M/S Cico Technologies Ltd & Anr vs M/S Frc Composites Ltd & Anr
2009 Latest Caselaw 2217 Del

     *IN THE HIGH COURT OF DELHI AT NEW DELHI

+                   CS(OS)1169/2002

%                              Date of decision: 22nd May, 2009

M/S CICO TECHNOLOGIES LTD & ANR ....... Plaintiffs
                         Through: Mr. Ashok Chhabra, Advocate

                                    Versus

M/S FRC COMPOSITES LTD & ANR                            ....... Defendants
                         Through: Ex parte


CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1.     Whether reporters of Local papers may
       be allowed to see the judgment?

2.     To be referred to the reporter or not?

3.     Whether the judgment should be reported
       in the Digest?


RAJIV SAHAI ENDLAW, J.

1. The plaintiffs have sued for specific performance of an

agreement by the defendant No.1 of sale of 40% shares of the

plaintiff No.2 company held by the defendant No.1 in favour of the

plaintiff No.1 for a sale consideration of Canadian $ 25,000. The

plaintiffs have claimed the alternative relief of recovery of

compensation/damages with interest. The plaintiffs have also

claimed the relief of permanent injunction restraining the defendants

from interfering in the working of the plaintiff companies and of

restraining the defendants from carrying on business in India under

the name FRC Composites Ltd and from selling goods under the

trade name "TAPECRETE" and/or entering into any business

transactions with any other person or company with respect to the

business conducted by the plaintiff No.2.

2. The counsel for the defendants appeared on the very first date

when the suit was listed. It appears that there were some other

connected litigations also pending and the present suit was ordered

to be listed in the same court where the said other litigations were

pending. The defendants filed an application under Section 8 of the

Arbitration and Conciliation Act, 1996. The said application

remained pending for long. None appeared for the defendants on

16th January, 2007 and the application under Section 8 was

dismissed in default. The defendants had not filed the written

statement. The defendants were proceeded against ex parte and

remain ex parte. The plaintiffs have led their ex parte evidence.

3. It is the uncontroverted evidence of plaintiffs that the plaintiff

No.2 company, namely, M/s FRC Composites India Pvt Ltd was set

up by the plaintiff No.1 in collaboration with the defendant No.1, a

Canadian Company. It is further the case of the plaintiffs that in

accordance with the said collaboration agreement, the defendant

No.1 came to hold 40% shares of the plaintiff No.2 company; that

though the collaboration came to an end but the defendant No.1

continued to hold the said share holding in the plaintiff No.2

company; that ultimately defendant No.1 offered to sell its said 40%

share holding in the plaintiff No.2 company to the plaintiff No.1 for a

consideration Canadian $25,000. Correspondence/communications

of the year 1999 in this regard have been proved as Exhibit PW1/5 to

Exhibit PW1/8. The plaintiff in pursuance to the said agreement is

also proved to have applied for and obtained the permission of the

Reserve Bank of India for remitting Canadian $25,000 to the

defendant No.1. The transaction is, however, stated to have been

held up owing to the demise of Mr Ergo Karuks, President of the

defendant No.1; defendant No.2 being daughter of the said Mr Ergo

Karuks and who is stated to have come into control of the defendant

No.1 on the demise of her father is also stated to have initially

promised to abide by the aforesaid agreement but is stated to have

subsequently wriggled out of the same. Hence this suit.

4. The plaintiffs besides examining their Chairman and Managing

Director Mr Amit Gupta have also examined the Deputy General

Manager of the plaintiff No.1 to prove the readiness and willingness

and ability of the plaintiffs to make the payment aforesaid to the

defendants. The defendants having chosen not to contest the suit,

the evidence of the plaintiff remains unrebutted. Though the

plaintiffs have in the plaint, besides the relief of specific

performance, also claimed the relief of injunction, as aforesaid, but

no evidence in that regard has been led. Considering that the

plaintiff No.2 company was a collaboration of the plaintiff No.1 and

the defendant No.1 and further considering that the plaintiff No.2 is

otherwise a closely held company, a suit for specific performance of

agreement of sale of shares thereof is found to be maintainable. The

shares of the plaintiff No.2 company are found to be such, for which

there can be no substitute in money and which if not acquired by the

plaintiff No.1 can cause irreparable injury to the plaintiffs. The

defendants having been proved to have agreed to sell the said shares

to the plaintiff No.1, if sell the said shares to some other person,

considering the large percentage of the shares, such third person

can cause irreparable injury to the management of the plaintiff No.2.

5. The suit of the plaintiffs for the relief of specific performance

of the agreement of sale of shares of the plaintiff No.2 company held

by the defendant No.1 for consideration of Canadian $25000 is

decreed. The suit for the other reliefs is, however, dismissed. Upon

the failure of the defendants to transfer the said shares in pursuance

to this decree, the plaintiff shall be entitled to have the said shares

transferred through process of the court after paying Canadian

$25000/- to the defendant No.1. The decree sheet be drawn up.

However, since the defendants have ultimately not contested the

suit, no order as to costs.

RAJIV SAHAI ENDLAW (JUDGE) May 22, 2009 M