Manoj Kumar Jha vs Surjeet Singh & Ors.

PER: JUSTICE RAKESH KUMAR JAIN: (ORAL)

07.08.2024: This appeal is directed against the order dated 31.01.2020 passed by the National Company Law Tribunal, Kolkata Bench (in short ‘Tribunal’) in I.A. No. 1407/KB/2019 filed in CP No. 71 of 2014 by Shri Surjeet Singh (Respondent No. 1) under Rule 11 & 15 of the NCLT, Rules, 2016 seeking clarification of the order dated 19.02.2019 and 03.06.2019 passed by the Tribunal which has been disposed of with the order that Appellant/Applicant shall pay Rs. 3,45,05,900/- to Prakash Kumar and 3,44,85,000 to Manoj Kumar Jha with interest calculated @ 9% to compensate them for the delayed payment, within 15 days from the date of receipt of the order.

Brief facts of this case are that CP No. 71 of 20214 was filed by Surjeet Singh (R1) under Section 241 and 242 of the Companies Act, 2013 (in short ‘Act’) alleging oppression and mismanagement which was dismissed on 21.04.2017.

Aggrieved against the order dated 21.04.2017 passed by the Tribunal, Respondent No. 1 filed CA (AT) No. 293 of 2017 before this Court. The said appeal was disposed of on 24.10.2018 by this Tribunal with the following orders:-

“16. We pass following directions and Orders:-

(A) We set aside the transfer of shares from Respondent No.4 in favour of Respondent No.3.

(B) The Appellant is entitled to function as Director and is entitled to remuneration as Director equal to what has been paid to Respondent No.3 from August, 2014 till his shares are purchased by Respondent Nos.2 and 4 from the funds of the Company.

(C) We remit back the matter to NCLT, Kolkata Bench. NCLT will first give opportunity to the Respondent Nos.2 and 4 to purchase shares of the Appellant of Respondent No.1 company on the basis of Valuation Report (Annexure A-11) (filed in this Appeal with Diary No.2428) within time preferably of 3 months (or as may be specified by NCLT). If the Respondents 2 and 4 fail to purchase the shares of the Appellant in time as may be specified by NCLT, opportunity will be given to the Appellant to buy out, in time to be specified by NCLT, the shares of Respondents 2 and 4 in which contingency he would be entitled to purchase the shares of Respondent No.2 and 4 on a discount of 5% on the value as specified in the Valuation Report. NCLT may pass any and further suitable Orders deemed fit in the context, and matter.

(D) Parties to appear before NCLT, Kolkata on 19.11.2018.

(E) Respondents 2 and 3 each will pay costs of Appeal Rs.1 Lakh each to Appellant from their own sources.

The Appeal is disposed accordingly.”

In terms of the aforesaid order of remand dated 24.10.2018, the Tribunal was to give first opportunity to Prakash Kumar and Manoj Kumar to purchase shares of Surjeet Singh of the Company, namely, Prowess International Pvt. Ltd. on the basis of valuation report (which was attached as Annexure 11) within a period of three months or as may be specified by the Tribunal. It was further directed that if Prakash Kumar and Manoj Kumar fail to purchase the share of Surjeet Singh ( within the time specified by the Tribunal) then the Tribunal shall give opportunity to Surjeet Singh to buy the shares of Prakash Kumar and Manoj Kumar within the time specified by the Tribunal and in such eventuality Surjeet Singh would be entitled to purchase the shares on a discount of 5% on the value specified in the valuation report.

Since, the first chance was given to Prakash Kumar and Manoj Kumar to purchase the share of Surjeet Singh, therefore, they were asked to buy the shares of Surjeet Singh. An order has been recorded by the Tribunal on 19.02.2019 as per which aforesaid two persons though paid an amount of Rs. 36.3 Lakhs and sought one month time for payment of the balance amount of Rs. 6.08 Cr. but the said amount was never paid. The order dated 19.02.2019 is reproduced as under:-

“Ld. Counsel for the petitioner and the respondent no. 1 and 3 is present.

Ld. Counsel appearing for the Respondent Nos. 2 and 4 today tendered a post-dated cheque for an amount of Rs. 36.3 lakhs and sought one months’ time for payment of the balance amount amounting to Rs. 6.08 Cr. in total. Tendering a cheque for part payment is not in compliance of the directions of the Hon’ble NCLAT. Respondent No. 2 and 4 has given time to produce demand draft for the entire amount as per valuation of shares but produced a post-dated cheque on today for enabling them to purchase the shares of the appellant-petitioner. Being failed to comply with the directions ..do not find any justifiable reason to give further opportunity to pay the amount as directed. The Respondents not even cared to produce demand draft to show that they are willing to comply with the directions. As per the directions of the Hon’ble NCLAT respondents are to be given first opportunity to purchase shares of the Appellant. Failing which the appellant is entitled to purchase the shares of the Respondent No. 2 and 4 at a discount of 5% on the value as per the valuation report.

Ld. Pr. CS appearing for the appellant-petitioner has showed his willingness to pay Rs. 6.08 cr. as the value of its shares within three months. So three months’ time is granted. Directed to pay the amount to the respondent nos. 2 and 4 or else to produce demand draft for the aforesaid amount on or before 19.05.2019 at the registry. List it on for reporting compliance as above on 03.06.2019.”

Now the ball was in the Court of Surjeet Singh to purchase the shares of Prakash Kumar and Manoj Kumar which he also failed to purchase and in this regard, an order was passed by the Tribunal on 28.08.2019 which read as under:-

“Ld. Counsel for the petitioner appears. Ld. Counsel for R1 and R2 appears.

It is evident that the directions of the NCLAT has not been complied with on both sides. Therefore, further hearing is needed for what next steps are to be taken in the peculiar circumstances of the case in hand.

Accordingly, adjourned to 31.10.2019 for hearing.”

There was no dispute between the parties that neither parties could purchase the share within the time specified.

However, Surjeet Singh filed an I.A. No. 3889 of 2019 for clarification before this Tribunal regarding the observations made in Para 16(c) of the judgment dated 24.10.2018 passed by this Court seeking confirmation that for amount of DD to be given to Respondent No. 4 for urgent compliance of said order. The said application, however, was disposed of holding that no clarification from this Court is required.

It is pertinent to mention that the order dated 24.10.2018 passed by this Court became final as it was not challenged further in appeal before the Hon’ble Supreme Court.

Thereafter, an application bearing I.A. No. 1407 of 2019 was filed by Surjeet Singh but it is submitted that it has wrongly been mentioned as Manoj Kumar. It has now been disposed of by the impugned order dated 31.01.2020 as per which Surgeet Singh was allowed to purchase the share of Prakash Kumar and Manoj Kumar with the discount of 5%. The operative part of the order is reproduced as under:-

“1. The appellant shall pay to Mr. Prakash Kumar Rs. 3,45,05,900/- and to Mr. Manoj Kumar Jha Rs. 3,44,85,000/-, the Respondent Nos. 2 and 4 alongwith interest @ 9% as aforesaid to compensate them for the delayed payment, within 15 days from the date of receipt of this order since this valuation has been arrived at vide valuation report submitted to the Hon’ble Appellate Tribunal.

II. There shall be no order as to costs. ”

Counsel for the Appellant has submitted that the Tribunal has committed an error while calculating the value of the share of PIPL. He has further submitted that even otherwise the Tribunal has erred in allowing a discount of 5% on his shares purchased by Surjeet Singh as the order of remand came to an end with the efflux of time provided therein and the impugned order has been passed in a fresh application filed by Surjeet Singh.

Counsel for the appellant has further submitted that the Tribunal has not taken into consideration that besides the share owned by the Appellant i.e 3,33,200, the Appellant has the share in PIEC which has been dissolved, therefore, the shares held by PIEC in the Company should have been given to him as per his entitlement.

In this regard, Counsel for the Respondent has referred to para 12 of the impugned order to contend that firstly, this issue was not raised before the Appellate Tribunal and secondly, the Tribunal has already protected the right of the Appellant observing that shareholding as regards other two companies, the parties may avail appropriate remedies in appropriate proceedings, if they are so advised.

We have heard Counsel for the parties and perused the record with their able assistance.

The only issue which falls for our consideration in this appeal is as to whether the Tribunal has erred in applying 5% discount in purchase of shares by Surjeet Singh belonging to Prakash Kumar and Manoj Kumar, in terms of the order passed by this Court on 24.10.2018.

It is needless to mention that the order dated 24.10.2018 was an order of remand with particular directions. The direction 16(c) of the order was not complied with by both the parties, therefore, the said direction came to an end. However, Surjeet Singh filed a fresh application bearing no. 1407 of 2019 on which the impugned order has been passed and in that the Tribunal has committed an error by applying deduction of 5% as discount on the amount to be paid to Prakash Kumar and Manoj Kumar on the pretext that the same has been allowed by the order dated 24.10.2018. In so far as this issue is concerned, we are one with the Appellant that 5% discount should not have been applied, therefore, we direct that the discount of 5% which has been ordered by the impugned order shall be paid by Surjeet Singh to the Appellant alongwith interest @ 9% calculated on his amount from the date of deduction till the date of payment.

In so far as the agitation of the Appellant in respect of the shares being held by the firm PIEC in PIPL is concerned, already liberty has been granted to the Appellant in para 12 of the impugned for which no further direction is required.

No other point has been raised.

In view of the aforesaid direction, the present appeal is hereby disposed of.