TaxTMI 
TaxTMI 
1995 (7) TMI 284
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....two groups who are contesting parties before us. Appellants nos. 1 to 5 represent one group and Respondents nos. 2 to 8 represent the other one. We shall refer to the respondents' group as Pravin Patel group and the appellants' group as K.Y. Patel group for the sake of convenience. K.Y. Patel group filed Petition No. 28/91 in October 1991 before the Company Law Board under the provisions of sections 397 and 398 of the Companies Act, 1956. They contended that the affairs of the company were conducted in a manner prejudicial to the interest of the company and public interest. They also sought for a direction that the resolutions passed at the Extraordinary General Meeting should not be given effect to. The parties arrived at consent terms signed on February 11, 1993 before the Com- pany Law Board and in pursuance thereof the Company Law Board disposed of the petition by its consent order dated 5-3-1993. The consent terms provided that both groups would deposit their shares with Com- pany Law Board and one Shri M. Vatsaraj would determine the fair value per share. Accordingly, K.Y. Patel group, that is the appellants' group deposited 91,702 shares and the respondents' group, that is P....
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.... reads as under:- "In the event of the company failing to make payment of the full purchase price, or of any two of the instalments of price on the dates fixed by clause 21 above, the company shall lose its rights to purchase the shares of the K.Y. Patel group and the petitioners shall automatically be entitled to purchase the shares of the Pravin Patel group (i.e., shares listed in part I of Schedule II and such shares listed in Part II of Schedule II in respect of which written confirmations and undertakings have been furnished as aforesaid) at the price per share fixed by the Valuer under clause 16 above. The date of the last instalment or the date of the second instalment in respect of which the default has been committed, whichever is earlier, shall be the date on which the petitioners shall automatically be entitled to purchase the said shares and such date shall be referred to as "the date of purchase". 5. It is not in dispute between the parties that the Company Law Board fixed the instalments of the purchase price of the shares of K.Y. Patel group as provided by clause 21 of the consent terms by directing that 30% of the amount be paid within two months of the receip....
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....hri Vatsaraj's valuation was not proper and correct, then he should himself make the valuation. The expert was requested to decide before 13th June, 1994. As noted earlier clause 21(3)(a) of these consent terms provided that valuation per share made by the expert that is Shri Iyer shall be deemed to be the valuation per share made under the consent order dated 5-3-1993 passed by the Company Law Board. 7. On 21st October, 1994 Shri Iyer held that Shri Vatsaraj's valuation was not proper and correct and he valued the shares at Rs. 450 per share as against Shri Vatsaraj's valuation of Rs. 194, that is Rs. 4,12,65,900 for 91,702 shares. The first respondent company offered the said amount with interest only from 21-10-1994, the date on which Shri Iyer gave his report. The appellants contended that as per clause 21 of the consent order of 5-3-1993 read with clause 21(3)(a) of the consent order dated 21-4-1994 the appellants were entitled to Rs. 4,12,65,900 and a further sum of Rs. 66,13,850 being the interest payable thereon from 30-9-1993, the date of Shri Vatsaraj's decision and that the amount tendered by the company did not constitute full payment as required under the consent te....
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....nterest on the additional amount was payable only from the date of Shri Iyer's valuation dated 29-10-1994. Refuting these submissions Shri Soli Sorabjee, the learned counsel for the respondents contended that clause 21(3)(a) of the consent order of 29-4-1994 provided that the valuation of the shares as made by Shri Iyer will be deemed to be the valuation per share made under the earlier consent terms. But it had nothing to do with the interest amount payable on the valuation of the share price computed by the expert. Shri Sorabjee further contended that if Shri Nariman's contention is right and 15 per cent interest is to run from 30-9-1993 then an impossible and anomalous position would arise. He submitted that in such a case even assuming that Pravin Patel group had committed default it would be impossible to work out the right of the appellants' group to purchase the shares of Pravin Patel group as per default clause 28(a) itself, as the date of purchase by the appellants' group as per the said clause would be the date of last instalment or second instalment in respect of which the default is deemed to have been committed by the company, whichever is earlier. In such a case as pe....
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.... Shri Iyer will have to be treated to have been made under the consent order dated 5-3-1993 passed by Company Law Board. As the other clauses of the consent terms have remained untouched, it may prima facie be felt that 15 per cent interest would become payable on the valuation per share as made by Shri Iyer on 21-10-1994 right from 30-9-1993, the date on which Shri Vatsaraj made lower valuation and which got superseded and substituted by the later valuation of Shri Iyer. However, it is not necessary for us to closely examine this aspect of the matter and reach any final conclusion thereon, in view of the fair stand taken by the learned counsel Shri Sorabjee. Once the respondents have agreed before us to pay a total amount of Rs. 77 lakhs as interest towards the disputed dues and once they are prepared to pay Rs. 66 lakhs in addition to Rs. 11 lakhs which are already deposited by them the first grievance made by Shri Nariman would pale into insignificance. 10. However, so far as the second contention of Shri Nariman is concerned it is not possible to agree with him that the default clause 28 got attracted on the facts of the present case. The reasons are obvious. The default cla....