Housing Development Finance ... vs Reliance Capital Limited
2021 Latest Caselaw 4091 Bom

                                                        (13) IA(l) 5282.202.doc


                      IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                         ORDINARY ORIGINAL CIVIL JURISDICTION
                              IN ITS COMMERCIAL DIVISION

                        INTERIM APPLICATION (L) NO. 1535 OF 2021
                                          IN
                     COMMERCIAL SUMMARY SUIT (L) NO.5120 OF 2020


            Housing Development Finance Corporation Limited ... Applicant /
                                                              Plaintiff
                 Vs

            Reliance Capital Limited                            ... Respondent/
                                                                    Defendant

            Dr.Birendra Saraf, Senior Advocate a/w. Ms.Nanki Grewal,
            Mr. Aryan Srivastava, Mr.Viren Mandhle i/b. Wadia Ghandy & Co.
            for the Applicant / Plaintiff.

            Mr.Tushar Kakalia a/w Ms.Raghavi Sharma, Mr.D. J. Kakalia i/b.
            Mulla & Mulla & Craigie Blunt & Caroe for the
            Respondent/Defendant.


                                   CORAM : B.P. COLABAWALLA, J.

FRIDAY , 5TH MARCH, 2021

P.C. :

1. The above Interim Application is fled seeking an

order of deposit in the sum of Rs.564.95 crores, or in the

alternative, to secure the aforesaid amount by way of bank

guarantee or other liquid security of like nature. Prayers are also

sought for attachment before judgment as well as injunction and

(13) IA(l) 5282.202.doc

for disclosure of assets.

2. The brief facts of this case are that monies to the

extent of Rs.500 crores was advanced to the respondent under

the Master Facility Agreement dated 29 th September, 2017. Since

the respondent failed to repay the aforesaid facility, the above

Summary Suit came to be fled seeking recovery of the claim

amount of Rs.564.95 crores, more particularly set out in the

Particulars of Claim. In the above Suit, the present Interim

Application is fled seeking urgent reliefs as set out earlier.

3. An affdavit-in-reply is fled by the respondent

opposing the reliefs claimed in the Interim Application. In reply

to the Interim Application, it is stated that it is severely delayed

and hence the applicant is not entitled for any relief. The learned

Advocate appearing on behalf the respondent brought to my

attention that the alleged default in respect of the aforesaid

Facility is stated to have taken place in November 2019. The

"Default Notice" by which the applicant declared an 'event of

default' is dated 5th December 2019. Despite this, the present Suit

is fled only in October 2020, and thereafter, the present Interim

(13) IA(l) 5282.202.doc

Application is fled. He submitted that there is no explanation for

the aforesaid delay.

4. Without prejudice to the aforesaid argument, the learned

Advocate submitted that there is no necessity to pass any interim

order in the present Interim Application, considering that there are

already other orders passed by different Tribunals and/or Courts

restraining the respondent from transferring, alienating, selling,

disposing of and/or dealing with and/or parting with possession and/

or encumbering any/all of its assets. He submitted that so long as

these orders continue to operate, the respondent cannot dispose of

any/all of its assets. Hence the applicant is adequately protected.

5. The learned Advocate has also brought to my attention

paragraphs 9 to 12 of the affdavit-in-reply wherein it is stated that

the respondent is presently in the process of resolution of its debt by

monetizing its assets and the asset monetization process is being

run by Vistra, who is the Debenture Trustee for approximately more

than 1,000 lenders of the respondent. The lenders represented by

Vistra account for approximately Rs.16,290 crores of exposure to

the respondent and include government owned entities such as Life

(13) IA(l) 5282.202.doc

Insurance Corporation ("LIC") and Employees' Provident Fund

Organization ("EPFO"). The learned Advocate submitted that if the

reliefs sought in the Interim Application are granted, and that too at

the instance of a creditor whose alleged outstanding is less than 1%

of the total debt of the respondent, the same would impair value

maximization of the respondent's assets and thereby deprive the

stakeholders in the process from unlocking the true value of the

respondent's assets. For all these reasons, the learned Advocate

submitted that no reliefs ought to be granted in the present Interim

Application.

6. I have heard Dr. Saraf, the learned senior Advocate

appearing on behalf of the applicant and the learned Advocate Mr.

Kakalia appearing on behalf of the respondent.

7. Presently, at this stage, at least, so far as the amounts

outstanding are concerned, there appears to be no real serious

dispute. The claim of the applicant is a large claim of Rs.564.95

crores. It is also not in dispute that the respondent is in serious

fnancial distress. This being the position, I am certainly of the

opinion that a case for limited ad-interim relief is made out. The

(13) IA(l) 5282.202.doc

argument canvased by Mr.Kakalia regarding the applicant being

adequately protected as there are other orders already passed by

this Court as well as other Courts / Tribunals, I fnd that the exact

the same argument was canvassed by the respondent and rejected

by this Court in the another matter fled by IDBI Trusteeship

Services Ltd. The exact same argument was canvassed and rejected

by this Court vide its order dated 4 th November 2020. So far as the

argument of delay is concerned, I do not think that on that ground

alone, with nothing more, would dis-entitle the applicant to apply

for ad-interim relief. This is more so when one takes into

consideration the fnancial condition of the respondent which is

precarious at best. As far as the argument regarding the of asset

monetization process is concerned, admittedly, the applicant is not

involved in the said process. In any event, Vistra, the debenture

trustee, would not be precluded by this order from enforcing its

securities in accordance with law. Under these circumstances, I am

satisfed that a case for ad-interim relief is made out.

8. In view of the foregoing discussion, there shall be ad-

interim relief in terms of prayer clauses (d) and (e) except the

bracketed portion, which read thus ;

(13) IA(l) 5282.202.doc

d) restraining the Defendant from selling, transferring,

alienating, or encumbering, in any manner whatsoever, or

otherwise dealing with or creating any third party right, title

or interest, whether directly or indirectly, in respect of their

movable and immovable assets, including the present and

future book debts, receivable, bills, claims and loan assets of

the Defendant;

e) directing the Defendant to disclose on an afdavit before this

Hon'ble court their entire assets and properties, both

movable and immovable, including present and future book

debts, receivables, bills, claims and loan assets of the

Defendant and upon such disclosure, [pass an order of

attachment of all such assets and properties;]

9. List the above Interim Application for hearing and

fnal disposal in usual course.

10. This order shall be digitally signed by the Private

Secretary/Personal Assistant of this Court. All concerned shall

act on production by fax or e-mail of a digitally signed copy of this

order.

Digitally signed by Vina Vina A. A. Khadpe Date:

Khadpe    2021.03.08
          20:12:56
                                                                         B.P. COLABAWALLA, J.
          +0530