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TMI Blog2021 (10) TMI 1088X X X X Extracts X X X X X X X X Extracts X X X X ..... is clear that Anand Rathi Shareholders shall be in sole control of the company and committee formed thereunder shall be responsible for management, supervision, direction and control of the company including day to day management of the company - The Petitioner is a party to the said Agreement and has acquiesced to the rights conferred to both the parties under the SHA and now is estopped from claiming that the Anand Rathi group are conducting the affairs of Respondent No.1 which are oppressive and amounts to mismanagement of Respondent No. Company. This Bench therefore is of the considered opinion that no prejudice is caused to the rights of the Petitioner under said alleged transfer of shares of Respondent No.1 to Respondent No.11 or transfer of assets to Respondent No.2 from Respondent No.1, and is governed by the interse agreement namely the shareholder agreement/share purchase agreement both dated 10.08.2016. The rights of the shareholders qua the company in the Petition alleging the Oppression and mismanagement are squarely covered under the SHA/SPA dated 10.08.2016 and hence are bound by the terms and conditions thereof. The Anand Rathi Group being the majority shareh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent No. 1 Company. The broad terms of arrangement were captured in the email sent by the Respondent No.3 on behalf of the Respondent No.2 and the Petitioner. Further, the Share Purchase Agreement (hereinafter referred as SPA ) dated 10.08.2016. Thereafter, the shareholders transferred their shares to the Respondent No.2 and in return were allotted shares to the Respondent No. 1 Company. Pursuant to the arrangement Respondent No. 11 became 100% subsidiary of Respondent No. 1 and Respondent No. 12 being subsidiary of R11 became a stepdown subsidiary of Respondent No. 1 Company. 4. On 25th Sep 2017, the Respondents without informing the Petitioners surreptitiously and clandestinely transferred Respondent No. 11 from Respondent No. 1 to Respondent No.2, thereby stripping the Respondent No.1 of one of its substantial undertaking in favour of Respondent No.2 wherein the Petitioners did not hold any shares. Thereafter, on 23th Nov 2017, Respondent No.11 transferred his shareholding in Respondent No.12 to Respondent No.1. 5. As per to the understanding between the parties, the Anand Rathi group was required to invest a sum of ₹ 60 crores in Respondent No.1, post the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Tribunal to entertain C.P 1417 of 2020 u/s 241-242 of the Companies Act, claiming that the Petitioner is dressed up Petition which is attempting to disguise disputes which are purely contractual and arising out of shareholders agreement which contains an Arbitration clause. 2. On 10.08.2016 Shareholders Agreement (hereinafter referred as SHA ) was executed between the Company and its shareholders, terms and conditions of SHA governed the relation of the parties interse in Respondent No. 1 Company. The Applicant further pointed out that the SHA has an arbitration clause at clause 19 and that governs the dispute arising out of the shareholders agreement to be referred to arbitrators as defined in the SHA. 3. The Applicant contended that upon perusal of the Petition it reveals the real purpose of the Petitioners is to exit the company at a mutually aggregable value/proportionate representation on the board/direct the respondent must fulfil the investment of 60 crores and ensure the Petitioners hold 15% of shareholding. All these prayers aminates from the SHA and are subject matter of arbitration. 4. The Applicant further sought to refer the dispute between the parties to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... layers of subsidiary companies was formed qua Respondent No. 2 vis- -vis the Respondent No.12. 9. Subsequently, the Ministry of Affairs (MCA) issued a Notification dated 20.09.2017 bearing number G.S.R. 1176(E) (in short notification ) imposing a restriction on numbers of layers for holding companies. As per the said notification, no company other than a banking, a non-banking financial company, insurance company and a Government Company shall have more than two layers of subsidiaries. In view of embargo laid down by the Notification and to ensure its due compliance, on 20.09.2017, the Respondent No. 1 transferred its entire shareholding in Respondent No. 2. The transfer of shareholding was to the complete knowledge any by seeking consent of all shareholders, (including the Petitioner). Copy of the financial statement of Respondent No. 2 for the year ended 31.03.2018 and the form MGT-17 for the Financial Year 2017-18 submitted by the Respondent No.2 to the MCA recording the transfer of shareholding by Respondent No. 1 in Respondent No. 11 in favour of Respondent No. 2. On 31.10.2017, the Respondent No. 12 conducted its Board Meeting wherein a resolution was passed approving the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on report wherein the equity shares of Respondent No. 12 were valued at the rate of INR 434 per share. 13. After the proper analysis of the June, 2019 Valuation Report, the management of Respondent No. 1 placed the offer of Respondent No. 2 before its members by sending a notice of Extra Ordinary General Meeting on 18.12.2019 thereby inviting its members for discussion and voting on the resolution pertaining to the sale of the entire share capital in Respondent No. 12 to Respondent No. 2. 14. In pursuance to the aforesaid notice, the Respondent No. 1 conducted in its Extra-Ordinary General Meeting on 15.01.2020. The meeting was also attended by the Petitioner No. 1 along with the other members. In the said meeting, the majority of members of Respondent No. 1 unconditionally approved for the sale of its shareholdings in Respondent No. 12 in favour of Respondent No. 2. Despite having the fill and complete knowledge as well as understanding about the valuation of shares since 18.12.2019, the Petitioners chose to register their protest only on 16.01.2020 against the said transfer by alleging that the same was undervalued and occurred in the absence of service of valuation reports ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred their shares to Respondent No. 2 and in return were allotted shares in Respondent No. 1 Company. 3. The Petitioner alleged that on 25.09.2017, the Respondents without informing the Petitioner transferred Respondent No. 11 from Respondent No. 1 to Respondent No. 2, thereby the said transfer of assets from Respondent No. 1 to Respondent No. 2, causes prejudice the rights of the Petitioner as they do not hold any shares in Respondent No. 2. On 23.11.2017, Respondent No. 11 transferred its shareholding in Respondent No. 12 to Respondent No. 1. 4. The Petitioners further have pointed out and drawn the attention of this Tribunal to the understanding namely the SPA wherein Anand Rathi Group was to invest an amount of ₹ 60 Crores in Respondent No. 1, post the said investment the Freedom Shareholders were to hold 15% of Respondent No. 1. Further, an EGM dated 05.02.2019 was conducted wherein a Resolution was allot 15,62,500 shares at ₹ 10 each at premium of ₹ 246 per share amounting to ₹ 40 crores to R2. The Petitioners objected the transfer of shares. 5. The Petitioner were further aggrieved by a notice of EGM 18.12.2019 of Respondent No. 1 company wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in milestones mutually agreed between the Anand Rathi Group Shareholders and the Company. Any further issue of Equity Securities of the Company shall be carried out in accordance with the requirements of the applicable Law and the Articles. Clause No. 19: ARBITRATION 19.1 Any dispute, controversy or claim arising out of or relating to this agreement or the performance thereof or the breach thereof or the termination thereof or the determination thereof or concerning the provision of this determination thereof interpretation or their implementation or their application to any state or facts or the right or equities of the parties ( Disputes ) shall be referred to arbitration before a panel of arbitrators ( panel ) to be appointed within 10 (ten) calendar days from the dater of Dispute arising. Both parties to the Dispute (that is the party instituting the arbitration proceedings and the respondent party shall appoint 1 (one) arbitrator each to the Panel and the 2 (Two) arbitrators so appointed by the parties to the dispute shall together appoint one more arbitrator to the Panel. It is hereby clarified that the Other Shareholders shall jointly have the right to appoint only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt on the substance of the dispute, refer the parties to arbitration. (2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof. (3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued, and an arbitral award made. 13. In view of section 8 of Arbitration Act, if a party to the Arbitration Agreement so applies no later than the submitting of first statement on the substance of dispute, the Judicial Authority may refer the parties to arbitration. In the instant case the parties have executed the shareholders agreement which specifically contains a clause that all disputes with regard to the agreement shall referred to arbitration. In strict interpretation of the statute this Bench concludes that the language of Section 8 is peremptory and therefore obligatory for the court to refer the parties to arbitration in terms of their Arbitration Agreement as held by Hon ble Supreme Court in P. Anand Gajpathiraju Vs. PVG Raju (AIR 2000 SC 188 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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