Vinod Kumar Vs. M/S.
Singmalon Equipment Pvt. Ltd.& Ors. [2008] INSC 1586 (17 September 2008)
Judgment
CIVIL APPELLATE
JURISDICTION CIVIL APPEAL NO.5729 OF 2008 (Arising out of SLP(C)No.3378 of
2006) VINOD KUMAR ... APPELLANT VS.
M/S. SINGMALON EQUIPMENT
WITH CIVIL APPEAL NOS.5730-5731 OF 2008 (ARISING OUT OF SLP(C) NOS.14366-14367
OF 2007)
O R D E R Delay
condoned.
1.
Leave
granted. Heard learned counsel for the parties. For convenience, we will refer
to the parties by their rank in the first matter. Application for deleting the
name of the deceased second respondent in CA No.5729/2008 is allowed as his LRS
(respondents 3 to 5) are already on record.
2.
These
appeals relate to a dispute between the appellant (a shareholder and director
who holds 40% of shares in the first respondent company) and the other share
holders (respondents 2 to 5 - appellant's brother 2 and his family) and
directors of the said company who hold 60% of the shares. In the year 1998, the
appellant filed a petition under section 397 and 398 of the Companies Act,
1956, alleging oppression, and mismanagement. By orders dated 20.8.1999,
3.11.1999 and 1.5.2000, the Company Law Board (`Board' for short) gave an
option to the appellant to sell his shares to respondents 2 to 5 Group at a
price fixed by an independent valuer. On exercise of the option by the
appellant, M/s Price Waterhouse Coopers were appointed as the valuer for
determining the fair value of shares, based on the balance-sheet as on
31.3.1998. The valuer submitted a Report on 13.12.2001 valuing the shares at
Rs.2044/- per share. On objections by both, the Board directed fresh valuation.
The valuer reiterated its earlier valuation. Thereafter, the Board by its order
dated 05.05.2003, accepted the valuation and held that the second respondent
group will purchase the shares held by the appellant-Vinod Kumar at Rs.2044/-
per share. As the appellant held 7,420 equity shares of Rs.100 each the Board
arrived at the amount payable for the shares as Rs.1,51,66,480/-. It also directed
that the payment should be made to the appellant positively by 31.7.2003. The
Board directed the first respondent company to pay the arrears of
salary/perquisites to the appellant for the period upto 31.3.2002. That order
of the Board was 3 challenged by both the parties before the High Court. The
appellant did not receive any payment either towards value of shares or towards
salary and perquisites.
3.
The
High Court disposed of the appeals by common order dated 16.06.2005. It set
aside the valuation on the ground of bias. It directed the revaluation as on
31.3.2005. It held that appellant is entitled to remuneration and perquisites
till date of valuation of shares and payment thereof.
4.
Not
being satisfied with the said order dated 16.6.2005 of the High Court, both
sides have filed these appeals by special leave. When the matter came up today
learned counsel for the appellant submitted that there has been complete change
in the circumstances after the appeals were filed as the respondents 2 to 5
Group in control of the first respondent company had virtually sold all the
movable assets. He therefore submitted that the grounds that were urged by the
appellant in support of his appeal to contend that the date of valuation should
not have been shifted from 31.3.1998 to 31.3.2005 no longer survived and it is
therefore necessary that relief should be moulded by taking note of all the
subsequent events and the situation as it exists today. He submitted that all
4 acts of the respondents 2 to 5 group, which was referred to by him as acts of
oppression and mismanagement and all acts subsequent to his petition should be
considered in the correct perspective for grant of relief. The appellant has
also filed an application (IA No.2/2007) to change the date of valuation to the
current date, for release of salary and perquisites and for declaration of
certain Board resolutions as null and void.
5.
The
fact that there is a change in circumstances is not disputed by the
respondents. The learned counsel for the respondents (majority group holding
60% shares) however submits that any change in circumstances is due to passage
of time, natural course of events and the decisions taken by the Board of
Directors in the usual course of business and the appellant can have no
grievance in the matter. He however stated that the respondents have no
objection for re-examination of the entire matter by the Board.
6.
In
view of the changed circumstances and in view of the submission of the
appellant that the grounds urged by him for challenging the alteration of date
of valuation as 31.3.2005 no longer exists, and the challenge to the order of
the Board and the order of the High Court by both 5 parties, we consider it
appropriate to set aside the order of the Company Law Board dated 5.5.2003 and the
order of the High Court dated 16.6.2005 and remand the matter to the Board for
reconsideration and fresh appropriate decision by taking note of all events
which have taken place till now and the facts and circumstances as they exist
today, in accordance with law. The appeals of both sides are allowed in part
accordingly, leaving open all contentions. All pending applications stand
disposed of.
7.
The
appellant is at liberty to raise the issue of salary and perquisites payable to
the appellant from 1.10.1999, also before the Board. As the matter has been
pending for a considerable time and the very pendency has led to the change of
the circumstances, we request the Company Law Board to dispose of the matter
expeditiously.
Both the parties
agree to appear before the Company Law Board without further notice on
13.10.2008 and take further order from the Board.
............................J.
(R.V. RAVEENDRAN)
............................J.
(LOKESHWAR SINGH PANTA)
NEW
DELHI,
SEPTEMBER
17, 2008.
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