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TMI Blog2021 (6) TMI 344X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of shareholding pattern of the petitioner and respondents in R1 Company. 5. IA No. 21/2021 is filed by original Respondent No. 5 in main Company Petition (hereinafter referred as R5) seeking the same relief. 6. It is alleged that in contravention of order dated 19.03.2021, when this Bench heard the matter and reserved the same for passing interim orders the respondents offered the rights issues and by selling them raised certain amount. It is not only illegal but amounting to committing contempt of the order which this tribunal was to pass. 7. The petitioners further alleged that the respondent's action of declaration of sale of rights issues was with mala-fide intention to reduce shareholding pattern of the petitioner in the R1 Company in order to acquire the complete control of affairs of the R1 Company. 8. As against this the respondents contend that respondent No. 1 Company was in dire need of finance. Its loan account was to be declared as NPA by its bankers, hence in order to raise the funds for the company, Right issues were sold before passing any interim order by this tribunal and more over only for benefit of R1 Company. 9. We heard the learned couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioners shares in R1 Company by R3 R4 is fraudulent transfer. Such finding can't be recorded unless the matter is heard at length. d. There is also material on record to indicate that for such transfer the petitioner has received the consideration of ₹ 6 Crore. It may be adequate or it may be inadequate, the finding to that effect vis-a-vis whether it is oppression of the Petitioners rights can only be recorded after hearing the matter at length. The fact remained that the transfer of shares prima-facie does not appear to be void. We answer the point No. 1 in the affirmative. Point No. II a. It is not in dispute that R1 Company is a joint venture company established by the Petitioner and R2. The petitioner and R2 entered into MOA dated 14.11.2017. Thereafter on 17.01.2018, the petitioner and R2 have executed shareholding agreement. From the bare perusal of above agreement, it can certainly be inferred prima-facie that there appears some dispute that has arisen in between the petitioner and the respondent about the joint venture business being carried out by R. 1 company. b. In shareholding agreement dated 17.01.2018, clause-18 speaks that any dispu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R2 and/or beyond their authority. Moreover it is a matter between nominee directors of the petitioner and petitioner itself. f. We have gone through all rulings relied on by the Ld. Counsels. As far as referring the matter to the arbitration, when there are allegations of fraud etc. the Hon'ble apex court in the matter of A. Ayyasamy vs. A. Paramsivam and others (2016)(10) SC 386 has observed that: In view of our aforesaid discussions, we are of the opinion that mere allegation of fraud simpliciter may not be a ground to nullify the effect of arbitration agreement between the parties. It is only in those cases where the court, while dealing with Section 8 of the Act, finds that there are very serious allegations of fraud which make a virtual case of criminal offence or where allegations of fraud are so complicated that it becomes absolutely essential that such complex issues can be decided only by civil court on the appreciation of the voluminous evidence that needs to be produced, the court can sidetrack the agreement by dismissing the application under Section 8 and proceed with the suit on merits. It can be so done also in those cases where there are serious alle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s illegal and has to be set-aside. As against this learned senior counsel for the respondents brought to our notice the letter issued by Union Bank of India dated 14.07.2020 where by the Union Bank of India, one of the creditors of R1 Company, had warned the Company that it may recall the loan facilities granted to the R1 Company declaring their account as NPA if certain amount is not raised. To avoid that action by Union Bank of India and since R1 Company was in dire need of funds, it was felt necessary to raise funds by way of right issues. Such action on part of respondent was with a view to save R1 Company going insolvent and it can't be said to be illegal. The respondent Company had no intention to commit the contempt of any order of this Tribunal. b. We have considered the material on record. It is true that on 19.03.2021 we have heard both Ld. Counsels and reserved the matter for interim orders. On 19.03.2021 respondents declared the sale of rights issues. However in our considered opinion and in view of the letter issued by Union Bank of India dated 14.07.2020, it appears to us that R1 Company was then in the dire need of financial aid. It was necessary to raise fu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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