Has anyone gone through this document @ http://indiankanoon.org/doc/230068/
This relates to the promoter's case against 2 ex promoters.
I am not completely sure as to what can be inferred from this.
Please find below some extracts:
P.V.Chandran (the appellant herein) had a 19% share
P.K.Ganeshwar, and M.Rathnaswamy 38% share combined
As of 2005, the company had the bank liability to the tune of approximately Rs.140 crores
In the said circumstances, the company proposed to increase the share capital.
After negotiations with Unit Trust of India Investment Advisory Services, the appellant allotted to them 8,75,000 equity shares of the face value of Rs.10 each and at a premium of Rs.175/- per share, as evidenced by the agreement dated 19.05.2005.
On 19.05.2005, the shares were allotted to the Unit Trust of India Investment Advisory Services Limited at the premium of Rs.175/- per share.
The allotment was at a discount of approximately Rs.60/- per share against the trading in stock exchange on that date.
At that time, certain differences arose between two groups of promoters, viz., the appellant group and the group comprising of P.K.Ganeshwar and M.Rathnasamy. Finally, a resolution was arrived at through the intervention of UTI Venture Funds Management Company Private Limited, the Manager for the Unit Trust of India Investment Advisory Services Ltd. As per the agreement, the UTI Venture Funds Management Company Private Limited would facilitate the sale of the whole shares held by the two dissenting promoters P.K.Ganeshwar and M.Rathanasamy comprising approximately 21,99,000 shares at an average price of Rs.250/- per share. It was accepted that the appellant would continue with the company and assume the management.
Thus, the appellant, with a view to settle the dispute, had assured the dissenting promoters, to realise the price of Rs.250/- per share, with the assurance that in the event of the realisation being less than Rs.250/- per share the appellant will compensate to the extent of shortfall. The parties agreed that the bank of Nova Scotia, having its branch office at Coimbatore would act as an Escrow agent in respect of the above transactions. Accordingly, an escrow agreement was entered into on 24.08.2005. As per the escrow agreement, the appellant would assure the sale realisation at the rate of Rs.250/- per share to the dissenting promoters and in the event of a shortfall, such shortfall would be made good by the appellant. If there was any excess realisation over and above Rs.250/-, that would be taken by the appellant. The shares were sold at a higher price and thus, the appellant received Rs.2,74,12,446/- for the assessment year 2006-07.
What isn't clear is how the share was valued at 250 bucks when the share price was nowhere close to that number in May 2009. Can someone shed some light?