2017 (9) TMI 1609 - Tri - Companies Law

Locus-standi of the petitioner - they are neither shareholders nor members of the Respondent No. 1 company - breach of conditions of the MOU between the petitioner and respondents - False information filed through a fictitious AOC-4 and MGT-7 with the ROC without the approval of the Board of Directors and the shareholders of the Company - Held that - A serious question is raised by the respondents that the first petitioner is no longer a shareholder as the shares are reverted back by operation of Clause 7 (a) of MOU and that the petitioners No.2 a 3 ceased to be the Directors, as no resolution is passed by AGM confirming their appointment as Directors. The Respondents have raised a serious objection that the petitioners have nothing to do with the management and that they have no right to seek any interim relief. As already stated, the respondents have also filed a separate application under Arbitration and Reconciliation Act to refer the dispute to the Arbitrator and it is still pending. The respondents are questioning the maintainability of the petition by the petitioners on the ground that the first petitioner ceased to be the shareholder and the petitioners No.2 and 3 are not the Directors. Therefore, in the light of these contentions and further the first petitioner has failed to adhere to the payment schedule, it is not possible to grant interim relief in favour of the petitioners as prayed. The first petitioner is yet to establish its rights over the shares said to have been transferred in the light of Clause 7(a) of the MOU and also in the light of undertaking letter executed by the first petitioner marked as Annexure- R/1 to the objections. The petitioners main document Annexure-A/8 contemplates entering into agreements. MOU is not a final document. The parties have to enter into definite agreements basing on the compliance of the provisions of MOU. Therefore, MOU itself is not a sole document to create rights in favour of the parties. It should be followed by definite agreements. The last paragraph of MOU is as follows The execution of this MOU is intended to constitute a binding obligation on both the parties. This MOU is intended to outline the various points to be included in the definitive agreements. To give effect to the spirit of this MOU, the parties agree to enter into the definitive agreements. In the light of the above discussions, the petitioners cannot be granted interim relief as prayed for.

Summary

Issues Involved:
1. Allegation of filing false information through fictitious AOC-4 and MGT-7 forms.
2. Dispute over the locus standi of the petitioners.
3. Compliance with the Memorandum of Understanding (MOU) dated 03.05.2015.
4. Maintainability of the petition under Sections 241-242 of Companies Act, 2013.
5. Arbitration clause in the MOU.
6. Interim reliefs sought by the petitioners.

Detailed Analysis:

1. Allegation of Filing False Information:
The applicants alleged that the respondents filed false information through fictitious AOC-4 and MGT-7 forms for the financial years 2014-15 and 2015-16 without the approval of the Board of Directors and shareholders, violating legal provisions. They requested the Tribunal to restrain the respondents from taking any corporate action without their presence and to direct the ROC not to record these forms.

2. Dispute Over Locus Standi:
The respondents argued that the petitioners lacked locus standi as they were neither shareholders nor members of the Respondent No. 1 company. They cited a Memorandum of Understanding (MOU) dated 03.05.2015, which outlined payment terms for the sale of shares. The petitioners allegedly failed to fulfill these terms, leading to the automatic reversion of shares to the original shareholders, thereby nullifying their status as shareholders.

3. Compliance with the MOU:
The MOU stipulated a payment schedule: ?3 crores initially, ?12 crores after due diligence, and ?3 crores by 31.12.2015. The petitioners paid only ?3 crores and failed to pay the remaining ?15 crores. The respondents contended that due to this failure, the shares reverted to the original shareholders as per Clause 7(a) of the MOU. The petitioners argued that the respondents failed to transfer the land and building, hindering their ability to pay the balance.

4. Maintainability of the Petition:
Respondents contended that the petition was not maintainable under Sections 241-242 of the Companies Act, 2013, as the petitioners were no longer shareholders. The Tribunal noted that the petitioners' rights over the shares and their status as directors needed to be established in the main petition, considering the non-compliance with the MOU's payment schedule.

5. Arbitration Clause in the MOU:
The respondents highlighted an arbitration clause in the MOU, stating that any disputes should be referred to arbitration. They filed a separate application under Section 8 of the Arbitration and Reconciliation Act to refer the matter to an arbitrator, which was pending. The Tribunal acknowledged this contention, indicating that the dispute might need to be resolved through arbitration.

6. Interim Reliefs Sought by the Petitioners:
The petitioners sought interim reliefs, including restraining the respondents from taking corporate actions without their presence, directing the ROC not to record certain forms, and holding fresh Board meetings and AGMs. The Tribunal found that these interim reliefs were not in aid of the main reliefs sought in the petition. Given the unresolved issues regarding the petitioners' status and the pending arbitration application, the Tribunal concluded that interim relief could not be granted.

Conclusion:
The Tribunal dismissed I.A. No. 80/2017, denying the interim reliefs sought by the petitioners. The main issues, including the petitioners' shareholder status and compliance with the MOU, were to be determined in the main petition. The Tribunal emphasized the need for definitive agreements following the MOU and acknowledged the potential for arbitration to resolve the dispute.