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KAL AIRWAYS PRIVATE LIMITED AND KALANITHI MARAN Versus SPICEJET LIMITED AND ANR

2016 (9) TMI 514 - DELHI HIGH COURT

Arbitration and Conciliation - Held that:- As admitted case of the respondents that both petitioners had transferred the equity shares of 35,04,28,478 constituting of 58.46% of respondent No.1 for just ₹ 2/-. The value of the said shares was ₹ 765 crores at that time in the market. Obviously, the respondent No.2 to clear the liabilities of respondent No.1 and in lieu thereof, the shares were transferred for ₹ 2/-. The respondents have not shown any cogent evidence before this C .....

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ot denied by the respondents if the BSE would have allowed the application filed in 2014, the warrants were supposed to be issued. It was agreed earlier and even after execution of SPA. Further during hearing the respondents have time and again mentioned that they are helpless at the hand of BSE. Otherwise, they are ready for issuance of warrants. - As per issue of non-compounding of offences under Section 276B of Income Tax Act is concerned, as per SPA, in case the amount is received by the .....

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as all the disputes have to be decided by the Arbitral Tribunal the part prayers in both petitions are allowed. The said amount of ₹ 579 crores shall be deposited by the respondents without prejudice in five equal monthly installments by way of fixed deposit for twelve months in the name of Registrar General of this Court. The first installment amount shall be deposited by the respondents on or before 7th August, 2016. Thereafter, the remaining installments shall be deposited on every suc .....

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award within the period of twelve months. Liberty is also granted to move the application under Section 17 of the Act before the Arbitral Tribunal if so necessary or under any change of circumstances. - O.M.P. (I) (COMM.) 71/2016, O.M.P.(I) (COMM.) 72/2016 - Dated:- 29-7-2016 - MR. MANMOHAN SINGH , J. For The Petitioner : Mr.Kapil Sibal, Sr. Adv. Dr.A.M.Singhvi, Sr.Adv. and Mr.Rajiv Nayar, Sr.Adv. with Mr.Anirban Bhattacharya, Mr.Gauhar Mirza & Mr.Aditya Vikram, Advs. For The Respondent : M .....

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No.71/2016 and Mr.Kalanithi Maran, the petitioner in OMP(I)(Comm) No.72/2016 filed under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred as the Act ). 2. The Petitioner Kalanithi Maran was a Director and non-executive Chairman of Spicejet Limited- respondent No.1 (a company incorporated under the Companies Act, 1956 having its registered office at Indira Gandhi International Airport Terminal 1D, New Delhi-110037 and corporate office at 319, Udyog Vihar, Phase-IV, Gu .....

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e on any shares of the Company; b. pass an ad-interim ex-parte order directing the Respondents to deposit a sum of ₹ 835,00,00,000/- (Rupees Eight Hundred and Thirty Five Crores only)in the Court i.e. the value of the shares due to the Petitioner against the Warrants and CRPS shares; c. pass an ad-interim ex-parte order attaching the bank accounts of the Respondents bearing Nos. 000705011602 held in ICICI Bank Ltd, 9A Phelps, Connaught Place, New Delhi-110001, 000381400002337 held in Yes B .....

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, Chennai- 600028. pending adjudication of the disputes; d. confirm the above prayers in (a) to (c) above upon hearing the parties; e. award costs of the present petition to the Petitioners; . 4. The relief sought in OMP (I) (Comm) 72/2016 reads as under: a. pass an ad-interim ex-parte order restraining Respondent No.1 and Respondent No.2 from allotting/ transferring/issuing/ alienating and/or creating -any third party interest and/or encumbrance on any shares of the Company; b. pass an ad-inter .....

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New Delhi- 110021, 05860200001369 held in Bank of Baroda, Parliament Street, New Delhi-11 0001, 04852320000132 held m I-IDFC Bank Ltd, B-1, Vaniya Kunj, Enkay Tower, Udyog Vihar, Phase V, Gurgoan-122001, Haryana, 50000741832 held in Allahabad Bank, 2nd Floor, 37, B.S. Marg Fort, Industrial Finance Branch, Mumbai- 400023, A/c nos. 0361200001681086, 036109000143003 and 510909010018546 held in City Union Bank Ltd, Keerthis, 67, Mandaveli Street, Chennai- 600028. pending adjudication of the dispute .....

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ncumbrances and 8,30,57,932 equity shares were encumbered with various lenders (hereinafter both petitioners would be referred as petitioners). 6. During the years 2013-2015, the respondent No.1 company was in the midst of tremendous distress, due to which it was facing difficulties in maintaining its fleet, staff and operational integrity. The petitioner were therefore, keen and desirous of reviving the respondent No.1 company from the distress and in this regard. 7. Admittedly vide a Loan Agre .....

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provided under the First Loan Agreement and utilize the same towards the payment of exercise of option attached to 191,69,000 warrants issued on preferential basis to the Petitioner by the Respondent No.1. Accordingly, the outstanding loan amount under the First Loan Agreement stood at ₹ 64,59,16,170/- (Sixty Four Crore Fifty Nine Lakh Sixteen Thousand One Hundred and Seventy only). Thereafter, another loan of ₹ 114,00,00,000/- (Rupees One Hundred and Fourteen Crores only) was given .....

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cation to the Bombay Stock Exchange (BSE). Admittedly, the respondent No. 1 Company was still under the control and management of the Petitioner and KAL Airways Private Limited. 9. In its general meeting who also approved the issuance of the Warrants at a conversion price of ₹ 16.30 per Equity Share. The said resolution also recorded that the issuance of Warrants would be in accordance with Regulation 76 of the SEBI (Issue of Capital & Disclosure Requirements) Regulations, 2009. 10. Th .....

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rgoing, and under the provisions under Section 3, Series C, Part II of the Civil Aviation Requirements and other applicable regulations, this ministry conveys its no objection to: • The Scheme of Reconstruction and Revival for Takeover of Ownership, Management and Control for the takeover of the ownership, management and control of the Company by Mr. Ajay Singh; • The change in the ownership of the Company, pursuant to proposed transfer of the Sale Shares by the Outgoing Promoters in f .....

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isition of Shares and Takeovers." 12. Based on many discussions and in order to restore the operation and market position of the respondent No.1, the petitioners had agreed to transfer their shares and respondent No.2 agreed to acquire the same. The share Sale Purchase Agreement ("SPA") was executed between both the petitioners and the respondents on 29th January, 2015. 13. By virtue of agreement, the respondent No.2 had acquired 35,04,28,753 equity shares in the respondent No.2 i .....

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AL Airways Pvt Ltd under the loan agreements dated 18th December, 2013 and 21st November, 2014 and loan amendment agreements dated 7th November, 2014, 5th December, 2014 and letters dated 29th January, 2015 issued by the petitioner to Spicejet Ltd./respondent No.1 and the said position is not denied by the respondents in paras 6,19 and 20 of reply filed to the petitions. 14. The relevant terms of the SPA are extracted herein for ready reference: "3.1 The Parties agree and acknowledge that t .....

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ssue of Capital and Disclosure Requirements) Regulations, 2009, for which the Sellers were required to pay to the Company, a sum of ₹ 3,08,21,89,461 (Rupees Three Hundred and Eight Crores Twenty One Lakhs Eighty Nine Thousand Four Hundred and Sixty One only) in aggregate of which the amount payable on or before February 15, 2015, has been set out in Schedule D ("Balance Warrants Payment''). 3.2 The Seller 1 agrees to make the Balance Warrants Payment on or before February 15, .....

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econd Closing Date and the Company agrees to thereafter, issue and allot on a preferential basis, the Tranche 1 CRPS Shares, the particulars of which are set forth in Schedule B, free and clear from all and any Encumbrance, together with all rights and ·advantages now and hereafter attaching or accruing thereto such that the Sellers shall, upon allotment of the Tranche 1 CRPS Shares in their name, receive full legal and beneficial ownership and all shareholder rights relating thereto. 3.4 .....

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thereto such that the Seller 2 shall, upon allotment of the Tranche2 CRPS Shares in his name, receive full legal and beneficial ownership and all shareholder rights relating thereto. 4. CONDITIONS PRECEDENT TO FIRST CLOSING 4.1 The obligation of the Acquirer to purchase the Sale Shares and pay the Purchase Consideration on the First Closing Date is conditional upon the achievement of, to the reasonable satisfaction. of the Acquirer (or where permissible under Law, waiver in writing by the Acquir .....

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ctive Date, the Company shall have initiated steps for taking the approval of the Shareholders by undertaking a postal ballot under the Act and the Companies (Management and Administration) Rules, 2014, subject however to the provisions of applicable Law and receipt of requisite Governmental Approvals: (a) for the issuance and allotment of Tranche 1 CRPS Shares and Tranche 2. CRPS Shares to the Sellers for the Tranche.] CRPS Amount and the Tranche 2 CRPS Amount respectively, on the terms and con .....

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e of the Seller Guarantees: 6.3.1 The Acquirer shall procure the release from Yes Bank, of the Seller Guarantee, being the Personal Guarantee executed by Seller 2 on July 11, 2012 for financing facility provided in favour of the Company on or before February 24, 2015; and 6.3.2 The Seller 2 shall make a fixed deposit of ₹ 100, 00, 00, 000 (Rupees One Hundred Crores only) in the City Union Bank ("Fixed Deposit'') and provide the evidence of the same to the Company. Thereafter, .....

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7. SECOND CLOSING 7.1 Second Closing Date The Second Closing shall take place on February 15, 2015 or such other date as may be agreed between the Parties ("Second Closing Date'') subject to the achievement of the First Closing and the satisfaction of the Conditions Precedent specified in Clause 5.3.5 (d) and Clause 6.3. All transactions relating to the subscription of the Tranche I CRPS Shares by the Sellers shall be deemed to have occurred simultaneously. 7.2 Closing Agenda On th .....

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ule H, provided that the amount of : (a) ₹ 1,05,20,35,549.34(Rupees One Hundred and Five Crores Twenty Lakhs Thirty Five Thousand Five Hundred and Forty Nine and Paisa Thirty Four only) shall be deposited in Designated Account 2 on or before February 24, 2015; and; (b) ₹ 100,00, 00, OOO(Rupees One Hundred Crores only) shall be deposited in Designated Account 2 within two(2) days of the Company issuing written instructions to City Union Bank for the encashment of the Fixed Deposit. Th .....

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Tranche 1 CRPS Shares shall be issued and allotted to the Sellers, free and clear of all Encumbrances, in accordance with the applicable provisions of the Act; (b) The name of the Sellers shall be entered in the register of members of the Company as the legal and beneficial owner of the Tranche 1 CRPS Shares; (c) Certificates representing the Tranche 1 CRPS Shares shall be issued to the Sellers in such numbers as may be required by the Sellers; 7.2.3 The Parties agree and acknowledge that upon t .....

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date as may be agreed between the Parties ("Third Closing Date''). All transactions relating to the subscription of the Tranche 2 CRPS Shares by the Seller 2 shall be deemed to have occurred simultaneously. 8.2 Closing Agenda On the Closing Date, the following events shall take place: 8.2.1 The Seller 2 shall remit the Tranche 2 CRPS Amount into the Designated Account 1; 8.2.2 .... 8.2.3 The Parties agree and acknowledge that upon the payment of the Tranche 2 CRPS Amount, the Compan .....

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ues of the respondent No.1 to the statutory authorities. The said clause is reproduced below: "12.2 The Sellers and the Acquirer shall ensure and shall procure that the amounts in Designated Account 2 is utilized only for the settlement of the existing outstanding statutory dues to the Governmental Authorities of the Company and towards release of Sellers Guarantees as per the order of priority set forth in Schedule H and the amounts in the Designated Account 1 shall be utilised by the Comp .....

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l ensure that the Company undertakes all steps to defend and hold harmless the Sellers, the nominee Directors of the Sellers who have resigned on the First Closing Date or Representatives of the Sellers as well as existing Directors on the Effective Date .from any penal action, liability or claim due to non-payment of statutory dues stated in Schedule I in relation to the Company. " The Respondent No.1 also issued a letter dated 24.02.2015 to the Petitioner and KAL, indemnifying, ensuring a .....

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atutory dues. " 17. Vide a letter dated 29th January, 2015, Kalanithi Maran waived the outstanding interest on the outstanding loan amount of ₹ 64,59,16,170/- (Rupees Sixty Four Crore Fifty Nine Lakh Sixteen Thousand One Hundred and Seventy only) and discharged the respondent No. 1 company from payment of the same. It was also agreed that the aforesaid outstanding loan amount of ₹ 64,59,16,170/- (Rupees Sixty Four Crore Fifty Nine Lakh Sixteen Thousand One Hundred and Seventy on .....

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377; 114,00,00,000/- (Rupees One Hundred and Fourteen Crore only) to be utilized for the subscription to 208,00,000 warrants to be issued by respondent No. 1 company and convertible in the financial year 2015-2016; ii) ₹ 43,84,70,000/- (Rupees Forty Three Crore Eighty Four Lakh Seventy -Thousand -only) from the outstanding loan amount of ₹ 114,00,00,000/- (Rupees One Hundred and Fourteen Crore only) to be utilized for the subscription to 269,00,000 warrants to be issued by respondent .....

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date was extended to 24th February, 2015. 20. By letter dated 17th February, 2015 the SPA was amended and the following extension of dates were agreed upon: i) the Second Closing Date as per Clause 1.1 of the SPA was extended to 23.02.2015; ii) in Clauses 3.1 and 3.2. of the SPA, the reference to 15.02.2015 was amended to 23.02.2015; iii) in Clause 5.1 of the S,.PA, the reference to 15.02.2015 was amended to 23.02.2015; iv) in Clause 7.1 of the SPA, the reference to 15.02.2015 was amended to 23. .....

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7; 100,00,00,000/- (Rupees Hundred Crores only) under Clause 3.2 of the SPA were made to the Respondent No.1 on 24.02.2015; 20.2) The Tranche 1 CRPS Amount of ₹ 20,02,93,039/- (Rupees Twenty Crore Two Lakh Ninety Three Thousand and Thirty Nine only) in terms of Clause 3 .3 of the SPA was paid to the Respondent No.1 on 24.02.2015; 20.3) The Tranche 2 CRPS Amount of ₹ 94,79,64,450/- (Ninety Four Crore Seventy Nine Lakh Sixty Four Thousand Four Hundred and Fifty only) was paid to the Re .....

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into the designated accounts on 24.02.2015; 20.6) On 24.02.2015, the Fixed Deposit for an amount of ₹ 100,00,00,000/-(Rupees One Hundred Crore only) was created in City Union Bank Ltd., Maildaveli in lieu of the release of collaterals; 20.7) The Tranche 2 CRPS Amount of ₹ 50,00,00,000/- (Rupees Fifty Crore only) was remitted into the Designated Accounts on 03.06.2015. 23. As per law, the respondents were obligated to seek approval of the Competition Commission of India for the sale a .....

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is a signatory to the SPA including the arbitration agreement contained in Clause 16 thereof. The equity shares of the respondent No.1 company are listed and admitted to trading on the Bombay Stock Exchange. 25. Both petitioners claimed to have paid entire amount towards their contractual obligations under the binding SPA including the amounts which were dues of the respondent No.1 Company to the statutory authorities. The petitioners case is that admittedly the respondents have received the amo .....

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despite the Petitioners have fulfilled all their obligations under the SPA by depositing the requisite amounts as per the SPA in the designated accounts, the Respondents failed to honour their commitments/obligations under the SPA in the following manner: a. The Respondents failed to issue the 'Warrants' in terms of Clauses 3.1 and 3.2 of the SPA. b. The Respondents failed to issue and allot the Tranche 1 and Tranche 2 CRPS Shares in terms of Clauses 3.3, 3.4, 7.2.2 and 8.1 of the SPA; c .....

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201(1A) of the Income Tax Act, 1961 pursuant to the powers conferred under Section 119 of the Income Tax Act, 1961. This was done by the Respondent No.1 only after filing of two (2) complaint cases being CC Nos. 103/4 and 104/4 titled "ITO vs. M/s Spicejet Ltd. & Ors." (hereinafter "Complaints") have been filed on 02.03.2015 by the Assistant Commissioner of Income Tax under Section 200 of the Code of Criminal Procedure, 1973 (hereinafter "Cr.PC") for alleged co .....

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tioners that in terms of Clause 12.2 of the SPA read with Schedule-H and I, all the requisite amounts were deposited by the petitioners in the Designated Accounts, which were agreed to be utilized for settlement of the statutory dues payable by the Respondents to the Governmental Authorities, specially towards the Income Tax liabilities, service tax with respect to which the criminal proceedings have been initiated by way of the Complaints, however, the respondents have failed in their obligatio .....

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tatutory dues, as claimed in the Complaints in terms of the letter and spirit of clause 12.2 of the SPA; d. To take all necessary steps for compounding the offence under Section 276B of the IT Act as alleged in the Complaints and relieve Mr. Kalanithi Maran from any penal action and/or liability. 30. In nut-shell, it is submitted by the petitioners that the respondents have received the amount of ₹ 679 Crores till 23rd February, 2015 who failed to honour even a single contractual commitmen .....

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inter alia that the petitioners were aware of the fact that the application which had been made to the BSE may or may not fructify. It was also incorporated in the Share Sale Purchase Agreement ( SPA ) executed between the parties that the issuance of warrants would be within 15 days of receipt of all the necessary approvals including the Governmental Approvals required for the same. It is also submitted that the respondents have not only complied with the terms of the SPA but have gone beyond .....

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r stand clear that in light of the SEBI ICDR Guidelines the Warrants cannot be issued in the prevailing facts and circumstances. The petitioners have not initiated any action to challenge/appeal the stand taken by SEBI and BSE by the parties herein before this Court. Therefore, having accepted the position that the Warrants cannot be issued the petitioner is not entitled to any relief and the same ought to be dismissed with costs. It is not in the control of respondents insist upon the SEBI and .....

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nd completion of the obligations of the Petitioner under the SPA, the respondent No.1 Company shall be in violation of applicable laws and the terms of the SPA, should the Respondent No.1 Company proceed with the issuance of CRPS Shares and any such issuance of CRPS Shares will be illegal and irregular. Accordingly, the respondent No.1 Company has not been able to proceed with the issuance of the CRPS Shares. 35. It is submitted that the subject matter of the present dispute does not concern the .....

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crores was brought in as loan by the petitioners, the respondent No.1 Company, the same was under the management and control of the Petitioners. The said amount was used for the operations of the respondent No.1 Company before execution of SPA. In addition to that an amount of ₹ 100 crores was not received from the petitioners by the respondents in terms of SPA. As such, an amount of ₹ 278 crores out of the total ₹ 308 crores is already accounted for and therefore, the entire .....

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ction 43 of the Companies Act would be removed, the respondents could also offer to issue CRPS shares for the value for which warrants were to be issued to the petitioners thereby settling the entire dispute between the Parties. As such, no cause for grant of interim relief to the petitioner has arisen, therefore, the present petition should be dismissed and the interim relief granted by this Court should be vacated. 37. Both parties have made their submissions who have also filed the written ar .....

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ndents, Mr. Kapil Sibal, learned Senior counsel appearing on behalf of the petitioners submits that warrant were to be issued to Mr. Kalanithi Maran and KAL under Clause 3.1 and 3.2 the SPA in Tranche 1 and Tranche 2 at an agreed price of ₹ 16.30/- per share. But the respondents failed to issue the same. In terms of the SPA the respondent No.2 ( Mr. Ajay Singh ) acquired the 58.46% stake of the petitioners, i.e. Mr. Kalanithi Maran and Kal Airways Pvt. Ltd. in the respondent No. 1 company, .....

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submitted by him that his client was following the application dated 18th September, 2014 very strongly. However, when Company was taken over by respondent No.2 on 29th January, 2015. It was the duty of the respondents to do whatever was necessary for the purpose of ensuring the issuance and allotment of the warrants at the agreed price of ₹ 16.30/- per share. After 29th January, 2015, both petitioners have lost full control of respondent No.1, they could not have approached the BSE and S .....

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ejet Ltd. wherein it has been categorically stated that due to lack of response from the company the application is considered closed which is attributable only to the respondents. 41. The respondents do not dispute that on the basis of said resolution on 18th September, 2014 filed an application with the BSE under clause 24(a) of the Listing Agreement for seeking its in-principle approval for the issue and allotment of up to: i) 8,16,80,629 warrants having option to apply for and be allotted eq .....

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7; 16.30 convertible into equivalent number of equity shares of the Respondent No.1 Company, in two tranches, to the erstwhile promoters of the Respondent No.1 Company (i.e. the Petitioner herein and Mr. Kalanithi Maran-the Petitioner on preferential allotment basis. His simple reply is submits that when the resolution passed by the Board of Directors on 21st August, 2014, the Respondent No. 1 Company was under the management of the Petitioner and Mr. Kalanithi Maran provided that the issue of w .....

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ed and Allahabad Bank), the BSE on 25th September, 2014 raised a query and requested the Respondent No 1 Company to provide a non-disposal undertaking/confirmation from the said Banks in compliance with the lock-in requirements under applicable laws. On 1st October, 2014, the BSE sent a reminder to the Respondent No.1 Company in regard to its earlier communication dated 25th September, 2014. The Respondent No. 1 Company again wrote to the BSE vide its letter dated 7th October, 2014 seeking time .....

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pany to the BSE under cover of its letter dated 10th October, 2014. From 14th October, 2014 to 25th October, 2014, BSE once again requested the Respondent No. 1 Company to provide said non-disposal undertaking/confirmation from the Banks. However, as a result of non-cooperation of the banks due to the extreme financial distress faced by the Respondent No.1 Company, these undertakings could not be provided to the BSE. The Respondent No.1 Company continued to pursue its application dated 18th Sept .....

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an additional sum of ₹ 450 crores in the Respondent No. 1 Company with the objective of supporting the turnaround plan. 44. In the reply it is not denied by the respondents that it was also agreed in the SPA that upon payment of the Tranche 1 CRPS amount and Tranche 2 CRPS amount, the Respondent No.1 Company shall issue and the sellers i.e. petitioners shall subscribe to the Tranche 1 CRPS and Tranche 2 CRPS shares respectively, the particulars of which were set forth in Schedule B of the .....

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f 10th July, 2015, in light of failure of the Banks to submit non-disposal undertaking/ confirmation, the Application of the Respondent No.1 Company was considered closed. 46. Consequent to letter dated 10th July, 2015 being issued by BSE, the Respondent No.1 Company again actively followed up with the BSE and accordingly, provided a written response dated 5th August, 2015 to BSE contesting the wrongful disposal of the application and the reasons cited thereof. Thereafter, on 14th September, 201 .....

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issued by the Bombay Stock Exchange. He argued that since the allotment of warrants at ₹ 16.30/- per share would have afforded the Petitioners 24% equity (approx.) in Spicejet Ltd.-respondent No.1 and the attendant rights flowing from such shareholding in terms of the applicable law, but, if a fresh application is made today, the same would be at the prevailing price (Rs. 82/- approx) and the Petitioners would not have more than 3% equity. 48. Mr.Sibal submits that it is the admitted posit .....

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nd ₹ 66.30/- (price of the shares at the time of filing of the petitions) amounts to a total loss of ₹ 250 Crores to Mr.Kalanithi Maran and ₹ 835 Crores to KAL Airways Pvt. Ltd. Therefore the said amount is required to be secured under Section 9(1)(ii) of the Arbitration Act as per petitioners apprehends that in case the interim relief is not granted, the petitioners would suffer irreparable loss and injury and if the Respondents are not restrained by an order of injunction fro .....

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receipt of all necessary approvals including the Governmental Approvals required for the same . The terms of SPA are not denied by the respondents. The respondents cannot take the stand contrary to the agreed terms. Admittedly after 29th January, 2015, both petitioners have no control with the respondent No.1 even they could not have directly dealt with BSE and SEBI being stranger after the execution of S.S.A. on 29th January, 2015. As per clause 3.2 it were obligation of the Respondents. The Cl .....

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t to all provisions of this Agreement that specify a time for performance, provided, however, that the foregoing shall not be construed to limit or deprive a Party of the benefits of any grace or use period allowed in this Agreement. 51. If the Clauses 3.2 read with 17.8 read with 17.11 of the SPA are read co-jointly it appears that parties agreed that the respondents were obligated under the SPA to undertake all actions to ensure that the petitioners are allotted the warrants at the agreed pric .....

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argument, the respondent No.2 is not to be blamed but at the same time, it cannot be denied by the respondent No.2 warrants as per SPA were to be allotted to the petitioners and amount thereto were in possession of the respondents. On one hand, the respondents are alleging that the warrants should have been issued and after prescribed period of time, the respondents were also supposed to issue share of CRPS. On other hand, it is being argued on their behalf that the CRPS shares cannot be issued .....

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at ₹ 16.30/- per share is an impossibility. Surprisingly on one hand there is specific argument of the respondents that it is impossible in law to issue of warrants, on other hand it is argued by the respondents that the petitioner should have challenged the order of BSE by filing of an appeal. It is the respondents who have received the consideration from the petitioners and one is failed to understand why the petitioners should litigate with BSE or SEBI who are simply stranger to the SP .....

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When these petitions were listed on 11th March, 2016, Mr.Kapil Sibal, learned Senior counsel appearing on behalf of the petitioner in O.M.P. (I) (COMM.) No.72/2016 had informed the Court that the petitioner Mr.Kalanithi Maran has issued the General Lien Letter dated 24th February, 2015 to the Chief Manager, City Union Bank Limited, Mandaveli Branch, Chennai-600028, requesting him to take delivery of the deposit of ₹ 100 crores duly discharged in favour of the said Bank and hold the same as .....

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passed by the Board of the respondent No.1-Company, authorizing an Agent to appear and represent the Company before the Bombay Stock Exchange (BSE)/Securities and Exchange Board of India (SEBI) in the matter of issuance of warrants and place the same before the BSE to consider the application dated 18th September, 2014. Thereafter, the matter was adjourned for today for the purposes of drafting the resolution to be passed by the Board as well as authorization to appear and represent the respond .....

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hareholding of the petitioners was transferred to Mr.Ajay Singh, respondent No.2 herein. The BSE thereafter on 27th March, 2015 sent a letter to respondent No.1-Company seeking undertaking from banks for the pledged shares. On 10th July, 2015, the BSE also sent another letter to respondent No.1-Company closing the in-principle application dated 18th September, 2014, as the said Company did not provide clarification. It is a matter of fact that respondent No.1 sent a letter dated 5th August, 2015 .....

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he sum of ₹ 100 crores is concerned, the same was deposited in time and a letter was also issued to the Chief Manager, City Union Bank Limited, Mandaveli Branch, Chennai. He says that after the application is closed, the same should be reconsidered by the BSE, as the respondents are agreeable to submit the fresh resolution by the Board before the BSE along with the authorization letter so that in the application, appropriate order be passed and thereafter, the respondents may issue the war .....

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r issuing the CRPS shares in terms of the provisions of the SPA. d) On receipt of approval of BSE/SEBI, the warrants are to be issued on the same terms as approved in the General Meeting dated 24th September, 2014. e) Since, the Company has paid the statutory dues stated in Schedule 1 of the SPA to the extent of the principle amount, as required under the amended Schedule H of the SPA and as the penal action has not been launched due to any breach/default of the terms of the SPA thus there is no .....

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umstances, because of the reason that earlier the respondent No.1-Company did not provide clarification and now, since the clarification is available coupled with the subsequent events, the application dated 18th September, 2014 can be considered by the BSE and the said subsequent events can also be informed to SEBI who is dealing with the representation made by respondent No.1 for approval. 9. Accordingly, as agreed, the parties will file the fresh resolution along with the letter of authoritie .....

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0. List these petitions on 7th April, 2016 for further directions. 11. Copies of this order be given dasti to the learned counsel for the parties, under the signatures of the Court Master and copies thereof be also communicated to the BSE & SEBI for information. 55. In view of difficulty explained by the respondents the order dated 24th March, 2016 were passed with the consent of the parties when the matter was taken on 7th April, 2016, the following order was passed: On 14th March, 2016, th .....

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s are passed in-principle application dated 18th September, 2014, consequently there would be no impediment on the part of the respondents to issue the warrants without any delay. I have been informed by the learned counsel for the parties that so far no decision has been taken by the BSE as well as SEBI in view of the detailed order passed. Learned counsel for the respondents submits that as per his information, the BSE has sent the matter to SEBI. As a matter of fact, two weeks have already be .....

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so agreeable that once the warrants are issues, the compliance of CRPS was also offered by the respondents as per agreed terms of SPA. Their only plea was that if the warrants are not allotted by the BSE and SEBI, the respondents may be able to issue the CRPS, otherwise, their act would be considered as violation of Section 42 of the Companies Act CRPS, they may be prosecuted the same. 57. Later on, learned counsel appeared on behalf of Bombay Stock Exchange on 10th May, 2016 and informed the Co .....

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de by the learned counsel for the parties on 31st May, 2016 and orders were reserved. 58. The respondents have admitted in reply as well as during the course of hearing that it is now not possible to issue the warrants to the petitioners. It means under no circumstances as per old application, the petitioners can get warrants as agreed by the parties. The said position is also confirmed by the BSE and SEBI. It is also stated by the petitioners that in terms of Section 42(6) of the Companies Act, .....

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ble, then the Parties will negotiate in good faith to agree on such provision to be substituted, which provisions shall, as nearly as practicable, leave the Parties in the same or nearly similar position to that which prevailed prior to such invalidity, illegality or unenforceability. 60. The said arguments of the respondents do not help the case. intent of the respondents as the said Clause indicates that parties agreed that in case of an eventuality wherein any clause of the SPA becomes unenfo .....

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n enacted, promulgated or issued or deemed applicable to the transactions contemplated by this Agreement, which would restrain, enjoin or otherwise prohibit or make illegal the consummation of the transactions contemplated in this Agreement. whereby all the transactions under the SPA have been rendered void. 61. As on 4th March, 2016, the price per share of respondent No.1 is ₹ 66.30 when commitment was made to the petitioners, price of per share was ₹ 16.30. The petitioners are insi .....

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he schedule D of the SPA depicts the details of amounts paid by the petitioners against the warrants as per agreements:- NAME TRANCHE 1 (FY 2015-I6) TRANCHE 2 (FY 2016-I7) No. of Warrants Total Consideration (NR) Advance/Loan Amount (Refer No.1) Amount payable for Tranche 1 after adjustment of Advance/loan Amount No. of Warrants Total Amount Payable (INR) Amount payable for Tranche 2 after adjustment of Advance/Loan Amount Total Amount to be Paid for Tranche 1 and Tranche 2 of Warrants ("Ba .....

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ments details for issue of Warrants and CRPS: Particulars Kal Airways Pvt. Ltd. Kalanithi Maran 3,082,189,461 No. of warrants in Tranche 1 No's 60,880,629 20,800,000 No. of Warrants in Tranche 2 No's 80,510,749 26,900,000 Total no. of warrants No's 141,391,378 47,700,000 Total consideration at the rate of ₹ 16.30 Rs. 2,304,679,461 777,510,000 CRPS to be issued Particulars Kal Airways Pvt. Ltd. Kalanithi Maran 3,708,699,000 No. of warrants in Tranche 1 No's 3,008,406 200,293 .....

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.2015 Rs. 200,293,039 Kal Airways T-2 CRPS on 24.02.2015 Rs. 947,964,451 Mr.Kalanithi Maran T-1 CRPS on 24.02.2015 Rs. 52,035,549 Mr.Kalanithi Maran T-2 CRPS on 02.06.2015 Rs. 500,000,000 Fixed Deposit Rs. 1,000,000,000 Mr.Kalanithi Maran Total consideration paid Rs. 6,790,888,670 Total Amount Paid 6,790,888,670 Difference, if any 209 64. The petitioners have claimed compensation on account of loss in investment and interest thereon. The said details referred as under: Kal Airways Private Limite .....

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. Payments for the Warrants was made in the following manner: Petitioner- ₹ 777,510,000/-(Rupees Seventy Seven Crore Seventy Five Lakh and Ten Thousand only) KAL- ₹ 2,304,679,461/-(Rupees Two Hundred and Thirty Crore Forty Six Lakh Seventy Nine Thousand Four Hundred and Sixty One only) Total- ₹ 3,082,189,461/-(Rupees Three Hundred and Eight Crore Twenty One Lakh Eighty Nine Thousand Four Hundred and Sixty One only) 66. The total consideration for Tranche 1 and Tranche 2 warrant .....

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suance and allotment of warrants is impossible under law, therefore, Section 56 of the Indian Contract Act, 1872 read with Clause 17.6 of the SPA is triggered and now it is to be decided at this stage as to what extent the petitioners can be secured in the petitions filed under Section 9 of the Act. 68. Section 56 of the Indian Contract Act, 1872 reads as follows: 56. Agreement to do impossible act.-An agreement to do an act impossible in itself is void. -An agreement to do an act impossible in .....

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unlawful.2" Compensation for loss through non-performance of act known to be impossible or unlawful.-Where one person has promised to do something which he knew, or, with reasonable diligence, might have known, and which the promisee did not know, to be impossible or unlawful, such promisor must make compensation to such promisee for any loss which such promisee sustains through the non-performance of the promise. -Where one person has promised to do something which he knew, or, with reaso .....

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redeemable cumulative preference shares (for short CRPS), Mr. Sibal has submitted that admittedly the CRPS shares were to be issued to the Petitioner and KAL under Clause 3.3 and 3.4 the SPA in Tranche 1 and Tranche 2. Payments for the CRPS shares was made in the following manner: Mr. Kalanithi Maran- ₹ 700,293,000/-(Rupees Seventy Crore Two Lakh Ninety Three Thousand only) KAL Airways Pvt. Ltd. ₹ 3,008,406,000/-(Rupees Three Hundred and Eight Crore Four Lakh Six thousand only) 70. M .....

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position is also admitted by the respondents in the Reply filed to the petitions and paras 19-20 by the respondent No.1. 71. It is contended by the respondents, the petitioners on their on 23rd February, 2015 another amendment letter was executed between the Petitioner, KAL Airways Private Limited and the Respondents whereby the SPA was amended and: i) Respondent No. 2 -Mr. Ajay Singh agreed to procure release of a personal guarantee issued by Mr. Kalanithi Maran on or before 24th February, 2015 .....

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he date on which the consent from Export Development Canada (EDC) was obtained for repayment of financing facility obtained by the Respondent No.1 Company and upon completion of aforesaid actions, i.e release of ₹ 100 crores to the Respondent No.1 Company towards the Tranche 1 CRPS Amount. Further, the Second Closing Date was extended to 24th February, 2015; iv) The details of Tranche 1 CRPS Shares and Tranche 2 CRPS Shares to be issued and allotted to the Petitioner and Mr. Kalanithi Mara .....

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the release from City Union Bank of the seller guarantee and obtained the consent of EDC for repayment of the financing facility provided by City Union Bank within the stipulated time. In fact the petitioner failed to honour his commitment of remitting ₹ 100 Crores to Designated Account 2 towards Tranche 1 CRPS in view of failure to issue irrevocable instructions to the City Union Bank. 73. In reply of the respondents, it is contended by Mr. Sibal, learned Senior counsel for the petitioner .....

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,00,000(Rupees One Hundred Crores only) or such other date as may be agreed between the Parties( Second Closing Date ) subject to the achievement of the First Closing and Clause 6.3. In case the Consent of EDC is not received within ninety(90) days from the date hereof, the Company shall have the lien removed from the Fixed Deposit and provide alternate form of security acceptable to CUB. Immediately upon release of lien on the Fixed Deposit, Seller 2 agrees to forthwith remit ₹ 100,00,00, .....

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. Kalanithi Maran to remit ₹ 100 Crores to the Designated Account 2 were (a) removal of the lien and (b) provision of an alternate form of security by respondent No.1 to City Union Bank. Both the said acts were not accomplished due to lapse of the Respondents. Further, it is difficult to believe that if the said substantial amount was allegedly not paid to respondent No.1, they would not have kept quiet and demanded the same and raised. The issue for the first time in their reply dated 9th .....

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es would remain the same as it is the case of the respondents that issuance of warrants is not possible and once it is not possible under Section 42(3) of the Companies Act, the respondent No.1 cannot make an invitation for issuance of CRPS shares otherwise such issuance of CRPS shares will be illegal and irregular and in violation of law. 75. Mr.Sibal has refuted the submission of the respondents that the alleged ₹ 100 Crores was due towards warrants is factually incorrect as the said amo .....

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he consent from EDC, then to remove the lien and further to provide alternate security to City Union Bank, which not having been undertaken during the stipulated time, he was not required under the SPA to remit the said amount to the Designated Account and due to lapse on the part of the respondents, the said amount could not be remitted. The attachment of the said FD lying with the City Union Bank by the Enforcement Directorate is irrelevant since the pre-requisitions for such remittance not ha .....

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the respondents are paid of ₹ 579 Crores, which even in terms of Section 42(6) of the Companies Act, 2013 (hereinafter CA13 ), they are liable to have returned to the Petitioners within 60 days of the closure of the in-principal application i.e. on 10.07.2015, together with the statutory interest @ 12% p.a. 78. Mr.Sibal submits that the difference between ₹ 16.30/-(in terms of the SPA) and ₹ 66.30/-(price of the shares at the time of filing of the petitions) amounts to a total .....

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securities made earlier have been completed. In case the Respondent No.1 Company proceed with the issuance of CRPS shares and any such issuance of CRPS shares will be illegal and irregular. Therefore, the respondent No.1 Company has not been unable to proceed with the issuance of the CRPS shares as the application dated 18.09.2014 was closed by BSE vide its letter dated 10th July, 2015, the offer of warrants was no longer open. It is the case of the petitioners that the CRPS shares ought to have .....

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42(10) of Companies Act, 2013 which extends to the amount involved in the offer or invitation or two crore rupees, whichever is higher. 81. Section 42(3) of Companies Act, 2013 is extracted below for convenience: Section 42(3) No fresh offer or invitation under this section shall be made unless the allotments with respect to any offer or invitation made earlier have been completed or that offer or invitation has been withdrawn or abandoned by the company. 82. Mr.Kapil Sibal has rightly submitted .....

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dian Contract Act, 1872 read as under as relied upon by Mr.Sibal: 65. Obligation of person who has received advantage under void agreement, or contract that becomes void When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore, it, or to make compensation for it, to the person from whom he received it. 84. Mr.Sibal submits that the consideration accepted by the respondents in lieu o .....

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en allotted at the agreed terms of the SPA, therefore, the respondents are liable to refund the said amount to the petitioners. Such amount i.e. ₹ 579 Crores and the losses i.e. ₹ 403 Crores caused to the Petitioners being a subject matter of arbitration are therefore, liable to be preserved by the respondents. Further, since Spicejet accepted the consideration for the CRPS in violation of Section 42(6) of Companies Act, 2013, it is statutorily liable to return the monies to the resp .....

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o repay the application money within the aforesaid period, it shall be liable to repay that money with interest at the rate of twelve per cent. per annum from the expiry of the sixtieth day: Provided that monies received on application under this section shall be kept in a separate bank account in a scheduled bank and shall not be utilised for any purpose other than- (a) for adjustment against allotment of securities; or (b) for the repayment of monies where the company is unable to allot securi .....

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ty days of the order imposing the penalty. The said position is affirmed by BSE in its letter dated 18th May, 2016 which states as under: 2….. c)………………company s obligation under the relevant provisions of the Companies Act 2013(the Act ) has expired as of date, it attracts the applicable consequent provisions, including penal, as well as the deeming provisions of the Act relating to acceptance of deposits. 3……. i……. The .....

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on for the warrants and CRPS barring a sum of ₹ 100 Crores (which is an arbitrable dispute). However, CRPS have not been allotted/issued even after receipt of the consideration even when the same is statutorily liable to be returned to the petitioners together with the loss caused to the petitioners, being the subject matter of arbitration, is required to be preserved. 87. Prima facie, this Court does not find any force in the submissions of the respondents that the petitioners were not re .....

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. The said plea of the respondents is now to be determined by the Arbitral Tribunal. 88. Prima facie this Court is of the view that the justification given by the petitioners on the on the said amount of ₹ 100 crores plausible, the said issue is to be decided by the Arbitral Tribunal. Even otherwise once it is the stand of the respondents themselves that shares of CRPS could not be allotted in the absence of issuance of warrants by BSE otherwise there would be a breach under Section 42 of .....

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the said issue is an arbiterable issue which is accordingly to be decided by the Arbitral Tribunal in the light of evidence. 89. Thus, as agreed by the respondents that CRPS cannot allotted, otherwise, they would be held for guilty by violation of the provisions of Section 42 of the Companies Act. However, at the same time, it is mentioned time and again that they are helpless, otherwise there is no denial from the said of the respondents. Only warrants are issued they are duty bound to allot C .....

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er and cannot by any stretch of imagination be taken to include compounding of offences. It appears from SPA that in terms of Clause 12.3 the respondent No.2 indemnified, ensured and undertook to take all steps to defend and hold harmless the petitioners from any penal action, liability or claim due to non-payment of statutory dues in relation to Respondent No.1. The said clause is reproduced below: 12.3. The Acquirer shall procure that the Company shall undertake the Business in compliance with .....

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4th February, 2015 to the petitioners, indemnifying, ensuring and undertaking to take all steps to defend and hold harmless the Petitioners from any penal action, liability or claim due to non-payment of statutory dues in relation to it. The relevant extract of the letter dated 24.02.2015 are reproduced below: The Company undertakes to pay all statutory liabilities to the satisfaction of the authorities concerned and to defend and hold harmless Seller 1 and Seller 2, from any penal action, liabi .....

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titioners that the respondents did not pay the interest and sought a waiver of the same only on 22nd July, 2015 i.e. after the complaints were filed. The respondent No.1 can still compound the offences. Only the respondent No.1 who can file an application for compounding, Mr. Kalanithi Maran has been arraigned for being the Chairman and allegedly the principal officer of respondent No.1 despite of having execution of MSA and fracturing of shareholders. 93. As per SPA "CRPS Shares" shal .....

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); "Tranche 1 CRPS Shares" shall mean 32,08,699 CRPS Shares:"Tranche 2 CRPS Amount" shall mean ₹ 50,00,00,000 (Rupees Fifty Crores only); "Tranche 2 CRPS Shares" shall mean 5,00,000 CRPS Shares. 95. As per clause 7.2.1 to 7.2.3 of SPA, the meaning of Closing Agenda described:- On the Second Closing Date, the following events shall take place: 7.2.1 The Sellers shall remit the Tranche 1 CRPS Amount (less Rs, 100,84;06,170 (Rup¢es One Hundred Eighty Four La .....

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1.4: (a) The Tranche 1 CRPS Shares shall be issued and allotted to the Sellers, free and clear of all Encumbrances, in accordance with the applicable provisions of the Act; (b) The name of the Sellers shall be entered in the register of members of the Company as the legal and beneficial owner of the Tranche 1 CRP$ Shares; (c) Certificates representing the Tranche 1 CRPS Shares shall be issued to the Sellers in such numbers as may be required by the Sellers; 7.2.3 The Parties agree and acknowledg .....

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isting Agreement. 96. Details of Sale Shares as per schedule A of SPA are Status of Shares Kal Airways Pvt.Ltd. Mr.Kalanithi Maran Unpledged shares 73,460,073 129,741,753 Pledged share 83,0570932 - Shares yet to be credited to depositor account (unpledged) 45,000,000 19,169,000 Total 201,518,005 148,910,753 97. Terms and Conditions of the CRPS Shares are mentioned in schedule B of SPA. The same read as under: (a) CRPS Shares shall be non-convertible redeemable cumulative preference shares of fac .....

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d: To Seller 1: 30,08,406 CRPS Shares To Seller 2: 2,00,293 CRPS Shares Tranche 2 CRPS Shares to be issued: - To Seller 2: 5,00,000 CRPS Shares. 98. Order of Priority for Payment as per schedule H is mentioned in SPA in the following manner: Aggregate of Balance Warrant Payment and Tranche.1 CRPS Amount= ₹ 400 Crores Amount to be deposited in Designated Account 1 = ₹ 220,02,93,039 Amount to be deposited in Designated Account 2 = ₹ 179,97,06,961 99. Schedule H of the SPA was ame .....

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-15 79,97,06,961.00 Seller-1 Balance Warrants Payment 24-Feb-15 20,02,93,039.00 Seller-1 Tranche 1 CRPS Amount 24-Feb-15 5,20,35,549.34 Seller-2 Tranche 1 CRPS Amount 24-Feb-15 100,00,00,000.00 Seller 2(FD to be created with CUB in lieu of release of Collaterals provided to CUB Tranche 1 CRPS Amount TOTAL 205,20,35,549.34 Order of Priority for payment 100. The amount in designated Account 1 shall be utilized by the Company for its operations in the ordinary course. The amounts in Designated Acco .....

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5.09 shall be utilized towards overdue installment of term loan facility availed from Yes Bank. d. The balance amount of ₹ 6,58,41,111.25 shall be utilized towards creation of margin with Yes Bank in form of fixed deposit. 101. Outstanding dues as on December 31, 2014 as per schedule-I are given in SPA: 1. TDS ₹ 99,30,15,695 2 Interest ₹ 27,57,72,835 Interest is calculated on the basis that the amount paid till now is against TDS liability only. 2. Service Tax ₹ 21 ,83,82 .....

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despite the failure of the sellers to remit a substantial amount agreed under the SPA (viz ₹ 100 crores) and for this purpose, the Respondent No.1 Company has generated cash flows from its own resources. Thus, the Respondents have in fact not just complied with the terms of the SPA but have gone beyond their obligation despite blatant breaches by the sellers (including the Petitioner) of their obligations and it is the Respondents who deserve protection rather than the Petitioner. The Res .....

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ubmitted that the scheme of payment of consideration by the Petitioner and Mr. Kalanithi Maran under the SPA is provided below: Date(s) Amount (in Rs. ) Name of the Party who paid the Amount Utilisation Status August 2014 to November 2014 50,49,72,500.00 KAL Airways Private Limited Utilised by the Respondent No. 1 under the ownership, management and control of the Petitioner The amount was provided as advance towards subscription of warrants proposed to be allotted to the Petitioner. During Dece .....

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r SSPA Performed by the Parties - the amount was paid for subscription of CRPS 24-Feb-15 100,00,00,000.00 KAL Airways Private Limited Utilised by the Respondent No. 1 for ordinary operations of the Company as per SSPA Performed by the Parties - the amount was paid for subscription of warrants. 24-Feb-15 79,97,06,961.00 KAL Airways Private Limited (a) ₹ 891,682,799 utilized towards payment of Income Tax liabilities (being the principal amount of Tax Deducted at source) as on January 31,2015 .....

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Maran To be utilized towards repayment of the financing facility obtained by the Company from the City Union Bank Mr. Kalanithi has not deposited this amount till date in the Designated Account 2-the amount is still outstanding and payable towards subscription of CRPS. 03-Jun-15 50,00,00,000.00 Mr. Kalanithi Maran Utilised by the Respondent No. 1 for ordinary operations of the Company as per SSPA Performed by the Parties-the amount was paid for subscription of CRPS 103. The counsel for the respo .....

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date of the takeover of management and control of the respondent No. 1 Company by the respondent No.2 and there was no way that the respondents could have prevented the said complaints from being instituted on 5th March, 2015. 104. The respondents submit that they have paid the substantial amount as schedule H and I of the SPA. The amount of ₹ 1052035549.54 were to be utilized towards settlement of existing outstanding due of the company i.e. respondent. The amount lying with the responden .....

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ime in the market. Obviously, the respondent No.2 to clear the liabilities of respondent No.1 and in lieu thereof, the shares were transferred for ₹ 2/-. The respondents have not shown any cogent evidence before this Court that by this time they have spent more than ₹ 765 crores. The petitioners admittedly asked the respondents by letter dated 24th September, 2015 to take the steps to utilize the amount in the designated account No.2 in order to pay outstanding statutory dues and to .....

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s at the hand of BSE. Otherwise, they are ready for issuance of warrants. 106. As per issue of non-compounding of offences under Section 276B of Income Tax Act is concerned, as per SPA, in case the amount is received by the respondents and after adjustment already paid, the respondent is liable to pay the remaining outstanding as per details of designated account No.1 and 2 subject to the final adjustment of the amount before the Arbitral Tribunal. In case at this stage if both parties are agree .....

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straining the respondents from allotting/transferring and/or creating any third party interest on any shares of the respondent No.1 108. In OMP (I) (Comm) 72/2016, the relief sought against the respondents is to deposit a sum of ₹ 250,00,00,000/- in the Court i.e. the value of the shares due to the petitioner against the Warrants and CRPS shares and to attach the bank accounts and from allotting, transferring and/or creating third party interest on any shares of the company. 109. The petit .....

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ceedings infructuous or there is an admitted liability. 58……However, if the petitioner has been able to make out a strong case against the respondent, particularly, when the respondent has received the amount from the employer and it is avoiding to clear the due amount and is raising flimsy reasons and when it appears to the Court to be just and convenient, then the Court has ample power to exercise its discretion to secure the amount even when the condition of the company is solve .....

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obligation on the part of the respondent and such an obligation can be enforced under Section 9 of the Act by way of interim relief ii) The High Court of Bombay in the case of Nimbus Communications Limited v. BCCI; 2013(1) MHLJ 39 held: 22 …The Division Bench noted that the power being of a drastic nature, a direction to secure the amount claimed in the arbitration petition should not be issued merely on the merits of the claim, unless a denial of the order would result in grave injustice .....

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would serve as a guiding principle for the exercise of the jurisdiction while dealing with a petition under Section 9 requiring the respondent to furnish security and the basic consideration is that the Court should be satisfied that the furnishing of security is essential to safeguard the interest of the petitioner. 24. A close reading of the judgment of the Supreme Court in Adhunik Steels would indicate that while the Court held that the basic principles governing the grant of interim injunct .....

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etition under Section 9 must have due regard to the underlying purpose of the conferment of the power upon the Court which is to promote the efficacy of arbitration as a form of dispute resolution. Just as on the one hand the exercise of the power under Section 9 cannot be carried out in an uncharted territory ignoring the basic principles of procedural law contained in the Code of Civil Procedure 1908, the rigors of every procedural provision in the Code of Civil Procedure 1908 cannot be put in .....

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an application under Section 9(ii)(b). iii) This Court in S. Harinder Singh v. S. Nirmal Singh & Ors; 2009c (113) DRJ 784 (DB) has held: 28. We may note that repeated attempts to persuade the parties to settle their disputes amicably have failed. One of the primary reasons for the deadlock appears to be the unfair advantage being enjoyed by the respondents, who continue to hold the entire amount of US$ 550,000, even though, as per the agreement dated 29.08.2002 the amount of US$ 300,000 had .....

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on 12.01.2009 as the appeal was even then pending) not only entitles a party to apply to the Court 'for an interim measure of protection in respect of...preservation, interim custody...of' the subject matter of the arbitration agreement' and to secure 'the amount in dispute in arbitration', but also goes on to say 'and the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it.' The power of the C .....

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o pass the order dated 12.01.2009 as jurisdiction to pass the order dated 12.01.2009 as corrected on 6.2.2009. We, therefore, reject this submission as well. iv) The Supreme Court in Arvind Constructions Co. (P) Ltd. v. Kalinga (2007) 6 SCC 798 the Supreme Court held the power under Section 9 cannot be read as independent of the Specific Relief Act and it could not be contended that the restrictions placed by the Specific Relief Act cannot control the exercise of the power under Section 9. The C .....

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d on an ordinary court of the land, without laying down any special condition for the exercise of that power, the general rules of procedure would apply. The Supreme Court adverted to the position which was inter alia taken by the Division Bench of this Court that the power under Section 9 is not controlled by Order 38, Rule 5 of the Code of Civil Procedure 1908, but left it open to be determined in an appropriate case. v) The High Court of Bombay in the case of National Shipping Company of Saud .....

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of the nature like Section 9(ii)(b), we are afraid, exercise of power cannot be restricted by importing the provisions of Order 38, Rule 5 of the Code of Civil Procedure as it is. The legislature while enacting Section 9(ii)(b) does not seem to us to have intended to read into it the provisions of Order 38, Rule 5 of the Civil Procedure Code as it is. It is true and as has been held by the Supreme Court in ITI Ltd, (supra), that for want of specific exclusion of the Code of Civil Procedure in th .....

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esides the merits of the claim that order under Section 9(ii)(b) is eminently needed to be passed as there is likelihood or an attempt to defeat the Award, though as indicated above, the provisions of Order 38, Rule 5, CPC are not required to be satisfied. The statutory discretion given to the Court under Section 9(ii)(b) must be exercised judicially in accordance with established legal principles and having regard only to relevant considerations. In our view, this is the proper approach for con .....

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dispute. 110. The petitioners at this stage are also claiming compensation and interest on the amount which is in possession of by the respondents. However, in the facts and circumstances of the present case, the entire amount as asked by the petitioner cannot be secured. The petitioner is also seeking the relief of amount to a total loss of huge amount on account of difference between ₹ 16.30 in terms of SPA and ₹ 66.30 (price of the shares at the time of filing of petitions) toget .....

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