9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (6) TMI 344 - Tri - Companies LawOppression and Mismanagement - transfer of shares of petitioner, by its nominee directors, without his consent - dispute required to be referred to Arbitrator or not - sale of rights issues of respondent 1 Company, pending the adjudication. Whether transfer of some of shares of the petitioner in R1 Company by its nominee directors R3 R4 to R2 is prima-facie legal and valid? - HELD THAT - Since R3 R4 were not specifically restrained by the petitioner acting on its behalf while acting as its nominee Directors in R1 Company, such transfer of shares, prima-facie cannot be held to be void in absence of enough material. In any way it can't be held at this stage that the act of transferring the Petitioners shares in R1 Company by R3 R4 is fraudulent transfer. Such finding can't be recorded unless the matter is heard at length - The fact remained that the transfer of shares prima-facie does not appear to be void - issue answered in affirmative. Whether the dispute in between the petitioner and the respondent requires to be referred to the Arbitrator in view of clause 18 of SHA dated 17/1/2018? - HELD THAT - The mere allegations of fraud simpliciter levelled against R3, R4 R5, are sufficient to hold prima-facie that such allegations may not stand to legal scrutiny for want of sufficient material. The petitioner and R2 have entered into MO A dated 14.11.2017 and shareholding agreement dated 17.01.2018 whereby the R1 has been formed. Both the petitioner and respondents have agreed that the dispute that would arise out of Joint venture activities of R1 Company shall be referred to the arbitration - the matter in dispute except allegation of transfer of shares and rights issues has to be referred to the arbitrator - question answered in the affirmative. Whether the act of respondents selling rights issues of respondent 1 Company, pending the adjudication for passing interim order is prima-facie valid? - HELD THAT - The respondents raised the funds considering the paramount interest of the R1 Company. At this stage that action can't be described as a mala-fide act - the act of respondents in raising funds for R1 Company by selling rights issue is prima-facie held to be valid. Application allowed.
Issues Involved:
1. Legality and validity of the transfer of shares by nominee directors. 2. Requirement to refer the dispute to arbitration as per the Shareholding Agreement. 3. Validity of the act of selling rights issues by the respondents pending adjudication. Issue-wise Detailed Analysis: I. Legality and Validity of the Transfer of Shares: a. The petitioner alleged that its nominee directors, R3 and R4, acted beyond their authority by transferring shares to R2 without consent, claiming collusion with other respondents. b. Upon review, the tribunal found no document restraining R3 and R4 from making decisions, including selling shares. The allegations of collusion lacked assertive material, and the responsibility of R2 in this context was unclear. c. The tribunal refrained from making a definitive finding on the transfer's legality at this stage, noting insufficient material to deem the transfer void or fraudulent. A detailed hearing would be required for such a determination. d. Evidence indicated that the petitioner received ?6 Crore as consideration for the transfer, though the adequacy of this amount and potential oppression of the petitioner's rights would need further examination. The tribunal concluded that the transfer of shares was prima facie not void. II. Referral to Arbitration: a. The tribunal acknowledged that R1 Company was a joint venture between the petitioner and R2, governed by a Shareholding Agreement dated 17.01.2018, which included an arbitration clause for disputes. b. The agreement stipulated that disputes related to joint venture activities should be referred to arbitration. The tribunal recognized this mandate, emphasizing the legal obligation to refer such disputes to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996. c. However, the tribunal distinguished that the validity of the share transfer could not be referred to arbitration. Other disputes related to the joint venture activities could be referred, as per the agreement. d. The tribunal considered rulings, particularly A. Ayyasamy vs. A. Paramsivam, which clarified that mere allegations of fraud do not nullify an arbitration agreement unless the fraud allegations are severe and complex, necessitating civil court intervention. e. The tribunal found the fraud allegations against R3, R4, and R5 insufficiently substantiated to prevent arbitration. Thus, except for disputes regarding the share transfer and rights issues, other disputes were directed to arbitration. III. Validity of Selling Rights Issues: a. The petitioner argued that the respondents' sale of rights issues, declared on 19.03.2021, was illegal and intended to reduce the petitioner's shareholding, alleging contempt of the tribunal's pending interim order. b. The respondents countered, citing a letter from Union Bank of India dated 14.07.2020, which warned of declaring R1 Company's loan account as NPA. The sale of rights issues was a necessary action to raise funds and avoid insolvency, done in the company's best interest. c. The tribunal acknowledged the urgency and necessity of raising funds, finding the respondents' actions prima facie valid and not mala fide. However, a final determination would be made after considering all material and arguments. Order: 1. Parties are directed to maintain the status quo regarding the shareholding pattern of R1 Company as of the order date to prevent multiplicity of proceedings. 2. Disputes related to the joint venture activities, excluding the share transfer and rights issues, are to be referred to arbitration. 3. Parties are instructed to suggest names of arbitrators as per the agreement. 4. MA No. 5/2021 and 21/2021 are allowed and disposed of. 5. Parties are directed to complete pleadings in the main petition within four weeks. 6. The registry is instructed to list the matter for consideration and hearing in due course.
|
