Case Note & Summary
The dispute centered on the shareholding of Gharda Chemicals Ltd., a closely held company originally belonging to the Gharda and Kavasmaneck families. The minority shareholders, comprising Jer and Darius Kavasmaneck, Percy and Aban Kavasmaneck, Maharukh Oomarigar, and Colin and Conrad Rebello, together held approximately 34% of the equity. In 1989, Dr. Gharda attempted to transfer his shares to a foundation and sought voluntary donation of shares, which the minority opposed. An Extraordinary General Meeting in 1990 sought to remove preemptive rights under Article 57, leading to Company Petition No. 77 of 1990 and an injunction preventing implementation of any resolution. To secure their position, the minority shareholders entered into a Memorandum of Understanding (MoU) dated 3 June 1992 with Godrej Industries Limited, whereby Godrej agreed to advance loans for share purchases, with each purchased share secured by two equity shares of the company. The MoU was to remain until the company became a publicly listed entity. Godrej advanced loans over time. Disputes later arose, prompting two arbitration petitions under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim measures. By order dated 11 May 2012, a learned single Judge of the Bombay High Court allowed the petitions and restrained the appellants (Godrej Industries and certain Kavasmaneck family members) from dealing with the shares. The appellants filed four appeals against this order. Additionally, applications under Section 11 of the Act were filed for appointment of an arbitrator. The division bench heard the matter on 17 August 2012 and pronounced judgment on 18 September 2012. The court examined the factual background, the MoU, and the shareholding pattern, and considered whether the interim injunction should be upheld pending the arbitration proceedings.
Issue of Consideration
Case Details
2012 LawText (BOM) (09) 47
Appeal No. 331 of 2012, Appeal No. 332 of 2012, Appeal (Lodging) No. 497 of 2012, Appeal (Lodging) No. 498 of 2012, with Arbitration Application No. 220 of 2012 and Arbitration Application No. 219 of 2012
Mohit S. Shah, N.M. Jamdar
Anil Divan, V. Dhond, R.M. Kadam, Rohit Kapadia, Pravin Samdani, Anil Jamsandekar, Snehal Shah, Shriraj Dhruv, Khyati Pandit, Manish Acharya, Simil Purohit, Saurabh Gadkari, Ranjit Shetty
Godrej Industries Limited; Percy Rutton Kavasmaneck and Aban Percy Kavasmaneck
Colin Mario Rebello; Jer Rutton Kavasmaneck; Darius Rutton Kavasmaneck; Maharukh Murad Oomarigar; Conrad Anthony Rebello
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Nature of Litigation
Appeals against interim order in arbitration petitions restraining dealing with shares
Remedy Sought
Appellants sought to set aside the restraint order; respondents sought to continue the interim protection
Filing Reason
Alleged threat to minority shareholding rights and alleged breach of MoU
Previous Decisions
Single Judge allowed Arbitration Petitions, restrained appellants from dealing with shares of Gharda Chemicals Ltd.
Judgment Excerpts
By the impugned order dated 11 May 2012, the learned single Judge has allowed the arbitration petitions and has restrained the appellants from in any manner dealing with certain shares of Gharda Chemicals Ltd.
The Company was incorporated as a Private Company, which later became a deemed public Company, by virtue of its turnover, under Section 43A of the Companies Act, 1956.
A memorandum of understanding (MoU) was executed on 3 June 1992 between minority shareholders on one hand and Godrej on the other hand.
Procedural History
Company Petition No. 77 of 1990 filed, leading to injunction on 14 February 1990; MoU executed on 3 June 1992; Arbitration Petition (L) No. 398 of 2012 and Arbitration Petition No. 444 of 2012 filed; by order dated 11 May 2012, single Judge allowed petitions and granted interim restraint; appeals filed; arbitration applications under Section 11 also filed; heard on 17 August 2012, judgment pronounced on 18 September 2012.
Acts & Sections
- Companies Act, 1956: 43A
- Arbitration and Conciliation Act, 1996: 9, 11
