SICOM LIMITED Vs. PARMOD LATH

JUDGEMENT

(1.) The present petition is filed under section 31 (l) (aa) of the state Financial Corporation Act. Respondent No. 4 in the present petition is a company and the principal borrower. Respondent Nos. 1 to 3 are the directors and guarantors who have guaranteed the repayment of the loan amount lent and advanced to the 1st respondent company.

(2.) Some of the material facts of the present case, briefly enumerated are as under :-

(3.) The respondent No. 4 requested the petitioner to grant financial assistance of Rs. 75 lacs by way of equity participation in the equity shares of the 4th respondent company. It was agreed that the respondent No. 4 shall issue 7,50,000 equity shares of the face value of Rs. 10/- each on par to the petitioner and in consideration thereof the petitioner will pay a sum of Rs. 75 lacs to the respondent No. 4 as and by way of financial assistance to set up a project at village Walkhed, Tal. Dindori, Dist. Nasik in the State of Maharashtra. The respondent No. 4 was proposing to set up a plant for process of Dehydrated onions/garlic. Under the terms and conditions of the subscription agreement dated 13.12.1994 which was entered into by and between the petitioner and the respondent No. 4 company it was agreed that the petitioner will subscribe to the said 7,50,000 equity shares for the total sum of Rs. 75 lacs. It was further agreed that the respondent No. 4 will repurchase the said shares of the petitioner under the terms and conditions of the said agreement. Some of the relevant terms of the said subscription agreement which are relevant for the purpose of the present petition are briefly enumerated as under :- 1. The Company shall issue to the Corporation and the Corporation shall subscribe to 7,50,000 equity shares of the company of the face value of Rs. 10 each at par for Rs. 75,00,000 (Rupees seventy five lacs only) , (hereinafter referred to as the said Shares') on the terms and conditions detailed in appendix 'a' to this Agreement agreed and accepted by the Company. " the terms and conditions annexed as Appendix 'a' to the said subscription agreement, inter alia, provide for repurchase of the shares. Clause 3 of the said terms and conditions reads as under :- 3. repurchase OF SHARES. a. If at any time the SICOM decides to sell its shareholding in the Company, it shall first make an offer to Shri Pramod Lath and Shri Manish Kejriwal (hereinafter referred to as the PROMOTERS) and/or their nominees for the repurchase of these shares. Such an offer for the sale of the shares shall be on the basis of the highest of the following three alternatives: i. The (paid up value of the shares) / (price at which the shares are acquired by sicom i. e. face value plus premium) plus an amount computed at the prevailing lending rate of SICOM for non-refinanceable loans at the time of sale, less dividends, if any, received by SICOM in respect of these shares from the date of such subscription or disbursement of deposit/ unsecured loan/advance against the shares upto the date sale. However, such price shall not be less than the paid up value of the shares) / (price at which the shares are acquired by SICOM). ii. If listed, the average price of the shares of the Company ruling on die recognised stock exchange computed for a period of preceding 3 months from the date of such offer by SICOM / the date on which the option for the repurchase of shares is to be exercised by the promoters, as the case may be. iii. The break up value of the shares of the Company on the basis of proforma and/or audited accounts, if available, for the preceding quarter ended within atleast 120 days from the date of such offer by sicom for the sale of shares. b. Acceptance of refusal of the offer for repurchase of the shares shall be communicated by the PROMOTERS and/or the nominees of SICOM in writing within a period of 30 days from the date of the offer by SICOM. c. In the case the PROMOTERS and/or nominees decide not to purchase the shares or fail to communicate their decision within a period of 30 days from the date of the offer, SICOM shall be free to transfer or sell the said shares to any other party at any time at such price and on such terms and conditions as it may deem fit, without making any further offer to the PROMOTERS. d. The loss suffered by the SICOM as a result of sale pursuant to Clause (c) hereinabove, and all the expenses incidental to the sale shall be made good to SICOM by the PROMOTERS and/or the nominees within a period of 30 days from the date of demand made by SICOM. e. Notwithstanding the provisions of the Clauses (a) to (d) hereinabove : (i) The PROMOTERS and/or the nominees shall jointly and severally buy back the shares held by SICOM at the end of the third year, from the date of allotment of shares or commencement of production ink the project, whichever is later, at a price to be determined in accordance with the formula laid down hereinabove. (ii) The PROMOTERS and/or the nominees will have the option to repurchase from SICOM any time after three months of listing of the shares on a recognised Stock Exchange, all the shares held by SICOM in the Company in one instalment in accordance with the formula laid down hereinabove. f. In case, however, the PROMOTERS and/or the nominees decide to repurchase the shares on the offer made by SICOM, they shall arrange to remit the amount payable to SICOM and take delivery of the relevant share Certificates within a period of one month from the date of acceptance of the offer. The share transfer fee, stamp duty and other expenses in connection with such transfer of shares shall be borne and paid by the PROMOTERS. g. If for any reason the project is not implemented production does not commence in the Project within 5 years of the date of first disbursement by sicom, PROMOTERS shall immediately repurchase all the shares subscribed by sicom and/or shall repay the entire unsecured loans/advanced extended by sicom against their equity contribution in accordance with the formula laid down hereinabove. " thus, under the repurchase scheme it was provided that if the petitioner decides to sell the said shareholding to the company it shall make an offer to two of the promoters and/or nominees for the repurchase of these shares in any of the three alternatives prescribed thereunder. Under Clause 3 (c) it was provided that in case the promoters and/or nominees decide not to purchase the shares or fail to communicate their decision within a period of 30 days from the date of the offer, SICOM the offer, SICOM shall be free to transfer or sell the said shares to any other party at any time at such price and on such terms and conditions as it may deem fit, without making any further offer to the PROMOTERS. Under clause 3 (d) of the said terms and conditions it was provided that the petitioner shall be entitled to recover from the respondent No. 4 the loss suffered by them as a result of the sale of the said shares in pursuance of Clause 3 (c) of the said terms and conditions and all other expenses incidental to the sale.