Comments
Mahendra Kumar Agarwal, the managing director of Gati, is not ready to step down from his position even after one of India’s largest logistics players, Allcargo, acquired a near 47 per cent stake in the company this year.
Agarwal now owns a mere 0.29 per cent (unencumbered) stake in Gati and the rest of his 6-8 per cent stake is pledged with the lenders. The issue has snowballed into a legal wrangle.
On September 4, the Supreme Court (SC) allowed Allcargo to go ahead with an EGM to oust Agarwal. The meeting will be held on September 30.
A single-bench judgment of the Bombay High Court (HC) had earlier ‘refused’ to grant status quo against the meeting and Agarwal’s position when Allcargo decided to remove him.
Agarwal then appealed to the division bench of the HC, which stayed the meeting.
When the matter reached the SC, a bench comprising Justices Rohinton Nariman, Navin Sinha and Indira Banerjee stuck to the core principle of law, which says that any shareholder can call an EGM by giving prior notice, and altered the division bench order of the HC to allow Allcargo to hold the proceedings.
The SC, however, has said that the decision taken at the meeting will be effective only after settlement on other legal proceedings. “A board meeting may be called within the next four days in order to consider all the agenda items.
“Thereafter, AGM/EGM, that is to be held, may be held after giving the requisite statutory notice. Resolutions that are passed at the AGM/EGM qua the re-election or removal of MK Agarwal as Director/Managing Director, respectively, will not be given effect and will be subject to further orders that may be passed in the pending proceedings in the arbitration appeal in Bombay,” the apex court said in its order dated September 4.
Fulfilment of SPA
According to court documents seen by BusinessLine , Agarwal had challenged Allcargo’s move to remove him on the ground that Allcargo had not yet fulfilled the share purchase agreement (SPA) since all the shares, including those taken by the lenders and shares subject to court restraint, are yet to be acquired. His claim is that until all shares are actually acquired, the transaction is not complete.
Allcargo has argued that the removal is backed by its rights as a shareholder under company law.
With regard to the SPA, Allcargo has argued that it was completed on January 28, 2020.
“Even assuming that whether completion of SPA took place is still arguable, Agarwal has no vested right either in law or in SPA to continue as the MD,” Allcargo has told the court.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.