Siva Industries and Holdings Ltd v. Tata Teleservices Ltd. & Ors

RAJIV SAHAI ENDLAW, J.

APRIL 26, 2017 "pp".. (corrected & released on 14th October, 2017)

* IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of decision: 26th April, 2017 + CS(COMM) No.246/2017 & IA No.4079/2017 (u/O XXXIX R-1&2 CPC). SIVA INDUSTRIES AND HOLDINGS LTD. ..... Plaintiff Through: Mr. Anirudh Wadhwa, Mr. Akash Chandra Jauhari and Mr. Vipul Kumar, Advs. Versus TATA TELESERVICES LTD. & ORS. ..... Defendants Through: None. CORAM: HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW 1. The plaintiff has instituted this suit pleading, (i) that the plaintiff, by virtue of a Share Subscription Agreement dated 24th February, 2006, subscribed to 520 million shares of defendant no.1 Tata Teleservices Ltd. (TTL) at a Subscription Price of Rs.17/- per share; (ii) pursuant to a rights issue announced by the defendant no.1 TTL in July / August, 2007, the plaintiff subscribed to additional 20.8 million equity shares, increasing its shareholding to 540.8 million shares; (iii) that pursuant to a re-structuring exercise done by the defendant no.1 TTL, plaintiff"s shareholding stands at 270.4 million shares of Rs.34/- each, representing 8.19% of the total paid-up equity capital of defendant no.1 TTL; (iv) the defendant no.1 TTL and the defendant no.2 Tata Sons Ltd. (TSL) issued and allotted 84,38,79,801 equity shares of defendant no.1 TTL representing about 20% of the post-issue paid up equity capital to the defendant no.3 NTT Docomo Inc. (Docomo); (v) defendant no.3 Docomo also entered into Secondary Share Purchase Agreements with other existing shareholders of the defendant no.1 TTL including the plaintiff, defendant no.2 TSL and group companies of defendant no.2 TSL; (vi) consequent thereto, shareholding of the defendant no.3 Docomo constituted 26% of the post-issue paid up equity capital of defendant No.1 TTL; (vii) on 25th March, 2009, defendant no.1 TTL and defendant no.2 TSL executed a Shareholders Agreement with defendant no.3 Docomo as regards inter se rights, obligations and duties with respect to defendant no.3 Docomo"s shareholding in defendant no.1 TTL; (viii) on the same day, the plaintiff also executed an inter se Agreement with the defendant no.1 TTL and defendant no.2 TSL, agreeing to indemnify certain losses that the defendant no.1 TTL and defendant no.2 TSL may suffer on account of certain claims that could be made by the defendant no.3 Docomo under the Shareholders Agreement dated 25th March, 2009; (ix) that the Shareholders Agreement dated 25th March, 2009 between defendant no.1 TTL and defendant no.2 TSL on the one hand and defendant no.3 Docomo on the other hand provides for an exit (put) option at an assured / pre-determined price, inter alia providing that in the event of failure of defendant no.1 TTL to achieve certain performance indicators, the defendant no.3 Docomo would have a right to divest its shareholding at a pre-determined price; (x) that the inter se Agreement Dated 25th March, 2009 between the plaintiff on the one hand and the defendant no.1 TTL and defendant no.2 TSL on the other hand, without any consideration and /or on a mistaken and erroneous basis provides for indemnification by the plaintiff to the defendant no.1 TTL and defendant no.2 TSL of the losses suffered by them as a result of any indemnification claim made by the defendant no.3 Docomo; (xi) that on account of gross mismanagement of defendant no.1 TTL by the defendant no.2 TSL and defendant no.3 Docomo, the defendant no.1 TTL failed to achieve the key performance indicators and which caused grave prejudice to the legal rights of the plaintiff as a minority shareholder; (xii) on 25th April, 2014, on account of failure of the defendant no.1 TTL to meet the performance indicators as set out in the Shareholders Agreement dated 25th March, 2009, the defendant no.3 Docomo informed the defendant no.1 TTL and defendant no.2 TSL about its election to exercise its sale option and requested the defendant no.1 TTL and defendant no.2 TSL to acquire its shareholding in the defendant no.1 TTL for a consideration of 50% of the acquisition price, amoun