TMI Blog2017 (9) TMI 1609X X X X Extracts X X X X X X X X Extracts X X X X ..... ents are questioning the maintainability of the petition by the petitioners on the ground that the first petitioner ceased to be the shareholder and the petitioners No.2 and 3 are not the Directors. Therefore, in the light of these contentions and further the first petitioner has failed to adhere to the payment schedule, it is not possible to grant interim relief in favour of the petitioners as prayed. The first petitioner is yet to establish its rights over the shares said to have been transferred in the light of Clause 7(a) of the MOU and also in the light of undertaking letter executed by the first petitioner marked as Annexure- R/1 to the objections. The petitioners' main document Annexure-A/8 contemplates entering into agreements. MOU is not a final document. The parties have to enter into definite agreements basing on the compliance of the provisions of MOU. Therefore, MOU itself is not a sole document to create rights in favour of the parties. It should be followed by definite agreements. The last paragraph of MOU is as follows: "The execution of this MOU is intended to constitute a binding obligation on both the parties. This MOU is intended to outline the various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of Respondents No.2 and 3 in the Respondent No. 1 company. The Memorandum of Understanding provides for payment of sale consideration as stated below: Sl. No. 1st Trench Amount (in Rs.) Period 1. 2nd Trench 3 Crores On execution of the MOU whereupon the Petitioner was provided access to the books and records for the 1 st Respondent 2. 3rd Trench 12 Crores Cumulative payment for share Transfer 3. 3 Crores To be paid within 31/12/2015 or 6 months from the date of conformity with Clause 5 (d) of the MOU. 4. Apart from the above considerations, after payment of the 3 rd Trench a further amount of 6% of the sales made by the company was also to be given to the Respondents No.2 and 3 for a further period of 2 years commencing from 01/01/2016. It is stated that in terms of the Memorandum of Understanding, the Respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The petitioners have filed the main petition seeking the relief of directing the respondents to transfer the remaining 50% shares and also for other reliefs. Apart from the main reliefs, the petitioners have sought for interim reliefs. Pending enquiry, the petitioners have filed IA No.80/2017. In this Interlocutory Application, the petitioners have sought for three interim reliefs. The interim reliefs prayed in the Interlocutory Application are different from the reliefs prayed for in the main petition. The interim reliefs if any, shall be in aid of the main reliefs prayed. The present interim reliefs sought for in the Interlocutory application are nowhere in the aid of reliefs prayed in the main petition. The admitted facts are that on 03.05.2015, the first petitioner has entered into a Memorandum of Understanding with Respondent No.2 for the sale of shareholding of Respondent No. 1 Company. According to the Memorandum of Understanding, the first petitioner had to pay ₹ 3.00 crores at the first instance and after exercising due diligence in about 30 days, the first petitioner has to pay further ₹ 12.00 crores and the remaining ₹ 3.00 crores was to be p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir part of obligation, cannot contend that the applicants have failed to perform their obligation. The PCS would also contend that obligations are on both sides as per the Memorandum of Understanding and that the petitioners have paid ₹ 3.00 crores and that the land is yet to be transferred in the name of the Respondent No. 1 Company. Therefore, the first petitioner is the shareholder and Petitioners No.2 and 3 are the Directors and that they are entitled to participate in the management of the Company and that they are entitled for the interim reliefs. The contention of the learned counsel for the respondents that as per the terms Of Memorandum of Understanding, if first petitioner fails to pay the amount agreed, then the shares held by the first petitioner stands automatically transferred to the shareholders from whom they are acquired by operation of law. It is also the contention of the learned counsel for respondents that the present petition is not maintainable as any dispute arising under the Memorandum of Understanding, the matter is to be referred to the Arbitrator. Therefore, the Counsel would contend that this Tribunal cannot entertain the main petition as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per MOU. The contention of Respondents is that except payment of ₹ 3.00 crores, the 1 st petitioner has not paid the balance consideration as per the terms of understanding. There is no dispute that the first petitioner has paid only ₹ 3.00 crores out of the total consideration of ₹ 18.00 crores. The balance payable is ₹ 15.00 crores. It is an undisputed fact that the balance amount was not paid by the first petitioner as per the time schedule of the understanding. The first petitioner is throwing his blame on the respondents contending that the respondents did not cooperate with the first petitioner company to exercise due diligence. Secondly, the transfer of land and building over which this unit of Respondent No. 1 Company is located stands in the name of the wife of Respondent No.2, which is not yet transferred in the name of the Respondent No. 1 Company. Further, the contention of petitioners that the Board meeting of Respondent No. 1 Company was not held to facilitate the first petitioner to raise loan from the Banks. On the other hand, the contention of respondents that the first petitioner has failed to pay the 2 nd instalment of ₹ 12.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ACM. Admittedly, there is no resolution of AGM appointing petitioners No. 2 and 3 as Directors. Thus, a serious question is raised by the respondents that the first petitioner is no longer a shareholder as the shares are reverted back by operation of Clause 7 (a) of MOU and that the petitioners No.2 a 3 ceased to be the Directors, as no resolution is passed by AGM confirming their appointment as Directors. The Respondents have raised a serious objection that the petitioners have nothing to do with the management and that they have no right to seek any interim relief. As already stated, the respondents have also filed a separate application under Arbitration and Reconciliation Act to refer the dispute to the Arbitrator and it is still pending. The respondents are questioning the maintainability of the petition by the petitioners on the ground that the first petitioner ceased to be the shareholder and the petitioners No.2 and 3 are not the Directors. Therefore, in the light of these contentions and further the first petitioner has failed to adhere to the payment schedule, it is not possible to grant interim relief in favour of the petitioners as prayed. The first petitioner is yet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yed in this petition. On this ground also the petitioners are not entitled for these interim reliefs. The contention of the PCS that the first petitioner is unable to pay the balance as the landed property and building of Respondent No. 1 Company stands in the name of the wife of Respondent No.2. The contention of PCS is that the Respondent No.2 had in fact, undertaken to get the landed property and building transferred in the name of Respondent No. 1 Company. He has relied on Annexure-A/10 filed with the petition. His contention is that till date the building as well as the landed property is not transferred in the name of Respondent No. 1 Company as per this undertaking letter Annexure-A/10. It is true that Annexure-a/ 10 is an undertaking given by Respondent No.2 that the land and building owned by Mrs. Parvathy Subramanian, who is also the Director of Respondent No. 1 company shall be transferred to the Respondent No. 1 company by way of sale. Now, the PCS has contended that since the property is not transferred in the name of Respondent No. 1 company, the question of paying the balance of sale consideration would not arise. This is the main ground on which the PCS is conten ..... X X X X Extracts X X X X X X X X Extracts X X X X
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