Indian Kanoon - Search engine for Indian Law

6. It is not in dispute that there was a joint venture agreement ('JVA') dated 1st May 1999 entered into between the parties, in terms of which Mr. Aditya Ahluwalia had an affirmative vote in matters relating to the company. It was under the same JVA that the shareholding pattern of Mr. Vivek Dhir, WPIGI and Mr. Pankaj Patel was decided. Despite Clause 6.2 of the JVA giving an affirmative vote to Mr. Aditya Ahluwalia at the Board meeting held on 31st October 2012 the resolution for approving the rights issue as proposed was approved without his being present and voting. This according to him, therefore, severely prejudiced his rights.

12. The first question that arises for consideration is whether the CLB was justified in holding that since there was no bar to the affirmative vote in the AoA of the company, Clause 6.2 of the JVA which provides for the affirmative vote must be given effect to. This, in turn, requires the interpretation of Section 9 of the Act which the CLB has understood as not being applicable to private companies.

13. Section 9 of the Act reads as under:

"9. Act to override memorandum, articles, etc. - Save as otherwise expressly provided in the Act--

16. Mr. Virender Ganda, learned Senior counsel for the Respondent, has placed extensive reliance on the decision of the Supreme Court in Reliance Natural Resources Limited v. Reliance Industries Limited (2010) 7 SCC 1 (hereinafter referred to as the 'RNRL case') and, in particular, the observations made in paras 56 and 59 thereof. In the said case, a submission was made on behalf of RNRL that, in terms of the 'doctrine of identification', Reliance Industries Limited ('RIL') was identified by "such of its key personnel through whom it workss", and that in that case, the key persons were Smt. Kokilaben Ambani, Mr. Mukesh Ambani and Mr. Anil Ambani, who had entered into a family arrangement which was reduced in writing in the form of a Memorandum of Understanding ('MoU'). The submission was that in terms of the said doctrine of identification, the actions of the key personnel should be taken to be the actions of the company itself. Mr. Ganda has submitted that in the present case, the JVA was in the nature of an agreement between the key personnel of the Appellant No.1 company and since their actions were taken to be the actions of the company itself, Clause 6.2 which provided for an affirmative vote should be taken to be applicable and enforceable notwithstanding the fact that no amendment was made to the AoA to incorporate such an affirmative vote of WPIGI.

19. The offshoot of the above discussion is that the JVA in the present case cannot be said to bind the company as such. What the company can do has to be ascertained with reference to the AoA. In the present case, although the JVA was entered into in 1999 itself, there was no move made by Mr. Aditya Ahluwalia or WPIGI to have the AoA amended at any point in time to incorporate the affirmative vote provided to WPIGI under Clause 6.2 of the JVA. Nothing prevented WPIGI from doing so. Unless the AoA was actually amended, WPIGI could not insist on exercise of the affirmative vote. This law has been clearly explained by the Supreme Court in V.B. Rangaraj v. V.B. Gopalakrishnan AIR 1992 SC 453. Referring to the decision in S.P. Jain v. Kalinga Tubes Ltd. [1965] 2 SCR 720, the Supreme Court observed: