1 IN IN IN THE HIGH COURT OF JUDICATURE OF BOMBAY THE HIGH COURT OF JUDICATURE OF BOMBAY THE HIGH COURT OF JUDICATURE OF BOMBAY ORDINARY ORDINARY ORDINARY ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION COMPANY APPEAL NO.31 OF 2008 IN COMPANY PETITION NO.26 OF 2006 Alcot Slugs Pvt.Ltd. & Ors. ..Appellants. (Org.Respodnents) V/s. Shri Preetam C. Kelkar ..Respondent. (Org.Petitioner) Mr.P.D.Ankalesaria for Appellants. Mr.J.S.Kini i/b Suresh Dubey for Respondent. CORAM: CORAM: CORAM: A.M.KHANWILKAR,J A.M.KHANWILKAR,J A.M.KHANWILKAR,J DATE DATE DATE : DECEMBER 5, 2008. : DECEMBER 5, 2008. : DECEMBER 5, 2008. P.C. P.C. P.C. : : : 1. Heard Counsel for the parties. 2. According to the Appellants, the question that arises for consideration in this Appeal is whether the value of shares fixed by the Company Law Board for sale and purchase thereof at the rate of Rs.671/- per share is opposed to the scheme of Section 75 of Companies Act, 1956, for which reason the said order and the transaction will have to be set aside. It is not possible to entertain this argument in the fact situation of the present case. In that, it is not in dispute that the value of the shares was agreed upon between the parties, which statement was made before the Company Law Board, on 2 the basis of which the Company Law Board proceeded to dispose of the proceedings. In other words, the parties were ad-idem with regard to the price of shares in question and invited Board’s order in that behalf. It is not as if the value of shares is determined by the Board as such. In such a case, the rigours of Section 75 of the Act will have no bearing. 3. According to the Counsel for the Appellants, Section 75 implicitly prohibits entering into any agreement for excessive price of shares of the Company. It is not possible to accept this submission having regard to the purport of Section 75 which reads thus: "75. 75. 75. Return as to allotments. Return as to allotments. Return as to allotments.-(1) Whenever a company having a share capital makes any allotment of its shares, the company shall, within [thirty days] thereafter,- (a) file with the Registrar a return of the allotments, stating the number and nominal amount of the shares comprised in the allotment, the names, addresses and occupations of the allotees, and the amount, if any, paid or due and payable on each share: [Provided that the company shall not show in such return any shares as having been allotted for cash if cash has not actually been received in respect of such allotment;] (b) in the case of shares (not being bonus shares) allotted as fully or partly paid up otherwise than in cash, produce for the inspection and examination of the 3 Registrar a contract in writing constituting the title of the allottee to the allotment together with any contract of sale, or a contract for services or other consideration in respect of which that allotment was made, such contracts being duly stamped, and file with the Registrar copies verified in the prescribed manner of all such contracts and a return stating the number and nominal amount of shares so allotted the extent to which they are to be treated as paid up, and the consideration for which they have been allotted; and [(c) file with the Registrar- (i) in the case of bonus shares, a return stating the number and nominal amount of such shares comprised in the allotment and the names, addresses and occupations of the allottees and a copy of the resolution authorising the issue of such shares; (ii) in the case of issue of shares at a discount a copy of the resolution passed by the company authorising such issue together with a copy of the order of the [Tribunal] sanctioning the issue and where the maximum rate of discount exceeds ten per cent, a copy of the orders of the Central Government permitting the issue at the higher percentage.] Emphasis was placed on proviso to clause (a) in subsection (1) which has been inserted with effect from 15th October, 1965 vide amendment of 1965. That proviso has been inserted on the basis of recommendation of Dutta Commission. Once again, this argument overlooks that there is no express provision in the Act to the effect that if two parties willingly agree for a price of shares of the Company and incidently that price happens to be excessive, the transaction would be void in law. It is only if the law was to make such a provision, the argument 4 could have been of some consequence. There is nothing in the provisions of the Companies Act, which even remotely suggest that such a transaction is void. Assuming that the transaction arrived at between the parties was to be considered as voidable at the instance of the company, the fact remains that the company has not questioned the authority of the Counsel, who had made statement on behalf of the Company that the value of the shares should be fixed at the rate of Rs.671/- per share. In absence of such a stand, no fault can be found with the Board for having accepted the stand taken by the parties and to pass appropriate consequential Order. Thus understood, the argument of the Appellants that there was no material before the Board to justify the valuation of shares at the rate of Rs.671/- does not commend to me. Inasmuch as, that value has been determined by consensus of both the parties, who were parties to the proceeding before the Board. The Board was invited to pass order on the basis of that understanding. In such a case, the decision of the Board, which is impugned in this Appeal cannot be challenged at the instance of the Appellants before this Court on the above argument. Hence this Appeal fails. The same is rejected. (A.M.KHANWILKAR,J) (A.M.KHANWILKAR,J) (A.M.KHANWILKAR,J)