2017 (11) TMI 1773

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....mon order dated 1st March, 2017 passed by National Company Law Tribunal (hereinafter referred to as "Tribunal") Chandigarh Bench, Chandigarh in Company Petition No. 49/2007, they were heard together and are being disposed of by this common judgment. 2. The brief fact of the case is that the Respondent- Gurlal Singh Grewal & Others (Appellants in Company Appeal (AT) No. 189 of 2017) -(hereinafter referred to as "Petitioners") preferred a petition under Sections 397 and 398 of the Companies Act, 1956 alleging 'Oppression and Mismanagement' against M/s. Upper India Steel Manufacturing & Engineering Company Limited (Appellants in Company Appeal (AT) No. 150 of 2017) and others (hereinafter referred to as "Respondents"). 3. The Tribunal by impugned judgment dated 1t March, 2017 while held that the Petitioners and Respondents cannot get along to decide the conduct of the business, disposed of the Company Petition with following orders and directions: - "A. As discussed in Para 1.2 above of the judgment, the alleged violators of section 314 namely, S. Gursimran Singh Grewal (R-3), S. Paramvir Singh Grewal (R-4), S. Saminder Singh Grewal (R-6), S.Mandeep Singh Grewa)....

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....the same within four weeks and Shall prepare a comprehensive/ speaking supplementary report dealing with each and every objection. Thereafter, the Valuer shall send final report to the parties. G. After determination of the value of the shares, the respondents 2 to 13 shall pay the amount to the petitioners, other than those who have withdrawn from the petition and whose application for withdrawal is pending (as per the petitioners' shareholding proportions) within 30 days thereof and upon receipt of the amount, the petitioners shall execute all the documents / deeds necessary for the transfer of the shares held by the petitioners of the company in favour of the respondents and/or their nominees within two weeks. H. In case, the respondents decline to purchase the' shares of the petitioners as aforesaid at the determined share value, the petitioners shall have the right to purchase the same from the respondents. The procedure and the time line as detailed above shall be followed. I. The remuneration of the Valuer shall be negotiated and paid by the company in three equal instalments. First instalment shall be paid on the commencement of valuation ....

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....en valuation is ordered. There is no liability to buy out before an order enabling buyout is passed, thus there can be no question of payment of interest from a prior date. 8. It was further submitted that there is no finding recorded that the Appellants were responsible for delay. In fact, the Hon'ble Tribunal did not consider the adjournments taken by the Petitioners/ Respondents and made the Appellants liable for payment of interest without any justification. 9. It was further submitted that the Tribunal failed to consider that Appellant Company is on-going concern engaged in the Steel Industry, and it is well known fact world over that the Steel Industry is highly volatile industry and has been struggling for many years. 10. It was also submitted that there was no question of any payment of interest till an order enabling purchase/buyout is made and thus, interest cannot run prior to any period of order, but could have only been ordered from the date of valuation till the date of payment. 11. The other ground taken is the date of valuation/ buyout should be the date of filing of the petition i.e. 31st March, 2007, which according to the Respondents/Appellants is....

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....d be as on the date of the order in facts and circumstances like in the instant case. 13. It was further submitted that the majority shareholder cannot be compelled to sell their shares. In support of submission, reliance has been placed on judgment of Hon'ble Supreme Court in "Dale and Carringtom Invt. (P) Ltd. and Anr. V. P.K. Prathapan & Ors., AIR 2005 SC 1624 Paras 22-24)". 14. On the 'other hand, according to the Petitioners (Appellants in Company Appeal (AT) No. 189 of 2017), the impugned judgment is bad as the Tribunal failed to notice various facts. 15. It was submitted that there are materials in support of allegations pertaining to two whole time directors being paid salary without discharging any duty whatsoever. 16. In this connection, we are of the view., that mere allegations that two whole time directors have been paid without discharging any duty ipso facto will not amount to 'Oppression and Mismanagement', till it is shown by placing evidence that such payment is detrimental to one or other member or against the interest of the Company. 17. Next it was contended that Shri Ashok Singh Garcha's family holds the largest shareholding ....

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....er is solely a business decision and cannot be interfered with. 28. In view of the aforesaid specific findings of the Tribunal and for the reasons mentioned in the preceding paragraphs, we reject the plea taken by the Petitioners (Appellants in Company Appeal (AT) No. 189 of 2007). In so far it relates to the relief granted by Tribunal, it is desirable to refer some of the provisions of the Companies Act, 2013. 29. The Company Petition in question was filed by petitioners before the erstwhile Company Law Board and was subsequently transferred under, Clause (a) of sub-section (1) of Section 434 of the Companies Act, 2013, which reads as follows: - "434. Transfer of certain pending proceedings. - (1) On such date as may be notified by the Central Government in this behalf, - (a) all matters, proceedings or cases pending before the Board of Company Law Administration (herein in this section referred to as the Company Law Board) constituted under sub-section (1) of section 1 OE of the Companies Act, 1956 (1 of 1956), immediately before such date shall stand transferred to the Tribunal and the Tribunal shall dispose of such matters, proceedings or cases ....