Rajeev Kumar Kathuria & Anr vs Sbs Logistics Holdings Singapore ...
2016 Latest Caselaw 2034 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                        Order delivered on: 15th March, 2016

+                    O.M.P.(I) (COMM.) No.79/2016

       RAJEEV KUMAR KATHURIA & ANR              ..... Petitioners
                   Through  Mr.Sandeep Sethi, Sr. Adv. with
                            Mr.Gyanendra Kumar, Ms.Shikha
                            Tandon & Ms.Shreya Soni, Advs.

                            versus

       SBS LOGISTICS HOLDINGS SINGAPORE PTE LIMITED
       & ORS                                     ..... Respondents
                     Through  Mr.Rajiv Nayar, Sr. Adv. with
                              Mr.Sanjeev Kapoor, Mr.Sahil Narang,
                              Mr.Rajat Jariwal, Mr.Sarthak Sarin,
                              Mr.Rajat Mukherji & Mr.Abhishek
                              Sanyal, Advs. for R-1.

       CORAM:
       HON'BLE MR.JUSTICE MANMOHAN SINGH

MANMOHAN SINGH, J. (ORAL)

I.A. No.3451/2016 (exemption) Exemption allowed, subject to just exceptions.

The application is disposed of.

O.M.P.(I) (COMM.) No.79/2016

1. Issue notice to the respondents through all modes including registered post and approved courier, on filing of process fee and Regd. A.D. Covers within a week, returnable on 31st March, 2016. Dasti in addition. The

petitioners will file an affidavit of service along with tracking report about the service of the respondents on the next date.

2. Learned counsel appearing on behalf of respondent No.1 accepts the notice. Hence, issuance of notice to the said respondent is dispensed with. However, notice shall be issued to the other respondents for the date fixed. Let a short affidavit be filed by respondent No.1 within ten days from today.

3. Learned Senior counsel appearing on behalf of the petitioners is pressing for an ad-interim order. The prayer is strongly opposed by the learned counsel for respondent No.1.

4. The petitioners together hold 12.96% of the shareholding in respondent No.3-Company and are part of the Promoter group who along with the other promoters together have 29.63% shareholding in the said Company. The respondent No.1 is 70.37% shareholder in respondent No.3.

5. The respondent No.1 is a group company of SBS Group which are involved in the business of Logistics and other peripheral businesses including marketing, human resources, financial and environment, incorporated under the laws of Singapore, and having its registered office at No.61, Ubi Avenue, #05-09/10, UB Point, Singapore-408941.

6. The respondent No.2 (SBS Holdings Inc.) is the parent company of the respondent No.1 holding 100% of the equity share capital of the respondent No.1.

7. Admittedly, a Share Purchase Agreement (SPA) was executed on 7th July, 2014 between respondent No.1, the petitioners and the other members of the promoter group pursuant to which the respondent No.1 became the holder

of more than 70.37% shares in Transpole Logistics Private Limited which was renamed as SBS Transpole Logistics Private Limited, ("SBS Transpole") - the respondent No.3 on terms and conditions as set out in the said SPA.

8. The case of the petitioners is that respondents No.1 and 2 have violated the various clauses of Shareholders Agreement. Many attempts were made to resolve the disputes amicably.

8.1 In terms of Clause 4.2 of the Shareholders Agreement, the Board of respondent No.3 shall comprise of 5 Directors of which, the respondent No.1 shall have the right to nominate 3 persons for appointment as a Director and the petitioners collectively shall have the right to nominate, for appointment as a Director, 2 persons and amongst other conditions, such persons have to be acceptable by the Board.

8.2 With the deadlock in the issue of the corporate guarantees between the promoters and the respondents No.1 and 2 and the urgency in the matter, a request for the convening of a Board meeting at a shorter date to resolve all the issues was made to respondent No.2. Accordingly, an email dated 19th February, 2016 requesting the same along with draft agenda to be discussed in the Board meeting to be convened on 23rd February, 20I6 was sent to respondent No.1.

8.3 The respondents, instead of cooperating on the same, raised issues and questions with regard to other matters in SBS Transpole and also raised an issue of the board meeting being called at a shorter notice. Finally, it was requested on behalf of the petitioners that a Board meeting be convened on 29th February, 2016 in order to amicably resolve all issues between the

petitioners and the respondent No.1 on the working and management of the respondent No.3-Company.

8.4 The same not being accepted by respondent No.1 was rescheduled to be held on 2nd March, 2016 at the behest of respondent No.1.

8.5 Just two days before the scheduled Board meeting, the three nominee Directors resigned from the Board vide resignation letters dated 29th February, 2016, thereby disabling the holding of Board meeting on account of lack of quorum.

8.6 As the Board meeting could not be held on account of the malafide resignations by the nominees of respondent No.1, requisite resolutions could not be passed for renewal of the credit facilities which, in turn, could threaten the very existence of the company.

8.7 It is submitted that while the timing of the resignations belies their malafide objectives, an attempt has been made to justify the same on false allegations of mismanagement in respondent No.3 and despite the fact that the respondent No.1 had, in fact, appointed a whole-time Executive Director, Mr.Masahiro Fujisawa, on the Board of respondent No.3, who was paid a salary by SBS Transpole and who, at all points of time, was fully aware and participating in the day-to-day activities of the Company.

8.8 Subsequently, the petitioners discovered that the respondent No.2 has made a disclosure to the Tokyo Stock Exchange on 29th February, 2016 (the very day that the respondent No.1's nominee Directors resigned), that it intends to sell its shares in respondent No.3 to another Singapore based company Global International Network Pte. Ltd. which is in the business of

hardware and software consultancy, completely unrelated to the activities carried out by SBS Transpole.

8.9 It was also revealed to the petitioners that the issued and paid-up share capital of the said Company was a mere 3 Singaporean Dollars (equivalent to an amount less than INR 150/-).

8.10 In view of the same, the petitioners apprehended that their intent is to sell the shares of respondent No.3 and the mechanism being adopted by the respondent No.2 is that the shares of the holding company, viz., the respondent No.1, would be transferred by respondent No.2, thereby transferring its shareholding in respondent No.3 itself.

9. It is submitted that the malafide of respondent No.1 is clear, as despite knowledge of the Board meetings to be held on 2nd March, 2016 and the agenda thereof, the nominee Directors of respondent No.1 tendered their resignations and refused to attend the meeting with the sole motive of defeating the rights of the petitioners under the SHA and SPA, while at the very same day, the respondent No.2 also made a disclosure of its intent to sell the shareholding of SBS Transpole.

10. It is submitted by the petitioners that respondents No.1 and 2 are now trying to wriggle out from their binding obligations with a malafide intention to leave the petitioners at lurch and unjustly enrich themselves by causing loss to the petitioners, and such illegal and malafide act of respondents No.1 and 2 has exposed respondent No.3 to third party liabilities, as due to the resignation of the nominee Directors of respondent No.1, a valid quorum is not possible due to which the issue of credit facilities extended by the consortium bank is

not possible. Many sequences of events are mentioned in the petition about the conduct of respondent No.1.

11. Thus, the petitioners have filed the present petition under Section 9 of the Arbitration and Conciliation Act, 1996 seeking restrain against the respondents No.1 and 2 from, directly or indirectly, selling the shares held by them in the respondent No.3-Company.

12. The main contention of Mr.Sandeep Sethi, learned Senior counsel appearing on behalf of the petitioners is that as per the agreement, the respondents No.1 & 2 are supposed to give the option to the petitioners to purchase the shares as per the procedure mentioned in the agreement. However, the respondent No.1 by flouting the said stipulated term has sold the shareholding to the third party without any intimation to the petitioners.

13. Learned Senior counsel appearing on behalf of respondent No.1 submits that in pursuant to arrangement dated 29th February, 2016 as culminated into transfer of shareholdings of respondent No.1 in favour of Global International Network Pte. Ltd., between yesterday and today, there is no dilution of respondent No.1's shareholdings in respondent No.3 and the same would not be done till the next date of hearing.

14. In view of disclosure made by the learned Senior counsel appearing on behalf of respondent No.1, learned Senior counsel for the petitioners is now also pressing for an interim order against Global International Network Pte. Ltd.

15. As far as respondents No.1 and 2 are concerned, it is directed that till further orders, the said respondents are restrained from selling the shares held by them in respondent No.3-Company, if already not sold.

16. However, as pressed by the learned counsel for the petitioners, I am not inclined to pass the interim order at this stage against the Global International Network Pte. Ltd., as the said company is neither a party to the present petition under Section 9 of the Act, nor a party to the arbitration agreement. The said Company is also outside India. However, the petitioners are at liberty to take an independent action against the said company, if necessary as per law.

17. Dasti, under the signatures of the Court Master.

(MANMOHAN SINGH) JUDGE MARCH 15, 2016