1. This case has a long history. The petitioner claiming to hold 15% shares in Consulting Engineering Services India Ltd (CES) filed this petition in December 1997, challenging the decision of the Board of CES to allot further shares without any offer to the petitioner. When the petition was mentioned, it came to light that CES had issued further shares on two earlier occasions also without any offer to the petitioner. By these two allotments, the petitioner's shareholding had come down to around 10.63%. It also came to light in another group company Consulting Engineering Services Investment and Management Company Limited (CESIM), in which the petitioner held 24.7% shares, further shares had been issued on two earlier occasions without any offer to the petitioner, by which his shareholding had come down to 7.94%. The other allegation was that some of the shares held by CESIM in CES had been transferred at par to the directors of the company, by which the worth of CESIM has come down. In view of these new allegations, when the petitioner sought to amend the petition to challenge the earlier allotments in both the companies as also the transfer of shares held by CESIM, the parties had agreed to resolve the disputes amicably on certain terms. The terms of compromise agreed between the parties were incorporated in the order of this Board dated 28^th May, 1998. According to the terms of this order, the petitioner had agreed to sell his shares CES, CESIM and also another group company Consulting Engineering Services (Water Resources Development, Management) Company (CESRD), in which he held ----% shares, on a fair valuation of the shares to be determined by M/S Price Waterhouse & Co.
CESIM is a private investment company holding shares in CES and CESRD is a shell company doing no business.
2. A part of the terms incorporated in the order dated 28.5.1998 is as follows: "The parties had agreed that the valuation shall be made on the following alternative basis: (a) That the petitioner holds 14.5 per cent, of share capital of CES, 24.7 per cent. of the share capital of CESIM and 25 per cent, of the share capital of CESWRDMC and (b) That the petitioner holds 10.63 per cent. of the share capital of CES, 7.94% per cent, of the share capital of CESIM and 25 per cent. of the share capital of CESWRDMC. The valuation of the shares of CESIM shall be made on the following two alternative bases : (a) On the footing that the transfer of shares held by CESIM in CES after 1994 did not take place.
(b) By giving effect to the said transfer of shares held by CESIM in CES. Parties will be entitled to make submissions to the CLB on the valuation and also which of the alternative basis of valuation should be adopted and the Company Law Board shall decide the same.
3. Thereafter, with the consent of the parties M/S S.R. Batliboi were appointed to determine the fair value of the shares. In April, 2000, M/S Batliboi submitted their valuation report against which both the parties filed objections. Since both the parties had filed objections, the petitioner desired to have a new valuer appointed, while the respondents sought for dismissal of the petition as not maintainable.
By an order dated 23.1.2002, this Board dismissed the application of the respondents seeking for dismissal of the petition and decided to appoint a new valuer. The respondents filed an appeal before the High Court against the order of this Board dated 23.1.2002. The appeal was dismissed by the High Court on 22.4.2002. In the meanwhile, by an order dated 10.4.2002, this Board appointed two valuers - one nominated by the petitioners and another nominated by the respondents to prepare a joint valuation report. Thereafter, the respondents filed an appeal before the Division Bench on 20.5.2002 against the order of the Single Judge dated 22.4.2002, which was dismissed on 29.10.2002. In May, 2003, the joint valuers expressed their inability to carry out the valuation.
By an order dated 31.7.2003, this Board appointed M/S KPMG to determine the fair valuation of the shares. On 15.8.2003, the respondents filed an SLP before the Supreme Court against the order of the Division Bench dismissing the appeal. On 19.9.2003, the parties filed a consent memo before the Supreme Court agreeing for valuation of shares one by a valuer nominated by the petitioner and another nominated by the respondents. Both valuers submitted their reports before the Supreme Court and in view of the difference in valuation, the Supreme Court appointed Justice Shri Wadhwa (retired) to value the shares on the basis of the two reports. Justice Shri Wadhwa filed his report before Supreme Court on 6.2.2006. Both the sides raised objections on the valuation report. By orders dated 8.5.2006 and 18.8.2006, the Supreme Court directed this Board to give a finding on the quantum of shares to be taken into consideration for determining the consideration payable to the petitioner and also interest, if any, payable to the petitioner and also the rate of interest. On the basis of this order of the Supreme Court, the petitioner has filed CA 197 of 2006 seeking for a decision on these issues. Accordingly, in this order, I will be considering these issues.
4. M/S Consulting Engineering (India) Ltd, a deemed public company at the relevant time, was incorporated in the year 1969 by a group engineering professionals. Late K.K. Framji, the father of the petitioner was one of the promoter directors along with respondents 2nd 3. He expired in the year 1994. The petitioner inherited the shares of his father. At the time of his death, he held 1870 equity shares accounting for 14.5% in CES. After his death, the company had allotted 2607 shares on 14.7.1995 and 2080 shares on 23.1.1996. No shares had been offered to the petitioner and due to these allotments, his holding had come down from 14.5% to 10.63% On 31.3.1998, the date of valuation, the total number of shares in the company was 17587 as against 12900 shares that existed before these two allotments. According to the petitioner, for determination of the fair value of his shares, the total number of shares in the company should be taken as 12900 shares and not 17587 shares while according to the respondents, the latest figure should be taken into account. Likewise, in CESIM, the petitioner held 115 shares constituting 24.5% of the total issued capital of 470 shares. The company had issued further shares in the year 1995-96 and 1996-97 without any offer to the petitioner by which his percentage holding in the company had come down to 7.94% of the total issued capital of 1448 equity shares as on 31.3.1998. Of the shares of CES held by CESIM, 2393 shares were transferred to the directors at par which according to the petitioner is highly oppressive to him as by this transfer the worth of CESIM which is only an investment company has come down and at the same time by this transfer the directors had enriched themselves by getting the shares at par as against an approximate value of Rs. 1 lac per share.
5. Shri Sawhney, Senior Advocate, appearing for the petitioner submitted: The father of the petitioner was the principal promoter of the company. At the time of his demise, the father held 14.5% shares.
The petitioner inherited all these shares. The company is a deemed public company. Therefore, at the time of allotment of further shares, the petitioner should have been offered proportionate share. There is nothing on record to show that the company had passed a resolution under Section 81(1)A of the Act to offer the shares without following proportionate allotment. The respondents have contended that shares Were always allotted only to the employees of the company as a measure of reward for their services. In the guise of allotment of shares to the employees, it is the respondents 2,3 and 4 who are the directors of the company, got maximum number of shares while other employees have been allotted only a few/negligible number of shares. By these two allotments, respondents 2 and 3 have consolidated their position resulting in their holding in the company increasing substantially while the shareholding of the petitioner has come down to 10.63%. By these two allotments, the company raised only about Rs. 5 lacs which was too insignificant compared to the turnover of the company at the relevant time. Therefore, allotment of shares could never be the reason for raising funds. The object of the allotment was definitely to reduce the shareholding of the petitioner. Further, the shares had been allotted at par by which the respondents 2 and 3 had bestowed on themselves over crores of rupees. The petitioner does not desire cancellation of the allotment but the additional shares issued should be ignored for the purpose of valuation of the shares held by the petitioner so that he would get value for 14.5% shares held before fee impugned allotments. In regard to the allotment further shares in CESIM, the respondents have not shown any need for the further issues and as such the sole motive for allotment of shares was only with the view to reduce the holding of the petitioner. Therefore, in respect of CESIM also, further shares allotted should be ignored for the purpose of determining the fair price of the shares held by the petitioner.
6. In so far as the transfer of shares held by CESIM in CES is concerned, the learned Counsel submitted: Of the 4453 shares of CES held by CESIM, 2393 shares were transferred to the 2nd and 3rd respondents are par, without any justification. The company being an investment company, its major asset was the shares in CESIM. Therefore, by transferring the shares at is highly oppressive to the petitioner as by this transfer, the worth of CESIM has come down and at the same time by this transfer the directors had enriched themselves by getting the shares at par as against an approximate value of Rs. l lac per share.
The justification given that the shares were transferred to clear the liability of CESIM to CES is also a bogus one as this liability has been existing for a long time. Therefore, while determining the consideration payable to the petitioner in respect of the shares held by him in CESIM, the transfer of 2393 shares should be ignored.
7. In so far as payment of interest is concerned, the learned Counsel submitted: The delay in valuation of shares is squarely attributable to the respondents. Even though the petitioner had also, along with the respondents questioned the valuation of M/S S.R. Batliboi, the petitioner had sought for appointment of a new valuer but the respondents challenged the maintainability of the petition and thereafter dragged on the matter up to the Supreme Court. Before the Supreme Court, the respondents had also agreed that CLB would consider the question and rate of interest payable with effect from 1^st April, 1998. Even though, the consent order dated 28.5.1998 did not provide for payment of interest on the consideration payable by the respondents, it is to be noted that there is no prohibition in the consent order regarding payment of interest. That is the reason why in the consent order of the Supreme Court, payment of interest has been provided. Since the petitioner was bound to sell the shares to the respondents in terms of the consent order passed by this Board on 28.5.1998, the petitioner could not deal with the shares otherwise and his hands had been tied. While the company had the benefit of the money payable to the petitioner, he lost the opportunity of utilizing the same and as such the petitioner is entitled for a reasonable rate of interest on the consideration payable to him. Further, even the cause for the petitioner objecting to the valuation of S.R. Batliboi arose because the company had not provided full details to M/S S.R. Batliboi resulting in wrong valuation. If the consideration for the shares had been paid to the petitioner in 1998, he would have had the benefit of the money which he has been deprived of because of the delayed tacties of the respondents in dragging the matter up to Supreme Court. In Secretary, Irrigation Department, Government of Orissa v. G.C Roy AIR 1992 SC 732, the Supreme Court has held that a person deprived of the use of money to which he is legitimately entitled has a right to be compensated for the deprivation- call it by any name like interest, compensation or damages. On this basis, the Supreme Court held that even though the arbitration agreement in that case did not provide for payment of interest pendente lite, the power to award interest had to be inferred. In the present case, what the petitioner seeks is interest pendente lite. Therefore, this Board should direct payment of a reasonable rate of interest from 1.4.1998.
8. Shri Sarkar appearing for the respondents submitted: The allegation of the petitioner that the shares were allotted either to reduce his holding or to increase the holding of the respondents has no basis. It is not a case of either conversion of a majority into minority or vice versa. The company is a consulting company wherein shares have always been allotted only to employees and not to any outsiders. The respondents 2 and 3 are promoter directors actively involved in the business of the company. It is on record that the father of the petitioner who held 58.82% shares in 1969-70 gradually and voluntarily reduced his holding to 14.5% at the time of his demise. This he did either by transferring his shares to CESIM or by not subscribing to shares when allotted. By doing so, his percentage shareholding became more or less equal to that of respondents 2 and 3. It is to be noted that at the time of allotments made after 1969-70, substantial shares were allotted to the promoter directors while other employees had been allotted less number of shares. Thus, the practice in the company, right from the beginning has been, to allot more shares to the original promoters compared to the allotments made to other employees. The same procedure was adopted in the impugned allotments. Therefore the argument of the petitioner that the respondents 2 and 3 got more shares only to enrich themselves is not correct. Further, all the allotments made by the company so far has always been at par and as such petitioner cannot impugn that shares were issued at par to enrich respondents 2 and 3. Even the father of the petitioner never objected to the allotment of shares to the employees. The allotment to employees is made on the basis of their performance just like stock option. The concept of the respondent company was to allot shares only to its engineers/technically skilled whole time employees arose in terms of Article 36 of AOA. The petitioner is not an engineer or a technically skilled person nor an employee of the company to seek for allotment of proportionate shares. He became a shareholder only by virtue of his being a legal heir of late Framji. Further, in terms of Article 4, the directors have been empowered to allot shares on such terms as they consider fit. Therefore, the petitioner cannot impugn the allotments and seek for ignoring the additional shares from computation of valuation of his shares. The petitioner had alleged that there was no need for funds at the time when the shares were allotted. In Needles case, the Supreme Court has very clearly held that for allotment of shares, need of funds alone is not the criteria. Right through the existence of the company, shares had always been allotted only with a view to reward and motivate the employees and not with the sole objective of raising funds.
9. As far as payment of interest is concerned, Shri Sarkar submitted: The consent order dated 28.5.1998 does not provide for payment of interest. Respondents cannot be held responsible for the delay in completion of valuation as even the petitioner objected to the valuation by M/S SR Batliboi. The question of any claim for interest would arise only if there had been a default in payment of the consideration after its determination. Till today, the consideration has not been determined. The petitioner continues to hold the shares and has been enjoying all rights as a shareholder including getting dividends. He might have had a claim for interest if he had already transferred his shares and ceased to be a shareholder. It is inconceivable that a person holding on to his assets could claim interest on the consideration payable which is yet to be determined.
When there is a delay in determining the valuation, the question of payment of interest for the intervening period does not arise.
10.In rejoinder, Shri Sawhney submitted: If the allotment of shares is with oblique motive especially when the need for funds has not been established, the allotment can be challenged. The directors cannot gain by allotting shares to themselves in the guise of rewarding employees.
The powers under the Articles cannot be misused by the directors to enrich themselves. If the company wanted to reward the employees, it could have given bonus instead of shares. Further, it is wrong to say that the petitioner inherited the shares from his father. The petitioner was a joint holder of the shares along with his father and as such he was the largest shareholder in the company. In Ashok Kumar Malpani v. Malpani Food Products Pvt. Ltd. MNU/CL/0053/2005 the Company Law Board has held that allotment of shares without offering the same to all the shareholders is an act of oppression. Likewise, in Uma Pathak v. Eurasian Choice International Pvt. Ltd. 122 CC 922, CLB has held that while issuing shares, the Board of Directors discharge fiduciary responsibilities and as such if the shares are issued with the sole objective of benefiting themselves, the same is an act of oppression. The Supreme Court has also held similarly in Dale & Carrington case.
11. He further submitted: In so far as delay in the valuation is concerned, the respondents are squarely responsible for the same. It is on record that from 2002 when the respondents challenged the maintainability of the petition, it is they who had gone to the High Court and thereafter the Supreme Court, thus, getting the valuation delayed. In terms of Section 34 of Cr.PC, interest is payable pendent lite. Further, when before the Supreme Court, the respondents had agreed that interest should be payable from 1.4.1998, there is no discretion left to this Board except.to determine the rate of interest.
In so far as the transfer of shares held by CESIM in CES is concerned, it is quite obvious that respondents 2 and 3 got the shares transferred in their names at par only to enrich themselves. The only justification given for the share transfer is that CESIM owed a sum of Rs. 5 lacs to CES and to raise finance for repayment of the loan, the shares were sold. By selling 2320 shares at par to the respondents, CESIM got only a sum of Rs. 2.32 lacs. Since both the companies are under the same group, there was no urgency to sell the shares and make part payment of the loan. Even assuming that the shares had to be sold, it should have been at the fair value and not at par. Therefore, for valuation of shares of CESIM, the transfer of the shares should be ignored.
12. I have considered the matter carefully. Whether the petitioner's holding in CES should be 14.5% or 10.63% would depend on whether further issue of shares in CES was legitimate and bonafide. The petitioner has challenged the allotments on the grounds, that it was done to reduce the holding of the petitioner as the company was not in need of funds, that in the guise of allotment to executives, the respondents 2 and 3 got maximum number of shares, that proportionate offer has not been made to the petitioner in terms of Section 81 and that by allotting maximum number of shares to themselves at par, these respondents have enriched themselves. On this basis he has also alleged that the directors have acted in breach of their fiduciary responsibilities. To determine these allegations, the history of past allotments has to be looked into to find out whether the company has followed a constant practice. As long as the practice followed in earlier allotments had been followed in the impugned allotments also, the petitioner cannot have any grievance even if it is in violation of Section 81 of the Act. The respondents have submitted a chart of various allotments made in the company right from 1969-70 to 31.3.1998.
From this Chart, I find that in 1969-70, the number of total issued shares was 510, of which the father of the petitioner held 300 shares constituting 58.82%. The 2nd and 3rd respondents held 75 shares each constituting 14.71% each and the employees held 60 shares. There was an allotment of 50 shares on 15.7,1972 of which 20 shares were allotted to the father of the petitioner and 30 shares to the 4th respondent, all at par. No shares were allotted to other existing members. On 27.3.1981, 300 shares were allotted only to CESIM at par and no other shareholder was allotted any share. On 3.7.1982, 8 shares were allotted each to the father of the petitioner and the 2nd, 3rd, and 4th respondents and 28 shares to the employees, all at par. CESIM was not allotted any share. There was another allotment of 370 shares on 12.3.1984, again at par of which the father of the petitioner was allotted 72 shares and the 2nd and 3rd respondents 70 shares each and the 4th respondent was allotted 30 shares and the employees 128 shares.
CESIM was not allotted any share. In the allotment made of 510 shares at par on 30.7.86, the father of the petitioner and the 2nd and 3rd respondents were allotted 75 shares each and the 4th respondent was allotted 30 shares, CESIM-200 shares and the employees 55 shares.
Thereafter, the impugned allotments were made. On 14.7.1995, 2607 shares were allotted at par of which the 2nd and 3rd respondents got 915 shares each and the 4th respondent-390 shares, CESIM 42 shares and the employees 345 shares. In the other impugned allotment of 2080 shares on 23.1.1996, the 2nd and 3rd respondents got 555 shares each, the 4th respondent 280 shares and the employees 690 shares. From the allotments made during the life time of the father of the petitioner, it is evident, that at no time the company had followed the principle of proportionate allotment, that the shares were always allotted at par and that compared to the number of shares allotted to the employees, the promoter directors were being allotted higher number of shares. The petitioner has also alleged that the company was not in need of funds, but the shares were allotted only to reduce his shareholding. From the various allotments made earlier also, considering the number of shares allotted, it appears, that need for finance was a material consideration for the allotment of shares. Therefore, the petitioner cannot impugn the allotments made on 14.7.1995 and on 23.1.2003 on any of these grounds.
13. His only grievance could be that he had been excluded from allotment of shares. For this grievance, the respondents have submitted that shares have always been allotted only to those who are in active employment of the company or ex employees and since the petitioner is not an employee of the company, he was not offered any shares. From the allotments made during the life time of the father of the petitioner also no shares had been allotted to non employees except CESIM in which, incidentally, the promoters of CES held/hold substantial shares.
However, the matter has to be examined in a larger perspective and on equitable grounds. It is on record that the father of the petitioner was one of, if not the prime, promoters of the company and he had consistently reduced his shareholding either by transfer of his shares to the respondents, or to the employees or to CESIM from 58.82% shares in 1969-70 to 14.5% in 1994, thus, more or less matching the percentage shareholding of the 2nd and 3rd respondents of 14.19% each. Therefore, the petitioner being not only the joint holder of the shares of his father but also as a legal heir is entitled to the benefit that accrued to the company at the time of the demise of his father especially when the company has decided not to allot further shares to the petitioner on the ground of his not being in the employment of the company. The reduction in his shareholding due to the allotment of further shares excluding the petitioner has denied the petitioner of the benefits accrued to the company during the life time of his father. Therefore, when the petitioner is going out of the company he should be entitled to the consideration for his shares on the basis of his percentage shareholding i.e. 14.5% that existed before the impegned allotments. In other words, his shareholding in the company for the purposes of valuation shall be 14.5%. While holding that the petitioner is entitled to 14.5% shares in the company, I also note that both the impugned allotments were made during the year 1995-96 but the valuation of the shares is being made as on 31.3.1998. Therefore, I am of the view that the petitioner cannot have the benefit of 14.5% share holding and the benefits of the growth of the company after 31.3.1996, which could have been partly due to the incentive given to the employees by allotment of shares. The average profit for 1996-97 and 1997-98 was of the order of Rs. 1.17 crores as against the average profit for the previous two years of Rs. 1.01 crores. The increase is about 15%. Therefore I consider it appropriate that the fair value for the shares when determined, should be reduced by 10% to determine the total consideration payable to the petitioner.
14. In so far as CEISM is concerned, in 1994, the number of sharers issued was 470 of which the petitioner held 115 shares constituting 24.5%. Further shares of 308 and 670 were issued in the year 1995-96 and 1996-97 respectively without any offer to the petitioner. By these allotments, as on 31.3.1998, the petitioner's holding of 115 shares in 1448 shares came down to 7.94% as against 24.9% in 1994. The company is only an investment company and therefore the question of allotment of shares on the ground of giving incentive to employees does not arise.
Even though, the company is a private limited company, considering the fact that it held substantial shares in CES, most of which were transferred by the father of the petitioner, the company could not have excluded the petitioner from allotment. Therefore, I hold that for valuation of shares held by him in CESIM, his holding should be taken as 24.5%. However, on the same logic as I have indicated in the earlier paragraph, the shares held by CESIM in CES will be valued 10% -less than the fair price.
15. The petitioner has challenged the transfer of shares held by CESIM in CES on various grounds. I find that initially on 27.3.1981, the father of the petitioner transferred 700 shares from his holding in CES to CESIM and again on 23.10.1982, he transferred 2 shares to CESIM.With allotment of bonus shares and further allotment of 300 shares on 27.3.1981 and 200 shares on 30.7.1986, its shareholding in CES came to 4453 constituting 34.52% at the time of the demise of the father of the petitioner. In other words, it is evident that majority of the holding of CESIM in CES came out of the shares transferred by the father of the petitioner to CESIM. Out of these 4453 shares held by CESIM, 2475 shares have been transferred mostly to the respondents 2,3 and 4 except 75 shares to the employees. By these transfers, the shareholding of CESIM in CES has come down from 34.52% to 11.43%. Considering the fact that if the father of the petitioner had not transferred his shareholding to CESIM, the petitioner would have had the benefit of these shares, I am of the view that for the purpose of valuation of shares of CESIM, transfer of 2475 shares of CES held by CESIM should be ignored. However, As I have held in paragraph 14 ante, the fair value of the shares of CES held by CESIM shall be reduced by 10% while determining the fair value of the shares of CESIM.16. In view of the above findings, the consideration payable to the petitioner would be on the basis that he held 14.5% shares in CES and 24.7% in CEISM and the transfers had not taken place. The total consideration payable shall be reduced by 15% for the reasons stated in the earlier paragraphs. In so far as the consideration for his shares in CESWRDMC is concerned, there is no dispute that he holds 25% shares and no adjustment is necessary.
17. In so far as payment of interest is concerned, the main ground for seeking interest is that the respondents are responsible for the delay in determining the fair price of the shares. The petitioner has sought for interest from 14.1998 on the basis that the same was agreed to before the Supreme Court. The terms agreed to before the Supreme Court reads "It shall be open for the CLB to consider the question and the rate of interest which would be payable to respondents with effect from 1^st of April, 1998". From this, it appears that this Board has to decide all the matters relating to whether interest is payable and if so, at what rate and from what date. In other words, all the issues have been kept open to be decided by this Board. First I shall decide whether interest is payable. According to the petitioner, the respondents are responsible for the delay in determining the fair price, first by not providing full information to S.R. Batliboi and thereafter by challenging the maintainability of the petition when the petitioner sought for appointment of a new valuer and thereafter taking up the matter up to Supreme Court. The petitioner has further justified the claim for interest on the ground that he has been denied the benefit of the money and in view of the consent order, he could also not dispose of the shares otherwise. Shri Sarkar argued that when the petitioner was holding on to the shares and had been enjoying the benefit of being a shareholder including receipt of dividend during all these years, the question of payment of interest does not arise. It is an admitted fact that delay in determination of the fair price at least after the order of this Board dated 23.1.2002 is mainly on the respondents. No doubt, there is no stipulation in the consent order regarding payment of interest. Neither of the parties could have visualized that there could be such a long delay in determination of the fair price. Even though, I find justification in the submission of Shri Sarkar that since the petitioner had not parted with the shares and had been enjoying all the benefit of a shareholder, he cannot claim interest, yet, being conscious of the fact that it is the respondents who have delayed the determination of the fair price, on equitable grounds, I am of the view that the petitioner should be entitled to interest.
18. As far as the amount on which the petitioner is entitled for interest is concerned, since the fair price for the shares has not been determined as yet and as such has not become due and payable to the petitioner he cannot voice a grievance that he has been deprived of the benefit of the consideration. Further, even though the petitioner has alleged that by taking the matter upto the Supreme Court, the respondents are responsible for the delay, it is to be noted that not withstanding the appeals before the High Court, this Board had appointed two joint valuers who later on reported that they could not do the valuation. Therefore, the delay in valuation cannot be attributed only to the respondents. However, the fact is that because of the delay, for whatever or whomever has been responsible for the same, the petitioner has been deprived of the benefits the money that he would have got. No doubt, I find substance in the argument of Shri Sarkar that, the petitioner has been enjoying all the benefits of being a shareholder including receipt of dividends, yet, it cannot be a justification to deny interest to the petitioner. But at the same time, the interest cannot be on the amount of consideration which is yet to be determined as no one, particularly the respondents, could be held responsible for the delay after the parties had entered into consent terms before the Supreme Court, as the valuation would take its own time. In other words, petitioner is also partly responsible for the delay right from the beginning when he declined to accept the valuation of M/S SR Batliboi. Therefore, I am of the view that while the petitioner should get some interest, it cannot be on the consideration yet to be determined, and therefore the quantum on which the petitioner would be entitled to for interest, according to me is on the amount that he would have got if he had accepted the valuation of M/S Batliboi. Therefore, I hold that the petitioner is entitled for an interest at the rate of 9% on the amount that was payable to him for his shares in all the three companies on the basis of the valuation of M/S Batliboi. The consideration payable would be on the basis that he was holding 14.5% shares in CES, 24.5% in CESIM and on the basis that transfer of shares from CESIM had not taken place. There shall be no reduction of 10% for the purpose of computing the interest payable.
19. In so far as the date from which the interest payable is concerned, considering the fact that the consent order was passed only on 28.5.1998 and that there is no stipulation of payment of interest in that order and that it always takes some time for determining the fair value by the valuer and that the petitioner also questioned valuation of M/S SR Batliboi, I am of the view that the petitioner should be entitled to interest only from 23.1.2002 till the date of payment. The respondents are at liberty to deposit the amount due to the petitioner in his name in a fixed deposit with a bank on the basis of the valuation report of M/s Batliboi along with interest, so that they could avoid payment of interest till the final determination of the fair price by the Supreme Court.
(1) The holding of the petitioner in CHS will be taken as 14.5% in determining the fair price for his shares in CCS. (3) The valuation of his shares in CESIM will be on the basis that no transfer of shares from CESIM of CES shares had taken place.
(4) The total consideration payable to the petitioner for his shares in CESIM and CES shall be reduced by 10%.
(5) While determining the fair value for the shares in CESIM, the fair value of the shares held by it in CES shall be reduced by 10%.
(6) The petitioner will be entitled to an interest at the rate of 9% from 23.1.2002 on the total consideration which he would have received on the basis of the valuation of M/S SR Batliobi.