Summary Judgment Denied as Determination of Reasonable Price for Shares Precludes Dismissal of Specific Performance Claim

The plaintiff filed a suit for specific performance of a Memorandum of Understanding (MOU) dated 15.08.2010, which envisaged a settlement regarding the management and shareholding of Kumudam Publications Private Limited (KPPL) and its affiliates.

The MOU stipulated the transfer of 33.40% shares from the defendants to the plaintiff at a price to be based on professional valuations and subsequent mutual agreement.

Following the suit's designation as a commercial dispute, the 2nd Defendant (Applicant) filed an application under Order XIII-A of the CPC for summary judgment, seeking dismissal of the claims for specific performance and mandatory injunction (tower removal).

Simple steps toward implementation, such as appointing statutory auditors and moving a broadcasting tower, occurred after the MOU, but no "Final Settlement Agreement" was executed.

1. Whether the plaintiff has "no real prospect of succeeding" on the claim for specific performance, thereby justifying a summary judgment under Order XIII-A.

2. Whether the MOU is merely an unenforceable "agreement to agree" due to the lack of a fixed price and the requirement for a future final contract.

3. Whether Section 9 of the Sale of Goods Act, 1930, can be applied to an agreement for the sale of shares to determine a "reasonable price" when the parties fail to agree.

Order XIII-A, Rules 3 and 6 of the CPC (as amended by the Commercial Courts Act, 2015), which permits summary judgment only if a party has no "real prospect" of success and there is no other compelling reason for trial.

Principles from Reliance Eminent Trading v. DDA (2026) and Godaddy.com LLC v. Puravankara Projects Ltd (2022) regarding the avoidance of "mini-trials" during summary proceedings.

Section 4 and Section 9 of the Sale of Goods Act, 1930, defining "goods" to include shares and allowing for the payment of a "reasonable price" where a contract fails to determine price.

Section 12 of the Specific Relief Act, 1963, regarding part performance of contracts.

The Court rejected the Applicant’s argument that the MOU was an unenforceable "agreement to agree." It observed that while the MOU contemplated a "Final Settlement Agreement," several obligations—such as the withdrawal of criminal complaints and the appointment of joint auditors—were immediate and binding.

Regarding the lack of a fixed price for shares, the Court reasoned that Section 9(2) of the Sale of Goods Act might allow the Court to determine a "reasonable price," and this possibility cannot be foreclosed at a summary stage.

The Court noted that the Applicant’s defense of "duress/coercion" in executing the MOU is a factual dispute that necessitates oral evidence.

The fact that parties took steps toward implementation (e.g., removing the tower and corresponding with the Department of Company Affairs) suggested the MOU was acted upon beyond its initial 60-day window.

Thus, the prospect of success was deemed "real" and not "fanciful".

It held that the Applicant failed to establish that the plaintiff had no real prospect of success, as the applicability of Section 9 of the Sale of Goods Act and the nature of the MOU as a concluded contract are triable issues.

The Court found that the presence of factual allegations regarding the absence of free consent (duress) and the partial implementation of the MOU required a full trial with oral evidence.

All parties were directed to facilitate an/the expeditious adjudication of the main suit.