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IN THE HIGH COURT OF DELHI
Vipin Sanghi, J.
Appellants: Glencore Grain Rotterdam B.V.
Vs.
Respondent: Shivnath Rai Harnarain (India) Company
E.A. No. 342/2011 in EX.P. 72/2009
Decided On: 25.05.2011
Valuation Report - Sale of Shares - Order XXI Rule 64 CPC, Order XXI Rule 66 (2)(d), Order XXI Rule 78 Code of Civil Procedure - The court upheld the valuation report prepared by ITCOT for the sale of shares, rejecting the applicant's claim of non-disclosure and low valuation. The court found that the sale of the entire shareholding of judgment debtors No. 2 & 3 as a block was appropriate and necessary, considering the unlisted nature of the company and the influential minority shareholding. The court also dismissed objections regarding the absence of the exact amount in the sale notice, citing precedents and lack of substantial injury to the applicant.
Fact of the Case:
The judgment debtor No. 2 sought a direction to ITCOT to furnish a copy of the valuation report and to keep the public auction of shares in abeyance. The court had previously directed the sale of shares through an authorized broker, and ITCOT was appointed to undertake the valuation and sale of the shares.
Finding of the Court:
The court upheld the valuation report prepared by ITCOT and dismissed the applicant's objections regarding non-disclosure and low valuation. It found the sale of the entire shareholding of judgment debtors No. 2 & 3 as a block to be appropriate and necessary, considering the unlisted nature of the company and the influential minority shareholding. The court also dismissed objections regarding the absence of the exact amount in the sale notice, citing precedents and lack of substantial injury to the applicant.
Issues: The issues included the non-disclosure of the valuation report, low valuation of shares, and objections regarding the absence of the exact amount in the sale notice.
Ratio Decidendi: The court held that the sale of the entire shareholding of judgment debtors No. 2 & 3 as a block was appropriate and necessary, considering the unlisted nature of the company and the influential minority shareholding. It also dismissed objections regarding the absence of the exact amount in the sale notice, citing precedents and lack of substantial injury to the applicant.
Final Decision: The court dismissed the application, upholding the valuation report prepared by ITCOT and finding the sale of the entire shareholding of judgment debtors No. 2 & 3 as a block to be appropriate and necessary. It also dismissed objections regarding the absence of the exact amount in the sale notice, citing precedents and lack of substantial injury to the applicant.
Vipin Sanghi, J.
1. Issue notice. Notice is accepted on behalf of the decree holder by Mr. Vidhur Bhatia. Counsel for the decree holder has opposed this application without filing the reply.
2. I have heard learned senior counsel for the parties and proceed to dispose of this application.
3. The present application has been filed by the judgment debtor No. 2 to seek a direction to ITCOT Consultancy and Services Limited (hereinafter referred to as ITCOT) to furnish a copy of the valuation report prepared by it, and to grant leave to the applicant to file objections to the said valuation report. A further direction is sought to ITCOT to keep in abeyance the public auction proposed to be held in terms of the public notice issued by it for sale of shares of judgment debtors No. 2 & 3 held in judgment debtor No. 5 company.
4. By an order dated 19.04.2010 passed in this execution petition, this Court had, inter alia, directed as follows:
Since the decree is sought to be executed by sale of shares of J Ds No. 2 and 3 in the Company JD No. 5, the sale of these shares be done through an authorized broker. SBI Capital Markets Limited, Word Trade Tower, 6th Floor, Barakhamba Lane, New Delhi-110 001 is appointed as authorized broker. It is directed to sell the shares of J Ds No. 2 and 3 held by them in JD No. 5 and the amount so released be kept by SBI in suspense account and the court be informed about the amount realized by sale of share for satisfaction of the decree out of the amount so raised from the sale of the shares. Since the shares of J Ds No. 2 and 3 have been attached in execution of this decree, and JD No. 5 is not a listed company these shares shall be sold by SBI Capital Markets Ltd in the manner shares of an unlisted company are sold, after getting the value of the shares assessed through a Chartered Accountant. The SBI Capital Markets Ltd shall appoint a Chartered Accountant for assessment of value/worth of shares. The charges of the Chartered Accountant shall be borne by the Decree Holder.J Ds No. 2, 3 and 5 are directed to provide the account books and other necessary information to the Chartered Accountant so appointed so as to assess value/worth of the shares and once the value of the shares is assessed by the Chartered Accountant and the information is given, the shares shall be put to auction by above broker. The Decree Holder or any other person shall be at liberty to purchase these shares.
(emphasis supplied)
5. This order was challenged by the judgment debtors in appeal, being EFA(OS) No. 15/2010. The said appeal was dismissed by the Division Bench vide order dated 11.06.2010. Consequently, the order dated 19.04.2010 has attained finality. Subsequently, SBI Capital Markets Limited was substituted by ITCOT vide order dated 22.02.2011. The said order, inter alia, states as follows:
I, therefore, appoint ITCOT Consultancy and Services Limited 50-A, Greames Road, Murugesan Naicker Complex, Chennai-600006 Ph.# 044-28290324, 42936800 Fax # 044-28293512 as the firm to undertake valuation of the shares held by JD No. 2 & 3 in JD No. 5 and after valuing the shares to sell the shares. The work shall be split in two parts. The first part shall be the valuation of the shares and second part shall be selling of the shares.J Ds shall provide all necessary information to the above said broker for valuation of the shares and shall cause no hindrance. The aforesaid company shall complete the valuation work as early as possible, in all probabilities within 60 days. The initial charges for the first part of the work shall be borne by the decree holder to be recovered from J Ds as a part of the decreetal amount. The final fee for the work shall also be recovered by the DH as a part of the decree. The sale of shares shall be undertaken within 30 days after valuation of the shares. The agent shall give its report after completion of entire work to the Court. The money so realized shall be kept by agent in a nationalized bank and the
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