Company cannot pursue both shareholder exit with fair valuation and oppression proceedings simultaneously under Sections 397-398

The Bombay HC dismissed company appeals challenging Company Law Board orders regarding shareholder exit and share valuation. The court held that under Sections 397-398 of Companies Act 1956, a petitioner cannot simultaneously pursue both exit with fair valuation and oppression/mismanagement proceedings. Once the appellant agreed to exit based on share valuation, the Company Law Board had authority under Section 402 to order valuation, which is enforceable as a court decree. Regarding duplicate share certificates issued without original certificates, the court found no prejudice to the appellant as duplicate certificates would be issued for her shares too. No question of law arose warranting interference with the Company Law Board's decision.

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Issues Involved:
1. Consent for Exit and Valuation Date
2. Transmission and Preemptive Rights
3. Issuance of Duplicate Share Certificates
4. Jurisdiction of Company Law Board and Validity of Orders

Issue-Wise Analysis:

1. Consent for Exit and Valuation Date:
The appellant contested the consent order dated 22nd July 2011, arguing it was conditional and did not reflect all agreed terms. The court found that the appellant had indeed agreed to exit on fair valuation based on the balance sheet as of 31st March 2008. The appellant's subsequent attempts to modify or challenge this agreement were deemed inconsistent and afterthoughts. The court emphasized that the consent order was clear, signed by authorized counsel, and no additional terms were recorded. The appellant's arguments about alleged conditions and liberties not recorded in the order were rejected as they were not supported by the court's records or subsequent actions. The court upheld the agreed valuation date and dismissed the appellant's claims for a different valuation date or additional considerations.

2. Transmission and Preemptive Rights:
The appellant argued that the transmission of 1/3rd shareholding of late Mr. Anthony Maynard to respondent no.7 was illegal and that she had preemptive rights to purchase those shares. The court found that the appellant had admitted the respondent no.7's entitlement to 1/3rd shareholding in her pleadings and prayers. The court also noted that the order for transmission of shares to respondent no.7 had attained finality and was implemented. The appellant's claims of preemptive rights were dismissed as the Articles of Association did not mandate offering shares to family members first. The court concluded that the appellant's agreement to exit nullified her preemptive rights, and the respondent no.7 was free to deal with his shares.

3. Issuance of Duplicate Share Certificates:
The appellant challenged the issuance of duplicate share certificates to respondent no.7, claiming non-compliance with Section 84(2) of the Companies Act, 1956. The court found that the respondent no.1 had followed the requisite procedure and issued duplicate shares after the original certificates were untraceable. The appellant's own prayers included a request for duplicate shares if originals were not available. The court upheld the issuance of duplicate shares as valid and compliant with the law.

4. Jurisdiction of Company Law Board and Validity of Orders:
The appellant argued that the Company Law Board's orders for transmission of shares and impleadment of respondent no.7 were illegal and void. The court found that these orders were not challenged by the appellant and had attained finality. The court emphasized that such orders could not be indirectly challenged in the present appeals. The court upheld the Company Law Board's jurisdiction and the validity of its orders, dismissing the appellant's claims.

Conclusion:
The court dismissed the appeals, upholding the consent order for exit on fair valuation, the transmission of shares to respondent no.7, the issuance of duplicate share certificates, and the validity of the Company Law Board's orders. The court directed the National Company Law Tribunal to expedite the hearing of pending company petitions and applications.

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