NIKHIL RUBBERS P LTD Vs. STATE

JUDGEMENT

(1.) THIS is an application filed by the respondents in CP No. 27 of 1997 which was disposed of by this Bench by an order dated 25-9-2000. In that order, considering the facts of the case, this Bench had declared the first petitioner and the second respondent would be treated as 50 per cent shareholder each in the company and that the petitioner would go out of the company on receipt of fair consideration for her 50 per cent shares in the company. The fair value was to be determined by an independent valuer mutually acceptable to the parties. Both the parties were to appear before this Bench on 15-11-2000 for appointment of a valuer. Since the parties could not agree on the name of the valuer, the same was left to this Bench to decide. Accordingly, this Bench passed an order on 22-12-2000 appointing Shri Vinod Jain, Chartered Accountant, New Delhi to determine the fair price of the shares of the company and in that order it was also stipulated that the date of valuation would be based on the balance sheet as on 31-3-1997. The respondents have filed this application CA 33 of 2001 seeking for modification of the stipulation that the valuation would be made on the basis of the balance sheet as on 31-3-1997 and have sought for valuation to be made on the value of the residual assets as on 25-9-2000--the date of the final order.

(2.) Dr. Singhvi appearing for the applicant submitted that the date of 31-3-1997 was not agreed to by the respondents in the hearing held on 22-12-2000 and as such it is not acceptable to the respondents in view of various events having effect on the valuation that had taken place after 31-3-1997. According to him, after 31-3-1997, the petitioner had taken away Rs. 9.6 lacs from the company and that the factory remained closed thereafter due to which the assets of the company have depreciated in value. Therefore, keeping the valuation date as on 31-3-1997 would be detrimental to the interest of the respondents. He further submitted that due to the removal of the records by the petitioners, even the balance sheet as on 31-3-1996 had not been prepared and, therefore, the question of the shares being valued on the balance sheet as or. 31-3-1997 which is not only not in existence but cannot also be prepared, does not arise. He pointed out that the latest balance sheet available on record is the one as on 31-3-1995. Therefore, he submitted that to be fair to both the sides, the assets of the company as on the date of the order should be the basis for valuation of the shares.

(3.) WE have considered the arguments of the counsel. The determination of date of valuation of shares in a 397/398 petition has been discussed in various cases. In Co-operative Wholesale Society Ltd. v. Neyer 1958 3 AER 66, it was held that the date of valuation may be fixed as the date on which the petition was filed on the ground that it is on that date that the petitioner chose to treat the conduct of the respondents as oppressive. The same was the decision: London School of Economics. In re 1985 BCLC 273. Cutnana Ltd., In re 1986 BCLC 430, it was held that the date of valuation could be a date prior to the filing of the petition if it is established that the majority anticipating a petition takes steps resulting in depreciation of the value of shares. : A Company, In re 1983 2 AER 854, the date of valuation was decided as the date in which the petitioner was excluded from management. In Elgindala Ltd 1991 BCLC 959, it was held that the date of order could also be considered to be the date of valuation. However, this Bench has been consistently following the principle of fixing the date of valuation as the date on which a petition is filed. In view of the fact that it would not be practicable to prepare a Balance Sheet on a particular date, this Bench has also consistently been following the date of annual balance sheet which is proximate to the date of the petition as the date of valuation. Accordingly, in the present case also, 31-3-1997 being the proximate date of the petition was fixed as the date of valuation and, therefore, we do not find any infirmity in this regard.