S. V. CHOUDARY Vs. V. VIDYA SAGAR

JUDGEMENT

(1.) This petition is filed by the petitioner s under Sec. 11(6)(a) of the Arbitration and Conciliation Act, 1996 r/w Rules and Scheme under the Act for getting the disputes resolved between the parties as per Clause 7 of the Memorandum of Understanding dtd. 1/10/2009.

(2.) Learned counsel for the petitioner submitted that the petitioner was the core promoter and founder Director of Subhodaya Chemicals Limited (Subhodaya Chemicals Pvt. Ltd). The respondents 1,3 and 4 are co-promoters of the 2nd Respondent Company. Petitioner has given his personal guarantees and offered family properties as collateral security to financial institutions and Banks, thereby extending loans to the business entity for its establishment and survival. The 1st respondent and petitioner has entered into a bilateral agreement by way of an MOU dtd. 20/7/2005 with the petitioner promising that the promoter Directors, including the petitioner will divest themselves of their equity and consideration will be paid before December 2005 and promised to release the collateral securities offered by the petitioner and also has taken the responsibility of relieving him from all personal guarantees given by the petitioner and thereafter, the amount due will incur interest at 15% p.a. In the MOU dtd. 1/10/2005 the 1st respondent has agreed that the petitioner will continue as a whole-time director of the company for a period of 5 years from the date of MoU and in the meantime, the first respondent will have to relieve the petitioner from all the personal guarantee and collateral securities given to financial institutions.

(3.) On 11/3/2006, the 1st respondent has entered into an MOU with the petitioner to the effect that 33% of the equity held by the Petitioner in the business entity shall be transferred on consent only, after the personal guarantees and securities given by him, his friends and relatives will be released and interest at 15% will be paid with effect from 31/12/2005 on the consideration which is to be transferred. Again on 11/3/2006 the 1st respondent entered into an MOU agreeing to discharge the obligation under earlier MOU dtd. 20/7/2005. Once again on 1/10/2009 1st respondent entered into an MOU with the petitioner in continuation with the earlier MOU wherein he promised to undertake the total liabilities of the company and to relieve the petitioner from personal guarantees given by him. As per the MOU the petitioner agreed to transfer 12,50,225 shares constituting 25% of the total equity share capital in respondent favour. And also transfer of remaining 4,00,075 shares for the price of Rs.10.00together with interest at 15% per annum from 31/12/2005, subject to fulfillment of earlier agreed conditions.