TaxTMI 
TaxTMI 
2019 (1) TMI 1692
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.... in the separate escrow account with HDFC Bank, Bhavnagar Branch. (b) That, pending hearing and final disposal of IA No. 127/2018, the Respondents be ordered and directed to forthwith submit to the Bench a Bank Guarantee, Bond or such other document as may be considered by the Hon'ble Tribunal to be suitable or necessary for securing /enforcing payment by the Respondent of the balance amount towards consideration. 2) The instant application is arising out of Company Petition filed by the Applicant / Original Petitioner under the provisions of section 241 r.w. section 244 of the Companies Act, 2013 (hereinafter referred to as "the Act") with one of the prayers, seeking restriction in the form of injunction upon the Respondent from transfer of shares of the Petitioner in view of exit offer made by the Respondent on 30.03.2017. 3) In view of reaching amicable solution between the parties, this Bench passed an order on 12.10.2017 in C.P. No. 69 of 2017 on the basis of consent terms entered into between the parties, wherein in Paragraph no. 4 sub paragraph no. 1, it was agreed that, a valuer would be appointed to carry out the valuation of the business of the Respondent No. 1....
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....ending and without adjudication of those interlocutory application as well pursis for withdrawal, no such order could be passed for release of the sale consideration, deposited by the Respondents in Escrow Account with the HDFC Bank that too without acceptance of Respondents' offer u/s. 236 by the petitioners / applicants herein unconditionally and without depositing original share certificates along with necessary legal documents in respect of the offer. Mr. Saurabh Soparkar, Senior Advocate appearing on behalf of the respondent has also brought to the notice, that in para 33 of the original petition No. 69 of 2017 filed by way of an affidavit, that as a general principle, for any contract of sale and purchase of shares, there has to be an offer and acceptance of such offer and the shares of the Respondent No. 1 company are the assets of the petitioners and it cannot be acquired at a price which is not agreeable to the petitioners. He has further drawn attention to para 31 of the original petition, stating that section 236 is not forced buy out at whims and fancies of the majority shareholders. It indicates that the consent to the fair value price by minority is essential. A....
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....Advocate for the Respondents further submitted that the Original Respondents No. 1 to 4 filed an IA No. 127/2018 stating inter alia that the valuation report dtd. 25.01.2018 prepared by 'Deloitte' is hit by fraud and ought to be set aside to which the petitioners and Deloitte had filed their respective affidavit and objected the Interlocutory Application No. 127/2018. In counter, the Applicants had also filed affidavit in Rejoinder to their objection. It is also pertinent to mention that the said application is pending for final adjudication. It is further submitted that in pursuant to order dated. 17.07.2018 passed in CP No. 69/2017, the Respondents Nos. 01 to 04 herein have deposited Rs. 5,95,00,000/- (Rupees Five Crores Ninety-Five Lakhs only) towards share price consideration in separate escrow account with HDFC Bank, Bhavnagar Branch relying on their own valuation, to show their bona fide. 6) Heard both sides at length. Also seen the records and the documents annexed therein. Before deciding IA 389/2018 and coming to the conclusion, I find it appropriate to refer and summarize some important events chronologically which have bearing in the adjudication / disposal of ....
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....ted that despite the said fact, the petitioner group has filed a frivolous petition under section 241 r.w. section 244 of the Companies Act, 2013, alleging oppression and mismanagement by the respondent company, based on past event, which otherwise never challenged by the petitioner group. 12) During the pendency of proceedings in CP No. 69 of 2017, the parties agreed to resolve the dispute amicably. That, in order to bring an end to the dispute, the parties entered into a consent terms to show their bona fide, wherein it was agreed by parties to appoint an independent valuer for the purpose of carrying out valuation of the business of the Respondent No. 1 Company. 13) Accordingly, vide order dated 12.10.2017, this Bench appointed independent valuer on the basis of agreed upon terms. For the sake of convenience, the terms are reproduced herein below: - a. It is agreed by and between the parties to the petition that in order to bring an end to the matters raised in the petition, the shares held by the petitioners in the Respondent No. 1 Company ("the company") shall be purchased by the respondents at a value to be determined by the Independent Valuer on the following terms: ....
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....siness of the 1st Respondent Company, Madhu Silica Private Limited as on 31st March, 2017. d. The Valuer shall complete the entire exercise of valuation of the business of the company within 10 weeks from the date of this order. e. Both the parties shall provide necessary documents, data and information to the Valuer within 10 days of service of notice on them by the Independent Valuer. f. The Independent Valuer shall submit the valuation reports in three originals to the Registrar of this Tribunal in a sealed cover and the over shall be opened on 22nd December, 2017 in the open Court. Thereafter, this Tribunal will pass appropriate orders for the exchange of shares / consideration by fixing a time line. 14) In view of the above order the independent Valuer namely Deloitte Touche Tohmatsu Limited, Ahmedabad is appointed who filed its valuation report on 25.01.2018, the copy of the same is also furnished to the respondents as well as petitioners. 15) Being aggrieved by the valuation report dated 25.01.2018 filed by the Independent Valuer, the respondent (s) no. 1 to 4 filed IA 127 of 2018 on 06.04.2018, strongly objecting to the said valuation report and alleged the fra....
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....e applicant on one hand and respondent on another hand with regard to valuation of shares and therefore there was no possibility to give mutually agreed upon projection of the company. Yet Independent Valuer insisted for mutually agreed upon projection of the company to be submitted to them. And thereafter avoided to apply one of the internationally accepted and commonly followed method namely Discounted Free Cash Flow (DCF) Methodology. Offering the absence of details of mutually agreed upon projection of the company as an excuse / pretext. The Applicant had furnished data of future prospect of the company as per their perception. I say that if perception offered by the applicant was not acceptable to Independent Valuer, Independent Valuer should have given reasons for non- acceptance. Even otherwise, Independent Valuer could have carried out exercise on its own by gathering data from other sources with regards to Precipitated Silica Industries. Independent Valuer has not given any reason why Independent Valuer has not carried out exercise on its own for collection of data. This was minimum expected from an Independent Valuer. Independent Valuer could have informed NCLT that in th....
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....ch communication by the petitioner, relied upon those material, without giving any opportunity to the respondent (s) to be heard and/or clarify their stand. 17) It is further alleged that the valuer unilaterally arrived at the price of Rs. 20,429/- per share which appears to be calculated in a fraudulent manner. It is submitted that the said valuation report is prepared in contravention of provisions of Law as it is the obligation on the part of the valuer to apply provisions of Rule 27 of the companies (compromise, arrangements and amalgamation Rule 2016) for the purpose of preparing a valuation report. 18) During the pendency of IA 127 of 2018, with a view to put an end to the controversy of valuation report, respondent (s) filed a purshis on 20.10.2018 for withdrawal of original offer made under Section 236 of the Companies Act. 19) It is submitted by the respondent that, according to the provisions of Section 236 of the Companies Act, 2013, purchase of minority shareholding has to be completed within a period of one year. That in the present case, admittedly the offer was made on 30.03.2017 and transaction ought to have been completed on or before 30.03.2018 as required u....
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.....07.2018 which is against established principle of law. 24) Further, the petitioner, in view of getting ride over of the dispute of valuation report dated 25.01.2018, filed pursis for withdrawal of original offer under Section 236 of the Companies Act, which cannot be ignored, especially when, as per Section 236 of the Companies Act 2013, purchase of minority shareholding has to be completed within a period of one year. Section 236 of the Companies Act, 2013 is reproduced here below: - Purchase of minority shareholding: "236. (1) In the event of an acquirer, or a person acting in concert with such acquirer, becoming registered holder of ninety per cent or more of the issued equity share capita/ of a company, or in the event of any person or group of persons becoming ninety per cent majority or holding ninety per cent of the issued equity share capital of a company, by virtue of an amalgamation, share, exchange, conversion of securities or for any other reason, such acquirer, person or group of persons, as the case may be, shall notify the company of their intention to buy the remaining equity shares. (2) The acquirer, person or group of persons under sub section (1) shal....
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....s from the date of majority acquisition or majority shareholding. (8) Where the shares of minority shareholders have been acquired in pursuance of this section and as on or prior to the date of transfer following such acquisition, the shareholders holding seventy-five percent or more minority equity shareholding negotiate or reach an understanding on a higher price for any transfer, proposed or agreed upon, of the shares held by them without disclosing the fact or likelihood of transfer taking place on the basis of such negotiation, understanding or agreement, the majority shareholders shall share the additional compensation so received by them with such minority shareholders on a pro rata basis. Explanation- For the purposes of this section, the expressions "acquirer" and "person acting in concert" shall have the meanings respectively assigned to them in clause (b) and clause (e) of sub- regulation (1) of regulation 2 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. (9) When a shareholder or the majority equity shareholder fails to acquire full purchase of the shares of the minority equity shareholders, the....
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.... section 236 of the Act, the registered valuer shall determine the price (hereinafter called as offer price) to be paid by the acquirer, person or group of persons referred to in sub-section (1) of section 236 of the Act for purchase of equity shares of the minority shareholders of the company, in accordance with the following rules:- (1) In the case of a listed company,- (i) the offer price shall be determined in the manner as may be specified by the Securities and Exchange Board of India under the relevant regulations framed by it, as may be applicable; and (ii) the registered valuer shall also provide a valuation report / basis of valuation addressed to the Board of directors of the company giving justification for such valuation. (2) In the case of an unlisted company and a private company, (i) the offer price shall be determined after taking into account the following factors: - (a) the highest price paid by the acquirer, person or group of persons for acquisition during last twelve months; (b) the fair price of shares of the company to be determined by the registered valuer after taking into account valuation parameters including return on net worth, book....