Shajas Developers Private Limited And ... vs Moniveda Consultants Llp And Others

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NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH NEW DELHI COMPANY APPEAL (AT) NO.85/2024 (Arising out of the order dated 11.01.2024 passed by the Learned NCLT, Mumbai in CA No.199/2021 of CP/159/MB/2021) In the matter of: 1. Shajas Developers Pvt Ltd, Bajaj Bhavan, 3rd Floor, JP Marg, Nariman Point, Mumbai, Maharashtra 400021

2. Neelakantan Krishnan Iyer, B/503, Pawan Building, Mohan Srishti-1 CHS Ltd, Near Patri Pool, Kachore, Kalyan (East), Thane, Mumbai Maharashtra 421306

3. Mangesh Pandurang Kadam, 1/20 Sanman Kunj Cooperative Society, JM Road, Near Shivaji Tank, Bandup (W), Mumbai Maharashtra 400078 Appellants

Vs

1. Moniveda Consultants LLP, Formerly known Gauri Rajeshwari Pvt Ltd, 38, Pali Village, Bandra (West) Mumbai, Maharashtra 400050

2. Rajat Jhunjhunwala 1st Floor, Natasha Sea View, Carter Road, Bandra West Mumb ai 400050 2

3. JLS Realty Private Ltd, Duru House, 2nd floor, Juhu tara Road, Mumbai 400049

4. Suketu V Shah A-52 Darshan Apartments, Malabar Hills, Mumbai 400006

5. Mamta Digvijay Singh, 404, Arena II Wing A, Poonam Garden Mira Bhayandar Road, Mira Road, Thane, Maharashtra 401107

6. Mohammed Shahid, 105/4, Karaya Road, Circus Avenue Kolkata, West Bengal 700017

7. Registrar of Companies 100 Everest Marine Drive, Mumbai 400002

8. Regional Director Everest 5th Floor, 100 Marine Drive, Mumbai 400002 Respondents

For Appellant:Mr Arvind Nayar, Sr. Advocate with Mr. Sumeer Sodhi and Mr. Chaitanya Sharma, Advocates. For Respondent:Mr. Ashish Dholakia, Sr. Advocate with Mr. Jatin Sehgal, Ms Devna Soni, Mr. Kumar Anurag Singh, Mr. Zain A Khan and Mr. Anish Ahlawat, Advocates. JUDGEMENT

JUSTICE YOGESH KHANNA, MEMBER (JUDICIAL) This appeal is filed against an order dated 11.01.2024 passed by the

Ld. NCLT, Mumbai, wherein while dismissing the Company Application under 3 Section 8 of the Arbitration and Conciliation Act, 1996 the Ld. NCLT had

observed the original petitioners/Respondents herein hold 4000 shares in the

Appellant No.1 company, thereby allegedly exceeding its jurisdiction under

Section 8 of the Arbitration and Conciliation Act.

2. It is argued the Ld. NCLT had no powers to grant reliefs sought in main

company petition at this stage and that too in an application under Section

8 of the Arbitration and Conciliation Act, 1996 as in such an application the

court is only to see if there exists a valid arbitration agreement between the

parties and if disputes are covered therein.

3. Admittedly an application was moved under Section 8 of the Act by the

Appellants in Company Petition No.159/2021 to refer the parties to

arbitration in accordance with the Clause 9.5.2 of the Securities Purchase

Agreement (SPA) dated 06.05.2016. In fact the Respondent No.1 herein had

earlier filed Commercial Arbitration Petition No.8887/2021 before the

Bombay High Court, prior to filing of Company Petition No.159/2021, which

it subsequently withdrew.

4. The Respondent No.1 then by way of Company Petition No.159/2021

filed before the Ld. NCLT had sought a declaration that it is the rightful owner

of 4000 shares in the appellant No.1 company as per SPA. The prayer clause

(ii) of Company Petition is as under:-

"ii. Pass an order declaring that the Petitioner No.1 is the rightful owner of 4000 equity of the Respondent No.1 and consequently declare that the revised CGT-7 filed on behalf of Respondent NO.1 on March 1, 2021 as null and void."

4 5. It was alleged the petition was though filed by Respondent No.1 and 2

for enforcement of SPA but was in the guise of a Petition under section 241,

242, 244 and 59 of the Companies Act, 2013. It is alleged the Respondent

No.1 is not a member or a shareholder of appellant company No.1 and though

the transaction of purchase of shares in the appellant No.1 company was

divided in two tranches which are referred to as closing dates; the first closing

date was to occur within 5 business days from 06.05.2016 and the second

closing date was to take place not later than 5 business days from the release

of the personal guarantees by the India Infoline Limited to any of its associates

including IDBI trusteeship Services Ltd. Further it is the submission till date

no consideration has been received by Appellants No.2 and 3 in relation to the

SPA read with the side letter along with such SPA. Even the Company Petition

filed by the Respondent No.1 and 2 does not contain a whisper of an allegation

that Respondent no.1 company made any payment towards the purchase of

shares of the company. It was argued the Respondent No.1 company had

failed to perform any of its obligations under the SPA or the Side Letter, both

of which stood terminated by efflux of time as provided under clause 9.12 of

the SPA, is as under:-

"9.12 Time Any date or period as set out in any Clause of this Agreement

may be extended with the written consent of the Parties

failing which time shall be of the essence."

6. It was further alleged the shares certificates produced by the Appellant

No.2 and 3 clearly show the shares were never transferred in the name of

Respondent No.1 and it continued to remain in their names. It is also alleged 5

the share certificates produced clearly state the fact that no transfer was

recorded in the section of Memorandum of Transfers in favour of the

Respondents No.1 and 2. It is alleged these shares certificates were

suppressed by the Respondent No.1 and 2 before the Ld. NCLT. Even the

income tax returns for the period 2017 to 2023 do not show any record

pertaining to the transfer of shares in the name of Respondent No.1 and

merely because the Respondent No.1 was inadvertently mentioned as a

shareholder in the erroneous Form No.MGT 7 dated 27.1.2021; Board Report

dated 05.09.2019 and independent auditor's report dated 05.09.2019 it does

not constitute valid compliance of Section 56 of the Companies Act, 2013

7. Heard.

8. All the above contentions show the main dispute was if the respondents

are the rightful owners of 4000 shares. Various litigations are pending

between the parties and the matter even went to the Hon'ble Supreme Court.

9. In a contempt case 02/2022 in Company appeal (AT) No.104/2021, the

respondent No.1 herein had sought various reliefs including, status quo in

respect of shareholding of R1 and R2 as existed on January 27, 2021, however,

this Tribunal remanded the matter to the Ld. NCLT for final consideration of

the issues and to pass a reasoned order as the Ld. NCLT had not commented

on maintainability which in fact was a primary issue raised and also did not

specify the reasons for not granting interim orders. This Tribunal further in

sub para (vi) of para 17 of order dated 11.10.2022 directed the parties not to

take perceptive steps in the subject matter for a period not exceeding one

month from the date of the said order.

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10. This order was challenged before Hon'ble Supreme Court in Civil Appeal

No.9052-9053 of 2022 whereby vide order dated 16.12.2022 the Hon'ble

Supreme Court had observed there shall be interim relief in terms of clause

(vi) of para 17 of the impugned order wherein the NCLT was directed to

proceed further as there being no stay in the proceedings and the parties were

directed not to take perceptive steps in the subject matter.

11. Thus it is clear the issue of ownership of 4000 shares is pending since

long and such finding in the impugned order would certainly affect the

pending cases interse the parties.

12. We have gone through the impugned order. Language of Section 8 of

the Arbitration and Conciliation Act has inherent restrictions. The Section

puts a bar on the courts not to go outside the contours of Section 8 and the

Court can only exercise jurisdiction to see if there is a valid clause and

whether the dispute is arbitrable. Thus to give a finding at this stage to the

effect R1 and R2 are owners of 4000 shares, which in fact is the main relief

claimed in the Company Petition, the Ld. NCLT certainly had travelled beyond

its jurisdiction. There was no occasion for Ld. NCLT to delve into the issue of

ownership of 4000 shares in an application under Section 8 (Supra) and the

said question would arise only when the maintainability of the main case

would be decided.

13. Thus though the appellant forego their claim to challenge dismissal of

its application under Section 8 of the Arbitration and Conciliation Act but the

observations in the impugned order so far as it relate to the declaring of the

ownership of 4000 shares was never warranted at this stage and is set aside. 7

This issue needs to be decided by the Ld. Tribunal at an appropriate stage

and this order be not construed as an expression/opinion on merits upon the

ownership of shares which fact shall be now decided by the Ld. NCLT on facts

and law.

With the above observations the appeal stands disposed off.

Pending applications also stand disposed of.

(Justice Yogesh Khanna) Member (Judicial)

(Mr. Ajai Das Mehrotra) Member (Technical) Dated:10-04-2024 bm