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1
Sources:
1 http://indiacorplaw.blogspot.in/2015/07/bombay-high-court-on-share-transfer.html
2 https://www.nseindia.com/content/corporate/eq_BAJAJHLDNG_base.pdf
3 Legal Updates Vinod Kothari & Company
Background of the case
Brief chronological details which leads these parties to file case in court
30th june 2002- On the joint request of the Complainant and the defendant CRISIL
carried out a valuation of the shareholding of the defendant in MSL.
April 2002 The defendant considered selling and transferring its 27% shareholding
to the Complainant
9th April 2003 - Addressed a letter offering to sell its 27% shareholding in MSL
(30,85,712 shares) to the Complainant at a price of Rs.232.20/- per share.
2
Sources:
1 http://indiacorplaw.blogspot.in/2015/07/bombay-high-court-on-share-transfer.html
2 https://www.nseindia.com/content/corporate/eq_BAJAJHLDNG_base.pdf
3 Legal Updates Vinod Kothari & Company
3rd May 2003 - In reply thereto, by their letter, the Complainant, under clause 7 of the
Protocol agreement confirmed their interest in buying the shareholding of the
Respondent. It was however stated that the price at which the shares were offered was
not acceptable to the Complainant and therefore, requested that a meeting be called for
by a High Level Committee to carry out official negotiations to reach a fair and
marketable settlement.
7thMay, 2003 - To confirm Complainant whether their letter dated 3rd May, 2003 was
in response to the buy back by the Bajaj Auto Limited.
10th May 2003 -The Complainant confirmed that their letter dated 3 rd May, 2003 was
a response to the offer made by the defendant under clause 7 of the Protocol Agreement
but the price offered was not acceptable to the Complainant and therefore, requested
that a meeting be called for by the High Level Committee to negotiate the price.
6th June 2003 - the Complainant replied that they were not agreeable to the price of
Rs.232.20 per share as demanded by the defendant and offered to purchase the 27%
shareholding of the defendant at the rate of Rs.75/- per equity share.
27th October 2003 -Defendant addressed a letter to the arbitrator requesting him to
accept his appointment as a Sole Arbitrator for the assignment to determine the value of
the shares. This process of price offer and acceptance has been completed and since no
agreement has been reached on the value of the share. The parties involved have to
proceed to appoint a Sole Arbitrator for the purpose. Kindly forward your acceptance to
be appointed as the Sole Arbitrator for this assignment and also communicate the
retainer ship charges and venue suitable to you for the purpose of Arbitration.
29th December 2003- Joint request was made to arbitrator. Cost of Arbitration shall
be fixed by the 'Arbitration Tribunal' in accordance with Sec. 31(8) of the Arbitration
and Conciliation Act 1996. These costs will be shared equally by both parties.
The Arbitrator, after considering all details held in favour of the Complainant provided
the valuation for selling price of Rs.151.63/- per share.
2 https://www.nseindia.com/content/corporate/eq_BAJAJHLDNG_base.pdf
3 Legal Updates Vinod Kothari & Company
shareholders are not violating of the Companies Act, 1956 (the 1956 Act) and that they
can be enforced inter se among shareholders. The dispute arose out of a share transfer
restriction contained in clause 7 of a protocol agreement between Bajaj Auto ltd and
WMDC, which is in the nature of a right of first refusal. A dispute related to the price at
which Bajaj Auto could exercise the right to acquire WMDCs stake. The matter resulted
in arbitration for determination of the price, wherein an award was issued. They appeal
to court that all terms and condition were mention in the agreement under clause 7 of a
protocol agreement. As per the agreement all procedure are followed and all related
documents are submitted in court the judgment should be in favor of Bajaj Auto
Limited. Clause 7 is not binding any free transfer of shares of MSL which are held by
public as they can free trade on stock exchanges only give first right of refusal to Bajaj
Auto ltd as per the terms and condition of agreement. Bajaj Auto has confirmed the
interest to buy shares at proper valuation for which transparent procedure has been
followed.
4
Sources:
1 http://indiacorplaw.blogspot.in/2015/07/bombay-high-court-on-share-transfer.html
2 https://www.nseindia.com/content/corporate/eq_BAJAJHLDNG_base.pdf
3 Legal Updates Vinod Kothari & Company
Judgement and its rationale- Decision of the Bombay High Court in 2015
The Bombay High Court highlighting the provisions of Section 111A and
Section 9 of the Companies Act, 1956 thus held that The provision contained in the law
for the free transferability of shares in a public Company is founded on the principle that
members of the public must have the freedom to purchase and, every shareholder, the
freedom to transfer. The incorporation of a Company in the public, as distinguished
from the private ltd company and same rules cannot be applied. The principle of free
transferability must be given a broad dimension in order to fulfill the object of the law.
Imposing restrictions on the principle of free transferability is a legislative function and
cannot be bind any shareholders in the case of listed company. Section 111A and Section
9 of the companies Act 1956 gives overriding force and effect to the provisions of the
Act, notwithstanding anything to the contrary contained in the Memorandum or
Articles of a Company or in any agreement executed by it or for that matter
in any resolution of the Company in general meeting or of its Board of
Directors. A provision contained in the Memorandum, Articles, Agreement or
Resolution is to the extent to which it is repugnant to the provisions of the Act, regarded
as void.
Bombay high court judgement was relied upon the decision given by the Delhi High
Court in Smt. Pushpa Katoch vs. Manu Maharani Hotels Ltd. Decision of Delhi high
court was based on decision made by Supreme Court in V.B.Rangaraj vs.
Gopalkrishnan The Supreme Court in Rangarajs case has observed that whether
under the Companies Act or the Transfer of Property Act, the shares are transferable
like any other movable property. Restrictions on transferability are valid only if
contained in the companys articles. A private agreement between some shareholders
which contains additional restrictions on transferability is not binding either on the
company or on its shareholders.
5
Sources:
1 http://indiacorplaw.blogspot.in/2015/07/bombay-high-court-on-share-transfer.html
2 https://www.nseindia.com/content/corporate/eq_BAJAJHLDNG_base.pdf
3 Legal Updates Vinod Kothari & Company
Current holdings of Maharashtra Scooters Ltd as on quarter ending
December 2016
BHIL currently holds stake in various group companies such as Bajaj Auto Ltd,
Bajaj Finserv Ltd, Bajaj Auto Holdings Ltd and Maharashtra Scooters Ltd.
6
Sources:
1 http://indiacorplaw.blogspot.in/2015/07/bombay-high-court-on-share-transfer.html
2 https://www.nseindia.com/content/corporate/eq_BAJAJHLDNG_base.pdf
3 Legal Updates Vinod Kothari & Company