2017 (10) TMI 570 - Tri - Companies Law

Compromise Petition - Held that - Each party as Petitioner and Respondent out of their own free will have the authority and capacity to enter into the Compromise and execute the Settlement Deed and perform their respective obligations under the Settlement Deed and the same would be binding and enforceable against such person under all applicable laws; and that each of the Petitioners and Respondents has full power and authority to grant the releases to the other as contemplated in the Settlement Deed. The Petitioners and Respondents have wholeheartedly jointly and severally agreed, confirmed and affirmed the terms of this Compromise Petition. The Settlement Deed is herewith produced as Annexure A to this Compromise Petition under Memo to the Honourable Tribunal. The Board Resolution by circulation passed by the Respondent No. 1 is herewith produced as Annexure B to this Compromise Petition under Memo to the Honourable Tribunal. The Petitioners and Respondents agree that the Honourable Tribunal may on an application filed by either the Petitioners or Respondent or the Company institute an execution proceeding to enforce the consent order passed pursuant to this Compromise Petition. The parties in person informed the Tribunal that they are accepting the terms of the compromise and that they have signed in the compromise settlement noting the contents. The Compromise is recorded. The petition is disposed of in terms of compromise settlement and the terms of the compromise are part and parcel of the order. In the result the petition is disposed of in terms of compromise settlement dated 16th August, 2017

Issues Involved:
1. Transfer of shares and relinquishment of rights.
2. Payment of consideration for the transfer of shares.
3. Handover of share certificates and compliance with regulatory requirements.
4. Effective Date of the Settlement Deed.
5. Resignation of directors.
6. Relinquishment of rights, title, claims, and interests.
7. Mutual release of claims.
8. Amendments to the Articles of Association.
9. Non-compete and non-solicitation covenants.
10. Validity and binding nature of the Settlement Deed.
11. Jurisdiction and dispute resolution.
12. Defamation and non-disparagement clause.
13. Authority and capacity to enter into the Settlement Deed.

Detailed Analysis:

1. Transfer of Shares and Relinquishment of Rights:
The Petitioners agreed to sell their entire shareholding in the Company to Respondent No.2 or its nominees. The shares involved include 19,289 Ordinary Equity Shares and 49 Class A Equity Shares owned by Petitioner No.1, 11,783 Ordinary Equity Shares owned by Petitioner No.2, and 911 Ordinary Equity Shares owned by Petitioner No.3. The Petitioners will relinquish all rights to these shares.

2. Payment of Consideration for the Transfer of Shares:
The Petitioners will receive a total consideration of ?9,00,00,000/- for the transfer of shares. The breakdown is as follows: ?5,43,24,881/- to Petitioner No.1, ?3,31,14,851/- to Petitioner No.2, and ?25,60,268/- to Petitioner No.3. The payments will be made via wire transfer by Respondent No.2.

3. Handover of Share Certificates and Compliance with Regulatory Requirements:
Simultaneously with the wire transfer, the Petitioners will hand over their share certificates and duly stamped and signed share transfer forms. They will also get the FC-TRS form pre-approved by the authorized dealer to ensure timely endorsement after receiving the payment. The Company will take necessary steps as per its Articles of Association to facilitate the transfer.

4. Effective Date of the Settlement Deed:
The Effective Date is defined as the date on which the Tribunal passes an order accepting the terms of the Settlement Deed and disposes of the Transfer Petition.

5. Resignation of Directors:
Mr. Vasudeva Adiga and Mr. Parameshwar Adiga will cease to be directors or officers of the Company from the Effective Date.

6. Relinquishment of Rights, Title, Claims, and Interests:
From the Effective Date, the Petitioners will relinquish all rights, title, claims, and interests in their shareholding in the Company. They will not make any claims on the assets or revenues of Respondent No.1 or against Respondent Nos.2 to 5 after receiving the settlement amount.

7. Mutual Release of Claims:
Both parties mutually release and discharge each other from any claims arising out of the execution, performance, or cancellation of the Investor Agreements or the Petitioners holding any shares of the Company. However, tax indemnities and representations and warranties related to the sale shares in the SSSPA will remain in effect.

8. Amendments to the Articles of Association:
The Company and Respondent No.2 will amend the Articles of Association to reflect the revised rights and obligations pursuant to the Settlement Deed. This includes deleting special articles and making other necessary modifications.

9. Non-compete and Non-solicitation Covenants:
The Petitioners will not start any new restaurants or outlets in the food and beverages or catering business for one year from the Effective Date. They will also not induce suppliers or employees to cease their association with the Company.

10. Validity and Binding Nature of the Settlement Deed:
Any modifications or amendments to the Settlement Deed must be in writing and executed by all parties. The Deed is executed voluntarily without duress or undue influence, and all parties have received legal advice on its terms and consequences.

11. Jurisdiction and Dispute Resolution:
The Court of Bengaluru will have exclusive jurisdiction to adjudicate any disputes arising from the Settlement Deed under Indian laws.

12. Defamation and Non-disparagement Clause:
Both parties agree to refrain from defamation, libel, or slander of each other and will not interfere with each other’s contracts and relationships. They will not make any statements that may damage the other's reputation.

13. Authority and Capacity to Enter into the Settlement Deed:
Each party represents that they have the authority and capacity to enter into the Settlement Deed and perform their obligations. The Deed is binding and enforceable against each party under applicable laws.

Conclusion:
The Tribunal recorded the compromise and disposed of the petition in terms of the compromise settlement dated 16th August 2017. The terms of the compromise are part and parcel of the order.

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