Court Orders New Share Valuation; Upholds Director's Right to Remuneration Until Payment Finalized.

The HC rejected the initial valuation report of the shares held by the petitioner due to lack of independence and directed the CLB to appoint a new Chartered Accountant for re-evaluation. The court upheld the petitioner's right to remuneration as a director until share valuation and payment were completed. The respondent-company was ordered to pay arrears with interest, after which the petitioner would transfer shares and resign. Appeals were disposed of without costs.

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Issues Involved:
1. Whether the market value determined in respect of the shares held by the respondent can be said to be just and properRs.
2. Whether the respondent would continue to exercise rights as Director of the appellant-company until the amount towards the valuation of his shares held by the respondent is paid over to himRs.

Detailed Analysis:

1. Market Value Determination of Shares:
The first issue revolves around the fairness and propriety of the market value determined for the shares held by the petitioner. Both parties were dissatisfied with the valuation report prepared by M/s. Price Water House (COOPER). The respondent-company argued that the valuation erroneously included plots A-9 and A-10 as assets of the company. They contended that these plots should not have been considered in the valuation, and even if included, the premium ratio fixed was incorrect. The petitioner criticized the valuation report entirely, arguing that the valuer lost its independent character and acted as an agent of the respondent-company, citing a letter dated 1-3-2001 as evidence. The court found that the valuer's approach lacked independence and bona fides, leading to the rejection of the valuation report in its entirety. The court directed the Company Law Board to appoint a new Chartered Accountant to re-evaluate the shares as of 31-3-2005, ensuring an independent and unbiased valuation process.

2. Rights and Remuneration of the Director:
The second issue concerned whether the petitioner was entitled to remuneration as a director after opting to sell his shares. The respondent-company argued that the petitioner should not receive any remuneration once he chose the second option of selling his shares. However, the petitioner contended that he should receive remuneration throughout the period until the shares were evaluated and payment was made. The court held that the petitioner, holding 40% of the shares, was entitled to remuneration and perquisites until the shares were evaluated and the payment was made. The court directed the respondent-company to pay arrears of remuneration up to 31-3-2005 within two months, with interest at 12% per annum. Upon payment, the petitioner would transfer his shares, resign from the directorship, and cease to have any claim to remuneration as a director.

Conclusion:
The court provided specific directions to ensure a fair and independent valuation of the shares and upheld the petitioner's right to remuneration until the completion of the share transfer process. The appeals were disposed of with no order as to costs.

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