Compromise Settlement: Share Transfer, Non-compete, Non-solicitation, Mutual Release

The Tribunal accepted the compromise settlement dated 16th August 2017, where the Petitioners agreed to transfer their shares to Respondent No.2, receiving a total consideration of Rs. 9,00,00,000/-. The Petitioners relinquished all rights to their shares, resigned as directors, and agreed to non-compete and non-solicitation covenants. Both parties mutually released claims, amended the Articles of Association, and agreed to jurisdiction in Bengaluru for dispute resolution. The Settlement Deed was deemed valid and binding, with parties representing authority to enter into the agreement.

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Issues Involved:
1. Transfer of shares and relinquishment of rights.
2. Payment of consideration for the transfer of shares.
3. Handover of share certificates and compliance with regulatory requirements.
4. Effective Date of the Settlement Deed.
5. Resignation of directors.
6. Relinquishment of rights, title, claims, and interests.
7. Mutual release of claims.
8. Amendments to the Articles of Association.
9. Non-compete and non-solicitation covenants.
10. Validity and binding nature of the Settlement Deed.
11. Jurisdiction and dispute resolution.
12. Defamation and non-disparagement clause.
13. Authority and capacity to enter into the Settlement Deed.

Detailed Analysis:

1. Transfer of Shares and Relinquishment of Rights:
The Petitioners agreed to sell their entire shareholding in the Company to Respondent No.2 or its nominees. The shares involved include 19,289 Ordinary Equity Shares and 49 Class A Equity Shares owned by Petitioner No.1, 11,783 Ordinary Equity Shares owned by Petitioner No.2, and 911 Ordinary Equity Shares owned by Petitioner No.3. The Petitioners will relinquish all rights to these shares.

2. Payment of Consideration for the Transfer of Shares:
The Petitioners will receive a total consideration of Rs. 9,00,00,000/- for the transfer of shares. The breakdown is as follows: Rs. 5,43,24,881/- to Petitioner No.1, Rs. 3,31,14,851/- to Petitioner No.2, and Rs. 25,60,268/- to Petitioner No.3. The payments will be made via wire transfer by Respondent No.2.

3. Handover of Share Certificates and Compliance with Regulatory Requirements:
Simultaneously with the wire transfer, the Petitioners will hand over their share certificates and duly stamped and signed share transfer forms. They will also get the FC-TRS form pre-approved by the authorized dealer to ensure timely endorsement after receiving the payment. The Company will take necessary steps as per its Articles of Association to facilitate the transfer.

4. Effective Date of the Settlement Deed:
The Effective Date is defined as the date on which the Tribunal passes an order accepting the terms of the Settlement Deed and disposes of the Transfer Petition.

5. Resignation of Directors:
Mr. Vasudeva Adiga and Mr. Parameshwar Adiga will cease to be directors or officers of the Company from the Effective Date.

6. Relinquishment of Rights, Title, Claims, and Interests:
From the Effective Date, the Petitioners will relinquish all rights, title, claims, and interests in their shareholding in the Company. They will not make any claims on the assets or revenues of Respondent No.1 or against Respondent Nos.2 to 5 after receiving the settlement amount.

7. Mutual Release of Claims:
Both parties mutually release and discharge each other from any claims arising out of the execution, performance, or cancellation of the Investor Agreements or the Petitioners holding any shares of the Company. However, tax indemnities and representations and warranties related to the sale shares in the SSSPA will remain in effect.

8. Amendments to the Articles of Association:
The Company and Respondent No.2 will amend the Articles of Association to reflect the revised rights and obligations pursuant to the Settlement Deed. This includes deleting special articles and making other necessary modifications.

9. Non-compete and Non-solicitation Covenants:
The Petitioners will not start any new restaurants or outlets in the food and beverages or catering business for one year from the Effective Date. They will also not induce suppliers or employees to cease their association with the Company.

10. Validity and Binding Nature of the Settlement Deed:
Any modifications or amendments to the Settlement Deed must be in writing and executed by all parties. The Deed is executed voluntarily without duress or undue influence, and all parties have received legal advice on its terms and consequences.

11. Jurisdiction and Dispute Resolution:
The Court of Bengaluru will have exclusive jurisdiction to adjudicate any disputes arising from the Settlement Deed under Indian laws.

12. Defamation and Non-disparagement Clause:
Both parties agree to refrain from defamation, libel, or slander of each other and will not interfere with each other’s contracts and relationships. They will not make any statements that may damage the other's reputation.

13. Authority and Capacity to Enter into the Settlement Deed:
Each party represents that they have the authority and capacity to enter into the Settlement Deed and perform their obligations. The Deed is binding and enforceable against each party under applicable laws.

Conclusion:
The Tribunal recorded the compromise and disposed of the petition in terms of the compromise settlement dated 16th August 2017. The terms of the compromise are part and parcel of the order.

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