SCHNEIDER ELECTRIC SA Vs. TELEMECANIQUE CONTROLS I LIMITED

JUDGEMENT

(1.) The whole controversy for the limited purpose of the instant application revolves around the point "Whether the plaintiff company (in short "SESA") is the rightful successor-in-interest of the parent French company known as LTE which had entered into a joint venture with Indian company `CS' and floated the defendant company known as `TC' by investing equity of 38% each." Plaintiff company SESA is seeking injunction against the defendant-TC from holding the meetings of Board of Directors of the defendant company as at the time of constitution of the defendant-company both LTE and CS were having 38% share each and plaintiff-SESA being the successor-in-interest of LTE is entitled to have one Director on the Board of Directors of the defendant company.

(2.) The dilemma and difficulty of the defendant-TC is that it is not sure whether the plaintiff company is rightful successor of LTE or not as till 1997 the defendant had no information about the change of name of LTE and in 1997 SEI claimed to be the successors(transferees)-in-interest of the shares of LTE and on the premise of this claim, SEI was permitted to nominate its Director in the Board of Directors. In 2000 the plaintiff staked its claim as successor-in-interest of LTE for the first time on the basis of the alleged merger of LTE into SESA in the year 1997.

(3.) Mr.Arun Kathpalia, learned counsel for the defendant-TC contends that the defendant-TC allowed SEI to nominate its nominee on the Board of Directors on the bonafide belief on the representation of SEI that it was the successor in-interest of LTE and its representation on the Board of Directors continued for three years i.e for 1997, 1998 and 1999. It was only in the year 2000 when the plaintiff SESA started claiming the succession of LTE on the basis of the alleged merger that it made the defendant wake up and examine the bonafide of the plaintiff company as to its claim. The defendant started examining the records and unearthed the following facts:-