TaxTMI 
TaxTMI 
2020 (9) TMI 889
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....petition which is moved by the petitioner, made a prayer to declare the notice of EGM dated 16th December 2019, invalid, cancel the proposed EGM and during the pendency, direct the Respondent to maintain the status quo in the shareholding of the Respondent-1. Since, these two prayers are related with each other, therefore, we would like to dispose off both these interlocutory applications by this common order. 3. Firstly, we shall take up the application filed on behalf of the Respondent-2 under Section 45 of Arbitration and Conciliation Act, 1996, the facts mentioned in the application, in short, is that the Petitioner have preferred the Company petition seeking the following reliefs:- "In view of the facts mentioned hereinabove, it is most respectfully prayed that:- a) during the pendency of this Petition and till final disposal. This Hon'ble Tribunal may be pleased to pass an order restraining the Respondents through themselves or through their officers, agents, servants, etc. from giving effect to the resolutions passed in the Board Meeting dated 08.08.2019, 10.07.2019 and 16.07.2019 and the two circular resolutions nos. 08/2019-20 allegedly passed on 0....
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....municating that their action demonstrates deliberate and intentional breach of the Agreement." 5. Further, the entire facts mentioned in the main petition are based on the agreement entering between the parties, therefore, in view of arbitration clause in the said agreement, the matter may be referred to the arbitration instead of hearing the main application filed on behalf of the Petitioner. 6. We have heard the Learned Counsels appearing for the Petitioner as well as Respondents. In course of his arguments, Senior Learned Counsel appearing for the Respondent submitted that since there is an arbitration clause which the Petitioner has enclosed at page 65 of the main application, therefore, in view of clause 17 of the Joint Venture Agreement dated 19th September, 2006, the matter may be referred to the Arbitration under Section 45 of the Arbitration and Conciliation Act, 1996. 7. Learned Counsel appearing for the Respondent submitted that Hon'ble Supreme Court, in a case reported in Civil Appeal No. 8299 of 2016 Sasan Power Ltd. vs. North American Coal Corpn. (India) (P) (Ltd.) (2016) 10 SCC 813 held that Section 45 of the Arbitration and Conciliation Act, 1996 Act ma....
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....p Professional Education, 2016 SCC Online Del 5521 xi. Ravindra Kumar Verma vs. M/s. BFTP Ltd. & Anr. (2014) SCC Online Del 6602 xii. Demerara Distilleries (P.) Ltd. vs. Demerara Distillers Ltd. (2015) 13 SCC 610 xiii. TRL Krosaki Refractories Limited vs. Lindsay International Private Limited MANU/WB/0117/2019 : xiv. M/s. Rakesh Malhotra vs. Rajendra Kumar Malhotra (2014) SCC OnLine Bom 1146 xv. Grass Lands Agro Private Ltd. and. Ors. vs. R.S. Mohammed Saleem and Ors. (2017) SCC OnLine NCLT 954 xvi. Century Finance Corporation Ltd. vs. Union of India (UOI) and Ors., (2011) 161 CompCas 247 (Delhi) xvii. Binod Kr. Bawri vs. Calcom Cement Ltd. and Ors. (2017) 136 CLA 227. 9. On the other hand, Learned Counsel appearing for the Petitioners submitted that in view of Section 45 of the Arbitration and Conciliation Act, 1996, if the arbitration agreement is null and void, inoperative or incapable of being performed then Section 45, it is not applicable. He further submitted that since clause 17 of the Arbitration clause of the Joint Venture Agreement is incapable of being enforced, therefore, the Petitioner has no option but....
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....l Appeal No. 5440 of 2002 in the matter of Booz Allen and Hamilton Inc. vs. SBI Home Finance Ltd. and Ors. iv. CA No. 181/2002 and CP No. 39 of 2012 in the matter of Premier Automobiles Ltd. vs. Fiat India Private Ltd. and Ors. 11. Now in the light of the submissions raised on behalf of the parties, we shall consider the case in hand. Before making any comment on the submissions made on behalf of the parties and the decisions upon both the parties place reliance, we would like to refer Section 45 of the Arbitration and Conciliation Act, 1996 and the same is quoted below: - "45. Power of judicial authority to refer parties to arbitration.--Notwithstanding anything contained in Part I or in the Code of Civil Procedure, 1908 (5 of 1908), a judicial authority, when seized of an action in a matter in respect of which the parties have made an agreement referred to in section 44, shall, at the request of one of the parties or any person claiming through or under him, refer the parties to arbitration, 1 [unless it prima facie finds] that the said agreement is null and void, inoperative or incapable of being performed." Merely, plain reading of the provisions shows t....
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....on behalf of the Respondent-2 under Section 45 of the Arbitration and Conciliation Act, 1996, we think it is proper to give liberty to the Respondent-2 to raise this issue during the course of final hearing and order shall be passed on merit after considering the submissions of both the parties at the time of final hearing on the point, whether Section 45 of the Arbitration and Conciliation Act, 1996 can be invoked or not? 16. Now coming to the other application filed on behalf of the Petitioners under Rule 32 of the NCLT, Rules, 2016, we have heard the Learned Counsel appearing for the Petitioners and Respondents on this application also. Learned Counsel appeared for the Petitioners in course of his arguments submitted that Respondents 2 and 4 filed reply to the Petition and the facts stated in the reply in short is that the Adjudication on the present application is required to be postponed until the final application of the C.A. 65/C-V/ND/2020 filed by the Respondent-2 under Section 45 of the Arbitration and Conciliation Act, 1996 is decided at first. 17. Further the hearing on this petition is also required to be postponed as the Petitioners have not prayed for any final ....
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....lding of Petitioners and the Respondent-2 in the company. The Respondent-2 agreed to consider the proposal of the Petitioner No. 1. 24. Further, in the Board meeting dated 4th April, 2019, the Directors unanimously decided that Respondent-1 would avail an unsecured loan of Euros 250,000 @ 50 basis points above six months and no protest was raised on behalf of the Petitioner-1 and in pursuant of that, Respondent-2 signed loan agreement and submitted the same to Respondent-1 for necessary compliances before the Reserve Bank of India but Petitioner refused to execute the loan agreement and the Petitioner in the meeting dated 13th June 2019 stated that he was reconsidering the relationship with the Respondent-2 and he would discuss with Mr. Alessandro Spaggiari, Chairman of the Respondent No. -2. Since the Petitioner did not agree to grant loan to the Respondent-1, therefore, Respondent-2 was compelled to withdraw the decision to provide credit to Respondent-1. Further, from the facts stated above, it is cleared that Respondent-1 is in need of additional funds, which is also admitted by the Petitioners and increase of share capital of Respondent-1 is justified and is in the interest....
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....g for the Petitioner and the Respondent and perused the averment made in the application as well as reply and rejoinder filed on behalf of the respective parties. 29. Learned Counsel appearing for the Petitioner, in course of his argument, submitted that Respondent-1 is bound by the provision of JVA because Respondent-1 in the Board meeting dated 16th October 2006 duly ratified and approved the JVA. He further submitted that they have appointed the Petitioner as the Managing Director of the Respondent-1 Company in pursuance of the JVA and in support of this contention, the Petitioner placed reliance upon-the minutes dated 16th October, 2006 and the relevant portion of those minutes is at page 23 of the application. 30. He further submitted that the Board further delegated power to Petitioner-1 as per the JVA which is at Page 24 of the application. He further submitted that subsequently the petitioner was also working as per the JVA and similarly Respondent have also acted in pursuance of the JVA. The minutes of the meeting of the Board of Directors held on 18th January 2019 of Respondent-1 in item 12 summarized the review of the Board for new shareholder agreement in place of....
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....Bina Sharma vs. Vardaan Agrotech Pvt. Ltd. and Ors. [2007 135 CompCas 133 CLS]. 31. He further submitted that the Respondent-1 has as per the Directors Report dated 21st October 2019 raised adequate funds by borrowings and the proposed increase in authorized capital is mala-fide. He further submitted that the authorized capital cannot be increased without the consent of the Petitioner-1 as per the Clause 2.2 of the JVA. He further stated that the Petitioner has set out a series of incidents constituting oppression of minorities in CP No. 137/241-242/ND/2019. He further submitted that increase in share capital with ulterior motive cannot be permitted and, in this regard, he placed reliance upon the decision of Hon'ble Company Law Board, Principal Bench, New Delhi in the matter of PIK Securities (P) Ltd. vs. United Western Bank Ltd., Company Law Board, Principal Bench, New Delhi. 32. He further submitted that the Hon'ble Supreme Court in the matter of Vodafone International Holdings vs. Union of India [ (2012) 6 SCC 613] and in the matter of Premier Hockey Development Private Ltd. vs. Indian Hockey Federation [O.M.P. 92 OF 2011 & O.M.P. 52 of 2011] decided by the Delhi ....
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.... million by Respondent 2 for funding the expansion plan of the Company. 36. Learned Counsel for the Respondents raised all the facts mentioned in the reply and placed reliance upon the following decisions:- i. Cotton Corporation of India vs. United Industrial Bank [ (1983) 4 SCC 625] ii. Milen Sen vs. Guardian Plasticode Ltd. SCC OnLine Cal 153 iii. Hanuman Prasad Bagri & Ors. vs. Bagress Cereals Pvt. Limited & Ors. SCC OnLine Cal 90 iv. M/s. Free Wheel (India) Ltd. New Delhi-1 vs. Dr. Veda Mitra & Another AIR (1969) Delhi 28 v. Jetu Jacques Taru Lalvani and another vs. J.B.A Printing Inks Limited and Others 1995 SCC OnLine BOM 261 vi. V S Krishnan and Ors. vs. Westfort Hi-tech Hospital Ltd. (2008) 3 SCC 363 vii. Krishna Murari Goenka and Ors. vs. Schreiber Dynamix Dairies Private Limited MANU/CL/0114/2015 viii. Kunduru Anki Reddy and Ors. vs. Bindu Pharmaceuticals Private Limited and Ors. MANU/NS/6716/2019 ix. V B Rangraj vs. V B Gopalkrishnan (1992) 1 SCC 160 x. World Phone India vs. WPI Group - 2013 SCC online Del 1098 xi. Akshay Ispat Udyog vs. Ishwardas-2014 SCC Online CLB 8. ....
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....les. The further contention of the Petitioner is the notice can only be issued by the approval of the Board as required under Section 100 of the Companies Act, 2013. As we have already referred the clause 4.9 of the Joint Venture Agreement which shows that the quorum is not said to be completed unless one Director nominated by PR and one Director by SPAL. Admittedly, the Petitioner was not participating in that meeting. 41. At this juncture, we would like to refer the arguments advanced on behalf of the Ld. Counsel appearing for the Respondent-1 that the JVA is not applicable and since the Petitioner has tendered his resignation, therefore, he has not participated in the meeting. He was not party to the meeting. 42. Now, we shall consider these submissions of the Respondents whether the JVA is applicable or not? At this juncture, we would like to refer the resolution dated 16th October 2006 then we find by the resolution dated 16 October 2006, the Board of Directors ratified and approved the Joint Venture Agreement executed on 19 September 2006 in between Pankaj Rustagi & Anr. and SPAL. 43. Therefore, in our considered view, that contention of the Respondents that JVA is n....
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....ccordingly, we hereby quash the notice dated 13th January 2019 issued by the Board in which the Petitioner was not party. 49. Now coming to the other point whether the company can raise the fund or not? 50. In course of his arguments, Learned Counsel appeared for the Respondent referred the meetings dated 18th January 2019 in which the Petitioner-1 was also present and presided the meeting and the meeting dated 15th March, 2019 presided by the Petitioner and in both the meeting the financial condition of the Respondent company was discussed and it was decided to raise the fund by taking the loan and that was not opposed by the Petitioner which shows that financial condition of the company is not good and company needs fund and that is the reason when the matter was placed before Board of Directors, chaired by the petitioner in that meeting. Petitioner had not raised any objection. He further referred the email dated 28th March 2019 which is at page 44 of the reply to CA, email dated 31st March 2019 at page 43-44 of the reply to CA and submitted that the Petitioner, himself, suggested that the company should raise capital by way of right issues in the ratio of current sharehol....