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Shakti Nath & Ors. v. Alpha Tiger Cyprus Investment No. 3 Ltd. & Ors.

Civil Appeal · 2020 INSC 443Decided 23 Jun 2020
Civil Appeal No. 1674 of 2020
Justice Uday Umesh Lalit · Justice Indu Malhotra

Background

Under an earlier Supreme Court order, a real-estate developer, Good Living Infrastructure Pvt. Ltd. (GLI), had agreed to buy out the entire shareholding of a joint-venture company from the appellants and two Cyprus-based investor respondents for about Rs. 99.44 crore. After the order, the parties exchanged draft Share Purchase Agreements (SPAs) by email, but the respondent investors later resiled from signing, instead demanding upfront deposit of the full balance consideration before handing over share documents. The appellants moved an application asking the Court to direct execution of the SPA so GLI could raise financing against proper legal documentation.

Decision Breakdown

The Court found the respondents had earlier been agreeable to signing the SPA (as shown by the email exchanges) before changing their position, and that GLI's request for standard warranties (clear title, no encumbrances, authorised signatories) was reasonable and did not prejudice the respondents. It directed the appellants and respondents to execute the SPA within three weeks, furnish the necessary warranties and board resolutions, released the Rs. 26 crore the appellants had already deposited to the respondents, and directed the Registry to continue holding GLI's Rs. 10 crore deposit pending further orders.

Lesson Learnt

A party that has effectively agreed to a commercial deal through correspondence and conduct cannot simply walk away from formalising it in writing; courts can direct execution of the legal documentation needed to give effect to a settlement already arrived at, so long as doing so doesn't create new prejudice.

Official source (sci.gov.in)View Judgment (PDF)

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