Validity of m.o.u
Querist :
Anonymous
(Querist) 21 October 2011
This query is : Resolved
MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding ("MOU") dated __________________
Between
M/s......... & Company, Chartered Accountants, a Partnership Firm, having its registered office at ...... hereinafter referred to as ‘N’.
AND
Shri ........ Chartered Accountant, residing at ....herenafter referred to as ‘S’.
Preamble :
1. S worked as an employee of N during the period from 1st August 1980 to 31st July, 1995. Subsequently, S made a claim for gratuity on N, which was disputed by N. Thereafter, on 26th August, 2005, S filed an application (No. .....) before the Controlling Authority under the Payment of Gratuity Act, 1972, at Mumbai, seeking payment of Gratuity. After several hearings It was mutually agreed to pay an amount of Rs.89,000/-to SKP, comprising of the principal amount of Rs. 53,450 and interest thereon, as against a consolidated claim of Rs.123,610 made by him. The amount of Rs.89,000/- was paid to S vide cheque no. 078735 dated 31st August, 2009, drawn on ............, for which a written acknowledgement was received from S on the same day, stating that the amount so paid was in full and final settlement of his dues. The said cheque was subsequently deposited by him and the amount realized.
2. However, immediately thereafter, S continued to demand the balance amount, which was declined by N.
3. During the pendency of the proceedings before the Hon’ble Labour Court, S had, in fact, started acquiring nominal holdings in some of the listed companies where N was the statutory auditor. He then proceeded to write letters to the Directors of these companies, in his capacity as a shareholder, asking them to remove N as the statutory auditors. He also appeared at the AGMs of some of the companies and reiterated his demand for removal of N as the statutory auditors.
4. The said act of S was causing incalculable harm to N’s status as one of the most respected firms in the Chartered Accountancy profession.
5. In order to avoid further damage being caused to its reputation arising out of S’s actions, sometime in early July, 2010, N approached S with an offer to pay him the balance amount as demanded by him, on a clear and specific condition that he would, forthwith, stop and refrain from making any allegations whatsoever against N in any forum and in any manner whatsoever, whether directly or indirectly. S agreed to enter into a Memorandum of Understanding (MOU) in this regard.
6. Vide letter dated July 7, 2010, S conveyed the balance amount being claimed by him towards gratuity as being Rs.42,695/- (Rupees Forty Two Thousand Six Hundred and Ninety Five only).
7. In the meanwhile, the matter came up for discussion in the audit committee of one of the clients of N. Upon being told that N was in the possession of a court order settling the dispute, the Chairman of the audit committee of that client strongly advised N not to pay S any further amounts as demanded by him.
8. Accordingly, N did not proceed to finalise the MOU.
9. Upon realizing that his demand was not being entertained, S again started resorting to writing letters to various clients of N, asking for N to be replaced as the statutory auditors.
10. In order to protect its business interests and professional standing, N was left with no choice but to once again approach S with a proposal for settlement of his demands.
11. Accordingly, S was approached once again on 06th Sept. 2011 for reaching a settlement, pursuant to which he would hereafter refrain from acting in a manner that would cause any harm whatsoever to N’s stature and goodwill in the profession and in the corporate world. A revised demand for Rs.58,290/- was received from him vide his letter dated September 8, 2011.
12. Upon discussion with S, he agreed to revise the amount to Rs.48,700/-, as being the amount payable to him in full and final settlement of his demands.
13. N and S have now irrevocably agreed upon the following terms:
(i) N will, on signing of this MOU, pay SKP the said amount of Rs. Rs.48,700/- (Rupees Forty Eight Thousand Two Hundred and Ninety only) by an account payee cheque drawn in his favour, in full and final settlement of S’s demand.
(ii) S agrees that upon receipt (and realization) of the cheque for Rs.48,700/-, he will have no demand of any nature whatsoever pending against N and its Partners and will not, hereafter, make any claim against N and its Partners for any additional amount whatsoever.
(iii) In consideration of N paying him the aforesaid sum of money, it is hereby agreed between N and S that:
(a) S will forthwith stop and refrain from writing any letters whatsoever, or causing to have any letters written by other people to any of N’s clients, both present and future, making any derogatory or uncharitable remarks against N or its Partners or demanding the removal of N as auditors of those Companies.
(b) S will also forthwith stop and refrain from indulging in any communication with N’s clients, both present and future, in any other manner whatsoever, whether directly or indirectly, that contains any reference to N in derogatory or defamatory terms.
(c) SKP will refrain from making derogatory remarks against N at any Annual General Meetings of any of NMR’s clients where S has acquired shares.
(d) N, on its part, will not initiate any legal action in any forum against SKP for the damage already caused by him to its reputation and image.
(e) In the event that S violates any of the clauses in this MOU, or reneges on the undertaking given by him in the foregoing paras, N shall not be bound by the undertaking given by it in sub-para (d) above, and shall become free to pursue legal action against S in any forum at the entire risk of S as to cost and consequences.
(iv) This act of N, of paying SKP the said amount of Rs. 48,700/-, as mutually agreed, is solely with a view to protect its reputation, goodwill and professional interests and should not be misconstrued as N’s acceptance of S’s claim before the Hon’ble Labour Court.
M/s. N.... & Co.
CA S....
Whether the above mention M.O.U. is valid in law? It restrains a person to exercise the rights of a shareholder which are given by the companies act. 1956.
________________________ _______________________
Shonee Kapoor
(Expert) 21 October 2011
:-)
Regards,
Shonee Kapoor
harassed.by.498a@gmail.com
Shailesh Kr. Shah
(Expert) 22 October 2011
Question: It restrains a person to exercise the rights of a shareholder which are given by the companies act, 1956
Answer: Of course, you can't restrains him to exercise the rights of a shareholder which are given by the companies act, 1956.
It is suggestible that amend clauses, "mala fide" words in which restrains him to exercise the rights of a shareholder.
and further mentioned at last para that he will freely exercise bona-fide the rights of a shareholder which are given by the companies act, 1956.
