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Ehg Elektro Holding ... v. Government Of Karnat...
Factual and Procedural Background
This opinion addresses an application for leave to file an appeal (I.A.No.1/2021). The appellant, a shareholder, sought permission to appeal, which was contested on maintainability grounds. Subsequently, the parties filed a compromise petition resolving the dispute underlying the appeal. The compromise includes the transfer of shares and settlement of all claims and liabilities between the parties.
Legal Issues Presented
- Whether the appellant, being a shareholder, has the maintainable right to file the appeal.
- Whether the Court should accept the compromise petition filed under Order 23 Rule 3 of the Code of Civil Procedure, 1908, thereby settling the dispute.
Arguments of the Parties
Appellant's Arguments
- The appellant contended that as a shareholder, the appeal is maintainable at their instance.
Respondent's Arguments
The opinion does not contain a detailed account of the respondent's legal arguments.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The Court considered the submission that the appellant, being a shareholder, had the right to maintain the appeal and accordingly overruled the office objection on maintainability. Upon review of the compromise petition signed by the parties, the Court found that the dispute had been resolved on mutually agreed terms. The Court examined the terms of the compromise, which included complete withdrawal of rival claims, transfer of shares, and the appellant’s release from liabilities towards the respondents. The Court accepted the compromise petition as it was voluntarily executed without any undue influence or coercion.
Holding and Implications
The Court allowed I.A.No.1/2021 and overruled the maintainability objection to the appeal. Subsequently, the Court accepted the compromise petition and disposed of the appeal on the terms set out therein.
The direct effect of this decision is the final settlement of all disputes between the parties, including the transfer of minority shares from the appellant to the first respondent. The appellant relinquishes all rights and liabilities related to the second respondent following the share transfer. No new precedent was established by this decision.
Mr.R.V.S.Naik, learned Senior counsel for the appellant. Mr.Saji P.John, learned counsel for the respondent No.1. Heard on I.A.No.1/2021, an application seeking leave of this Court to file an appeal.
2. We have heard the learned counsel for the parties.
3. Learned counsel for the appellant submits that the appellant is a shareholder and therefore, the appeal, at the instance of the appellant is maintainable.
4. In view of aforesaid submission, I.A.No.1/2021 is allowed. Office objection with regard to maintainability of the appeal is overruled.
5. Learned counsel for the parties have filed a compromise petition under Order 23 Rule 3 of the Code of Civil Procedure, 1908 and submit that the dispute in this appeal has been resolved between the parties subject to the terms and conditions mentioned in the compromise petition. It is further stated that the compromise petition has been duly signed by the parties. Learned counsel for the parties, while inviting the attention of this Court to the joint memo, submitted that the terms and conditions set out in the compromise petition have already been complied. After perusal of the compromise petition, we are inclined to accept the same.
6. The terms of the compromise arrived at between the parties is reproduced below for the facility of reference: "9. TERMS AND CONDITIONS: 9.1 Pursuant to the terms of this compromise being fully complied with, all the parties withdraw their respective rival contentions raised before the various forums, unconditionally. The parties agree that the appellant shall not be liable on any account towards the 1st respondent or the 2nd respondent and all rights, claims and / or liabilities whatsoever of the parties stand fully and finally settled in terms hereof. 9.2 Further, after completion of the share transfer, the appellant shall not have any right or liability over the immovable / movable properties of the 2nd respondent or the general functioning of the 2nd respondent. 9.3. Co-operation- The parties shall co-operate with each other in good faith and provide all requisite assistance for the satisfaction of any of the duties and obligation reasonably requested to do so by the other party. If any party becomes aware of anything which will or may prevent any of the conditions precedent from being satisfied before such date, the relevant party shall notify the other party in writing as soon as practicable.
10. This compromise petition and the terms contained herein shall constitute the entire agreement between the parties and shall supersede all or any prior agreement, contract, agreement, understanding, communication whatsoever between the parties, either written or oral.
11. The above share transfer does not diminish the rights and liabilities either of the company or of its shareholder, the Government of Karnataka, since there is no cancellation of shares / liabilities thereon. The 2nd respondent being a body corporate, continues to exist, the liabilities by or against the 2nd respondent thus, continue unaltered. The appellant's rights and liabilities of being a shareholder would vest with the 1st respondent.
12. The parties submit that, the parties are duly represented by their respective authorised signatories who have executed this compromise petition, and the same has been signed by them out of their own free will and volition without any undue influence, fraud, threat or coercion whatsoever. SCHEDULE MINORITY HOLDING / MINORITY SHARES / SALE SHARES Folio Certificate Distinctive No Nos of
1. Vol II RI 12 161 to 1,88,760 1,88,600
2. Voll II RI 40 28,40,001 to 29,00,000 60,000
3. Voll II RI 41 29,00,001 to 30,00,000 1,00,000
4. Voll II RI 42 30,00,001 to 31,00,000 1,00,000
5. Voll II RI 68 56,00,001 to 57,00,000 1,00,000
6. Voll II RI 70 57,64,601 to 58,00,000 35,400
7. Voll II RI 71 58,00,001 to 59,00,000 1,00,000
8. Voll II RI 73 59,44,001 to 59,60,000 16,000
9. Voll II RI 100 84,40,001 to 85,40,000 1,00,000
10. Voll II RI 101 85,40,001 to 86,40,000 1,00,000
11. Voll II RI 102 86,40,001 to 87,40,000 1,00,000
12. Voll II RI 103 87,40,001 to 88,40,000 1,00,000
13. Voll II RI 104 88,40,001 to 89,40,000 1,00,000
14. Voll II RI 105 89,40,001 to 90,00,000 60,000
15. Voll II RI 106 90,00,001 to 91,00,000 1,00,000
16. Voll II RI 107 91,00,001 to 92,00,000 1,00,000
17. Voll II RI 108 92,00,001 to 93,00,000 1,00,000
18. Voll II RI 109 93,00,001 to 94,00,000 1,00,000
19. Voll II RI 110 94,00,001 to 95,00,000 1,00,000
20. Voll II RI 111 95,00,001 to 96,00,000 1,00,000
21. Voll II RI 112 96,00,001 to 97,00,000 1,00,000
22. Voll II RI 113 97,00,001 to 98,00,000 1,00,000
23. Voll II RI 114 98,00,001 to 99,00,000 1,00,000
24. Voll II RI 115 99,00,001 to 1,00,00,000 1,00,000
25. Voll II RI 194 1,77,40.001 to 2,00,00,000 1,00,000 Total 45,20,000" Accordingly, the appeal is disposed of in the aforesaid terms. Sd/- JUDGE Sd/- JUDGE
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