Bombay High Court
Infinite India Investment Management ... vs Ekvity Ventures Llp And Ors on 6 May, 2024
Author: Bharati Dangre
Bench: Bharati Dangre
2024:BHC-OS:8242
CARBPL-1614-2024.doc
rajshree-tilak
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL ARBITRATION PETITION (L) NO.1614 OF 2024
ALONGWITH
INTERIM APPLICATION (L) NO.5140 OF 2024
IN
COMMERCIAL ARBITRATION PETITION (L) NO.1614 OF 2024
Infinite India Investment Management Limited].. Petitioner
vs.
Ekvity Ventures LLP & Ors. ] .. Respondents
Mr. Zal Andhyarujina, Senior Advocate a/w Ms.Shalaka Patil a/w
Shilpa Sengar, Ankit Pathak and Surbhi Shah i/b Trilegal for the
Petitioner.
Mr.Mehul Talera a/w Kevin John i/b Bathiya Legal for the
Respondents.
CORAM : BHARATI DANGRE, J
Reserved On : 4th April , 2024.
Pronounced On : 6th May, 2024.
JUDGMENT
1] The Petitioner, who has invoked the jurisdiction under
Section 9 of the Arbitration and Conciliation Act, 1996, is a
Company registered under the Companies Act, carrying on
business as management, consultants, financial advisors,
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administrators to individuals, firms, companies, NRIs and foreign
financial institutions amongst others.
It also claims to have served as investment manager for JM
Financial Property Fund and two infrastructure investment
trusts registered with SEBI.
2] The Petitioner, has entered into a Share Purchase
Agreement (SPA) on 07.12.2023 with the Respondent No.1,
Ekvity Ventures LLP, also an Asset Management Company,
providing financial solution to Investors for wealth management
for purchase of 1,50,000/- (1.5 Lakh) equity shares of the
National Stock Exchange of India Limited (NSE) and it is under
this Agreement, the Respondent No.1-Ekvity agreed to transfer
Sale Shares to the Petitioner for a consideration of Rs.48.15
Crores, the closing date of the SPA being determined as
30.01.2024.
It is the case of the Petitioner that the aforesaid
arrangement was reached, pursuant to Kotak Securities Limited,
the Depositories Participant (DP), inter alia reflecting in its
holding statement that the Respondent No.1, Ekvity is holding
5,47,000 shares of the NSE as on date and the DP holding
statement being shared with the Petitioner, the SPA was
executed, for sale and purchase of agreed number of shares.
3] The SPA, through its clauses has set out, its terms and
conditions including the purchase consideration and closure of
the deal and I would be referring to its various clauses a little
later, which include the clause for termination of the
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arrangement, but suffice it to note that despite receipt of
principal approval from NSE for transfer of Sale Shares to the
Petitioner and submission of stage II approval documents, the
Respondent No.1, Ekvity is alleged to have dealt with the shares,
to the detriment of the Petitioner and it is only on 02.01.2024, via
an email communication at the end of the Respondent, the
Petitioner was asked to put the payment on hold.
It is the case of the Petitioner, that tranche II purchase
consideration, to the tune of 85% was paid on 03.01.2024,
resulting in remittance of the entire purchase consideration,
despite this, Ekvity backed out of the arrangement and re-
transferred the purchase consideration in the account of the
petitioner, thus calling off, the agreement.
It is, in this background, the Petitioner has approached this
Court, pending invocation of arbitration, conduct of the arbitral
proceedings and until passing of the final Award therein, for the
following principal reliefs:-
a) Restrain by an interim measure of protection
under Section 9 of the Arbitration and Conciliation Act,
1996 Respondent No.1 from directly or indirectly
through its agents, officers, or any persons acting on its
behalf or under its instructions from in any manner
dealing with/ alienating/creating third party rights in
the Sale Shares being 1,50,000 shares of National Stock
Exchange of India Limited, to any entity other than the
Petitioner during the pendency of the arbitration till the
finial award is passed.
b) Pass an appropriate order directing Respondent
No.2 to3 refrain from effecting any transfer of the Sale
Shares on the instructions of Respondent No.1, being
1,50,000 shares of National Stock Exchange of India
Limited, to any entity other than the Petitioner during
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the pend3ency of the arbitration till the final award is
passed.
c) Pass an order directing Respondent No.1 to
disclose on oath the complete details of the current
status of the Sale Shares, being1,50,000 shares of
National Stock Exchange of India Limited, including
details of current ownership and/or any agareeemnts
and/or agreements that Respondent No.1 may have
entered into with respect to the Sale Shares.
4] Heard the learned senior counsel Mr. Zal Andhyarujina i/b
Trilegal for the Petitioner and the learned senior counsel
Mr.Vikram Nankani i/b Bathiya Legal for the Respondents.
The Petition was permitted to be amended and National
Stock Exchange of India Limited is impleaded as Respondent
No.3, who is represented by the learned Advocate General
Dr.Birendra Saraf.
5] Mr. Zal Andhyarujina, while seeking the reliefs in the
Section 9 Petition has placed before me the list of dates and
events in seriatim and he would contend that the SPA was entered
with the Respondent No.1, on a representation that it holds
5,47,000 shares of NSE, as on the date and this impression was
based on the DP holding statement shared by Respondent No.1
with a clear recital to the following effect :-
"The Seller is holding and in complete ownership of 5,47,000
Equity Shares of RS.1 (Rupee one only) each in the share capital of
National Stock Exchange of India Limited."
In terms of the execution of the SPA on 07.12.2023,
according to the learned senior counsel, Ekvity continued to hold
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the sale shares as a trustee on behalf of the Petitioner, with no
rights retained in it, as in view of clause 4.3(1) of the SPA, within
24 hours of receipt of the entire purchase consideration, it was
obligated to issue duly and validated executed transfer
instructions for transfer of Sale Shares, which it had failed to
transfer and this act is in utter violation of the contractual terms.
According to Mr.Andhyarujina, the tranche I of purchase
consideration, i.e. 15% as per Clause 3.1 of the SPA was paid by
the Petitioner on 14.12.2023 and a letter was addressed by Ekvity
to NSE, on 21.12.2023 sending across the "Format of confirmation
about the Purchaser", creating an impression, that it had taken all
reasonable steps and exercised necessary diligence and care in
ascertaining the profile and background of the Purchaser.
Further the stage I, in principal approval was also received from
NSE on 27.12.2023, which was to remain valid for a period of 30
days from its issuance.
Not only this, the Petitioner received a request from Ekvity
to send Stage II documents for the transfer of 1,50,000 shares. It
is at this stage, according to Mr.Andhyarujina, the Respondent
No.1 put spoke in the wheels of the transaction and spoiled the
arrangement by instructing that the payment of second tranche
be kept on hold, but despite this, on 03.01.2024, the Petitioner
paid the balance 85% purchase consideration and informed about
the same by a communication send via email, demanding the
documents for initiating transfer of shares and completion of the
transaction.
6] Mr. Andhyarujina has submitted that, when the Petitioner
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followed up with Ekvity, on 09.01.2024, a communication is
received, informing that it has reversed the funds for the deal, as
there was no insistence for making the second tranche of
payment. This was followed by a detailed email communication
from the end of the Petitioner on 10.01.2024, disapproving of its
conduct and the learned counsel would submit that, in order to
defeat the transaction, Ekvity effected transfer of NSE shares to
third parties and has acted in breach of the Share Purchase
Agreement and since Infinite India was always ready and willing
to perform and discharge its obligations under the Agreement, the
relief sought in the Petition deserve to be granted or else
irreparable loss will be caused to it, since the balance of
convenience and prima facie case lies in its favour.
7] The Respondent no.1 Ekvity has filed its Affidavit on
27.01.2024 and it has adopted a stand that through its whatsapp
message dated 02.01.2024, the Petitioner was informed that
there was material challenge and change due to the unexpected
withdrawal of its counter party seller for sale of that particular
transaction, which would adversely impact the closing of the
SPA. It is also clearly stated that the balance 85% consideration
out of the total consideration agreed i.e. the second tranche of
payment was payable, within five working days from the date of
receipt of in principal approval from NSE and Ekvity requested
Infinite India through WhatsApp and via telephone, not to remit
the balance consideration in respect of the Sale Shares, but
despite this, it is accused of remitting the remaining
consideration on 03.01.2024.
CARBPL-1614-2024.doc
The learned senior counsel Mr.Nankani, representing
Ekvity, would place reliance upon clause 3.3.3 of the SPA and he
would submit that due to occurrence of an unforeseen material
adverse event beyond its control, in the matter of its counter
party, with whom there was a back to back arrangement, was
unable to provide the requisite shares and thus a contingency
arose, which was covered within clause 3.3.3 and Ekvity was
unable to consumate the transfer under the SPA and refunded
the entire purchase consideration on 09.01.2024.
Ekvity, therefore, has justified the termination in the wake
of the occurrence of an unforeseen event and it is specifically
pleaded in the Affidavit, that on good faith basis, it sought of 12
days to deliver the sale shares to the Petitioner, which request
was turned down.
Apart from this, it is also the stand adopted by Ekvity that,
the Petitioner has alleged that vide 4.1(a) and 4.1(b) and in
principal approval was granted by NSE in respect of sale of
Shares, but this was solely based on a prima facie view and was
verified only limited to "Fit and Proper person' within the
meaning of Securities Contract (Stock Exchanging and clearing
corporations) Regulation, 2018, the criteria of the buyer of the
shares in question.
A specific stand adopted by Ekvity is that the NSE shares,
available in its Demat Account had been pre-sold to various third
party purchasers, prior to the execution of the SPA with Infinite
India and the Delivery Instruction Slips (DIS), pertaining to its
transfer had been dispatched prior to SPA, pursuant to which the
NSE shares had been and will continue to auto debit from its
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Demat Account.
The details of all such transfers including the date of the
SPA with third parties, are also annexed alongwith the Affidavit
as Annexure I and a statement is included in the Affidavit,
affirmed on 27.01.2024 that, as on date the Demat Account of
Ekvity has 40,600 NSE shares, but even they are liable to be auto
debited, as per prior transfer/transactions, and, therefore, it is
contended that the shares which were held in its Demat Account,
as on the date of SPA, are already transferred pursuant to the
prior transactions and there exist a pre existing third party
arrangement, which bear no connection or nexus to the Sale
Shares, which had agreed to be transferred in favour of the
Petitioner under the SPA.
8] On 30.01.2024, i.e. after the Respondent No.1 placed its
Affidavit on record, the NSE marked its appearance upon an
intimation being forwarded, and the counsel representing it
fairly stated that it is open to give disclosure of the transactions
involved in the petition in regard to 1,50,000 shares.
Recording the statement made by the learned senior
counsel Mr. Nankani that has pre-sold 40,600 shares by issuing
necessary instructions, in furtherance of the contract with third
party, prior to the date of the SPA, the following direction was
passed :-
"3] Mr.Nankani, the learned senior counsel has
made a categorical statement that he has pre-sold
40,600 shares by issuing necessary instruction in
furtherance of the Contract executed with third parties
prior to 07.12.2023 i.e. the date of the Agreement
CARBPL-1614-2024.doc
executed with the Petitioner, though a statement is
made in the Affidavit that the shares are lying in his
Demat account.
It is also case of the Mr.Nankani that as far as other
balance shares are concerned, they are already
transferred in favour of third party entities in
furtherance of distinct Contracts executed between
them and these are necessarily prior to the Contract
executed with the Petitioner.
In these circumstances, I deem it appropriate to direct
the NSEL, that if it has not permitted transfer of 40,600
shares till 3.00 p.m. today, it shall keep the transfer on
hold, till the next date of hearing.
9] Pursuant thereto NSE sprung into action and issued written
request to the depositors and the Registrar Transfer Agent to
refrain from transferring NSE shares held by Ekvity and
alongwith its Affidavit dated 08.02.2024, it placed the
communications on record.
10] In the wake of the arrangement between the Constesting
Parties, in form of the Share Purchase Agreement, where the
Seller, subject to the terms and conditions, stipulated therein, on
the closing date, agreed to sell, transfer, convey and deliver to the
purchaser i.e. the Petitioner in its demateralised account opened
with JM Financial Services Limited, the Sale Shares, which were
determined to be 1,50,000 shares, together with all rights, title
and interest, attached thereto, for the agreed purchase
consideration, to be paid on or before execution of the Agreement.
Clause 2.2 of the said Agreement recorded, the
understanding amongst the parties, that on and from the
execution date, the Seller shall hold the Sale Shares in its account
CARBPL-1614-2024.doc
as a Trustee on behalf of the Purchaser and shall transfer the
same in the Purchaser's account as may be permitted by NSE on
the closing date. The purchase consideration is agreed in the
Agreement; 15% to be received by the Seller before or within
three working days of signing the Agreement and the balance 85%
to be deposited on or within 5 working days of the Purchaser
receiving the companies formal approval for the acquisition of
shares.
11] The relevant clause in the SPA, is Clause 3.3.3, which
permit either of the party to the Agreement to notify the other
party, on becoming aware of any event or circumstance that may
prevent, any of the conditions from being satisfied, on or before
the long stop date and on occurrence of such an event, the
Agreement shall stand terminated.
It also provide that upon such termination, the Seller shall
immediately and in no case later than 5 business days refund the
amount received from the buyer and in case if the Seller fails to
repay the amount, it shall carry an interest at the rate of 12% p.a.
to be paid on monthly basis.
12] Long stop date is defined in the Agreement, as 90 days
from execution of the Agreement whereas, the closing date is set
out as 30.01.2024 or such date as may be mutually agreed by both
the parties. Clause No.4.2 contemplate that both the parties shall
endevour to achieve completion of the Sale and Purchaser of the
Sale Shares, as per the terms of the Agreement.
The mechanism for closing is set out in Para 4.3, which cast
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a duty upon the Seller, within 24 hours of transfer of the balance
money (85%) of the purchase consideration, to provide a copy of
duly and validly executed transfer instructions, for the transfer
of Sale Shares to the purchaser, to its Depository Participant and
to the Purchaser.
It is also imperative for the Seller to submit such documents
with NSE as may be required so as to enable it to effect transfer of
Sale Shares to the purchaser.
On the closing date, the purchaser is duty bound to submit
such documents with NSE as may be required and file forms as
required under applicable laws.
13] On behalf of the Petitioner, what Mr. Andhyarujina, has
stressed upon is the breach of the representation and warranty
at the end of the Ekvity and according to him it represented, in
clause 5.1 that as of the execution date and as of the closing date,
each of the representation set out in the Agreement is/are correct
and not misleading and the most significant representation being,
that it has 5,47,000 shares of NSE, and only dependent upon this
representation, the Petitioner agreed to purchase 1,50,000 shares
and it acted towards its completion, by initially paying 15% of the
purchase consideration and subsequently upon, in principal
approval being received from NSE, by transferring 85% of the
balance consideration, but the Seller who was to hold, the Sale
Shares as Trustee in a fiduciary capacity and who was duty bound
to complete the transaction by transfer of the Sale Shares to the
purchaser, has failed to discharge its obligation.
This argument is to be appreciated in the wake of Clause 9
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of the Agreement, which cast a duty upon the Seller, who
acknowledged that it is holding these shares, as Trustee of the
Buyer and it is duty bound to complete the transaction by
transferring the shares, which obligation is subject to an
exception, of any unforeseen reason, when it is not possible to
transfer the shares, and in such a case, there is provision made
for refund of the entire purchase consideration, to the purchaser.
The Respondent, Ekvity has set out unforseen contingency,
as it adopt a stand that it was to purchase the shares of NSE
including Sale Shares proposed to be sold under the SPA to the
Applicant from one Tiger Global Management LLC, an investment
Company incorporated in USA and to achieve this end, it was in
constant communication with Tiger Global and was preparing to
execute SPA for a lot of 5,00,000 shares of NSE, which also
included Sale Shares, agreed to be sold to the Petitioner.
However, Tiger Global abruptly and suddenly reneged and
withdrew from the said deal and informed Ekvity of its changed
position vide its email dated 23.12.2023 and as a consequence of
this, by way of abundant caution, the Respondent No.1 informed
the Petitioner of the material challenge faced in the transaction
and requested to keep the payment of second tranche, on hold.
Thereafter, it followed Tiger Global who confirmed its position on
12.01.2024 and 20.01.2024, that it was unable to deliver.
14] It is, in these unforeseen circumstances, Ekvity has urged
that, on becoming aware of these challenges in a back to back deal
of shares, it requested the Infinite India to hold to the payment,
of second tranche, and sought extension on 04.01.2024, which
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request was rejected and ultimately on realizing that, it was
unable to transfer the Sale Shares, it refunded the entire
consideration received under and in accordance with the SPA on
09.01.2024 and this at this point of time, when Clause 3.3.3 gets
triggered resulting into termination of SPA.
Though Mr. Andhyarujina has vehemently submitted that
in the SPA there is no reference of such back go back arrangement
with Tiger Global, I do not found this arrangement to be novel as
peculiar to the transaction of shares, either purchase or sale, such
arrangements are not uncommon and it is unfathomable that
the Petitioner, which is engaged in investment management and
rendering advisory services to various funds, is unfamiliar with
such orchestration.
The Agreement in question clearly contemplate the
contingency where it shall stand terminated and under the
caption of "Responsibility or satisfaction", it permit the Seller to
notify the other party of an event or circumstance that may
prevent the conditions of the Contract being satisfied and what is
imperative, is refund of the amount in any case no later than 5
days from such notification.
Upon sensing trouble in its back to back contract with Tiger
Global, Ekvity instructed the Petitioner to keep the payment on
hold on 02.01.2024, but received the payment on 03.01.2024
despite such clear instructions received and on 09.01.2024
money was redirected in account of the Petitioner.
15] The Petitioner, ultimately is seeking specific performance of
the Agreement and therefore its case will have to be tested on the
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parameter of, whether it is entitled for the performance at this
stage when it has instituted proceedings under Section 9 of the
Act of 1996. Though the SPA contemplate that from the date of its
execution the shares are held in trust by the Seller , I will have to
balance the rights of both the parties, in ascertaining whether the
relief can be granted in favour of the Petitioner, when parties, are
at stage of pre-arbitration, as the SPA, provide Arbitration as the
mode of resolution of disputes arising therefrom.
16] A share is a Chose-in-action; a Chose in action implies the
existence of some person entitled to the rights, which are rights
in action as distinct from rights in possession, and until the share
is issued, no such person exists.
A share is regarded as 'goods' within meaning of sales of
Goods Act, 1980. But though, a movable property, but distinct in
its nature, it is incorporeal and it consists merely of a bundle of
rights and obligations.
Pertinent to note that the shares reflected in the Demat
Account of Ekvity, being unlisted share, are fungible in nature
and hence cannot be held in trust. If the Seller, Ekvity was unable
to deliver the shares, on account of its back to back arrangement,
and it has shown the cause why shares could not be delivered
ultimately, the cause and its justiciability will have to be tested
through a full-fledged trial.
It is rather unusual for the Petitioner to be incognizant
with the manner in which the shares are traded and this is very
obvious from a SPA executed by Petitioner itself and redacted
copy of which, is placed alongwith the rejoinder, where it has
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projected that it is in process of acquiring NSE shares, from an
outside seller party and a deal is struck with a purchaser, who is
desirous of buying the NSE shares. Somehow a contract of similar
nature is entered between the Petitioner, as the seller and a third
party as the Purchaser, and therefore Mr. Nankani is right in
submitting that these types of transactions, are not uncommon
and I concur with him.
17] Ekvity has adopted a stand that the shares of NSE in it's
Dmat account are the ones which are pre-sold to various bonafide
third party purchasers prior to the execution of the SPA, with the
Petitioner and they are no longer in it's ownership and the details
of the third party purchasers are also provided along with.
The shares being fungible in nature, it is difficult to
ascertain whether they are the same shares, which belong to the
petitioner and held in trust by Ekvity as its specific case is, that it
had entered into a transaction for purchase of 5,00,000 shares
from Tiger Global and SPA with the petitioner included 1,50,000
shares out of this. However, since these shares never came from
Tiger Global, it is difficult to ascertain whether the shares
presently lying in the Dmat account of equity are those which
were intended to be sold by Ekvity and purchased by the present
petitioner or are those which were sold to third party purchasers
through distinct agreements, executed prior to 07.12.2023.
18] Along with the affidavit in reply filed on behalf of respondent
no.1, email correspondence with Tiger Global is placed on record
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and from the email dated 23/12/2023, it is evident that Tiger
went back on its arrangement, when it communicated that it is
reconsidering the sale and has put a pause on the sale process,
indicating that it had second thoughts in selling the shares in the
wake of its arrangement, with Ekvity. On 12/1/2024, Tiger Global
made this position clear that it had decided to hold the position in
NSE shares, and expressed its regret in transferring the shares.
19] In the dispute between the petitioner and respondent no.1,
IA(L) 5140/2024 is filed by five applicants, seeking intervention
and praying for vacating the stay on the transfer of shares by
recalling the order dated 30/1/2024, and for direction to NSE, to
resume the transfer process, as per the ordinary course of
business.
Learned counsel Mr.Rohan Savant representing these
applicants would submit that the applicants are the bonafide
purchasers of shares from Ekvity and they are prejudicially
affected by the order passed, holding the disbursement of shares
on hold.
The application is accompanied with five separate Share
Purchase Agreements executed by respondent no.1 with each of
them for a collective purchase of 5500 unlisted shares of NSE and
a look at these agreements would reveal that the dates of its
execution are prior to the SPA entered between Infinite India
and Ekvity.
CARBPL-1614-2024.doc
20] Depending upon the date of the SPA, the date of the payment
as well as the closure dates of the transaction are set out in the
application. In consideration of 5,500 shares, Ekvity has received
consideration of INR 1,80,47,500/- and it is the case of these
applicants that they are awaiting the transfer of equity shares
from Ekvity, but in the wake of the order passed, in these
proceedings, on 30/1/2024, directing to keep on hold the transfer
of 40,600 shares in the Demat account of respondent no.1, their
rights are impacted, though they pre-exist 7/12/2021 i.e. the date
of arrangement by Ekvity, with the petitioner.
21] Mr.Savant has also specifically submitted that the shares
which were to come to the applicants, were entirely independent
and having no connection with the transaction between the
petitioner and respondent no.1, and since they are unlisted
shares, they are non fungible assets and are not capable of specific
identity.
Through the application for intervention, the five applicants
thus claim transfer of shares from the Demat account of Ekvity
on the ground that they are the prior purchaser and their claim is
based on equity, as evidently Ekvity had entered into share
purchase agreement with these applicants prior to the one
entered with the present petitioner.
22] Dr.Saraf, who has represented the NSE, has apprised me of
the procedure which is followed by the NSE when the shares are
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transferred, and according to him, initially, for the transaction of
sale and purchase of share, in principal approval, is granted by
NSE, which is followed by the final approval, which involves
execution of a Corporate Action Form (CAF) and pursuant to this,
the shares are transferred.
Dr. Saraf would make a specific statement that on
30/1/2024, when order was passed by this Court in respect of
40,600 shares, the Corporate Action Form was already submitted
and what remained with NSE was 38,800 shares. He would
further submit that on 6/2/2024, 14,200 shares were further
transferred in the wake of the prior CAF.
As a sequel to this, what remained in the Dmat account of
respondent no.1 are 24,600 shares, out of which for 22,000
shares, CAF is issued before 30/1/2024, but on account of the
order of the Court, the actual transfer could not be effected.
Mr.Nankani had fairly, made a statement that after
16/1/2024, he has not applied for CAF.
23] Mr.Andhyarujina had, at one point of time, during his
submission, stated that he is ready to deposit the money for
24,600 shares in order to protect them, but when the next
tranche of shares come to the account of respondent no.1, they
should also be protected so as to ensure that he get the entire
shares of 1,50,000 shares in his kitty.
On understanding the conspectus of the matter, and when
the question arises whether the balance of convenience lies in
CARBPL-1614-2024.doc
favour of the petitioner, it is imperative to take note of nature of
the shares, and the transaction entered between the petitioner
and the respondent, which is in respect of unlisted shares, which
are fungible by its nature. Since the SPA clearly contemplated a
situation of impossibility of performance of the agreement, and
had a window open, for the seller from not completing the
transaction by transferring the sale shares to the purchasers,
only in case of the same, not being possible due to any unforeseen
reason and in such circumstances, to refund the entire purchase
consideration to the purchaser.
Ekvity has put forth the impossibility of discharge of its
obligation in the wake of the unforeseen reason, which it has
pressed into service, being its arrangement with Tiger Global, an
investment firm, which recalled its arrangement with Ekvity, as a
consequence of which it was unable to fulfill its obligation towards
the petitioner.
In any case, it had transferred the entire purchase
consideration to the petitioner immediately, on 9/1/2024 and
hence it claim benefit of clause (9) of the agreement.
The justiciablity of its cause as "unforeseen reason"
ultimately will have to be tested in a full fledged trial, when the
arbitration proceedings commence in terms of clause 10.6.1 of the
agreement, but at present, since the petitioner has received its
entire purchase consideration and since it has also entered into
arrangement with other purchasers, based upon the incoming
shares to its kitty and though Mr.Andhyarujina has asserted that
there is irreparable loss caused to it, the redacted contracts
CARBPL-1614-2024.doc
which are annexed along with the rejoinder would clearly
establish that even when it entered into Share Purchase
Agreement with the prospective purchaser, it contemplate a
clause of a similar nature, when it has reserved the right to not
consummate the transaction and refund of the purchase
consideration to the purchaser.
In such a case, it is open for the petitioner to seek damages
in lieu of the specific performance and since even the balance of
convenience also do not favour the petitioner and there is
likelihood of any loss to it since the entire purchase
consideration is refunded and as on date the Petitioner has not
contributed for a single fare and hence I must decline the relief in
Commercial Arbitration Petition (L) No.1614 of 2024 filed under
Section 9 of the Arbitration and Conciliation Act, 1996, by
dismissing the same.
24] For the reasons recorded to the aforesaid effect, and since I
have dismissed the petition, the order dated 30/1/2024, putting
the shares on hold, stand vacated and it is open for the NSE as
well as respondent no.1 to deal with the shares which include its
transfer.
IA(L) No.5140/2024 stand disposed off, accordingly, by
directing that, as per the prearrangement with Ekvity, shares
may be transferred to the Applicants therein.
( SMT. BHARATI DANGRE, J.)
