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TMI Blog2023 (10) TMI 1221X X X X Extracts X X X X X X X X Extracts X X X X ..... has also cautioned what will be situation if the Court will start interfering in holding of the meeting of the Company. Ultimately, it is part of the Corporate democracy. No ground is made out for stalling of EOGM. The Court cannot stall holding of any meeting of the company. This is the prerogative of the shareholders. About offering corporate guarantee by Hexagon - when the proceeding will be go on with DRT, there will be conflict of the interest in between the Defendant No. 4 being managed only by Arcadia on one hand and Arcadia as borrower of the Kotak Mahindra Bank Limited on the other hand - HELD THAT:- No doubt, it is true that Plaintiff or Hexagon does not say that they have paid dues of the Arcadia. It is an independent issue. It is also true that the Arcadia being lender has got right as per the Memorandum of Understanding to sell those flats by giving a notice. No doubt notices are also given. That right is an independent right. However, when the question of the proceeding before the DRT arises, certainly the interest of the Hexagon needs to be protected to certain extent. The issue raised about notice by India bulls to the Hexagon cannot be considered in this appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... once the money will be repaid. This is the area of dispute in the present suit. Furthermore, the said Arcadia has also obtained loan from Kotak Mahindra Bank Limited. Company-Hexagon has offered their two flats by way of Corporate guarantee for repayment of the said loan. Those flats are subject matter of a dispute before DRT, Mumbai. 4. As shares are transferred in the name of the Arcadia, the said Company has nominated Defendant Nos. 2 and 3 on the board of the Directors of the D-4-Hexagon. Now the present suit is filed by one of the shareholder of the Hexagon asking for the following reliefs:- a) For the declaration that Arcadia is not entitled to hold any shares in the Hexagon Company and is not entitled to vote. b) Direct Arcadia to re-transfer shares of Hexagon Company held by :-- i) the Defendant Nos. 5 which are 42,188 in number ii) defendant no. 6 which are 50,625 in numbers. c) There are also other prayers including for damages. 5. Pending the suit, there are two Interim Applications filed by the Plaintiff. They are :-- (i) Interim Application No. (L) 4782 of 2023 and (ii) Interim Application (L) No. 19877 of 2023. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s from the board of directors of the Hexagon. In other words, Arcadia wants to take control on the entire company. Grievances about corporate guarantee. d) Arcadia is defaulter of Kotak Mahindra Bank Limited and instead of repaying the loan, they have created such a situation due to which the Corporate guarantee offered by Hexagon in respect of two flats will be encashed by Kotak Mahindra Bank Limited by selling those flats. e) Plaintiff and Defendant Nos. 5, 6 and 7 are residing in those flats and if their possession is taken, they will be without roof. f) There is an emphasis on the provisions of Section 60 of the Transfer of Property Act which gives right to mortgagor i.e. Hexagon to ask for delivery of the mortgage deed and documents. g) According to the learned Advocate, there are also certain duties on the lender and relationship is of fiduciary in nature and reliance is placed on observation in case of Mathew Varghese Vs. M. Amritha Kumar and Others (2014) 5 SCC 610 and more specifically para no. 29.2, wherein the provisions of Section 13(8) of the SARFAESI Act were considered. It gives right to object for transfer of the secured assets if du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... standing. f) He submitted that the Memorandum of Understanding executed on 13/07/2015 mentions that there is an outstanding of Rs. 15,20,83,733/-. He also contends that there is no merit in the grievance raised for not financing entire amount for the reason that it was not raised at any time earlier. g) He submitted that the transfer of the shares has already taken place. He invited my attention to three of the documents. About arbitration clause. h) According to him, there is an Arbitration clause in the Memorandum of Understanding dated 29/08/2013. There is clause after clause no. 18. He also submitted that there is similar clause by clause no. 17 in the share holders agreement dated 29/08/2013. i) He submitted that such clause is not there in the Share transfer agreement dated 29/08/2023 and the suit is drafted in a such manner so as to come out the Arbitration clause in above two referred agreements. j) He submitted that in fact Defendant Nos. 2 and 3 have already been nominated on the Board of the directors and in fact they were removed by Defendant No. 7 illegally. k) By way of resolution to be passed in Extra Ordinary General meetin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 79 (Para 25) It is observed more specifically para no. 25 that the claim made on the basis of the inheritance to share cannot be decided in the proceedings under Sections 241/242 of the Companies Act (It is on the basis of observations from the earlier judgment). ii) Pradip R. Kamdar and Anr. Vs. Rajiv Sanghvi and Others which is affirmed by the Division Bench in 2022 SCC Online Bom 3147. If the parties intend to enforce contractual obligations, the N.C.L.T., will not be having jurisdiction. b) According to him, if smaller part of the relief even though falls outside jurisdiction of this Court, still Court can entertain the suit if major part of the relief falls within the purview of this Court. To buttress his submission, he relied upon the judgment in case of Ishar Singh Vs. National Fertilizers and Another 1991 Supp (2) SCC 649 and more specifically para no. 5. c) He also submitted that merely raising an issue on the basis of the arbitration clause will not oust the jurisdiction of the Court unless and until the contender has taken recourse to the provision of the said Act for the appointment of the arbitrator and it is not done in this case. d) Ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was subject matter of earlier interim application. However the meeting was not held. There is subsequent notice dated 15/7/23 to hold extra ordinary general meeting on 25/7/23 and it is subject matter of present interim application. As said above the holding of requisition meeting is challenged on various grounds by plaintiff. 17. One of the ground is non fulfillment of terms of MoU. There are two MoUs. They are :-- a. MoU dated 29/8/2013 mentions about advancing loan of Rs. 13,50,00,000/- to Hexagon but in fact only an amount of Rs. 10,32,40,000/- was advanced. b. whereas second MoU., of 2015 (which mentions about advancing of Rs. 15,20,83,733/-) was never acted upon. Grievance is when the full amount is not advanced, the transfer of shares of defendant nos. 5 and 6 are ineffective. And hence representation on those shares by Arcadia in the board of directors of Hexagon is ineffective. As said above various contentions about non fulfillment of responsibilities of mortgagor as per the provisions of Transfer of Property Act are made. Whereas Arcadia s counsel contend that even the Hexagon has not repaid the amount which is admitted to them and hence any of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... knowledge of these documents when direction was given on 28/07/2021 by the Division bench of this Court in Writ Petition (L) No. 15950 of 2021 filed by the plaintiff. This is disputed on behalf of the Arcadia. 22. Prima-facie the allegation about the transaction of two flats is found to be after thought. Because how the documents referred above could have been executed in the year 2013. The issue relating to mortgage of the flats is certainly outside the purview of the inquiry of this application. So while hearing this present interim application now the only issue arises is in the Extra Ordinary General meeting, if the resolution is passed then the Defendant nos. 2 and 3 being nominees of the Arcadia will be nominated by the Arcadia on the Board of directors and in that case Arcadia will be in control of Hexagon. The copy of the notice calling of the meeting dated 29/11/2022 is annexed on page no. 159. It is true that it recommends passing of the resolution appointing Defendant Nos. 2 and 3 as Director of the Company. Plaintiff apprehends that they will do certain acts before the DRT and it will amount to loosing of possession of two flats. The documents clearly indicates that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before DRT or may even submit to the Orders of DRT. In any eventuality, I think the interest of the Plaintiff and shareholder of the Hexagon needs to be protected. 27. It is no doubt true that in a case before the Invesco Developing Markets Fund and Ors. (supra) and the Life Insurance Corporation of India (supra) such issues have not arisen. It is plain issue of the conduct of holding the meeting at the instance of the shareholder. Those issues are different from the issues involved in these interim applications. 28. For the above reason, I am inclined to grant certain interim reliefs in favour of the Plaintiff, Defendant Nos. 4 to 6. This will not affect the authority of DRT to decide the proceedings on the basis of materials. But the Order is only against Defendant No. 1. As I have granted limited interim reliefs, I am not inclined to put any conditions of Hexagon including condition to deposit any any amount towards outstanding amount. Hence Order :- ORDER a) As a shareholder of defendant No. 4, Defendant No. 1 is restrained from taking any decision which may amount to giving consent/NOC for handing over possession of two flats before DRT in proceedings i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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