IN THE SUPREME COURT OF INDIA
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
PVT. LTD. & ORS. ... RESPONDENTS
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. 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
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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.