TaxTMI 
TaxTMI 
2017 (3) TMI 1422
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....6 to R9 (Nominee Directors on R5 behalf) and RIO namely IDBI Trusteeship Services Ltd. (hereinafter referred as "Debenture Trustee") with the reliefs as follows: (a) To pass reliefs u/s.241 & 242 of the Companies Act 2013 (b) To direct that the Articles of Association of Vinca be modified and be substituted by the Articles as set out in Table - F of Schedule - I of the Companies Act, 2013. (c) To restrain the Nominee Directors of FMO from acting as Directors of Vinca and restrain them from giving any further instructions to the Debenture Trustee, whose Trusteeship has been validly terminated by Vinca. (d) To declare and direct that Board of Directors of Vinca are not bound to act in accordance with instructions of the Nominee Directors of FMO, the same being illegal and unlawful. (e) To remove the Nominee Directors of FMO from the Board of Vinca. (f) To declare all the actions taken by IDBI Trusteeship Services Ltd., in its capacity as Debenture Trustee at the instance of the Nominee Directors of FMO as illegal, null and void. (g) To direct that the OPCDs (optionally partly convertible Debentures) issued in favour of Vinca by Amazia (100% subsidiary of Vinca) a....
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....itioners company, Hubtown (R5), Vinca and its Subsidiaries and FMO (R2), hence we brief it as below. 4. The above appeal before Apex Court arises out of a Summons for Judgment No. 39 of 2013 in a Summary Suit filed on the original side of the Bombay High Court, by the debenture trustee (RIO), to enforce rights that arise out of Corporate Guarantee executed by Hubtown (R5). 5. The case of the Petitioners is that Vinca was incorporated in the year August 2008 for carrying real estate business; later Amazia Developers Pvt. Ltd. (herein referred as "Amazia") incorporated on 4.6.2006 and Rubix Trading Pvt. Ltd. (incorporated as "Rubix" in the year 2009) have become wholly owned subsidiaries of Vinca. The Petitioners are shareholders of Vinca holding 20.50% of Class-A Equity Shares each and 50% of Class B Equity Shares each whereas FMO holds 10% Class-A Equity Shares i.e. 0.01% of the total Share Equity Capital of Vinca and 3-CCDs convertible over a period of 60 months into 99% of Class-A Equity Shares in Vinca. Whereas Hubtown holds 49% of Class-A equity shares amounting to 0.05% of the total issue and paid up equity of Vinca. 6. The Petitioners submit that they started Vinca b....
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.... by virtue thereof. The remaining 41% Class A equity shares in Vinca are owned by the individual promoters of Hubtown, who are none other than Hemant Shah and Vyomesh Shah (petitioners) entitling them to 41% of the voting rights and economic interest in Vinca. These petitioners together also own 100% of Class B equity shares of Vinca, which carry with them collective voting rights and dividend entitlement not exceeding 0.01%. Upon conversion, the 3 CCDs in Vinca will entitle FMO to 99% of the equity of Vinca (by allotment of additional Class A shares), thereby entitling FMO to 99% of the voting rights of Vinca. The said monies invested by FMO into Vinca were then used by Vinca to subscribe to certain optionally partially convertible debentures (OPCDs) issued by Vinca subsidiaries namely Amazia and Rubix by execution of Debenture Subscription and Debenture Trustee Agreements in the year 2009 making IDBI Serviceship Services Ltd (R10) as Trustee. As per the Trust Deeds, Vinca subscribed to the OPCDs carrying a variable coupon and a back ended coupon to ensure internal rate of return of 14.75% per annum. This money came through subscription into Amazia and Rubix were to be applied tow....
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.... permission is not granted, then again there would be no infraction of FEMA Regulations. The judgment in ImmamiAppa Rao's case would be attracted only if the illegal purpose is fully carried out, and not otherwise. 39. Based on the aforesaid, it cannot be said that the defendant has raised a substantial defence to the claim made in the suit. Arguably at the highest, as held by the learned Single Judge, even if a triable issue may be said to arise on the application of the FEMA Regulations, nevertheless, we are left with a real doubt about the Defendant's good faith and the genuineness of such a triable issue. Rs. 418 crores has been stated to be utilized and submerged in a building construction project, with payments under the structured arrangement mentioned above admittedly being made by the concerned parties until 2011, after which payments stopped being made by them. The defence thus raised appears to us to be in the realm of being 'plausible but improbable'. This being the case, the plaintiff needs to be protected. In our opinion, the defendant will be granted leave to defend the suit only if it deposits in the Bombay High Court the principal sum of Rs. 4....
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....1. The Petitioners submit that the Nominee Directors of FMO in their letter dated 11.11.2016 opposed to discuss any Reserved Matters inter alia including matters pertaining to OPCDs as a consequence of which the decisions remained pending on account of want of their affirmative vote, and obstructing working of the company. They further submit numerous cross suits are pending before various judicial authorities in respect to conversion of CCDs issued to FMO by Vinca, if such conversion is effectuated, FMO would become 99% shareholder of Vinca which ultimately become detrimental to the interest of the Petitioners and Vinca. The Petitioners further submit that the Nominee Directors of FMO consistently refused to co-operate with Vinca in conducting Board meetings and AGM despite notices have been sent to them. 12. The petitioners further illustrated that on the Notice dated 10.9.2016 issued for holding Board meeting on 27.9.2016, the Nominee Directors of FMO opposed to holding such meeting by sending a letter on 13.9.2016 stating that they received only on 16.9.2016 by which they could not make their travel plans, therefore, re-scheduling for the meeting to 6.10.2016, failing which ....
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....r default on the part of Amazia and Rubix under the Debenture Agreements, FMO sent a letter dated 27.4.2012 to Vinca, followed by notices dated 2.5.2012 by the Debenture Trustee to Amazia and Rubix, at the instance of Nominee Directors of FMO and FMO itself calling for payment of interest on the OPCDs allegedly due and payable to Vinca under rectification of the other alleged defaults. For the Nominee Directors of FMO having given instructions to the Debenture Trustee for redemption OPCDs, the Debenture Trustee issued Early Redemption Notices dated 27.6.2012 to Amazia and Rubix calling upon them to redeem the OPCDs and pay the redemption amount along with interest computed at 171.22 cr. for Amzaia and 305.92 cr for Rubix thereafter, the Debenture Trustee served a demand certificate dated 3.8.2012 on Hubtown purportedly invoking the Corporate Guarantee and calling upon Hubtown, who is 49% shareholder of Vinca, to pay Early Redemption amount. The Counsel further submits that in terms of the mandate given by the Board of Directors vide its Resolution dated 19.5.2012, Vinca terminated on the appointment of Debenture Trustees vide its letter dated 6.8.2012 (this letter is also not annex....
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....he Petitioners tout that the instructions of the nominee directors of FMO to the Debenture Trustee for taking legal action against Hubtown for invoking Guarantee given by it and legal action against its subsidiaries for protecting interest to ensure that the proceeds come to Vinca as acts prejudicial to the Vinca. The fact of the matter is, these Petitioners on their own showing that they only invested Rs. 12.8 crores, whereas FMO invested Rs. 418 crores in the year 2009, since then nothing has gone as return to Vinca as per the agreements in between them. It is also not the case of the Petitioners that its subsidiaries are not owed to pay interest to Rl company as agreed in the Debenture Agreements. In fact, the Hon'ble Apex Court has given direction to R5 in the Civil Appeal to deposit principal sum with the Honourable High Court of Bombay. 19. It is a settled proposition of law that any Court, for that matter even NCLT, can dismiss Company Petition at threshold if the cause of action for invoking respective section has not been reflected in the Company Petition and if the material facts placed before this Tribunal do not constitute a case under the respective section of l....
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....ty for letting the petitioners make themselves free out of the guarantee Hubtown given to the Debenture Trustee which ultimately shut out FMO from realising Rs. 418 crores invested in Vinca. Moreover, since this conversion of OPCDs into shares being a reserved matter, unless the Nominee Directors of FMO exercise their right for such conversion, the Petitioners cannot impose such an obligation upon the Nominee Directors of FMO to exercise their affirmative of vote for conversion of OPCDs into shareholding. Now the relief sought by the Petitioners is for direction to the Nominee Directors of FMO to convert those OPCDs into shareholding so that the Petitioners wriggle out from the direction given by Hon'ble Supreme Court of India to deposit Rs. 418 crores with Vinca before putting up their defence in Civil Suit pending before Bombay High Court. 22. On having this Bench observed that either seeking a direction not to convert CCDs into shareholding of Vinca or seeking a conversion of OPCDs into shares of Amazia and Rubix will ultimately nothing but taking away the rights of FMO and its Nominee Directors by the Petitioners themselves through Hubtown, therefore, this Bench, having ....
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.... situation that entitles one person to obtain a remedy in court from another person. In Stroud's Judicial Dictionary a "cause of action" is stated to be the entire set of facts that gives rise to an enforceable claim; the phrase comprises every fact, which if traversed, the plaintiff must prove in order to obtain judgment. In "Words and Phrases" (4th Edn.) the meaning attributed to the phrase "cause of action" in common legal parlance is existence of those facts, which give a party a right to judicial interference on his behalf. (See Navinchandra N. Majithia v. State of Maharashtra and Ors. (2000 (7) SCC 640). 27. Even if the entire petition is taken as whole and look for case under section 241 & 242 of the Companies Act 2013, to our knowledge, no cause of action arose for showing the exercise of the rights of FMO for protecting its economic interest is unjust and unfair to the petitioners, moreover the company is managed by the petitioners and it is not the case of the petitioners that the money invested by FMO was spent by FMO, therefore by seeing some ornamental paras recanting unfair, harsh and burdensome slogans, devoid of any material facts will not amount to cause of ....