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2015 (7) TMI 453 - COMPANY LAW BOARD NEW DELHI

2015 (7) TMI 453 - COMPANY LAW BOARD NEW DELHI - TMI - Charges of oppression and wilful misstatement u/s 397 & 398 - Wilful termination of MOU - Impact of Arbitration clause in agreement - Doctrine of Severability - Held that:- This Doctrine of Severability will come into operation when the agreement has come into effect. Here the respondents filed this application saying though this agreement entered into has not been given effect, it has to be referred to arbitration for the reason that MoU ha .....

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r CP, turned around and made further allotments without giving any opportunity to the petitioners to participate in right issue. Looking at this scenario Dhanuka group causing Tulsain group withdraw earlier CP on the MoU with a proposal to set right earlier allotment, thereafter turning around and making allotment to their group at a price far lower than the price at which the shares were allotted to Tuisain group, I am of the view if it is not oppression, what else would become oppression?

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implementation of clause under MOU dated 11.02.2012.

The grievances of the petitioners are not covered by either MoU or Arbitration clause of MoU, because the alleged acts cannot be coined as mere violation of the clauses of the MoU, they are, I believe, beyond the ambit of MoU and arbitration clause amounting to oppression against the petitioners, hence I dismiss the relief sought under section 8 of Arbitration and Conciliation Act, 1996. - the petitioners failed to make the parties .....

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013 and for referring this matter to Arbitration in terms of Section 8 of the Arbitration and Conciliation Act, 1996. 2. Before going into the merits on CA No. 143/2014, it is necessary to bring in the facts of the petition in brief so that it would become easy to find out as to whether this CA is to be allowed or dismissed. 3. This dispute is primarily between two groups namely Tulsian group (petitioners) and Dhanuka group (answering Respondents). 4. R1 Company was incorporated in the year 1999 .....

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ian Group has subscribed to 4,40,000 equity shares at a premium of ₹ 130/- per shares for a sum of ₹ 616 lakhs, resulting into an effective stake of 13.85%. 5. Before Tulsian group filing this CP, they filed CP No. 92/2011, wherein a settlement was arrived by an MoU dated 11.02.2012. On seeing the said MoU, CLB, on 01-03-2012 disposed CP 92/2011 in terms of the MoU dated 11.02.2012. That MoU says the principal promoter of the company is Dhanuka Group; the company has recently complet .....

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June 2012 and thereafter to enter into a Share Holders Agreement. Since Suresh Gaggar Group (shortly called as Gaggar Group) expressed their desire to come as strategic investor, all these three groups agreed that Gaggar group shall invest INR 400 lacs to acquire 10% share holding in the Company, As on the date of execution of agreement, the position in the company is paid up capital of the company had 31, 75, 902 equity shares of ₹ 10/- each. Out of which, Dhanuka group had 82.34% shareh .....

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to transfer its 10,599 shares to Tulsian at the rate of ₹ 60/-, which Active had earlier acquired from the company on 30-10-2010, remaining 1,067 shares held by Active would be transferred to Dhanuka at the same rate. Likewise New Age Import (P) Ltd. would transfer its 14,364 shares to Jain group at ₹ 60/- at which New Age had earlier purchased. As said above, Gaggar group would invest INR 400 lakhs to acquire 10% shareholding, similarly, Dhanuka group either in the name of them or t .....

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swering respondents, having these Respondents made the petitioners believe earlier allotments would not remain in force, the petitioner withdrew the earlier CP. In view of the MOU arrived between the parties, the changes in the shareholding of the company shall be completed on or before 15th June 2012. After which, the parties shall enter into a binding Shareholders Agreement, on execution of the Shareholders Agreement, Tuisian Group and Gaggar Group, each shall have the right to nominate and ap .....

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45 bighas, owned by the company, at Gram Bai Ka Bas, Khasra No. 243 & 244 Teh, Chomu, District Jaipur shall be used by the company for its expansion, details, and project matrix of which shall be mutually decided by all the three groups. It is agreed between Dhanuka Group and Tulsian Group that Jain Group would continue to remain as a minority shareholders/Group, without any Director on the Board, it is also said that Jain Group will be presented and protected by Tuisian Group. It is also ag .....

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Gaggar Group shall be entitled to receive quarterly profit and loss account and financial statements within 30 days by the end of respective quarter. It is agreed that the affairs of the company shall be carried out and managed with high standards of Integrity, performance in conformity to best Corporate Governance. The important Clause upon which this application hinges is Arbitration Clause-24, which says as follows : ''Any disputes or differences, if any arising between the Groups sh .....

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f this MOU by any of the parties In CP No. 92/2011 will amount to contempt of court. The petitioners submit that fair value of the share has been stated as ₹ 113 per share (premium of ₹ 103 per share) in clause 2 of the MOU. The petitioners submit that the respondents have not performed any of the oblations, para-wise Clauses of the MOU, apart from this, R1 company allotted 3,77,173 equity shares on 18.10.2012 to a company called Umang Boards (Mumbai) Pvt. Ltd.. an associate and shel .....

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ts of the petitioners and needs to be annulled. 7. R1 company also issued 83,695 equity shares on 08.10.2012, at ₹ 46 per share (premium of ₹ 36 per share) to the shareholders of Jain Group by unlawfully showing the loan given by the Jain Group as share application money in its audited annual accounts in the previous years. The petitioners state that Jain Group has not given money towards share application or consent letter or confirmation to make allotment to it; therefore, this all .....

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spondents No. 2 and 3, being Umang Business Venture Pvt. Ltd. and Umang Corporate Park Pvt. Ltd. have availed the funds from such multi layered shell/benami companies, involved in round tripping of the funds of over ₹ 12,000 crores. In addition to this, 4 bodies corporate, now forming part of Dhanuka Group are in addition to these 231 multi layered/benami/hawala companies, having involved in round tripping of black money, foreign funds, as also hawala money of over ₹ 12,000 crores Th .....

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ey, thereafter making investments in Purti Group. 9. The petitioners further submit that R1 had availed Buyers' Credit from overseas branches of 4 banks, of ₹ 354 lakhs, as at 31.03.2012 this was shown as money come on import of raw material and other components used in the normal business and operations of the company but whereas the company showing imported raw-material of ₹ 144.27 lakhs only, which is in contravention to the provision of FEMA, as foreign exchange has been used .....

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are the allotment of 83,692 equity shares made on 08.10.2012 at ₹ 46 per share to the shareholders of Jain Group by unlawfully and coercively converting the loan given by some members of the Jain Group to the R1 company as null and void, accordingly to rectify the shares register; (5) To direct the respondents to complete the requirements for transfer of 66,629 shares acquired by Tulsian Group and Jain Group from Dhanuka Group in accordance with MOU dated 11.02.2012; (6) To order the accou .....

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n into the beneficial ownership of 231 and 1,500 multilayered benami/shell/hawala companies; (8) To order investigation into the source of funds of the shareholders of Dhanuka Group; (9) To direct appointment one director of petitioners on the Board of R1 company; (10) To direct appointment of independent auditors for R1 company, for financial year 2013-14; (11) To direct appointment of two independent directors and one nominee director of SBBJ on the Board of R1 company; 10. R2 and R3 filed thi .....

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ed to the Arbitration as agreed in between them because, as per MoU, they agreed for Arbitration u/s 8 of Arbitration and Conciliation Act, 1996 as and when any of the parties want to dispute the acts covered under the MOU dated 11.012012. Since the petitioners allegations are based on non-compliance of terms of MOU, the counsel says, the same has to be referred to Arbitration in terms of Section 8 of the Arbitration and Conciliation Act, 1996. 11. The counsel without prejudice to the contention .....

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y in the audited annual accounts of the respondents company for the previous years. The counsel submits that the petitioners have not attended to any of the general meetings of previous years. The respondents also raised another contention stating that since the petitioners are seeking a relief of investigation into the ownership of 231 & 1500 multilayered Benami/Shell/Hawala companies referred in para 6.23 of the present CP without showing any of them as parties to the parties to the presen .....

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herjee [1971] 41 Comp Cas 678 (Delhi) to support the proposition placed above. For having the petitioner in this case sought investigation into the ownership of as many as 1731 companies without adding them as parties to the petition, the respondent counsel submits that this Bench shall dismiss it at threshold. 14. Having the petitioners sought for an enforcement of MOU dated 11.02.2012 there being an arbitration clause in the said MOU, the respondents counsel submits that this petition, in the .....

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on Vijay Sekhri v. Union of India [2011] 106 SCL 297 (Delhi) and Everest Holding Ltd. v. Shyam kumar Shrivastava [2008] 16 SCC 774 to say ratio in the cases supra covers the facts in the present case. 15. The respondents counsel also relied upon Pinaki Das Gupta v. Maadhyam Advertising (P.) Ltd. [2002] 38 SCL 170 (CLB - New Delhi) to say when Arbitrator could grant an appropriate relief which is sought before CLB, then such dispute could be referred to the Arbitration. 16. The respondents counse .....

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say that even on termination of an agreement, the Arbitration clause of that agreement would still survive. Basing on this proposition, the respondents counsel says the Arbitration Clause in MoU dated 11.02.2012 would remain binding on the parties notwithstanding the fact of termination of MoU dated 11.02.2012. 18. The respondents counsel further relied upon observation made by Lord Macmillan in Heyman v. Darwins (1942) AC 356, which is as follows : ''I venture to think that not enough a .....

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dertaken to the others such dispute shall be settled by a tribunal of their own constitution. And there is this very material difference, that whereas in an ordinary contract the obligations of the parties to each other cannot in general be specifically enforced and breach of them results only in damages, the arbitration clause can be specifically enforced by the machinery of the Arbitration Acts. The appropriate remedy for breach of the agreement to arbitrate is not damages, but its enforcement .....

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their settlement. The purposes of the contract have failed, but the arbitration clause is not one of the purposes of the contract." 19. The respondents counsel also relied upon the judgment in between Today Homes and Infrastructure (P.) Ltd. v. Ludhiana Improvement Trust (2014) 5 SCC 68, Swiss Timing Ltd. v. Organising Committee, Commonwealth Games AIR 2014 SC 3723 to say when the subject matter and parties are covered by Arbitration Clause, this case has to be referred to Arbitration. 20. .....

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U, such unilateral termination of MoU by the respondents amounts to contempt of court. 22. The petitioner counsel relied upon Bhushan Power & Steel Ltd. v. Rajesh Verma [2014] 5 SCC 551 to say that non-compliance of a court order amounts to contempt. The petitioner counsel submits that the present CP is for enforcement of order dated 01.03.2012 passed by CLB in CP No. 92/2011 and also for investigation into the affairs of R1 company under section 237 and to bring oppressive acts being commit .....

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h company Is not a party, the parties are at liberty to invoke arbitration clause, provided subject matter is covered by arbitration clause. I do also agree that the principle of Doctrine of Severability is applicable to arbitration clause though the remaining clauses of the Memorandum of Understanding ceased to operate. 24. Now the point for determination is whether the MoU dated. 11.02.2012 has given any effect at all or not. 25. If the agreement itself is not given effect, is it necessary to .....

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olders agreement when the clauses of MoU in para 1 to 8 have been compiled with on or before 15.06.2012. The parties will get a right for becoming directors of the company only after shareholders agreement has come into existence, Here no changes took place as stated in para 1 to 8 of MOU dated 11.02.2012 and no shareholders agreement was executed after 15.06.2012. Apart from this, the very applicants who are respondents in this case - Dhanuka Group - unilaterally terminated this agreement sayin .....

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hat there is an arbitration clause in an MoU that has not seen the light of the day. In cases supra, the agreement entered between the parties remained in force for some time, both the parties acted upon, here nothing happened except the respondents using this MoU as a device for the withdrawal of earlier CP. 29. This Doctrine of Severability will come into operation when the agreement has come into effect. Here the respondents filed this application saying though this agreement entered into has .....

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stment from Gaggar group. But whereas these Respondents after disposal of earlier CP, turned around and made further allotments without giving any opportunity to the petitioners to participate in right issue. Looking at this scenario Dhanuka group causing Tulsain group withdraw earlier CP on the MoU with a proposal to set right earlier allotment, thereafter turning around and making allotment to their group at a price far lower than the price at which the shares were allotted to Tuisain group, I .....

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