IN RE: KEYSTONE REALTORS (P.) LTD. Vs. STATE

JUDGEMENT

(1.) ON 6th August, 2012 when CP No. 57 of 2012 which was listed to be mentioned by the petitioner (Mausmi SA Investments LLC) in the matter of R -1 -company [Keystone Realtors (P.) Ltd.] and others the respondents (R -1 and R -2) drew my attention to their Company Applications Nos. 128 of 12 and 116 of 12 respectively, which were not on Board, pointing out and contending that the applicants have moved these applications under section 8 of the Arbitration and Conciliation Act, 1996 ('the Arbitration Act') and since the applications have been mentioned before the petitioner has commenced his arguments on CP No. 57 of 2012 filed under section 397/398 read with section 402 of the Companies Act, 1956 ('the Act'), the applications be adjudicated upon first. The petitioner vehemently objected to it. My attention was drawn to his reply dated 4th July, 2012 wherein it was stated that the arbitration clause has been purportedly invoked solely for the purpose to steal a march over P -1 and R -18 and is clearly an attempt to prevent them from approaching the Company Law Board ('CLB') and/or any other forum for seeking redressal of issues inter alia relating to corporate governance, protection of minority interest in the company by invoking clause 20.4 of the SHA without there being any legally tenable claim. It was argued that the applications seeking reference to arbitration are not on Board and in any case have been presented solely to steal a march over them and cannot be argued without them having filed their counter affidavits in reply whereas their company petition has been filed under sections 397/398 road with section 402 of the Act alleging oppression and mismanagement. It was pointed out that the petition has been filed by a 20 per cent shareholder who also has two nominee directors on the Board and is also entitled to affirmative vote in respect of the affairs of the R -1 -company and projects of the subsidiary companies through the Board of the R -1 -company. It was pointed out that the company having its Registered Office at 702, Natraj, M V Road, Western Express Highway, Andheri (East), Mumbai -400 069 is a holding and operating company which undertakes various real estate projects in India either directly or through its joint ventures ('JVs')/other special purpose vehicles (including subsidiaries) ('SPVs') under the brand name 'Rustomjee', which is solely owned by Mr. Boman Irani. My attention was drawn to clause 6.2 of the securities subscription and shareholders' agreement dated 12th March, 2009 between P -1 as Investor I -R -18 as Investor II and R -1 -company and promoter directors R -2, R -3 and R -4 which in article 37 of the articles of association ('AoA') reads as under :

(2.) THE counsel for the petitioner pointed out that pursuant to the said agreement, the petitioner and respondent No. 18 participated in the company by infusing a sum of Rs. 234,90,53,900 into the company in lieu of which shares valuing sum of Rs. 53.900 equivalent to 539 number of shares and 20 per cent of the shareholding of the company was issued and allotted to the petitioner. The respondent No. 18 was allotted CCDs (7 year 15 per cent compulsorily convertible debentures) in lieu of their investment in the respondent No. 1 -company, out of the monies infused by the petitioner, a sum of Rs. 226,01 crore was invested by the company as follows:

(3.) MY attention was drawn to p. 596 of the CP to read a letter dated 31st March, 2012 regarding receipt of cheques from Megacorp Constructions (P.) Ltd to show the R -1 -company's Board is very much in control of the affairs of the subsidiary companies and in terms of clause 22 of the affirmative vote items mentioned in Annexure 13 of the shareholders agreement read with the articles of the company, the company has been, seeking the petitioner's affirmative vote on the related party transactions in the affairs of the subsidiary company My attention was drawn to various such instances at pp 573, 575, 590, 592, etc. Thus, compliance to the understanding between P -1, R -1, R -18 and the promoters of the R -1 was demonstrated and it was vehemently argued that whatever happened in the Subsidiaries, which were like departments, had to come to the R -1 and without P -1 and R -18's affirmative vote nothing could be approved and there would be no quorum without them.