High Court upholds Company Law Board order on share sale dispute, sets auditor valuation deadline

The High Court of Calcutta upheld the Company Law Board's order directing the sale of shares at a fixed price of Rs. 500 per share to resolve internal conflicts among the parties involved. Controlling shareholders were also given the option to sell their shares at the same price. Independent appeals were filed challenging the fixed price, leading to the appointment of an auditor to value the company shares. The court set a deadline for the valuation report submission and allocated expenses between the parties involved, with the petitioners bearing one-third of the costs.

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Issues: Company Law Board's order directing share sale at a fixed price, valuation of company shares, appointment of valuer, sharing of valuation expenses, timeline for valuation report submission.

Analysis:
The judgment by the High Court of Calcutta pertains to applications and proposed appeals related to a common order issued by the Company Law Board in separate proceedings under Sections 235, 397, and 398 of the Companies Act. The Company Law Board, while finding no grounds for investigation or cases of oppression or mismanagement, directed the aspiring appellants to sell their shares to the management at a fixed price of Rs. 500 per share to resolve internal conflicts. Additionally, the controlling shareholders were given the option to sell their shares to the appellants at the same price. Two independent appeals were filed by the controlling shareholders, which were admitted and numbered as ACO No. 55 of 2009 and ACO No. 56 of 2009.

The parties involved, including the controlling shareholders and the petitioners, agreed to value the company shares. However, the controlling shareholders contested the fixed price set by the Company Law Board, alleging it lacked a proper basis and was solely based on the petitioners' submissions. On the other hand, the petitioners argued that their valuation was grounded in the company's financial statements and accounts. To address this dispute, Mr. Sashi Agarwal, an empanelled auditor, was appointed to value the company shares as of March 31, 2003, and March 31, 2009.

To facilitate the valuation process, the company agreed to pay an initial amount to the chartered accountant for expenses related to travel and other incidental costs. It was further decided that the petitioners would bear one-third of the final valuation bill, with the company covering the remaining expenses. The High Court set a deadline for the completion of the valuer's report by April 23, 2010, with all related matters scheduled to appear in court on April 30, 2010. Additionally, the court authorized the provision of urgent certified copies of the order to the concerned parties upon request, subject to fulfilling necessary formalities.

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