TaxTMI 
TaxTMI 
2009 (7) TMI 771
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....,392 shares of the company held by respondent Nos. 2 to 5 in favour of respondent Nos. 6 to 9 at a price of Rs. 7,031 per share, is clearly in contravention of article 37 of the articles of association and the order of the Company Law Board is vitiated for not taking note of the specific provision. 3. Brief facts leading to the above appeal are that the company petition before the Company Law Board has a history, in the sense that in respect of the very subject-matter the appellant had approached this court earlier by filing Company Petition No. 77 of 1989 [Devaraj Dhanram v. Firebricks & Potteries (P.) Ltd. [1999] 96 Comp. Cas. 361 1 (Kar.)], under the provisions of sections 397 and 398 of the Act. This petition, though was pending for more than eight years before this court, was ultimately disposed of, inter alia, observing that it is open to the petitioner therein, the very appellant herein, to withdraw the petition with liberty to re-institute the same before the Company Law Board by or before 30-11-1998, as per order dated 9-11-1998 [Devaraj Dhanram's case (supra)]. It is thereafter, the present company petition has its birth before the Company Law Board and had received atte....
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....tter of respondent Nos. 2 to 5 addressed to the company about their proposal to sell shares in favour of the sixth respondent at the price indicated and to elicit response from other shareholders, more particularly from the appellant-petitioner about the willingness on their behalf to buy the shares at this price, in the wake of the pre-emptive right the appellant-petitioner and other shareholders had as per article 37 of the articles of association of the company, is only a pretence and only a device to show that the requirement of article 37 of the articles of association of the company had been complied with. 7. It is submitted by Sri B. Ramesh that the entire drama of offering the shares to the appellant-petitioner had been preceded by an agreement between respondent Nos. 2 to 5 on the one hand and the sixth respondent on the other hand wherein the sixth respondent had made an offer to buy the share at a price of Rs. 7,031 per share and it is only thereafter the offer was made in favour of the present appellant, and, therefore, it was in fact and in spirit, there was no offer for pre-emptive purchase in favour of the appellant-petitioner and the alleged transfer is also not in....
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....hareholder would face considerable practical problems, an option was given to the appellant-petitioner to sell out his shares, also at the price as had been arrived at by the parties for the sale of complained number of shares or as determined by an independent valuer at the option of the appellant-petitioner, for which purpose the appellant-petitioner has not put forth any offer, and therefore the Company Law Board is right in holding that the appellant-petitioner has not made out the allegation of mismanagement and therefore submits that there is no merit in this appeal and it is to be dismissed. 11. We have examined the impugned order, perused grounds in support of the appeal, submissions made at the Bar and the records. 12. We find that the appeal though had a considerable history, the short question is as to whether there was compliance with article 37 of the articles of association of the company and if there is any violation, as to whether the violation further leads to an inference resulting in an act of oppression or suppression? 13. This is not even the case of the appellant-petitioner, even in respect of violation of article 37 of the articles of association of the co....
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....n the offer was made to the appellant-petitioner at Rs. 7,031 per share, it was not a reasonable offer, as the shares had not been properly valued. While complaining of higher valuation on one hand, on the other, he is complaining that the sale in favour of the sixth respondent is not a valid sale, because the company had not offered the shares to public at large or had not invited offers from the public at large, which would have fetched a better price than what is offered by the sixth respondent and it would be to the benefit of the existing shareholders and therefore the sale in favour of the sixth respondent is also bad. This dual or conflicting stand adopted by the appellant-petitioner only indicates that, while on the one hand when it comes to buy shares by himself, to exercise pre-emptive right, the appellant-petitioner complaining of higher price and when it comes to the examination of the question of transaction in favour of the sixth respondent, the appellant-petitioner is complaining of under-valuation of shares. This is nothing but blowing hot and cold at the same time, which reflects on the conduct of the appellant-petitioner, who has not really availed of the pre-empt....