TaxTMI 
TaxTMI 
2025 (11) TMI 1357
X X X X Extracts X X X X
X X X X Extracts X X X X
....er (Judicial)] In the instant case, the Appellant has preferred two Company Appeals being Comp App (AT) (CH) No.70/2025, as well as Comp App (AT) (CH) No.72/2025, which are interconnected. 2. Since the issue involved herein is confined to a very narrow compass, and is more or less common to both the Appeals, hence they are being decided together for the reason being that, if one of the appeals is adjudicated, connected Company Appeal, would automatically stand answered. 3. The Comp App (AT) (CH) No.70/2025, would be taken up as the lead company appeal. Precise facts, that engage consideration are, that a Company Petition, being the Company Petition/CA/96(CHE)/2023, stood initiated by the Appellant before the NCLT, Chennai Bench, which was accompanied with an Application that was preferred, under the proviso to Section 244(1) of the Companies Act, 2013, to be read with Rule 11 and Rule 83A of NCLT Rules, 2016, seeking a waiver from the requirements specified in Section 244(1)(a) for the purposes of initiating proceedings under Section 241 and 242 of the Companies Act, on the ground that, she is a minority shareholder holding 5.98% of shares. 4. In the Application, thus p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ant Company Appeal is the one which has emanated from the Impugned Order dated 05.03.2025, which has been passed by the Learned NCLT. The said order is extracted hereunder:- "Ld. Sr. Counsel Mr. P.H. Arvindh Pandian is present for the Petitioner. Ld. Counsel Mr. Santhakrishnan is present for the Respondent no.1 Ld. Counsel Mr. Gautam Raman is present for the Respondent. Case Heard. We find that the parties are not in agreement with the valuation submitted by the Valuer and therefore the exercise of providing an exit to one of the parties is futile at this stage. Therefore this Court finds the Application has to be decided for maintainability / waiver u/s 244 of CA, 2013. List the petition for physical hearing, top of the list, on 04.06.2025". 6. On a simpliciter reading of the observation, that, has been made by the Learned NCLT in the Impugned Order, it could be very easily derived that, there had been disagreement interse between the parties qua the valuation of the 1st Respondent Company, that exercise of exit option is possible only when valuation is mutually agreed upon and that therefore no purpose will be served by proceeding further in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed for an objection to the application preferred under Section 244 of the Companies Act, in order to facilitate the Tribunal to decide the Application under Section 244 on merits, before the right of the Appellant is crystallized to be considered about the sustainability of the proceedings at her behest, owing to the embargo of not holding the threshold percentage of shares for maintaining the proceedings under Section 241 and 242 of the Companies Act, 2013. Counter was filed and in response there to the rejoinder, too was filed. Thereafter 06.12.2023 was fixed for hearing argument on the issue of maintainability of the Company Petition. 8. The issue that now becomes relevant to be considered for us is that, in the order passed by the Tribunal on 20.12.2023, the finding was recorded that, the Applicant is willing to exit the company, if right price is offered for the shares and that both the counsels have agreed that they would discuss amongst themselves and find out a valuer for the purpose of valuing the shares and report back to the Tribunal. In the proceeding, which was held on 08.01.2024, it was agreed that the petitioner will recommend will the valuer's name to the Tri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....etition, pending consideration before the Learned Adjudication Authority. They have submitted that since the right of the Appellant is yet to be crystallised by the Learned Adjudication Authority, the Company Appeal would not lie, and even though as per the provisions of Section 421 of the Companies Act, the Appeal against an order of Learned Tribunal, is maintainable, the term "order", will always denote an order which decides the right of a party on merits, which in the instant case is yet to happen, and therefore an appeal against an order given at an interlocutory stage, which itself is procedural in nature, would not be maintainable. 13. The question, which emerges for consideration for us, as pressed upon by the Learned Counsel for the Appellant is whether by permitting the request to appoint a valuer and to obtain the valuation report, by accepting the same on record, and letting the parties to the proceedings to file their objection and to exchange their affidavits confirming the offers made by them before 28.02.2025, which has been recorded in the proceedings held by the Tribunal on 25.02.2025, Learned Tribunal has expressed his opinion on merits as if it is proceeding ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e member holding less than one tenth of the issued share capital of the company, except in cases where an waiver is obtained under the proviso to Section 244(1)(a). The process and procedure contemplated under the proviso to Section 244(1) of the Companies Act, 2013 has to be mandatorily followed, so as to override restrictions of Section 244(1)(a) of the Companies Act and an applicant to the proceedings under Section 241 of the Companies Act, can override the restrictions imposed by Sub-Section (1) of Section 244 of the Companies Act, only after the adjudication made by the Tribunal, by passing of an order of waiver on merits, under the proviso, which the Appellant has sought for by filing of an specific application in that regard before the Tribunal. 15. In the instant case, the process so far adopted till the order of 05.03.2025 emanating out of consensus between the parties and also from the act of exercise of discretion by the Tribunal, in order to find a mutually acceptable solution to the controversy, cannot be interpreted as allowing of the application for waiver, as it has been attempted to be read by the Appellant, so as to press for adjudication of proceedings under S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the valuation report prior to recording the finding to decide the application of waiver under Section 244 of the Companies Act, is absolutely a misconception, for the reason being that at the stage when the valuation report was called it was with the consent of the parties and which was accepted on record by consent and that it was not an act or procedure that was contemplated under law, but rather, an exercise of a discretion or an equity by the Tribunal to find an amicable settlement. 17. Accordingly it has to be held that the provision of waiver contemplated under the proviso to Sub-Clause (a) of Sub-Section (1) of Section 244, is intended to override the restriction that has been imposed by Sub-Clause (a) of Sub-Section (1) of Section 244 of the Companies Act, before the petition is made maintainable, and that any statutory obligation which has been required to be satisfied by passing of a statutory order which is procedurally contemplated under law, cannot be overridden by any Interlocutory proceedings or by an order of the Tribunal as in the instant case of calling for the valuation report, that too based upon the consent of the parties to the proceedings. 18. There wou....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the contents of para 41, which are extracted hereunder, may not be applicable under the facts and circumstances of the instant case. "41. The appellant has on the basis of section 634A of the old Act stressed that this was an order required to be treated as a decree made by court in a suit pending. We have already noted the judgments relied on by the appellant but when we examined this order of the Company Law Board, it could be seen that the Company Law Board had itself directed the valuer to determine the fair valuation of the shares within a period of 30 days and "thereafter" the valuer was required to hear objections, if any, of both the parties within 15 days and "thereafter" submit final valuation report to the original respondent No. 1-company, to the petitioners and to the Company Law Board within further period of 15 days from the hearing of the objections of the parties. It was not an order which stated that the valuation report of the valuer, once submitted, shall be treated as final and the petitioners shall transfer their shares to the respondents without demur. When the valuation report is prepared and submitted, the party had a right to address the Company ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erit and the same accordingly deserves to be dismissed. 21. In the connected Company Appeal, being Comp App (AT) (CH) No.72/2025, the challenge has been given by the Appellant to the Impugned Order of 16.04.2025, which has been passed in IA(CA)/68(CHE)/2025, by virtue of which the order of 05.03.2025, passed in CP/(CA)/96(CHE)/2023, is being marginally modified, recording the correctly the contends of para 8(a) of the affidavit which was filed by 1st Respondent in the proceedings on 28.02.2025, that, "the Respondents are in agreement with the valuation carried by the Hon'ble NCLT appointed valuers". In the order of 05.03.2025, Learned NCLT has recorded that "we find that the parties are not in agreement with the valuation submitted by the valuer". However, in this order dated 28.02.2025, Learned Tribunal had recorded that "counsel for 1st Respondent stated that he would like to strictly abide by the valuation given in the valuation report". Therefore, based on the application by 1st Respondent and based on the averment made by him affidavit filed on 27.02.2025, Learned Tribunal directed that the rectification to be carried to the effect that "Respondents in the main appeal had a....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., which was put to challenge by the Appellant at any stage of time, which means that it was an order obtained by consent. 7. The order sheet reflects that the submission of the valuer's report was the fact, which was admitted by the parties, owing to the finding, which has been recorded in the order sheet. But it will not automatically lead to the inference that, it will have a consequential effect of allowing of an application under Section 244 of the Companies Act, which itself is an independent proceeding in its own, which has to be decided being a condition precedent, to be decided before a right is fructified of the Appellant to sustain the proceeding is fructified under Section 241 and 242 of the Companies Act, 2013. 8. The order of rectification of the Impugned Order of 05.03.2025, which is the subject matter of consideration of the accompanying Company Appeal of 72 of 2025, was absolutely justified owing to the recordings in the order dated 28.02.2025 and the averment made in the affidavit of 1st Respondent and the fact of Appellant along disagreeing with the valuation report which were in contradiction with the finding inadvertently recorded by the Tribun....