TaxTMI 
TaxTMI 
2021 (10) TMI 596
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.... Nos. 3 And 4 In Company Appeal (AT) Nos. 141 And 123 of 2020 : Joy Saha , Senior Advocate, with Rajarshi Dutta , V. V. V. Sastry , Ms. Wamika Trehan and Tridib Bose For Respondents Nos. 3 And 4 In Company Appeal (AT) Nos. 141 And 123 of 2020 : Sanjay Gupta , Rahul Joshi and Rohit Keshari , (Company Secretary) For The Appellants In Company Appeal (AT) No. 123 Of 2020 And For Respondents Nos. 5 And 8 In Company Appeal (AT) No. 141 of 2020 : P. Nagesh , Senior Advocate, with Ashutosh Gupta , Ratnankur Roy , Akshay Sharma and Gaurav Rana For Respondent No. 6 In Company Appeal (AT) Nos. 141, 132 And 123 of 2020 : Krishnendu Datta , Senior Advocate, with Sholab Arora , Kunal Mimani and Kunal Vajani For Respondents Nos. 4 And 7 In Company Appeal (AT) No. 132 of 2020 : P. Nagesh , Senior Advocate, with Ashutosh Gupta , Ratnankur Roy , Akshay Sharma and Gaurav Rana For Respondents Nos. 5 And 8 In Company Appeal (AT) Nos. 132 And 123 of 2020 : Dinesh Agnani , Senior Advocate, with Ms. Leena and Tuteja JUDGMENT A. I. S. CHEEMA J. (OFFICIATING CHAIRPERSON).- 1. These appeals are arising out of litigation between five brothers and the company and partnership firms estab....
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.... in part upon the following orders : (i) The reserve price of share value of one equity share is fixed at Rs. 277 based on the valuation report ; (ii) The petitioners group and respondents group each shall quote respective price for buyout/sell out which shall be higher than Rs. 277 per shares of respondent No. 1, in a sealed cover with in one week from the date of this order before the Tribunal, with due intimation to the Registrar, National Company Law Tribunal, Kolkata, preferably on or before 3 p.m. on August 12, 2020 ; (iii) The group quoting is price higher than the one quoted by the other group shall have first option to buy the shares of the group quoting the lower price and the group quoting higher price to purchase the shares of other group quoting lower price and the group quoted lower price shall transfer the shares to the successful bidder. Unnumbered I. A. No. . . ./KB/2020 in C. P. No. 492/KB/2017 is allowed in part listed on confirmation of bidding and for hearing the CP along with the pending applications on August 14, 2020." 3. (A) Company Appeal (AT) No. 141 of 2020 is filed by original respondents Nos. 4 a....
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.... set up several branches. The petition then refers to litigation started against the original petitioners by original respondents Nos. 2 to 4 and filing of suit before Civil Judge Senior Division, Alipore and obtaining ex parte order. The petition refers to litigation and as to how the original petitioners were now not being made part of the board meetings and balance-sheets were being settled without notice to the original petitioners. For such and other reasons, the petition claimed oppression and mismanagement on the part of the respondents. 6. We now refer to defence raised by contesting respondents in National Company Law Tribunal. Original respondents Nos. 1 to 4, 6, 7 and 8 filed reply in the petition as at annexure A3, page 192. The fact about how the family patriarch started the proprietorship business which converted into the company and the fact that the trademarks "M. P." and "M. P. Jewellers" have gained substantial goodwill is claimed by the original respondents. It is stated that these trademarks are registered with the company. The floating of partnership firms by the brothers is also not in dispute. It is stated by the respondents in the reply before the learned....
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....bsp; v. M. P. Jewellers (G. B.) and Co. and Ors. . . . Defendants 5. In the court of learned 9th Civil Judge (Senior Division) at Alipore Title Suit No. 1314 of 2018 Topaz Advertising Services . . . Appellants v. Rudrankur Roychowdhury and Anr. . . . Respondents 6. In the High Court at Calcutta C. O. No. 486 of 2018 Biplabankur Roychowdhury and Ors. v. M. P. Jewellers (G. B.) and Co. and Ors. 7. In the court of learned 6th Civil Judge (Junior Division) at Alipore Title Suit No. 343 of 2019 M. P. Jewellers and Co. (1945) P. Ltd. . . . Plaintiff v. Pralaynkur Roychowdhury and Ors. . . . Defendants 8. In the court of learned 6th Civil Judge (Junior Division) at Alipore Misc. Case No. 59 of 2019 (Arising out of Title Suit No. 343 of 2019 M. P. Jewellers and Co. (1945) P. Ltd. . . . Plaintiff v. Pralaynkur Roychowdhury and Ors. . . . Defendants 9. In the court of the learned District Judge at Alipore Misc. Appea....
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....porting the impugned order and claimed that the company which was to carry on various aspects of jewellery business in terms of the memorandum of understanding dated April 7, 2009 the same was for limited duration which expired by afflux of time on July 31, 2011. It is claimed that company has no running business and the only asset is five registered trademarks which are licensed to the five branches against which the company earns nominal license fee every year. Apart from that the company has some nominal fixed deposits. Respondents Nos. 1 and 2 (original petitioners Nos. 1 and 2) are 40 per cent. shareholders in the company while the other brothers hold 60 per cent. shares. Based on the memorandum of understanding, the respective appellants in these appeals initiated proceedings against the original petitioners and obtained ex parte orders which order ultimately merged in the order of District Judge on January 31, 2018 and the interim orders were set aside and that it was held that the memorandum of understanding had expired by afflux of time. It is stated that as per article 53 of the articles of association of the company no business in the board of meetings can be transacted ....
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....ation arises. It is denied that the petitioners have done everything to build the brand value of M. P. Jewellers or its respective trademarks as alleged." Referring to this paragraph, respondents Nos. 1 and 2 (original petitioners Nos. 1 and 2) are submitting that even the respective appellants claimed right to exercise option to buy out the minority shares at fair value. Thus it is argued that no fault can be found with the impugned order which has been passed by the learned National Company Law Tribunal considering situation of deadlock between the parties, keeping in view the interest of the company. The order directing buy/sell shares is only with the object of bringing to closure the disputes between the parties. 10. It has been argued on behalf of respondents Nos. 3 and 4 (original respondents Nos. 1 and 2) (Company Appeal (AT) No. 132 of 2020) adopting the arguments of original respondents Nos. 4 and 8 that while dealing with and disposing the un-numbered I. A. so as to pass the impugned order principles of natural justice were not followed. It is claimed that these respondents were not given opportunity to file affidavit in reply to the I. A. which was filed and....
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....ated January 3, 2020. 11. These respondents claimed that the impugned order has been passed even without deciding such applications and it is claimed that the appointment of the valuer and valuation report are both bad in law and the same were in violation of orders dated December 3, 2019 of the National Company Law Tribunal itself. 12. Respondents Nos. 5 and 8 in Company Appeal (AT) No. 141 of 2020 (original respondents Nos. 3 and 7-Ratnankur Roychowdhury and M. P. Jewellers (JSK) and Co., in Company Appeal (AT) No. 123 of 2020) have also made similar averments against the impugned orders. 13. Respondent No. 6 (original respondent No. 5) and original respondents Nos. 1 and 2 (original petitioners Nos. 1 and 2) are supporting the impugned orders. 14. Now if the impugned order is perused the order shows as to how the present parties who are brothers have been litigating. The order has been criticised as un-numbered but it would be appropriate to record that impugned order shows that said I. A. was moved on July 24, 2020 through video conferencing. That was some time after, when Covid-19 affected the country in March, 2020 and lockdown had been imposed and the learned Nat....
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....res with an offer to buy back either to the respondent or he may buy the share. It is a family company and the petitioner and respondent cannot go together as it appears from the pleading. We direct the Special Officer to appoint valuer by taking names from petitioner as well as respondents of their choice. Valuer to value all shares in terms of prayer A of this application and file report within two weeks. Matter to come up on January 3, 2020." 16. Paragraph 8 of the impugned order then reads as under (page 233 of 228 Comp Cas) : "In compliance of the aforesaid orders the petitioners have suggested names of valuer to the learned Special Officer but the respondents did not give any suggestion for appointment of a valuer nor reverted on the petitioners' suggestion. Ultimately, the learned Special Officer on his own appointed M/s. L. S. I. Financial Services P. Ltd., having their office at Sagar Trade Cube, 5th Floor, 104, S. P. Mukherjee Road, Kolkata-700 026 requesting to submit report by December 30, 2019 to enable the Special Officer to file his report by January 3, 2020 before this Adjudicating Authority. The applicants-petitioners have annexed ....
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....sed by original respondents Nos. 3 and 7 that they were not heard. Paragraph 17 of the impugned order itself mentioned that no one appeared for original respondents Nos. 3 and 7. Written submissions of respondents Nos. 5 and 8 (original respondents Nos. 3 and 7) Diary No. 23583 show in paragraph "i" that their representative had sent e-mail to registry with copy to all parties on August 31, 2020 (should be August 3, 2020) about inability and furnished medical prescription and thus one-third of the respondents were not present. Thus they were aware. There is no reason why counsel could not appear. 18. The learned National Company Law Tribunal referred to the averments being made by the parties against each other and observed in paragraphs 19 and 20 as under (page 236 of 228 Comp Cas) : "Learned senior counsel Mr. Abhrajt Mitra, in his reply submitted that excepting respondent No. 5, all the respondents are objecting to this application. When the valuation report has been received, no one filed any objection to the valuation report. The respondents cannot object to buy out and sell out the shares because the valuation order was made on December 3, 2019 without anybody'....
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....he is filing another application for early hearing. Altogether six (6) application filed is pending for consideration. To have a better understanding of those I. As. pending for consideration, and for an eye view to understand the ligation instinct in the respondents not to exist from respondent No. 1-company by selling out their shares, or they themselves will not takes over respondent No. 1 buying the shares from the petitioners, even if a competitive price is arrived at upon conducting bidding between the parties, it is good to read some of the I. As." (emphasis supplied) 19. The learned National Company Law Tribunal after such observations referred to the manner in which the respondents had filed some of the I. As. and observed in paragraphs 22 to 23 as follows (page 237 of 228 Comp Cas) : "An overall screening of the pending I. As., I am unable to find out any serious objections raised on the side of the respondents challenging the valuation done by the valuer. What is under challenge is that valuer has not given an opportunity to suggest the name of the valuer at their instances and appointing the valuer by the Special Officer is against the direction and hence th....
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....h other better than me and their professionals. It is difficult to have a reunion when brotherhood between them is broken irrevocably. I am afraid they are controlled by their emotions despite the highs and lows of relationships between them. They want to add fuel to burning flame. In a situation brought out in the peculiar nature of the instant case why they disagree to buy the shares of the petitioners or selling out their shares to the petitioners not at a value fixed by the Tribunal or by the valuer, but in an auction in between them giving an opportunity to quote highest price to take over the company in their hand safely without any sort of interference from rival group of brothers ? No valid explanation is forthcoming from the side of the respondents. (emphasis supplied) 20. The learned National Company Law Tribunal relied on the judgment in the matter of Namtech Consultants P. Ltd. v. GE Thermometrics India P. Ltd. MANU/KARN/7403/2007 ; [2008] 141 Comp Cas 697 (Karn), passed by the hon'ble Karnataka High Court at Bengaluru for a way out in situation recorded above and taking a clue from observations in the said judgment observed as under (page 240 of 228 Comp Cas) : ....
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....the matter, what appellants of these appeals are, in the name of "principles of natural justice" seeking is that they should have been allowed to take their own time before National Company Law Tribunal acted upon the valuers report that had been received. The unnumbered I. A. was only to give further orders on valuation received. It is not that, for every application filed whole drill of reply affidavit, and rejoinder, etc., must be compulsory. The impugned order and record show that multiple I. As. were being filed by the respondents and the learned National Company Law Tribunal has found their conduct to be a litigation instinct. The learned National Company Law Tribunal which has been dealing with parties in the company petition has taken such view and it would not be appropriate for us to question the observations of the learned National Company Law Tribunal. In appeal also, the appellants instead of one appeal preferred to file multiple appeals although it appears that in the company petition original respondents Nos. 1 to 4, 6, 7 and 8 (brothers) filed common reply (annexure A3). Adding multiple I. As. in National Company Law Tribunal and multiple appeals here to the docket ....