JUDGMENT

I.A. 897/2023 (Application under Order XXXIX Rule 1 and 2 of the CPC) 1. The plaintiff has filed the abovementioned suit for a declaration that a Letter Agreement dated 03.12.20218, for sale of shares of defendant No. 2 - company by the plaintiff to defendant No. 1 [“the Agreement”], has become void, and for cancellation of the share transfer form [“Form SH-4”] dated 03.12.2018 executed by him pursuant to the Agreement. Plaintiff also seeks a declaration that he continues to be the owner of the shares in question and an injunction restraining defendant No. 1 from creating any third-party interest in the said shares or exercising any rights therein. By way of this judgment, I propose to dispose of I.A. 897/2023, filed under Order XXXIX Rule 1 and 2 of the Code of Civil Procedure, 1908 [“CPC”], whereby the plaintiff seeks an interim injunction restraining defendant No. 1 from alienating or transferring or creating any third-party rights in the shares or exercising any rights therein or claiming ownership thereof, and an injunction directing defendant No. 2 to reflect the plaintiff as the legal and beneficial owner of the shares in question in its register of members.

A. Facts as pleaded by the parties.

2. The factual details set out in the plaint, so far as they are relevant for the disposal of the present application, are as follows:-

a. The plaintiff, alongwith one Mr. Shashwat Nakrani were partners of a partnership firm – M/s EZY Services, which developed a payment platform under the trademark “BharatPe” in 2016. They incorporated defendant No. 2 - company on 20.03.2018 as a private limited company with 10,000 equity shares. The plaintiff and Mr. Nakrani each held 5,000 shares. The BharatPe platform was transferred to defendant No. 2 by the erstwhile partnership firm under an assignment deed dated 10.08.2018.

b. In May 2018, defendant No. 1 was employed as Chief Executive Officer [“CEO”] of defendant No. 2 - company. He was also given the title of “Co-Founder” and was offered 31.9% shareholding in the company.

c. The shareholding was transferred to him by the plaintiff and Mr.

Nakrani to the extent of 745 shares and 2447 shares respectively.

In both transactions, the consideration was fixed at ₹10 per share.1 d. The parties were thereafter engaged in raising funds for defendant No. 2, including from foreign investors. However, defendant No. 1 informed the plaintiff that there was an impediment in raising funds from investors in the United States of America because the plaintiff had been prosecuted in the United States of America in the year 2013. Although eighteen of the nineteen charges were dismissed, and the last was the subject matter of plea agreement, the plaintiff agreed to transfer his shares in defendant No.2 - company to defendant No. 1 and Mr. Nakrani, so as to obviate the concerns of any potential investors. According to the plaintiff, it was the common understanding and intention of the parties that the plaintiff’s interest in the company would be protected by way of other contractual arrangements, including a call option to ensure that the plaintiff’s shares could be retransferred to him in future.

e. Plaintiff and defendant No.1 entered into the Agreement dated

03.12.2018 for the sale of 1,611 equity shares of the company by the plaintiff to defendant No. 1 [“the Suit Shares”], together with all rights attached, at a consideration of ₹5,500 per share [wrongly mentioned in the Agreement as ₹31,516/- per share]. A similar

1Thesesharesarenotthesubjectmatterofthepresentsuit.

agreement was entered into between the plaintiff and Mr. Nakrani for transfer of 1,289 shares of the company from the plaintiff to Mr. Nakrani.2 f. According to the plaintiff, transfer of title in the shares was, in terms of the Agreement, to be simultaneous with payment of consideration bydefendant No. 1 to the plaintiff.

g. The plaintiff, defendant No. 1 and Mr. Nakrani also entered into a “Call Option Agreement” dated 12.12.2018 which gave the