HARISH KUMAR Vs. SEB INTERNATIONAL SAS

JUDGEMENT

(1.) Petitioner no.1 Harish Kumar claims to have been successfully running the business of developing and manufacturing electrical appliances and selling them with the brand name 'Maharaja Whiteline' for over three decades. For carrying on that business he had formed a private limited Company by the name of 'Maharaja Whiteline Industries Pvt. Ltd.' (to be referred hereinafter as 'the Indian Company') in which the entire shareholding was owned by him and his family members. However, in November, 2011 he and other shareholders decided to sell 55% of their fully paid up equity shares (2,819,300 shares out of 5,126,000 shares) in the Indian Company to respondent no.1, which is a French Company (hereinafter to be referred as 'the French Company'). After negotiations and finalisation of the deal various agreements were executed on 28th November, 2011 between the Indian Company and the French Company and the existing shareholders of the Indian Company for sale of their shares in favour of the French Company. Those documents included one Shareholders Agreement and one Share Purchase Agreement. It was also decided at that time to make petitioner no.1 as the first Managing Director of the re-constituted Indian Company after the said deal. The other members of the Board of Directors were four nominees of the French Company, respondent nos. 2-5 herein and petitioner no. 1's wife(petitioner no.2) and his daughter(petitioner no.3). Restated Articles of Association of the Indian Company after the deal with the French Company were also brought into existence. An Employment Agreement was also executed between petitioner no.1 and the reconstituted Indian Company whereby he was employed as the Managing Director and the annual compensation payable to him was fixed at one million rupees. The name of this joint venture Company which came into existence on 28th November, 2011, however, remained unchanged and now reference to it shall be made as 'the reconstituted Indian Company'.

(2.) Petitioner no.1's grievance is that despite the fact that his family still holds 45 % shares in the Indian Company and it was the intention of the parties concerned at the time of sale of 55 % shares to the French Company and execution of Employment Agreement as well as Share Holders Agreement that he shall remain the Managing Director for a period of five years and in any case he could not be removed for a period of two years at least, he had been illegally and in most arbitrary manner and unceremoniously removed as the Managing Director of the re-constituted Indian Company within a year from his taking over as the Managing Director by the Board of Directors in its meeting held on 21st December,2012 which was chaired by himself as the Chairman and attended by his wife and daughter and respondent nos.2-4 herein in the capacity of Directors nominated by the French Company. It is also his grievance that in an illegal way his Group was virtually reduced to a non entity, as far as the management of the affairs of the reconstituted Indian Company is concerned, even though it was never the intention behind the deal with the French Company that this situation would also arise.

(3.) Since the Employment Agreement between the petitioner no.1 and the re-constituted Indian Company, whereunder petitioner no. 1 was appointed as the Managing Director of the re-constituted Indian Company, had an arbitration clause also this petition under Section 9 of the Arbitration and Conciliation Act, 1996 was filed by him against the French Company and its four nominee Directors on the Board of the re-constituted Indian Company in which he claimed that he had been illegally removed by the Board of Directors of the re-constituted Indian Company as its Managing Director and claimed the following reliefs: