9911796707
TMI Blog2009 (11) TMI 991X X X X Extracts X X X X X X X X Extracts X X X X ..... gistered under the Companies Act, 1956. It is a commercial Metro Ethernet Fiber Network Infrastructure company and is engaged in delivery of broadcast-quality television/video signals to subscribers over a broadband connection using the Internet Protocol (IPTV). The applicant entered into a Share Subscription and Shareholders Agreement (for short 'SHA') dated December 1, 2005 with Exatt Technologies Private Limited (for short 'Exatt'), which was a Company registered under the provisions of the Companies Act, 1956. Under the terms of SHA dated December 1, 2005 the applicant agreed to supply certain CISCO equipments to Exatt equivalent to US$ 400,000. It was further provided under the said Agreement that in lieu of supply of CISCO equipments, Exatt would issue equity shares to the applicant aggregating to 6.50% of the then paid-up equity share capital of Exatt on terms and conditions set out in the said Agreement. Pursuant to the said Agreement, the applicant Company supplied CISCO equipments, delivery of which was acknowledged by Exatt without any demur as to quantity or quality. As per the arrangements made between the parties under the Agreement, the Exatt should h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e allotted 1,73,000 equity shares of the respondent Company as a shareholder of Exatt. The Scheme came into effect on January 15, 2008. However, the shares to which the applicant was entitled to, were never issued or allotted to it by the respondent Company. The applicant Company claims that it made various requests and representations to the respondent Company but the shares of the respondent Company were never issued. What is claimed by the applicant is that after sanction of the claim the prices of the shares of the respondent Company skyrocketed on the stock exchanges and each share was quoted at ₹ 510/-. The grievance made by the applicant is that if the shares of the respondent Company had been duly issued, the applicant Company would have the opportunity to sell them at the price quoted on the stock exchanges and Would have received price of ₹ 8,82,30,000/- (1,73,000 IOL shares x ₹ 510/- per share) equivalent to US$ 21,00,715. The applicant has, therefore, asserted that the respondent Company, being the transferee/successor of Exatt is bound and liable to pay an amount of ₹ 8,82,30,000/-to the applicant Company. The record would indicate that the appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheme of Amalgamation is a subject-matter of the said Scheme, which is governed by the provisions of Companies Act, 1956. According to the respondent, the claim advanced by the applicant does not arise out of the purported SHA dated December 1, 2005 and any issue arising out of the Scheme of Amalgamation has to be addressed to the Company Court that has sanctioned the Scheme of Amalgamation. It is mentioned in the reply that the arbitration clause relied upon by the applicant is one contained in the purported agreement between the applicant and the Exatt and brings within its ambit only those transactions which are contemplated in the purported agreement and as 6920 equity shares were allotted to the applicant by Exatt under SHA dated December 1, 2005, the said Agreement was fully performed by the parties and, therefore, there is no scope for any dispute under the purported agreement to be referred to Sole Arbitrator for adjudication. According to the respondent the purported Share Subscription and Shareholders Agreement dated December 1, 2005, relied upon by the applicant, is a document which is described at' the foot of the said document as preliminary and tentative draft fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tween the parties and the conduct of Exatt as well as the respondent, it is clear that as SHA is signed and acted upon by the parties, which stood affirmed by reason of conduct of the parties and, therefore, it is wrong to say that the said Agreement was preliminary and tentative, draft for discussion purpose only. After referring to Clause 4.3 of the SHA, it is stressed that the said Clause stipulates that if the closing does not occur on the closing date or on a date extended under Clause 4.2, the Exatt would have the option of purchasing CISCO equipment from the applicant for a consideration of US$ 400,000 and forwarding of Xerox copy of the Share Certificate dated December 31, 2006 to the applicant indicates that while acting under the terms of the SHA the said Xerox copy of the Share Certificate was issued to the applicant. It is mentioned in the rejoinder that since Exatt neither paid the amount for CISCO equipment that was due to the applicant under the SHA nor returned the same to the applicant nor allotted the shares as stipulated in the SHA, the issues raised by the respondent in reply affidavit can be decided only by the Arbitrator and, therefore, the application should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is no manner of doubt that the respondent company is successor-in-interest of the Exatt. No document could be produced by the respondent to show that in fact 6920 equity shares were issued and allotted by the Exatt to the applicant company. If, in fact, 6920 equity shares had been issued and allotted by the Exatt to the applicant, the name of the applicant company would have found place in the Register of Members of the Exatt. However, it is in no uncertain terms admitted by the respondent company in paragraph 4.1 of its counter affidavit that the question of allotting shares to the applicant did not arise at all as applicant was not a member of the said Exatt as evidenced by the Register of members of the said Exatt . In the light of these glaring facts, the so called admission made by the applicant in its notice dated July 31, 2008 will have to be viewed. The admission sought to be relied upon by the respondent company reads as under: 4. In terms of the arrangement embodied in the SHA, Exatt issued and allotted 6920 equity shares of ₹ 10 each to GCI under a share certificate No. 6 dated 31.12.2006. The name of GCI seems to have been entered in the Register of Members ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tative draft for discussion purposes only and, therefore, the relief claimed in the application should be refused, has no substance. The assertion made by the applicant Company that it had supplied CISCO equipment worth US$ 400,000 could not be demonstrated to be untrue. There is no reason for this Court to refuse to believe the claim advanced by the applicant Company that it supplied CISCO equipment to Exatt, delivery of which was acknowledged by the said Company without any demur as to quantity or quality. The correspondence referred to by the applicant in the rejoinder affidavit would indicate that the SHA dated December 1, 2005 was fully acted upon and the parties, i.e., applicant and Exatt thereafter never contemplated execution of further documents. It is relevant to mention that a Xerox copy of the SHA dated December 1, 2005 is produced by the applicant at Annexure A-1 along with the instant application. It indicates that it was signed by Mr. K. Bhavnani on behalf of the applicant Company pursuant to the resolution passed by the Board of Directors of the applicant Company whereas it was signed by Mr. Parind Parekh on behalf of the Exatt Technologies Private Limited pursuant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law, to the respondent company. This position of law was fairly admitted by the learned Counsel for the respondent at the time of hearing of the application. Even Clause 3.3 of the Scheme of Amalgamation inter-alia specifically provides that the respondent company will be bound by all the obligations and liabilities of any nature of Exatt. Therefore, Clause No. 11.7 of SHA dated December 1, 2005 is applicable to the respondent company in the same manner as it was applicable to Exatt. On the facts of the case, it is held that there exists a valid arbitration agreement between the parties. It is an admitted position that shares have not been issued by the respondent to the applicant and reason stated by the respondent for not issuing/allotting shares to the applicant is that the applicant was not a member of Exatt. The grievance of the applicant relates to non-payment of consideration for supply of equipment to Exatt under SHA dated December 1, 2005. The further dispute raised by the applicant relates to non-issuance of shares by the respondent in terms of Amalgamation Scheme entered into between Exatt and the respondent company. Thus the disputes are very much live and surviving. As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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