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2022 (3) TMI 1411 - Tri - Companies LawOppression and Mismanagement - stance of the Petitioner is that there was a gross and deliberate undervaluation of the pledged shares - Sections 241 and 242 of the Companies Act, 2013 - HELD THAT - It.is seen that AAPICO came in as a Joint Venture partner at SGAH level and has contributed both in equity and loan and that as already stated supra, 49.99% equity in SGAH was given to AAPICO, and ABT UK held 50.01% and ABT continued to hold the controlling interest. Hence, ABT continued to be the ultimate holding company of the automotive group. However, in respect of loan funds given by AAPICO, ABT UK's 50.01% shareholding in SGAH was pledged to AAPICO - there are force in the arguments advanced by the Learned Counsel for the Petitioner that the fact whether AAPICO is entitled to control of SGAH itself is in issue in UK pending adjudication. Pending the UK proceedings, AAPICO has secured an award from Singapore Arbitration Tribunal holding that AAPICO is entitled to 3/4 representation in the Board of SACL on the basis that AAPICO currently has majority in SGAH even though the same is disputed in UK Court - Also, as per Section 48 of the Arbitration and Conciliation Act, 1996 a Foreign Award cannot be enforced until the Hon'ble High Court of Madras pass an order to that effect. It was also brought to our knowledge that AOP No. 296 of 2021 is pending adjudication before the Hon'ble High Court of Madras. The Petitioner has made out a prima facie case for this Tribunal to pass an order of interim relief and also the balance of convenience lies in favour of the Petitioner. In view of the fact that the proceedings before the UK is pending as to whether the AAPICO was right in invoking the pledge and claim control of SGAH and also that the Arbitral Award is yet to be enforced by the Hon'ble High Court of Madras, the respondents are permitted to file counter in the main Company Petition within a period of 3 weeks from the date of this order and the Petitioner is also permitted to file rejoinder if any, within a period of 2 weeks thereafter.
Issues Involved:
1. Interim relief request by the petitioner under Sections 241 and 242 of the Companies Act, 2013. 2. Allegations of mismanagement and fraud by AAPICO. 3. Validity and enforcement of the Singapore Arbitration Award. 4. Control and management rights of SACL's Board. 5. Legal proceedings and their impact on the control of SACL. Detailed Analysis: 1. Interim Relief Request by the Petitioner: The petitioner sought interim relief under Sections 241 and 242 of the Companies Act, 2013. The respondent opposed this request and sought time to file a counter. The Tribunal reserved the matter for orders and directed the parties to file written submissions, which were duly submitted. 2. Allegations of Mismanagement and Fraud by AAPICO: The petitioner argued that AAPICO, which held a 49.99% equity stake in SGAH, misused its position to trigger a default by SGAH, leading to a hostile takeover. It was alleged that AAPICO deliberately pushed the US operations into bankruptcy, undervalued the pledged shares, and misused confidential information to acquire Portugal operations at a throwaway price, causing significant losses to SACL. The petitioner sought to restrain AAPICO from implementing resolutions passed at an EGM held on 25.01.2022. 3. Validity and Enforcement of the Singapore Arbitration Award: The petitioner contended that the Singapore Arbitration Award, which granted AAPICO the right to 3/4 representation on the SACL Board, was not enforceable until the UK Court decided on AAPICO's entitlement to control SGAH. The award itself noted that the UK Court was the proper forum to decide on this issue. Furthermore, the enforcement of the award in India was pending before the High Court of Madras. 4. Control and Management Rights of SACL's Board: The respondents argued that AAPICO, holding 77.04% shares in SACL through SGAH, had legitimate rights to control the SACL Board as per the Shareholders' Agreement and Articles of Association. They contended that the Sakthi Group, holding a minuscule 0.85% share, was attempting to defeat these rights through vexatious proceedings. They emphasized that the Singapore Arbitration Tribunal validated AAPICO's rights and directed the appointment of AAPICO-nominated directors proportionate to their shareholding. 5. Legal Proceedings and Their Impact on the Control of SACL: The Tribunal acknowledged that the issue of AAPICO's control over SGAH was pending adjudication before the UK Court, which had found a prima facie case for trial. The Tribunal also noted that the Singapore Arbitration Award was yet to be enforced by the High Court of Madras. Given these pending proceedings, the Tribunal found that the petitioner had made a prima facie case for interim relief. Findings and Interim Relief: The Tribunal heard submissions from both parties and concluded that the petitioner had made a prima facie case for interim relief. It was determined that the balance of convenience lay in favor of the petitioner due to the pending UK Court proceedings and the non-enforcement of the Singapore Arbitration Award. Consequently, the Tribunal passed an interim order restraining the respondents from acting upon or giving effect to any resolution passed at the EGM held on 25.01.2022 until the disposal of the present Company Petition. The respondents were directed to file a counter in the main Company Petition within three weeks, and the petitioner was permitted to file a rejoinder within two weeks thereafter. The case was posted for final disposal on 01.06.2022.
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