Majumdar J. - (1.) LEAVE granted.
(2.) BY consent of learned Counsel for parties, the appeal was finally heard. A short question centering round Clause 21.3(a) of the consent terms filed by parties in Company Appeal 2/94 before the learned Company Judge, Bombay High Court falls for determination. The said clause reads as under: the valuation per share made by the expert shall be deemed to be the valuation per share made under the consent order (including the consent terms) dt. 5.3.93 passed by the CLB. A few facts leading to this appeal may be noted at the outset. Respondent No. 1, Patel Engineering Company Limited, is a public limited company registered and incorporated under the Companies Act. The shares of the company are closely held between two groups who are contesting parties before us. Appellants Nos. 1 to 5 represent one group and Respondents Nos. 2 to 8 represent other one. We shall refer to the respondents' group as Pravin Patel group and the appellants' group as K.Y. Patel group for the sake of convenience. K.Y. Patel group filed petition No. 28/91 in October, 1991 before the Company Law Board under the provisions of Sections 397 & 398 of the Companies Act. 1956. They contended that the affairs of the company were conducted in a manner prejudicial to the interest of the company and public interest. They also sought for a direction that the resolutions passed at the Extraordinary General Meeting should not be given effect to. The parties arrived at consent terms signed on February 11, 1993 before the Company Law Board and in pursuance thereof the Company Law Board disposed of the petition by its consent order dated 5.3.93. The consent terms provided that both groups would deposit their shares with Company Law Board and one Shri. M. Vatsaraj would determine the fair value per share. Accordingly, K.Y. Patel group, that is the appellants' group deposited 91,702 share and the respondents' group, that is Pravin Patel group deposited 1,04,299 shares. Clause 21 of the consent terms reads as under: Agreed and ordered that the Company do pay the value per share as determined by the valuer for the shares belonging to K.Y. Patel Group and the supporters of K.Y. Patel group in manner following. The said installments shall include interest on the outstanding amount at 15% per annum from the date of the valuer's decision. The amounts so paid by the company shall remain deposited with M/s. Mulla & Mulla & Craigie Blunt and Care till the entire amount has been paid and the said shares have been duly delivered by Company Law Board to the Company. (i) ...% within month/months of the receipt by the Company of the valuation report but at any rate not before 1st April, 1993 plus interest on the entire amount at 15% per annum from the date of the decision till the date of the payment of the installment. (ii) ...% within...months of the receipt by the Company of the Valuation report plus interest on the outstanding amount at 15% per annum from the date of the payment of first installment till the date of the payment of the second installment. (iii) the balance...% within months of the receipt by the Company of the Valuation report plus interest on the outstanding amount at 15% per annum from the date of the payment of the second installment.
(3.) AS per Clause 16 of the consent terms one Shri. Mangalbhai Vatsaraj, Partner of M/s. Vatsaraj & Company, Chartered Accountants being the auditor of Respondent No. 1 company was appointed for valuation of shares of Respondent No. 1, company. As per Clause 19 it was agreed that the valuer shall report to the Board his decision as to the valuation per share and forward copies thereof to the company as also to M/s. Mulla & Mulla & Craigie Blunt & Care, Advocates for the K.Y. Patel group and M/s. Bachubhai Munim & Co., Advocates for the Pravin Patel group. As per Clause 23 it was agreed that on the company making full payment with interest for the said shares the said shares shall be delivered by the Company Law Board to the company and shall stand cancelled. Thus on the payment being made by the company as per Clause 21 K.Y. Patel group, that is the appellants' group had to walk out of the company. However, there was a default clause provided by Clause 28(a) in the consent terms which reads as under: In the event of the company failing to make payment of the full purchase price, of any two of the installments of price on the dates fixed by clause 21 above, the company shall lose its rights to purchase the shares of the K.Y. Patel group and the petitioners shall automatically be entitled to purchase the shares of the Pravin Patel Group (i.e. shares listed in part 1 of Schedule II and such shares listed in part II of Schedule II in respect of which written confirmations and undertakings have been furnished as aforesaid) at the price per share fixed by the Valuer under Clause 16 above. The date of the last installment or the date of the second installment in respect of which the default has been committed, whichever is earlier, shall be the date on which the petitioners shall automatically be entitled to purchase the said shares and such date shall be referred to as "the date of purchase.;