Calcutta High Court
Andrew Yule & Co. Ltd vs Descon Ltd. & Anr on 13 April, 2010
Author: Mohit S. Shah
Bench: Mohit S. Shah, Harish Tandon
G.A.No.973 of 2010
APOT 157 of 2010
A.P.O. of 2010
C.S. 504 of 2001
IN THE HIGH COURT AT CALCUTTA
CIVIL APPELLATE JURISDICTION
ORIGINAL SIDE
ANDREW YULE & CO. LTD.
VERSUS
DESCON LTD. & ANR.
For the appellant : Mr. Jayanta Mitra, Sr.Advocate with
Mr. Soumen Sen and
Mr. A.Moitra, Advocates
For the Respondents : Mr. P.C.Sen, Sr.Advocate with
Mr. D.Basak, Mr. Subhojit Roy, Mr. Raj Ratno Sen and Mrs. Mousumi Bhattacharya, Advocates BEFORE :
The Hon'ble Mr. MOHIT S. SHAH, CHIEF JUSTICE AND The Hon'ble Justice HARISH TANDON April 13, 2010.
THE COURT : Instead of hearing the stay application, by consent of the parties, we have taken up the appeal itself for hearing by treating the same on the day's list. 2 G.A.No.973 of 2010 APOT 157 of 2010 A.P.O. of 2010 C.S. 504 of 2001 This appeal is directed against the judgment dated 18th March of the learned single Judge vacating the ad-interim order dated 18th December, 2007 and declining to grant the appellant's prayer for appointment of Receiver in respect of the shares in question.
On 3rd October, 2001, the appellant, Andrew Yule & Co. Ltd. instituted a suit before this Court for specific performance of an agreement between the appellant and respondent no.1 Descon Ltd. (hereinafter "Descon" for short) and also for a decree for delivery up of 12,87,416 shares held by Descon in respondent no.2 - Dishergarh Power Supply Co. Ltd. ("DPS" for short) and for cancellation of resolution dated 28th September, 2001. The appellant was basically seeking to enforce the minutes of meeting of the Board of Directors held on 26th December, 1998 at which the Board considered a Memorandum on shares of DPS. Extract from minutes of the said meeting reads as under :
"The Board considered a memorandum on shares of Disergarh Power Supply Co. Ltd. (DPS) and the background explained by the Chairman and noted that : 3 G.A.No.973 of 2010 APOT 157 of 2010 A.P.O. of 2010 C.S. 504 of 2001
i) The Company had subscribed 12,87,416 shares in DPS in the year 1996 on the basis of renunciation of "Rights" entitlement by Andrew Yule & Co. Ltd (AYCL), Bengal Coal Co. Ltd. (BCCL) and Katras Jherriah Coal Co. Ltd., the issue of shares of "Rights" by DPS as described below :
Name of the Shares Additional Shares Date Company Renounced through detachable Warranties AYCL 3,01,269 3,01,269 BCCL 1,99,320 1,99,320 KJCCL 143119 1,43,119
ii) The renunciation of "Rights" entitlement was made by AYCL, BCCL and KJCCL without any cost/additional premium ... with the objective of keeping the shares of DPS within the Group.
Under the above background the Board observed that the Companies would not sell its holdings of shares in DPS. 4 G.A.No.973 of 2010 APOT 157 of 2010 A.P.O. of 2010 C.S. 504 of 2001 However, should an exigency arise in future and the Company decides to sell its holding of shares in DPS, the Board agree in principle, that the Company would give its first offer to AYCL, BCCL and KJCCL and if accepted would sell the same to AYCL, BCCL and KJCCL of their respective renunciated shares in DPS subject to compliance of all applicable laws/regulations."
Initially ad-interim injunction was granted by the learned single Judge on 3rd October, 2001 restraining the respondent- defendant no.1 from transferring or alienating its shares in proforma respondent in any manner whatsoever. Subsequently on 10th October, 2001 the said ad-interim order of injunction was modified. An order was also passed on 18th December, 2007 by which the learned single Judge granted an ad-interim order of injunction restraining the defendants from transferring or encumbering the shares in question. Subsequently, by the impugned judgment the learned single Judge has vacated the said ad-interim order dated 18th December, 2007. 5 G.A.No.973 of 2010 APOT 157 of 2010 A.P.O. of 2010 C.S. 504 of 2001 Mr. Sen, learned counsel appearing on behalf of the appellant submits that when the suit is for specific performance of the agreement giving the appellant right of pre-emption, the Court is required to pass an order of status quo so that the shares are available for transfer to the appellant as and when the suit may be decreed. It is further submitted that the shares in question were Rights shares renunciated by the appellant and their group of companies without any price and, therefore, the respondent- defendant no.1 Descon which had obtained those shares at a lesser value were required to be preserved for the appellant during the pendency of the suit.
On the other hand, learned counsel for the respondent- defendant no.1 submits that the impugned judgment has been delivered on an application for interim injunction in a suit filed on 3rd October 2001 wherein the appellant had come up with a specific case that the Memorandum of 1998 was arrived at in order to ensure that shares in DPS would remain within the same group, but the appellant itself has sold off its shares in DPS at the rate of Rs.710/- per equity share and now the appellant-plaintiff does not have any shareholding in DPS.
6G.A.No.973 of 2010 APOT 157 of 2010 A.P.O. of 2010 C.S. 504 of 2001 Under the circumstances, the question of any right of pre-emption remaining with the appellant cannot arise. It is further submitted that just as the appellant has sold off its shares in DPS at the rate of Rs.710/- per equity share, similarly the respondent-defendant no.1 is also entitled to transfer its holding to the extent of 32.31 % equity shares in DPS at the rate of Rs.710/- per share as per the offer made by Orbis Power Venture Pvt. Ltd. in their letter dated March 4, 2010. It is also stated that 17% of the shareholding of the respondent-defendant in DPS is already sold to Orbis Power Venture Pvt. Ltd. Under the above offer and now only 15% shareholding in DPS remains with the respondent-defendant no.1 which is also proposed to be sold at the same rate of Rs.710/- per equity share, as indicated in the letter dated March 4, 2010. It is also submitted that the respondent-defendant no.1 by their offer letter dated March 18,2010 made an offer to the appellant and their associate companies (BCCL and KJCCL) to purchase 12,87,416 shares held by the respondent-defendant in DPS at the price of Rs.710/- per equity share aggregating to the value of Rs.91.40 crores by March 20, 2010, but the appellant did not 7 G.A.No.973 of 2010 APOT 157 of 2010 A.P.O. of 2010 C.S. 504 of 2001 accept the said offer. Therefore, the appellant is not entitled to get any interim relief.
Having heard the learned counsel for the parties, we find considerable substance in the submission made on behalf of the respondent-defendant that as per the appellant-plaintiff's own case, the arrangement arrived at in the year 1998 was aimed at ensuring that the shareholding in DPS remains within the same group or group of companies, but once the appellant itself has transferred its shareholdings in DPS to the extent of 7.12% and the shareholding of their group to the extent of 15.2% at the rate of Rs.710/- per share to Orbis Power Venture Pvt. Ltd., it cannot be said that the appellant has a strong prima facie case to seek an order of injunction to restrain the respondent-defendant from transferring their shares to Orbis Power Ventures Pvt.Ltd at the rate of Rs.710/- per equity share. In any view of the matter, the alleged injury complained of is not such which cannot be compensated in terms of money. Therefore, no case has been made out for granting any injunction as prayed for during pendency of the suit.
8G.A.No.973 of 2010 APOT 157 of 2010 A.P.O. of 2010 C.S. 504 of 2001 The appeal as well as the application for stay is dismissed. Photostat certified copy of this order be made available to the parties upon compliance of usual formalities.
( MOHIT S. SHAH, C.J.) ( HARISH TANDON, J.) Rsg.
Asst.Registrar(CR)