, it is apparent that these two groups of shareholders decide every aspect of the functioning of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal character arising between one individual and another, which may make it unjust, or inequitable to insist on legal right, or to exercise them in a particular way . In that case, even though the term legitimate expectations has not been specifically used, yet, the meaning conveyed is nothing but legitimate expectations . Therefore, in dealing with the various claims of the petitioners on the basis of the agreements, I shall be only examining whether the conduct of the parties pursuant to the terms of the agreements, has caused creation of any legitimate expectation for the petitioners. 67. The next objection raised by the respondents is that the petitioners are guilty of suppression of material facts and as such they have played a fraud on the CLB and therefore they are not entitled for any equitable relief. On this proposition, certain cases have been relied on. The charge of commission of fraud by suppression of material facts can be made only when a person obtains certain benefits from a court of law by way of an award, judgment or decree and not otherwise as is evident from the cases cited by the counsel for the respondents. In S.P. Chengalvaraya Naidu 1994 1 SCC 1, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fraud. On the contrary, as I would be pointing out later in this order, GoWB/WBIDC might be held to be guilty of misrepresentation in getting the order dated 5.8.2005. 68. The respondents have further contended that only allegations which relate to the affairs of the company can be looked into by this Board in a petition under Section 397 of the Act. According to them, the issues relating to 155 million shares and the sale of rest of the shares by WBIDC/GOWB do not relate to the affairs of the company as they arise out of private agreements between two groups of shareholders. On this proposition, they relied on the decisions of this Board in Hotel Queen, Vijaya Dairy Farms, Regal Industries cases and also in Jermin Street Trukish Bath and Gaekwad cases. Whether, the matter of transfer of shares is in the affairs of the company or not, would again depend on facts of the case. I shall deal with this objection later on when I deal with the allegations connected with these issues, keeping in mind Buckley on Companies Act according to which when shareholders agreements give rise to expectations on the parties to it so that when the expectations are thwarted, this could constitute co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which stand was not rebutted by the respondents when the interim reliefs were considered on 4.8.2005. When the respondents, however challenged the ownership of the petitioners of these 155 million shares in the replies to the petition, this issue automatically becomes a matter to be decided by this Board. As far as other allegations which are not pleaded, I shall be dealing with them subsequently. 70. Having given my findings on the preliminary issues, I shall now deal with the merits of this case. Allotment of shares to IOC: At the outset, I have to record, as is revealed from various documents, the petitioners cannot question the allotment of shares to IOC per-se. The allotment of shares to IOC, as rightly pointed out by the learned counsel for the respondents was not sudden, surreptitious or with any ulterior motive. The allotment of shares to IOC was under the contemplation of the shareholders right from 2000. As a matter of fact, it appears that the idea of inducting IOC was initiated by Dr. PC himself as is seen from his letter dated 24.3.2000 addressed to the Chief Minister wherein, while expressing that IOC had shown interest in participating in the project, he had sough ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that GOWB/WBIDC shall be entitled to cause induction of ₹ 150 crores of equity through an industrial portfolio investor. On 3rd September, 2004, Dr. PC met the Chief Minister when he had agreed for induction of IOC, which he also confirmed by his letter dated 20th September, 2004. Thereafter on 24.9.2004, a confidentiality agreement was entered into with IOC to enable IOC to carry out due diligence. 71. However, according to the petitioners when the matter came up for discussion in the board meeting on 2nd November, 2004, many directors including their nominees had voiced their reservations on the IOC allotment but, even though the same were reflected in the draft minutes sent to the petitioners, they did not find a place in the final approved minutes. I do not propose to get into the controversy as to whether the approved minutes reflect the correct deliberations in the board in view of subsequent events. In the letter of Dr. PC dated 10.12.2004 to the Chairman wherein, after referring to the board meeting on 2nd November, 2004 and the letter of the Chairman to IOC on that date inviting IOC to join as a portfolio investor for ₹ 150 crores, he had expressed his appre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e place between the parties, drafts on the terms are exchanged but at the end the parties are bound by the final agreement. This is what exactly happened in this case also. As of today, irrespective of what transpired between WBIDC and IOC before the EOGM approval, IOC and the company are bound only by the terms approved by the EOGM and accepted by IOC. The only question is whether non disclosure of the discussion by the 7th, 8th and 9th respondents, would affect the allotment. Shri Sundaram argued that a shareholder is not bound or expected to disclose discussions with a third party. I would have accepted this contention if the discussions were restricted only in relation to the shares of WBIDC. In terms of the agreement dated 30.7.2004, to which the company was a party, GoWB/WBIDC had been given the authority to induct a portfolio investor and the main discussion with IOC was in relation to participation in the equity of the company. Therefore, even as shareholders, when they have acted as per the authority vested in them, WBIDC/GoWB were bound to keep the Board of the company informed about the deliberations with IOC even assuming that the discussion on disinvestment by WBIDC in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or during the arguments, that if the disclosure had been made, their nominees would have prevented the passing of the resolution. Further, since allotment to IOC was on the terms proposed by the company only, the alleged secret agreement has no bearing, as far as the company is concerned. In view of this even the allegations of the petitioners that WBIDC/GOWB should not have entrusted the valuation exercise to IOC etc. do not survive. Further, when in terms of Article 33 (b) of the AOA, it has been specifically provided that in case of exercising pre-emptive rights, the valuer would be appointed jointly by WBIDC and the petitioners, even WBIDC cannot insist on the petitioners to accept the valuation done by IOC. Therefore, on this account, the petitioners can have no grievance. Regarding the expectation of the petitioners that IOC would only remain as a portfolio investor is concerned, the fact is that, as of date it remains so and without the consent of the petitioners, no special resolution can be passed for allotting further shares to IOC nor it can acquire the shares of WBIDC till the petitioners either waive their pre-emption rights or they fail to acquire the shares when offe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial need not be furnished. As long as the explanatory statement is fair and gives, as far as possible, all information reasonably necessary for the shareholders to understand and appraise the proposal, then, such a statement would satisfy the requirements of Section 173(2) provided it does not conceal or suppress or withhold relevant information or facts and does not make any false suggestion. As long as the explanatory statement contains sufficient, true and correct information to enable the general body to intelligently appraise the proposal, then, the explanatory statement should be considered to be fulfilling the requirements of Section 173(2) of the Act . In that case, the proposal was for the sale of a unit of the company. Therefore, this Board held that, the material facts could comprise of the reasons for the sale, whether sale would affect the interest of the company, to whom the sale was being effected, the consideration for the sale, how and by whom the consideration was assessed, whether the directors had any interest in the sale, whether all statutory clearances had been obtained, etc. Finding that, these information were disclosed in the explanatory statement, this Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... token of your approval. Thereafter, further action would be taken by the company in keeping with the wishes of the Board 76. First, I shall deal with the contention of the petitioners with reference to Section 289 of the Act. They have challenged the circular resolution on the ground of non compliance with the provisions of Section 286 according to which necessary papers should accompany a circular resolution. In the present case, even though the respondents have taken the stand that all the documents like letters from IOC, legal notices by their advocates etc had already been circulated or placed before the Board in its earlier meetings, yet, the only document on which the circular resolution was based, was the legal opinion from the former ASG, which had been circulated on 27.7.2005 and all the directors were aware of the contents of the same. (I must note that only a portion of the opinion was circulated and not the full one, and this had been pointed out by one of the directors also by a letter dated 30.7.2005). As I have observed in relation to the explanatory statement, one has to look into the spirit of the statute and not rely only on the letter of the same. The spirit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the effect that shares should be allotted to IOC. The board had considered the delay in allotment of shares to IOC in its board meeting held on 29.3.2005 wherein while considering the letter of IOC dated 17.3.2005, the board noted that the allotment was pending resolution of transfer of 155 million shares to the petitioners, completion of adjourned AGM subsequent to the said transfer, appointment of auditors and refinancing of loans. Again in the board meeting held on 28.5.2005, the board considered further letters from IOC and notices from its advocates and noted While taking note of the above letters from IOC and its advocates, the board felt that the issue should be resolved expeditiously . This is in spite of the fact that in the legal notice dated 21st April, 2005, IOC has threatened taking legal proceedings, and by a letter dated 5th May, 2005, again IOC threatened to file necessary suits in appropriate courts, by another legal notice dated 17.5.2005, there was a further threat that if allotment was not made within 7 days, IOC would be constrained to take such proceedings against the company and directors as considered appropriate and in its letter dated 25th May, 2005 IO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered a formal application dated 17.2.2005 along with a cheque for 150 crores. In terms of Section 41 of the Act, an application to become a member has to be in writing and no allotment could have been made without such an application, which was received only after 17.2.2005. Therefore, whatever might be the wordings of the resolutions, the resolution of the Board on 2.11.2005 was only to invite IOC to subscribe to the shares, and the resolution of the Empowered Committee on 20.1.2005 was only to enable the company to make an offer. Therefore, neither of the resolutions could be considered to be a resolution allotting the shares, which was not legally possible without a formal application by IOC and also remittance of the consideration. In terms of Article 3(A)(4) of the AOA, the shares are under the control of the Board and it has the power to issue and allot shares. Therefore, since the power to allot shares is with the Board, it should have passed a resolution after IOC had applied for membership accepting the offer and remitted the consideration. Viewing in this context, shares were actually allotted only through the circular resolution as is evident from the wordings of the ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability on 29.7.2005. No details have been furnished as to the names of such directors and how they had communicated their non availability. Legal opinion was sought and obtained on the same day, that is on 27.7.2005. The circular resolution was sent the next day and on getting the majority approval, shares were directed to be issued immediately not withstanding the fact that one of the nominees of the petitioners Shri Vasudevan had written to the Chairman on 30.7.2005 suggesting that the matter should be considered in a Board meeting. Another nominee of the petitioners had also written to the Company Secretary on 31.7.2005 not to take any further action in regard to the allotment. One of the reasons adduced during the hearing for the speedy allotment was that the time given by IOC of 10 days had expired and therefore urgent action was necessary. As I have pointed out earlier, even the Board collectively did not recognize the 7 days notice given earlier. 80. Therefore, the speed with which the entire exercise was completed, leads me to the only inevitable conclusion that it was done only with the view to pre-empt any efforts of the petitioners to stall the allotment through a le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany shall not show in such return any shares having been allotted for cash if cash has not actually been received in respect of such allotment . This proviso was inserted in 1965. In terms of the Notes on Clauses, the object of this proviso is to impose a duty on the directors/promoters to ensure that the share capital reflects cash or valuable assets and not supported by merely book adjustments. This being the object of the proviso, I do not find any fault in the allotment as the same was against cash, even though subsequently realized. However, I must also add that normally the allotment is complete once the Board approves the allotment and issuance of shares scripts is subsequent. But in the present case, the allotment would have become complete, in terms of the circular resolution itself, only when the cheque was realized as the resolution specifically states Subject to encashment of cheque towards subscription, the board do hereby allot... . Further, in his letter to the Dy. Company Secretary dated 2.8.2005, while informing him of the approval of the circular resolution by the board, the Chairman greeted You are therefore instructed to encash the IOC cheque and issue share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital for the time being of the company shall not be modified except in the manner hereinafter provided and provided further that any such new shares ( whether equity or preference)shall always be offered to the existing members of the company in proportion to the shares held by them in the company to the end and intent that WBIDC and/or its nominees, CPC and/or its nominees and TATAs and/or nomimes shall at all times continue to hold 25%, 25% and 8.1/3% respectively of the share capital of the company . According to Shri Sarkar, since the allotment to IOC was out of new shares created by increasing the authorized capital, the existing shareholders should have been offered the shares first in terms of Article 47 and failure to do so amounts to ultravires. The respondents contended that in terms of Article 3 A of AOA, which is practically the reproduction of Section 81(1)(A) of the Act, shareholders approval had been obtained for allotment of shares to IOC and Article 47 is not applicable. Shri Sarkar relied on the decision of the CLB in Binod Kumar Aggarwal v. Rington Tea Co. Pvt. Ltd. 85 CC 289. In that case, Article 7 of AOA of the company vested with the directors the discretio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra-vires. I am in full agreement with the said proposition. However, if an act which is within the power of the company but beyond the power of directors, then, the act of the directors can be rectified by an ordinary resolution. In the present case, as Article 47 would indicate, the directors have the powers to allot shares in accordance with the said Article. Assuming for argument sake, that shares could not have been allotted to IOC without offering the same to the existing shareholders, the admitted fact in this case is that, allotment of shares to IOC was approved in the EOGM on 14.1.2005 wherein all the petitioners were, represented and voted in favour of the allotment of shares to IOC. In other words, prior approval of the shareholders was available to allot shares to IOC. I note that many allotments of sharers had taken place during the last 10 years. The allotments made in 1996,1997,2002 and 2003 were all only to the promoters viz WBIDC, the petitioners and Tatas. On 31.7.2004 shares were allotted to the 2nd and 3rd petitioners along with outsiders without any offer to WBIDC and Tatas. Again shares were allotted to the outsides on 11.10.2004, but without any offer to petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeared for them in the hearing held on 4.8.2005. In paragraph 7 of the order dated 4.8.2005, I have recorded the submissions of Shri Shanti Bhushan: This allotment to IOC has not reduced the petitioners from a majority into minority . On the basis of that statement, I also gave a finding in paragraph 10 of that order : While doing so, I have also taken a note as pointed out by me during the hearing, that even after this allotment, the petitioners would continue to hold majority of about 53% shares in the company . Having so observed, I also noted that if shares of ₹ 135 crores were to be allotted to the lenders, the petitioners would be reduced to a minority and accordingly I directed the company to defer allotment of further shares. If the position as of that date remains so today, the petitioners would have no justification in seeking for cancellation of allotment to IOC as it has not in any way prejudicially affected their legitimate expectations. 85. But with the stand now taken by WBIDC/GOWB and the company with regard to 155 million shares, the entire scenario has changed. If WBIDC/GOWB and the company were to challenge the transfer of these 155 million shares to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 14.1.2005 (Para 41 ante). In addition to this, the involvement of the company in the matter relating to 155 million shares is all pervasive. For instance, the company itself wrote to IDBI on 12.1.2005, that is two days prior to the EOGM, seeking for expediting its approval for registration of transfer, in the board meetings, the delay in getting the approval from IDBI was noted and when the IDBI approval was received, the same was again noted. More than these, during the arguments, Shri Sundaram contended, as noted by me in paragraph 47 ante that Further, the registration of transfer was subject to lenders' approval, which no longer is available as of date. Since in terms of the agreement between the lenders and the company, without their approval, company cannot register the transfer even CLB cannot direct the company to register the transfer, as it would place the company to act in breach of its agreement with a third party viz, the lenders . This argument clearly shows that the company is concerned with the matter of transfer of the impugned shares in view of its agreement with the lenders and therefore it has to be held that the transfer of 155 million shares is in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus, making it abundantly clear that it was the legitimate expectation of the petitioners to hold 51% shares in the company. The factum of sale of shares having been not only recorded in the agreement, has also been acknowledged by WBIDC in the balance sheet as on 31st March, 2002 as pointed out by Shri Sarkar. In addition, immediately after the agreement dated 8.3.2002, by a letter dated 13.3.2002, WBIDC informed GoWB As the majority shareholders have agreed to the cancellation of the contingency support assumed by GoWB to HPL, we as a minority shareholders of HPL now confirm that we have no objection to the cancellation of the said contingency support arrangement . This shows that WBIDC has recognized the petitioners as the majority shareholders and the petitioners also, in that capacity, waived the contingent support assumed by GoWB as per the earlier agreements. This matter was discussed in a number of board meetings when WBIDC/GOWB never questioned the factum of transfer. Further, WBIDC had also accepted three annual installments of ₹ 10 crores each towards the repayment of the loan, but without lodging for registration, 30 million shares in favour of the petitioners. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchased by WBIDC from TATAs. No discussion took place regarding the price for these 155 million shares transferred to the 4th petitioner by the agreement dated 8th March, 2002. This would show that WBIDC stood by the terms of said agreement wherein the consideration for the 155 million shares was treated as a loan to be repaid in accordance with the said agreement. Therefore, I do not accept the contention of Shri Sundaram that the petitioners have not paid the consideration for the shares. Thus, in so far as the 155 million shares are concerned, the petitioners are entitled to have the registration of transfer effected in favour of the 4th petitioner. As far as the price for these shares is concerned, since the transfer had been concluded at par value, and that WBIDC has already accepted ₹ 30 crores on that basis, asking the petitioner to pay more than the par value would be highly inequitable to the petitioners. However, not only with the to put an end to this controversy, but also to ensure that WBIDC gets the balance consideration, I shall be directing the petitioners to pay the balance consideration of ₹ 125 crores in one go, instead of paying in installments as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the affairs of the company. The initial idea of WBIDC disinvesting its entire shares in favour of the petitioners was proposed in the agreement dated 12.1.2002 to which the company was a party. In terms of this, the petitioners had the right to seek WBIDC/GoWB to divest its shares in favour of the petitioners. Thereafter, in the supplemental agreement dated 30.7,2004, to which the company was again a party, the petitioners relinquished their said right. Further, even the Chairman by his letter dated 30.6.2005 informed Dr. PC that the allotment to IOC was pending in view of resolution of the promoters issues. The matter of transfer of shares held by WBIDC is in the knowledge of the board is also evident from the circular letter issued by the Chairman on 28th July, 2005 wherein he has stated In recent board meeting we have been briefed by the Government of West Bengal and the Chatterjee group on inter-se promoter issues, with particular reference to the proposed disinvestments by the State Government in favour of the Chatterjee group . Thus, even though it would appear that the transfer of the balance shares of WBIDC in favour of the petitioners is an issue between two groups o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mauritius) Limited, a nominee of Chattel-jee Petro Chem(India) Private Limited. It is requested that the lenders may kindly permit these transfers also . IDBI also conveyed its approval. Further, as is seen from the letter of Dr. PC dated 25th July, 2005, GOWB had indicated their desire to conclude the share transfer transaction as soon as possible. The bonafide manner in which GoWB had dealt with the commitment is also evident from its letter dated 27.7.2005 addressed to Dr. PC. In that letter it is stated It is in this context that the State Government entered into discussions with you since January, 2005 to disinvest in your favour. These discussions have continued over 7 months and as you are aware, the State Government took several steps in the direction including application to IDBI for approval to sell shares . However, when the petitioners had indicated the availability of funds to the tune of ₹ 11.10 billion towards purchase of the shares, it is not clear as to why and how GOWB informed the petitioners on 27.7.2005 in the following terms However, the negotiations have not been concluded and the documentation you have sent with your letter of 25th July is uncl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioners acquired the shares of WBIDC, they would be holding nearly 79% of the equity shares post allotment to IOC and the lenders. 91. Shri Sundaram submitted that GoWB had lost confidence in the petitioners as they did not bring in the funds as undertaken by them and that considering the public interest GoWB had decided not to divest the shares in favour of the petitioners. He pointed out that even though in terms of the agreement dated 12.1.2002, the petitioners were to produce a letter of comfort and also to bring in ₹ 500 crores, they failed to do so. On the production of comfort letter, I find that Shri Sundaram was not factually correct. By a letter dated 25th January, 2002, Citi Bank, New York had given a letter of comfort. The same was confirmed by another letter dated 8.2.2002 by Citi Bank. These letters of comfort were accepted by GOWB by a letter dated 15.2.2002. As a matter of fact, the agreement transferring 155 million shares was entered into subsequent to these comfort letters, on 8th March, 2002. In so far as ₹ 500 crores is concerned, I do not find any document by which the petitioners were sought to comply with this undertaking and considering the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th respondent as the MD is concerned, I do not find any scope to interfere in this matter. Firstly, his appointment was not challenged in the petition even though the said appointment was prior to the date of the petition. Secondly, the nominees of the petitioners were present in the board meeting held on 29.3.2005 when the board unanimously approved his appointment. Thirdly, when his remuneration was fixed in a board meeting held on 28.5.2005, Dr. PC was present. His functioning as the MD and discharging various functions in that capacity had not been objected to by the petitioners for a long time. The petitioners took objection to his appointment only in September, 2005 after he had filed his counter to the petition, perhaps, because he has defended the allotment of shares to IOC. The main contention of the petitioners is that there was no vacancy in the board to appoint Shri Bhowmik as the MD. On the day when he was appointed, the petitioners were aware that there was no vacancy but yet their nominees on the board approved the appointment. This Board has taken a consistent view that a person who is a party to a decision cannot, when the relationship becomes sour, seek to impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one group of shareholders, namely, WBIDC/GOWB. They have also complained that the company is not giving inspection of records/documents sought for by Dr. PC even though he is entitled for the same in his capacity as director. Another grievance of the petitioners relates to C AG audit. In so far as the allegation that the 16th respondent and the company are siding with WBIDC/GoWB is concerned, I find that they have only brought on record the material available with them in regard to the allotment of shares to IOC and relating to 155 million shares, and they have defended the appointment of the 16th respondent as the MD as per the available records. Therefore, it cannot be construed that they are siding with once group of share holders. In so far denial of inspection is concerned, the MD should not have taken the stand that since Dr.PC is a party to the present proceeding, he cannot inspect the statutory records as , not only as a director, but also as a major shareholder Dr.PC is entitled to inspect the records. According to the petitioners, as on 2.11.2004, the private holding in the total paid up capital inclusive of preference shares constituted 52.95% shares and the Government h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27 crores (143 crores) to effectuate the CDR package. Further, the petitioners never objected to the allotment of shares to IDBI, as, according to them it would be in the interests of the company to allot shares to IDBI. They were only concerned about the timing of the allotment, which according to them, should be after the registration of 155 million shares in their favour and transfer of the balance shares of WBIDC to the petitioners so that the company continues to be a company in the private sector. Regarding the allotment of shares to IDBI/lenders, I find that they had originally agreed for allotment of shares three days after the petitioners had acquired the shares held by WBIDC and once the transfer was deferred by GoWB/WBIDC by their letter dated 27.7.2005, IDBI demanded allotment immediately by its letter dated 2.8.2005. Taking note of this fact, I shall be issuing suitable directions for allotment of shares to IDBI. 96. IDBI has intervened in the matter and as such it was aware that the petitioners have relied on the approval of IDBI for seeking registration of 155 million shares in their favour. Therefore, while IDBI may have a grievance, rightly or wrongly, about the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he disputes amicably, in the month of November, 2006, I suggested to the petitioners to interact with GoWB/WBIDC to arrive at an amicable settlement. Even though it appears that some discussions took place, yet, no fruitful result emerged. Thereafter, in the hearing held on 9.3.2006, I gave certain proposals for the consideration of GoWB/WBIDC with a view to resolve the disputes amicably. Since there was no favourable response to my suggestion, in the hearing held on 30.3.2006, I enquired from GoWB/WBIDC as to whether they would be willing to exist from HPL and if so on what terms. On 31.3.2006, they gave a without prejudice proposal indicating therein that they would offer a particular price for their shares which the petitioners should accept within a certain time frame failing which the petitioners should sell their shares to WBIDC/GoWB at that price. When this suggestion was made, Shri Sarkar submitted that the petitioners were not insisting to purchase the shares of WBIDC nor the petitioners were willing to sell their shares to WBIDC and their only prayers were that the 155 million shares should be registered in the name of the petitioners and IOC allotment should be cancelled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to seek for transfer of the balance shares held by WBIDC. WBIDC, in fact transferred 155 million shares, by which the petitioners came to hold 51% of the then paid up capital. Thereafter, with further allotment of shares to the 2nd and 3rd petitioners, the collective holding of the petitioners went up to 58.34%. Thereafter, even though by the Supplemental agreement dated 30.7.2004, the petitioners gave up their right vested in them by the agreement dated 12.1.2002 to require WBIDC to transfer their shares held by it at any time, GoWB committed to transfer its shares by a letter dated 17.12.2004 and also by the agreement dated 14.1.2005. It is to be noted that this agreement was entered into, not withstanding the earlier discussions with IOC and the alleged secret agreement. Further, thereafter, GoWB/WBIDC took further steps in this regard, culminating in seeking the approval of IDBI for the transfer of its shares to the petitioners by a letter dated 25.5.2005 and IDBI also gave its approval. Even in its letter dated 27.7.2005, GOWB had only deferred disinvestment and had not said that it would not disinvest. Thus, it is evident, that right from the beginning, the intention of GoW ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat ₹ 28.80 per share had already been agreed to, in all fairness, as I have decided in the case of 155 million shares that the agreed price of ₹ 10 per share cannot be varied, I am of the view that the price per share for these 520 million shares cannot be less than ₹ 28.80 per shares. But at the same time, to ensure that if a higher price is determined by the valuer, WBIDC/GoWB should get the benefit of the same, I am of the view that the fair price should be determined by an independent valuer, as demanded by the petitioners also, however, with the stipulation that the price payable by the petitioners would be either the fair price to be determined by the valuer or ₹ 28.80 per share, which is higher. In so far as 155 million shares already transferred to the petitioners are concerned, I have already held that the price per share shall be ₹ 10. Further, since WBIDC/GoWB would be going out of the company, the petitioners should also purchase the preference shares held by GoWB/WBIDC within a stipulated period or they should ensure that the company redeems these shares within the same period. 102. Accordingly, in terms of Section 402 of the Act, I de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er would be in terms of this order, IDBI cannot have any objection to the registration of transfer and as such, on payment of consideration, and production of necessary transfer documents etc, the company shall register the transfer in the names of the petitioners, subject to approval by RBI if any. 13. The consideration for the preference shares shall be paid within a period of 60 days of payment of consideration for 520 million shares. 14. Immediately after acquisition of the shares, the petitioners will comply with all the stipulations in the CDR package in relation to the shares. 15. There shall be a lock in period of 3 years in respect of all shares, except in case of public offering in line with SEBI guidelines. The petitioners shall continue to hold majority shares and be in control of the company for a minimum period of 3 years from the date of acquisition of the shares held by WBIDC. I am stipulating this lock in period and continuity of majority shareholding and control of the company with the view to ensure, that after acquiring the shares from a promoter of ten years association, the company is not handed over to a third party. 16. As far as allotment to IDB ..... X X X X Extracts X X X X X X X X Extracts X X X X
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