M.F.A.NO.9388/2010
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 8TH DAY OF DECEMBER 2010 ..
BEFORE
THE I-ION'BLE MRJUSTICE H.G.RAMESI-.1" '
Misceilaneous First Amoeal
BETWEEN:
LIGHT HOUSE MARKETING PVT. LTD
A COMPANY INCORPORATED UNDER _»
THE PROVISIONS OF THE COMPANIES" ACT, ' I 956
AND HAVING ITS OFFICE AT 3-~,I._;I;2 ; -- "
ALI ASKER ROAD , " 2
JAYASHREE POINT 2-A, BANGALORE I
REGISTERED OFFICE._AT__7 * " * ' I.
CHITTARANJAN AVEN *
3RD FLOOR, LAHATA PAINT; HO
KOLKATA 700 0*=i72. > j
REP. BY ITS AUTiiOR.I$ED SICiNAT_ORY'"
MR.AS¥fiNIN"SA1\ICH.ETI'*i::, * A
S/OMSANCHETI"a*, _
AGED 34 YEARS', R/AI'fR.o.9,V&'IIIDQ .. '
CHOUDAPPAROAD. S2»1AI$ITINAGAR,.~
NEAR NIRMALGIRLS HIGH SCHOOL
BANGALORE 56'G,02~7V '
... APPELLANT
~ A. &_ [BY SR; UDAY HOLLA, S_R_.ADVOCATE FOR
A IVE-/S CRESTLAW PARTNERS, ADVOCATES)
1 VIBRATION CONTROL SYSTEMS PRIVATE LIMITED
A 'COMPA:~IVI.'INCORPORATED UNDER
. THE PROVISIONS OF THE COMPANIES ACT, 1956
AND IIAVING ITS OFFICE AT PLOT NO.27A,
I EAR PHASE, PEENYA INDUSTRIAL AREA
. I3AN'GALORE 560 058
REEF-{BY ITS MANAGING DIRECTOR
V GESSELSCHARFT FUR ISOLIERUNG
A COMPANY INCORPORATED
UNDER THE LAWS OF THE
M.F.A.NO.9388/2010
FEDERAL REPUBLIC OF GERMANY
AND HAVING ITS REGISTERED OFFICE AT
ROEDERNALLEE 174- 176,
D-- 13407 BERLIN, GERMANY
REP. BY ITS MANAGING DIRECTOR RESpONDE§§;TS' ..
[BY SR1 S.S.NAGANANDA, SRCOUNSEL FOR
SMT SUNITHA AN D SURE, ADVOCATES)
THIS MFA IS FILED U/S 37{1}{a] OE AI:iIsITI>,ATIOI\I_" 'AIfjID""
CONCILIATION ACT AGAINST THE ORDER DAFED'30;~1_O.201.0-..p fr'
PASSED IN A.A.NO.25076/2010 ON THE FILE GE IV ADI;_\1TIOI*JAL. '
CITY CIVIL as: SESSIONS JUDGE, BANGALORE-,._ D}SMISSINC~__THE§
PETITION FILED U /S 9 OF ARBITRATIO_N"AND CONCILIATION AC'I'
F'ORT.1. '
THIS MFA COMING oI§I"EoR VDAYVV, THE
COURT DELIVERED THE FOLLOWING-; 1, ; '0 .
I
This appeal 'VV3'7V{$1)[a) of the
Arbitration .1996 ('the Act') is
directed against'the..:e1~cI'ei§_i':dated 30.10.2010 passed by
the Court of"the IVVVA;iditi'On'-aibity Civil Judge, Mayo Hall
.-g1Init,p.»Eiyanga1ore By the impugned order, the
'I:,~.e1O_w.L"'I*I..3f.S dismissed Arbitration Application
N0;9,x§$07f3'/i§A.Gp--1Gii;.'Tiled by the appellant herein under
'VSeCtionz9"V.Of"i:he Act for grant of an Order of temporary
:irIin:1c_tiOn to restrain the respondents herein from taking
Steps to enter into any agreement to purchase / invest
“”.:in”the Schedule property or any portion thereof or any
M.F’.A.i\io.9388/2010
other immovable property till the resolution of the
dispute between the parties through arbitration.
2. i have heard Sri Udaya Holla, C”
Counsel appearing for the appeilant’ 1: .
Sri.S.S.Naganand, learned Senior Couns_e1A~
the respondents and perused
3. Material facts relevant appeal
are as follows: C it it
RespondentN:o;.__l – Systems
Private Ltd. is” under the
provisions of 1956 having only two
share holders iinariiellyip theprappellant and respondent
_No.2; pp iaappellanptlvlholids 40% and respondent No.2
the share capital of the Company.
Company in its Board meeting held
it .011 06″;’09.£2:O has resolved to purchase the schedule
(hilly described in the application filed before
the._llCo’L:irt below} approximately measuring 1.8 acres
it ibeloriging to a company by name Everest Industries Ltd.
f/..
M.F.A.N0.9388/2010
The case of the appellant is that it opposed the aforesaid
resolution and as the Articles of Association.,:of’ll~.._
respondent No.1 — Company requires its con’sent”‘=fojr. -1-
purchase of such a property, the decision is”‘u’1~t–1{a. pviresip
the Articles of Association of the Corrirpariyefi”
accordingly sought for the interirnnieasure referredvtonat
para 1 above. As the same was”-refuxsedlhhyl_:theVf%Civ’il
Court, the appellant is in ‘a1$p_«:a1_ pbefore’~.thisiCourt.
4. Sri Udaya§~H’:ilVla–, appearing
for the the Joint Venture
Agreement’ ‘dated _v ; submitted that
the agreern.ent Articles of Association of
respondent ~~<_C;'.on:pa1illy) entered into between the
' l'appel1a'nt:'_s,predecessorin interest and respondent No.2,
si_;b'rn_it'tedv«._.th'at_A the decision of respondent No.1 -~»
Cornpany vtopjurchase the schedule property is contrary
to Clause 8.6 of the said agreement which contemplates
it l'unanirij'.ous consent of its shareholders as the scheduie
-.._l:;pro§3erty is ‘a part of the undertaking’ of Everest
~ ifhidustries Ltd. He further submitted that the appellant
M.F’.A.N0.9388/2010
did not consent for purchase of the schedule property in
the Board meeting held on 6.9.2010. He submitted
as the schedule property is ‘a part of the underta.k_ihg*5 .1. C
Everest Industries Ltd., clause 8.(3mMof
agreement gets attracted and accordirigly; C
ought to have granted the interim meetsfire
under Section 9 of the Act.
5. On the contrary, Sril Senior
Counsel appearing««#fr’3r the that
the schedule.’ undertaking’ nor
forms ‘as Everest Industries
Ltd. and vVtl<1er«eforel,ly by the Court below is
correct- _He subrrlittedAthatfthe schedule property is only
stand, Helllfurfiier submitted that the case of the
"the Court below is that the schedule
6
property come within the ambit of an
‘u.ndertdkirr§g’; it was not the case of the appellant that the
it property would come within the ambit of ‘a part
Qfthe undertaking’ as now urged before this Court.
l
/
M.F’.A.No.9388/2010
6. In View of the above. the only question that falls for
determination in this appeal is as to whether the dec4Eei_o£1it’~..
of respondent No.1 – Company to purchase ‘7’
property is prima facie contrary toQlause'”8′.{3~::’of’V”tt;e.V
aforesaid joint venture agreement or ‘rlot? It iS”1’T_Et1’Et\f€U.1’Vt :3 ‘
refer to Clause 8.6 of the Joint’tV_Ve1;.1tur2e’Ag1’eenierit._’d.ated
30.7.1990 which reads as fo11ows___:_i: e
“8.6 –« Certain matters’-_io%.j_ybe’4 by
Special Reso1utions__ H V
The parties GERB
andiaj tithe prior
unahiiinoius of ehareholders
accorded –resolution passed at
a C’§ener*al’f»:Feéiir;_gr:”Q,f” [INDIA] do or
undertake =a’ny.”- the following in
‘accordance with—Aiis Share Capital :
, ., ., _c1}.._Increase in Share Capital.
of Memorandum and/ or
Articles of Association.
c) v.1t§1I’erger or Amalgamation with any other
Company or body corporate.
‘ Acquisition of direct or indirect. control
and/ or takeover of any other company
or body corporate or whole or any part
/
M.F.A.No.9388/2010
of business operations or undertaking
of any other company, body corporate
or persons including acquisition of
control by way of investment control of _
composition of the Board andmthe like; V
e) Enter into technical collaboration’ anctl/ior ‘-
Joint Venture with third paratt-esL—-_lt A’ it it it
fl Establishment, ‘foirnation ._
incorporation of any Company or” V
corporate. _
g) In the event of l’ the
Company’, l
(Indial to V’ ‘Therefore,
¢jjGERB (India)
lslhaiiinot tie; ‘ussed.;by either party. ”
l V . supplied)
As could L be hlseerxtvfroin ‘the above clause, it is not
for respondent No.1 — Company to acquire
or business operations or undertaking of
V ” any other.c~o_rnpany without the prior unanimous consent
1’
its shareholders accorded by a special resolution
at a general meeting of the Company. In my
h opntiion, the question as to whether the schedule property
this ‘an undertaking’ or forms ‘a part of the undertaking’ of
3A’/
M.F.A.No.9388/20 10
the Company namely, Everest industries Ltd. and
whether the decision to purchase the scheduie properiyVrisr”._V’
contrary to clause 8.6 of the agreement referred :_. C
requires consideration. Having regard to 1._:l’1’e~p:e.culiar
facts of the case, i deem it appropriate C
interest of both the parties pencling adjudicat~ion.Vp:.of
dispute that has arisen -the” and
accordingly make the folloiiringli H
Respondent No”. 1 —-i Systems
Private Limit_ed§’–i. the schedule
property the dispute, if it is
held by ‘Triblulrial – that the purchase of the
schedule No.1 — Company is
contrary to Cla’us_e: 8.6: of the joint venture agreement
Alnreferrjed _to,above, respondent No.1 — Company shall sell
in public auction and if any loss is
–incur”red”—V: torespondent No.1 — Company by this
lllvptransaction of purchase and sale, it shall be made good
— respondent No.2 – Company.
M.F.A.N0.9388/2010
At this stage, learned Senior Counsel appearing on
both sides submit that both the parties would submit
arbitration for resolution of the dispute referred
and that the parties would fully (:0HfVQI3era.t€”””:T’i:tEl:
Arbitrator for disposal of the arbitratioii .l
expeditiously and in any eventlwi.thinllli’oui’
today. Their submission is –recolr<":i..w:flfibeylfiseek
leave to move this Court–….tor_ the
event of the arbitrai concluded
within the said» granted.
the above terms
in modifieation of herein.
Sd/’~
JUDGE
V -Vhkh/llata l