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TMI Blog2017 (3) TMI 1422X X X X Extracts X X X X X X X X Extracts X X X X ..... or case under section 241 & 242 of the Companies Act 2013, to our knowledge, no cause of action arose for showing the exercise of the rights of FMO for protecting its economic interest is unjust and unfair to the petitioners, moreover the company is managed by the petitioners and it is not the case of the petitioners that the money invested by FMO was spent by FMO, therefore by seeing some ornamental paras recanting unfair, harsh and burdensome slogans, devoid of any material facts will not amount to cause of action because such paras have no material facts warranting this Bench to inquire into, hence this Bench hereby held that this case is liable to be dismissed in limine. If the facts of the case are such that they need no further proof to take into consideration and if those facts do not make any cause of action under the sections relied upon, then we don't believe that this Tribunal has to remain waiting until pleadings of the case are complete, because such waiting will never improve the case of the petitioners except causing inconvenience and sufferance to the answering Respondents and to this Bench and the litigation like this shall not be entertained more specially when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of FMO as illegal, null and void. (g) To direct that the OPCDs (optionally partly convertible Debentures) issued in favour of Vinca by Amazia (100% subsidiary of Vinca) and Rubix (100% subsidiary of Vinca) be converted into Equity Shares of Amazia and Rubix. (h) To direct that the CCDs (Compulsorily Convertible Debentures) issued in favour of Vinca not to be converted into Equity Shares until and unless, the transaction is made in compliance with FEMA by conversion OPCDs into ordinary Equity Shares and release of all guarantees and securities. (i) To direct FMO and its Nominee Directors to compensate Vinca for loss caused on account of the failure of FMO and its Nominee Directors to perform its/ their obligations and fiduciary duties in the best interest of Vinca. (j) For ad-interim and interim reliefs in terms of prayer clause (b) to (d) above. (k) Ad-interim relief directing the Debenture Trustee to release the shares of Brainpoint and permit the sale/leasing of ATC (Ackruti City Ltd.) units (1) For costs of the Petition (m) For other reliefs which are deemed fit in the circumstances. 2. The entire case of the Petitioners is rest on an argument that the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in Vinca. Whereas Hubtown holds 49% of Class-A equity shares amounting to 0.05% of the total issue and paid up equity of Vinca. 6. The Petitioners submit that they started Vinca by investing ₹ 12.50 crores, thereafter through a subscription Agreement dated 12.11.2009, FMO (foreign company) invested ₹ 418 crores by allotment of fully paid up, transferable, non-marketable, unsecured fully and mandatorily convertible INR denominated Debentures of Vinca to FMO into two tranches and by allotment of 1244 Class-A Equity Shares of Vinca to FMO with 10% of voting rights of the entire issued Share Capital of the company. The money FMO invested in Vinca towards Equity Share Capital and CCDs under FEMA and RBI guidelines and the proceeds were transferred contractually into its subsidiaries Amazia and Rubix so as to obtain fixed assured return in violation of FDI Policies. In furtherance of Subscription Agreement, Article 2(uu) of the Vinca also provided for certain reserved matters in respect of which the decisions by the Board can be taken only with the approval of one of the Nominee Directors of FMO. The Quorum for Board Meetings pertaining to the reserved matters required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OPCDs carrying a variable coupon and a back ended coupon to ensure internal rate of return of 14.75% per annum. This money came through subscription into Amazia and Rubix were to be applied towards infrastructure projects as provided under Debenture Trustee Agreements. In order to secure the said OPCDs, and to ensure the due and punctual payment by Amazia and Rubix of all dues to Vinca under the Debenture Guarantee Deeds, the Hubtown has, inter alia vide the Corporate Guarantee Deed, dated 9th December, 2009, issued an unconditional, absolute and irrevocable corporate guarantee in favour of the Debenture Trustee, inter alia, for the benefit of Vinca. For having the subsidiaries defaulted in making payments and violated the Debenture Agreement clauses in the year 2011, the Debenture Trustee issued redemption notices on 27th June 2012 to both Amazia and Rubix, when these subsidiaries neglected to pay the amounts payable in terms of the Trust Deeds, the Debenture Trustee (R10) issued Demand Certificate for the enforcement of the guarantee, in terms of the aforesaid Guarantee, to Hubtown on 3rd August 2012, when no reply came from Hubtown, the Trustee filed the Summons for Judgement, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This being the case, the plaintiff needs to be protected. In our opinion, the defendant will be granted leave to defend the suit only if it deposits in the Bombay High Court the principal sum of ₹ 418 crores invested by FMO, or gives security for the said amount of ₹ 418 crores, to the satisfaction of the Prothonotary and Senior Master, Bombay High Court within a period of three months from today. The appeal is accordingly allowed, and the judgment of the Bombay High Court is set aside. 40. We further direct that the suit be tried expeditiously, preferably within a period of one year from the date of this judgment, uninfluenced by any observations made by us herein. 8. It is a strange case - the petitioners want an order from this Bench to rewind not only the covenants with FMO, but also Articles of the company, so that FMO could not even get back their principal sum that was invested in the year 2011.Therefore, this Bench need not said in many words, who is oppressive against whom. 9. This action of filing this case, we firmly believe, is abuse of process of law to pre-empt FMO, from realising said money. This section 241 jurisprudence is an exceptional and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such meeting by sending a letter on 13.9.2016 stating that they received only on 16.9.2016 by which they could not make their travel plans, therefore, re-scheduling for the meeting to 6.10.2016, failing which to provide video conferencing or skype facility to attend the meeting if held on 27.9.2016. The Petitioners Counsel mentioned this fact which is not part of the Company petition stating as to the notice dated 18.10.2016 for Board meeting to be held on 24.11.2016 and the AGM to be held on 23.12.2016, the Nominee Directors of FMO wrote a letter on 11.11.2016 for re-scheduling the Board Meeting between 28th to 2nd December, 2016 pursuant to travel plan of R3 and opposed by R2 through a letter dated 11.11.2016 seeking rescheduling the meeting between 4th to 6th December, 2016 due to travel plans of R3. 13. When this Bench put a question to the Petitioners Counsel as to whether the documents reflecting these facts have been filed along with the Company Petition, the Counsel candidly stated that no material proof has been placed, and when this Bench further put it to the Petitioners Counsel as to whether such Board Meetings and the AGM held by the company, for which also, the Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of the mandate given by the Board of Directors vide its Resolution dated 19.5.2012, Vinca terminated on the appointment of Debenture Trustees vide its letter dated 6.8.2012 (this letter is also not annexed to this CP) and further the Board of Directors of Vinca passed a resolution on 8.8.2012 for discharge of Corporate Guarantee vide its letter dated 18.12.2012 addressed to Hubtown, and said fact was conveyed to the Debenture Trustee and the FMO by Vinca vide its letter dated 19.12.2012. Despite termination of the Debenture Agreement and discharge of Corporate Guarantee, the Debenture Trustee issued a winding up notice dated 3.1.2013 to Hubtown purportedly on behalf of Rl company (this notice is not visible to read). The Counsel further submits that the Nominee Directors of FMO wrote a letter on 3.7.2014 alleging that since quorum for the meeting to discuss about the OPCDs was limited to nominee directors of FMO, they alone can unilaterally take decisions with regard to the OPCDs conversion. In relation to it, various proceedings have been filed among the parties and they are pending. The petitioners submit that despite the Debenture Agreement terminated, the Debenture Truste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... threshold if the cause of action for invoking respective section has not been reflected in the Company Petition and if the material facts placed before this Tribunal do not constitute a case under the respective section of law. 20. As to amendment of Articles, it is not the case that the Respondent managing the company and misusing the Articles incorporated, in fact, it is a case of the Petitioners that the Respondents acting in accordance with the Articles of Association causing oppression to them. This argument is inconceivable to assume that compliance of Article is oppressive against the Petitioners. The Petitioners on their own entered into an Agreement with the Respondents to get ₹ 418 crores into the company thereafter, to align Articles with the Agreement entered into with them. They incorporated clauses of the Agreement as Articles of Association, therefore, it can't now be said that the Respondents acting in accordance with the Articles is unfair and prejudicial to the Petitioners because they voluntarily and openly agreed to provide affirmative vote to FMO to vote on reserved matters and it has become integral part of the Articles of the Company. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of Vinca or seeking a conversion of OPCDs into shares of Amazia and Rubix will ultimately nothing but taking away the rights of FMO and its Nominee Directors by the Petitioners themselves through Hubtown, therefore, this Bench, having believed such orders could not be passed citing the affirmative right given to the Nominee Directors of FMO as unfair, does not find any merit in these allegations made by the Petitioners. 23. Another star argument of the Petitioners Counsel is that Nominee Directors of FMO could not give any instructions to the Debenture Trustee to take action in respect of OPCDs issued by Amazia and Rubix. If this allegation is looked into in the light of Articles of Vinca, it is clear and unambiguous that Nominee Directors are given full liberty to give instructions to the Debenture Trustee directly. Therefore, the arguments of the Petitioner that their instructions should route through Rl company is not tenable on the fulcrum of oppression and mismanagement. Indeed, FMO invested ₹ 418 crores in this company as against the Petitioners investment of ₹ 12.5 crores. This argument of the Petitioners directing the Nominee Directors of FMO to instruct th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged by the petitioners and it is not the case of the petitioners that the money invested by FMO was spent by FMO, therefore by seeing some ornamental paras recanting unfair, harsh and burdensome slogans, devoid of any material facts will not amount to cause of action because such paras have no material facts warranting this Bench to inquire into, hence this Bench hereby held that this case is liable to be dismissed in limine. 28. If the facts of the case are such that they need no further proof to take into consideration and if those facts do not make any cause of action under the sections relied upon, then we don't believe that this Tribunal has to remain waiting until pleadings of the case are complete, because such waiting will never improve the case of the petitioners except causing inconvenience and sufferance to the answering Respondents and to this Bench and the litigation like this shall not be entertained more specially when litigation is intended to circumvent the directions of other competent courts on the same subject matter. 29. To answer all these points and also to uphold dispensation of timely justice, this Bench for the reasons aforestated, hereby dismiss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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