2020 (2) TMI 1541 - Tri - Companies Law

Transfer of shares - Respondent No. 2, 3 and 4 will purchase all the shares of the petitioners 1 2 at the rate of ₹ 331/- per share - Sections 397 -398 of the Companies Act, 1956 - HELD THAT - It is stated that, the petitioners shall issue and sign the Share Transfer Forms having details of number of shares share certificates and the counsel for the petitioner will hand over the same to the counsel for the respondents as and when the cheques are given. Thereby, petitioners agreed to withdraw all pending cases/complaints/suits etc against all the respondents at various Courts/forums on the date of signing the Memorandum of Settlement - It is further stated that in case of any financial liability that may fall upon the Company on account of the non-compliances during the period when the petitioners were whole time Directors, it shall be proportionately shared among the members of the Board as on the date of non-compliance, in proportion to their shareholding after exhausting legal remedies. As agreed between the parties, this settlement memo was filed and prayed to close this Company Petition - Petition allowed.

Summary

Issues: Company Petition under Sections 397-398 of the Companies Act, 1956

Analysis:
1. Settlement Agreement: The Company Petition was filed by the petitioners against the respondents under Sections 397-398 of the Companies Act, 1956. However, both parties reached a settlement agreement on 11.02.2020, where it was decided that Respondent No. 2, 3, and 4 would purchase all shares held by the petitioners at a specified rate per share as per the valuation report. The cheques for payment would be held by the respondents' counsel, and the share transfer forms and certificates would be held by the petitioners' counsel.

2. Withdrawal of Cases: The settlement agreement included a provision where the petitioners agreed to withdraw all pending cases, complaints, suits, etc., against the respondents in various courts and forums upon signing the Memorandum of Settlement. This clause aimed to resolve any ongoing legal disputes between the parties.

3. Financial Liability: Another significant aspect of the settlement was the allocation of any financial liability arising from non-compliances during the period when the petitioners were whole-time Directors. The agreement stated that such liabilities would be proportionately shared among the members of the Board as on the date of non-compliance, based on their shareholding after exhausting legal remedies.

4. Closure of Company Petition: Based on the settlement agreement and the mutual understanding between the parties, a settlement memo was filed, and the petitioners prayed for the closure of the Company Petition. The Tribunal allowed the prayer, and the Company Petition was disposed of without any costs imposed, bringing an end to the legal proceedings between the parties.

This detailed analysis highlights the key provisions and outcomes of the settlement agreement reached between the petitioners and respondents, leading to the closure of the Company Petition under Sections 397-398 of the Companies Act, 1956.