w w w . L a w y e r S e r v i c e s . i n



Bimal Kumar Agarwal & Others v/s Aarti Sponge And Power Ltd. & Others


Company & Directors' Information:- AARTI SPONGE AND POWER LIMITED [Active] CIN = U27102CT2004PLC016615

Company & Directors' Information:- B R SPONGE AND POWER LIMITED [Active] CIN = U27101OR2003PLC007028

Company & Directors' Information:- S R S SPONGE PRIVATE LIMITED [Active] CIN = U27102WB2004PTC099344

Company & Directors' Information:- J G SPONGE AND POWER PRIVATE LIMITED [Active] CIN = U27109DL2003PTC121655

Company & Directors' Information:- S. N. SPONGE PRIVATE LIMITED [Active] CIN = U27310MH2015PTC270853

    C.P. No. 129 of 2007

    Decided On, 26 July 2013

    At, Company Law Board Principal Bench New Delhi

    By, THE HONOURABLE MR. B.S.V. PRAKASH KUMAR
    By, JUDICIAL MEMBER

    For the Petitioners: U.K. Chaudhary, Senior Advocate, Sanjay Kumar, Srishti Jai Singh, Advocates. For the Respondents: Anju Jain, Parthiv J. Mehta, Advocates.



Judgment Text

1. The petitioners herein filed this application for implementation of order dated July 16, 2009, on the consent given by the parties that the petitioners would go out of the company on receipt of fair value of their shares, to be determined by an independent valuer and on return of unsecured loans on company and its sister concern, if any, and also on release of personal guarantees given by them in favour of the company/sister concern. They also agreed that M/s. Ernst and Young to be appointed to determine the fair value of the shares. Accordingly, this Bench appointed M/s. Ernst and Young to determine the fair value of the shares based on the balance-sheet as on March 31, 2007. The company would negotiate the fees payable to the valuer and pay the same. Both sides would provide whatever information that was needed by the valuer and were at liberty to make both oral and written submissions before the valuer. The valuer would take into consideration the submissions while determining the fair value of the shares. The valuation should be submitted latest by January 31, 2009. The company should serve a copy of this order on M/s. Ernst and Young to do the needful.

2. The petitioners together hold approximately 29.05 per cent, paid-up equity capital of respondent No. 1 company. The petitioners between May 7, 2006 to May 12, 2006, from Atlani and Modi group purchased these shares. The same was reflected in the annual general meeting held on September 30, 2006. In addition to the shares they acquired, they also furnished loans to the respondent-companies on various dates. The petitioners had advanced total unsecured loan of about Rs.3,41,40,000 (rupees three crores forty one lakhs forty thousand only) to the first respondent-company. They also furnished personal guarantees and collaterals to the Bank of Baroda so that respondent No. 1 company could avail various facilities from the bank.

3. In pursuance of the order dated July 16, 2009, M/s. Ernst and Young filed valuation report on December 20, 2009, determining the fair value of shares of respondent No. 1 company at Rs.40.40 per share. As the said report was not acceptable to the parties, this Bench directed the parties on October 6, 2010, to present their case on merits on the company petition. When this Bench passed the order re-opening the company petition, the respondents went in appeal before the hon'ble High Court of Chhattisgarh, whereupon, the hon'ble High Court of Chhattisgarh passed an order on December 5, 2011, Aarti Sponge and Power v. Bimal Kumar, [2014] 183 Comp Cas 134 (Chhattisgarh), which is as follows (page 145) :

"In view of the above discussion, we are of the considered opinion that the order dated July 16, 2009, is a consent order and it is binding upon the parties to the his unless it is challenged and the same is interfered with by the courts above. The matter is to be settled on the basis of the valuation report submitted by the independent valuer appointed by the order dated July 16, 2009, itself. The finding of the learned Member, Company Law Board in the impugned order dated October 6, 2010, that the issue of shareholding/actual paid-up capital is beyond the scope of the terms of reference to the valuer, is not sustainable. In our opinion, even if, there is no specific wordings used in the consent order dated July 16, 2009, in regard to shareholding/ actual paid-up capital, the valuer appointed by the consent order was required to furnish the valuation report after obtaining information that was needed by it and after considering the oral and written submissions made by the parties. Therefore, the whole dispute and subject matter involved in the company petition was required to be looked into by the valuer, while furnishing the valuation report. The effect of the impugned order dated October 6, 2010, directing the parties to present their case on merits on the company petition and all pending company applications would be reviewing the consent order dated July 16, 2009, which was passed by the Chairman of the Company Law Board after hearing counsel for the parties on July 14, 2009, which was not within the domain of learned Member of the Company Law Board.

If the valuation report was objected to by the parties, the objections could have been referred to the valuer for giving valuation report, including valuation of shares afresh, upon considering the objections or any other independent valuer could be appointed for furnishing valuation report afresh, considering the objections raised by the parties. But in any case for that purpose the consent order was not liable to be reviewed.

In view of the foregoing, the appeal is allowed. The impugned order dated October 6, 2010, is set aside. The Company Law Board is directed to pass appropriate order in Company Petition No. 129 of 2007, in accordance with law. The valuer may be directed to submit valuation report afresh after considering the objections of the parties or if need be so, some other independent valuer may be appointed for the purpose and thereafter the Company Law Board shall pass the final order having regard to the spirit of the consent order dated July 16, 2009."

4. Upon the appeal, the hon'ble High Court directed this Bench either to get a fresh valuation from the same valuer or appoint an independent valuer having regard to the spirit of the consent order dated July 16, 2009.

5. On the appellate order passed by the hon'ble High Court of Chhattisgarh, on February 20, 2012, this Bench appointed M/s. Rawla and Co., a chartered accountants' firm, to determine the fair value of the shares for respondent No. 1 company as follows :

"In view of the foregoing, in compliance with the order of the hon'ble High Court, another independent valuer namely. M/s. Rawla and Co., a chartered accountants' firm at No. 504, Surya Kiran, 19, K. G. Marg New Delhi-110 001 (Phone Nos. 41510425, 26, Mobile Sri Y. P. Rawla 9811464459) is hereby appointed to take up the assignment as per the Company Law Board's order dated July 16, 2009 and in view of and in compliance with the order of the hon'ble High Court dated December 5, 2011. The whole dispute and subject matter involved in the company petition is required to be looked into by the valuer, while determining the fair value of the shares and on return of unsecured loans to respondent No. 1 company and the sister concerns. The fair value of the shares has to be determined afresh on the basis of the balance-sheet as on March 31, 2007, the date being approximate to the filing of the company petition, after taking into account the issue of shareholding/actual paid-up capital and the whole dispute and the subject matter involved in the company petition as well as the unsecured loans to respondent No. 1 company and sister concerns. Both the sides will provide whatever information that is needed by the valuer. Both parties are at liberty to make both oral and written submissions before the valuer.. ."

6. In pursuance of the order dated May 20, 2012, respondent No. 1 company paid installments to the petitioners, a sum of L 3,12,68,865 (rupees three crores twelve lakhs sixty eight thousand eight hundred and sixty five only). The petitioner's counsel says respondent No. 1 company is still required to pay Rs.28,71,135 out of the unsecured loan of Rs.3,41,40,000 as respondent No. 1 company paid only Rs.3,12,68,865. The interest over this amount has not been paid so far. Though the petitioners' side says, they have to get Rs.28,71,135 balance out of the loan advanced by them, the valuer M/s. Rawla and Co., stated that the petitioners would get only of Rs.8,40,000 but not Rs.28,71,135.

7. As to the interest, the petitioners submit that they are entitled to interest at the rate of 18 per cent, per annum on the unsecured loans for having the respondents paid interest at the rate of 18 per cent, per annum to the relatives of the respondents. The petitioners are, therefore, claiming 18 per cent, interest per annum on unsecured loans from the date they advanced till date they paid the money in installments, i.e., between April, 2006 to October, 2006 and interest over the balance amount till the date of actual refund. The petitioners' side counsel stated that the respondents agreed to pay interest on unsecured loans to the petitioner, as reflected in the order dated August 11, 2009.

8. As to share valuation, the valuer, M/s. Rawla and Co., subsequently appointed determined the fair value of the shares of respondent No. 1 company at L 56.68 per share. If this is calculated to the shares of the petitioners, it will come around L 5,88,05,500 for the shares held by them in respondent No. 1 company. The petitioners' counsel says that the petitioners are entitled to the interest on the value of shares as well, because this Bench passed an order on April 9, 2012, that the petitioners would get interest over the shares and deposits in compliance of the order dated December 5, 2011, passed by the hon'ble High Court of Chhattisgarh. The petitioners herein submit they will get interest over the share money as per the valuation given by M/s. Ernst and Young over L 4,19,15,000 from December 21, 2009, until actual payment. For the difference of increase in the share valuation given by M/s. Rawla and Co., being Rs.1,68,90,500, the petitioners say they are entitled for interest on this balance amount from September 17, 2012, till date of actual payment.

9. In between, I must say one thing that M/s. Ernst and Young valued the share value as Rs.40.40 per share taking the allotments made to the respondents themselves on February 28, 2007, into consideration, whereas M/s. Rawla and Co., valued the shares of the petitioners at the rate of L 56.68 per share without counting in the shares shown as allotted to the respondents on February 28, 2007, the difference of valuation between the valuation of Ernst and Young and M/s. Rawla and Co., is because M/s. Ernst and Young valued the share value by including the valuation of the shares shown as allotted to the respondents as on February 28, 2007. Otherwise, if the allotment made on February 28, 2007, is not included, the valuation per share shown by M/s. Ernst and Young and M/s. Rawla and Co., is more or less the same.

10. The petitioners' counsel submits that the hon'ble High Court of Chhattisgarh passed order on December 5, 2011, that the valuer is directed to go into the whole dispute and the subject matter involved in the company while determining the fair value of the shares of the petitioners on the basis of balance-sheet as on March 31, 2007, after taking into account the issue of shareholding/actual paid-up capital and the whole dispute and the subject matter involved in the company petition. In view of the orders passed by the hon'ble High Court, this Bench passed an order directing the valuer to determine the valuation after taking into account the issue of shareholding/actual paid-up capital, by looking into the whole dispute and subject matter involved in the company petition. The petitioner's counsel submits the hon'ble High Court in the order dated December 5, 2011 and the hon'ble Bench of the Company Law Board in the order dated February 20, 2012, categorically mentioned that the valuer was to look into the whole dispute and the subject matter involved in the company petition for determining the value of the shares of the petitioners, who were to go out of respondent No. 1 company on receipt of the amount of fair value for their shares. The petitioners' counsel says that M/s. Rawla and Co., rightly considered the actual shareholding/paid-up capital of the company for determining the fair value of the shares whereas M/s. Ernst and Young had not considered the actual paid-up capital of the company while valuing the shares. Instead, it considered the capital as per the balance-sheet which included the share capital illegally increased by the respondents on February 28, 2007.

11. The respondents' side alleged that the valuation report given by M/s. Rawla and Co., is biased and the method applied by the valuer is not consistent with the standard of the chartered accountants. The petitioners' side submitted that neither the hon'ble High Court nor the Company Law Board prescribed any specific method for valuing the shares. In fact, it is left open to the valuer to adopt any recognised method of valuation. In the present case M/s. Rawla and Co., adopted the net asset value and discounted cash flow method to determine the fair value of the shares. He submits that once the valuer is given freedom to apply whatever method is applied in the given case, the valuer in his wisdom is free to choose any recognised method of valuation and it is not open to challenge, unless it is demonstrated that the valuation was made on erroneous basis or that the valuer had committed blatant mistake or adopted wrong approach going to the root of the matter. In support of this contention, the petitioners' counsel filed citation between G.L. Sultania v. Securities and Exchange Board of India, [2007] 137 Comp Cas 658 (SC) : [2007] 5 SCC 133, to say that the valuation of shares is a technical and complex problem thereby it should be left to the consideration of experts in the field of accountancy.

12. The petitioner counsel submits that the valuer valued the shares in the standard that is required to be followed while valuing the shares. Since the value of the shares given by M/s. Ernst and Young and M/s. Rawla and Co., is more or less one and the same, the actual difference is that M/s. Ernst and Young included the shares alleged to have been allotted to the second respondent on February 28, 2007, i.e., hardly 10 days before filing the balance-sheet dated March 31, 2007, whereas M/s. Rawla and Co., valued the shares deleting the shares said to have been shown as allotted to the respondents on February 28, 2007. If the valuation made by these two valuers are compared, deleting the shareholding shown as allotted to the second respondent, the share value is more or less the same. Therefore, the methodology applied by M/s. Rawla and Co., cannot be faulted with on the allegations and objections rose by the respondents.

13. The respondents' side raised objections on the valuation report of M/s. Rawla and Co., Chartered Accountants, Delhi, as the valuation report is erroneous, biased and in violation of guidelines of the Institute of Chartered Accountants of India. The objections of the respondents to the valuation report are as follows.

14. The respondents' counsel submits that the consent order dated July 16, 2009, categorically mentions that the cut-off date for valuation shall be March 31, 2007, as mentioned in the balance-sheet dated March 31, 2007. Therefore, whatever shareholding that appears in the balance-sheet as on March 31, 2007, shall be taken into consideration for valuing the shares of the company whereas the valuer, M/s. Rawla and Co., instead of complying with the directions given in the consent order dated July 16, 2009, ignored the additional shares which were allotted on February 28, 2007, as part of the balance-sheet filed on March 31, 2007. Though the hon'ble High Court of Chhattisgarh passed an order on December 5, 2011, stating that the consent order dated July 16, 2009, is binding upon the parties unless it is challenged.

15. The respondents' side counsel says, in view of the said observations, the hon'ble High Court set aside the order dated October 6, 2010, the Company Law Board passed for reviewing the consent order dated July 16, 2009 and gave directions either for submitting the valuation report afresh after considering the objections of the parties or to appoint an independent valuer for fresh valuation. By the order passed by the hon'ble High Court, counsel says it is evident that the hon'ble High Court is not inclined to decide the petition on its merits against the consent order passed by this Bench taking March 31, 2007, as cut-off date for valuation of the shares. Therefore, the valuer cannot do what the Company Law Board cannot do directly or indirectly by going beyond the cut-off date mentioned in the consent order. Counsel says it is to be noted that the Company Law Board has however not quashed the allotment of shares dated February 28, 2007. Therefore, the valuer has no right to ignore the said shareholding in valuing the shares of the petitioners. The valuer has interpreted the hon'ble High Court and the Company Law Board order in its own wisdom held the allotment of shares on February 28, 2007, as void without referring it to the Company Law Board. Since the valuer went beyond the cut-off date mentioned in the consent order, it would become violation of the High Court order and the consent order passed by this Bench. The first valuer, M/s. Ernst and Young, valued the share price at L 40.40 per share when the book value of the company was L 24 per equity share as per audited balance-sheet of the company as on March 31, 2007. The second valuer, i.e., M/s. Rawla and Co., arrived at a value of Rs.56.68 per equity share as against claim of the petitioners of L 67.68 per equity share by arbitrarily splitting the balance-sheet of company as on March 31, 2007.

16. The respondents' side raised another objection that the valuer applied wrong methodology and approach in valuing shares without taking the actual figures of the years 2007-08, 2008-09 and 2009-10.

17. That when the actual figures are available, the valuer took the projections made by the company in 2007 into consideration. That the respondents side raised various technical aspects against the report given by the valuer saying the valuer violated the normal standards that are maintained while assessing the value of the shares.

18. The respondents' side also raised objection saying the valuer violated guidelines issued by the Chartered Accountants of India, saying that the valuer has no adequate experience prior to acceptance of this job. Counsel further says the valuer, instead of reporting to the Company Law Board that he has no experience, has put forward figures he felt as correct. The respondents' counsel stated that the valuation report made in 2009 and 2010 are placed in 2012 by these two valuers respectively and had a fair idea of the gap between the actuals and the projections. The gap between the actuals and projections showed huge variations on the negative side and thus weightage of 15 per cent, was merely theoretical exercise leading to unfair valuation.

19. The respondents' side stated that M/s. Rawla and Co., simply reiterated the Ernst and Young report without applying their own mind in valuing the shares of the company. The respondents stated that it is pertinent that the second valuer has wrongly compared the company with main producers' companies. Counsel says the valuer has no experience thereby they simply cut and pasted corresponding part of the valuation report of Ernst and Young P. Ltd.

20. The respondents made a submission that they were always willing to pay the shares held by the petitioners at the rate of Rs.25 per share and later even at the rate of Rs.40.40 per share, i.e., at the rate given in the valuation of Ernst and Young. The respondents' group had invested Rs.4,48,88,635 (rupees four crores forty eight lakhs eighty eight thousand six hundred and thirty five only) by way of share application money as on March 31, 2006 and the petitioners were to bring in matching share application money in the company. The petitioners kept on promising but never brought the said funds. Finally, on February 28, 2007, the shares were allotted to the respondent group only. Respondent No. 1 company is a closely held public company and the petitioners on an independent charge basis looked after the day to day operations. Thus, the petitioners' argument that formal non-intimation prior to allotment should be treated only as de jure and not de facto. The respondents' side admitted that they were ready to honour Ernst and Young's report as global settlement but the petitioners turned down the same.

21. Another objection raised by the respondents is that the valuer did not give any personal hearing on objections raised by the respondents and has acted in violation of the principles of natural justice enshrined in the Constitution of India. The respondents side distinguished Mafatlal's case Appears to be to Miheer H. Mafatlal v. Mafatlal Industries Ltd., [1996] 87 Comp Cas 792 (SC). that the share valuation in that case was for the purpose of amalgamation but not for exit from the company. Therefore, it is not applicable. The respondents' side also states that since it is nowhere mentioned in the consent order that the interest is payable over the value of the shares, the petitioners herein are estopped for asking for any interest over the value of the shares. The respondent submits that since the valuation report given by M/s. Rawla and Co., is full of patent errors and fundamental lapses, it cannot be accepted based on G.L. Sultania v. Securities and Exchange Board of India, [2007] 137 Comp Cas 658 (SC) : [2007]5 SCC 133 that the report given by the valuer could be final and binding on the parties despite some serious objections raised by the parties.

22. The respondents' side relied upon Vinod Kumar v. Sigmalon Equipment P. Ltd., [2005] 127 Comp Cas 54 (Bom) and B.M. Jain and Sons Co. P. Ltd. v. Bombay Cable Car Co. P. Ltd., [2009] 152 Comp Cas 537 (CLB), to say that as and when some patent error comes in the report given by a valuer is necessarily to be set aside. In support of this submission, the respondents' side submits that the valuation report given by M/s. Rawla and Co., was highly oppressive to the respondents, therefore, the same be set aside in the interest of justice on equity.

23. On hearing the submissions from the petitioners' side and the respondent's side, I have observed that this Bench passed a consent order on July 16, 2009, providing an exit to the petitioner on fair valuation of his shares as on March 31, 2007, appointing Ernst and Young Co., to value the shares of the petitioners.

24. In pursuance thereof, the valuer assessed the share valuation, arrived at the share value at L 40.40 per equity share.

25. When the petitioner raised objection over the report given by Ernst and Young Co., the Company Law Board posted the matter to review the consent order dated March 31, 2007, whereupon the hon'ble High Court, on appeal, set aside the order of the Company Law Board for reviewing the consent order already passed and gave direction to the valuer to consider the whole dispute and the subject matter involved in the company petition while furnishing the valuation report. The hon'ble High Court was of the opinion that even if there is no specific wordings used in the consent order dated July 16, 2009, in regard to the shareholding/actual paid-up capital, the valuer appointed vide the consent order was required to "furnish the valuation report after obtaining information that was needed by it" after considering oral and written submissions made by the parties.

26. On seeing the operative part of the order of the hon'ble High Court, it appears that the hon'ble High Court was under the opinion that the valuer appointed by the consent order was required to "furnish the valuation after obtaining the information that was needed by it". Since this clause followed after a clause saying "even if there is no specific wordings used in the consent order dated July 16, 2009, in regard to the shareholding/actual paid-up capital", if the order is read in tandem, not in isolation, it clearly says that the valuer is at liberty to go into the whole dispute and the subject matter involved in the company petition and he is authorised even to decide over shareholding of the parties. Otherwise, the hon'ble High Court would not have mentioned authorising the valuer to look into the whole dispute and the subject matter involved in the company petition. The respondents' side has not filed any appeal over the order passed by the hon'ble High Court.

27. In pursuance of the order passed by the hon'ble High Court, this Bench passed an order directing the valuer to look into the whole dispute and the subject matter involved in the company petition while determining the fair value of the shares and other aspects, after taking into account the issue of shareholding/actual paid-up capital and the whole dispute under the subject matter involved in the company petition. The respondents' side has not even filed the appeal over this order though this order explicitly says to take into account the issue of shareholding/actual paid-up capital and the disputed subject matter involved in the company petition. Therefore, the order passed by the hon'ble High Court and the order of the Company Law Board passed thereafter for having attained finality, are binding upon the parties.

28. The respondents now cannot say that the valuer deleting the allotment made on February 28, 2007, as bad on the grounds M/s. Rawla and Co., mentioned as below :

No evidence in the nature of "share application money form" as on the date of receipt of deposit is found, non-maintenance of deposit receipt issued by the company, nature of deposits is also not recognisable from the board minutes provided from time to time, from the potential depositor.

Special resolution said to be authorising the allotment is 16 months old and also before the petitioners joined the company. More so, it only applies to share application money received prior to the date and time of the special resolution, i.e., dated October 25, 2005.

Mandatory disclosure requirements in the explanatory statement to the notice calling extraordinary general meeting dated October 25, 2005, were not completely complied with.

Proof of dispatch of notice calling the extraordinary' general meeting is not provided by the company.

Share application money is received in various installments and funded on various occasions over a period of more than 2 years.

No board of directors' meeting confirming the approval of the pending share applications money existing on October 25, 2005, of their consent for continuing the share application that such share application will be considered in any future allotment to be made, more so there is no confirmation from the applicant also.

Copies of share application forms received from the respondent-company are dated as February 28, 2007, i.e., the date of allotment of shares.

Share application money received is neither recorded in the board minutes nor acknowledged by the board of directors.

Form 2, i.e., return of allotment was filed after 3 months from the date of allotment.

Proof of dispatch of notice calling board meeting dated February 28, 2007, is not provided by the company.

Loose slips were added in the attendance register of the board of directors with regard to the important meetings dated February 15, 2007, February 28, 2007, March 26, 2007 and April 2, 2007.

29. By seeing all these, it is observed that the respondents acted in violation of the Companies Act and prejudicial to the petitioners. He has concluded that the allotment made on February 28, 2007, is void and should not be considered for the purpose of valuation of equity shares of the respondent-company. Therefore, it is considered that L 6,07,06,250 in respect of allotment made on February 28, 2007, is considered as deposit with the company. The records say that by the time the respondents made allotment to themselves, the money of the petitioners was also lying as deposit in the company. Had the respondents been fair to the petitioners, they would have allotted shares to the petitioners as well. The Company Law Board and the hon'ble High Court, perhaps on seeing the date of allotment and the funds before allotment, permitted the valuer to look into the whole dispute though it was not explicitly mentioned in the consent order passed by the Company Law Board on July 16, 2009. Since the valuer dealt with this issue on the order passed by the hon'ble High Court and the Company Law Board, I am of the opinion that there is no infirmity in the report given by the valuer.

30. Because the respondents in management never put it to the notice of the petitioners that alleged share application money was pending for allotment when the petitioners entered into this company after the alleged extraordinary general meeting dated October 25, 2005, there was not even any material indicating share application in waiting for allotment when these petitioners invested huge money in the form of shares amounting to 29.05 per cent, and loan/deposit to the company. It is obvious whoever comes into the company acquiring more than 25 per cent, will come with minimum expectation that no allotment will happen without notice to them. Here the respondents, out of blue, filed balance-sheet dated March 31, 2007, showing allotment in favour of them on February 28, 2007, hardly ten days before March 31, 2007, but Form 2 was filed three months later. When the petitioners invested money in the company, there was no record that these respondents appreciated the petitioners about the fact of share application money pending allotment. The crux of the petition is illegal allotment made to the respondents themselves on February 28, 2007.

31. I believe that the hon'ble High Court, on seeing the grievance of the petitioners, passed order on December 5, 2007, giving liberty to the valuer to go into this aspect, therefore I do not believe the valuer has gone beyond the order of the honourable High Court and the Company Law Board order followed the High Court order. However, I say that the consent order cannot be seen in isolation from the order dated December 5, 2011, passed by the honourable High Court, because whenever the appellate court passes an order on original court order, the appellate court, being conferred with powers of original court, every observation and direction by the appellate court need not be limited to that impugned order alone, it ha

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s power to hold on any aspect as to that petition, case or suit, as the case may be. Since the order passed by the Company Law Board for reviewing is impugned, the appellate court gave further directions to the valuer after hearing, therefore, in my wisdom, the respondent side is not expected to place appellate order for scrutiny before the court below, the appellate court directed the valuer to peruse the whole dispute, not otherwise. So now, I hold the valuer acted within the framework of the order dated December 5, 2011, passed by the honourable High Court and the order dated February 20, 2012, passed by the Company Law Board. I must also say since the appellate court passed the order on December 5, 2011, taking consent order and subsequent order of the Company Law Board into consideration, the orders of the Company Law Board are merged with the order passed by appellate court, and therefore there is no purpose in clinging to the consent order saying the consent order alone is to be taken into consideration for valuation, nothing else. 32. As to challenge to the method of valuation applied by M/s Rawla & Co., the respondent counsel made several allegations saying the valuer is biased, inexperienced, violated guidelines of institute of Charted Accountants of India, the valuer has taken projections into consideration instead of taking actuals. The same respondents agreed the share value assessed by the previous valuer Eamst & Young without challenging the method applied by the said valuer and they are even ready to pay the share value to the petitioners calculating on that basis, but when M/s Rawla & Co, placed report applying the same method which Ernst & Young applied, serious objections such as Rawla report is biased, inexperienced so on and so forth, have come up to the respondents. Hie major difference In these two reports is Rawla has not counted in the allotment made to the respondents on 28-2-2007, whereas the Ernst & Young counted In the said allotment in its valuation. Therefore except non-inclusion of subsequent allotment in the valuation of Rawla, no major difference is appearing in between these two reports, then there shall not be any objection to the respondents as to the method and approach taken up by the valuer Rawla, As to considering projections, whatever the respondent side urging to consider actuals has come into existence only after this litigation started. For this reason, I don't find any wrong with the valuer for having taken projections into consideration, therefore all the allegations made by the respondent side against Rawla are unfounded and motivated. 33. I have concluded that valuation report given by M/s Rawla & Company is correct I have not found any merit in the submissions placed by the Respondents side. Therefore, R-l Company is hereby directed to repay the value of shares held by the Petitioners at the rate of Rs.56,68 per share, in three equal installments within three months from the date of this order. to repay the balance of loan of Rs.8,40,000 as held by the valuer M/s Rawla & Company, within one month from the date of the order and to repay interest on the loan, Including the money payable mentioned above to the Petitioners from the date of borrowing till the date of realization, at the rate of 15% per annum in three equal installments within three months from the date of this order.
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