TaxTMI 
TaxTMI 
2021 (4) TMI 1324
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....ndent No. 2 ("Mehta") and Respondent No. 5, Zon Investment Advisors Pvt. Ltd. ("Zon") entered into agreements on 31st March 2017 to secure repayment of an earlier loan that Respondent No. 3 ("Champion Agro World") took in the amount of Rs. 40 crores from IFIN. There was a previous loan agreement of 17th May 2014 (to be read with an offer letter dated 15th May 2014). By this, IFIN gave a finance facility of Rs. 40 crores to Champion Agro World. This facility was secured by a pledge of 52,86,679 shares--60.7% of the share capital of Champion Agro Ltd. ("Champion Agro"), Respondent No. 4--held by its promoters, a first charge of mortgage of land at Palitana, an exclusive charge on the current assets of Champion Agro World, a pledge of the entire equity shares of Champion Agro World by its shareholders, and various personal guarantees. There was also a Comfort Letter of 19th May 2013 from Bay Capital undertaking to provide the necessary funds should there be any payment default by Champion Agro World. 4. In 2015, Champion Agro World defaulted. In 2016, IFIN filed Commercial Suit No. 469 of 2016 in this Court against Champion Agro World and the personal guarantors. 5. Meanwhile IF....
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.... charge in favour of Bay Capital. The pledge agreement does not seem to have been registered and, as I noted, the actual pledge has never been effected. 10. I am leaving aside for the moment the other narrative in the plaint. I come immediately to the EoD notice of 23rd July 2019, a copy of which is at Exhibit 'A' from page 39. This is addressed to Bay Capital, Mehta and Zon Software. It briefly sets out the background in paragraphs 1 to 3, with reference to the subscription agreement of 31st March 2017. Paragraph 4 sets out the distinct events of default that IFIN invoked. It claimed that, on 1st July 2019, an aggregate amount of Rs. 3,46,81,650/- was overdue and unpaid. It said that Bay Capital had failed to take IFIN's approval for a merger of the 1st Respondent with another entity. Certain necessary documents, including audited financial and statutory auditor certificates for the financial year 2018 were not produced. Lastly, it said that the hypothecation charge that was agreed to be created was not registered. In paragraph 5, IFIN then said that since Bay Capital had continuously failed and neglected to cure all events of default within the cure period, in acco....
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....reme Court in Cotton Corporation of India Ltd. v. United Industrial Bank Ltd. & Ors. (1983) 4 SCC 625 Section 41 of the Specific Relief Act reads thus: "41. Injunction when refused.--An injunction cannot be granted-- (a) to restrain any person from prosecuting a judicial proceeding pending at the institution of the suit in which the injunction is sought, unless such restraint is necessary to prevent a multiplicity of proceedings; (b) to restrain any person from instituting or prosecuting any proceeding in a court not subordinate to that from which the injunction is sought; (c) to restrain any person from applying to any legislative body; (d) To restrain any person from instituting or prosecuting any proceeding in a criminal matter; (e) to prevent the breach of a contract the performance of which would not be specifically enforced; (f) to prevent, on the ground of nuisance, an act of which it is not reasonably clear that it will be a nuisance; (g) to prevent a continuing breach in which the plaintiff has acquiesced; (h) when equally efficacious relief can certainly be obtained by any other usual mode of....
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....) 15. In paragraph 10, the Cotton Corporation court went on to consider the argument that these considerations as enunciated in paragraph 8 do not apply to temporary injunctions. That submission was also negative by the Supreme Court in these words: "10. Mr. Sen, learned counsel for the respondent-Bank, contended that Section 41 (b) is not at all attracted because it deals with perpetual injunction and the temporary or interim injunction is regulated by the Code of Civil Procedure specially so provided in Section 37 of the Act. Expression 'injunction' in Section 41 (b) is not qualified by an adjective and therefore, it would comprehend both interim and perpetual injunction. It is, however, true that Section 37 specifically provides that temporary injunctions which have to continue until a specified time or until further order of the court are regulated by the Code of Civil Procedure, But if a dichotomy is introduced by confining Section 41 to perpetual injunction only and Section 37 read with Order 39 of the Code of Civil procedure being confined to temporary injunction, an unnecessary grey area will develop. It is indisputable that temporary injunction is grant....
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....etc.--(1) Any member of a company who complains that-- (a) the affairs of the company have been or are being conducted in a manner prejudicial to public interest or in a manner prejudicial or oppressive to him or any other member or members or in a manner prejudicial to the interests of the company; or (b) the material change, not being a change brought about by, or in the interests of, any creditors, including debenture holders or any class of shareholders of the company, has taken place in the management or control of the company, whether by an alteration in the Board of Directors, or manager, or in the ownership of the company's shares, or if it has no share capital, in its change, it is likely that the affairs of the company will be conducted in a manner prejudicial to its interests or its members or any class of members, may apply to the Tribunal, provided such member has a right to apply under section 244, for an order under this Chapter. (2) The Central Government, if it is of the opinion that the affairs of the company are being conducted in a manner prejudicial to public interest, it may itself apply to the Tribunal for an order under this Ch....
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....being conducted in a manner prejudicial or oppressive to any member or members or prejudicial to public interest or in a manner prejudicial to the interests of the company; and (b) that to wind up the company would unfairly prejudice such member or members, but that otherwise the facts would justify the making a winding-up order on the ground that it was just and equitable that the company should be wound up, the Tribunal may, with a view to bringing to an end the matters complained of, make such order as it thinks ft. (2) Without prejudice to the generality of the powers under sub-section (1), an order under that sub-section may provide for-- (a) the regulation of conduct of affairs of the company in future; (b) the purchase of shares or interests of any members of the company by other members thereof or by the company; (c) in the case of a purchase of its shares by the company as aforesaid, the consequent reduction of its share capital; (d) restrictions on the transfer or allotment of the shares of the company; (e) the termination, setting aside or modification, of any agreement, howsoever arrived at, between....
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.... stating therein specifically as to whether or not the respondent is a fit and proper person to hold the office of director or any other office connected with the conduct and management of any company. (5) Where an order of the Tribunal under sub-section (1) makes any alteration in the memorandum or articles of a company, then, notwithstanding any other provision of this Act, the company shall not have power, except to the extent, if any, permitted in the order, to make, without the leave of the Tribunal, any alteration whatsoever which is inconsistent with the order, either in the memorandum or in the articles. (6) Subject to the provisions of sub-section (1), the alterations made by the order in the memorandum or articles of a company shall, in all respects, have the same effect as if they had been duly made by the company in accordance with the provisions of this Act and the said provisions shall apply accordingly to the memorandum or articles so altered. (7) A certified copy of every order altering, or giving leave to alter, a company's memorandum or articles, shall within thirty days after the making thereof, be filed by the company with the Regi....
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.... in Gautam Landscapes, the learned single Judge held the Division Bench decision in Universals Enterprises to be per incuriam. For our purposes, it makes little difference that the Division Bench's view is now apparently the correct position in law; the point is that a declaration that a particular decision is rendered per incuriam is not the sole province of a superior court. 20. While I do not think I need to go quite that far with the NCLAT order, it seems to me plain that when the NCLAT passed such an order it did something it could not possibly have done. When it used the words 'any court of law' this could conceivably mean the High Court as well. The NCLAT has absolutely no jurisdiction over this Court, even on its Original Side, given that this is a Chartered High Court. The High Court is in no way subject to the NCLAT's jurisdiction or superintendence. I do not see how the words 'court of law' can be 'read down', because other than the NCLT, there is no other judicial authority over which the NCLAT exercises such superintending power. But if we leave that aside and focus on the words 'arbitration panel and arbitration authority', a....
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....s seems to me to be prima facie extremely doubtful. 24. At page 357 in the Rejoinder is a copy of letter of 1st November 2019 from IFIN. This gives the details of the outstanding amounts as of 30th September 2019. The outstanding are computed under two steams, so to speak. One is under the facility of Rs. 30 crores and the second outstanding is under the OCD facility of Rs. 44 crores. This yields IFIN's total claim of Rs. 47,53,78,882/- and there is a stipulation of further interest of Rs. 16,63,562/-. 25. What Mr. Sakhardande in essence seeks, and I do not think there is any other way to look at it, is virtually a re-writing of the terms of the commercial contract between the parties at the time of Section 9 Petition. I am asked to waive or ignore a breach of the obligation to pay interest on schedule. I am asked to turn a blind eye to the failure to create a hypothecation and the pledge of shares. All these breaches and defaults are to count for nothing; and in the meantime, IL & FS is to be restrained from enforcing its contractual obligations against Bay Capital. I do not see why Bay Capital should not be held to the bargain that it struck. This agreement has never be....