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TaxTMI 
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2021 (10) TMI 1344
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....18, ILFS and its several group entities ran into severe trouble. This led, inter alia, to proceedings under Sections 241 and 242 of the Companies Act 2013 against ILFS in the NCLT Mumbai. On 15th October 2018, the NCLAT issued a 'stay' of all proceedings anywhere by anyone against IL&FS or any of its group entities. I have had occasion to address this order in a previous proceeding that was carried in appeal; more on that a little later. 4. The relevant portion of the NCLAT stay order is at page 76 of the Plaint. The NCLAT stayed 'the institution or continuation of suits or any other proceedings by any party or person or bank or company etc against ILFS and its 348 group companies in any Court of Law/Tribunal/Arbitration Panel or Arbitration Authority'. There were other directions with which I am not concerned. 5. There began then a process before the NCLT and NCLAT of restructuring ILFS and some of its group entities as a part of a resolution process through the Companies Act 2013. On 4th January 2019, expressions of interest were invited from bidders to acquire ILFS's controlling stake (or that of its group companies) inter alia in domestic road assets. JSEL is one such. It was....
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....cked into it with no end date in sight. While matters or litigations wound their way through the hierarchy of Courts, IL&FS and ITNL would have to wait and not receive the required inflow of funds. This was not the purpose of the SPA or the resolution process. SRL's bid was indeed higher than the reserve price and was the highest bid when it was made. But that is no longer true, for today there are significantly higher valuations available for SRL. It would defeat the purpose of the resolution process, i.e. the foundation of the SPA, he says, if parties were to be held to an earlier bid well below current valuations. Therefore, in his submission, not only were ILFS and ITNL entitled to not consent to a a LSD-extension request, but the want of a mutual extension had inevitable contractual consequences, namely, that the SPA itself lapsed. It is now, in his submission, incapable of performance. 8. The other argument, of course, is based on the NCLAT-declared stay or moratorium. I will come to that a little later. 9. He finally argues that an application of this kind should best be made to apply to the NCLT or the NCLAT. I should not, in exercise of my jurisdiction, at an ad-interim....
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....Off Date (October 15, 2018); 13. For completeness, I note clause 4.8 to which Mr Chinoy has drawn attention at page 496. "4.8In the event, any Party becomes aware of anything which shall or may prevent any of the Sellers' Conditions and/or the Purchaser's Conditions from being satisfied on or before the initial Long Stop Date, the relevant Party shall, along with documentary evidence, promptly notify the other Parties in writing, and this Agreement, if so agreed to by the Parties, shall stand extended from the Initial Long Stop Date to the Extended Long Stop Date. In the event the Parties are unable to agree on the Extended Long Stop Date, then the Initial Long Stop Date shall be deemed to be the Long Stop Date." 14. Mr Tulzapurkar points out that clause 13 at pages 514-515 is important because it provides for a termination but this termination, exhaustively defined and spread over four pages, is only termination for cause. There is no provision for an automatic termination. SRL has the right to terminate. 15. That there was a first extension of the LSD to 6th August 2021 - which became the first ELSD - is not in dispute. 16.On 18th August 2021, ILFS wrote to SRL (page 650 to....
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....that the NCLT does not have jurisdiction to decide specific performance actions. That, in his submission, is a complete answer to the objection based on Section 430 of the Companies Act 2013. 20. On the question of the stay issued by the NCLAT on 15th October 2018, and to which I referred earlier, Mr Tulzapurkar has a few submissions to make. The first is to refer to my order of 9th April 2021 in Arbitration Petition (L) No. 10089 of 2020 (Bay Capital Advisors Pvt Ltd & Ors v ILFS Financial Services Ltd). At that time, I considered this very NCLAT stay, and I held it to be without jurisdiction. I did so on the basis inter alia of the decision of the Supreme Court in Cotton Corporation of India Ltd v United Industrial Bank Ltd & Ors. [1983 (4) SCC 625] I referred to paragraph 8 of Cotton Corporation in the Bay Capital order. Four lines from the end of paragraph 7 of Cotton Corporation and the whole of paragraph 10 are also important. I reproduce the relevant passages below: "7. .... As a necessary corollary, it would follow that the court is precluded from granting an injunction restraining any person from instituting or prosecuting any proceeding in a Court of coordinate or su....
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....7 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 granted during the pendency of the proceeding so that while granting final relief the court is not faced with a situation that the relief becomes infructuous or that during the pendency of the proceeding an unfair advantage is not taken by the party in default or against whom temporary injunction is sought. But power to grant temporary injunction was conferred in aid or as auxiliary to the final relief that may be granted. If the final relief cannot be granted in terms as prayed for, temporary relief in the same terms can hardly if ever be....
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..... 23. In answer to this, Mr Tulzapurkar points out that a 'stay' of an order is not equivalent to a setting aside or a reversal. [Shree Chamundi Mopeds Ltd v Church of South India Trust Association, 1992 (3) SCC 1.] He also points out that a Full Bench of our own High Court has in Export Credit Guarantee Corporation of India Ltd v Annamma Philips [2010 (5) Mah LJ 659] held, following Cotton Corporation, that an order in restraint of legal proceedings before another tribunal or Court not subordinate to the Court issuing the stay is impermissible. 24. Mr Chinoy's argument that the NCLAT stay is not against this Court but against parties does not carry the matter further. That is true of every anti-suit injunction. The stay order still runs against Cotton Corporation. The submission also does not address a question fundamental to any form of an anti-suit injunction: subject-matter jurisdiction. If the NCLAT has no jurisdiction to decide a civil suit for specific performance, I do not see how it can stay a party from approaching a court for that relief. 25. Finally, my order in Bay Capital - and therefore the stay by the Division Bench in appeal - must necessarily be confined to tha....