TMI Blog2021 (1) TMI 514X X X X Extracts X X X X X X X X Extracts X X X X ..... ling another application for early hearing. Altogether six (6) application filed is pending for consideration. To have a better understanding of those IA's pending for consideration, and for an eye view to understand the litigation instinct in the respondents not to exist from the R1 company by selling out their shares, or they themselves will not takes over the R1 buying the shares from the petitioners, even if a competitive price is arrived at upon conducting bidding between the parties, it is good to read some of the IA's. What is under challenge is that valuer has not given an opportunity to suggest the name of the valuer at their instances and appointing the valuer by the special officer is against the direction and hence the report of valuation is not binding on them. There are no averments in the application as to why the valuation done by the independent valuer is faulty. In fact, the valuer's report is unchallenged on merits and the only ground for challenging the valuation is that the respondents did not get adequate opportunity to give names of valuers. This objection is also found devoid of any merits. The reserve price of share value of one equity sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not to any third party: i. Restriction on future transfer of shares in the respondent No. 1 company to any third party by the successful bidder for a period of at least 3 (three) years from the date of the auction. ii. Restriction on transfer or assignment of the trademarks of the company by the successful bidder for a period of at least 3 (three) years from the date of buy/sale of shares; iii. Restriction on any change in the composition of shareholders and management of the company for a period of at least 3 (three) years after the date of buy/sale of shares; d) Leave be granted to the applicants to file this urgent application by e-filing in view of the prevailing pandemic caused by Covid-19 and the applicants undertake to file a duly affirmed copy of the same with the Court fees before the Registry of this Hon'ble Tribunal within 7 days from re-opening of the Hon'ble Tribunal; e) Ad interim orders in terms of prayers above; f) Such further and/or other order or orders be passed, direction or directions be given as Your Lordships may deem fit and proper. Accordingly, the unnumbered interim application along with C.P. No. 492/KB/2017 was listed for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when such meeting is held. 6. In the meanwhile, petitioners have filed an interlocutory application being IA No. 834/KB/2019 for further illegal acts committed by the respondents and in view of the continuing deadlock mainly praying for valuation of shares of R-1 Company and also for various other reliefs as set out hereunder. (a) A valuer be appointed for the purpose of determining the value of the petitioners' shareholding and the concerned respondents' shareholding in the respondent No. 1 Company as also the value of the company itself in the manner indicated in paragraph 24 above; (b) Direction upon the Respondent Nos. 2 to 4 and their partnership firms i.e. the Respondent Nos. 6 to 8 to transfer the shareholding in the company to the petitioners or their nominees at the value that may be determined by the valuer; (c) In the alternative and only if the direction in terms of prayer (b) is not granted, appropriate direction be given for by buyout/sellout of the shares of each side in the respondent No. 1 Company at the value of each side's shareholding as may be determined by the valuer to be appointed; (d) In the further alternative, valuation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Ltd. (Annexure - 'D' to this application), the Learned Special Officer has filed the same along with his report (Annexure - 'E' to this application) and the same was recorded vide order dated 03/01/2020 as follows: Ld. Counsel for the Petitioner appeared. Mr. Bippabankur Roy Chowdhury appeared in person, Mr. Kumar Gupta appeared for the Special Officer. The Special Officer produced the report. It is taken on record. Copies made available to the respondent. Respondent seeks time to file a response to the report. It is to be filed within 10 days. Today a copy of the report is handed over to respondent No. 2 by Ld. Counsel for the Special Officer in Court. Matter to come up next on 30/01/2020. 9. On 30/01/2020 the matter was taken up for consideration by this Adjudicating Authority and upon hearing directions were given to list the matter on 03/02/2020, interim order, if any, shall continue till the next date of hearing and any application, if pending shall be listed along with the CP, if it is numbered and defect-free. Thereafter, the matter was listed on 03/02/2020 wherein the following directions were passed : Ld. Counsel for the Pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay in the disposal of the application and therefore in order to attain a finality, it is fair and just to allow one of the rival groups to exist by selling the shares held by the group at a competitive price fixed by the Tribunal or through an auction to be conducted by fixing the price of share valued by the valuer at the direction of Tribunal. According to him this is the only manner in which the proceedings can be concluded. Delaying the proceeding only to the advantageous to the respondent nos. 2 to 4. If the said respondents can delay the proceeding, business will be affected. Realising this the respondents have filed six frivolous applications, i.e., IA Nos. 172, 173, 174, 175 and 177/KB/2020 and Contempt Application No. 176/KB/2020. 14. Ld. Pr. CS. Mr. Sanjay Kumar Gupta, for the Respondent Nos. 2 and 6 submitted that in the Order dated 03-12-2019 only valuation has been ordered by appointing a Valuer by taking names from the Petitioner and Respondents. The Special Officer has himself chosen the names without permission from the AA. The Special Officer has no jurisdiction to choose the name of the Valuer instead of getting it from the Petitioner and Respondents. The Order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luation done, the valuation order implies that the parties agree to buy and sell. The Order dated 03-12-2019 did not dispose of the Application. The Application is pending. Nobody challenged the valuation, appointment of Valuer etc. For directing buying out and selling out on the basis of valuation report, no consent is required because when the valuation order is made, order is made for the purpose of implementing it unless the parties object to it. The valuation is done with an object in mind that after valuation, somebody can sell or buy the shares. Sofar as the oppression and mismanagement is concerned, if the Petitioner establishes that the Respondents are oppressors, the Petitioner has the right to buy out the shares. Oppression does not compel to sell the shares. If the buying and selling of shares is done through auction, everybody will participate in the auction bid. The Respondents did not challenge the Order dated 03-12-2019. Last six months have been spent on valuation without objecting to it. That cannot be done by the Respondents when this application was moved for conducting sale of the shares to resolve the dispute with a finality. The valuation has been done for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondents. 22. An overall screening of the pending IA's, I am unable to find out any serious objections raised on the side of the respondents challenging the valuation done by the valuer. What is under challenge is that valuer has not given an opportunity to suggest the name of the valuer at their instances and appointing the valuer by the special officer is against the direction and hence the report of valuation is not binding on them. There are no averments in the application as to why the valuation done by the independent valuer is faulty. In fact, the valuer's report is unchallenged on merits and the only ground for challenging the valuation is that the respondents did not get adequate opportunity to give names of valuers. This objection is also found devoid of any merits. The Special Officer's records pertaining to valuation annexed with the application clearly go to show that the Learned Special Officer went out of his way to accommodate the respondents' demand. It appears that Learned Special Officer in fact adjourned the meetings twice, i.e., on 11/12/2019 and 13/12/2019, so as to enable the respondents to attend the meeting for appointment of Valuer, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arnataka High Court at Bangalore (Equivalent Citation ILR 2008 KARNATAKA 1187) in Company Appeal No. 3/2006, decided on 13/11/2007 (Namtech Consultants Private Limited and Ors. -vs- GE Thermometrics India Private Limited and Ors.). He takes me to para 30-31. it is good to read the said para. It is reproduced as follows: 30. It would not be possible to achieve this object if particular group is directed to sell its shares to the other group at the price to be determined by the third party i.e., an independent firm of Chartered Accountant because though the price of shares would be determined by such Chartered Accountant most scientifically and impartially by taking all the relevant facts into consideration yet such price would only be an 'opinion price' as could be distinguished from the 'competitive price' at which a prospective buyer or seller would opt to buy or sell in competition with the other buyer or seller. This object of adequately compensating the outgoing group of shareholders could be achieved by making both the rival groups to compete with each other in the purchase of shares of the company at a price higher than the one determined by the independe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be made known to each group and then each group shall quote in sealed cover before the CLB the competitive price of each share in JV Co. which shall be higher than the price determined by the said firm of chartered accountants, agreeing to buy the shares of other group or to sell its shares to the other group at the said higher price and the group quoting its price higher than the one quoted by the other group shall have first option to buy the shares of the group quoting the lower price, thereafter the CLB shall pass appropriate order directing the group quoting higher price to purchase the shares of other group quoting lower price. The proposition laid down in the cited decision is squarely applicable to the case in hand. By partly upholding the view of the CLB that in view of the strained relationship between both the rival groups, one of them should quit the JV Co., by selling its shares to the other group but it was not justified in directing the appellants' group to sell their shares in favour of the respondents' group at the price to be determined by the independent firm of chartered accountants the Hon'ble high court allowed bidding in between the P ..... X X X X Extracts X X X X X X X X Extracts X X X X
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