C.A. No. 57 of 2015 and C.A. No. 58 of 2015 in C.P. No. 103 of 2013. Case: General Atlantic Singapore Fund Pte. Ltd. and Ors. Vs Fourcee Infrastructure Equipments Pvt. Ltd. and Ors.. Company Law Board

Case Number:C.A. No. 57 of 2015 and C.A. No. 58 of 2015 in C.P. No. 103 of 2013
Party Name:General Atlantic Singapore Fund Pte. Ltd. and Ors. Vs Fourcee Infrastructure Equipments Pvt. Ltd. and Ors.
Counsel:For Appellant: Janak Dwarkadas, Sr. Advocate, Rohan Rajadhyaksha, Bhavya Mohan and Manan Mehta, Advocates, i/b AZB & Partners, Advocate and For Respondents: Kevic Setalvad, Sr. Advocate, Yadavdeep Deshmukh, Burzin Somandy, Siddhi Doshi and Tejaswita Nalawade, Advocates i/b. Vinod Juwale, Adv.
Judges:Ashok Kumar Tripathi, Member (J)
Issue:Companies Act, 1956 - Section 169; Companies Act, 2013 - Sections 100, 100(1), 100(2), 2(89), 43, 47, 47(1)(a), 47(2), 50
Judgement Date:April 13, 2015
Court:Company Law Board

Order:

Ashok Kumar Tripathi, Member (J), (Mumbai Bench)

1. By this common order I propose to deal with two Company Applications in C.P. No. 103/2013, first Company Application being C.A. No. 57 of 2015, filed on behalf of the Applicants/Petitioners praying therein to pass an order thereby directing the Respondents to forthwith set out, on an Affidavit, the full details, including but not limited to the terms of the proposed agreement with Titagarh Wagons Limited, and to pass further order thereby restraining the Respondent No. 1 Company from entering into any agreement with the said company in relation to the containers of the Respondent No. 1 Company (owned or leased) without prior consent of the Applicants/Petitioners, and another Company Application, being C.A. No. 58 of 2015, which has also been filed by the Applicants/Petitioners pursuant to an order passed by the Hon'ble High Court of Bombay on 26/3/2015 in Company Application (Lodg.) No. 10 of 2015 in Company Appeal No. 66 of 2014 in CLB/CA/113 of 2014 in CLB/CP/103 of 2013. The said order states as under:--

1] Heard learned Senior Counsel appearing for the parties. The present company application shall be heard by the Company Law Board (CLB) within a period of two weeks from today.

2] Parties shall appear before the Company Law Board (CLB) tomorrow i.e. 27th March 2015 at 10.30 am and obtain necessary directions. It is clarified that since the appeals including Appeal No. 66 of 2014 is pending before this Court, the same shall not preclude the Company Law Board from hearing the above application.

3] Learned Senior Counsel appearing for respondents states that the respondents shall not contend before the CLB that the subject matter of the appeal is pending before this Court or that it will affect the hearing of the appeal. Statement accepted. Application is accordingly disposed of.

2. In view of the above, first I proceed to deal with the Company Application No. 58 of 2015 filed by the Petitioners/Applicants herein. Thereafter, I will consider the C.A. No. 57 of 2015.

3. By C.A. No. 58/2015 the Applicants/Petitioners has sought the following directions inter alia on the grounds set out in the application:--

(a) To direct the Respondent No. 1 Company, along with its employees, agents, servants and assigns to forthwith give effect to the resolutions passed at its Extraordinary General Meeting held on January 9, 2015 and to remove the Respondent No. 2 as a member of its Board of Directors and to do all necessary and incidental acts for effecting the same.

(b) To direct the Respondent No. 1 Company, along with its employees, agents, servants and assigns to forthwith give effect to the resolutions passed at its Extraordinary General Meeting held on January 9, 2015 and to remove the Respondent No. 5 as a member of its Board of Directors and to do all necessary and incidental acts for effecting the same.

(c) To pass an order thereby appointing a suitable person as an Administrator on the Board of Directors of the Respondent No. 1 Company, who can monitor the day to day affairs of the Respondent No. 1 Company and to direct such Administrator to conduct day to day affairs of the Respondent No. 1 Company.

(d) To pass an order, pending the hearing and final disposal of the present C.A., thereby--

(i) restraining the Respondent No. 2 from in any manner acting and/or holding himself out as a Director of the Respondent No. 1 Company;

(ii) restraining the Respondent No. 5 from in any manner acting and/or holding himself out as a Director of the Respondent No. 1 Company; and

(iii) appointing a suitable person as an Administrator on the Board of Directors of the Respondent No. 1 Company, who can monitor the day to day affairs of the Respondent No. 1 Company and direct such Administrator to conduct day to day affairs of the Respondent No. 1 Company and make such reports to this Board at such intervals as deemed fit by this Board.

4. Pleadings have been exchanged between the parties in respect of C.A. No. 58 or 2015. I have heard the Ld. Senior Counsels appearing for both the sides.

5. At the outset, for the sake of convenience, I would like to reproduce the relevant provisions contained in Section 2(89), Section 43 and Section 47 of the Companies Act, 2013 and Articles 7, 71, 80 and 92 of the Articles of Association of the Company and Articles 10.1, 10.6 and 11.1 of the Shareholders Agreement dated 21st September, 2011 entered into between the parties, here as under:--

"S. 2(89) "total voting power", in relation to any matter, means the total number of votes which may be cast in regard to that matter on a poll at a meeting of a company id all the members thereof or their proxies having a right to vote on that matter are present at the meeting and cast their votes.

43. The share capital of a company limited by shares shall be of two kinds namely:--

(a) equity share capital-

(i) with voting rights; or

(ii) with differential rights as to dividend, voting or otherwise in accordance with such rules as may be prescribed 81; and

(b) preference share capital:

Provided that nothing contained in this Act shall affect the rights of the preference shareholders who are entitled to participate in the proceeds of winding up before the commencement of this Act.

Explanation.-For the purpose of this section,--

(i) 'equity share capital", with reference to any company limited by shares, means all share capital which is not preference share capital;

(ii) "preference share capital", with reference to any company limited by shares, means that part of the issued share capital to the company which carries or would carry a preferential right with respect to-

(a) payment of dividend, either as a fixed amount or an amount calculated at a fixed rate, which may either be free of or subject to income-tax; and

(b) repayment, in the case of a winding up or repayment of capital, of the amount of the share capital paid-up or deemed to have been paid-up, whether or not, there is a preferential right to the payment of any fixed premium on any fixed scale, specified in the memorandum or articles of the company;

(iii) capital shall be deemed to be preference capital, notwithstanding that it is entitled to either or both of the following rights, namely:--

(a) that in respect of dividends, in a addition to the preferential rights to the amounts specified in sub-clause (a) of clause (ii), it has a right to participate, whether fully or to a limited extent, with capital not entitled to the preferential right aforesaid;

(b) that in respect of capital, in addition to the preferential right to the repayment, on a winding up, of the amounts specified in sub-clause (b) of clause (ii), it has a right to participate, whether fully or to a limited extent with capital not entitled to that preferential right in any surplus which may remain after the entire capital has been repaid.

Voting nights.

47. (1) Subject to the provisions of section 43 and sub-section (2) of section 50,-

(a) every member of a company limited by shares and holding equity share capital therein, shall have a right to vote on every resolution placed before the company; and

(b) his voting right on a poll shall be in proportion to his share in the paid-up equity share capital of the company.

(2) Every member of a company limited by shares and holding any preference share capital thereto shall, in respect of such capital, have a right to vote only on resolutions placed before the company which directly affect the rights attached to his preference shares and, any resolution for the winding up of the company or for the repayment of reduction of its equity or preference share capital and his voting right on a poll shall be in proportion to his share in the paid up preference share capital of the company.

Provided that the proportion of the voting rights of equity shareholders to the voting rights of the preference shareholders shall be in the same proportion as the paid-up capital in respect to the equity shares bears to the paid-up capital in respect of the preference shares;

Provided further that where the dividend in respect of a class of preference shares has not been paid for a period of two years or more, such class of preference shareholders shall have a right to vote on aft the resolutions placed before the company,

Articles of Association of the Respondent No. 1 Company

7. Terms and Conditions for the Issue of Series B CCPS--

"Series B CCPS" means the 11,500,000 (Eleven Million and Five Hundred Thousand) compulsorily cumulative participatory preference shares of face value of Rs. 100/- (Rupees One Hundred only) each and having the characteristics set out below.

(i) Payment of dividend

The Company shall pay cumulative dividend at the rate of 0.001% (Zero Point Zero One Percent) per annum on the Series B CCPS. Dividend on Equity Shares shall be subordinated to the dividend on the Series B CCPS. In case the dividend on Equity Shares declared by the Company is at a rate higher than that on Series B CCPS, while the Series B CCPS remain unconverted in whole or in part or are pending redemption (Subject to Applicable Law), then the dividend on the Series B CCPS shall be paid at the same rate as that on Equity Shares, on a Fully Diluted Basis.

(ii) Liquidation Preference

In the event of a Liquidity Event/Liquidation Event the aggregate liquidation preference of each holder of the Series 8 CCPS will be determined in accordance with Article XI (Liquidation Preference) of these Articles.

(iii) Conversion option of Series B CCPS

a. The Series B CCPS shall automatically convert into Equity Shares on the earlier to occur of: (a) the latest date permissible under Applicable Law prior to an IPO; or (p) the 10th anniversary of the Investor Closing Date (the "Series B Maturity Date") in accordance with Paragraph 4 hereof.

b. Any time prior to the Series 8 Maturity Date, the holder of Series B CCPS shall have the right to convert, at...

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