Supreme Court Ruling on Share Purchase Dispute in IT Infrastructure Park Case

The case of Shakti Nath & Others vs. Alpha Tiger Cyprus Investment No.3 Ltd. & Others revolved around a commercial dispute concerning the execution of a Share Purchase Agreement (SPA) in relation to IT Infrastructure Park Pvt. Ltd. The appellants sought directions from the Supreme Court to compel the respondents to execute the SPA as per the agreed terms.

Background of the Case

The dispute arose when Good Living Infrastructure Pvt. Ltd. (GLI), part of the Bhutani Group, agreed to purchase the entire shareholding of IT Infrastructure Park Pvt. Ltd. from the appellants and respondents for a total sale consideration of Rs.99,44,55,000. An Affidavit of Undertaking was submitted by GLI, committing to the purchase and setting out the payment schedule.

However, complications arose when the respondents allegedly failed to execute the SPA, preventing GLI from securing financing for the transaction. The appellants contended that the respondents’ reluctance to sign the SPA was an unjustified deviation from the agreement recorded by the Supreme Court in its previous order.

Petitioners’ Arguments

The appellants, represented by Senior Advocate Dhruv Mehta, presented the following key arguments:

• The respondents were bound by the Supreme Court’s earlier order, which had recorded the commitment to sell shares to GLI.
• The respondents’ refusal to execute the SPA was causing delays in the transaction and preventing GLI from securing necessary funds.
• The execution of the SPA was a necessary legal step to reflect the agreed terms of the sale.
• Emails exchanged between the parties indicated that the respondents were initially willing to execute the SPA but later changed their position.
• GLI had already deposited Rs.10 crores as a down payment in the Supreme Court’s registry, further demonstrating its commitment to the transaction.

Respondents’ Arguments

The respondents, represented by Senior Advocate Sanjeev Puri, countered the appellants’ claims with the following arguments:

• Executing the SPA would modify the Supreme Court’s earlier order and introduce new obligations that were not originally contemplated.
• The respondents were only obligated to return the shares upon full payment, as per Clause 11.23 of the ICC Arbitral Award.
• The respondents were willing to deposit the shares with the Supreme Court, ensuring they would be transferred once full payment was received.
• The appellants already had control of the property’s title deeds, making additional documentation unnecessary.

Supreme Court’s Observations

After hearing both sides, the Supreme Court made several key observations:

• GLI had already deposited a significant amount as part of the transaction, demonstrating its commitment.
• The respondents were initially willing to execute the SPA but later changed their position without providing a legally valid reason.
• Executing the SPA was necessary to formalize the agreed-upon transaction and facilitate financing for GLI.
• The respondents’ concerns about modifying the previous order were unfounded, as the SPA merely reflected the sale agreement already approved by the Court.
• “Legal documentation reflecting the agreement is essential to ensure compliance with the commitments made before this Court,” the judgment stated.

Final Judgment

The Supreme Court ruled in favor of the appellants and issued the following directives:

• The appellants and respondents were ordered to execute the Share Purchase Agreement (SPA) within three weeks.
• The respondents were directed to provide warranties confirming that their shares were free from encumbrances.
• Certified copies of Board Resolutions authorizing the SPA execution were to be submitted by all parties.
• The Supreme Court directed that Rs.26 crores deposited by the appellants be released to the respondents.
• The Rs.10 crores deposited by GLI would remain with the Supreme Court until further orders.

Conclusion

The Supreme Court’s ruling reinforced the principle that commitments made in legal proceedings must be honored. The judgment ensured that the agreed-upon transaction proceeded smoothly, protecting the interests of all parties. By directing the execution of the SPA, the Court upheld contractual obligations and provided legal certainty in commercial transactions.

Petitioner Name: Shakti Nath & Others.
Respondent Name: Alpha Tiger Cyprus Investment No.3 Ltd. & Others.
Judgment By: Justice Uday Umesh Lalit, Justice Indu Malhotra.
Place Of Incident: Noida, Uttar Pradesh.
Judgment Date: 23-06-2020.

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