Novation and entire agreement clause defeated interim enforcement of an alleged additional share transfer obligation.

A later restructuring agreement, scheme of arrangement and deed of covenant limited the transfer to 14.95% of the shareholding and stated that they comprised the entire agreement, so the earlier understanding was prima facie superseded by novation. On the interlocutory record, the plaintiffs did not establish a separate binding obligation to sell the remaining 0.78% at the claimed price, and the plea for interim specific performance-type relief therefore failed. The court left limitation open for trial. It also noted, for prima facie purposes under section 10 of the Specific Relief Act, 1963, that the publicly traded nature of the shares meant monetary compensation could not be ruled out, so specific performance was not shown to be clearly unavailable on that ground.

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Issues: Whether the plaintiffs established a prima facie binding agreement requiring the defendants to sell the balance 0.78% shareholding at Rs. 240 per share, and whether interim specific performance-type relief was warranted.

Analysis: The transaction originally contemplated an exit of the defendants' entire 15.73% holding, but the later restructuring agreement, scheme of arrangement, and deed of covenant expressly confined the transfer to 14.95% and declared themselves to be the entire agreement between the parties, superseding prior understandings. The scheme was sanctioned on that basis. In these circumstances, the earlier understanding was prima facie superseded by novation, and the pleadings and contemporaneous record did not, at the interlocutory stage, establish any independent binding agreement for the remaining 0.78% at the claimed price. The Court also noted that the question of limitation was left open for trial. On the plea based on section 10 of the Specific Relief Act, 1963, the shares being publicly traded meant that monetary compensation could not be ruled out as a matter of prima facie assessment, and specific performance was not shown to be clearly unavailable on that ground.

Conclusion: The plaintiffs failed to make out a prima facie case for interim relief, and the motion was dismissed.

Ratio Decidendi: Where the parties execute a later restructuring agreement and related documents containing an entire agreement clause and the court sanction for the arrangement is obtained on that basis, earlier understandings are prima facie superseded and cannot, without clear further proof, sustain interim enforcement of an alleged additional contractual obligation.

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