9911796707
TMI Blog2010 (10) TMI 913X X X X Extracts X X X X X X X X Extracts X X X X ..... tity who is a financial investor holding 1,03,82,174 shares of Rs. 10 each (44 per cent.) at a premium of Rs. 38 allotted on preferential basis. Currently respondent No. 9 is the managing director with effect from April 29, 2009. The allegation in the company petition is, the board had approved an expansion plan and rights issue in an illegal manner to jeopardise the interest of original promoters and the intention is to do away with the petitioners. It is also their contention that the veto right as per the non-compete agreement dated April 29, 2009, will apply to rights issue. As per the above agreement, the earlier agreement dated July 27, 2007, stands terminated. Admittedly, the non-compete agreement and shareholder rights of promoter dated April 29, 2009, was entered into with the erstwhile promoters (petitioners Nos. 1 to 3) and respondent No. 1 company, as per which petitioners Nos. 1 to 3 agreed to remain non-compete for a period of three years in consideration of a lump sum of Rs. 500 lakhs. As per the above agreement, promoters/shareholders shall be entitled to the same special rights. The right which is relevant for this company petition as contained in clause 4(e) sub-c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suance of shares on pro rata basis". According to the petitioners, the said approval is in contravention of clause 4(e) sub-clause (e) in the agreement and the articles of association. The second petitioner further claims as director as enjoined in the agreement. The applicant-company therefore alleges that the entire issues raised are covered by the agreement dated April 29, 2009 and hence the arbitration clause in the agreement is liable to be invoked. The applicant-company further points out that it has already invoked the arbitration clause by issuing notice dated June 14, 2010 and filed a petition before the High Court. 7. According to the petitioners/respondents in company application, the jurisdiction of the Company Law Board has been invoked on the strength of their statutory rights vested under the Companies Act, alleging acts of oppression and mismanagement by the respondents. The application has been filed only by the company. It is therefore contended that the averments and the reliefs in the company petition include various reliefs and directions against other respondents. It is further pointed out that all the parties to the company petition are not parties to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t between the parties can be referred to arbitration, and the Company Law Board can proceed with the remaining disputes in the company petition. As per the above decision, the allegations contained in the petition covered by the arbitration clause in the agreement were referred to arbitration and the allegations independent of the sponsorship agreement were allowed to be dealt with in the company petition. However, I am not inclined to split the allegations as submitted by the applicant because all the parties in the company petition are not parties to the agreement. That apart, the applicant has already invoked arbitration clause by issuing a notice to the concerned parties and filed a petition before the High Court. I therefore decline to refer the parties to arbitration. The application is liable to be dismissed. 10. The next issue deals with rights issue, respondent No. 1 company wants this Bench to permit the company to proceed with the rights issue. Respondent No. 1 is a public company, having its shares listed on the stock exchange. It is engaged in the business of equity, commodity and insurance broking, etc. The authorised share capital as on March 31, 2010, is Rs. 40 cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssociation provides for an increase in the subscribed capital of the company by allotment of further shares and in such cases it shall be offered to persons who, at the date of offer, are holders of the ordinary shares of the company, in proportion as nearly as circumstances admit, to the capital paid-up on those shares at that date, and such offer shall be made in accordance with the provisions of section 81 of the Act, provided that notwithstanding anything herein before contained, the further shares aforesaid may be offered to any persons, whether or not those persons include the persons who, at the date of the offer, are holder of the ordinary shares of the company, in any manner whatsoever : (a) if special resolution to that effect is passed by the company in general meeting, or (b) where no such special resolution is passed if the votes cast (whether on a show of hands or on a poll as the case may be) in favour of the proposal contained in the resolution moved in that general meeting (including the casting vote if any, of the chairman) by members who, being entitled so to do, vote in person or where proxies are allowed, by proxy, exceed the votes, if any, cast against the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecific performance in appropriate cases before appropriate forums. 15. In view of the above findings, I have to tentatively hold that clause 157A is void as far as this company petition is concerned. If that be so, the petitioners are not entitled to seek an injunction against the company from issuing the shares proposed to be issued by them on the alleged rights basis. Except the allegation regarding the rights issue, no prima facie case is made out regarding oppression on other grounds pleaded in the petition. The shares are being issued to all shareholders on pro rata basis, so, no serious prejudice is likely to be caused to the petitioners. Clause 157A in the articles of association flows from the agreement dated April 29, 2009. Evidently the issue whether the parties have fulfilled their respective obligations under the agreement is pending arbitration at the instance of the company. Admittedly the second respondent has made substantial investment in the company and took charge of the management of the business of the company. Petitioners Nos. 1 to 3 being the original promoters were paid a lump sum amount of Rs. 500 lakhs as non-compete compensation by the company. There i ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
