Bombay High Court
Matrix Partners India Investment ... vs Ashok Chattaraj And 2 Ors on 22 April, 2022
Author: G.S.Kulkarni
Bench: G.S.Kulkarni
Digitally
signed by
VIDYA
VIDYA SURESH
SURESH AMIN
Date:
AMIN 2022.04.22
21:42:00 907.CARBPL10042_2022.doc
+0530
Vidya Amin
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMMERCIAL ARBITRATION PETITION (L) NO. 10042 OF 2022
Matrix Partners India Investment Holdings
LLC & Anr. ... Petitioners
V/s.
Ashok Chattaraj & Ors. ... Respondents
Dr. Birendra Saraf, Senior Advocate a/w. Mr. Nitesh Jain, Mr. Hridhay
Khurana, Siddharth Ratho, Mahi Mehta i/b. Trilegal fo rthe petitioners.
Mr. J.P. Sen, Senior Advocate a/w. Mr. Shanay Shah, Sita Kapadia,
Alefiyah Shipchandler, Shreya Mohapatra and Tvishi Pant i/b. Keystone
Partners for respondent nos. 1 to 3.
CORAM : G.S.KULKARNI, J.
DATE : 22 April, 2022.
P.C.:
1. This is a petition filed under section 9 of the Arbitration and Conciliation Act, 1996 (for short, "the Act") whereby the petitioners have prayed for interim reliefs pending the arbitral proceedings.
Disputes and differences between the parties have arisen under the Shareholders Agreement dated 10 June, 2013 as amended on 2 September, 2013, 30 October, 2013 and 13 March, 2014.
2. It is the case of the petitioners that petitioner no. 1 is a foreign Venture Capital Investor and petitioner no. 2 a foreign investor, who have subscribed to the share capital of respondent no. 3 interalia in the 1/8
907.CARBPL10042_2022.doc manner as set out in the Shareholders Agreement dated 10 June, 2013. Respondent nos. 1 and 2 are the co-promoters of respondent no.3 who are the other parties to the shareholders agreements. It appears that since the year 2017, the petitioners had expressed their intention of an exit from respondent no. 3 company, pursuant thereto, there were negotiations between the petitioners and the respondents. The petitioners in making an exit were to exercise their rights under Clause 8 of the Shareholders Agreement. Learned counsel for the parties have referred to Clause 8 of the Shareholders Agreement dated 10 June, 2013 and more particularly Clause 8.3 and 8.4 which makes a provision for an exit in a manner as recognised and provided in such clauses.
3. After hearing the learned senior counsel for the parties, it appears that the dispute between the parties interalia centers around the following two issues:
(i) The respondents, keeping the petitioners in dark and also in violation of the Shareholders Agreement, have taken steps to sell the business of respondent no. 3 to the third parties, contended by the petitioners, to be in absolute breach of Clause 6.9(b) of the Shareholders Agreement. Hence, such action of 2/8
907.CARBPL10042_2022.doc respondent Nos.1 and 2 of selling the business of respondent no.
3 to third parties and accepting part consideration (Rs.37 crores) is illegal and in the teeth of the Shareholders Agreement;
(ii) Secondly, as to what should be the valuation, of the petitioners shareholding for a buy back by respondent Nos.1 and 2 for the purposes of the petitioners exit. In this context, both the parties rely on the directives of the Reserve Bank of India contained in the Circular dated 1 July, 2015.
4. Insofar as the first issue is concerned, Mr. Sen, learned senior counsel for the respondents, could not make good, that the respondents have not acted in breach of the terms and conditions of the Shareholders Agreement. He states that the respondents did not adhere to the agreed terms and conditions, and have in fact kept away the petitioners from everything in regard to sale of respondent no. 3 to the third parties not complying their obligations under clause 6 of the shareholders agreement in respect of the petitioners affirmative vote.
5. On the second issue, insofar as the applicability of the Reserve Bank of India directives/guidelines are concerned, the contention as 3/8
907.CARBPL10042_2022.doc urged on behalf of the petitioners is that petitioner no. 1 had invested an amount of about Rs.68 crores as a foreign venture capital investor and thus the provisions of the RBI Circular dated 1 July, 2015 in paragraph 5(b) - "Pricing Guidelines" are not applicable to the petitioners. It is however, the respondents' case that such provisions of the RBI directives were applicable qua the exit of the petitioners, and in that regard even the petitioners have proceeded on the ground that such pricing guidelines were applicable to the petitioners. It is submitted by Mr.Sen in this context that there is a substantial correspondence between the parties as placed on record, to which the attention of the Court was drawn, which also includes exchanges of draft agreements, setting out the references to such share valuation at the FMV. Dr.Saraf, learned Senior Counsel for the petitioners would contend that the petitioners exit as per clause 8.3 read with clause 8.4 of the shareholders agreement, cannot be lower than the principal amount of investment of the petitioners which is an amount of Rs.83 crores. The contention as urged on behalf of the petitioners is that the respondents have completely breached the trust of the petitioners and have entered into the terms sheet and Business Transfer Agreements with the third party as also have received part amounts of approximately Rs.37 crores. The total consideration which is expected 4/8
907.CARBPL10042_2022.doc to be received from the third parties is Rs.78 crores, and such amounts are being appropriated to the prejudice of the petitioners, in patent breach of the shareholders agreement. It is submitted that the claim of the petitioners is for about approximately Rs.83 crores. It is in these circumstances it is submitted that if interim protection as prayed for is not granted, serious prejudice would be caused to the petitioners.
6. During the course of their respective submissions, learned Senior counsel for the parties have stated that they are agreeable for reference of the disputes to arbitration.
7. Having heard learned senior counsel for the parties and having perused the record, in my opinion, as the parties have now agreed that the disputes be taken for adjudication of an arbitral tribunal and that the parties can make appropriate prayers for interim measures, keeping all contentions of the parties open on the merits of the disputes, in my opinion, the following interim measures would serve the interest of justice, till the arbitral tribunal passes appropriate orders on the Section 17 applications as may be filed by the parties:
(i) The respondents are directed not to part with any amounts which may be received by the respondents under the Business 5/8
907.CARBPL10042_2022.doc Transfer Agreements and shall keep the petitioners informed of such amounts received within twenty four hours of the receipt of such amounts. The receipt of such amounts shall be subject to further orders to be passed by the arbitral tribunal;
(ii) The respondents are also directed not to deal with the assets of respondent no. 3 and/or create any third party rights in any manner whatsoever except in the ordinary course of business of which prior intimation of 48 hours of any payment being made be issued to the petitioners and their advocates.
(iii) Respondent nos. 1, 2 and 3 are directed to place on record of the arbitral tribunal an affidavit disclosing all their movable and immovable assets including the bank account details and the bank statement. Disclosure affidavit be served on the petitioners within a period of two weeks from today.
(iv) Respondent nos. 1 and 2 are directed not to deal with their movable and immovable assets in any manner.
(v) Respondent nos. 1 and 2, however, shall be entitled to withdraw an amount of Rs.2,00,000/- per month each. Such respondents are at liberty to make an application for withdrawal/ utilization of the amounts over and above the cap of Rs.2,00,000/- before the arbitral tribunal, which shall be 6/8
907.CARBPL10042_2022.doc considered by the arbitral tribunal and appropriate orders passed.
(vi) In regard to all the expenses being made by respondent no. 3, an account shall be maintained.
(vii) The present order shall operate forthwith.
(viii) All contentions of the parties on merits of the disputes are expressly kept open to be agitated before the arbitral tribunal.
(ix) By consent of the parties, Mr. Justice S.C. Gupte (Retd.), is appointed as a sole arbitrator to adjudicate the disputes between the parties which have arisen under the Shareholder Agreement dated 10 June, 2013 and the allied agreements.
(x) The learned sole arbitrator, before entering the arbitration reference, shall forward a statement of disclosure as per the requirement of Section 11(8) read with Section 12(1) of the Arbitration and Conciliation Act,1996, to the Prothonotary & Senior Master of this Court by email id - [email protected], to be placed on record of this application with a copy to be forwarded to both the parties;
(xi) All other terms and conditions of his appointment to be fixed by the learned sole arbitrator.
(xii) The parties are at liberty to seek appropriate orders of the aforesaid directions before the arbitral tribunal and the arbitral 7/8
907.CARBPL10042_2022.doc tribunal shall not be under any embargo in the event if it finds that the above orders which are only to operate as an interim arrangement to enable the parties to appear before the arbitral tribunal, need any modification. All contentions in that regard are expressly kept open.
(xiii) The respondents are also directed to provide for all necessary information to the petitioners as may be demanded, concerning the rights of the petitioners to obtain such information.
(xiv) The petition is disposed of in the above terms. No costs.
(xv) Parties to communicate this order to the learned Arbitrator.
(G.S.KULKARNI, J.) 8/8