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Judgment
[Per; Shreesha Merla, Member (T)]
Aggrieved by the Order dated 16.10.2020, passed by National Company Law Tribunal, Ahmedabad Bench, Ahmedabad (‘NCLT’) in I.A. 251 of 2017 in T.P. No. 26 of 2016 (CP No. 46 of 2012), M/s. Beeceelene Textile Mills Pvt. Ltd. & Ors. preferred this Appeal under Section 421 of the Companies Act, 2013 (in short the ‘Act’). By the Impugned Order, NCLT has observed as follows:
“9.Hence, by the submissions dated 11th June, 2018, the Respondent No. 1 to 5 requested this Tribunal to approve fair value of Equity Share of Respondent No. 1 company by correctly applying Jantri rate based on which the value per share is not more than Rs. 426.38 per share.
10.The Applicant/ Original Petitioner vide affidavit dated 5th September, 2018 provided their submissions on the determination of fair value calculated by the Independent Valuer in her valuation report on the ground that the Jantri rate do not reflect the actual property rates and consequently submitted to this Tribunal to set aside the unrealistic valuation report and to take actual value of shares from both sides and higher value submitted should be made binding on the other side or both sides as per various judicial decisions.
11.Moreover, the Applicant also submitted an Affidavit dated 5th October, 2019 and submitted that he is ready to purchase the shares of the Company at mean value of two independent valuers' reports of real estate appointed by both the parties before the charted accountants appointed by this Tribunal which as per his submission comes to Rs. 1247.27 per equity share of Respondent No. 1 Company. Further, the Applicant also confirmed that he is ready to sell at mean value and ready to purchase at 5% above the mean value which comes to Rs. 1309.63 per share.
12.In the Valuer report dated 26th February, 2018, the Independent Valuer has considered and placed on record, the Valuation reports of the Government approved Valuers appointed respectively by the Petitioner and the Respondent No. 1 to 5 for considering the valuation with the three immovable properties of the Respondent No. 1 in proper determination of fair value of equity share of the Respondent No. 1 Company viz.
a. Three Valuation reports dated 23rd January, 2018 of Mokani Nagin N. (Property Valuer No. 1 appointed by the Respondents) for each of the three commercial shops of Respondent No. 1.
b. Consolidated Valuation report dated 5th February, 2018 issued by Mahesh S Patwa (Property Valuer No. 2 appointed by the Petitioner) for all the three immovable commercial shops of Respondent No. 1.
13.We have gone through the Valuation report dated 26th February, 2018 of the Independent Valuer appointed by this Tribunal containing therein the Valuation reports of both the Property Valuer No. 1 & Property Valuer No. 2 as well as the submissions/comments /objections made by the Applicant and the Respondents.
14.Notwithstanding anything above, both the parties have agreed to part amicably as such for the betterment of the company. The parties are allowed to buy back their share/asset and release the company in favour of the party who is giving the higher offer. Since the Respondent is not satisfied with the valuation report and the Petitioner is ready to purchase the share of the company at mean value of 2 Independent Valuers of real estate appointed by both the parties which comes to Rs. 1247.27/- per equity share of Respondent 1 company and has further confirmed that he is ready to sell at the mean value and is ready to purchase at 5% above the mean value which comes to Rs. 1309.63 per share.
15.Under such circumstances, we find it expedient to direct both the parties to quote their offer price independently in a sealed cover before this Tribunal so as the higher offeror be allowed to purchase the share and part with the company amicably.
16.Accordingly, both sides are given 15 days time to submit their offer before this Tribunal and accordingly, the matter is listed on 13.11.2020 for compliance of the direction so passed.
17.Hence, the instant IA is disposed of with above observations. No order as to cost.”
It is the main case of the Appellant that after disposal of the main Petition vide Order dated 13.04.2017, NCLT was only acting as an executing Court for implementation of the Order dated 13.04.2017; that NCLT vide Order dated 25.10.2017 appointed M/s. Alpa Bhavesh Shah & Co. Chartered Accountant, as an Independent Valuer, who submitted their Report on 26.02.2018 determining the value of Equity Shares at Rs.426.38 per share; that the Independent Valuer’s Report is based on the value of asset as per the guideline value/circle rate Jantri value; that the first Respondent objected to the valuation submitted by the Independent Valuer and supported the valuation submitted by the valuer appointed by the first Respondent; that the first Respondent’s valuer arrived at a valuation of Rs.1900 per share based on conjectures and surmises; that the Appellant Company has only three assets; that the Appellants are ready and willing to purchase the shareholding of the first Respondent at Rs.426.38 per share or at any price which may be determined by this Tribunal; though the Appellants did not challenge the Order dated 27.09.2019, the Appellants had in compliance of the Order dated 27.09.2019 filed detailed Written Submissions in which they have not only brought on record their clear intent to purchase the share of the first Respondent but also put forth their submissions that in terms of the Order dated 13.04.2017, the first Respondent cannot be allowed to purchase the shares of the Appellant group; that the valuer appointed by the first Respondent has arrived at the value based on unsubstantiated evidence and it is repeated that the Appellant’s group is ready and willing to purchase the shares of the first Respondent as determined by the Independent Valuer appointed by the NCLT or any other valuation as may be determined by this Tribunal.
It is the case of the first Respondent that the Appellant has no locus standi to file this Appeal as it is filed by a Company; without a Board Meeting there cannot be any valid authority to sign on behalf of the Company and hence this Appeal is defective; the Appeal is qua Order dated 27.09.2019 against which the Appellant preferred an Appeal before this Tribunal which was dismissed; the first Respondent filed an IA seeking implementation of the Order, during which period, the Appellant did not appear before NCLT on the ground that they had preferred an Appeal, that NCLT ordered for appointment of the valuer to obtain the valuation of the three commercial shops; that the Valuation Report submitted by the valuer appointed by the NCLT, it was seen that the Report was based on the circle rate/Jantri value which is the registration/or stamp value payable by the Government that the fair value is much more than the Jantri value but the first Respondent being a Senior Citizen wanted to put an end to the dispute and submitted an Affidavit before NCLT that value of assets can be decided by the average value of two valuations submitted by the first Respondent and the Appellant; to be fair in assisting the Court in rendering justice, the first Respondent also submitted that if the average value is on the higher side, the first Respondent is ready to purchase the shares of the Appellant at 5% higher value than the average price at which he is ready to sell the shares; the Appellants are getting much higher value of shares than their own valuation, yet despite several requests, the Appellant remained adamant on the lowest value and hence NCLT ordered on 27.09.2019 that Appellant has to either purchase a share at average value or sell its share to R-1. Accordingly, the decision to sell the shares of Appellant to the first Respondent was given on 27.09.2019. One more opportunity was given on 16.10.2020 to decide the share value of the shares and NCLT ordered both sides to submit their value of share in a sealed envelope so that the party which offers the higher price could buy out the other side.
It was strenuously argued by the first Respondent that though NCLT has taken a judicious approach, it is only to drag the proceedings that the Appellant preferred this Appeal. Further, the Order dated 27.09.2019 was never appealed and hence the Order has attained finality.
Assessment:
For ready reference, paragraphs 78 to 80 of the Order dated 13.04.2017 passed by the NCLT under Sections 241/242 of the Act is reproduced as hereunder:
“78.In view of the above said discussions and in view of the fact that the petitioner and respondents belongs to the same family, instead of straight away appointing an independent valuer to assess the value of shares, it is just and expedient to direct the petitioner and respondent no. 2 to 5 to come to an understanding regarding fair value of the shares of the first respondent company as on the date of filing of petition at which the same can be sold. Petitioner and his group persons, if they are willing, they can sell their shares to respondents as per the value fixed by mutual agreement. Respondents 2 to 5 shall purchase the shares of petitioner group for the mutually agreed value of shares.
79.In case no mutual agreement on the fair value of shares of the respondent company is arrived and the sale of shares did not complete within a period of 90 days from the date of this order, if he is willing to sell his Shares, he is at the liberty till file an application before this Tribunal to appoint an independent valuer to fix fair value of shares of the first respondent company as on the date of filing the petition and, in such application this Tribunal shall pass necessary orders regarding appointment of independent valuer and regarding the manner and mode of sale of shares of petitioner group to respondents 2 to 5 and transfer such shares. Respondents 2 to 5 shall purchase the shares of the petitioner group as per the fair value fixed by the independent valuer and approved by this Tribunal.
80.In view of the above said order, no relief need to be granted in this petition. The pending applications are closed. Interim orders, if any passed, shall be in force, till transfer of shares as ordered above.”
For better understanding of the case, the Order dated 27.09.2019 passed by NCLT is being reproduces as hereunder:
“The Applicant is represented through learned PCS. The Learned PCS on behalf of the Respondent no. 1-5 appeared.
None appeared on behalf of the Respondent No. 6-8.
In the instant matter the judgment has already been passed on 13.04.2017, thereafter the judgment has been challenged by the Respondent before the Hon'ble NCLAT and the same was dismissed by the Hon'ble NCLAT with the observation that, the Hon'ble NCLAT do not find any ground to interfere with the impugned order in view of the observation made by the Tribunal and also on the ground of delay.
Now we are left with the option to execute the order so passed by this Bench on 13.04.2017 and it required to be executed in the fashion as reflected in the order and accordingly, the fair value has been obtained by Independent Valuer which is in the record. Since, there is a difference in both the valuation, the Petitioner is agreed for mean value and if Respondent does not wish to purchase the share and asset of the company, in that event, the Petitioner is ready to go for the mean value and shall purchase the shares and assets of the company.
The Learned PCS on behalf of the Respondent requested time to get appropriate instruction from the client.
The prayer is allowed as a last chance as the matter is pending since 2017.
The Respondent is directed to either purchase the assets and properties as per mean value or allow the Petitioner to purchase the same, since no alternative left.
List the matter on 10.10.2019.
(Emphasis Supplied)
It is pertinent to mention that this Order dated 27.09.2019 in the same Interim Application 251 of 2019 was never challenged and has attained finality.
It is relevant to mention that the Appellants have filed an Affidavit before CLB for implementation of MoU entered into 2012 seeking relief that the Appellants/Petitioner be directed to honour their obligation. It is an admitted fact that the MoU was never implemented as seen in para 53 of the final Order dated 13.04.2017. The Impugned Order dated 16.10.2020 has only given an opportunity to the Appellant to sell, have option, quote a face value. As the Order dated 27.09.2019 has attained finality and the Original Order which was appealed to by the Appellant, was dismissed by this Tribunal, we are of the considered view that the contention of the Learned Counsel for the Appellant that the NCLT was traversing behind the decree, is untenable.
This Tribunal while issuing Notice has observed in the Order dated 29.01.2021 that ‘R-1 is ready to sell the shares at an average value of shares as per the Order dated 27.09.2019 and ready to purchase the shares at 5% higher value than the average value of shares as per the Order dated 27.09.2019’. Thereafter the matter was adjourned several times as the Appellant had submitted that there were talks of settlement going on and sought time to file a Joint Affidavit recording the consent terms. At this juncture, we find it relevant to detail the Order of this Tribunal dated 01.07.2021:
“Learned counsel Mr Mohit D Ram representing the Appellant and Mr Dhirren R Dave, PCS appearing on behalf of Respondent No.1, is present. Learned counsel for the Appellant submits that talks of the settlement were going on between the parties, and he invited the attention towards the order of this Court dated 29.1.2021 wherein it is stated that; “R-1 makes this submission with great sincerity and responsibility to put an end to this entire dispute at the stage itself that 1) As per my affidavit made earlier, R-1 is ready to sell the shares at an average value of shares as per order dated 27.09.2019 and ready to purchase the shares at 5% higher than the average value of shares, as per order dated 27.09.2019.” He further submits that after the proposal given on 29.1.2021, the Respondent gave consent to accept the proposal, recorded in the order sheet dated 19.02.2021. On perusal of the order dated 19.02.2021, it appears that R1 submits that to put an end to the entire dispute at the stage itself, R1 is ready to sell the shares at the average value of shares as per the order dated 27.09.2019 and prepared to purchase the shares at 5% higher than the average value of shares as per order dated 27.09.2019. It also appears that learned counsel for the Appellant submits that he is ready to accept the offer given by learned counsel for Respondent No.1, as the parties are trying to settle the matter amicably and the terms offered by Respondent No.1. Accordingly, in continuation of the said order, directions were issued to both the parties to file a joint affidavit indicating the terms on which they have settled the matter jointly duly signed by the parties within two weeks. However, to date, no Joint Affidavit has been filed. Learned PCS representing Respondent No.1 submits that he has not received any money until today, so he cannot sign the documents without receiving the agreed sum. In response to that, counsel for the Appellant submits that he is ready to make the Demand Draft available in the Court by Monday, i.e. 5th July 2021. Learned PCS representing Respondent No.1 further submits that he has not received any payment regarding the unsecured loan given to the Appellant. In reply to this learned counsel for the Appellant submits that Respondent No.1 wants to expand the scope of terms of settlement for which he is not allowed. Both the parties are given time to file the consent terms within ten days from today, failing which the case will be heard on merits. List the case on 2nd August 2021 for hearing/filing of consent terms. Both the parties are directed to file hard and soft copies of notes of submissions and convenience compilation at least one week before the next hearing date.” (Emphasis Supplied)
It is clear from the aforenoted submissions that the Appellant was ready to accept the Order given by the first Respondent and a direction was issued to both the parties to file a Joint Affidavit indicating the terms of which they seek to settle the matter jointly. As no settlement was arrived at, despite the fact that the first Respondent wanted to put an end to the dispute, being a Senior Citizen filed an Affidavit that he was ready to sell the share at an average value of the shares as per the Order dated 27.09.2019 and ready to purchase the shares at 5% higher value than the average value of shares as per the Order dated 27.09.2019.
At the cost of repetition, the Order passed in the main Petition dated 13.04.2017 was challenged by the Appellant herein and this Tribunal had dismissed the same and hence has attained finality. The Appellant is bound by the direction given by NCLT which is:
“The Respondent is directed to either purchase the assets and properties as per mean value or allow the petitioner to purchase the same since there is no alternative left.”
Despite an opportunity given to the Appellant to submit their offer in a sealed cover before NCLT, the Appellants refused to do so. Dissatisfied with that direction, they had approached this Tribunal and further delayed the proceedings on the ground that ‘settlement talks were going on’. Taking into consideration the factual matrix of the matter and that 3 years has lapsed, since the Impugned Order was passed,5 years has passed since the main petition dated 13.04.2017 has attained finality, to avoid any further delay, to put an end to this family dispute, and further having regard to the fact that the Appellant has challenged a reasonable, fair and a judicious Order passed by NCLT; in the interest of justice, we do not find it a fit case to remand the matter back to NCLT for any further evaluation. We clarify that ‘Mean Value’ as specified in the Order dated 27.09.2019 means ‘average value’ and the Respondent is ready to sell the shares at this average value or purchase the shares @5% higher than the average value. The Appellant is bound by the NCLT Order dated 27.09.2019 which has since attained finality. The Appellant is at liberty to choose either of the options of purchase/sell given by the first Respondent and shall file an Affidavit of compliance before the NCLT within 4 weeks from today. The Appeal is disposed of with the aforenoted directions.
The Registry is directed to upload the Judgement on the website of this Tribunal and send the copy of this Judgement to NCLT (National Company Law Tribunal, Ahmedabad Bench, Ahmedabad) forthwith.