Court rules lack of fair value method makes consent order unenforceable under Companies Act.

The court held that the lack of a determined fair value or mechanism rendered the consent order unenforceable for the sale of shareholding under the Companies Act. It ruled that mere willingness to sell at fair value did not constitute a concluded executable agreement. The court found the consent order void due to the absence of agreement on the fair value determination method. The application under section 634A was dismissed, and the matter was remitted for a decision on the petition under sections 397 and 398 of the Act, emphasizing the need for a clear agreement on fair value for enforceability.

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Issues Involved:
Interpretation of consent orders for sale of shareholding at fair value under Companies Act, 1956.

Detailed Analysis:
Issue 1: Consent Order and Executable Agreement
The appellant argued that an executable order was necessary for enforcement under section 634A of the Companies Act. They contended that without a determined fair value or mechanism, no executable order existed. The respondents claimed that the consent order for fair value sale was conclusive and enforceable. The court held that mere willingness to sell at fair value did not amount to a concluded executable agreement. The lack of agreement on fair value or determination mechanism rendered the consent order unenforceable.

Issue 2: Validity of Consent Decree
The court analyzed the proceedings under the Indian Contract Act, emphasizing the need for certainty in agreements. It cited examples from the Act to illustrate void agreements due to uncertainty. The court found that the lack of agreement on fair value determination method made the consent order void. The court rejected the argument that fair value could be determined by a Chartered Accountant without explicit agreement by the appellants.

Issue 3: Precedents and Case Law
The court examined relevant case law, including Kuki Leather (P.) Ltd. v. T.N.K. Govindaraju Chettiar & Co. and Smt. Shanti Devi Mehra v. Gyan Prakash Mehra. It noted that these cases involved different circumstances and did not support the respondents' argument. The court also discussed Ahmadasahab Abdul Mulla v. Bibijan, clarifying its lack of relevance to the present case.

Conclusion:
The court ruled that the Board's presumption of a settled proceeding leading to an executable order was incorrect. The application under section 634A of the Act was dismissed, and the matter was remitted back to the Company Law Board for a decision on the petition under sections 397 and 398 of the Act. The judgment emphasized the necessity of a clear agreement on fair value and determination mechanism for consent orders to be enforceable under the Companies Act.

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