2022 (1) TMI 1137 - AT - Insolvency and Bankruptcy

Tribunal orders compliance with share purchase/sale terms in family dispute, dismissal of appeal

Beeceelene Textile Mills Pvt. Ltd., Pitamberdas B. Ruchandani, Amit Pitamberdas B. Ruchandani, Jitesh Pitamberdas B. Ruchandani, Pitamberdas Bhagwandas Ruchandani HUF Versus Mr. Radhakishan B. Ruchandani, Kanaiyalal B. Ruchandani, Monika A. Ruchandani, Arjandas Ruchandani HUF

Beeceelene Textile Mills Pvt. Ltd., Pitamberdas B. Ruchandani, Amit Pitamberdas B. Ruchandani, Jitesh Pitamberdas B. Ruchandani, Pitamberdas Bhagwandas ... Issues Involved:1. Determination of fair value of equity shares.2. Compliance with previous orders and execution of the sale/purchase of shares.3. Appellant's locus standi and procedural objections.4. Finality of previous orders and their implications.Issue-Wise Detailed Analysis:1. Determination of Fair Value of Equity Shares:The core issue revolved around the determination of the fair value of equity shares of the Respondent No. 1 company. The NCLT had earlier appointed an Independent Valuer, M/s. Alpa Bhavesh Shah & Co., who determined the value at Rs. 426.38 per share based on the Jantri rate. The first Respondent objected, claiming the Jantri rate undervalued the shares and proposed a higher valuation of Rs. 1900 per share. The NCLT considered multiple valuation reports, including those from government-approved valuers appointed by both parties. Eventually, the NCLT directed both parties to submit their offer prices in sealed covers, allowing the higher offeror to purchase the shares.2. Compliance with Previous Orders and Execution of the Sale/Purchase of Shares:The NCLT's order dated 13.04.2017 directed the parties to mutually agree on the share value or appoint an independent valuer if no agreement was reached. The order dated 27.09.2019, which was not challenged and thus attained finality, mandated that the Appellant either purchase the shares at the mean value or sell their shares to the first Respondent. The NCLT's subsequent order on 16.10.2020 reiterated this directive, emphasizing the need to execute the prior orders and avoid further delays.3. Appellant's Locus Standi and Procedural Objections:The first Respondent argued that the Appellant lacked the locus standi to file the appeal, as it was filed by a company without proper authorization from a Board Meeting. The first Respondent also highlighted that the appeal was essentially against the order dated 27.09.2019, which had already been dismissed by the Tribunal. The Tribunal found these objections significant but ultimately focused on the substantive compliance with the previous orders.4. Finality of Previous Orders and Their Implications:The Tribunal underscored that the order dated 27.09.2019 had attained finality and was binding on the parties. The Appellant's appeal against the main petition order dated 13.04.2017 had been dismissed, and thus, the Appellant was bound by the NCLT's directives. The Tribunal emphasized that the Appellant's refusal to comply and subsequent appeal were delaying tactics. The Tribunal directed the Appellant to comply with the order by either purchasing the shares at the mean value or selling them to the first Respondent at 5% above the mean value, as stipulated in the final order.Conclusion:The Tribunal concluded that the Appellant must comply with the NCLT's final order, either purchasing or selling the shares as per the agreed terms. The Tribunal dismissed the appeal, directing the Appellant to file an affidavit of compliance within four weeks, thus aiming to resolve the prolonged family dispute and execute the sale/purchase of shares as previously ordered.