TaxTMI 
TaxTMI 
2020 (8) TMI 875
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....e respondent M/s. Vistra ITCL (India) Ltd. was appointed as Debenture Trustee, vide Debenture Trust Deeds dated 5th January, 2017. 3. On the same day, i.e. 5th January, 2017, two Debenture Trust Deeds, were executed, whereby 5650 non-convertible debentures, each with face value of Rs. 10 lakhs, and 7000 debentures, each with face value of Rs. 10 lakhs, were issued, in favour of a consortium of lenders comprising M/s. KKR India Financial Services Pvt. Ltd. and KKR India Debt Opportunities Fund (referred to, collectively, as "KKR"), M/s. L & T Finance Ltd., L & T Fincorp Ltd. and Family Credit Ltd. (referred to, collectively, as "L & T") and M/s. BOI AXA Corporate Credit Spectrum Fund ("BOI"), who are referred to, collectively, as the "debenture holders". The total value of the debentures was, therefore, Rs. 1400 crores, and were issued to the debenture holders on private placement basis. Salient Features of the Debenture Trust Deeds 4. The Debenture Trust Deeds (which were identical) provided, inter alia, as follows: (i) The debentures were issued, in favour of the debenture holders, by way of private placement, in one or more tranches. (ii) The obligation....
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....ash Security, the Security Cover is equal to or greater than the Required Security Cover." "Required Security Cover" was defined, in Clause 1.1.100, somewhat enigmatically, as meaning "Security Cover of at least two times". (iv) "Obligations" were defined, in Clause 1.1.70 of the Debenture Trust Deed, as including all debts and liabilities, due or payable by the petitioner, under or in connection with any Transaction Document, including the Outstanding Amounts. "Transaction Documents", as defined in Clause 1.1.127, included, inter alia, the Debenture Trust Deeds, the Deeds of Hypothecation (of the amounts in the Designated Bank Accounts) and the Memoranda of Pledge (whereby the shares of CGP and BILT were pledged as security, pending redemption of the debentures). "Outstanding Amounts" was defined in Clause 1.1.73, as meaning all the amounts payable by the petitioner to the Debenture Holders and the Debenture Trustee. (v) KKR (comprising KKR India Financial Services Private Limited and KKR India Did Opportunities Fund II), L & T (comprising L & T Finance Ltd., L & T Fincorp Ltd. and Family Credit Ltd.) and BOI AXA Corporate Credit Spectrum Fund were enlis....
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.... Redemption", "Mandatory Redemption" and "Final Redemption", of the Debentures. (x) "Early Redemption" was covered by Clause 2.5.1, and was permissible at the option of the petitioner. The petitioner was permitted, by this Clause, to repay, in part or in full, the Outstanding Amounts, any time within a period of 30 months from the first Deemed Date of Allotment (which period was defined, in Clause 1.1.122, as the "Tenure"). The "First Deemed Date of Allotment" was, in turn, defined, in Clause 1.1.47, as the Deemed Date of Allotment of the First Tranche, i.e. the date when the Investment Amount, relevant to the First Tranche, was deposited by the concerned Debenture Holder. (xi) Early Redemption required the petitioner to issue a written notice, to the Debenture Trustee, stating the exact portion of the Outstanding Amounts, that it intended to redeem, and the date of such intended redemption. (xii) "Mandatory Redemption" was covered by Clause 2.5.2, and was mandatorily required to be undertaken, within 5 days of the occurrence of an Identified Event. "Identified Events" were defined, in Clause 1.1.52, as meaning "all steps and actions, taken by the Company....
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....1, to unconditionally permit release and transfer-out, of all Secured Assets held in the Designated DP Account and amounts standing to the credit of the Designated Bank Accounts. "Designated DP Account" was defined, in Clause 1.1.36, as meaning the dematerialised securities account of the petitioner, maintained with PNR Securities Ltd. and to be operated in accordance with the terms of the Debenture Trust Deed. (xvi) Clause 4.3.1 required the petitioner to constitute a subcommittee of its Board, which was to be entrusted with the responsibility for providing guidance on value creation, including by way of transfer of the businesses or undertakings of the Reference Entities, or the petitioner, for the purpose of achieving the Identified Events. This sub-Committee, to be known as the "Strategic Committee", was to comprise of one nominee of the petitioner and one nominee of the Debenture Trustee. (xvii) Clause 9 dealt with "Events of Default". "Event of Default" was defined, in Clause 1.1.41, as meaning any event set out in Schedule 3 to the Debenture Trust Deed. Schedule 3 enlisted as many as thirty three "Events of Default". Of these, the following "Events of Defau....
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....ny term of any transaction document entered into by the Company or any of its subsidiaries in relation to any portion of the Identified Date, which is considered to be an event of default under such transaction Document;" (xviii) The sequelae, to the happening of an Event of Default, were contained in Clauses 9.1 to 9.6, which merits reproduction, in extenso, thus: "9.1 Upon the occurrence of an Event of Default, the Company shall immediately inform the Debenture Trustee in writing of such occurrence, together with all details related thereto. The Debenture Trustee shall thereafter or upon becoming aware of an Event of Default immediately notify the Debenture Holders of the occurrence of such Event of Default, requesting for instructions as to the steps required to be taken by the Debenture Trustee, if any, under Clause 9.2 below. 9.2 On the occurrence of any Event of Default, the Debenture Trustee may (acting pursuant to Approved Instructions) by a notice in writing to the Company (an "Enforcement Notice"): 9.2.1. declare the Outstanding Amounts, in respect of the Debentures payable under the Transaction Documents to be immediately due and payab....
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....ale of the Secured Assets (including the pledged Reference entity Shares)(or part thereof), the Company shall, promptly but in any event within 3 (three) Business Days after the date of any Enforcement Notice, sell the Secured Assets including the pledged Reference entity Shares or part thereof as instructed in the Enforcement Notice) in one or more lots and procure that the proceeds from all such sales (collectively, the "Share Sale Proceeds") are directly credited only to the AHL Designated Bank Account or such account as may be notified from time to time by the Debenture Trustee (acting pursuant to Approved Instructions). 9.4. The occurrence of any one of the events set out in Schedule 3 shall constitute an event of default (an "Event of Default") for the purposes of this Deed. 9.5. Upon (i) the occurrence of any Event of Default or (ii) any event which, after the delivery of a notice, making of a determination or lapse of time (or any combination of the foregoing), could constitute an Event of Default (other than an Event of Default set out in paragraph 9 of Schedule 3 to the extent it relates to a Material Entity), the company shall promptly give notice there....
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....e, the Debenture Trustee (it being hereby clarified that any costs required to be borne by the Debenture Trustee in relation thereto shall be borne by the Debenture Holders (but nevertheless recoverable by the Debenture Holders as per the provisions of the Transaction Documents) on the one hand shall appoint 1(one) arbitrator, the Company shall appoint the second arbitrator and the 2(two) arbitrators so appointed shall appoint the third arbitrator who shall act as the presiding arbitrator. In the event a party fails to appoint their arbitrator for any reason whatsoever within 15(fifteen) days of another party appointing the arbitrator, then, the appointment process set forth in the International Chamber of Commerce Rules of Arbitration ("Rules") shall be followed. The seat of arbitration shall be at Delhi or such other seat in India as may be agreed to by the Parties and the arbitration shall be governed by the provisions of the Rules. The language of the arbitration proceedings shall be English. The expenses of the arbitration shall be borne in such manner as the arbitral tribunal may determine. The award shall be final, conclusive and binding on all parties concerned. The arbitra....
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....: "4.3.4. During the first 18 (eighteen) months from the first Deemed Date of Allotment, in the event there is a tie in the decision of the members of the Strategic Committee, the nominee of the Company will have a casting vote with respect to decisions/recommendations of the Strategic Committee. 4.3.5. Notwithstanding Clause 4.3.4, if (i) on the Target Date any of the Target Events have not occurred to the satisfaction of the Debenture Trustee (acting on the Approved Instructions) then on the Strategic Committee Target Date, the nominee of the Debenture Trustee on the Strategic Committee will have the casting vote with respect to decisions/recommendations of the Strategic Committee in the event of a tie, until the Final Settlement Date, or (ii) immediately upon the occurrence of an Event of Default under para 2 of Schedule 3 or if the Company fails to pay the Outstanding Amounts in case of acceleration of the Outstanding Amounts of the Debentures by the Debenture Trustee pursuant to this Deed or any other Transaction Document, the nominee of the Debenture Trustee on the Strategic Committee will have the casting vote with respect to decisions/recommendations of th....
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.... that the value of CGP had declined, significantly, over several months, and that preservation of the value of CGP, as also enhancement thereof, so as to create liquidity, with regard to the holding of the petitioner in CGP, was of the essence. Mr. Krishnan, as the nominee of the Debenture Trustee on the Strategic Committee, suggested that an external, independent individual, be appointed as a resource, who would work with the Chief Financial Officer, CEO and other executives of CGP, to implement objectives relating to value creation in CGP. The Strategic Committee agreed to implement the recommendation. 6.5. Following on the above recommendation, in the next meeting of the Strategic Committee, on 16th November, 2018, Mr. Krishnan suggested the appointment of Tranzmute LLP (hereinafter referred to as "Tranzmute"), a partnership of KKR and Mr. Narayan Seshadri, as the "Independent Resource", to suggest measures for value creation at CGP. 6.6. Subsequently, however, Mr. Krishnan suggested that the appointment of Tranzmute, as "Independent Resource" be placed on hold, as a result whereof it never fructified. The Debenture Trustee decided to withdraw the proposal for ....
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.... of the pledged shares of CGP, in the name of the Debenture Trustee, with the understanding that the shares would be released in favour of the petitioner, upon payment of the redemption amount as negotiated and within the time as extended by the parties. As such, the petitioner contends that the pledged shares of CGP, which were earlier in the name of the petitioner, were transferred to the name of the Debenture Trustee, i.e. Respondent No. 1. The petitioner has placed on record, a communication, dated 10th March, 2019, addressed by the petitioner to the National Stock Exchange of India Ltd. (NSE), the Bombay Stock Exchange Ltd. (BSE) and CGP, whereunder intimation has been provided, as required by Regulations 29 and 31 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (hereinafter referred to as "the 2011 SEBI Regulations"), regarding invocation, to the effect that the Respondent, as the Debenture Trustee, had invoked the pledge, of the shares of CGP, held by the petitioner. The said communication may be reproduced thus: "Date: 10th March, 2019 National Stock Exchange of India Limited Exchange Plaza Bandra Kurla Complex ....
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....to investigate transactions, entered into, purportedly without proper authorisation by CGP. The petition further asserts that, on 21st June, 2019, CGP proposed appointment of Tranzmute to help CGP in a capital restructuring exercise. 6.11. The petition alleges that on 5th August, 2019, Vaish tabled a Preliminary Report, resulting in a misleading disclosure, by CGP to NSEI and BSE. On 29th August, 2019, Mr. Gautam Thapar was removed as Chairman of the BoD of CGP. 6.12. It is submitted by Mr. Mukul Rohatgi, learned Senior Counsel and Mr. Jayant Mehta, learned counsel appearing on behalf of the petitioner, that this Preliminary Report was part of a plan, devised by KKR to ensure that the value of the shares of CGP, which stood transferred to the name of the Debenture Trustee, i.e. the respondent, plummeted, so that they could later purchase the shares at a pittance. 6.13. As a consequence of the aforesaid alleged machinations, chiefly, by KKR, the petition alleges that there was a fall in the value of the shares of CGP, from Rs. 36.60 on 1st March, 2019 to Rs. 12.25 on 6th December, 2019 per share. 6.14. It is alleged that, having thus succeeded in ....
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....e no occasion for invoking and selling the pledged shares of CGP, prior to the expiry of 30 months from 5th January, 2017, i.e. prior to 6th July, 2019. Instead of doing so, it is alleged that the respondent illegally transferred the pledged shares of CGP in its name, in March, 2019, creating a situation in which the value of the shares fell in the market and, thereafter, sold the shares in September, 2019, at a pittance. This, it is submitted, was entirely illegal. 6.17. On 30th June, 2020, the respondent wrote to the petitioner, alleging that, starting 28th September, 2018, several notices have been issued, by the respondent to the petitioner, pointing out that the required security cover, as per Clause 3.4 of the Debenture Trust Deeds, was not being maintained, and highlighted other breaches. It was also pointed out, in the said communication, that as per the covenants of the Debenture Trust Deeds, all Outstanding Amounts were payable by the petitioner on the final redemption date, i.e. 10th July, 2019, in which respect, too, the petitioner had defaulted. A tabular statement, setting out the amounts outstanding, to be paid by the petitioner, to the Debenture Trustee, on....
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....tioner responded, to the above communication, vide letter dated 8th July, 2020, addressed by counsel, asserting that it had been agreed, between the petitioner and KKR, (who was acting on behalf of the Debenture Holders), that the pledged CGP shares, after being moved to the DEMAT account of the respondent, would continue to be held as collateral, to enable the petitioner to repay the Outstanding Amounts under the Debenture Trust Deeds. The sale of the CGP shares, between July and September, 2019, it was alleged, was in stark violation of the said agreement and understanding. The manner in which the debenture holders had acted, it was alleged, reflected market manipulation, using the petitioner as a scapegoat. In view thereof, it was submitted that the Debenture Trust Deeds and the Memoranda Of Pledge stood vitiated and the petitioner, had no liability under the debenture trust deeds, which stood, accordingly rescinded. The petitioner has also pointed out that it had complained, in the above regard, to the SEBI, which was enquiring into the matter. 7. The petition asserts that, "in these extraordinary circumstances", the petitioner was seeking interim measures of protection, pen....
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....hares and obtaining a controlling stake in BILT. The petitioner has, therefore, expressed serious apprehension that the debenture trustee, i.e. respondent, in collusion with the debenture holders, would invoke the pledge and sell the pledged BILT shares, as threatened, in the notice dated 30th June, 2020 supra, thereby rendering all rights of the petitioner infructuous. This, it is submitted, is bound to result in irreparable loss and prejudice to the petitioner. The petitioner has, in its written submissions, highlighted the "intrinsic value", of the pledged BILT shares; however, for the purposes of disposal of the present petition, I do not deem it necessary to advert thereto. 11. This petition was initially listed, before this Court, on 10th July, 2020, and was renotified for 16th July, 2020. Mr. Mukul Rohatgi, learned Senior Counsel appearing for the petitioner, pointed out, on 16th July, 2020, that, even while the matter was thus pending before this Court, 50% of the pledged shares of BILT have been sold, by respondent, on 15th July, 2020. In the circumstances, he exhorted this Court to restrain the respondent from selling the remaining 50% of the BILT shares. 12. Before....
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....it would remedy the breaches and ensure repayment of the Outstanding Amounts. Reference has been invited, by Mr. Nayar, to the said communication dated 6th March, 2019, of the petitioner (which is on record), in para 3 of which the petitioner admitted breach, on its part, in payment of the Outstanding Amounts under the Transaction Document. The said document deserves to be reproduced in extenso thus: "March 6, 2019 From Avantha Holdings Limited Thapar House 124 Janpath, New Delhi-110001 Facsimile: +91 11 23368729 Email: [email protected] [email protected] Attention: Mr. Rajendra Mangal and Mr. S. Khandelwal Salient Financial Solutions Limited Thapar House, 124, Janpath, New Delhi-110001. Facsimile +91 11 23368729 Email:[email protected] [email protected] Attention: Mr. Rajendra Mangal: Mr. S. Khandelwal To Vistra ITCL (India) Limited The IL&FS Financial Centre, Plot C-22, G Block, 7th Floor Bandra Kurla Complex, Bandra (East) ....
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.... Amounts under the Transaction Documents, and from any sale of the Pledged Reference Entity Shares at the present time in consideration for which and as an alternative to an immediate sale of the Pledged Reference Entity Shares, we request you as the Debenture Trustee: 5.1 to move to the demat account of the Debenture Trustee, up to all of the pro-rata share of the Debenture Holders as identified in Annexure 1 of your Notice of the equity shares of CG Power and Industrial Solutions Limited that have been pledged in favour of the Debenture Trustee in terms of the Transaction Documents ("Pledged Reference Entity 1 Shares"), as collateral for the benefit of the Debenture Holders as identified in Annexure 1 of your Notice, pursuant to an invocation of the pledge created by AHL over such Pledged Reference Entity 1 Shares in favour of the Debenture Trustee; and 5.2. to assume, retain and exercise all rights, including all voting rights, in respect of any such Pledged Reference Entity 1 Shares so invoked and transferred to the Debenture Trustee, as collateral, until the payment of the Outstanding Amounts owing to the Debenture Holders as identified in Annexure 1 of your ....
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....he Debenture Holders shall continue to be entitled to exercise all rights available to the Debenture Trustee and the Debenture Holders, including all rights and remedies under any of the Transaction Documents, or under law or in equity, including the right to transfer and/or sell any of the Pledged Reference Entity Shares to recover any or all of the Outstanding Amounts due to the Debenture holders under the Transaction Documents upon the occurrence of an Event of Default. 9. We request you to kindly counter-sign this letter to indicate your agreement with the terms hereof, following which this letter (and the covenants contained herein) shall be binding on us, and shall be a "Transaction Document", as such term is defined under the Transaction Documents. Yours sincerely, For Avantha Holdings Limited Sd/- Authorised Signatory For Salient Financial Solutions Limited Sd/- Authorised Signatory For Vistra ITCL (India) Limited" 17. All Outstanding Amounts, Mr. Nayar points out, were required to be paid on or before 6th July, 2019, in which respect, too, the petitioner defaulted. This led to the issuance ....
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....litate grant of any interim relief to the petitioner. Analysis 23. Having heard learned Senior Counsel for the parties, and perused the material on record, I am of the firm opinion that the present petition is nothing more than a shot in the dark and is clearly bereft of any sustainable cause of action. Scope of Section 9 of the 1996 Act 24. Section 9 of the 1996 Act contemplates "interim measures, etc.", by the Court. The expression "etc.", used at the end of a definition clause has been held, in several decisions, to be required to be interpreted noscitur a sociis and ejusdem generis (the latter principle applying where the words, preceding the word "etc.", constituted a genus, and the former principle applying more universally, in all cases), the words preceding it. Rajagopala Pandarathar v. Thirupathi Pillai, AIR 1923 Mad 511; CIT v. Maulane Tea Co, (2000) 244 ITR 589 (Ker); KV. Mathew v. District Manager, Telephones Ernakulam, AIR 1984 Ker 40, Bombay Municipal Corporation v. Daily Taj Pvt. Ltd., AIR 2001 Bom 263 Measures, put in place by the Court, in exercise of the jurisdiction vested by Section 9 has, therefore, to be in the nature of "interim measures". "Interi....
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....hese criteria does not, ipso facto, make out a case for ordering interim measures under Section 9. Additionally, the Court is also required to satisfy itself that the relief, being sought under Section 9, cannot await the constitution of the arbitral tribunal, or the appointment of the arbitrator, and the invocation, before such arbitrator or arbitral tribunal, of Section 17. Emergent necessity, of ordering interim measures is, therefore, an additional sine qua non, to be satisfied before the Court proceeds to grant relief under Section 9 of the 1996 Act. While passing orders under Section 9, therefore, the Court is required to satisfy itself that (i) the applicant, before it, manifestly intends to initiate arbitral proceedings Sundaram Finance Ltd. v. NEPC India Ltd., (1999) 2 SCC 479, (ii) the criteria for grant of interim injunction, which apply to Order 39 of the CPC, stands satisfied, and (iii) circumstances also exist, which renders the requirement of ordering interim measures an emergent necessity, which cannot await a Section 17 proceeding, before the arbitrator, or arbitral tribunal. In assessing whether such an emergent necessity exists, or not, the Court would, essential....
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....working of the contract pending the arbitration. The Court of Appeal thought that it was an appropriate case for an injunction but that it had no power to grant injunction because of the arbitration. In further appeal, the House of Lords held that it did have the power to grant injunction but on facts thought it inappropriate to grant one. In formulating its view, the House of Lords highlighted the problem to which an application for interim relief like the one made in that case may give rise. The House of Lords stated at AC p. 367: (All ER p. 690g-h) "It is true that mandatory interlocutory relief may be granted even where it substantially overlaps the final relief claimed in the action; and I also accept that it is possible for the court at the pre-trial stage of a dispute arising under a construction contract to order the defendant to continue with a performance of the works. But the court should approach the making of such an order with the utmost caution, and should be prepared to act only when the balance of advantage plainly favours the grant of relief In the combination of circumstances which we find in the present case I would have hesitated long before proposing ....
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....n the case before it, is also instructive. In the case before it, M/s. Orissa Manganese and Minerals (P) Ltd.(hereinafter referred to as "OMM") entered into an agreement, dated 14th May, 2003, with Adhunik Steels (hereinafter referred to as "Adhunik"), for raising manganese ore on its behalf. The agreement was to subsist for 10 years, w.e.f. 18th May, 2003, with the option, to Adhunik, to seek renewal for a further term. Pursuant to the agreement, Adhunik mobilised huge resources, and incurred considerable expenditure. Just six months after entering into the agreement, on 24th November, 2003, OMM issued a notice, to Adhunik, purporting to terminate the agreement. The justification, cited by OMM for doing so, was that it had realised that the contract was in violation of Rule 37 of the Mineral Concession Rules, 1960, and that, therefore, OMM was in danger of losing its right is the lessee, necessitating termination of the contract. As Adhunik had incurred considerable expenditure, as well as losses, it moved the District Court, under Section 9 of the 1996 Act, for an injunction, restraining OMM from terminating the contract and from dispossessing it from the site. Vide order dated 1....
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....e just and proper to direct OMM Private Limited not to enter into a contract for mining and lifting of minerals with any other entity until the conclusion of the arbitral proceedings. 25. At the same time, we see no justification in preventing OMM Private Limited from carrying on the mining operations by itself. It has got a mining lease and subject to any award that may be passed by the arbitrator on the effect of the contract it had entered into with Adhunik Steels, it has the right to mine and lift the minerals therefrom. The carrying on of that activity by OMM Private Limited cannot prejudice Adhunik Steels, since ultimately Adhunik Steels, if it succeeds, would be entitled to get, if not the main relief, compensation for the termination of the contract on the principles well settled in that behalf. Therefore, it is not possible to accede to the contention of learned counsel for Adhunik Steels that in any event OMM Private Limited must be restrained from carrying on any mining operation in the mines concerned pending the arbitral proceedings." (Emphasis supplied) 29. Arvind Constructions Ltd. v. Kalinga Mining Corporation MANU/SC/7697/2007 : (2007) 6 ....
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.... the Court to grant "such other interim measure of protection as may appear to the court to be just and convenient"-specifically the ambit of the expression "just and convenient"-constitutes subject matter of the following enunciation of the law, by Banumathi, J. (as she then was), speaking for the High Court of Madras, in V. Sekar v. Akash Housing AIR 2011 Mad 110: (2011) 3 Arb LR 327 (DB): "The purpose of Section 9 is to provide an interim measure of protection to the parties to prevent the ends of justice from being defeated. Section 9(2)(e) vests the Court with the power to grant such interim measures of protection as may be just and convenient. The jurisdiction under the "just and convenient" clause is quite while in amplitude, but must be exercised with restraint. Interim measures are to be granted by the Court so as to protect the rights in adjudication before the arbitral tribunal from being frustrated. It does not allow the Coach the discretion to exercise on restrained powers and frustrate the very object of arbitration." (Emphasis supplied) The cause of action, and the prayers, in the petition 32. Tested on the touchstone of the above princi....
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....nd L & T themselves from the open market, at throwaway prices. In actual fact, the respondent would seek to contend, the "transfer" of the pledged CGP shares to the DEMAT account of Respondent was, actually, a transfer simpliciter, accompanied by an "oral agreement"-the existence of which the respondent emphatically denies-but was by way of invocation, of the pledged shares, in accordance with Clauses 9.1 to 9.3 of the Debenture Trust Deeds, as the failure, on the part of the petitioner, to maintain the requisite Security Cover constituted an "Event of Default", within the meaning of Clause 1.1.41 of the Debenture Trust Deeds, read with Schedule 3 thereto. 35. That, however, is a dispute which must, necessarily, fall to the arbitrator, or arbitral tribunal, which would, some day, be seized of the matter. I refrain from expressing any opinion thereon, lest the arbitral proceedings-if and when they take place-are prejudiced. Suffice it to state, for the purposes of the present petition, that no interim direction can, in the above circumstances, be issued, to transfer the pledged CGP shares into the DEMAT account of the petitioner, as all the shares stand invoked, and a majority th....
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....ated in Schedule 3 of the Debenture Trust Deeds have occurred under the Debenture Trust Deeds and the Transaction Documents. Accordingly, pursuant to the Debenture Trust Deeds, the Pledge Memoranda and other Transaction Documents, we hereby wish to inform you as below: a. The Company is hereby called upon to immediately, and in any event not later than 10 (ten) days from the receipt of this letter to make payment, to the Debenture Holders listed at Annexure 1, of the entire amount of all Outstanding Amounts owed to such Debenture Holders listed at Annexure 2 in accordance with the Transaction Documents forthwith; and b. In the event that all Outstanding Amounts required to be paid to the Debenture Holders listed at Annexure 1 are not paid to the Debenture Holders in their entirety, then the Debenture Trustee shall, without prejudice to any and all rights available to the Debenture Holders and the Debenture Trustee under the Transaction Documents, take all necessary steps to enforce such rights and remedies as are available to the Debenture Trustee and the Debenture Holders in respect of the Pledged Reference Entity 2 Shares set out in Annexure 1, including but not....
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....s regard were also made to the Stock Exchanges. 4. However, contrary to our arrangement and understanding, the Debenture Trustee sold the Pledged Reference Entity l Shares between July 2019 and September 2019. These facts were also pointed out to you by our letter of 11 September 2019 seeking KKR's intervention, to which we received no response. 5. Instead, on 16 September 2019, KKR India Financial Services Limited purchased 5,07,28,829 Pledged Reference Entity 1 Shares and KKR India Debt opportunities Fund II purchased 1,19,45,780 Pledged Reference Entity 1 Shares at Rs. 14.62 per share amounting to 10% of CG Power. On 4 November 2019, L&T Finance Ltd. purchased 62,600,000 Pledged Reference Entity 1 Shares at Rs. 14.65 per share amounting to 9.9% of CG Power. 6. As events have unfolded, it appears that the debenture holder's actions were part of market manipulation and putting CG into play, using AHL as a scapegoat. 7. In this context, it is also relevant to note that in mid-2018, the debenture holders had the option of convening its debt into equity shareholding of CG Power, the share price of which at the relevant time was approximatel....
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....n market manipulation at large scale to obtain control of CG Power with the intention to deceive AHL (as well as the public investors) and act in breach of the agreement arrived at with AHL. 15. In these circumstances, the Debenture Trust Deeds and Memoranda of Pledge stand vitiated and AHL has no liability under the Debenture Trust Deeds which stand rescinded. 16. This letter is issued without prejudice to AHL's rights in equity, law and contract including AHL's right to claim damages. Yours faithfully, Bharucha & Partners (Sd/-) Partner Cc.: 1. KKR India Financial Services Private Limited 2nd Floor, Piramal Tower, Peninsula Corporate Park, Ganpatrao Kadam Marg Lower Parel (W), Mumbai 400013, India Facsimile number: + 91 22 4355 1301 Email: [email protected]: [email protected] Attention: Mr. Naozad Sirwalla/Mr. Jigar Shah 2. KKR India Debt Opportunities Fund II KKR Capital Markets India Private Limited (in its capacity as Sponsor to KKR India Debt Opportunities Fund II) 2nd Floor, Piramal Tower, Peninsula ....
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....pted, so as to acquire the BILT shares for a song. Apart from the fact that the entire "conspiracy"-as the petitioner would allege-of artificially depressing the price of the pledged CGP shares, and purchasing them from the market at the artificially depress the price, essentially obfuscate the main issue in controversy between the parties, and have no real bearing thereon, the "apprehension", voiced by the petitioner, regarding a similar treatment being accorded to the BILT shares, is merely an apprehension, and nothing more. Even if there were any legitimate ground, for the petitioner to entertain such an apprehension, and the respondents were, arguendo, to resort to such "market manipulation", to purchase the BILT shares after artificially depressing their value, that cannot justify grant of any interim directions, by this Court, against invocation, by the respondents, of the pledged to BILT shares, where the alleged defaults, on the part of the petitioner, have not been controverted or denied. The assertion, of the petitioner, in para 15 of the afore-extracted response, dated 8th July, 2020, to the Respondent, that, owing to the alleged machinations of the respondents, the "Deb....
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....nd stand rescinded which, as already held by me above, has no merit. 46. Reliance was placed, by Mr. Jayant Mehta, arguing in rejoinder on behalf of the petitioner, on the judgment of the Supreme Court in Mardia Chemicals Ltd. v. U.O.I. MANU/SC/0323/2004 : (2004) 4 SCC 311, to contend that the respondents were required to act in good faith. My attention was invited, particularly, to para 71 of the report, which does hold that "the financial institutions, namely, the lenders owe a duty to act fairly and in good faith". There can be no gainsaying this proposition. In my opinion, however, it is completely irrelevant to the issue at hand. The dispute, between the petitioner and the respondent, which could legitimately form the basis of an arbitral proceeding and, consequently, of the present proceedings under Section 9 of the 1996 Act, is the alleged infraction, by the petitioner, of the covenants of the Debenture Trust Deeds, and the right of the respondents, on that basis, to proceed against the shares, pledged by the petitioner by way of security. That dispute has nothing to do with good faith or bad faith. The "want of good faith", on the part of the respondents-as alleged by th....