11,12,13,15 and 16 be ordered and mandatory injunction of this Honble Court to deliver up to the 1st Respondent the share certificates held by them in respect of 17,666 shares allotted on 16.11.1985 to the 1st Respondent for cancellation As had been numbered by the learned Single Judge, there was numberprayer for transfer of the disputed shares to the appellants.
It was alleged that the stipulation of time companyld number be imposed unilaterally.
The appellants called upon the Auditor to fix a fair valuation after giving the appellants a proper opportunity of being heard.
The allegation against the Auditors was that the valuation had been fixed companylusively and was number just, fair or reasonable according to the recognized principles of valuation.
There was numberresponse to either of these letters by the Auditors who straightaway issued a certificate on 21.2.1985 certifying that the price of the 93 shares was Rs.2,10,273/ and of the 3417 shares Rs.77,25,837/ .
In the meantime several of the parties including Shanta died.
twenty lacs as an earnest of our bonafides and genuine desire to purchase the said shares.
The appellants affirm that they came to know of the transfers of the shares to the Pawar group only when the Minutes of the earlier Meeting held on 21.9.1985 were put up for approval.
3 and 4 companytending that there was numberquestion of time being of the essence either under Article 57 A or under the offer letters.
The beneficiary of these transfers allotments is the respondent No.5 and his group represented by the respondents Nos.
This was granted by the Auditors upto 20.2.1985.
The Division Bench dismissed the appellants appeal and allowed the cross appeals filed by the respondents holding inter alia that the violation of S.108 was a mere irregularity which was curable, that the sale of 3417 shares had been validly made to the Pawar group and that although there was some irregularity in issuing the 17,666 shares, the irregularity had been cured by the subsequent ratification of the decision.
II.9 In the meanwhile, the appellants had protested against the certification to the Auditors both with regard to the procedure followed as well as the value certified.
The letters exchanged, the suits filed do number show that the appellants were renouncing the companytract number that they were absolutely refusing to perform the companytract.
At the instance of the appellants the interim order passed by the High Court on 21st December, 1989 was directed to companytinue for 8 weeks.
II.10 In response to this letter a telegram was sent by respondent No.3 stating Will companymunicate action numberhing in your letter deemed as admitted.
It was also stated that there was a final and companycluded companytract between the parties for the purchase of the said shares.
2, 3 and 4 on the ground that the subject matter involved in the suit was outside the pecuniary jurisdiction of the Court.
They also filed an application for extension of time for depositing the amount in terms of the Trial Courts order before the Trial Court.
5,6,8,11,12,13 and 14 be ordered and directed by a mandatory order and injunction of this Honble Court to deliver up to the 1st respondent the share certificates in respect of the said 3417 shares and 93 shares for removal of their names there from That the Respondent Nos.
II.14 On 1.10.1985 the appellant wrote to the respondent Nos.
This was followed by a letter dated 21.9.1985 written by the appellants.
The day before the meeting was held, on 20.9.1985, the respondent No.5 and his group lodged transfer forms in respect of the 3417 and 93 shares with the companypany.
3 and 4 in the companypany.
2, 3 and 4 from selling the shares companytrary to the companycluded companytract with the appellants.
It was however number intimated as to whom the shares were sold.
Also between the decision of the single Judge and the filing of the appeal by the appellants, the companypany became a Public Limited Company by virtue of Section 43A of the Act.
11,12,13,15 and 16 be removed from the Register of Members of the 1st Respondent Company in respect of 17,666/ shares That Respondent Nos.
They also stated that the time fixed was unreasonable and that in any event the certificate issued by the Auditor companyld number be treated as a final certificate.
11 to 16, all private limited companypanies.
Shanta asked for an extension of time to submit such information.
This had been so held by the Learned Single Judge which finding was number challenged before the Division Bench.
3 and 4 as holders of 93 shares intimating the appellant that the shares had already been sold.
Shanta died during the pendency of the appeal before this Court.
This was also how the parties understood the situation as the companyrespondence exchanged between the parties evidences.
The respondent No.2 was appointed as a Chairman upon the retirement of the respondent No.3.
The Company was directed to pay back the Pawar group a sum of Rs.17,66,600/ in respect of the 17,666 shares.
At the time of admission of the appeal an interim order had been passed by the Division Bench on 21st December, 1989 directing that pending disposal of the appeal, the appellants right of preemption was number to be disturbed and the companypany was directed number to issue or invite any fresh capital.
On the next date, the appellants sent a telegram to the Company protesting against holding the meeting of the Board of Directors at such short numberice and requesting for postponement.
As far as the 17,666/ shares were companycerned, it was directed that they should be allotted to such persons or persons at such price as the Board of Directors may decide.
The appellants filed an appeal from this order in so far as it was made companyditional on the deposit of the sum of Rs.79,86,110/ .
Efforts for an amicable settlement were number fruitful.
8 The respondent Nos.
On the issue and allotment of 17,666/ shares the Trial Court held that they were invalid.
Alternatively for damages by way of companypensation of Rs.3 Crore or 4 Crore?
No reason was put forward for this volte face by the appellant In response to this letter, two letters dated 2.10.1985 and 3.10.1985 were written by respondent No.2 on behalf of the Executors and by the respondent Nos.
5 and his group were number bonafide purchasers of the shares as they were aware of the preemptive right of the appellants to the shares.
The appellant was brought on record as Shantas only legal heir and representative.
2, the respondent No.
The Division Bench did number go into the issue having held in favour of the respondents on the merits.
Without prejudice to all that was stated and also without prejudice to their legal rights to take actions relating to the Certificate dated 21.2.1985 issued by the Auditors, the appellants wrote We are willing to deposit with any stakeholders of our mutual choice an amount of Rs.
The said amount will be paid to the stakeholders within three days from the receipt of your companyfirmation that you are ready and willing to accept this interim arrangement.
2, 3 and 4 stating that they were willing to purchase the shares at the price fixed by the Companys Auditors and would pay the same immediately upon the modalities for such payment being intimated.
Despite their protest the Minutes were approved.
II.11 On 2.3.1985 and 1.4.1985 two suits were filed by the appellants before the Civil Judge, Pune praying for a permanent injunction to restrain the respondents Nos.
The appellants claim that the numberice was given by a telegram late in the night on 16.9.1985.
225 of 1988 and 226 of 1988 before the Courts in Pune claiming specific performance of the companytract alleged to be existing in favour of the appellants for transfer of the 3417 and 93 shares.
The second branch of the appellants grievance pertains to the issue and allotment of 17,666/ shares of the companypany.
II.16 It was in these circumstances that the application under Section 155 of the Companies Act, 1956 was filed by the appellants.
The suits are pending.
5 and his group companyditional upon the appellants depositing a sum or Rs.80,73,000/ in the Court within a period of six weeks.
It was then said that in the event the appellants did number deposit a sum of Rs.79,86,110/ within six weeks the entire petition filed by the appellants would stand dismissed.
He also held that the transfers had been made in violation of the provisions of the Section 108 of the Companies Act, 1956 and the Articles of Association of the Company.
The basis of the claim of the appellant and Shanta with regard to the 3417 and 93 shares was the failure to allow the appellants to exercise their undisputed right of preemption in respect of the shares.
3 and the respondent No.
The stakeholder shall hold these monies until such time, but number later than one month within which we hope the Companys Auditors will submit a just, fair and impartial Certificate and it will be accepted by us.
3 4 then wrote to Shanta on the same date calling upon Shanta to pay the sum of Rs.2,10,273/ in respect of 93 shares on or before 2.3.1985 time being of the essence failing which they would dispose of the shares in such manner as they thought fit.
II.13 On 16.9.1985 a numberice was issued by the Board of Directors of the Company that a meeting would be held on 21.9.1985.
The request of the appellant for adjournment of meeting was number heeded to and the meeting was held on 21.9.1985 as scheduled.
At the meeting, despite there being numberitem in the agenda relating to the registration of the shares sold, a resolution was passed to register the transfer of the 3417 equity shares standing in the name of the four Executors as well as the 93 shares to the respondent No.5 and his group which included the respondent Nos.
II.17 Before we close this chapter of facts on the transfer of 3417 and 93 shares, it may be numbered that the District Court at Pune recalled its order rejecting the plaints in the two suits which had been filed by the appellants on a review application filed by them.
As far as the issue of 17,666/ shares are companycerned it is submitted that it was validly done and the allotment of the shares was duly made to the Pawar group.
There is also a challenge to the transfer of 93 shares by the respondent Nos.
It was held that the respondent No.
Before the eight weeks expired, the appellants filed the present appeal and an interim order was granted on 16th September, 1991 in terms of the order passed by the High Court on 21st December, 1989.
In 1948, Dr. Parulekar and Shanta promoted a companypany known as M s. Sakal Papers Pvt.
The appeal which is number being prosecuted by the daughter of Dr. Parulekar and Shanta, arises out of proceedings initiated by Shanta and the appellant under Section 155 as it stood in 1986 of the Companies Act, 1956 referred to hereafter as the Act in the Bombay High Court.
As Shanta was alive during the proceedings before the High Court, to avoid unnecessary verbiage, the appellant and Shanta are referred to hereafter as the appellants.
The respondent No.5 himself was appointed as an Additional Director of the Company together with another member of the respondent No.5s group.
They also wrote to the respondents Nos.
In the meanwhile the Appellants filed two suits being CS 225 and 226 of 1988 before the Court in Pune against the respondents seeking specific performance of the companytracts of sale of 3417 and 93 shares to them.
There is numberrecord when the offer of the respondent No.5 or his group had been made either to respondent Nos.
The appeal filed by the appellants against the Judgment and order of the learned Single Judge as also cross appeals filed by the respondents were heard and disposed of by a companymon judgment.
The suits were rejected on 5.8.1985 by the Civil Judge on the application of the respondents Nos.
By a letter written on the next date, Shanta asked for companyies of the documents submitted by the Company to the Auditors.
The learned Single Judge held that the transfer of the 3417 shares was made companytrary to the appellants rights of preemption.
In case a just, fair and impartial Certificate is number issued by the Companys Auditors, within the said period, then the stakeholder shall return the said monies to us without any objection immediately on a written demand by us.
The respondents challenged the order before the High Court.
II.15 On 13th October, 1985 a Board Meeting was held at which the appellants were present.
RUMA PAL, J. In 1933 Dr. N. B. Parulekar and his wife Shanta, started a Newspaper called Sakal.
3 or 4 or to the Executors prior to the sale number of any further numberice being given in respect of the sale of the shares to the respondent No.5 and his group to the appellant.
Having effectively held in favour of the appellants on merits, the Trial Court did number set aside the transfer of the 3417 and 93 shares but set aside the transfer of 3417 and 93 shares to the respondent No.
By a letter dated 20.2.1985 Shanta called upon the Auditors to submit a draft report and draft certificate within seven days in order to enable her to make her submissions in respect thereof.
6 to 16 hereafter referred to companylectively as the Pawar Group .
One of the matters in dispute in this appeal relates to the transfer of 3417 shares in the companypany belonging to the estate of late Dr. Parulekar by three of the four executors of the will of Dr. Parulekar.
The appellant also protested against the threat held out in the letter dated 21.2.1985, to sell the shares to third parties.
The Trial Court had rejected the preliminary objection and held that it was open to the parties to choose any one of the remedies available to such party and that the remedy under Section 155 of the Companies Act was equally efficacious, definitely more speedy and certainly appropriate.
According to all the respondents briefly speaking, the appellants were precluded from exercising any right of preemption and had in any event failed to exercise their right of preemption in respect of the 3417 and 93 shares.
The executors named in the will were Shanta, the respondent No.
II.12 According to the respondents, the 3417 and 93 shares were then sold to the respondent No.5 and his group on 9.9.1985.
Dr. Parulekar died in 1973.
Limited, which is the respondent No.1 and is referred to hereafter as the companypany.
