TaxTMI 
TaxTMI 
2021 (10) TMI 596
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....s. 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 established. Respondents Nos. 1 and 2-Mr. Pralayankur Roycho....
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.... 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 and 8-Mr. Shibaankur Roychowdhury and M. P. Jewellers (Calcutta). (B) Company Appeal (AT) No. 1....
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....nal 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 National Company Law Tribunal that to have better control over the business memorandum of understanding was entered....
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....bsp; 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. Appeal No. 100 of 2019 Pralaynkur Roychowdhury and Ors. . . . Appellants v. M. P. Jewellers and Co. (1945) P. Ltd and Ors. . . . Respondents 8. Against the impugned order in Company Appeal (AT) No. 141 of 2020 it has been argued and the grievances of these appe....
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....nning 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 without quorum with regard to the company. The article requires that two-third of the directors should remain present in person and two-third of the directors would constitute the quorum. This makes it necessary that four out of the five of the brothers should be present for holding of board meeting....
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....ight 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 that it was erroneous on the part of the learned National Company Law Tribunal to think that all relevant material was on record. It is also argued that no case of oppression or mismanagement was made out by the original petitioners. It is also argued that the learned National Company Law Tribunal fell in error in....
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.... 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 National Company Law Tribunal and other Tribunals were finding out ways to adopt the system of virtual hearing. The impugned order shows that the original petitioners had moved the application through video conferencing upon notice to the respondents and had pleaded for urgent hearing of the un-numbered application. The impugned order shows that when the un-numbered applica....
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....eport 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 the minutes of the meeting held by the learned Special Officer on December 11, 2019, December 13, 2019 and December 18, 2019 and collectively marked as annexure 'C' with this application. Upon receiving the valuation report from M/s. L. S. I. Financial Ser vices P. Ltd. (annexure 'D' to this application), the learned Special Officer has filed the same along with his report (annexure 'E'....
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....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's objection. When ever there is a valuation done, the valuation order implies that the parties agree to buy and sell. The order dated December 3, 2019 did not dispose of the application. The application is pending. Nobody challenged the valuation, appointment of valuer, etc. For directing buying out and selling out on the basis of valuation report, no consent is required because when the valuation order is made, order is made for the purpose of i....
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....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 the report of valuation is not binding on them. There are no averments in the application as to why the valuation done by the independent valuer is faulty. In fact, the valuer's report is unchallenged on merits and the only ground for challenging the valuation is that the respondents did not get adequate opportunity to give names of valuers. This objection is also found devoid of any merits. The Special Officer's records pertaining to valuation annexed with....
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....d 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) : "The proposition laid down in the cited decision is squarely applicable to the case in hand. By partly upholding the view of the Company Law Board that 'in view of the strained relationship between both the rival groups, one of them should quit the JV Co., by selling its shares to the other group but it was not justified in directing the appellant's group to sell their shares in favour of the respondents' group at the price to be determined by the independen....
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....at 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 shows justification in the observations of the National Company Law Tribunal that there was a deadlock and that there is a litigation instinct. The appellants are critical of the Special Officer appointed by the learned National Company Law Tribunal (who was appointed to ensure smooth holding of board meetings) and took opportunity to file even against such Special Officer a contempt application. The impugned order shows that when the original respondents did not co-operate in namin....