TMI Blog2002 (2) TMI 1319X X X X Extracts X X X X X X X X Extracts X X X X ..... that 3 shareholders including the petitioner were to continue to be employed by the company up to 30-9-2002 for which they were to enter into employment/consultant contract with the company on or before the date of acquisition. This term of the agreement is relevant since payment of 2nd to 4th instalments depended upon generation of revenue and earn-out. In terms of this agreement, the petitioner had handed over all the shares certificates in respect of his shares together with share transfer forms. While the first instalment has been paid, the company has committed breach of the term of the agreement relating to the employment/consultant contract. Since the consideration for the shares would depend upon the revenue of the company in respect of payment of 2nd to 4th instalments, the association of the petitioner with the company was very essential to ensure that the company earns better revenue. Further, even though the petitioner was a director, without any letter of resignation from the petitioner, the company has passed a resolution accepting his resignation with effect from 29-12-2000. Thus, the 1st and 2nd respondents have completely excluded the petitioner from the managemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eking in the petition is specific performance of the agreement. Even in the amendment application, which is yet to be admitted, his prayer relates to declaration of the MOU dated 23-2-2000 as null and void on the ground that he had no knowledge of the same earlier. This statement is wrong inasmuch as this MOU has been specifically referred to in the agreement dated 15-1-2001 in Clause 28. That being the case this could be subject to arbitration. Therefore, without recourse to the terms of the agreement, none of the allegations could be looked into and that being the case, since arbitration has been provided in the agreement, the CLB should refer the dispute to arbitration in terms of Section 8. 5. She further submitted: The petitioner has already filed an application before the Delhi High Court in terms of Section 9 of the Arbitration Act seeking certain interim reliefs relating to the restoration of the Board as it existed before 15-1-2001 and cancellation of the transfer of shares. This application is pending before the High Court. He has also invoked the arbitration clause by issue of a notice dated 19-5-2001 to the 2nd and 3rd respondents in which, according to him, the disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 402 of the Act are so wide that the CLB can mould proper relief with a view to put an end to the disputes. The company has filed a false criminal case against the petitioner which has been dismissed by the Court, in other words, inspite of the fact that the petitioner is a co-promoter director, he is being bounded. In Needle Industries case, which has been followed by the CLB in many other cases, it has been held that the Court is not powerless to render justice even if allegations of oppression are not established. However, in the present case, the sequence of events and also the manner in which the petitioner has been treated would establish that the petitioner is being oppressed. Therefore, the arbitration clause in the agreement cannot bar the petitioner from prosecuting the present petition before the CLB. In Manavendra Chitnis v. Leela Chitnis Studios (P.) Ltd. [1985] 58 Comp. Cas. 113 the Bombay High Court has held that subject-matter of a petition under Section 397/398 cannot be the subject-matter of an arbitration, for an arbitrator can have no powers such as are conferred on the Court by Section 402. Accordingly, he prayed for dismissal of this application. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In regard to this argument, no doubt Company Law Board has vast powers under Section 402 of the Act, yet, granting of relief depends on facts of a particular case and if for granting the relief, determination of bona fide disputes is required and the same is covered by an arbitration agreement, then, it is for the arbitrator to decide these issues and not the Company Law Board. In this connection we may also refer to the Delhi High Court judgment in Gurnir Singh Gill case (supra). In this case, the Court itself, as pointed out by Shri Chagla, in exercise of the powers under Section 402, referred the parties to arbitration. It did so because, in facts of that case, it felt that the reliefs justified in that case could be granted by the arbitrator notwithstanding the fact that the powers under Section 402 are very wide. This case settles the claim of Shri Chagla that since an arbitrator cannot grant the relief provided for under Section 402, the matter cannot be referred to an arbitration. Granting of relief in a proceedings under Section 397/398 is discretionary depending on the facts of a case. If the CLB comes to a conclusion that appropriate relief justified in a particular case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of shares dated 15-1-2001 entered into amongst the respondents and the petitioner, in favour of the petitioner. (b) Pass appropriate orders directing the defendants, their agents and other authorized persons not to indulge in violation and or breach of the any of the terms and conditions of the agreement for sale of shares dated 15-1-2001 and not to do any acts to the prejudice of the petitioner in ousting and excluding him from the affairs of the company. (c) Pass appropriate orders directing the respondent Nos. 1 and 2 companies not to give effect to the transfer and registration of the shares of respondent No. 1 company owned by the petitioner either in the name of the respondent No. 2 or anybody else till the specific performance of all the terms and conditions of the said agreement for sale of shares dated 15-1-2001 entered into amongst the petitioner and the respondents and in the meanwhile to return to the petitioner the shares owned by the petitioner along with the shared transfer forms duly signed by the petitioner and in the possession of the respondent. (d) Pass appropriate orders restraining the respondent No. 1 company from making any change in the composit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting as such and on behalf of the other shareholders and as representative of Maadhyam (P.) Ltd. on the ground that Mr. Michael Menezes was acting as such without proper authority from the petitioner herein, Shri Pinaki Dasgupta and without proper authority and or resolution approved by the Board of directors of the company, Maadhyam Advertising (P.) Ltd. 11. A perusal of the reliefs sought for as indicated in (b) to (g) would show that all the reliefs sought arise out of the agreement dated 15-1-2001. As a matter of fact the notice dated 19-5-2001 issued by the petitioner himself invoking the arbitration clause covers practically all the issues raised in the petition. That notice reads : I do hereby give you the following notice-- (1) That the following disputes/differences have arisen between us with regard to the agreement dated 15-1-2001: (a) specific performance of the agreement dated 15-1-2001 (b) signing of the employment contract as per Clause 21 of the Agreement dated 15-1-2001 and vide letter dated 16-2-2001 from Publicis (India) Communication Pvt. Ltd. (c) Payment of instalments as per Clause 3 of the Agreement dated 15-1-2001 (d) any other issue re ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
