Bombay High Court
3I Infotech Tusteeship Services ... vs United Breweries (Holding) ... on 3 December, 2015
Bench: V.M. Kanade
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL (L) NO.409 OF 2015
IN
NOTICE OF MOTION (L) NO.905 OF 2015
IN
SUIT (L) NO.290 OF 2015
WITH
NOTICE OF MOTION (L) NO. 1285 OF 2015
ICICI Bank Limited )
a Public Company incorporatedig )
under the Companies Act, 1956 )
and a Banking Company within the )
meaning of the Banking Regulation )
Act, 1949 having its registered )
office at Landmark Race Course )
circle, Vadodara 390007 and its )
Corporate Office at ICICI Bank )
Towers, Bandra-Kurla Complex, )
Bandra, Mumbai 400 051 ) Appellant.
V/s.
1. United Breweries (Holdings) Limited, )
A company incorporated under the )
provisions of the Companies Act, 1956 )
and having its registered office at )
UB Tower, Tower, Level 12, )
24 Vittal Mallya Road,Bangalore 560001)
)
2. Kingfisher Finvest (India) Limited, )
A company incorporated under the )
provisions of the Companies Act, 1956 )
and having its registered office at )
UB Tower, Level 12, 24 )
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Vittal Mallya Road, Bangalore-560001 )
)
3. Kingfisher Airlines Limited, )
Having its registered office at UB )
Tower, Level 12, 24 Vittal Mallya Road, )
Bangalore-560001, and having its )
Corporate Office at Kingfisher House, )
Western Express Highway, )
Vile Parle (East), Mumbai-400099 )
)
4. 3i Infotech Trusteeship )
Services Limited, a Company )
incorporated under the provisions of
ig )
the Companies Act, 1956 )
and having registered its office at )
th
Akruti Centre Point, 6 Floor, MIDC )
Central Road, Next to Marol Telephone )
Exchange, Mumbai 400 093 ) .Respondents.
ALONGWITH
APPEAL NO.312 OF 2015
IN
NOTICE OF MOTION (L) NO.905 OF 2015
IN
SUIT (L) NO.290 OF 2015
WITH
NOTICE OF MOTION (L) NO.1305 OF 2015
3i Infotech Trusteeship Services Limited )
A Company incorporated under the )
provisions of the Companies Act, 1956 )
and having registered its office at )
Akruti Centre Point, 6th Floor, MIDC )
Central Road, Next to Marol Telephone )
Exchange, Mumbai 400 093 ) Appellant.
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V/s
1. United Breweries (Holdings) Limited, )
A company incorporated under the )
provisions of the Companies Act, 1956 )
and having its registered office at )
UB Tower, Tower, Level 12, )
24 Vittal Mallya Road,Bangalore 560001 )
)
2. Kingfisher Finvest (India) Limited, )
A company incorporated under the )
provisions of the Companies Act, 1956 )
and having its registered office at
ig )
UB Tower, Level 12, )
Vittal Mallya Road, Bangalore-560001 )
)
3. Kingfisher Airlines Limited, )
Having its registered office at UB )
Tower, Level 12, 24 Vittal Mallya Road, )
Bangalore-560001, and having its )
Corporate Office at Kingfisher House, )
Western Express Highway, )
Vile Parle (East), Mumbai-400099 )
)
4. ICICI Bank Limited )
a Public Company incorporated )
under the Companies Act, 1956 )
and a Banking Company within )
the meaning of the Banking )
Regulation Act, 1949, having its )
Registered Office at Landmark )
Race Course Circle, )
Vadodara 390007 and its corporate )
office at ICICI Bank Towers, )
Bandra-Kurla Complex, Bandra )
Mumbai 400 051. ) Respondents.
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Mr. Iqbal Chagla, Senior Counsel alongwith Mr. Janak
Dwarkadas, Senior Counsel, Mr. Anikt Lokia, Mr. Anuj Menon
& Ms. Shreevardhini Parchure i/b Desai & Diwanji for the
Appellant in Appeal (L) No.409 of 2015.
Mr. V.R. Dhond, Senior Counsel alongwith Mr. Ashish Kamat,
Mr Rahul Jain i/b RES Legal for the Appellant in Appeal
No.312 of 2015.
Mr. N.H. Seervai, Senior Counsel alongwith Mr. M.S. Doctor,
Senior Counsel, Ms. Ankita Singhania i/b Bachubhai Munim &
Co. for Respondent Nos. 1 and 2.
SUMMARY OF THE JUDGMENT:
The Kingfisher Airlines Limited - original Defendant
No.3, who is a proforma Defendant against whom no reliefs
are claimed by the original Plaintiffs, had taken financial
assistance from large number of Financial Institutions and
Nationalized Banks including the ICICI Bank Limited - original
Defendant No.2. The financial condition of the Kingfisher
Airlines Limited - original Defendant No.3 deteriorated and it
requested all the Banks (hereinafter referred to as
"Consortium of Banks) including ICICI Bank Limited to
restructure its debt which, at the relevant time in 2010 was
Rs 573.72 crores.
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The Consortium of Banks including ICICI Bank agreed to
recast the loan and the loan was accordingly divided in two
parts viz. Rs 403.72 crores which was the recast loan plus
Rs 170 crores which was secured by Compulsory Cumulative
Preference Shares ("CCPS") which were converted into equity
shares of Kingfisher Airlines Limited.
The loan was secured by giving the pledged shares
over which ICICI Bank had the first exclusive charge and the
equity shares of Rs 170 crores was secured by undertaking
from Plaintiff No.1 - United Breweries (Holdings) Limited
("UBHL") that in the event of sale of Kingfisher shares by
ICICI Bank if there was short-fall for recovery of Rs 170
crores, Plaintiff No.1 - UBHL would recompense the ICICI
Bank for the said short-fall. So far as the pledged shares
are concerned, there were clauses viz. Clauses 4.1.1 to 4.1.3
in Loan Purchased Agreement ("LPA") which provided that in
the event the value of the pledged shares went below two
times the loan amount, they would be topped up by further
pledge shares by Plaintiff No.1 - UBHL. For the purpose of
this arrangement three Agreements were entered in to viz.
(I) Master Debt Recast Agreement dated 21/12/2010 between
the Kingfisher Airlines Limited and its lenders (ii) Preference
Share Subscription Agreement dated 21/12/2010 between
ICICI Bank Limited, United Breweries (Holdings) Ltd and
Kingfisher Finvest (India) Limited (iii) Loan Purchase
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Agreement dated 21/12/2010 between ICICI Bank Limited,
United Breweries (Holdings) Limited and Kingfisher Airlines
Limited. Under the Loan Purchase Agreement, Plaintiff No.1
- UBHL had secured the loan by giving the pledged shares
and had secured the equity shares of Rs 170 crores by
obtaining an undertaking from United Breweries (Holdings)
Limited - Plaintiff No.1 to recompense the said short-fall by
making payment to the ICICI Bank Limited.
Thereafter, a further Non-Disposal agreement ("NDA")
dated 12/11/2011 was executed between United Breweries
(Holdings) Limited - Plaintiff No.1 (as the NDU provider),
Defendant No.1 - 3i Infotech Trusteeship Services Limited (as
Plaintiff No.1's Attorney) and Defendant No.2 - ICICI Bank
Limited. By the said Non-Disposal Agreement, Plaintiff No.1 -
UBHL deposited 20,14,000 shares belonging to their
Company in a designated account and appointed Defendant
No.1 - 3i Infotech Trusteeship Services Limited as power of
Attorney. The clause (C) of the Recital indicates that till all
the obligations under the Loan Purchase Agreement were
satisfied, all terms and conditions under the Loan Purchase
Agreement would continue to be in operation.
ICICI Bank assigned its debt/loan of Rs 403.72 crores to
Global Competitive Fund ("IGCF") by assigning it for Rs 428
crores along with the pledged shares. Thereafter, initially,
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96,000 Kingfisher equity shares were sold and there was a
short-fall of Rs 45 crores which was squared off by one other
security given by Margosa Consultancy Services
("Margosa") which was to the extent of Rs 45 crores. Later
on, other equity shares of Kingfisher Limited were sold and
there was a short-fall of Rs 146 crores.
ICICI Bank demanded the said short-fall from Plaintiff
No.1 - UBHL, which contended that the said 20,14,000
shares were given to secure the loan and not the
recompense amount and since the ICICI Bank had assigned
the loan to IGCF and recovered the existing loan amount of
Rs 403.72 crores with interest, they were not entitled to
claim sale of these 20,14,000 shares to recover the short-fall
of Rs 146 crores towards the sale of equity shares of
Kingfisher Airlines Limited. ICICI Bank Limited sent a notice
to Plaintiff No.1 - UBHL that if the said amount was not paid
it constituted an event of default as defined under clause
9.1(c) of the Loan Purchase Agreement, they would ask
Defendant No.1 - 3i Infotech Trusteeship Services Limited
who was holding Power of Attorney on behalf of Plaintiff No.1
- UBHL to sell the said shares and deposit the sale proceeds
in the designated account.
Plaintiff Nos. 1 - UBHL and Plaintiff No.2 - Kingfisher
Finvest (India) Limited therefore filed a suit seeking an order
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of injunction. The learned Single Judge granted ex parte
injunction, restraining Defendant No.1 - 3i Infotech
Trusteeship Services Limited from selling the shares
mentioned in the Non-Disposal Agreement, though a caveat
was filed by Defendant Nos. 1 and 2.
The ex parte ad-interim relief was confirmed by the
learned Single Judge by the impugned order. The learned
Single Judge held that the Non-Disposal Agreement was not
meant to secure the recompense amount mentioned in the
Loan Purchase Agreement under clause 10.1. The learned
Single Judge held that LPA had worked itself out after the
assignment of loan alongwith the pledged shares by ICICI
Bank to IGCF.
We have, after interpreting the provisions of Loan
Purchase Agreement and Non-Disposal Agreement, held that
intention of the parties can be gathered from the terms and
conditions of Non-Disposal Agreement. We have further held
that till the entire obligation cast on Plaintiff No.1 - UBHL was
not fulfilled, the Loan Purchase Agreement would continue to
exist and, secondly, the Loan Purchase Agreement also
secured the recompense amount which was payable by
Plaintiff No.1 - UBHL in the event of there being a short-fall
after equity shares of Kingfisher Airlines Limited were sold by
the ICICI Bank. We have also held that since there was
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short-fall of Rs 146 crores, this could be recovered by
disposal of non-disposal shares and since Plaintiff No.1 -
UBHL had, despite being called upon to make payment
towards the short-fall of Rs 146 crores, failed to do so, non-
disposal shares could be sold by Power of Attorney appointed
by Plaintiff No.1 - UBHL viz. Defendant No.1 - 3i Infotech
Trusteeship Services Limited. Recital (C ) reads as under:-
"(C) In terms of the LP Agreement and in
order to provide assurance that it has the
ability to fulfill its obligations under the LP
Agreement, the NDU Provider has agreed
not to divest or deal with the shares of the
Company held by the NDU Provider unless
such divestment or dealing is required to
make payments as and when called upon
by the Lender in terms of this Agreement
and/or the LP Agreement, and undertakes
to irrevocably appoint and authorize the
Attorney to fulfill the obligations of the
NDU Provider under this Agreement."
The Appeals are therefore allowed and Judgment and
Order of the learned Single Judge is set aside.
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CORAM: V. M. KANADE, ACTING CHIEF JUSTICE &
DR. SHALINI PHANSALKAR-JOSHI, J.
Judgment reserved on : 29/09/2015
Judgment pronounced on :03/12/2015
JUDGMENT: (Per Acting C.J.)
BRIEF FACTS:
1. Both these appeals can be disposed of by a common
judgment since the appellants in both these appeals are
aggrieved by a Judgment and Order dated 16/4/2015 passed
by the learned Single Judge in Notice of Motion (L) No.905 of
2015 in Suit (L) No.290 of 2015.
2. Written Submissions were submitted by
Appellants/original Defendant Nos. 1 and 2 on 11/09/2015
and by Respondent Nos.1 and 2/original Plaintiffs on
28/10/2015.
3. Appellant - ICICI Bank Limited is the original Defendant
No.2 in the suit. Appellant - 3i Infotech Trusteeship Services
Limited is the original Defendant No.1 and Respondent Nos.1
and 2 are the original Plaintiff Nos.1 and 2 respectively. For
the sake of convenience, parties shall be hereinafter referred
to as the "Plaintiffs" and "Defendants" respectively.
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4. Plaintiff Nos.1 and 2 filed a suit against Defendant Nos.
1, 2 and Defendant No. 3 - Kingfisher Airlines Limited.
Plaintiffs inter alia asked for an order of injunction
restraining Defendant Nos. 1 and 2 from assigning or dealing
with 20,14,000 shares of United Breweries Limited belonging
to Plaintiff No.1.
5. Plaintiff No.1 - United Breweries (Holdings) Limited
("UBHL") is a Company incorporated under the provisions of
Companies Act having its registered Office at Bangalore and
is a constituent of the UB Group Companies holding shares in
various UB Group Companies, including in United Breweries
Limited. Plaintiff No.2 - Kingfisher Finvest (India) Limited is a
Company incorporated under the provisions of the
Companies Act having its registered Office at Bangalore and
it is a wholly owned subsidiary of Plaintiff No.1. Defendant
No.1 - 3i Infotech Trusteeship Services Limited is a
Trusteeship Company incorporated under the provisions of
the Companies Act and which provides wide range of
trusteeship services in India. Defendant No.1, in the present
suit, is claiming to be the Lenders' Agent appointed by
Defendant No.2 and also a Power of Attorney holder
purported to be appointed by UBHL. Defendant No.2 ICICI
Bank Limited is a Banking Company incorporated under the
Companies Act and is a Lender of money to the Plaintiffs.
Defendant No.3. - Kingfisher Airlines Limited is a proforma
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Defendant and no reliefs are claimed against it.
6. Defendant No.3 - Kingfisher Airlines Limited started its
airline business in the year 2003 and in the course of its
business availed loan from Defendant No.2 - ICICI Bank
Limited and also from number of other Banks.
7. Sometime after the year 2008 onwards Kingfisher
Airlines Limited suffered financial set back and therefore it
availed additional financial assistance from time to time.
8. Defendant No.2 - ICICI Bank Limited entered into Rupee
Facility Agreements dated 30/06/2008, 08/09/2010 and
04/08/2009 and advanced Rupee Term Loans to the tune of
Rs 527.22 crores and a Working Capital Facility to the tune
of Rs 46.5 crores aggregating to a total sum of Rs 573.72
crores (hereinafter referred to as the existing loan.) This loan
was secured by the following shares viz.
(A) 31,47,985 shares held by UBHL in
United Spirits Limited (USL);
(B) 5,91,50,000 shares held by UBHL in
Kingfisher Airlines;
(C ) 17,89,410 shares held by Kingfisher
Finvest (India) Limited in USL
which are hereinafter referred to as the "pledged shares".
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On account of the financial difficulty faced by Defendant No.3
- Kingfisher Airlines Limited, a request was made for
restructuring its debts and, accordingly, Master Debt Recast
Agreement ("MDRA") was executed between the Kingfisher
Airlines and a consortium of its lenders including the ICICI
Bank Limited. Under the Master Debt Recast Agreement,
ICICI Bank Limited continued to have the first exclusive
charge over the pledged shares as per Clause 5.1(II) of
MDRA. As per the terms and conditions of MDRA, two other
Agreements were executed viz. Preference Shares
Subscription Agreement ("PSSA" dated 21/12/2010 and the
Loan Purchase Agreement ("LPA") dated 21/12/2010. The
PSSA was executed between the Kingfisher Airlines Limited -
Defendant No.3 and United Breweries (Holdings) Limited -
Plaintiff No.1 and the LPA was executed between ICICI Bank
Limited - Defendant No.2, United Breweries (Holdings)
Limited - Plaintiff No.1 (as purchasing party) and Kingfisher
Finvest (India) Limited Plaintiff No.2 as confirming party.
9. Since one of the conditions of restructuring was that the
lenders would convert a portion of their credit facilities into
preference share/equity shares of Defendant No.3 -
Kingfisher Airlines Limited, Preference Share Subscription
Agreement was executed under which an amount of Rs 170
crores out of existing loan of the ICICI Bank Limited was
converted into preference shares of Defendant No.3 -
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Kingfisher Airlines Limited. By virtue of this, the existing loan
of Rs 573.72 crores was reduced by Rs 170 crores and the
existing loan became Rs 403.72 crores. Under the third
Agreement namely LPA of the same date viz 21/12/2010,
Plaintiff No.1 - United Breweries (Holdings) Limited has two-
fold obligations viz (1) to purchase the loan granted by ICICI
Bank Limited to Defendant No.3 - Kingfisher Airlines Limited
as and when called upon to do so by the Appellant ICICI Bank
Limited and (2) if the ICICI Bank Limited were to suffer a loss
upon sale of the shares held by it of Kingfisher Airlines
Limited - Defendant No.3 (after conversion of debt into
equity) to recompense such loss to the ICICI Bank Limited
and if there was a default in payment of the recompense
amount, it would constitute an event of default. The Clause
4.1.1 of LPA also provided that Respondents/Plaintiffs would
ensure that the loan purchase secured obligation was
secured by first exclusive pledge over such number of fully
paid up equity shares of USL which provided a cover of 1.25
times the ICICI Bank Facilities and such number of fully paid-
up equity shares of the Kingfisher Airlines which provided a
cover of 0.75 times the ICICI Bank Facilities.
10. On 31/03/2011 the CCPS (Preference Shares) were
converted into 2,63,64,764 equity shares of Defendant No.3 -
Kingfisher Airlines Limited at an allotment price of Rs 68.48
per share. On 28/06/2011, a sister concern of Plaintiff No.1
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viz. Margosa Consultancy Services ("Margosa") issued a
Letter of Comfort to the ICICI Bank Limited - Defendant No.2
to the effect that Margosa would provide security to the
extent of Rs 45 crores for meeting the claims of ICICI Bank
Limited.
11. The fourth Agreement was executed between the
parties on 12/11/2011 which is known as a Non-Disposal
Agreement ("NDA") between United Breweries (Holdings)
Limited - Plaintiff No.1 (as the NDU provider), Defendant No.1
- 3i Infotech Trusteeship Services Limited (as Plaintiff No.1's
Attorney) and Defendant No2 - ICICI Bank Limited (as the DP
agent and lender) whereby United Breweries (Holdings)
Limited - Plaintiff No.1 agreed not to deal in or dispose of
20,14,000 equity shares of United Breweries Limited held by
it (hereinafter referred to as "the NDA shares".) In view of
this, Plaintiff No.1 - United Breweries (Holdings) Limited
executed an irrevocable Power of Attorney in favour of
Defendant No.1 - 3i Infotech Trusteeship Services Limited.
12. Sometime during January-February 2012, ICICI Bank
Limited - Defendant No.2 sold 96,00,000 shares and,
according to ICICI Bank Limited, this resulted in shortfall of
Rs 47 crores. This was recovered by ICICI Bank Limited out
of Margosa Fixed Deposit.
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13. On 27/06/2012, Defendant No.2 - ICICI Bank Limited
transferred its outstanding credit facility viz Rs 403.72 crores
by assigning it to one SREI Venture Capital Limited in its
capacity as the Investment Manager of one India Global
Competitive Fund ("IGCF") By virtue of this transfer, the
outstanding credit facility by that time alongwith interest was
an amount of Rs 428.36 crores alongwith security for the
same i.e. the pledged shares.
14. Thereafter, in December 2013, the ICICI Bank Limited -
Defendant No.2 sold in tranches the following equity shares
held by it in Defendant No.3 - Kingfisher Airlines viz
(a) 7,753,120 shares at a total price of Rs 35,669,604/- and
(b) 9,011,644 shares at a total price of Rs 35,535,293.80.
This was in addition to the prior sale in January-February,
2012 of 96,00,000 shares. According to the ICICI Bank
Limited, there was a total shortfall of Rs 146 crores
approximately which resulted from the aforesaid sale.
Plaintiff No.1 - United Breweries (Holdings) Limited
addressed a letter to the ICICI Bank Limited calling for
release of the NDA shares (equity shares of Kingfisher
Airlines Limited) which were with ICICI Bank Limited.
15. On 12/12/2013 and 17/12/2013, ICICI Bank Limited
issued notice to Plaintiff No.1 - United Breweries (Holdings)
Limited, seeking payment of its Equity Recompense claims of
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Rs 146 crores under clause 10.1 of the LPA. On 23/12/2013,
Plaintiff No.1 - United Breweries (Holdings) Limited gave
reply to the said letter claiming that the NDA shares were not
offered as security for recompense claim and again
demanded release of the NDA shares (equity shares of
Kingfisher Airlines Limited) which were with ICICI Bank
Limited - Defendant No.2. On 02/02/2014, ICICI Bank Limited
- Defendant No.2 issued a notice to Plaintiff No.1 - United
Breweries (Holdings) Limited and Defendant No.3 - Kingfisher
Airlines Limited, stating therein the event of default under
LPA and called upon Plaintiff No.1 - United Breweries
(Holdings) Limited to cure the event of default, failing which
Defendant No.1 - 3i Infotech Trusteeship Services Limited
would proceed against the sale of the NDA shares. On
11/02/2015, Plaintiff No.1 gave reply to the said notice
reiterating its earlier stand.
16. Plaintiff No.1 - United Breweries (Holdings) Limited and
Plaintiff No.2 - Kingfisher Finvest (India) Limited filed a suit
inter alia seeking relief of injunction and also filed Notice of
Motion. The Notice of Motion was finally disposed of by an
order dated 16/04/2015 and the Notice of Motion was made
absolute in terms of prayer clause (a) and further directions
were given to ICICI Bank Limited to deposit the NDA shares.
17. Being aggrieved by the said judgment and order passed
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by the learned Single Judge, Defendant Nos. 1 and 2 have
filed the aforesaid two appeals.
SUBMISSIONS MADE BY THE LEARNED SENIOR
COUNSELS APPEARING ON BEHALF OF THE
APPELLANTS.
18. Mr. Iqbal Chagla and Mr. Janak Dwarkadas, the learned
Senior Counsels appearing on behalf of both the Appellants
i.e. Original Defendant Nos.1 and 2 submitted firstly that the
learned Single Judge had misconstrued the Recitals (A), (B) &
(C) of the Non-Disposal Agreement dated 12/11/2011 and
had held that the said Agreement was executed only for the
purpose of topping-up the pledged shares and these shares
had nothing to do with the recompense amount mentioned in
clause 10.1 of the LPA. It was submitted that perusal of the
three clauses of NDA would show that the NDA shares were
meant to secure all of Plaintiff No.1's LPA obligations. It was
submitted that this was evident from Recital (C) and clauses
3.1(h), (i) and (k) of NDA. It was submitted that these
clauses show that the NDA shares were furnished by Plaintiff
No.1 - United Breweries (Holdings) Limited to secure the
payment under LPA or NDA and failure of Plaintiff No.1 to
perform the NDA would constitute an event of default under
NDA. It was submitted that upon reading of these three
clauses, it was abundantly clear that the NDA shares were
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the security for the fulfillment of Plaintiff No.1's LPA
obligations including recompense claim. It was submitted
that the learned Single Judge had erred in coming to the
conclusion that the event of default and recompense amount
were sought to be interpolated in the NDA Agreement. It was
submitted on behalf of Defendant Nos. 1 and 2 that, on the
contrary, these three clauses clearly envisaged a situation
that in the event of sale of equity shares of the Kingfisher
Airlines Limited held by the ICICI Bank Limited - Defendant
No.2, if a loss is caused then the same would be
compensated by sale of shares of Plaintiff No.1 - United
Breweries (Holdings) Limited under the Non-Disposal
Agreement. It was submitted that the learned Single Judge
had erred in holding that the only security for the equity
shares (CCPS) was the Margosa Fixed Deposit and not the
NDA shares, is patently erroneous. It was submitted that
conjoint reading of the three agreements viz PSSA and LPA
both dated 21/12/2010 and the NDA Agreement dated
12/11/2011 clearly established that 20,14,000 shares of
United Breweries Limited were furnished as security under
the Non-Disposal Agreement dated 12/11/2011 in favour of
Defendant Nos 1 and 2 - the Appellants herein, for payment
of its recompense claim arising under clause 10.1 of the Loan
Purchase Agreement dated 21/12/2010. It was submitted
that the balance of convenience was entirely in favour of the
Defendant Nos.1 and 2 i.e. the Appellants herein since the
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value of the NDA shares was admittedly reducing day by day
and when the impugned order was passed the value was
Rs 235.26 crores and when the Appeals were filed it was
Rs 193.14 crores and on the date when the Appeals were
reserved for judgment, the value was Rs 171.65 crores.
Secondly, it was submitted that these shares being shares of
a public listed company, even assuming that the same were
not a part of the security available for the recompense claim
of Defendant No.2 - ICICI Bank Ltd, the same could always be
restored to Respondent Nos.1 and 2/original Plaintiff Nos. 1
and 2 by purchasing the same from the market or
compensating Respondent Nos. 1 and 2/original Plaintiff Nos.
1 and 2 in monetary terms.
SUBMISSIONS MADE BY THE LEARNED SENIOR
COUNSEL APPEARING ON BEHALF OF RESPONDENT
NOS.1 AND 2:
19. On the other hand, Mr. Seervai, the learned Senior
Counsel appearing on behalf of Respondent Nos.1 and 2 i.e.
the original Plaintiffs Nos. 1 and 2 submitted that the
Plaintiffs had made out a prima facie case and that was
accepted by the learned Single Judge and in appeal,
therefore, this Court should not interfere with the said order.
Reliance was placed on the judgment of the Apex Court in
The Apex Court in Wander Ltd and Another vs. Antox India P.
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Ltd.1 as also on the Judgment of Division Bench of this Court
in Avitel Post Studioz Ltd & Ors vs. HSBC PI Holdings
(Mauritius) Ltd.2. He submitted that the only question that
fell for consideration in appeal was whether the NDA shares
were offered as independent security for securing the
recompense amount as contended by the Appellants for the
first time in the appeal or were the NDA shares given
pursuant to the top-up obligation under clause 4.1.3 (ii)(a) of
the LPA to top-up the pledged shares which were only to
secure the Loan Purchase Secure Obligation under the LPA.
He then invited our attention to Master Debt Recast
Agreement, Preference Share Subscription Agreement and
the Loan Purchase Agreement. He submitted that the shares
which were pledged by three pledged agreements were
given for the purpose of securing the loan of Rs 400 crores
approximately and not the equity shares purchased by ICICI
Bank Limited in the form of Converted ICICI Bank Facilities.
He then submitted that clause 4.1 of the LPA provided for
security for the Loan Purchase Secured Obligation and
under Clause 4.1.1, the Respondent Nos. 1 and 2 had to
ensure that the Loan Purchase Secured Obligation was
secured by the first exclusive pledge over such number of
fully paid up equity shares of USL which provided a cover of
1.25 times the ICICI Bank Facilities and such number of fully
1 1990(Supp) SCC 727
2 2014 SCC Online Bom 929
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paid-up Equity Shares of Kingfisher Airlines which provided a
cover of 0.75 times the ICICI Bank Facilities. By virtue of
these two clauses, security for the Loan Purchase Secured
Obligation was not to fall below two times the value of the
ICICI Bank Facilities and to secure this obligation, clause
4.1.3 granted a right to the ICICI Bank Limited to call up the
Respondent Nos. 1 and 2/original Plaintiff Nos.1 and 2 to
pledge additional/top-up shares, if the value of the pledged
shares fell below this threshold level.
ig He then submitted
that clause 10 of the LPA provided for repayment of the
recompense amount. He submitted that this was secured by
Margosa Consultancy Services' Fixed Deposit. It was
submitted that the ICICI Bank was not entitled to sell the
additional top-up shares to satisfy the demand for this
recompense amount. It was submitted that the LPA
contemplated two primary obligations viz (i) the Loan
Purchase Obligation which was secured by the pledged
shares and (ii) the recompense obligation which was not
secured by the pledged shares and therefore not to be
secured by top-up shares which were only a top-up to
maintain the value of the pledged shares. It was therefore
submitted that the shares under the Non-Disposal
Arrangement were given only as a further top-up of the
pledged shares and it covered the amount of the loan
advanced by ICICI Bank Limited and not the equity shares
which were transferred in the name of ICICI Bank Limited.
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He also submitted that from the Recitals of Non-Disposal
Agreement viz Recitals (A), (B) and (C ), it was clear that to
provide security of shares pledged as set out in the LPA, the
parties had agreed to create additional security to ensure
that the stipulated security cover was maintained. Reliance
was also placed on the series of correspondence between the
parties in support of the said submission. It was submitted
that the clauses of NDA had to be read in the context and
understanding of the parties. Reliance was placed by the
learned Senior Counsel appearing on behalf of the
Respondents/original Plaintiffs on the following judgments
regarding interpretation of commercial contracts:-
1. Reardon Smith Line vs. Hansen-Tangen 1
WLR [1976] 989 at page 995, Placitum E.
2. Investors Compensation Scheme Ltd. vs.
West Bromwich Building Society 1 WLR
[1998] 896 at page 912, Placitum E.
3. Mannai Investment Co. Ltd. vs. Eagle Star
Life Assurance Co. Ltd. - 2 WLR [1997] 945
at page 967, Placitum G.
4. Antaios Compania Naviera S.A. vs. Salen
Rederierna A.B. - 1 AC [1985] 191 at page
200, Placitum G.
5. Mumbai Metropolitan Region
Development Authority vs. Unity Infraproject
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Ltd. [2008] 5 Bom CR 196 at page 201 &
204 at para 11-13 & 25.
6. The Commissioner of Income Tax, Delhi
vs. Shiv Raj Gupta (2014) SCC Online Del
7305.
It was then submitted that the pledged shares secured only
the ICICI Bank Facilities and not the amount of Rs 170 crores
which was converted into equity shares and after assigning
entire loan by ICICI Limited to IGCF along with the entirety of
the pledged shares, the obligation to provide top-up cover of
the pledged shares under clause 4.1.3 of the LPA came to an
end and to that extent the NDU Shares had worked itself out.
He submitted that ICICI Bank received total consideration of
Rs 428 crores from IGCF in lieu of assigning the said loan of
Rs 403.72 crores and the pledged shares and therefore there
was no obligation on the part of Plaintiffs towards the
repayment of the loan either under LPA or NDA. It was
submitted that IGCF sold the pledged shares far in excess of
the loan amount assigned to it and that the IGCF had been
ordered by the Hon'ble Karnataka High Court vide order
dated 20/06/2014 to deposit the balance amount of Rs 651
crores in Court. It was submitted that the balance of
convenience was entirely in favour of the Respondent Nos.1
and 2/original Plaintiff Nos. 1 and 2. It was submitted that if
the Appellants/original Defendant Nos. 1 and 2 sell the
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shares, the Respondent Nos.1 and 2 /original Plaintiff Nos.1
and 2 will lose multiple rights that accrue to them by virtue
of holding the said shares including the voting rights in
United Breweries Limited and the sale of these shares would
render the suit infructuous.
FINDINGS AND CONCLUSION:
20. We have heard the learned Senior Counsels Mr. Iqbal
Chagla and Mr. Janak Dwarkadas appearing on behalf of the
Appellants/original Defendant Nos. 1 and 2 and Mr. N.H.
Seervai appearing on behalf of Respondent Nos. 1 and
2/original Plaintiff Nos. 1 and 2 respectively.
21. Appellants are aggrieved by the order of injunction
granted by the learned Single Judge, restraining the
Appellants from selling 20,14000 shares of United Breweries
Limited (hereinafter referred to as "the NDA shares") which
were furnished as security under the Non-Disposal
Agreement dated 12/11/2011.
22. After the Appellants/Defendant Nos. 1 and 2 informed
the Respondent Nos. 1 and 2/Plaintiff Nos. 1 and 2 that they
were proceeding to sell these NDA shares which were
furnished as security, Plaintiff Nos.1 and 2, Respondent Nos.
1 and 2 herein filed a suit inter alia claiming an order of
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injunction restraining them from selling the shares. The
principal contention of the Plaintiffs is that these 20,14,000
shares were not given as security towards the recompense
amount under clause 10.1 of the LPA but were given as a
top-up security to the shares which were pledged by three
Agreements for securing the loan amount viz. Rs 403.72
crores approximately. It was contended by the learned Senior
Counsel appearing on behalf of Respondent Nos. 1 and
2/Plaintiff Nos. 1 an 2 that the equity shares of Rs 170 crores
were not collaterallised by NDA shares. It was contended in
the plaint that the Appellants/Defendant Nos. 1 and 2 having
assigned their debt to IGCF and having received Rs 428
crores, the LPA had worked itself out and Plaintiff No.1 -
United Breweries (Holdings) Limited was entitled to get back
these 20,14,000 shares. In support of this submission,
reliance has been placed by the learned Senior Counsel
appearing on behalf of the Respondent Nos. 1 and 2/Plaintiff
No.1 and 2 on the three pledged agreements viz (i) Master
Debt Recast Agreement (ii) Preference Shares Subscription
Agreement and (iii) Loan Purchase Agreement.
23. On the other hand, it is the case of
Appellants/Defendant Nos. 1 and 2 that the NDA shares were
also given for the purpose of security towards the
recompense amount as per clause 10.1 of the LPA dated
21/12/2010.
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24. Before we consider the rival submissions, admitted facts
need to be recapitulated.
25. Original Defendant No.3 - Kingfisher Airlines Limited had
taken financial assistance from various Banks including ICICI
Bank Limited in 2003. Between 2008 to 2010, Defendant
No.3 - Kingfisher Airlines Limited suffered financial
difficulties. A ig proposal was given by them for
restructuring/recasting their debts. Negotiations were made
between consortium of Banks which included ICICI Bank
Limited and Kingfisher Airlines Limited and Plaintiff Nos. 1
and 2 i.e. Respondent Nos. 1 and 2 herein. At the relevant
time, the loan which was advanced to Kingfisher Airlines
Limited was about 573.72 crores. This loan was secured by
the shares held by United Breweries (Holdings) Limited in
United Spirits Limited and Kingfisher Airlines Limited and also
by Plaintiff No.2 - Kingfisher Finvest (India) Limited in United
Spirits Limited. It was therefore agreed to enter into
restructuring/recasting agreement and divide original loan in
two parts. Out of Rs 573.72 crores, the monetary loan would
be reduced to Rs 403.72 crores which was secured by the
'pledged shares' which pledge was created on 08/09/2006
and 30/06/2008. The amount of Rs 170 crores was to be
converted into Compulsory Cumulative Preference
Shares/Equity Shares of Kingfisher Airlines Limited under the
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Master Debt Recast Agreement. This was secured by
margosa Fixed Deposit of Rs 45 crores. Under the LPA, there
were clauses viz clauses 4.1.1 to 4.1.3 which mentioned that
the value of the pledged shares would be twice the value of
the loan i.e. 1.25 times to be maintained by the fully paid-up
equity shares of USL which would cover the ICICI Bank
Facilities and fully paid-up shares of Kingfisher Airlines
Limited which provided cover of 0.75 times ICICI Bank
Facilities. There was, however, a clause 4.1.3 by which the
ICICI Bank Limited could call upon Respondent Nos.1 and
2/original Plaintiff Nos.1 and 2 to pledge additional/top-up
shares if the value of the pledged shares fall below the
prescribed limit.
26. Clause 10 of the LPA provided for the payment of
recompense amount in respect of the equity shares in the
event of the short-fall between the value of Converted ICICI
Bank Facilities i.e. equity shares of Rs 170 crores and the
Yield Amount which would have accrued thereon and the
value of the share sale proceeds (amounts received from
sale of the equity shares of Kingfisher Airlines) recovered by
ICICI Bank. Clause 9.1(c) provided that if there was a default
in payment of recompense amount, it shall constitute an
event of default. Thereafter, Non-Disposal Agreement was
entered into on 12/11/2011 and the ICICI Bank Limited
accepted the Non-Disposal Undertaking in respect of
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20,14,000 shares. The entire controversy revolves around
the purpose for which 20,14,000 shares were given.
According to Plaintiffs, the said undertaking for Non-disposal
of 20,14,000 shares of UBL was given as a top-up or
additional pledge for the payment of recast loan of Rs 403.72
crores so that in the event the value of the pledged shares
became less than the value which was to be maintained
under clauses 4.1.1 to 4.1.3, these shares could be sold.
According to the Respondent Nos.1 and 2/Plaintiff Nos. 1 and
2, upon ICICI Bank assigning the recast loan of Rs 403.72
crores along with the pledges shares to India Global
Competitive Fund, the shares held under the Non-Disposal
Agreement were liable to be released to UBL, whereas,
according to the Appellants/Defendant Nos. 1 and 2, the said
20,14,000 shares were given as security to secure the
recompense amount in the event of a default committed by
Plaintiff No.1 - Respondent No.1 herein, to perform the NDA
and on the occurrence of event of default, the
Appellants/Defendant Nos. 1 and 2 could, under clauses
3.1(h), (i) and (k) of NDA, enforce the security by selling the
NDA shares and appropriate the proceeds of the NDA shares
towards discharge of the payment obligations under LPA.
27. In support of their rival submissions, both the parties
have relied on all the agreements including definitions of
various clauses under the said agreements. Three questions,
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therefore, which fall for consideration before this Court are :
(1) Whether 20,14,000 shares of UBL
furnished as security (NDA shares)
under Non-Disposal Agreement dated
12/11/2011 was available as security in
favour of the Appellants for the
payment of their recompense claim
arising under Clause 10.1 of the Loan
Purchase Agreement dated
21/12/2010?
(2) Whether the Appellants'
recompense claim was capable of
being collateralised or secured?
(3) Whether the NDA shares were
given in lieu of top-up obligation under
clause 4.1.3 of the Loan Purchase
Agreement only?
28 It would be fruitful to prepare a chart showing the
division of loan under the Master Debt Recast Agreement.
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ICICI BANK LTD KINGFISHER AIRLINES LTD.
Original Loan : Rs 573.72 crores
_____________________________
Rs 170 crores Rs. 403.72 crores
Converted into CPPS/Equity Monetary loan which
Shares of Kingfisher Airlines Ltd remained post-Debt
pursuant to MDRA under MDRA
Secured by Secured by
Pledge of
Margosa Fixed Deposit of
Rs 45 crores (created pursuant
to document dated 28/06/2011)
(i) 3,147,985 shares held by UBHL )
(Plaintiff No.1) in United Spirits Ltd. )
) PLEDGED
(ii) 59,150,000 shares held by UBHL ) SHARES
(Plaintiff No.1) in Kingfisher Airlines ) (Pledged
Ltd.) ) created b/w
) 8th Sept 2006
(iii) 1,789,410 shares held by Kingfisher) &30th June,2008)
Finvest (Plaintiff No.2) in United
Spirits Ltd.
Non-Disposal Agreement dated 12/11/2011
Undertaking given by Plaintiff No.1 UBHL to
ICICI Bank for non-disposal of 20,14,000 shares
of UBL.
According to Plaintiffs this was given to provide a
top-up cover for the pledged shares under clause
4.1.3 of the LPA and to that extent only there was a
novation.
On the other hand, according to the Appellants/
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Defendant Nos.1 and 2 the said shares also were given
as security towards the recompense amount and
Defendant Nos. 1 & 2 would be entitled to sell these
shares in the event of default, which was secured by
NDA.
29. The learned single Judge has relied on Recitals (A), (B)
& (C ) of the Non-Disposal Agreement and has come to the
conclusion that these shares were given only as as a top-up /
additional pledge as per clause 4.1.3 and not for the purpose
of collateral security towards the
ig recompense amount.
The learned Single Judge held that the term 'event of
default' and 'recompense amount' mentioned in LPA dated
21/12/2010 could not be interpolated or incorporated in the
Non-Disposal Agreement dated 12/11/2011. In our view,
the view taken by the learned Single Judge is erroneous and
has been arrived at on the misconstruction of Recitals (A), (B)
and (C ) of the Non-Disposal Agreement and also by wrongly
holding that term 'event of default' and 'recompense
amount' could not be incorporated or read into the Non-
Disposal Agreement. The interpretation made by the learned
Single Judge therefore is contrary to the known canons of
interpretation of commercial transaction. We give the
following reasons for our conclusion.
30. In October, 2010, when consortium of Banks agreed to
restructure the loan given to Kingfisher Airlines Limited,
three agreements were entered into viz. (I) Master Debt
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Recast Agreement dated 21/12/2010 between the Kingfisher
Airlines Limited and its lenders (ii) Preference Share
Subscription Agreement dated 21/12/2010 between ICICI
Bank Limited, United Breweries (Holdings) Ltd and Kingfisher
Finvest (India) Limited (iii) Loan Purchase Agreement dated
21/12/2010 between ICICI Bank Limited, United Breweries
(Holdings) Limited and Kingfisher Airlines Limited. As
mentioned hereinabove, the existing loan of Rs 573.72 crores
was secured by three agreements viz (1) agreement dated
08/09/2006 which is at Exhibit-A to the Plaint (2) agreement
dated 30/06/2008 which is at Exhibit-B to the Plaint and
(3) agreement dated 30/06/2008 which is at Exhibit-C to the
Plaint. By virtue of this, the existing loan was secured by
pledge over : (a) 31,47,985 shares held by United Breweries
(Holdings) Limited in United Spirits Ltd. ("USL") (b)
5,91,50,000 shares held by United Breweries (Holdings)
Limited in Kingfisher Airlines Limited; and (c) 17,89,410
shares held by Plaintiff No.2 - Kingfisher Finvest (India)
Limited in USL (collectively referred to as the "pledged
shares")
31. When the Master Debt Recast Agreement was executed,
ICICI Bank Limited continued to have the first exclusive
charge over the pledged shares by virtue of clause 5.1(II).
The debt was divided into Rs. 403.72 crores which was the
loan given and a portion of the credit facility was converted
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into Preference Shares i.e. equity shares of Kingfisher
Airlines Limited to the extent of Rs 170 crores.
32. In order to give effect to the Master Debt Recast
Agreement dated 21/12/2010, Preference Share Subscription
Agreement was executed on the same date. Similarly,
Plaintiff No.1, Respondent No.1 herein i.e. United Breweries
(Holdings) Limited gave an assurance to the ICICI Bank
Limited in view of agreeing to restructure the Kingfisher
Airlines' debt. Under the Loan Purchase Agreement, there
were two-fold obligations on United Breweries (Holdings)
Limited viz (1) to purchase the loan granted by ICICI Bank
Limited to the Kingfisher Airlines Limited as and when called
upon to do so which is Rs 403.72 crores with interest; (1-A) to
ensure that value of the shares pledged always would be
1.25 and 0.75 times Facilities provided by the ICICI Bank
Limited and UBHL thus had agreed to give additional pledged
shares/top-up shares to ensure that the said level of 1.25 and
0.75 was maintained and (2) if ICICI Bank Limited were to
suffer loss upon sale of shares held by it of Kingfisher Airlines
Limited (after conversion of debt into equity) to recompense
such loss to the ICICI Bank Limited. If the said loss was not
recompensed, it would constitute an event of default. These
two conditions clearly revealed that both, the reduced loan of
Rs 403.72 crores with interest was secured by the pledged
shares and additional pledged shares/top-up shares which
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were to be given in the event the value of the pledged shares
went below 1.25 and 0.75 and, secondly, an amount of
Rs 170 crores in the form of equity shares also was secured
and it was provided that in the event there was a loss caused
to the ICICI Bank Limited by selling of shares of Kingfisher
Airlines Limited then the difference would be recompensed
by Plaintiff No.1 United Breweries (Holdings) Limited to the
ICICI Bank Limited and if the said difference was not paid, it
would constitute an event of default.
ig The said clauses viz
4.1.1, 4.1.2, 4.1.3, 9.1(c), 10 and 10.1 of the Loan Purchase
Agreement and the definition of "Converted ICICI Bank
Facilities" as mentioned in definition clause of LPA are
quoted hereinbelow in tabular form:-
Security by Pledged shares Security for equity shares of
& additional security of Rs 170 crores differential
shares/top-up. amount (Recompense
Amount) to be paid by
Plaintiff No.1 - UBHL
"4.1.1. The corporate Obligors "10. RIGHT TO RECOMPENSE
shall ensure that the Loan AND OTHER PAYMENT
Purchase Secured Obligations OBLIGATIONS.
are secured by a first exclusive
pledge over: 10.1 Recompense amount:
i. such number of fully paid up i. In case the Share Sale
equity shares of USL which Proceeds recovered by ICICI
provide a cover of 1.25 times Bank is of value lesser than such
the ICICI Bank Facilities; and Converted ICICI Bank Facilities
and the Yield Amount which
ii. such number of fully paid up would have accrued to ICICI
equity shares of the Borrower, Bank on such Converted ICICI
which provide a cover of 0.75 bank Facilities, then the
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times the ICICI Bank Facilities differential amount (the
"Recompense Amount") shall be
as held by the Corporate paid by the Purchasing Party
Obligors, in a form and manner within 7 Business Days of being
acceptable to ICICI Bank." called upon to do so by ICICI
Bank in writing; or
"4.1.2. Notwithstanding
anything to the contrary ii. In case ICICI Bank is unable to
contained herein, the divest either part / whole of the
Confirming party shall create Equity Shares / CCPS due to any
Pledge only over the fully paid reason whatsoever, the
up equity shares of USL while Purchasing Party shall pay to
the Purchasing Party shall ICICI Bank an amount equal to
create pledge over fully paid up the Converted ICICI Bank
equity shares of both KFA and Facilities and the Yield Amount
USL." (the "Recompense Amount")
within 7 (seven) Business Days
"4.1.3. The Corporate Obligors of being called upon to do so by
shall ensure that during the ICICI Bank in writing. Upon
currency of this Agreement: payment of such Redemption
Amount, part /whole of the
i. the Value of the USL equity Equity Shares/ CCPS shall stand
shares pledged in favour of transferred to the Purchasing
ICICI Bank shall always be at Party, as the case may be;
least 1.25 times the ICICI Bank
Facilities and shall pledge iii. Notwithstanding anything
additional shares of USL to contained in this Agreement, the
ensure that the Value of the obligation of the Purchasing
USL shares pledged / to be party to pay the Recompense
pledged in favour of ICICI Bank amount or the Redemption
does not fall below a 1.25 times Amount to ICICI Bank shall
cover of the ICICI Bank subsist even after the Loan
Facilities, within 15 days of Purchase Option has been
being called upon to do so by exercised by ICICI Bank and
ICICI Bank, in a form and shall survive till such time ICICI
manner acceptable to ICICI Bank recovers the Share Sale
Bank; and Proceeds which shall not be an
amount lesser than the
ii. the Value of the KA equity aggregate of the Converted ICICI
shares shall always represent at Bank Facilities and the Yield
least 0.75 times the ICICI Bank Amount."
Facilities. In case the Value of
the KFA equity shares fall below
the specified cover, the
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Corporate Obligors shall ensure: "1. DEFINITION & INTERPRETATION
a. that suitable number of fully 1.1. Definitions"
paid up equity shares of a listed
group entity are pledged in
favour of ICICI Bank so that a
cover of 0.75 times the ICICI "Converted ICICI Bank Facilities
Bank Facilities is maintained; or shall mean that portion of the
fund based ICICI Bank Facilities
b. maintain a fixed deposit with (which are more particularly
lien marked to ICICI Bank, in a described in Schedule III hereto),
form and manner acceptable to in lieu of which the Borrower
ICICI Bank, which shall be of an proposes to issue Convertible
amount which represents the Cumulative Preference Shares /
deficit in the cover being Equity Shares to ICICI Bank on
provided by the KFA equity the terms and conditions as
shares pledged in favour of contained in the Debt Recast
ICICI Bank. CAL ;"(i.e. equity shares of Rs
170 crores).
iii. The Corporate Obligors shall
ensure that at no point of time
shall the pledge
created/proposed to be created
over the equity shares of USL
and the Borrower represent
more than 30% (thirty percent)
of the paid up share capital of
either the Borrower or USL."
"9.1. For the purpose of this
Agreement the term "Eevent of
Default" shall mean any of the
events specified hereunder:
(a)........
(b)........
(c ) Default in Payment of the
Recompense Amount or
Redemption Amounts.
Default has been committed by
the Purchasing Party in
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payment of any portion of the
Recompense Amount or the
Redemption Amount in terms of
this Agreement.
(d).... to (m)......."
The above
ig tabular form clearly
restructured/recast loan of Rs 403.72 crores was secured by
shows that
clauses 4.1.1 to 4.1.3 of LPA and an amount of Rs 170 crores
of equity shares was secured by clause No.10.1 of LPA in the
event the sale proceeds recovered by ICICI Bank is of a Value
lesser than such Converted ICICI Bank Facilities and the
Yield Amount. Clause 3.1(h) of NDA secures the ICICI Bank in
the event of default by Plaintiff No.1 - UBHL to make good
the short-fall after sale of Rs 170 crores equity shares and in
that event ICICI Bank could sell 20,14,000 shares of UBL kept
in DP Account through Defendant No.1 - 3i Infotech
Trusteeship Services Limited. The contention of the learned
Senior counsel appearing on behalf of the Respondent Nos. 1
and 2/original Plaintiff Nos. 1 and 2 that these shares are not
secured by this agreement (LPA) is incorrect.
33. Clause 11 of the LPA clearly stipulates that the LPA shall
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be subsisting till such time all amounts due and payable to
the ICICI Bank thereunder are paid to the full and final
satisfaction of ICICI Bank and shall be subsisting
notwithstanding independently of the loan purchase option.
Clause 10.1(iii) (page 601 of the Appeal (L) No.409/15) and
clause 11.1 (page 602 of the Appeal (L) No.409/15) of the
LPA read as under:-
"10.1(iii) Notwithstanding anything contained in this
Agreement, the obligation of the Purchasing Party to
pay the Recompense amount or the Redemption
amount to ICICI Bank shall subsist even after the Loan
Purchase Option has been exercised by ICICI Bank and
shall survive till such time ICICI Bank recovers the Share
Sale Proceeds which shall not be an amount lesser than
the aggregate of the Converted ICICI Bank Facilities and
the Yield amount."
"11.1. This Agreement shall come into force on the
Effective Date and shall be valid and binding till such
time all monies due and payable to ICICI Bank under
this Agreement are paid to the full and final
satisfaction of ICICI Bank."
34. Non-Disposal Agreement dated 12/11/2011 was
executed and an undertaking was given by Plaintiff No.1
United Breweries (Holdings) Limited not to deal with or
dispose of 20,14,000 equity shares held by it. In our view,
perusal of the agreement clearly reveals that it was executed
not only to provide additional security by United Breweries
(Holdings) Limited to ensure that stipulated security cover is
maintained at all times during the currency of the LPA and as
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additional security for fulfillment of the obligation of United
Breweries (Holdings) Limited vis-a-vis the ICICI Bank Limited
under the LPA but also to secure the recompense amount as
defined at 10.1 of LPA. The Non-Disposal Agreement was to
subsist until all obligations of United Breweries (Holdings)
Limited under LPA were fulfilled. In this context, the word
'term' is relevant which is defined on page 619 of the Appeal
(L) No.409/15. This Agreement (LPA) also authorizes
Defendant No.1 - 3i Infotech Trusteeship Services Limited to
sell the NDU shares and realize the same and use the
proceeds therefrom for discharge of the claims of ICICI Bank
under the LPA upon occurrence of the event of default under
LPA. Clauses 3.1(g) and 3.1(h) of Non-Disposal Agreement
(page 621 and 622 of Appeal (L) No.409/15) make specific
provision which read as under:-
"3.1 The NDU Provider hereby irrevocably and
unconditionally agrees, undertakes and confirms that, during the
Term:
(a)......
to
(f).......
(g) and the NDU Provider :
i. shall execute the Power of Attorney (in the manner
set out in Schedule II (Format of Power of Attorney) in
favour of the Attorney, thereby appointing the POA
Agent as its legal attorney to do such acts, deeds and
things as may be required under the terms of this
Agreement and the Power of Attorney.
ii. shall not revoke the authority or terminate the
agency granted to the Attorney, pursuant to the
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irrevocable Power of Attorney nor amend or alter any
provision of the Power of Attorney executed pursuant
to sub clause (i) above; and
iiiI. revocation of the authority so granted under the
Power of Attorney shall constitute an Event of Default
under the LP Agreement.
(h) occurrence of any Event of Default or Potential Event of
Default under the MDRA and/or LP Agreement and /or failure
of the NDU Provider to do all such acts, deeds and things as
may be required under this Agreement shall constitute an
Event of Default under this Agreement. The NDU
Provider shall rectify / cure such Event of Default within a
period of three (3) ig Business Days ("Cure Period") from
the occurrence of such Event of Default, failing which the
NDU Provider shall promptly sell, transfer, assign and / or
otherwise dispose-off for cash consideration on an arms
length basis and with prior written consent of the
Lender's Agent, the Cover Assets and deposit the Share
Sale Proceeds in the Designated Account as per the terms of
the Designated Account Agreement."....
In view of this agreement, United Breweries (Holdings)
Limited - Plaintiff No.1 executed irrevocable Power of
Attorney in favour of Defendant No.1 - 3i Infotech
Trusteeship Services Limited. Clauses 3.1(g) and 3.1(h) of
NDA clearly falsifies the stand of the Plaintiffs that
recompense amount, namely, difference or short-fall on sale
of equity shares of Kingfisher Airlines Limited was not to be
recompensed by sale of 20,14,000 shares of United
Breweries Ltd. We are of the view that the learned Single
Judge has clearly overlooked and ignored these vital clauses.
35. The factual position thereafter is that, initially, ICICI
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Bank in January-February, 2012 sold 96,00,000 shares which
did not give the required returns and the short-fall of Rs 47
crores was recovered out of margosa Fixed Deposit which
was also given as security to recover the recompense
amount. The contention of the Plaintiffs that this was the
only security given for recompense amount is not correct. If
the recitals (A), (B) and (C) are read in their proper
perspective along with the intention of the parties which is
spelt out from the clauses in the contract, the finding of the
learned Single Judge that the event of default to
recompense amount has been interpolated and incorporated
in the Non-Disposal Agreement is erroneous in view of
specific clauses viz 3.1(g) and 3.1(h) of NDA. These recitals
also show that the definitions and terms used are to be given
some meaning which are given in the LPA. It is inconceivable
that the ICICI Bank, after restructuring the debts would not
secure its amount of Rs 170 crores which was held by it in
the form of equity shares though specific clauses 9.1(c) and
10.1 have been incorporated in the LPA Agreement. The said
clause 9.1(c) and 10.1 are relevant and which read as
under:-
"9.1. For the purpose of this Agreement the term "Event of
Default" shall mean any of the events specified
hereunder:
c. Default in Payment of the Recompense Amount or
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Redemption Amounts.
Default has been committed by the Purchasing Party in
payment of any portion of the Recompense Amount or
the Redemption Amount in terms of this Agreement.
"10.1 Recompense amount:
i. In case the Share Sale Proceeds recovered by ICICI
Bank is of value lesser than such Converted ICICI
Bank Facilities and the Yield Amount which would
have accrued to ICICI Bank on such Converted ICICI
bank Facilities, then the differential amount (the
"Recompense Amount") shall be paid by the
Purchasing Party within 7 Business Days of being
called upon to do so by ICICI Bank in writing;"
The finding of the learned Single Judge has therefore been
based on incorrect interpretation of the clauses in the LPA
and NDA.
36. ICICI Bank in December, 2013 sold equity shares held
by it in Kingfisher Airlines Limited and suffered a total short-
fall of Rs 146 crores approximately from the said sale and,
therefore, claimed recompense amount from the United
Breweries Ltd. The contention of the Plaintiffs that the ICICI
Bank, upon assigning its debt to IGCF alongwith the pledged
shares, had no right to claim recompense amount for the
short-fall for sale of equity shares is contrary to the
provisions of these agreements.
37. Much reliance has been placed by the learned Counsel
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appearing on behalf of the Respondent Nos.1 and 2/original
Plaintiff Nos.1 and 2 on the Recitals at (A), (B) and (C ) of the
Non-Disposal Agreement. It will be necessary to produce the
the said Recitals (A), (B) and (C ) which read as under:-
"(A) Pursuant to the Loan Purchase
Agreement dated December 21, 2010 (as
may be amended from time to time) (the
"LP Agreement") entered into inter alia
between United Breweries (Holdings)
Limited (the "Purchasing Party/UBHL/NDU
Provider") and the Lender, the NDU
Provider and the Lender mutually agreed
on the NDU Provider granting to the
Lender an irrevocable option to require
the NDU Provider, either by itself or
through its nominee/any third Person to
purchase all or part of the financial
assistances lent to the Borrower by the
Lender, in terms of the LP Agreement.
(B) One of the conditions set out in the LP
Agreement is that the NDU Provider shall
provide security of share pledge as
detailed in the relevant provisions of the
LP Agreement and shall create additional
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security to ensure that the stipulated
security cover is maintained at all times
during the currency of the LP Agreement.
(C) In terms of the LP Agreement and in
order to provide assurance that it has the
ability to fulfill its obligations under the LP
Agreement, the NDU Provider has agreed
not to divest or deal with the shares of the
Company held by the NDU Provider unless
such divestment or dealing is required to
make payments as and when called upon
by the Lender in terms of this Agreement
and/or the LP Agreement, and undertakes
to irrevocably appoint and authorize the
Attorney to fulfill the obligations of the
NDU Provider under this Agreement."
It is a well settled position in law that while reading the
contents of commercial documents, intention of the parties
has to be taken into consideration. It is also well settled that
apart from recitals, the main agreement itself also has to be
taken into consideration. Perusal of Recitals will indicate that
Recitals (A) and (B) narrate the circumstances under which
the earlier agreements viz. Master Debt Recast Agreement,
Preference Share Subscription Agreement and Loan Purchase
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Agreement were entered into between the parties and if
Recital (C ) is read in its proper perspective, it would indicate
that the present agreement was executed for the purpose of
securing the entire loan of the Kingfisher Airlines Limited
which was to be purchased by Plaintiff No.1 - UBHL under the
Loan Purchase Agreement. It cannot be forgotten that the
Loan Purchase Agreement makes clear distinction between
the pledged shares and equity shares (CCPS) for the purpose
of securing the existing loan (Rs 403.72 crores). Clauses 4.1
and 4.2 provided for top-up of pledged shares. At the same
time, equity shares - CCPS (Rs 170 crores) also is secured by
clauses 9.1 and 10.1 and the Plaintiff No.1 - UBHL was under
an obligation to cover the short-fall, if any, on sale of equity
shares. The Non-Disposal Agreement therefore covers both,
the pledged shares as as well as the short-fall on sale of
equity shares - CPPS since Recital (C ) speaks about
fulfillment of all obligations of Plaintiff No.1 - UBHL under the
Loan Purchase Agreement. The intention of parties,
therefore, become very clear from the Recitals as well as the
contents of the clauses of the Non-Disposal Agreement. The
contention of Mr. Seervai, the learned Senior Counsel
appearing on behalf of Respondent Nos.1 and 2/original
Plaintiff Nos. 1 and 2 that there was novation of contract in
respect of Clause No.4.1 is not correct.
38. The law on construction of commercial document is
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quite well settled. The House of Lords in Reardon Smith Line
Ltd. vs. Yngvar Hansen Tangen1 has observed as under:-
"It is less easy to define what evidence
may be used in order to enable a term to be
construed. To argue that practices adopted
in the shipbuilding industry in Japan, for
example as to sub-contracting, are relevant in
the interpretation of a charterparty contract
between two foreign shipping companies,
whether or not these practices are known to
the parties, is in my opinion to exceed what is
permissible. But it does not follow that,
renouncing this evidence, one must be
confined within the four corners of the
document. No contracts are made in a
vacuum: there is always a setting in which
they have to be placed. The nature of what is
legitimate to have regard to is usually
described as "the surrounding circumstances"
but this phrase is imprecise: it can be
illustrated but hardly defined. In a
commercial contract it is certainly right that
the court should know the commercial
purpose of the contract and this in turn,
presupposes knowledge of the genesis of the
transaction, the background, the context, the
market in which the parties are operating. I
give a few illustration. In Utica City National
Bank vs. Gunn (1918) 118 N.E., 607; 222 N.Y.
204 the New York Court of Appeals had to
consider the meaning of "loans and
discounts" in a contract of guaranty. The
judgment of Cardozo J. contains this passage,
at p.608 :
1 1 W.L.R. (1976) 989
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"The proper legal meaning, however, is
not always the meaning of the parties.
Surrounding circumstances may stamp
upon a contract a popular or looser
meaning. The words 'loans and discounts'
are not so clear and certain that
circumstances may not broaden them to
include renewals. They often have that
meaning in the language of business life.
To take the primary or strict meaning is to
make the whole transaction futile. To
take the secondary or loose meaning, is to
give it efficacy and purpose. In such a
situation, the genesis and aim of the
transaction may rightly guide our choice.
Wigmore on Evidence, vol. IV, para 2470,
Stephen, Digest of Law of Evidence, art.
91, subds. 5 and 6."
Similarly, the House of Lords in Investors
Compensation Scheme Ltd. Vs. West Bromwich Building
Society1 has observed as under:-
......"The result has been subject to one
important exception, to assimilate the way
in which such documents are interpreted
by judges to the common sense principles
by which any serious utterance would be
interpreted in ordinary life. Almost all the
old intellectual baggage of "legal'
interpretation has been discarded. The
principles may be summarised as follows.
(1) Interpretation is the ascertainment
1 1 W.L.R. (1998) 896
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of the meaning which the document would
convey to a reasonable person having all
the background knowledge which would
reasonably have been available to the
parties in the situation in which they were
at the time of the contract.
(2) The background was famously
referred to by Lord Wilberforce as the
"matrix of fact", but this phrase is, if
anything, an understated description of
what the background may include. Subject
to the requirement that it should have
been reasonably available to the parties
and to the exception to be mentioned next,
it includes absolutely anything which
would have affected the way in which the
language of the document would have
been understood by a reasonable man.
(3) The law excludes from the
admissible background the previous
negotiations of the parties and their
declaration of subjective intent. They are
admissible only in an action for
rectification. The law makes this distinction
for reasons of practical policy and, in this
respect only, legal interpretation differs
from the way we would interpret
utterances in ordinary life. The boundaries
of this exception are in some respects
unclear. But this is not the occasion on
which to explore them.
(4) The meaning which a document
(or any other utterance) would convey to a
reasonable man is not the same thing as
the meaning of its words. The meaning of
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words is a matter of dictionaries and
grammars; the meaning of the document is
what the parties using those words
against the relevant background would
reasonably have been understood to
mean. The background may not merely
enable the reasonable man to choose
between the possible meanings of words
which are ambiguous but even (as
occasionally happens in ordinary life) to
conclude that the parties must, for
whatever reason, have used the wrong
words or syntax: see Mannai Investments
Co. Ltd. vs. Eagle Star Life Assurance Co.
Ltd. [1997] A.C. 749.
(5) The "rule" that words should be
given their "natural and ordinary meaning"
reflects the common sense proposition that
we do not easily accept that people have
made linguistic mistakes, particularly in
formal documents. On the other hand, if
one would nevertheless conclude from the
background that something must have
gone wrong with the language, the law
does not require judges to attribute to the
parties an intention which they plainly
could not have had. Lord Diplock made this
point more vigorously when he said in
Antaios Compania Naviera S.A. vs. Salen
Rederierna A.B. [1985] A.C. 191, 201:
"if detailed sermantic and syntactical
analysis of words in a commercial
contract is going to lead to a
conclusion that flouts business
commonsense, it must be made to
yield to business commonsense."
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Further, the House of Lords in Mannai Investment
Co. Ltd. vs. Eagle Star Life Assurance Co. Ltd. 1 has observed
as under:-
"I propose to begin by examining the
way we interpret utterances in everyday
life. It is a matter of constant experience
that people can convey their meaning
unambiguously although they have used
the wrong words.
ig We start with an
assumption that people will use words and
grammar in a conventional way but quite
often it becomes obvious that, for one
reason or another, they are not doing so
and we adjust our interpretation of what
they are saying accordingly. We do so in
order to make sense of of their utterance:
so that the different parts of the sentence
fit together in a coherent way and also to
enable the sentence to fit the background
of facts which plays an indispensable part
in the way we interpret what anyone is
saying. No one, for example, has any
difficulty in understanding Mrs. Malaprop.
When she says "She is an obstinate as an
allegory on the banks of the Nile", we
reject the conventional or literal meaning
of allegory as making nonsense of the
sentence and substitute "alligator" by
using our background knowledge of the
things likely to be found on the banks of
the Nile and choosing one which sounds
rather like "allegory".
1 2 W.LR. (1997) 945
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Mrs. Malaprop's problem was an
imperfect understanding of the
conventional meanings of English words.
But the reason for the mistake does not
really matter. We use the same process of
adjustments when people have made
mistake about names or description or
days or times because they have forgotten
or become mixed up. If one meets an
acquaintance and he says "And how is
Mary?" it may be obvious that he is
referring to one's wife, even if she is in fact
called Jane. One may even, to avoid
embarrassment, answer "Very well, thank
you" without drawing attention to his
mistake. The message has been
unambiguously received and understood.
If one applies that kind of
interpretation to the notice in this case,
there will also be no ambiguity. The
reasonable receipt will see that in
purporting to terminate pursuant to clause
7(13) but naming 12 January 1995 as the
day upon which he will do so, the tenant
has made a mistake. He will reject as too
improbable the possibility that the tenant
meant that unless he could terminate on
12 January, he did not want to terminate at
all. He will therefore understand the notice
to mean that the tenant wants to
terminate on the date on which, in
accordance with clause 7(13), he may do
so, i.e. 13 January."
Similarly, the House of Lords in Antaios Compania
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Naviera S.A. Vs. Salen Rederierna A.B.1 has also observed as
under:-
"To the semantic analysis, buttressed
by generous citation of judicial authority,
which led the arbitrators to the conclusions
as to the interpretation of the wording of
the withdrawal clause that I have
summarised, the arbitrators' added an
uncomplicated reason based simply upon
business commonsense:
"We always return to the point that
the owners' construction is wholly
unreasonable, totally uncommercial
and in total contradiction to the whole
purpose of the N.Y.P.E., time charter
form. The owners relied on what they
said was 'the literal meaning of the
words in the clause.' We would say
that if necessary, in a situation such as
this, a purposive construction should
be given to the clause so as not to
defeat the commercial purpose of the
contract."
"While depreciating the extension
of the use of the expression
"purposive construction" from the
interpretation of the statutes to the
interpretation of private contracts, I
agree with the passage I have cited
from the arbitrators' award and I take
this opportunity of re-stating that if
detailed semantic and syntactical
analysis of words in a commercial
1 1 A.C. (1985) 191
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contract is going to lead to a
conclusion that flouts business
commonsense, it must be made to
yield to business commonsense."
This Court in Mumbai Metropolitan Region
Development Authority vs. Unity Infraproject Ltd. 1 has
observed in paras 11 and 25 as under:-
"11. In interpreting a contract, the
Court cannot place emphasis on an
isolated provision divorced from the
context and unrelated to the other
provisions which govern contractual
obligations. Contracts represent
business understandings between the
parties. Commercial dealings between
persons who are well versed in the
transaction of business are regulated by
contracts which parties ought to govern
themselves. The law regulates those
contracts and provides an ordered
framework in which business dealings
can be implemented. The duty of the
Court when called upon to assess where
the balance lies in a contractual dispute,
is to read the contract as a whole in
order to understand the business
meaning which the parties attributed to
their obligations. Interpretation in law
must ensure in commercial matters that
the view which the Court takes records
the sense which the parties to an arms
length transaction attribute to the terms
which they incorporate. The law is not
1 2008(5) Bom. C.R. 196
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divorced from business realities nor can
the vision of the judge who interprets
the law be disjointed from the modern
necessities to make business sense to
business dealings."
"25. A business like interpretation of
contractual provisions must be adopted
in construing contracts entered into by
persons of business to govern business
dealings. The Court must ensure that
interpretation of law in commercial
cases must not be disjointed from the
intent and object which those having
business dealings seek to sub-serve
unless interpretation of contracts
effectuates a business meaning for
persons of business, the law will not
fulfill its purports and object of being a
falicitator for business and providing a
structure of ordered certainty to those
who carry on business here. The legal
system must innovate constantly to
keep abreast with rapid changes in
technology and business."
39. We are therefore of the view that no prima facie case
has been made out by the Plaintiffs for grant of any interim
relief and Plaintiff No.1 - United Breweries (Holdings) Limited
was duty bound to pay the recompense amount and upon its
non-payment of the said total short-fall of Rs 146 crores,
Defendant No.1 - 3i Infotech Trusteeship Services Limited
became entitled to sell these shares to recover the said
short-fall and to whom Plaintiff No.1 - United Breweries
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(Holdings) Limited has given Power of Attorney to sell in the
event of default being committed by it. Non-payment of
short-fall and recompense amount clearly constituted the
event of default under clause 9.1 and 10 of the LPA which
also has been incorporated under clause 3.1(h ) of the NDA.
It is well settled that recitals alone do not spell out the
intention of the parties but terms and conditions of the
contract and intention of the parties have to be taken into
consideration for arriving at any conclusion. Even otherwise,
even if recitals are read in its proper perspective, they would
reveal that recitals (A) and (B) refer to the earlier
agreements and recital (C ) indicates that all the debts which
are due to ICICI Bank are to be satisfied and for that purpose
the said shares were given as security. There cannot be any
dispute regarding the ratio of the judgments on which
reliance has been placed by Mr. Seervai, the learned Senior
Counsel appearing on behalf of the Plaintiffs. The ratio of the
said judgment, in fact, supports the case of ICICI Bank
Limited and not that of the Plaintiffs. ICICI Bank and
consortium of Banks had, in fact, permitted the Kingfisher
Airlines to recast is debts and had arrived at an arrangement
so that the interest component could be converted into
equity shares and the loan component would be reduced to
403.72 crores with interest. However, both these
components have been fully secured; the loan component by
the pledged shares and the top-up shares and equity
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component by the Fixed Deposit of margosa and 20,14,000
shares of United Breweries Limited which could be sold in the
event of default. The event of default occurred when there
was a short-fall of Rs 146 crores in December, 2013 after the
Appellant - ICICI Bank sold the pledged shares and called
upon the Plaintiff No.1 - United Breweries (Holdings) Limited
to pay the recompense amount. The submissions made by
Mr. Seervai, the learned Senior Counsel appearing on behalf
of the Plaintiffs therefore cannot be accepted. In fact, in the
present case, the balance of convenience lies in favour of the
Defendant No.1 - 3i Infotech Trusteeship Services Limited
and Defendant No.2 - ICICI Bank Limited. The price of the
shares of Kingfisher Airlines Limited has been continuously
falling. When the impugned order was passed the value was
Rs 235.26 crores and when the Appeals were filed it was
Rs 193.14 crores and on the date when the Appeals were
reserved for judgment the value was Rs 171.65 crores which
are the figures given in the written submissions tendered on
behalf of the Appellant - ICICI Bank Limited and these figures
have not been disputed by the Plaintiffs. In our view, no
prejudice would be caused to the Plaintiffs if these shares are
sold and the amount of sale proceeds is kept in the DP
Account. If the Plaintiffs succeed, they can always be
compensated in terms of money or shares can be bought
from the market. In any event, the Plaintiffs do not have any
legal right to retain these shares in view of the clear terms
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and conditions of the contract and Non-Disposal Agreement
of shares.
40. Reliance has been placed by the learned Senior Counsel
appearing on behalf of the Plaintiffs on the judgment of the
Apex Court in Wander Ltd and Another vs. Antox India P.
Ltd.1. The Apex Court in the said judgment in para 14 has
observed as under:-
"14. The appeals before the Division Bench
were against the exercise of discretion by the
Single Judge. In such appeals, the appellate
court will not interfere with the exercise of
discretion of the court of first instance and
substitute its own discretion except where the
discretion has been shown to have been
exercised arbitrarily, or capriciously or
perversely or where the court had ignored the
settled principles of law regulating grant or
refusal of interlocutory injunctions. An appeal
against exercise of discretion is said to be an
appeal on principle. Appellate court will not
reassess the material and seek to reach a
conclusion different from the one reached by
the court below if the one reached by that court
was reasonably possible on the material. The
appellate court would normally not be justified
in interfering with the exercise of discretion
under appeal solely on the ground that if it had
considered the matter at the trial stage it would
have come to a contrary conclusion. If the
discretion has been exercised by the trial court
reasonably and in a judicial manner the fact
that the appellate court would have taken a
different view may not justify interference with
the trial court's exercise of discretion. After
referring to these principles Gajendragadkar, J.
1 1990(Supp) SCC 727
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in Printers (Mysore) Private Ltd vs. Pothan
Joseph (1960) 3 SCR 713 : AIR 1960 SC 1156 :
(SCR 721).
"...... These principles are well
established, but as has been observed
by Viscount Simon in Charles Osenton &
Co. v. Jhanaton [1942 AC 130) 'the law
as to the reversal by a court of appeal
of an order made by a judge below in
the exercise of his discretion is well
established, and any difficulty that
arises is due only to the application of
well settled principles in an individual
case."
The appellate judgment does not seem to
defer to this principle."
In the present case, the learned Single Judge, in our humble
view, has clearly misinterpreted the Non-Disposal Agreement
and the Loan Purchase Agreement and has held that LPA
has worked itself out without taking into consideration the
relevant clauses which clearly mentioned that the LPA would
subsist till all the dues of ICICI Bank are paid in full. The
other findings also, in our view, are perverse since they do
not take into consideration the relevant clauses in LPA and
NDA. We are, therefore, of the view that, in fact, the
observations made by the Apex Court in the case of Wander
Ltd (supra) would squarely apply to the facts of the present
case and we have therefore no hesitation in setting aside the
impugned order.
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41. Accordingly we answer the three questions framed in
para 27 above as under:-
Questions Findings
(1) Whether 20,14,000 shares of UBL
furnished as security (NDA shares) under
Non-Disposal Agreement dated
12/11/2011 was available as security in Yes
favour of the Appellants for the payment
of their recompense claim arising under
Clause 10.1 of the Loan Purchase
Agreement dated 21/12/2010?
(2) Whether the Appellants' recompense
claim was capable of being collateralised Yes
or secured?
(3) Whether the NDA shares were given in
lieu of top-up obligation under clause 4.1.3 No
of the Loan Purchase Agreement only?
CONCLUSION:
42. The impugned order passed by the learned Single Judge
is set aside and the Appeals are allowed.
43. Since both these appeals are allowed and disposed of,
Notices of Motion taken out therein do not survive and they
are also disposed of.
(DR. SHALINI PHANSALKAR-JOSHI, J.) (ACTING CHIEF JUSTICE)
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SUBMISSION OF THE LEARNED SENIOR COUNSEL FOR RESPONENT
NOS.1 AND 2 AND THAT OF THE APPELLANTS AFTER THE JUDGMENT
IS PRONOUCED AND THE ORDER THEREON:
44. After pronouncement of Judgment, the learned Senior
Counsel appearing on behalf Respondent Nos. 1 and 2
submitted that status quo be continued for a period of four
weeks. This is opposed by the learned Senior Counsel
appearing on behalf of the Appellants. He submitted there is
a possibility of market value of the shares falling down during
this period and therefore Respondent Nos.1 and 2 should
give an undertaking that in the event no further interim
orders are passed by the Apex Court, they should give an
indemnity that they shall ensure that short-fall would be
indemnified and they would make good the said amount.
45. In our view, since the interim order was in operation for
some time, the order of status quo shall continue till 5 th
January, 2016.
(DR. SHALINI PHANSALKAR-JOSHI, J.) (ACTING CHIEF JUSTICE)
