Appeal partly allowed: Disbursement direction set aside, share purchase upheld with interest.

The appeal was partly allowed. The direction to disburse Rs. 20 Lakhs to the Respondent was set aside, while the direction to Appellant No. 2 to purchase the Respondent's 500 shares at Rs. 2064.74 per share was upheld. The Respondent was also entitled to simple interest at 9% per annum on the cost of the shares from the date of the impugned order. No orders as to costs were made.

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Issues Involved:
1. Entitlement of the Respondent to Rs. 20 Lakhs in lieu of past services.
2. Obligation of Appellant No. 2 to purchase shares held by the Respondent at Rs. 2064.74 per share.

Issue-wise Detailed Analysis:

Issue No. I: Entitlement of the Respondent to Rs. 20 Lakhs in lieu of past services

The Respondent, a minority shareholder with 5% shares and Vice President (Research & Development) of Appellant No. 1, alleged oppression and mismanagement after Appellant No. 3 transferred shares to Appellant No. 2 without his consultation. The Respondent claimed he was integral to the company's growth and was unfairly terminated without proper compensation.

The NCLT found that the Respondent was an employee, not a director, and his termination followed due legal process. The Respondent was paid full and final settlement of salary, gratuity, and royalty. The NCLT awarded Rs. 20 Lakhs to the Respondent in lieu of his professional qualifications utilized during the company's initial days. However, the Appellate Tribunal found no justification for this award, as the Respondent had already been compensated per his employment contract. The Respondent's professional contribution during the early days of the company did not entitle him to additional compensation beyond the agreed terms.

Issue No. II: Obligation of Appellant No. 2 to purchase shares held by the Respondent at Rs. 2064.74 per share

The Respondent alleged that the valuation of shares at Rs. 1165 per share was unfair and was only for stamp duty purposes. The NCLT directed Appellant No. 2 to accept the transfer of 500 shares at Rs. 2064.74 per share based on an earlier valuation report. The Appellate Tribunal upheld this decision, noting that the second valuation was undervalued to evade proper stamp duty and did not reflect the fair value of the shares. The first valuation report was deemed appropriate for determining the transfer price.

Conclusion:

The appeal was partly allowed. The direction to disburse Rs. 20 Lakhs to the Respondent was set aside, while the direction to Appellant No. 2 to purchase the Respondent's 500 shares at Rs. 2064.74 per share was upheld. The Respondent was also entitled to simple interest at 9% per annum on the cost of the shares from the date of the impugned order. No orders as to costs were made.

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