Present: 1. Justice A.K. Banerji, Chairman

2. Shri S. Balasubramanian, Vice Chairman

In the matter of Companies Act, 1956-Sections 397/398/634A

AND

In the matter of Amar Gawri & Ors.

Versus

M/S Amartex Industries Limited & Ors.

Present on behalf of parties:

1. Shri Virender Ganda, Advocate .. for petitioners

2. Shri Amar Gawri .. petitioner in person

3. Shri U.K. Choudhary, Sr. Advocate .. for respondents

4. Ms.Nimedata, Advocate .. for respondents

O R D E R

(Date of hearing: 30.8.2001)

S.BALASUBRAMANIAN:

1. The petitioners in CP No.46 of 1999 have filed this application under Section 634A of the Companies Act, 1956 ( the Act) seeking for enforcement of the order of this Bench dated 14.12.2000.

2. The facts of this case are that when the petition was taken up for hearing, considering the relationship between the parties, this Bench had advised the counsel as well as the parties to settle the disputes amicably. Pursuant to our suggestion, it was agreed by the parties that the petitioners would go out of the company by selling their shares to the respondents on a valuation to be made by the statutory auditors of the company. It was also agreed that the date of valuation would be 31.3.1998. Accordingly, statutory auditors of the company were appointed to determine the fair value of the shares. The report was to be submitted by 31.3.2000. Thereafter, on submission of the valuation report, both the parties raised objections on the valuation report and accordingly in our order dated 1.11.2000 it was recorded “ Since both the sides have not agreed at the price of the shares in spite of valuation report, the counsel for both the sides submit that the Bench may fix fair price of the shares. We shall accordingly determine the fair value”. Thereafter, the following order was passed on 14.12.2000: “When the petition was taken up for hearing, considering the family relationship between the parties, we advised them that they should try to resolve the dispute amicably. In the hearing held on 14.12.1999, the parties agreed that the Petitioner, holding 27% shares, would go out of the company by selling their shares to the respondent group at a fair price to be determined by the statutory auditors of the company. Accordingly, we passed an order on that day appointing M/S Bassi & Associates to determine the value of the shares. Accordingly, they have determined the value of the shares at Rs.30.80 per share. This valuation was not acceptable to the respondents as the valuation report suffers from various infirmities more particularly on the valuation of the land at Daruhera, building at Daruhera, Panchkula. They have also disputed the value of plant and machinery and miscellaneous assets which according to them should have been valued at replacement value and not at book value. They have also disputed the valuation for goodwill. According to them if all their objections on the valuation are taken into consideration, then, the fair price per share would come only to Rs.9 per share. According to the petitioners, even the book value per share on the basis of net worth of the company would work out to Rs.16.50. In view of the wide variation in the value per share computed by the valuer, and the value on the basis of the net worth, we tried to persuade the parties to arrive at negotiated price. The efforts did not succeed. In the hearing held on 01.11.2000, the counsel appearing for the parties submitted that the Bench itself may fix that fair price on the basis of various submissions made by the parties. Accordingly, taking into consideration the submissions made by the parties, and also taking into consideration the value per share on the basis of net worth of the company, we consider that it would be equitable to both the sides to fix the price per share at Rs.20 per share and accordingly we do so. While doing so, we have also taken into consideration the family relationship between the parties and also the fact that the petitioners among themselves hold 27% shares and they would be going out of the company once for all. We make it abundantly clear that the price fixed by us is not based on any calculation but purely on the basis of equitable considerations. The parties will appear before us on 22^nd December, 2000 at 4.30 Pm to decide on the mode and the time frame for payment of the total consideration for the shares held by the petitioners”. In pursuance to the directions that the parties should appear before us, they appeared on 22.12.2000 and after hearing the counsel/parties, this Bench passed an order as follows: “ The respondents are not willing to accept the value of Rs.20 per share but are prepared for Rs.18 per share provided that the petitioners are willing to repay to the company the amount due from them together with 18% interest. According to the petitioners, this matter is already before the civil court and as such they are not willing to accept the demand of the respondents regarding clearance of the dues by the petitioners. The parties are at liberty to pursue whatever course of action they may choose to adopt. The petition is disposed in terms of our order dated 14.12.2000”.

3. Now the petitioners have filed this application under Section 634A of the Act seeking for enforcement of the order of 14.12.2000. Shri Ganda, Advocate appearing for the petitioners submitted that in spite of the order dated 14.12.2000 fixing the price at Rs.20/- per share, the respondents are not willing to purchase the shares held by the petitioners and as such the CLB should enforce the said order or in the alternative permit the petitioners to seek execution of the said order before a court of law in terms of Section 634A of the Act.

4. Shri Choudhary, Sr. Advocate appearing for the respondents submitted: The CLB has not passed any order which could be executed. The order of the CLB is not a consent order since no compromise was finally reached. The order of the CLB cannot be considered to be a decree in terms of order 20 of the Civil Procedure Code and as such cannot be executed in terms of Section 634A of the Act. Even though the parties had agreed for settling the disputes amicably, yet, the respondents never gave their consent for Rs.20 per share. Since the order of 14.12.2000 was not a consent order and since no final order has been passed on merits of this case, no order in terms of Section 634A of the Act can be passed and accordingly he sought for dismissal of this application.

5. We have considered the arguments of the counsel. Section 634A of the Act reads : “Enforcement of the orders of Company Law Board: Any order made by the Company Law Board may be enforced by that Board in the same manner as if it were a decree made by a court in a suit pending therein, and it shall be lawful for the Board to send, in the case of its inability to execute such order, to the court within the local limits of whose jurisdiction, _(a) in the case of an order against a company, the registered office of the company is situated or (b) in case of an order against any other person, the person concerned voluntarily resides or carries on business or personally works for gain”.

6. From the provisions of this section, it is abundantly clear that any order of the Company Law Board can be executed as if it is a decree. Therefore, the only issue for consideration is whether the order dated 14.12.2000 could be enforced in terms of Section 634A of the Act. The order dated 14.12.2000 narrates the complete sequence of events that took place before this Bench from which it is clear that the parties had agreed that the this Bench itself would fix the fair price. Therefore, both the parties had consented to this Bench fixing the fair price of the shares and accordingly this Bench fixed a price of Rs.20/- per share and as such the respondents cannot now claim that they had not given consent to the price of Rs 20 per share. Therefore, as far as the price for the share is concerned, the same is final and binding on the parties. No doubt in the hearing held on 22.12.2000, the respondents expressed that they were not willing for Rs.20/- per share but were agreeable for Rs.18/- per share subject to certain adjustment of dues from the petitioners, yet, since such adjustment was not raised at any time during the earlier hearings and before the Bench fixed the price at Rs 20 per shares, this price is final and binding on the parties. Further, in the order dated 22.12.2000, this Bench had disposed of the petition in terms of the order dated 14.12.2000. Therefore, this order has become final between the parties and as such this order can be enforced in terms of Section 634A of the Act.

7. Accordingly, we direct the respondents to purchase the shares held by the petitioners as impugned in the petition at Rs.20/- per share on or before 31.12.2001 failing which the petitioners are at liberty to move the appropriate civil court for execution of the order dated 14.12.2000 read with this order.

8. The application is disposed of in the above terms.

(S. Balasubramanian ) (A.K. Banerji)