TaxTMI 
TaxTMI 
2021 (10) TMI 1088
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....interim ex-parte order restraining the Respondents from transferring any investment/asset of the Respondent No. 1, 2, 11 and 12 in favour of any third party or creating third party interest in Respondent No. 1, 2, 11 and 12 in any manner; ii. Pass an ad interim ex-parte order directing the Respondent No. 2 to not transfer or create any further encumbrances or third-party rights on the shares held by it in Respondent No. 11 and Respondent No. 12 during the pendency of the present matter; BRIEF FACTS OF THE CASE 2. The Petitioner No. 1 to 3 were the promoters of Respondent No.11. On 19.07.2013, Respondent No. 11 incorporate a Company, Respondent No. 12, which is a wholly and subsidiary of Respondent No. 11 with an objective of running/operating technology platform which would utilize by share brokers to rendering services to their customers. Respondent No.2 is in the business of wealth management of high networth individuals. 3. In the year 2015, Respondent No. 2 approach the Petitioners with a proposal to buy out shares of all the shareholders of Respondent No. 11 including the Petitioner and in return allot them shares in the Respondent No. 1 Company. The broad te....
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....rovided to the Petitioners. ii. Transfer of Respondent No. 12 from the Respondent No.1 would amount to eroding the substratum of the company and therefore would be prejudicial to the interest of the Respondent No.1. iii. Transfer was being executed in favour of a related party (i.e.) Respondent No.2. 8. The Petitioner also raised objections by email 16.01.2020, 15.07.2020, 02.10.2020 and 06.10.2020, the Respondents replied on 19.10.2020 and provided the copy of valuation report. 9. Acts of Oppression and Mismanagement: - a. Systematic assets stripping of Respondent No. 1 and transferring to Respondent No. 2 were petitioners does not hold any shares; b. The Petitioners have been kept away from affairs of Respondent No. 1; c. Affairs of Respondent No. 1 are being conducted as a sole proprietorship; d. Unjustified transfer of Respondent No. 12 to Respondent No. 2. e. Breach of doctrine of legitimate expectation. f. Breach of doctrine of legitimate expectation. CA 68 of 2021 in CP 1417 of 2020 1. The Applicant in C.A. 68 of 2021 raised preliminary objection as to maintainability of this Hon'ble Tribunal....
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....31,20,000 equity shares along with their voting rights in Respondent No. 11. Respondent No. 1 agreed to purchase the shareholding of Respondent No. 11. The parties thus executed the share purchase agreement whereby erstwhile shareholders of Respondent No. 11 sold the respective shareholding in Respondent No. 11 in favour of Respondent No. 1. In consideration for sale of their respective shareholding 8,03,000 equity shares of Respondent No. 1 were issued to the erstwhile shareholders including the petitioners by way of preferential allotment on a private placement basis. Thereafter, Respondent No. 1 and its shareholders and the erstwhile shareholders of Respondent No. 11 executed SHA dated 10.08.2016. 8. Pursuant to said acquisition Respondent No. 11 became subsidiary of Respondent No. 1 and a stepdown subsidiary of Respondent No. 2. Furthermore, because of the acquisition of whole shares of Respondent No. 11 by Respondent No. 1, Freedom Intermediaries Infrastructure Private Limited (Respondent No. 12), being a subsidiary company of Respondent No. 11 de facto became a step-down subsidiary company of Respondent No. 1 and Respondent No.2. In view thereof, three layers of subsidiary....
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....,029 equity shares of face value of INR 10/- each at INR 335 (including premisum of INR 325 per equity share) aggregating to INR 40 crores. At the end of financial year 2018-19 inter alia on account of the increasing requirement of working capital, Respondent No. 1 approached No. 2 seeking infusion of funds. In line with its fiduciary duties, the Respondent No.2 agreed to advance a sum of INR 50,00,00,000 to the Respondent No. 1 at the interest of 10% per annum, of which has been subsequently repaid. In the said regards, an Inter-Company Loan Agreement dated 01.04.2019 was executed between Respondent No. 2 and Respondent No. 1 recording the terms and conditions therein. 12. To cover the additional capital requirement of Respondent No 1, Respondent No. 2 as also in view of the restriction laid down in the Notification, Respondent No. 2 proposed to buy the entire shareholding of Respondent No. 1 in Respondent No. 12. Accordingly, the management of Respondent No. 1 appointed M/s Patomath Capital Advisors Private Limited for conducting the valuation of equity shares of Respondent No. 12. On 21.10.2019, M/s Pantomath Capital Advisors Private Limited submitted its valuation report whe....
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.... REPLY FILED BY RESPONDENT NO. 7 & 8 18. The Respondent claims that the Petitioner allegations are baseless and devoid of merits. The Petitioner never disputed the said transfer for the last three years despite having knowledge of the same or being knowledge of same, thus the Petition is vitiated by gross delay in latches. Moreover, the Petition are deemed to have acquiesced to the same. The Petition lacks merit and liable to be dismissed. REJOINDER TO REPLY OF RESPONDENT NO. 2 TO RESPONDENT NO. 8 19. The Petitioner confirmed that the relief sought in the Company Petition are justified and fit to be granted. FINDINGS 1. The issue which falls for consideration is as follows: i. Whether any interim order can be passed restraining the Respondents from transfering /investment/assets, R1, R2, R11 and 12; ii. Not to create any further third-party rights on the shares held by the Petitioner in R11 and R12. 2. The core issue between the parties revolves from the SHA and SPA both dated 10.08.2016 executed between Freedom Shareholders, Respondent No.1, Shareholders of Respondent No. 2. In pursuance of the SPA, the Freedom Shareholders transferred their s....
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....ghts. The proposed EGM which is being challenged was held on 15.01.2020, the entire issue of dispute between the parties is founded in the Share Purchase Agreement and are purely contractual nature. 7. The relevant clauses of SHA are reproduced below: "Clause No. 3 BOARD OF DIRECTORS 3.1 Powers of the Board The Anand Rathi group sharesholders shall be in sole control of the Company and the Board and an committee formed thereunder shall be responsible for the management, supervision, direction and control of the Company. Clause No. 5 OPERATIONS AND DAY TO DAY MANAGEMENT 5.1 The Anand Rathi group shareholders through their nominees appointed as Directors will continue to manage and operate the business of the Company on a day to day basis. Clause no. 7: FURTHER ISSUE OF CAPITAL 7.1 The Anand Rathi group Shareholders may decide to invest either by itself or through its nominees or through investments by investors negotiated by Anand Rathi Group Shareholders an amount aggregating uptp Rs. 60,00,00,000/- into the company over a period of twelve (12) months subject to the satisfaction by the Anand Rathi Group Shareholders ....
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....arising out of the SHA and further in view of the embargo laid down by the notation of MCA dated 20.09.2017, Respondent No.1 transferred its entire shareholding in Respondent No.11 in favour of Respondent No.2. The transfer of shareholding was to the complete knowledge and consent of all shareholders including the Petitioners. 10. This Bench therefore is of the considered opinion that no prejudice is caused to the rights of the Petitioner under said alleged transfer of shares of Respondent No.1 to Respondent No.11 or transfer of assets to Respondent No.2 from Respondent No.1, and is governed by the interse agreement namely the shareholder agreement/share purchase agreement both dated 10.08.2016. 11. Further, the CA 68 of 2021 has been filed seeking reference of disputes to arbitration in purchase of clause 19 of SHA referred supra. 12. It is relevant to refer section 8 of Arbitration and Conciliation Act, Power to refer parties to arbitration where there is an arbitration agreement - (1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submi....