2021 (8) TMI 1275 - HC - Indian Laws

Seeking direction to transfer to the Petitioner 11 % of the equity capital of the Respondent No. 5 - seeking directions to transfer, order or direct the Respondent No. 1 to 4 to pledge their entire equity holding in Respondent No. 5 to the Petitioner - seeking restraint on Respondents No. I to 4 from transferring, alienating, disposing, or in any manner dissipating the equity capital of RSIL held by them to the extent of an aggregate 11 % and/or in any manner dealing with such shares - seeking direction to Respondents No. I to 4 to get 11 % of the equity capital of RSIL (from among RSIL's shares held by them), released from the pledge to the lenders by paying off the requisite debt. HELD THAT - Mr Chandhiok, learned Senior Counsel appearing for respondent nos. 1 to 4 states that the claims raised by the petitioner and the contentions advanced on its behalf are seriously disputed. He states that the respondent no.1 neither accepts that there is any agreement to refer the subject disputes to arbitration nor do respondent nos. 1 to 4 acknowledge that they have any obligation to transfer or otherwise make available shares of respondent no.5 to the petitioner. He, however, fairly states that notwithstanding the objections, the respondent nos. 1 to 4 will continue to hold majority shares in respondent no.5 for at least a period of 90 (ninety) days from today and will not further encumber the same during the said period - The respondent nos. 1 to 4 are bound down to the statements made on their behalf. Application disposed off.

Summary

Issues:
Petition under Section 9 of the Arbitration and Conciliation Act, 1996 for transfer of equity capital, pledge of shares, and restraining transfer of shares.

Analysis:
The petitioner filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996, seeking an order for the transfer of 11% equity capital of respondent no.5 company. The petitioner claimed entitlement to these shares based on agreements dated 25.11.2019 and 09.12.2019. Respondent nos. 1 to 4 disputed the claims raised by the petitioner, denying any agreement to refer the disputes to arbitration or any obligation to transfer shares of respondent no.5. However, they agreed not to encumber the shares for a period of 90 days. Respondent no.5 also contested the existence of any arbitration agreement. The court disposed of the petition without passing further orders, clarifying that all rights and contentions of the parties are reserved. The respondent nos. 1 to 4 were bound by their statements made during the proceedings.

This judgment highlights the legal battle over the transfer of equity shares and the pledge of shares in a company. The petitioner sought specific relief under Section 9 of the Arbitration and Conciliation Act, 1996, emphasizing agreements as the basis for the claim. The respondents vehemently disputed the existence of any such agreements or obligations, leading to a contentious legal dispute. Despite the denials, the court acknowledged the temporary agreement not to encumber shares, indicating a temporary resolution pending further legal proceedings. The court's decision to reserve all rights and contentions of the parties underscores the complex nature of the case and the need for a comprehensive legal examination.

In conclusion, the judgment reflects the intricacies of commercial disputes involving equity transfers and pledges. The legal battle centered around conflicting claims based on alleged agreements, with respondents denying any obligation to transfer shares. The court's intervention under Section 9 of the Arbitration and Conciliation Act, 1996, aimed to address the petitioner's plea for specific relief. The temporary agreement not to encumber shares provided a temporary respite amidst the legal tussle. The judgment's emphasis on reserving all rights and contentions signifies the ongoing legal complexity and the need for further legal proceedings to resolve the dispute conclusively.