TMI Blog2023 (4) TMI 1141X X X X Extracts X X X X X X X X Extracts X X X X ..... In fact, being a Majority Shareholder, the Applicant company/2nd Respondent company, intends to buy the Shares of the 1st Respondent / Petitioner (in Main Petition), who is having 10% of the total Shareholding in the 2nd Respondent company / 1st Respondent company. The 1st Respondent, had in para 6 of the counter to IA No.1169 of 2020 in CP No.285/241/HDB/2020, had proceeded to significantly point out that, he would be glad to settle the matter amicably if he is paid his rightful valuation for his 10% Shareholding in the Respondent No.2 / Respondent No.1 Company, along with accrued interest and legal costs incurred by him. - The First Respondent / Petitioner, had pointed out that the Application under Rule 11 of NCLT Rules, 2016, may be admitted by the Tribunal, and appoint a Registered Valuer, to fix a Fair Value, for the Equity Shares of the 1st Respondent / Petitioner, based on the audited financial 1st Respondent / Company for the fiscal year financial year 2017-18. Besides the above, the 1st Respondent / Petitioner, had stated in its Reply, that the Tribunal, may grant the prayer of Applicant Company / 2nd Respondent, to buy out the Equity Shareholding of the 1st Resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IA 1169 of 2020 in main CP. No.285/241/HDB/2020, on the file of NCLT, Hyderabad, Bench - I, and also taking into account the surrounding facts and circumstances of the present case in a holistic manner, without any simmering doubt, comes to a resultant conclusion that the Order, assailed by the Appellant, does not in any manner affect his Rights and Liabilities, and in any event, no prejudice is caused to him, by the issuance of direction, by the Tribunal, to the Valuer, to submit a Valuation Report, to be considered after submission of a Report, by the Valuer, of course by the NCLT, Hyderabad, Bench - I. This Tribunal , pertinently points out, that the Impugned Order of the NCLT, Hyderabad, Bench I, dt. 29.07.2022 in IA 1169 of 2020 in main CP. No.285/241/HDB/2020, does not in any way infringe the Rights and Liabilities of the Appellant and hence, the instant Company Appeal is not per se maintainable. Viewed, in that perspective, the instant Appeal, sans merits and it fails. Appeal dismissed. - Company Appeal (AT) (CH) No. 76 of 2022 (IA No.722 of 2022, IA No.723 of 2022 and IA No.752 of 2022) - - - Dated:- 24-4-2023 - [Justice M. Venugopal] Member (Judicial) And [Nar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Appellant, submits that unless there is a finding of an Oppression and Mismanagement , by the Tribunal , there cannot in Law , be an Order for the Exercise of Valuation . Also that, the Issue of Valuation , between the Parties , will be of relevance , only when the Tribunal , finds that the Appellant s Conduct , was an Oppressive one , under Section 241 of the Companies Act, 2013. 4. It is represented on behalf of the Appellant, that the Tribunal , cannot be permitted, to apply Section 242 (2) b of the Companies Act, 2013, in a piece meal manner and the Impugned order , merely orders for the valuation of Hyde India , without mentioning, who is to purchase 1st Respondent s Shares, the plea of the Appellant, that the Order for Valuation , at this stage, is similar to determining matters, pertaining to a final relief , without deciding the Disputed questions of Fact and Entitlement . 5. The Learned Counsel for the Appellant , points out any Order of Valuation , prior to evaluating the case of an oppression and mismanagement is Contrary to Law . Furthermore, the impugned order , records that the matter as regards the Sale of Shares , would be cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation and his unilateral act in that behalf is sufficient. No order of the Court is necessary permitting him to withdraw the application. The Court may make a formal order disposing of the application as withdrawn but the withdrawal is not dependent on the order of the Court. The act of withdrawal is complete as soon as the applicant intimates the Court that he withdraws the application . 12. The Learned Counsel for the Appellant, relies on the decision of the Hon ble High Court of Bombay in Anil Dinamani v. Chief Officer, Panvel Municipal Corporation 2003 SCC Online, Bom 24, wherein at paragraph 3, it is observed and held, as under: 3. Every applicant has a right to unconditionally withdraw his application and his unilateral act in that behalf is sufficient. No order of the Court is necessary permitting him to withdraw the application . 13. The Learned Counsel for the Appellant, falls back upon the Judgment of this Tribunal dt.19.01.2022 in CA AT 13 of 2022, between SREI Infrastructure Finance Ltd. v Trinity Alternative Investment Manager Ltd., wherein, at Paragraph 12, it is observed as under: From the bare perusal of the Impugned Order, we are of the view th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conduct or is burdensome, harsh or wrong or is mala fide or for a collateral purpose, it would amount to oppression under Sections 397 and 398. (e) Once conduct is found to be oppressive under Sections 397 and 398, the discretionary power given to the Company Law Board under Section 402 to set right, remedy or put an end to such oppression is very wide. (f) As to what are facts which would give rise to or constitute oppression is basically a question of fact and, therefore, whether an act is oppressive or not is fundamentally/basically a question of fact . 15. The Learned Counsel for the Appellant, cites the decision of the Hon ble Supreme Court in Shanti Prasad Jain v. Kalinga Tubes, reported in AIR 1965 SC 1535, wherein at Paragraph 18, it is observed and held as under: 18. These observations from the four cases referred to above apply to s. 397 also which is almost in the same words as s. 210 of the English Act, and the question in each case is whether the conduct of the affairs of a company by the majority shareholders was oppressive to the minority shareholders and that depends upon the facts proved in a particular case. As has already been indicated, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether the Company's stand is justified that the valuation report which was done in 2017 and even after three years, the same report could be taken into consideration. We are of the view that the said stand is against the Principles of equity and fair play and also violates principles of natural justice 18.The Learned Counsel for the Appellant, cites the decision In re London School of Electronics Ltd., reported in (1986) Ch 211,wherein it was held that it is part of fairness that the Shares , should be valued at a date as close as possible to the Actual Sale , so as to reflect the Value of what the Shareholder , is Selling. 19. The Learned Counsel for the Appellant, relies on the decision In re Elgindata Ltd. (No.2) (Court of Appeal), reported in 1993 (1) ALL ER 232, wherein, it was held that the Petitioner , cannot choose to fix a date for the Value of the Shares , at or near the time, when the Company s fortunes were at their peak, if such a course is adopted, it would be highly unfair. 20. The Learned Counsel for the Appellant, cites the order of the Hon ble Supreme Court in Petition(s) for Special Leave to Appeal (c) No(s) 33302 of 201 5, between Arunachal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, Both the parties 'shall submit their oral and written submissions latest by 10-10-2001 to the valuer who will prepare his draft valuation report by 10-11-2001. Thereafter, the parties should react to the draft valuation report by 25-11-2001. The final report of the valuer should be made available to the parties by 15-12-2001. On receipt of the valuation report, the respondents should pay the consideration for the 50 per cent share of the company to the petitioner within 30 days 22. The Learned Counsel for the Appellant, refers to the Judgment of the Hon ble High Court of Bombay, in Prudence Maynard v. Mundhra Container Freight Station (P) Ltd. and Ors., reported in 2017 SCC Online Bom 10221, wherein, it is observed as under : 1st Respondent s Submissions: 23. The Learned Senior Counsel for the 1st Respondent / Petitioner contends that there is correspondence to exhibit that there was an Agreement , between the Appellant and the 1st Respondent buy out of 1st Respondent s Shareholding in Hyde India, resting upon the last physical year, managed by the 1st Respondent viz., Financial year 2017-18, using Discounted Cash Flow ( DCF ) Valuation Method . 24. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of PAT numbers knowingly. 28. According to the 1st Respondent, the 1st Respondent had pointed out the falsification of numbers to the Appellant, while stating that cited profit figures do not match the profit disclosed in the filed financial statements. Furthermore, the Appellant had five different times had categorically stated that any Valuation of Shares , can only be done by a Valuation Firm, thus, contradicting their current position, now that the valuation, must be done by the Company s Auditors . 29. Besides the above, it is projected on the side of the 1st Respondent that the Appellant, in their Offers dt. 04.11.2018 and 05.02.2021, had Violated the Foreign Exchange Management Rules , which clearly provide the Valuation , must be done using the DCF Method , Merchant Banker or a Chartered Accountant . Also that, since the Offer , it is incorrect to state the application is infructuous one and merely misguided one, since the Offers violated the spirit of amicable settlement as directed by the Adjudicating Authority , being based on falsified PAT numbers, in negation to the Companies Act and FEMA Rules and neither conducted by a Registered Valuer nor in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , required under the Act, as per rules. As per Section 247 (2) of the Companies Act, 2013, the Valuer , appointed under sub section (1), shall make an impartial, true, and fair valuation, of any Assets, which may be required to be valued, is to exercise due diligence, while performing the functions of Valuer, make value in accordance with such rules as may be. 35. Undoubtedly, Valuation , is the realm of corporate and commercial wisdom of parties and the role of a Tribunal , is of course, peripheral and supervisory, in the considered opinion of this Tribunal . 36. It must be borne in mind that, it is neither the mandate of Law nor within the Court / Tribunals purview of enquiry, to question the Valuation, in the manner conducted. 37. In fact, to treat as unimportant a Method of Valuation , of shares, in scheme of Reduction, it must be exhibited that the chosen Method of Valuation , is such, that it resulted in an artificially depressed or Contrived Valuation , well below what a fair, prudent person may think about in a careful and cautious manner, as opined by this Tribunal . 38. The Valuation of Shares , can be impeached not only for Fraud, but also for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Petitioner (in CP No.285/241/HDB/2020), mentioning that the 1st Respondent / Petitioner, had filed main Company Petition and that he has 10% of Shareholding , in the 2nd Respondent/Company (M/s Hyde Engineering and Consulting India Pvt Limited, Telangana and one of the reliefs, is for Valuation of Shares , of the 2nd Respondent company / 1st Respondent company 47. In fact, being a Majority Shareholder , the Applicant company/2nd Respondent company, intends to buy the Shares of the 1st Respondent / Petitioner (in Main Petition), who is having 10% of the total Shareholding in the 2nd Respondent company / 1st Respondent company. 48. In reality, in IA No.1169 of 2020 in CP No.285/241/HDB/2020, the Petitioner company / 2nd Respondent Company, had prayed for the relief of appointing the Registered Valuer , to fix the Share Value of Equity Shares of the 2nd Respondent Company i.e. M/s Hyde Engineering and Consulting (India) Pvt. Ltd. Also, an order was prayed, directing the 1 st Respondent / Petitioner in the main Company Petition) to sell the Shares , held by in the 2nd Respondent company / 1st Respondent company M/s Hyde Engineering and Consulting (India) Pvt. Ltd. to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... costs incurred by him. 53. The First Respondent / Petitioner, had pointed out that the Application under Rule 11 of NCLT Rules, 2016, may be admitted by the Tribunal , and appoint a Registered Valuer , to fix a Fair Value , for the Equity Shares of the 1st Respondent / Petitioner, based on the audited financial 1st Respondent / Company for the fiscal year financial year 2017-18. 54. Besides the above, the 1st Respondent / Petitioner, had stated in its Reply , that the Tribunal , may grant the prayer of Applicant Company / 2nd Respondent, to buy out the Equity Shareholding of the 1st Respondent / Petitioner at a fair and proper value of the company, in respect of the Financial year 2017-18, along with the accrued interest and legal costs, incurred by the 1st Respondent / Petitioner and on payment of the same, within a time bound manner. 55. In the instant case, this Tribunal , pertinently points out in the Counter Affidavit filed by the 1st Respondent / Petitioner (vide page 65 in Diary No.791 dt. 23.8.2022 in CA (AT) CH No.76 of 2022) to IA No.1169 of 2020 in main CP No.285/241/HDB/2020, wherein at paragraph 6, the 1 st Respondent / Petitioner, had stated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... propriate orders if a party moves it contending that the order has not correctly reflected happenings in Court. 59. Coming to the plea taken on behalf of the Appellant in the Memorandum of the instant Appeal , to the effect, that there was No such Consent , between the Parties , regarding the Appointment of the Valuer , and further, there was no occasion or basis or material to allow , the prayer for Appointment of an Valuer , and the same was done only in the garb of allowing the Appellant s IA 1169 of 2020 in main CP No.285/241/HDB/2020, this Tribunal , keeping in mind of the Hon ble Supreme Court decision in Central Bank of India v. Vrajlal Kapurchand Gandhi and Anr., is of the earnest opinion that, it is for the Appellant, to take necessary steps, in contradicting the Statements of Fact , during the hearing recorded in the impugned order of the Tribunal , (which are conclusive of facts so mentioned / recorded, as a matter of judicial record), stating that the order was not correctly reflecting the happenings, before the Tribunal . 60. Be that as it may, this Tribunal , on a careful consideration of divergent contentions advanced on either side, on goi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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