Case Note & Summary
The dispute arose between a shareholder and director, who held 40% of shares in a company, and the majority shareholders (60%) who were his family members. In 1998, the appellant filed a petition under sections 397 and 398 of the Companies Act, 1956, alleging oppression and mismanagement. The Company Law Board had previously directed the valuation of shares, which was set at Rs.2044 per share, and ordered payment to the appellant by July 31, 2003. However, the appellant did not receive any payment, leading to appeals in the High Court, which set aside the valuation due to bias and ordered a revaluation as of March 31, 2005. Both parties were dissatisfied with the High Court's order and filed appeals in the Supreme Court. The appellant argued that circumstances had changed significantly since the appeals were filed, as the majority shareholders had sold most of the company's movable assets. The respondents acknowledged the change but attributed it to the natural course of business. The Supreme Court found it appropriate to set aside both the Company Law Board's and the High Court's orders, remanding the matter for reconsideration by the Board, while allowing the appellant to raise issues regarding salary and perquisites. The court requested the Company Law Board to expedite the proceedings, with both parties agreeing to appear before the Board on October 13, 2008.
Headnote
A) Company Law - Oppression and Mismanagement - Revaluation of Shares - Companies Act, 1956, Sections 397, 398 - The appellant challenged the valuation of shares and sought a change in the date of valuation due to changed circumstances. The court remanded the matter to the Company Law Board for fresh consideration, taking into account all relevant events and facts as they exist today. Held that the Board should re-evaluate the situation in accordance with law (Paras 6-7).
Issue of Consideration
Whether the Company Law Board's decision regarding the valuation of shares and payment of salary and perquisites should be reconsidered in light of changed circumstances.
Final Decision
The Supreme Court set aside the orders of the Company Law Board and the High Court, remanding the matter for fresh consideration by the Company Law Board, allowing the appellant to raise issues regarding salary and perquisites.
Law Points
- Oppression
- Mismanagement
- Valuation of Shares
- Company Law Board
- Revaluation
- Salary and Perquisites
