045A

IN THE HON’BLE SUPREME COURT OF GONDOR

AT MUMBA

IN THE MATTERS OF

CIVIL APPEAL NO. 4997/2023

SKYWALKER PVT. LTD.……………………………………………...…...…. APPELLANT

(REPRESENTED BY THE CEO, SKYWALKER PVT. LTD.)

V.

WAYSTAR ROYCO PLC………………………………………...…………….…RESPONDENT

(REPRESENTED BY THE CEO, WAYSTAR ROYCO PLC)

[Under Section 50 of the Arbitration and Conciliation Act, 1996 read with Order XIX of the

Civil Procedure Code, Rule 3 of the Supreme Court Rules, 2013]

Clubbed with

CIVIL APPEAL NO. 1234/2023

M/S IRON BANK AND FINANCIAL SERVICES (GONDOR) (P) LTD.

…………….......APPELLANT

(REPRESENTED BY THE CEO, M/S IRON BANK AND FINANCIAL SERVICES)

V.

M/S MINAS GROUP ENTERPRISES & ORS.

…………………………………........RESPONDENT
 (REPRESENTED BY THE CEO, M/S MINAS GROUP ENTERPRISES)

[Under Section 423 of The Corporation Act read with Order XIX of the Civil Procedure

Code, Rule 3 of the Supreme Court Rules, 2013]

THE ABOVE MATTERS HAVE BEEN CLUBBED UNDER ARTICLE 142 OF THE CONSTITUTION

OF GONDOR, READ WITH RULE 5 OF ORDER LV OF THE SUPREME COURT RULES, 2013

MEMORIAL ON BEHALF OF THE APPELLANTS

INDEX OF AUTHORITIES......................................................................................................v

STATEMENT OF FACTS.....................................................................................................viii

STATEMENT OF JURISDICTION..........................................................................................x

ISSUES FOR CONSIDERATION...........................................................................................xi

SUMMARY OF ARGUMENTS.............................................................................................xii

ARGUMENTS ADVANCED.................................................................................................14

I. The Emergency Arbitrator’s Award cannot be enforced/ confirmed by the Main

Tribunal considering the nature of the directions.................................................................14

A. The emergency arbitrator’s decision takes the form of an order...............................14

B. Limited scope of Emergency Arbitrator’s decision due to time constraints and the

addressal of only immediate issues...................................................................................15

C. Ambiguous nature of directions given by the Emergency Arbitrator.......................16

II. The MDLA2 stood terminated on 1 January 2020........................................................17

D. The agreement is deemed to be considered expired after the completion of 5 years’

term...................................................................................................................................17

E. The conduct of respondents indicates their intention to bring an end to their

obligations under MDLA2................................................................................................18

III. The Appellate Tribunal overreached its discretionary power in entertaining the

application under section 241 of the Corporation Act, 2013................................................19

iii
 F. The respondents do not fulfil the threshold requirements under Section 244 in order

to get a relief under Section 241 of the act as no case for oppression has been made out19

G. The respondents do not qualify to get a waiver under Section 244 of the Act..........21

IV. The Share Transfer Agreement between Minas Group (Holding Company), Beksak

Corporation Ltd and Mr. Elrond Wayne should not be considered a valid agreement........24

H. The share transfer agreement between the respondents violate the articles of the

company and hamper the principle of according primacy to articles of association over

the shareholder agreement................................................................................................24

I. The interconnection between contractual freedom, privity of contract and unilateral

transfer of shares...............................................................................................................27

PRAYER FOR RELIEF...........................................................................................................28

iv
 INDEX OF AUTHORITIES

Cases

Amazon.com NV Investment Holdings LLC v. Future Retail and Ors., (2022) 1 SCC 209...15

Elder v. Elder and Watson Ltd., 1952 SC 49...........................................................................19

Food Corp. of India v. Surana Commercial Co. (2003) 8 SCC 636........................................17

Griesheim GMbH v. Goyal MG Gases Pvt. Ltd. And Ors., 2009 SCC OnLine Del 4408......26

II & FS Trust Company Ltd. v. Birla Perucchini Ltd., 2002 SCC OnLine Bom.....................25

Jithendra Parlapalli v. Wirecard India Pvt. Ltd. and others, 2021 SCC OnLine NCLT 14939.

..............................................................................................................................................20

Kasturi & Sons Ltd. v. Sporting Pastime India Ltd., 2017 SCC OnLine NCLT 767..............26

Mafatlal Industries Ltd. v. Gujarat Gas Co. Ltd. And Ors., 1997 SCC OnLine Guj 195........25

Rajendra Kumar Tekriwal v. Unique Construction (P) Ltd., (2016) 16 SCC 93.....................26

Shanti Prasad Jain v. Kalinga Tubes Ltd., (1965) 2 SCR 720.................................................19

Sidharth Gupta and Ors. v. Getit Infoservices Private Limited and Ors., 2016 SCC OnLine

CLB 26.................................................................................................................................25

Suresh Kumar Jalan v. Eastcoast Steel Limited, 2019 SCC OnLine Mad 23940....................20

Syed Musharraf Mehdi and Another v. Frontline Soft Limited And Ors., 2006 SCC OnLine

CLB 18.................................................................................................................................20

Tata Consultancy Services Ltd. v. Cyrus Investment (P) Ltd., (2021) SCC 499.........21, 22, 23

V.B. Rangaraj v. V.B. Gopalakrishnan, (1992) 1 SCC 160.....................................................25

v
V.S. Krishnan v. Westfort Hi-tech Hospital Ltd., (2008) 3 SCC 363................................19, 20

Vodafone International Holdings BV v. Union of India, (2012) 341 ITR 1 (SC).............25, 26

Statutes

Indian Arbitration and Conciliation Act, 1996........................................................................14

Schedule I, Tables F to G, The Companies Act 2013..............................................................24

Section 2(5), The Companies Act, 2013..................................................................................24

Section 2(68), The Companies Act, 2013................................................................................27

Section 2(h), The Indian Contract Act, 1872...........................................................................17

Section 241, The Companies Act, 2013.............................................................................19, 20

Section 244, The Companies Act, 2013.............................................................................20, 21

Section 37, The Indian Contract Act, 1872..............................................................................17

Section 5(1), The Companies Act, 2013..................................................................................24

Section 56, The Companies Act, 2013.....................................................................................27

Section 88, The Companies Act, 2013.....................................................................................21

Reports

Law Commission of India, Report No. 246 on Amendments to the Arbitration and

Conciliation Act, 1996..........................................................................................................14

Rules

Appendix V, Article 5(2), 2021 Arbitration Rules, International Chamber of Commerce.....15

Article 28, 2021 Arbitration Rules, International Chamber of Commerce..............................14

vi
Article 29(2), 2021 Arbitration Rules, International Chamber of Commerce.........................14

Article 29(3), 2021 Arbitration Rules, International Chamber of Commerce...................14, 15

Article 5(2), Appendix V, 2021 Arbitration Rules, International Chamber of Commerce.....15

Article 6(1), Appendix V, 2021 Arbitration Rules, International Chamber of Commerce.. . .14,

15

Article 6(4), Appendix V, 2021 Arbitration Rules, International Chamber of Commerce.....15

Article 6(6)(c), Appendix V, 2021 Arbitration Rules, International Chamber of Commerce. 15

Articles

Shriya Mishra, Sehar Sethi & Pragya Chhabria, Conflict between the Shareholder's

Agreement and Articles of a Company, 5 INT'l J.L. MGMT. & HUMAN. 1893 (2022).. .24

Other Authorities

Article 33(1), Annexure – B, Proposition, The Summer Intra-University Moot Court

Competition, 2023................................................................................................................26

Article 4.3(c), UNIDROIT Principles of International Commercial Contracts, 2016.............18

Clause 1.3, Annexure – A, Proposition, The Summer Intra-University Moot Court

Competition, 2023................................................................................................................18

Clause 13.1, Annexure – A, Proposition, The Summer Intra-University Moot Court

Competition, 2023................................................................................................................17

Proposition, The Summer Intra-University Moot Court Competition, 2023...............17, 18, 24

vii
 STATEMENT OF FACTS

1) Skywalker, an established company in Gondor developing hardware and Software

technology for medical devices enters into a JV with Waystar Royco (UK). They enter into

MDLA1 (2010-2015) and MDLA2 (2015-20) to facilitate grant of technology for medical

devices. 

2) While MDLA1 limited to medical devices, MDLA2 also included background vehicle

designs and export was limited to only some countries. 

3) Grant was based on submission of royalty report and its payment at 4%, 2% for medical

devices and vehicle devices respectively. 

4) Gondor branch dealt with manufacture of interiors whereas UK with medical devices.

5) By early 2019, it was realised that JV cannot continue and split agreement was negotiated.

The functioning of Gondor branch was with Skywalker and UK was with Waystar. 

6) However, Skywalker stopped royalty payment and report after 1 July 2020 and waystar

started exporting the devices in other regions as well.

7) On 19 March 2021, Waystar sent the termination letter and filed for emergency arbitration

and main arbitrational simultaneously. 

8) Emergency Arbitration held against Skywalker and stopped Waystar from exporting till

Main Tribunal is constituted. Emergency Arbitration’s Award was upheld by the Main.

Hence, this second appeal by Skywalker.

9) Minas Group Enterprises (Holding Company) was a JV entered into by OSCORP and

Minas Tirth, wholly owned subsidiary is Iron Bank. The distribution of shares is 60% by

Holding Company, 28.5% by Mr. Elessar, and 11.5% by Mr. Baggins.

10) In 2019, the Federal Bank of Gondor enacted NDI Rules, requiring a maximum foreign

interest of 49% in companies. Due to a deadlock between the Holding Company and Iron

Bank w.r.t new regulation, Mr. Elessar proposed a resolution for issuance of new shares.

viii
11) Meanwhile, on 6th June, 2020, the Holding Company entered into STA with Beksak and

Mr. Wayne transferring 18% of its shares each. No intimation was provided regarding the

same.

12) Issuance of new shares not only diluted Holding Company interest to 9.6%, but also did

not include Beksak and Mr. Wayne.

13) Holding Company, and the two, therefore, filed an application under S.241 of

Corporation Act for oppressive behaviour and for recognition of STA, while Iron Bank

refused to recognize the STA due to shares not being offered to the existing shareholders

before others. 

14) The application was rejected on grounds of maintainability by NCLT, while NCLAT

decided in the Holding Company’s favour.

ix
 STATEMENT OF JURISDICTION

The Appellants most humbly and respectfully submits to the jurisdiction of the Hon’ble

Supreme Court of Gondor and accepts that this court has the jurisdiction to hear the matters

of:

1) Civil Appeal no. 4997/2023, filed by Skywalker under Section 50 of the Arbitration and

Conciliation Act, 1996, read with Order XIX of the Civil Procedure Court, Rule 3, of the

Supreme Court Rules, 2013.

2) Civil Appeal no. 1234/2023, filed by Iron Bank under Section 423 of the Corporation Act,

2013, read with Order XIX of the Civil Procedure Court, Rule 3, of the Supreme Court Rules,

2013.

The above matters have been clubbed under Article 142 of the Constitution of Gondor, Rule

5, Order LV of the Supreme Court Rules, 2013.

x
 ISSUES FOR CONSIDERATION

I. Whether the Emergency Arbitrator’s Award can be enforced/ confirmed by the Main

Tribunal considering the nature of the directions?

II. Whether the MDLA2 stood terminated on 1 January 2020 or on 19 March 2021 (on

account of alleged repudiatory breaches)?

III. Whether, the Appellate Tribunal overreached its discretionary power in entertaining

the application under section 241 of the Corporation Act, 2013?

IV. Whether Share Transfer Agreement between Minas Group (Holding Company),

Beksak Corporation Ltd and Mr. Elrond Wayne, be considered as a valid agreement?

xi
 SUMMARY OF ARGUMENTS

I. The Emergency Arbitrator’s Award cannot be enforced/confirmed by the Main

Tribunal considering the nature of directions.

The award given by the emergency arbitrator had a limited scope and it should not be

automatically enforced by the Main Tribunal because the emergency arbitrator had only

addressed the immediate issue of Royalty payments and royalty reports, without taking into

consideration the termination of MDLA2.

I. The MDLA2 stood terminated on 1 January 2020 on account of the expiration of

the five-year term

The termination occurred upon the expiry of the initial term of the MDLA2, as agreed by the

parties in the contract. Hence, MDLA2 stands terminated on 1st January 2020

II. The Appellate Tribunal overreached its discretionary power in entertaining the

application under section 241 of the Corporation Act, 2013

The Appellate Tribunal has overreached its discretionary powers as the applicant are not

members of the concerned company, the proposed application under section 241 fails to

establish a prima facie case for 'oppression and mismanagement'. Also, there do not exist any

exceptional circumstances that justify granting a 'waiver' for members to file an application

under section 241.

IV. The Share Transfer Agreement between Minas Group (Holding Company), Beksak

Corporation Ltd and Mr. Elrond Wayne should not be considered as a valid agreement

The share transfer agreement between Minas Tirth, Beksak Corporation Ltd. And Mr. Elrond

Wayne was executed without proper authorization or notice to Iron Bank, in contravention to

the Articles of Association, as stated above. The unilateral transfer of shares without the

xii
knowledge of the company’s board amounts to fraudulent conduct and violates the principle

of transparency and proper corporate governance.

xiii
 ARGUMENTS ADVANCED

I. The Emergency Arbitrator’s Award cannot be enforced/ confirmed by the

Main Tribunal considering the nature of the directions.

The Appellant submits that, due to the nature of the directives, inherent limits and time

constraints involved with emergency arbitration, the Main Tribunal cannot execute the

Emergency Arbitrator's Award.

The Indian Arbitration and Conciliation Act, 19961 does not contain any provisions in respect

of an emergency arbitrator or an emergency orders or awards. The 246th Law Commission

Report in 20142, on amendments to the Arbitration and Conciliation Act, 1996 3, made an

attempt to legislatively recognize emergency arbitration in India.4

A. The emergency arbitrator’s decision takes the form of an order

According to Art. 29(2)5 of the ICC Rules, the emergency arbitrator's decision shall take the

form of an order. It has been defined in Article 6(1) of the Appendix V. 6 Unlike the arbitral

tribunal pursuant to Article 287, the emergency arbitrator cannot grant relief in the form of an

award. Article 29(3)8 states that the emergency arbitrator's order does not bind the arbitral

tribunal with respect to any question, issue or dispute determined in the Order.

1
Indian Arbitration and Conciliation Act, 1996.
2
Law Commission of India, Report No. 246 on Amendments to the Arbitration and
Conciliation Act, 1996.
3
Supra Note 1.
4
Aakanksha Luhach and Varad S. Kolhe, Emergency Arbitration in India: A bellwether for
the grant of interim reliefs, 1 IALR (2019) 137.
5
Article 29(2), 2021 Arbitration Rules, International Chamber of Commerce.
6
Article 6(1), Appendix V, 2021 Arbitration Rules, International Chamber of Commerce.
7
Article 28, 2021 Arbitration Rules, International Chamber of Commerce.
8
Article 29(3), 2021 Arbitration Rules, International Chamber of Commerce.
14
Where the arbitral tribunal leaves the emergency arbitrator's Order untouched, Art. 6(6)(c) of

Appendix V9 provides that the order ceases to be binding on the parties upon the arbitral

tribunal's final award, unless the arbitral tribunal expressly decides otherwise.

Moreover, the emergency arbitrator’s decision, in consideration of the judgment of the

Supreme Court in Amazon.com NV Investment Holdings LLC v. Future Retail and Ors. 10, is

clearly recognized as an ‘interim order’ and not ‘award’.

B. Limited scope of Emergency Arbitrator’s decision due to time constraints and

the addressal of only immediate issues

The award given by the emergency arbitrator had a limited scope and it should not be

automatically enforced by the Main Tribunal because the emergency arbitrator had only

addressed the immediate issue of Royalty payments and royalty reports, without taking into

consideration the termination of MDLA2.

Emergency arbitration was conducted virtually in accordance with Appendix V, Article 5(2)11

with the aim of providing interim relief. Article 29(3) of the ICC Rules 2021 states that “The

emergency arbitrator’s order shall not bind the arbitral tribunal with respect to any question,

issue or dispute determined in the order. The arbitral tribunal may modify, terminate or

annul the order or any modification thereto made by the emergency arbitrator.”12

The time limits imposed by the ICC Rules for rendering an emergency arbitrator’s decision,

namely fifteen days13, inherently restrict the parties ability to present their evidentiary and

legal arguments comprehensively. Within such a timeframe, the emergency arbitrator lacks

9
Article 6(6)(c), Appendix V, 2021 Arbitration Rules, International Chamber of Commerce.
10
Amazon.com NV Investment Holdings LLC v. Future Retail and Ors., (2022) 1 SCC 209.
11
Article 5(2), Appendix V, 2021 Arbitration Rules, International Chamber of Commerce.
12
Supra Note 8.
13
Article 6(4), Appendix V, 2021 Arbitration Rules, International Chamber of Commerce.

15
the capacity to engage in a thorough and exhaustive examination of the complex merits of a

case.

C. Ambiguous nature of directions given by the Emergency Arbitrator

The aim of emergency arbitration is to provide interim relief to the parties. The order given

by the emergency arbitrator is considered to be provisional. The emergency arbitrator

mandated specific performance, i.e. payment of royalties and royalty reports. Hence, the main

tribunal should first delve into the complex legal issues involved.

As the nature of directions give no conclusive remarks regarding the continuation or

termination of MDLA2, it can be considered to be ambiguous. The directions of the

emergency arbitrator were meant to guide the parties in maintenance of a status quo until the

Main Tribunal was constituted, evident from the fact that the arbitrator left it to the discretion

of the Main Tribunal to give a conclusion upon the matter of exports.

Hence, the appellant submits that given the inherent limitations of time and scope in an

emergency arbitration, attempting to enforce an Emergency Arbitrator's Award as a

substantive determination of the main dispute's merits would be contrary to the very purpose

of this expedited measure.

16
 II. The MDLA2 stood terminated on 1 January 2020.

The MDLA2 was deemed to stay in effect for a stipulated period of 5 years i.e., until

1st January, 2020; following which the agreement stood expired. Hence, the appellant submits

that the MDLA2 stood terminated on 1st January 2020.

D. The agreement is deemed to be considered expired after the completion of 5

years’ term

The extension of the period of MDLA2 was subject to a discussion on the issue of extension

6 months before to its expiration14, i.e., before July 1st, 2019. However, any discussion on the

extension occurred during and after August, 2019, when the option to extend the Agreement

was no longer available. It is expressly mentioned that the Agreement shall remain in force

till 1st January, 2020.15 Herein, no measures were taken for the extension of the term of

MDLA2 and there ought to be termination on account of the expiration of 5 years.

Moreover, a contract, being a legally binding document 16, establishes a legal duty that

continues until fulfilled. Section 37 of the Gondoran Contract Act, 187217 outlines the

fundamental rule that all parties involved in a contract are obliged to carry out their promises.

The courts have previously stated that in a situation where the initial agreement was to

transform the whole arhar into dal, and the delivery and acceptance of dal occurred, the

obligations from the agreement were fulfilled.18 The continued manufacture or production of

the products does not imply continuance of the Agreement, merely preservation of the status

quo. The fact that the appellant refrained from providing royalty reports signifies a deliberate

act indicative of the intent not to adhere to the terms of MDLA2 after its expiration. Even

14
Clause 13.1, Annexure – A, Proposition, The Summer Intra-University Moot Court
Competition, 2023.
15
Supra Note 14.
16
Section 2(h), The Indian Contract Act, 1872.
17
Section 37, The Indian Contract Act, 1872.
18
Food Corp. of India v. Surana Commercial Co. (2003) 8 SCC 636.
17
though the Split Agreement talks about maintenance of the status quo, the same doesn’t

equate to extension of or non-termination of the MDLA2. The only objective of the Split

Agreement is to preserve the status quo until the eventual split of the joint venture.

E. The conduct of respondents indicates their intention to bring an end to their

obligations under MDLA2.

The duration of MDLA2 was from 2015 to 2020. The termination occurred upon the expiry

of the initial term of the MDLA2, as agreed by the parties in the contract.

When determining the parties’ intention, the conduct exhibited by the parties after conclusion

of the agreement must be taken into consideration. 19 The breach of provisions of the MDLA2

regarding restricted export ascertains an expiration of the agreement. The action breached the

provisions related to sale of ‘Licensed Products’ outside of the ‘Licensed Territory’ without

discretion of Skywalker Pvt. Ltd.20.

Moreover, the parties agreed to have a conversation about extending the duration of the

MDLA2 6 months before it reaches the end. Finally, in August 2019, the parties decided that

the joint venture cannot persist further and that a split needs to be discussed. 21 It is clear from

the conduct ad intention of both the parties, which can be seen from the letters exchanges

between them, that they wanted to end the contract.

Hence, MDLA2 stands terminated on 1st January 2020, i.e. at the end of its term.

19
Article 4.3(c), UNIDROIT Principles of International Commercial Contracts, 2016.
20
Clause 1.3, Annexure – A, Proposition, The Summer Intra-University Moot Court
Competition, 2023.
21
Proposition, The Summer Intra-University Moot Court Competition, 2023.
18
 III. The Appellate Tribunal overreached its discretionary power in entertaining

the application under section 241 of the Corporation Act, 2013.

The appellant most humbly submits that the appellate tribunal has overreached its

discretionary power while entertaining the applications by the Holding Company under

Section 241 of the Corporations Act, 2013.22

F. The respondents do not fulfil the threshold requirements under Section 244 in

order to get a relief under Section 241 of the act as no case for oppression has

been made out

Law doesn’t define oppression and it is upto courts to determine on facts of each case. 23 The

Supreme Court has approved the meaning of “oppression” as explained by Lord Cooper24:

“The conduct complained of, should at least involve a visible departure from the standards of

their dealing and violations of conditions of fair play on which every shareholder who

entrusts his money to company, is entitled to rely. The complaining member must show that

he is suffering from oppression in his capacity as a member but not in any other capacity. To

constitute oppression, persons concerned with the management of the company’s affairs

must, in connection thereof, be guilty of fraud, misfeasance or misconduct towards the

members”25

Moreover, the Supreme Court determined in V.S. Krishnan v. Westfort Hi-tech Hospital Ltd.26

and upheld in Ram Parshotam Mittal v. Hotel Queen Road Pvt. Ltd. 27 and Suresh Kumar

Jalan v. Eastcoast Steel Limited28 that oppression would be established when:

22
Section 241, The Companies Act, 2013.
23
Shanti Prasad Jain v. Kalinga Tubes Ltd., (1965) 2 SCR 720.
24
Elder v. Elder and Watson Ltd., 1952 SC 49.
25
Id.
26
V.S. Krishnan v. Westfort Hi-tech Hospital Ltd., (2008) 3 SCC 363.
27
Ram Parshotam Mittal v. Hotel Queen Road Pvt. Ltd., (2019) 20 SCC 326.
28
Suresh Kumar Jalan v. Eastcoast Steel Limited, 2019 SCC OnLine Mad 23940.
19
“(a) Where the conduct is harsh, burdensome and wrong. (b) Where the conduct is mala fide

and is for a collateral purpose where although the ultimate objective may be in the interest of

the company, the immediate purpose would result in an advantage for some shareholders vis-

à-vis the others…”29

It has also been held that- “The person complaining of oppression must show that he has

been constrained to submit to a conduct which lacks in probity, conduct which is unfair to

him and which causes prejudice to him in the exercise of his legal and proprietary rights as

shareholders.”30

Moreover, it has also been held that the requirement of requisite percentage is vital and go to

the root of the matter, and therefore, cannot be directory. 31 An individual complaining of the

acts of oppression and mismanagement must be qualified as per section 244 32 to raise a cause

of action under Section 24133 of the act.34

In the present factual matrix, in order to have to right to apply for appeal, the Holding

Company would have to collectively own no less than one tenth of the issue share capital of

the company. On August 31st 2020, following the private allotment of shares, all according to

the rules and in compliance with the Articles of Association, in order to comply with the

government orders, the interest of the holding Company in Iron Bank had been reduced from

60% to 9.6%, i.e. the Holding Company has less than one tenth of the share capital of the

company.

29
Supra Note 26.
30
Needle Industries (India) Ltd. v. Needle Industries Newey (India) Holding Ltd., (1981) 3
SCC 333.
31
Syed Musharraf Mehdi and Another v. Frontline Soft Limited And Ors., 2006 SCC OnLine
CLB 18.
32
Section 244, The Companies Act, 2013.
33
Supra Note 22.
34
Jithendra Parlapalli v. Wirecard India Pvt. Ltd. and others, 2021 SCC OnLine NCLT
14939.
20
Therefore, Holding Company has no locus standi to file an application seeking relief from the

Appellate Tribunal for oppression under section 241.

G. The respondents do not qualify to get a waiver under Section 244 of the Act

The proviso of section 244(1)35 empowers the Appellate Tribunal with the authority to

potentially waive any of the aforementioned eligibility criteria under justifiable circumstances

The court has correctly pointed out that: “Such order of ‘waiver’ being judicial in nature,

cannot be passed by Tribunal, in a capricious or arbitrary manner and can be passed only by

a speaking and reasoned order after notice to the respondent(s). The basic principle of

justice delivery system is that a court or a Tribunal while passing an order is not only

required to give good reason based on record/evidence but also required to show that after

being satisfied itself the Court/ Tribunal has passed such order. To form an opinion as to

whether the application merits waiver, the Tribunal is not only required to form its opinion

objectively, but also required to satisfy itself on the basis of pleadings/evidence on record as

to whether the proposed application under Section 241 merits consideration.”36

The respondents do not qualify the test given in the landmark case of Tata Consultancy

Services Ltd. v. Cyrus Investment (P) Ltd.37 to get a waiver.

a) THE APPLICANTS ARE NOT THE MEMBERS OF IRON BANK

Section 8838 of the Corporations Act mandates every company to keep and maintain a register

of members, indicating the class of shares held by them. In the present factual case, the

holding company is a member of Iron Bank and holds 9.6% of the total shares. However, the

transfer of the shareholding from the holding company to the other two implicated parties,

namely Beksak and Mr. Wayne had not been intimated to Iron Bank and nor had the STA

35
Supra Note 32.
36
Tata Consultancy Services Ltd. v. Cyrus Investment (P) Ltd., (2021) SCC 499.
37
Id.
38
Section 88, The Companies Act, 2013.
21
between the three parties been shared with Iron bank. Hence, Beksak and Mr. Wayne were

not listed on the revised list of shareholders and are not eligible to apply for a waiver

application.

b) THERE IS NO PRIMA FACIE CASE MADE UNDER SECTION 241 WITH

RESPECT TO OPPRESSION AND MISMANAGEMENT FACED BY THE

HOLDING COMPANY

The decision to issue new shares through a rights issue was made by the Board of Directors

of Iron Bank, with the participation of Mr. Elessar as well as Ms. Eldarion. This decision was

within the company's authority and aligned with the Articles of Association. The holding

company has failed to provide specific instances or concrete evidence of oppression or

mismanagement conduct by Iron Bank. Iron Bank's actions, i.e. the issuance of new shares

and the rights issue, were carried out with regulatory approval, including compliance with the

Federal Bank's directives. This suggests a legitimate effort by Iron Bank to adhere to legal

requirements and maintain transparency. Therefore, there is no prima facie case for the

holding company's claim of oppression and mismanagement under section 241 against Iron

Bank. The lack of specific allegations, the absence of harm to minority shareholders,

compliance with regulatory guidelines, and proper corporate procedures collectively weaken

the basis for such claims.

c) NO PREVIOUS MEMBER HAS ALREADY RAISED AND RESOLVED SIMILAR

ALLEGATIONS OF OPPRESSION AND MISMANAGEMENT

The Tribunal must ensure that no applications making out similar allegations of oppression

and mismanagement by other members stand decided.39 It is evident from the present factual

matrix that no such allegation of oppression and mismanagement had been raised against Iron

39
Supra Note 36.
22
Bank. Therefore, the essential of no previous raising and resolution to similar allegations of

‘oppression and mismanagement’ has not been fulfilled.

d) EXCEPTIONAL CIRCUMSTANCES DO NOT EXIST IN THIS CASE

The act of granting a waiver constitutes a departure from the main rule outlined in section

244. The Tribunal's decision to provide a waiver is a judicial action, imposing an obligation

on the Tribunal to provide a well-founded explanation in its order, elucidating the reasons

that validate the exceptional grant of waiver.40

Hence, the appellant most humbly submits that the Appellate tribunal failed to provide a

reason for waiving off the requirement of one tenth of the shareholding Therefore, the

Appellate Tribunal has overreached its discretionary powers as in the present case, the

applicant(s) are not members of the concerned company, the proposed application fails to

establish a prima facie case for 'oppression and mismanagement' and there do not exist any

exceptional circumstances that justify granting a 'waiver' for members to file an application

under section 241.

Hence, the appellant submits that the Appellate Tribunal exceeded its jurisdiction by

considering the respondents’ application as the procedural prerequisites of Section 241 and

Section 244 have not been met.

40
Supra Note 36.
23
 IV. The Share Transfer Agreement between Minas Group (Holding Company),

Beksak Corporation Ltd and Mr. Elrond Wayne should not be considered a

valid agreement.

On 6th June 2020, the Holding Company entered into a Share Transfer Agreement with

Beksak and Mr. Elrond Wayne, wherein it agreed to transfer a total 36% of its shareholding

in Iron Bank to Beksak and Mr. Wayne (which was to be divided equally amongst both). 41

Whereas, no intimation of the same had been given to any Board Member of Iron Bank or the

resident shareholders.42

H. The share transfer agreement between the respondents violates the articles of the

company and hampers the principle of according primacy to articles of

association over the shareholder agreement

According to Section 2(5) of The Act, “articles means the articles of association of a

company as originally framed or as altered from time to time or applied in pursuance of any

previous company law or of this act.”43 Section 5(1) states that "The articles of a company

shall contain the regulations for management of the company.”44 The Act prescribes that the

content of the Articles must provide for the calls, transfer, transmission and forfeiture of

shares.45 The Shareholder's agreement is an agreement which is private in nature, whereas the

Articles of Association of the Company is a public document which is a part of the

constitution of the company.46

It has been held by the courts that: “These provisions of the Act make it clear that the Articles

of Association are the regulations of the company binding on the company and its
41
Supra Note 21.
42
Supra Note 21.
43
Section 2(5), The Companies Act, 2013.
44
Section 5(1), The Companies Act, 2013.
45
Schedule I, Tables F to G, The Companies Act 2013.
46
Shriya Mishra, Sehar Sethi & Pragya Chhabria, Conflict between the Shareholder's
Agreement and Articles of a Company, 5 INT'l J.L. MGMT. & HUMAN. 1893 (2022).
24
shareholders and that the shares are a movable property and their transfer is regulated by

the Articles of Association of the company.”47

The Bombay High Court reaffirmed this position and held it would be applicable in respect of

any conflicts between AOA and Shareholders agreement. 48 It has also been held that “articles

alone govern the relationship between parties, breach of any of articles amount to oppression

and mismanagement.”49

It has been established that in order to uphold the clause of the Shareholder's agreement

which restricts the Shareholder's right to transfer the shares, should be incorporated in the

Articles of Association for it to have a binding force.50 The same was upheld in cases such as

Mafatlal Industries Ltd. v. Gujarat Gas Co. Ltd. And Ors. 51 and IL& FS Trust Co. Ltd. v.

Birla Perucchini Ltd.52

The courts have held that "Shareholders can enter into any agreement in the best interest of

the company, but the only thing is that the provisions in the SHA shall not go contrary to the

Articles of Association. The essential purpose of the SHA is to make provisions for proper

and effective internal management of the company. It can visualize the best interest of the

company on diverse issues and can also find different ways not only for the best interest of

the shareholders, but also for the company as a whole.”53

47
V.B. Rangaraj v. V.B. Gopalakrishnan, (1992) 1 SCC 160.
48
II & FS Trust Company Ltd. v. Birla Perucchini Ltd., 2002 SCC OnLine Bom.
49
Sidharth Gupta and Ors. v. Getit Infoservices Private Limited and Ors., 2016 SCC OnLine
CLB 26.
50
Vodafone International Holdings BV v. Union of India, (2012) 341 ITR 1 (SC).
51
Mafatlal Industries Ltd. v. Gujarat Gas Co. Ltd. And Ors., 1997 SCC OnLine Guj 195.
52
Supra Note 48.
53
Supra Note 47.
25
The same has been upheld in various cases like Rajendra Kumar Tekriwal vs. Unique

Construction54, Griesheim GMBH v. Goyal MG Gases Pvt. Ltd. & Ors. 55 and Kasturi & Sons

Ltd. v. Sporting Pastime India Ltd.56

Moreover, it has also been stated that “Provisions of the SHA may also go contrary to the

provisions of the Articles of Association, in that event, naturally provisions of the Articles of

Association would govern and not the provisions made in the SHA.” 57 "The shareholders can

enter into any agreement in the best interest of the company, but the only thing is that the

provisions in the SHA shall not go contrary to the AOA.”58

Article 33(1) of the Articles explicitly states that, “In the event that any of the shareholders

(the “Selling Party”) desires to sell, pledge, encumber or otherwise deal with the shares it

holds in the Company, it shall first make an offer to the other parties (the “Receiving

Parties”) at a proposed price (the “Offered Price).” 59 The Holding Company disregarded this

provision by directly selling the shares to a third party without first extending the offer to the

existing shareholders as mandated by the Articles.

Hence, the articles of association of Iron Bank hold precedence over any private agreements,

such as the Share Transfer Agreement between Minas Tirth, Beksak Corporation Ltd. And

Mr Elrond Wayne. Therefore, the agreement is invalid.

54
Rajendra Kumar Tekriwal v. Unique Construction (P) Ltd., (2016) 16 SCC 93.
55
Griesheim GMbH v. Goyal MG Gases Pvt. Ltd. And Ors., 2009 SCC OnLine Del 4408.
56
Kasturi & Sons Ltd. v. Sporting Pastime India Ltd., 2017 SCC OnLine NCLT 767.
57
Supra Note 50.
58
Supra Note 50.
59
Article 33(1), Annexure – B, Proposition, The Summer Intra-University Moot Court
Competition, 2023.
26
 I. The interconnection between contractual freedom, privity of contract and

unilateral transfer of shares

Section 2(68)60 mandates a Private Company to impose restrictions on the transfer of its

shares through its articles. Ensuring a proper legal transfer necessitates compliance with the

stipulations or limitations set forth in the Articles of Association by the transferor, transferee,

and the concerned company.

The Share Transfer Agreement cannot be enforced against the Iron Bank since it was not a

party to the agreement. The agreement was between Minas Tirth, Beksak Corporation Ltd.

And Mr. Elrond Wayne, and thus, its terms cannot be imposed on the Iron Bank. Moreover,

the respondents has provided no intimation, as required under Section 56 of the act.61

The share transfer agreement was executed without proper authorization or notice to Iron

Bank, in contravention to the Articles of Association. The unilateral transfer of shares

without the knowledge of the company’s board amounts to fraudulent conduct and violates

the principle of transparency and proper corporate governance.

Hence the appellant pleads that the Share Transfer Agreement dated 6th June 2020 should not

be considered a valid share transfer agreement.

60
Section 2(68), The Companies Act, 2013.
61
Section 56, The Companies Act, 2013.
27
 PRAYER FOR RELIEF

Wherefore, in light of the facts stated, issues raised, authorities cited and arguments

advanced, it is most humbly and respectfully prayed that this Honorable Court may be

pleased:

 To declare that the Emergency Arbitrator’s Award cannot be enforced/confirmed by

the Main Tribunal given the nature of the same

 Uphold the fact that MDLA2 terminated on 1st January, 2020

 Declare that the appellate tribunal overreached its discretionary power in entertaining

the Respondent’s application under Section 244 of the Companies Act,2013

 Declare the Share Transfer Agreement between Minas Group (Holding Company),

Beksak Corporation Ltd. and Mr. Elrond Wayne as an invalid agreement

And further pass any other order that this Hon’ble Court may deem fit in the ends of equity,

justice and just conscience.

All of which is most humbly and respectfully submitted.

Date: 19th August, 2023 Counsel for the Appellants

Place: Mumba Counsel number: 045A

28