TMI Blog2022 (12) TMI 1152X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant company. The Respondent has sought the reliefs before the Tribunal comprising of 6 reliefs mainly and the Tribunal has granted only one relief i.e. appointing an independent valuer from the panel of valuers of IBBI in terms of Section 247 of the Act, the cost of which to be borne by the Appellant Company We are not commenting at the moment what will be the valuation of shares but apparently it is difficult to perceive as to how the fair value can be lower than the earning per share - It is an incumbent duty to the Appellant company to disclose all material information to its shareholders disclosing thereon even the justification for the existing price offered by the Promoters which also seems to be missing in this case. There are no inconformity in the order and the appeal deserves to be dismissed and is dismissed. - Company Appeal (AT) No. 158 of 2022 - - - Dated:- 15-12-2022 - [Justice Rakesh Kumar] Member(Judicial) And [Dr. Ashok Kumar Mishra] Member (Technical) For the Appellant : Mr. Ramesh Singh, Sr Advocate and Mr. Gaurav Tanwar, Advocate For the Respondents : Ms Niharika Ahluwalia and Mr Arpit Sharma, Advocates ORDER DR. ASHOK KUMAR M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Appellant has also stated that it has followed the SEBI Circular and has done its valuation of shares by the empaneled independent valuer of Bombay Stock Exchange (BSE). 7. The Ld. Sr. Counsel for the Appellant has stated that the Appellant company has complied with the SEBI circular, appointed valuer and the Promoter have purchased the shares. He also stressed that the Respondent No.1 has also made a complaint to the Registrar of Companies (ROC), Ministry of Corporate Affairs (MCA) which has been closed by them. 8. The Ld. Sr. Counsel also stated that the valuation report was available for inspection to the public shareholders at the registered office of the Appellant company during the tendering period but the Respondent No.1 did not avail the said opportunity as meant for all public shareholders. However, Respondent No.1 didn t inspect the valuation report either during that period or thereafter. As per the Ld. Sr. Counsel for the Appellant, the sole object of the Respondent No.1 is to advance its own ulterior motive and cause nuisance to the Appellant. 9. The Ld. Sr. Counsel for the Appellant has cited the following judgments: Union of India and Anr. Vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it follows the circulars do not contemplate the exit of all public shareholders. This I also say, in view of the stipulation in the impugned SEBI Circular investors who are willing to remain shareholders of a company and do not want to exit, should be allowed . I do not find any illegality in such a stipulation as it is not necessary for a shareholder to seek his exit. GL Sultania and Anr. Vs. Securities Exchange Board of India and Ors. (2007) 5 SCC 133 para 32 and 84: 32-These decisions clearly lay down the principle that valuation of shares is not only a question of fact, but also raised technical and complex issues which may be appropriately left to the wisdom of the experts, having regard to the many imponderables which enter the process of valuation of shares. If the valuer adopts the method of valuation prescribed, or in the absence of any prescribed method, adopts any recognized method of valuation, his valuation cannot be assailed unless it is shown that the valuation was made on a fundamentally erroneous basis, or that a patent mistake had been committed, or the valuer adopted a demonstrably wrong approach or a fundamental error going to the root of the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hares of Bank of Maharashtra on 17.08.2018, one day before issuing the exit offer. Certain other facts as stated below were also stated by the Ld. Counsel for the Respondent. (b) The specific case of R1 which is not denied before the Tribunal that R4 approached R1 for purchase of shares @ Rs.125/- per share. (c) The argument of the Appellant is that once a valuation has been done, even if the same is illegal and shares are undervalued, it is beyond judicial review. Such a proposition of law would render the provisions of the Act, and the SEBI Circular dated 10.10.2016 nugatory. There cannot be a situation where the interest of the minority shareholders is violated and the Tribunal is compelled to shut its eyes. The Appellant Company is de-listed and public share-holders are deprived of getting the market value of the shares. (d) The Appellants continue to act in the most malafide manner and are guilty of blatant misrepresentation and concealment from this Tribunal as well. (e) It is clarified that the SEBI circular dated 10.10.2016 is not subject of challenge. Thus, Appeal u/s 15(T) of the SEBI Act is not the appropriate remedy. Further, the case of Nimish H.Shah (Hon b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive companies vide Circular No. CIR/OIAE/2/2011 dated 03.06.20111 R/w Circular No.CIR/OIAE/1/2012 dated August, 13, 2012 R/w Circular No.CIR/OIAE/1/2013 dated April 17, 2013. Further I note from the records that, the trading in the scrip of the Noticee company discontinued w.e.f.03.09.2010 and the scrip was delisted w.e.f 13.09.2010 on BSE and 15.05.2008 on Calcutta Stock Exchange Limited i.e. much before the issuance of the said circular and initiation of adjudication proceeding against the noticee. Thus the present adjudication proceedings are in respect of unlisted company where SEBI has no jurisdiction. C. The ld. Counsel for the Respondent has also cited the judgment of this Tribunal in Devinder Prakash Kalra and Ors. Vs. Syngenta India Limited CA(AT) No. 220 of 2020 held at para 53: 53.The principle laid down by the Hon'ble Supreme Court is that the shareholders are entitled to the profit of the Company, the only way to do justice to the public shareholders/non-promotor shareholder is to revalue the shares of the Company by appointing independent valuers and whatever the fair price arrived at by independent valuers, the same shall be paid to the public shareho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n does not come within the ambit of Section 59 of the Companies Act and therefore should be dismissed. The Respondents have, contended that no public shareholder has availed of the Exit Offer and hence there is nothing to be rectified in the Register. The Petitioner has however claimed that the promoters have purchased shares during the period of the Exit Offer and that for the purpose of Section 59, rectification is not limited only to public shareholders , but includes promoters and Members of the Company. Be that as it may, such rectification would only follow consequentially and be contingent upon the findings of a fresh valuation in respect of the fair price of the shares. We are therefore of the view that the matter needs to be considered on the strength of the factual position apparent from the oral and written submissions of the parties. 12. While considering the options available to the Petitioner for seeking redressal to his grievance it is pertinent to mention that the Petitioner could not have approached this Tribunal under the Provisions of Chapter XVI of the Companies Act, 2013 as he did not have the requisite numbers. Also, since the Respondent No.1 Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h and for right offer/ Exit Offer etc. The intent behind this provision is to ensure fair valuation of such Shares/assets/properties to protect interest of non-promoter shareholders. . So while specifically, valuation for an Exit Offer may not be provided for under the Companies Act, the intention as set forth in the report of the Standing Committee is amply clear that in order to protect the interest of non-promoter shareholders (as in the instant case) fair valuation for Exit Offer is also required to be done. In the light of the above, we are of the view that in the present case, where there is sufficient cause to show that the valuation of shares done earlier was suspect and its veracity is doubtful, a fresh valuation by an independent valuer needs to be done in the interest of justice and in order to protect theinterest of non-promoter shareholders. This Tribunal is convinced that in such a matter it will be in the interest of justice and fair play to invoke the powers of the Tribunal under Rule 11 of NCLT Rules, 2016 and direct the Respondent No. 1 Company to appoint a valuer registered with IBBI for re- valuation of the price of shares of the company. 15. It has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He will submit a copy of the Report to the Applicant and the Respondent No. 1 Company and its Directors. The Respondent No. 1 Company will compensate him for his services with a fair and reasonable package. The Respondent No. 1 Company will take all further necessary action on the basis of the valuation of shares arrived at by the independent valuer. The Applicant will be at liberty to approach the appropriate authority or legal forum for any grievance necessitated on the basis of the valuation report. d. The Respondent has sought the followings reliefs before the Tribunal comprising of 6 reliefs mainly and the Tribunal has granted only one relief i.e. appointing an independent valuer from the panel of valuers of IBBI in terms of Section 247 of the Act, the cost of which to be borne by the Appellant Company: That one or more an independent valuer be appointed to evaluate the fair price per equity share of the R1 Company in terms of Section 247 of the Act the cost of which to be borne by the R1 Company; In the event such Fair Price as determined by the Independent Valuer in terms of prayer(a) above is higher than that of the R7, necessary orders be passed against the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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