TMI Blog2020 (6) TMI 273X X X X Extracts X X X X X X X X Extracts X X X X ..... .4. Case of the applicants is that as per the Resolution dated 15th January, 2018 defendant No.1 has been absolved of part liabilities post the Resolution, however he continues to be responsible for the litigation including the one in relation to POCSO where the award for a sum of ₹45 crores has been passed against defendant No.4. ₹1 crore has already been deposited from the account of defendant No.4 pursuant to the extension of time granted by the Hon'ble Supreme Court on 11th May, 2020 and if a further sum of ₹4 crores is not deposited, the defendant No.4 would have to incur the liability of a sum of ₹45 crores immediately and thus the requirement of Section 1(a) that the property in dispute in the suit i.e. property of defendant No.4 is in danger of being wasted or alienated is satisfied. Even if the suit is finally disposed of the reliefs as sought by the applicants/defendant Nos.1 and 3 cannot be granted to them in the absence of a counter claim. The reliefs sought are not in the nature of seeking restoration of status-quo ante or the position at the time when the suit was filed. The applicants/defendant Nos.1 and 3 have also not made out a stron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present application filed by defendant Nos.1 and 3 in the representative capacity on behalf of defendant No.4, the following prayers are made: (a) grant a mandatory injunction and pass such necessary orders and directions against the Plaintiffs to enable Defendant No. 4 to undertake its business and affairs, including by raising finances to meet the deposit amount of ₹ 4,00,00,000/- (Rupees Four Crores) in terms of the SC Order by creating an appropriate security in respect of such number of the Unsold Units in Towers C1 and C2 in Defendant No. 4 s Project and/or by creating a hypothecation on the future receivables of sold units in Towers C1 and C2 in Defendant No. 4 s Project as detailed in Paragraph 65 above without the requirement of any consent from the Plaintiffs in that regard ; (b) grant a mandatory injunction and pass such necessary orders and directions against Plaintiff No.2 to enable Defendant No. 4 to undertake its business and affairs including by raising finance for re-commencing and completing the development of the Project including Towers C1 and C2 by creating appropriate security in respect of Defendant No. 4 s Project including the Land and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court being Commercial Arbitration Petition No.238/2019 wherein the defendant No.4 was granted stay. Challenging the said order POSCO filed a petition before the Hon ble Supreme Court being SLP (C) No.25412/2019 whereby vide order dated 4th February, 2020 without going into the merits of the matter, Hon'ble Supreme Court directed defendant No.4 to deposit a sum of ₹5 crores within a period of eight weeks from the date of the order failing which the interim stay granted by the Bombay High Court against the execution of the arbitral award would stand vacated. 6. Since defendant No.4 was short of funds in order to comply with the order dated 4th February, 2020 an email dated 21st February, 2020 was addressed to the plaintiffs requesting their permission for generating funds by availing secured/unsecured loan facility, sale of remaining stock of flats etc. It is the case of the applicants that vide their reply dated 2nd March, 2020, plaintiffs made wrongful allegations against the applicants and rejected the proposal made by the applicants for generation of the funds. Due to the nationwide lockdown due to outbreak of COVID-19, defendant No.4 was unable to deposit the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiffs the business and functioning of defendant No.4 has come to a standstill. Therefore the defendant No.4 is not in a position to raise funds to deposit the same in compliance of the orders of the Hon ble Supreme Court. In case the amount of ₹4 crores is not deposited by 15th June, 2020 the defendant No.4 company could be rendered insolvent and defunct thereby causing substantial loss not only to defendant No.1 and 3 but also to the plaintiffs. 9. In view of the reserved matters agreed to between the plaintiffs and defendant No.4 no major decision in regard to project can be taken without prior written approval of the plaintiff No.2. Under the Debenture Trust Deed (DTD) and the amended Article of Association (AOA), plaintiff No.2 has a right to appoint the majority Directors on the Board of defendant No.4 and from 2nd March, 2015 onwards till 31st September, 2019 the plaintiff No.2 was in control of the management of defendant No.4. All the nominee Directors of plaintiff No.2 resigned from the Board w.e.f. 31st September, 2019 so as to wriggle out of the rigours of RERA and other laws. The plaintiff No.2 has also not chosen to appoint any Director on the Board of defen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the parties in the year 2013 and was to expire in 180 days is wholly incorrect. The Term Sheet extended till December, 2014 and was superseded by the DSA. Further the Term Sheet is a non-binding, unstamped and invalid document which expired in December 2014. Plea of the applicants that the associate companies of the plaintiffs were also required to subscribe equity shares and having not invested in equity shares thereby causing loss to the defendant No.3 and defendant No.4 is a dishonest plea for the reason there was no agreement between the parties for investment in equity as the DSA superseded the Term Sheet. Further this grievance was never raised by the applicants and only when in the month of 2019 the plaintiffs issued notice of default to the applicants, a suit was filed in Pune to circumvent the plaintiffs actions against the defendants. Further even by the resolution dated 15th January, 2018 defendant No.1 was absolved to the limited extent of maintenance of customer relationship, delay in the project and any workman related issue or any accident however, defendant No.3 was never absolved. Further defendant No.1 was also not absolved of any other duties cast on him and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) obtain all requisite approvals, licenses, permissions; (ii) develop and construct the project; (iii) redeem and pay the entire loan along with interest and all redemptions amounts to the plaintiff No.2; (iv) personal guarantees of defendant Nos.1 and 2; (v) securities created in favour of the lender/plaintiff No.2 to secure the loan amounts and; (vi) all of the defendant Nos.1 to 4 are jointly and severely liable to pay amount to defendant No.2. There is no obligation of the plaintiff No.2 to contribute either in equity or extend any further loan to defendant No.4. The sale/allotments of the apartments as informed during the course of the arguments in the project were made prior to the disbursement of the loan by plaintiff No.2, that is, before 2nd March, 2015 and the submission of learned counsel for the applicants that the apartments were allotted/sold between 2015 to 2018 is factually incorrect. Even if there is a liability of POSCO on defendant No.4 the same is at best like an unsecured creditor and cannot triumph the rights of plaintiff No.2 who is a secured creditor. 14. Learned counsel for the plaintiffs contends that a party who has not purged the contempt till date ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... den by the plea of equity. Further the conduct of the defendant Nos.1 and 3, itself disentitles it for any relief on equity. Reliance is placed on the decision reported as AIR 1974 Del 207 Raman Hosiery Factory, Delhi vs. J.K. Synthetics Ltd. 16. Learned senior counsel for the applicant rebutting the arguments of learned counsel for the plaintiff contends that the present application before this Court in the present proceedings is maintainable. Every dispute involving a company is not liable to be decided as per the Companies Act. The jurisdiction of the Courts to try all suits of civil nature is very expensive as is evident from the plain language of Section 9 of the CPC. The two tests, relevant in dealing with the question about the exclusion of civil courts' jurisdiction are (a) whether the special statute which excludes such jurisdiction has used clear and unambiguous words indicating that intention; and (b) does that statute provide for an adequate and satisfactory alternative remedy to a party that may be aggrieved by the relevant order under its material provisions. Reliance is placed upon the decisions of the Supreme Court reported as AIR 1969 SC 78 Dhulabhai v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. It is also contended that this Court has power by virtue of Order XXXIX Rule 2 CPC to issue temporary injunctions in a mandatory form. Reliance is placed on (1990) 2 SCC 117 Dorab Cawasji Warden v. Coomi Sorab Warden and (2012) 131 DRJ 492 Gulshan Sethi v. Rajan Dhall. 20. In response to the claim of learned counsel for the plaintiffs that the defendant No.1 and 3 have no right to represent defendant No.4, learned counsel for the applicants states that defendant No.3 being 99% shareholder of defendant No.4 can bring an action on behalf of defendant No.4 in representative capacity, in case the wrongdoers themselves control the company or if the directors are in the wrong and carry out the affairs of the company in a prejudicial manner. [see ( 2002) 3 CompLJ 331 (Del) Spectrum Technologies USA Inc. v. Spectrum Power Generation Company Ltd. and ILR [1976] MP 30 : 1975 MPLJ 390 Prakashchandra Rajmal Jain v. Firm Swarupchand Hukumchand and Co.] 21. Heard learned counsel for the parties. 22. Present suit has been filed by Vistra ITCL (India) Ltd. and Ammon Holdings Pte. Ltd. as plaintiff Nos.1 and 2 respectively impleading Lalit Kumar Jain, Pranay Lalit Kumar Jain, Kum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... February, 2015. Besides the defendant Nos.1 and 2 also executed their Deed of Personal Guarantee in favour of plaintiff No.1, who was acting on behalf of plaintiff No.2 on 3rd February, 2015 itself. Consequently, the plaintiff No.2 subscribed to 160 Series A Debentures issued by defendant No.4 and remitted a sum of ₹160 crores in favour of defendant No.4. On 2nd January, 2018 first Amendment Agreement to the Series A DSA and Series C DSA were carried out as also to the Series A DTD and Series C DTD. Plaintiff No.2 thus subscribed to 30 unlisted redeemable, interest bearing Series C Debentures and remitted an amount of ₹30 crores to defendant No.1. Thus the total investment of plaintiff No.2 with defendant No.4 was a sum of ₹190 crores. After the subscription of the debentures by the plaintiff No.2 in defendant No.4, defendant Nos.1 to 4 continuously defaulted in complying with their obligations resulting in plaintiffs issuing a default notice being Series A default notice on 5th October, 2018 and Series C default notice on 11th October, 2018. 26. As the project was suffering the Board of Directors of defendant No.4 vide its Board Resolution No.19/2017-2018 date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are restrained from transferring, alienating, selling, parting with, disposing of, creating third party rights or interests or otherwise encumbering in any manner whatsoever any and all movable and immovable assets, shares, properties or any other assets. 25. Defendant Nos. 1to 3and 5are further restrained from transferring or permitting to transfer or attempting to transfer any pledged shares, being 22,20,000 equity shares held in a dematerialized form, constituting 74% of the share capital of Defendant No. 5in any manner. Defendant Nos. 1to 4 are further restrained from or permitting a Transfer or attempting to Transfer any Pledged Shares, being 65,00,000 equity share constituting 100% of the share capital of Defendant No.4. 28. Vide order dated 30th July, 2019 this Court decided the question regarding the viability of the security option given by the defendants, to secure the amount claimed by the plaintiffs in the present suit till final adjudication of the injunction application and modified the order dated 28th May, 2019 as under: 42. Till the application is heard and decided, the Court will also have to ensure that Defendant No. 3 does not fetter away its assets to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r stage of construction. Defendant Nos. 1 to 3 must also furnish affidavits for any future project that Defendant No. 3 would undertake in the future, until further orders of this Court. Further, Defendant No. 3 will continue to be restrained from alienating/selling any lands held by the Defendant No. 3 without permission of the Court, as mentioned in their note of submissions. 44. This affidavit shall be filed within a period of one week from the date of the passing of the order. 45. Subject to the above, the order dated 28th May 2019 is modified / clarified to the effect that it does not restrict Defendant No. 3 to carry out its routine/ordinary course of business which includes the construction and development of its projects, undertake sale of flats/units being developed by Defendant No. 3 and to receive sale proceeds therefrom; enter into fresh development agreements, joint ventures agreements and to receive consideration therefrom. However, the sale of flats/Units being developed by Defendant Nos. 1 to 3, is subject to the above-mentioned conditions. Defendants have sought further clarification by way of seeking permission to undertake corporate restructuring in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng. This Agreement along with the Transaction Documents constitutes the whole agreement between the Parties and supersedes any previous oral agreements, understandings, negotiations and discussions between the Parties in relation to the matters dealt with in this Agreement including the Debenture Subscription Agreement dated July 26, 2014 executed between the Parties, provided that this Section 16.6 shall not exclude any liability for (or remedy in respect of) fraudulent misrepresentation by the Promoters. It is clarified that the Debenture Subscription Agreement dated July 26, 2014 executed between the Parties stands terminated and replaced by this Agreement. 2.5 Tenor and Redemption. 2.5.1 The Series A Debentures shall have a maximum tenor of 60 (sixty) months from the Tranche1 Deemed Date of Allotment ( Tenor ). The Company shall proportionately redeem all the Series A Debentures collectively through reduction in face value of each Series A Debentures without distinguishing between the Series A Debenture Holders. An indicative schedule for redemption is set forth at Schedule XV hereto. Notwithstanding anything contained in this Agreement, the Company shall mandat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idence of title or other matters as the Series A Debenture Holders may deem proper without being liable or answerable or accountable for any loss or deterioration occasioned thereby. The Series A Debenture Holders shall also have the right to seek the liquidation/ windingup of the Company in accordance with the applicable Laws; (ii) It is an express condition of these presents that the right to cause a sale/transfer/conveyance/ lease/ sub-lease/ sub-let/ license disposal of the Project, the Project Land, the Additional Leased Lands and the ATSL Land or on any assets/ lands of the Company, or any part thereof or any other actions as set forth in this Section 2.5.2 shall apply to the development rights and, or, leasehold rights/ entitlements granted to the Company into the Project Land, the Additional Leased Lands and, or, the ATSL Land, and, or, any other rights, titles, interest that the Company has or it may acquire in the Project Land, the Additional Leased Lands, the ATSL Land and, or, the Project. In the event the Company, by the expiry of the Final Redemption Date, has not redeemed all and not less than all the Series A Debentures by paying the entire Redemption Amounts to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.26 Shareholders Meetings 8.26.2 The Promoters and the Company shall further ensure that no Reserved Matter shall be taken up, decided, acted upon or implemented by the Company, nor any of the Reserved Matters be placed for a vote at a Shareholders meeting, nor any decision shall be taken by the Shareholders; nor shall the Company be bound/ committed to any resolutions/ transactions pertaining to the Reserved Matters, unless the Reserved Matter has been first approved in the affirmative, in writing, by the Series A Debenture Holders. SCHEDULE XII RESERVED MATTERS (i) xxx xxx xxx (ii) Any sale, transfer, lease, license, assignment, mortgage. Encumbrance, pledge, hypothecation, grant of security interest in, exchange or other disposition of any asset/ property of the Company or any business restructuring, merger, demerger, spin off or reconstruction of the Company, except the sale of units/ spaces/ built up area in the Project to its customers not below the price set forth in the Approved Business Plan. (iii) Obtaining secured and unsecured financing/ lending facilities (construction, permanent, working capital, bridge, mezzanine or any other fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any liability, tax, stamp duly, costs, expenses or charges that may be incurred or may accrue or may be applicable on carving out/ hiving out of Phase II. - Change the shareholding pattern of KSDPL in such a manner that it ceases to be direct I indirect subsidiary of a public limited company so as to facilitate the transaction structure. The structure for this change in shareholding pattern shall be as mutually agreed between the Investor and the Developer or as set out in the definitive agreements. 3. Investment will be made in 4 tranches as per the following schedule: Tranche Amount Milestone 1 ₹ 1,500 MM Receipt of all approvals for commencement of construction of 460,358 Sq. ft. FSI area 1 saleable area of 700,000 Sq. ft. (refer Annexure for computation of Saleable Area). This investment amount may reduce on account of any downward variation in FSI or saleable area as mentioned above. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32. After the plaintiffs found that there were problems in the running of defendant No.4 the resolution of the Board of Directors of defendant No.4 dated 15th January, 2018 was passed which resolution reads as under: SINEW DEVELOPERS PRIVATE LIMITED ON: U45202PN1994PTC128486 Registered Office; l0th Floor, Kumar Business Centre, CTS No. 29Opp. Pune Central, Bund Garden Road, Pune -411001 CERTIFIED TRUE COPY OF THE CIRCULAR RESOLUTION NO 19 OF 2017-18 OF SINEW DEVELOPERS PRIVATE LIMITED INDEPENDENT MANAGEMENT TEAM OF THE COMPANY. The Board discussed this matter and passed the following resolutions unanimously: RESOLVED THAT approval is hereby granted to engage a fully independent team of professionals ( Independent Management ) and the Independent Management to be engaged by the Company to execute the development, construction, marketing and sale of the residential project namely 45 Nirvana Hills Tower No. CI, C2. C3 and C4 on land admeasuring 8,960 (eight thousand nine hundred sixty) square meters out of the total land bearing Survey No. 44/l(Part)/l/l/I situated at 45 Sinew Hills , Erandwane, Pune 411004, Maharashtra, India ( Project ) and manage the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t signatory of Series A Debenture Holders, except for the escrow accounts opened by the Company which shall continue to operate as per the escrow agreements entered into in relation thereto; (viii) appointment, removal, monitoring and supervision of employees of the Company as approved by the Board; (ix) the handling, management and control of the Company's website including the review, revision, amendments, etc. of the artwork, pictures and photos, that are uploaded on the website. Any text included on the website will be subject to approval of the Board; (x) to achieve sales and construction targets as per the business plan in order to timely distribute the distributable surplus to the debenture holders and KUDL. RESOLVED FURTHER THAT with effect from the date of this resolution, the employment of all of the current employees of the Company, except Ajay Poniya, Rajesh Bohite, Sudhir Kadam, Suresh Katkar, Lata Pokharkar, Girish Mande, and Sonica Tater and Mahesh Ram Patil, be terminated. Directors be and are hereby authorized on behalf of the Company to negotiate, alter, execute and sign all documents, deeds and agreements to give effect to this resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the Project. RESOLVED FORTHER THAT it be taken on record that, (i) Mr. Lalit Kumar Jain and KUDL have agreed that they shall continue to handle all the existing/ pending litigations filed by or against the Company, in respect of the Project or the underlying land or the slum rehabilitation buildings/ areas or the larger parcel of the land of which the Project forms a part of, and all other litigations/ proceedings/ arbitration, etc., including without limitation by or against the Dargah of Khwaja Peer Sayed Hisamuddin Kattal-E-Zanjani Chisti trust and its trustees, any Government authorities, the Charity Commissioner, Waqf Board, Posco E C India Private Limited, etc.; and (ii) the costs incurred in respect of the aforesaid litigations shall be borne by the Company, subject to the prior approval of the Board. It is further approved that Ms. Madhu Goel and Mr.Muralidhar who are consultants appointed by the Company for handling various litigations of the Company will continue their services with the Company. RESOLVED FURTHER THAT it be taken on record that any legal proceedings related to customers or any new matters related to the Project will be handled by the Indepen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng no reference to KUL/ KUDL and, or, KUL group of companies, Ammon Holdings Pte Ltd. or its affiliates. It is clarified and taken on record that the Company i.e. Sinew Developers Private Limited is a wholly owned subsidiary company of KUDL and as such, its mention will come wherever necessary. RESOLVED FURTHER THAT it being clarified and taken on record that Ammon Holdings Pte. Limited or its affiliates are not developer(s) of the Project and will never be referred to as such in any communication by the Company, the shareholders or the Independent Management. RESOLVED FURTHER THAT Directors are hereby authorized on behalf of the Company to negotiate, alter, execute and sign all documents, deeds and agreements and undertake all other actions required to give effect to all of the above resolutions. [Emphasis supplied] 33. Learned counsel for the plaintiffs objecting to the maintainability of the present application relies upon Section 430 of the Companies Act which bars the jurisdiction of the civil Court to entertain any suit or proceeding in respect of any matter which the Tribunal or the Appellate Tribunal under the Companies Act 2013 is empowered to deter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on has used clear and unambiguous words indicating that intention; and (b) does that statute provide for an adequate and satisfactory alternative remedy to a party that may be aggrieved by the relevant order under its material provisions, as held by the Constitution Bench in the decision reported as AIR 1966 SC 893 Ram Swarup v. Shikar Chand. 38. Dealing with Section 430 of the Companies Act, Karnataka High Court in Ravindra Veer Singh (supra) held: 15. On a plain reading of Section 430 of the Companies Act, it is clear that the civil court's jurisdiction is not ousted insofar as the relief of injunction against persons from interfering with the smooth management of the company and its affairs by the directors of the said company is concerned. The defendants have already been removed in the meeting. The very grievance aired by the defendants before the Board has not been taken into consideration, and it is held that the civil court is seized of the matter. Thus a simple suit for injunction seeking the equitable relief of permanent injunction about the day-to-day management of the company and its affairs is maintainable. 39. Further, this Court in Norma (India) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... result in loss to the defendant No.4 company. The reliefs sought both in the suit and the application partake the character of a civil dispute and the remedy available under the Companies Act may not be an adequate and satisfactory alternative remedy. 42. Hence, in view of the nature of the reliefs sought by the applicants in the present application it cannot be held to be barred under Section 430 of the Companies Act and that the applicants are required to be relegated to the proceedings under the Companies Act. 43. Learned for the plaintiffs has also objected to the maintainability of the present application by defendant Nos.1 and 3 on behalf of defendant No.4. Claim of applicants/defendant Nos.1 and 3 is that since defendant No.3 is a 99% shareholder of defendant No.4, it is required to act in the best interest of defendant No.4 and to save the immediate further liability of payment of a total sum of ₹45 crores, the defendant Nos.1 and 3 on behalf of defendant No.4 responded to the Special Leave Petition in the Supreme Court filed by the contractor POSCO wherein the order of injunction passed by the Bombay High Court was modified directing defendant No.4 to deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he suit, or wrongfully sold in execution of a decree, or (b) that the defendant threatens, or intends, to remove or dispose of his property with a view to defrauding his creditors, (c) that the defendant threatens to dispossess the plaintiff or otherwise cause injury to the plaintiff in relation to any property in dispute in the suit, the court may by Order grant a temporary injunction to restrain such act, or make such other Order for the purpose of staying and preventing the wasting, damaging, alienation, sale, removal or disposition of the property or dispossession of the plaintiff, or otherwise causing injury to the plaintiff in relation to any property in dispute in the suit] as the court thinks fit, until the disposal of the suit or until further orders. 47. Supreme Court in Dorab Cawasji Warden (supra) dealing with the issue as to when a Court can grant interlocutory mandatory injunction laid down the following principles: 15. In one of the earliest cases in Rasul Karim A Anr. v. Pirubhai AMrbhm, ILR 1914 38 Bom. 381, Beaman, J. was of the view that the court's in India have no power to issue a temporary injunction in a mandatory form but Shah, J. wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f such an injunction to a party who fails or would fail to establish his right at the trial may cause great injustice or irreparable harm to the party against whom it was granted or alternatively not granting of it to a party who succeeds or would succeed may equally cause great injustice or irreparable harm, courts have evolved certain guideline. Generally stated these guidelines are: (1) The plaintiff has a strong case for trial. That is, it shall be of a higher standard than a prima facie case that is normally required for a prohibitory injunction. (2) It is necessary to prevent irreparable or serious injury which normally cannot be compensated in terms of money. (3) The balance of convenience is in favour of the one seeking such relief. 17. Being essentially an equitable relief the grant or refusal of an interlocutory mandatory injunction shall ultimately rest in the sound judicial discretion of the Court to be exercised in the light of the facts and circumstances in each case. Though the above guidelines are neither exhaustive or complete or absolute rules, and there may be exceptional circumstances needing action, applying them as prerequisite for the gran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be responsible for the litigation including the one in relation to POCSO where the award for a sum of ₹45 crores has been passed against defendant No.4. ₹1 crore has already been deposited from the account of defendant No.4 pursuant to the extension of time granted by the Hon'ble Supreme Court on 11th May, 2020 and if a further sum of ₹4 crores is not deposited, the defendant No.4 would have to incur the liability of a sum of ₹45 crores immediately and thus the requirement of Section 1(a) that the property in dispute in the suit i.e. property of defendant No.4 is in danger of being wasted or alienated is satisfied. 51. A perusal of the reliefs sought in the present application as noted in para-2 above clearly shows that even if the suit is finally disposed of the reliefs as sought by the applicants/defendant Nos.1 and 3 cannot be granted to them in the absence of a counter claim. The reliefs sought are not in the nature of seeking restoration of status-quo ante or the position at the time when the suit was filed. The applicants/defendant Nos.1 and 3 have also not made out a strong case so that during the trial they would be in a position to asser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. This is more so because defendant No.1 and 3 claim that they alone are securing the interest of defendant No.4. 54. Rebutting the argument of learned counsel for the plaintiffs, learned counsel for the applicants contends that as per the terms of agreement between the plaintiffs and defendant No.4 and the subsequent Resolution of the Board of defendant No.4 dated 15th January, 2018 the defendant Nos.1 and 3 have no liability to pay for the litigation or the liabilities of defendant No.4 which have to be carried out from defendant No.4. Learned counsel for the applicants submits that the plea of the plaintiffs that he is an investor/lender to defendant No.4 is wholly incorrect as defendant No.4 is a joint venture company as is evident from recital C of the Share Subscription Agreement dated 26th July, 2014 which reads as under: Execution Version SHARE- SUBSCRIPTION-AGREEMENT AMONGST GIZA HOLDINGS PTE LTD AND KUMAR URBAN DEVELOPMENT PRIVATE LIMITED AND LALIT KUMAR JAIN AND PRANAY LALITKUMAR JAIN AND SINEW DEVELOPERS PRIVATE LIMITED C. The Company and the Promoters have approached the Investors to invest in the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sts. This key objective recognizes that all creditors do not need to be treated identically, but in a manner that reflects the different bargains they have struck with the debtor. This is less relevant as a defining factor where there is no specific debt contract with the debtor, such as in the case of damage claimants (e.g. for environmental damage) and tax authorities. Even though the principle of equitable treatment may be modified by social policy on priorities and give way to the prerogatives pertaining to holders of claims or interests that arise, for example, by operation of law, it retains its significance by ensuring that the priority accorded to the claims of a similar class affects all members of the class in the same manner. The policy of equitable treatment permeates many aspects of an insolvency law, including the application of the stay or suspension, provisions to set aside acts and transactions and recapture value for the insolvency estate, classification of claims, voting procedures in reorganization and distribution mechanisms. An insolvency law should address problems of fraud and favouritism that may arise in cases of financial distress by providing, for exampl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have higher claim on the property of defendant No.4 than POSCO which is an unsecured creditor even though it may be armed with a decree as also held by the Division Bench of this Court in the decision reported as 2013 (134) DRJ 467 Spice Jet Ltd. Ors. vs. Malanpur Steel Ltd. Ors. Therefore, the applicants cannot claim equity to create charge on the property of the defendant No.4 to satisfy the claim of an unsecured creditor even though armed with a decree over and above the charge of the plaintiff No.2 who is a secured creditor. 58. To consider the plea of equity raised, it would be appropriate to note that though the claim of the applicants is that in the defendant No.4 the land was brought by the applicants and they also infused a capital of ₹130 crores, however when this Court raised further queries from learned counsel for the applicants the said claim is found to be apparently incorrect, for the reason it was accepted that the land for the project was transferred to defendant No.4 on payment of approximately ₹130 crores taken as a loan and when the agreement was entered into with the plaintiffs, from the sum of ₹190 crores infused by the plaintiffs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charge on the property of defendant No.4 to satisfy the claim of an unsecured creditor as against the plaintiffs who are the secured creditors. 60. Though applicants claim that everything was with the approval of the plaintiffs however, a perusal of the agreements and particularly the Board Resolution dated 15th January, 2018 indicates that though the defendant No.1 was absolved of the liability of the delay in the project and an independent management brought in however, as regards the POSCO litigation was concerned the same arose when defendant No.1 was looking after the affairs of the defendant No.4. As per the Board Resolution dated 15th January, 2018 it was resolved that he will continue to look after the litigation however, it was clarified that the liability to pay for the cost incurred on litigation was on defendant No.4. The Resolution dated 15th January, 2018 does not resolve that the liability to pay any awarded amount or decree would be on the defendant No.4. The liability to pay the cost incurred in litigation is different from liability incurred by way of an award or a decree. It will have to be gone into by the parties as to whether the decree was suffered due to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of defendant No.3. 64. As noted above the defendant Nos.1 to 3 have already filed a suit in Pune seeking specific performance of the agreement between the parties against the plaintiffs herein and when a query was raised to learned counsel for the applicants that the remedy sought in the present application could be addressed in the suit filed at Pune and why no application was filed in the said suit, learned counsel for the applicants states that the present application was maintainable both in this suit as well as the suit at Pune and thus the applicants preferred the application in the present suit. This Court is not in agreement with the reply of learned counsel for the applicants. Though the reliefs claimed in the present application may or may not be incidental to the reliefs sought in the suit instituted at Pune, however they are certainly not incidental to the reliefs sought by the plaintiffs in the present suit. 65. At this stage it would be appropriate to note that in the present suit there is no interim orders vis- -vis the property of defendant No.4 as the rights of the plaintiffs in the property of the defendant No.4 are governed by the contract. The interim in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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