Bombay High Court
Sneha Metal Private Limited vs Nikhil Gandhi on 3 May, 2024
Author: Abhay Ahuja
Bench: Abhay Ahuja
2024:BHC-OS:7748
923. IAL 6231-24.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INTERIM APPLICATION (L) NO. 6231 OF 2024
IN
COMMERCIAL EXECUTION APPLICATION (L) NO. 6144 OF 2024
Sneha Metal Private Limited & Ors. ...Applicants
V/s.
Nikhil Gandhi & Ors. ...Respondents
Mr. Karl Tamboly with Mr. Piyush Raheja, Mr. Nikhil Wable, Ms. Parita
Mashruwala and Mr. Mihir Kakade i/b Jajakar Partners for the
Applicants.
Mr. Zal Andhyarujina, Senior Advocate with Ms. Maithili Parikh, Mr.
Pranay Chaugule, Mr. Harshit Bhomia and Mr. Dineshkumar Dubey for
Respondent No. 3.
CORAM : ABHAY AHUJA, J.
DATE : 3rd MAY, 2024
P.C. :
1. Pursuant to earlier order of this Court dated 20th March, 2024,
today when the matter is called out, Mr. Andhyarujina, learned Senior
Counsel appears for the Respondent No.3 and opposes the request
made on behalf of the Applicants for allotment of 86,66,667 equity
shares by Respondent No.3 to the Applicant No.4, however, submitting
that the said allotment would be subject to payment of Rs.
13,00,00,005/- being consideration for allotment of the said shares for
the face value of Rs. 10/- per share and the share premium of Rs. 5/-
per share.
923. IAL 6231-24.doc
2. Learned Senior Counsel would submit that the execution
application as well as the interim application in the said execution
application is for execution of the consent terms dated 19 th July, 2023,
between the Applicants and the Respondents, which consent terms
were taken on record by order dated 21 st July, 2023 of this Court
(Coram: Manish Pitale, J.).
3. Mr. Andhyarujina, learned Senior Counsel would submit that a
bare perusal of paragraphs No. 2, 4 and 5 of the consent terms would
suggest that for allotment of 86,66,667 equity shares of Respondent
No.3 to the Applicant No.4, the Applicant No.4 would need to pay Rs.
13,00,00,005/-. Learned Senior Counsel refers to the language of the
said consent terms and in particular to the word "for", which has been
used in paragraphs no. 2 and 4 as well as in paragraph 5 in support of
his contentions. Learned Senior Counsel refers to the dictionary
meaning of the word "for" and citing Black's Law Dictionary, learned
Senior Counsel submits that "for" means in consideration for, as an
equivalent for, in exchange for and also refers to the internet version of
the word "for" and submits that it means getting in exchange. Learned
Senior Counsel submits that wherever the word "for" is used, it means
"in exchange of something". Learned Senior Counsel would submit
923. IAL 6231-24.doc
that, therefore, when in paragraphs 2, 4 and 5 of the consent terms it is
stated that the Respondent No. 3 would allot and transfer 86,66,667
equity shares of Respondent No. 3 to the Applicant No. 4 for face value
of Rs. 10/- per share and share premium of Rs. 5/- per share,
amounting to a total Rs. 13,00,00,005/-, it means that the said shares
would be issued or transferred to the Applicant No. 4 in exchange for /
in consideration of Rs. 13,00,00,005/- and cannot be said to be in lieu
of Rs.33,00,00,000/- that has been agreed to be jointly and severally
paid by Respondents No. 1 and 2 to the Applicant No. 4.
4. Learned Senior Counsel would submit that giving the consent
terms dated 19th July, 2023, sought to be executed in these
applications, any other meaning would be completely outside the
purview of the jurisdiction of an executing Court as an executing Court
cannot be go beyond or behind the decree as the whole purpose of the
execution proceedings is to enforce the verdict of the Court which is the
order dated 21st July, 2023 of this Court, taking the consent terms on
record as it is. Learned Senior Counsel would submit that the Court
has to take the judgment on its face value and it is the bounden duty of
the Court to interpret the decree in the process of giving the true effect
to the decree and the executing Court has to be very cautious in
923. IAL 6231-24.doc
supplementing its interpretation and conscious of the fact that it cannot
draw a new decree, even if the consent terms have rightly or wrongly
been unhappily worded, and if that be the case, the Applicant has to
suffer the consequences. Learned Senior Counsel relies upon the
decisions of the Hon'ble Supreme Court in the cases of Kanwar Singh
Saini Vs. High Court of Delhi 1 and Meenakshi Saxena and Another Vs.
ECGC Limited (Formerly known as Export Credit Guarantee
Corporation of India Limited) and Another2.
5. Mr. Andhyarujina, learned Senior Counsel accordingly submits
that if the Applicant pays Rs. 13,00,00,005/-, the Respondent No. 3
would be happy to issue the 86,66,67 equity shares to the Applicant
No.4, as in any event, under Section 62 of the Companies Act, 2013
also no shares can be issued by a company without consideration.
6. On the other hand, Mr.Tamboly, learned Counsel appearing for
the Applicant, vehemently opposes the aforesaid submissions and firstly
draws the attention of this Court to the order dated 20 th March, 2024,
of this Court, and in particular to paragraph 3 thereof, whereby the
learned Counsel for the Respondents had sought one week's time to file
1 (2012 4 SCC 307
2 (2018) 7 SCC 479
923. IAL 6231-24.doc
reply inter alia for submitting the plan and the timelines in which the
Respondent No. 3 would allot 86,66,667 equity shares to the Applicant
No.4 of a face value of Rs. 10/- per share and the share premium as Rs.
5/- per share.
7. Mr.Tamboly would submit that originally a Memorandum of
Understanding was entered into between the Applicants and the
Respondents for settling their accounts for the business transactions,
whereby the Respondents had agreed to pay to the Applicants an
amount of Rs. 70,00,00,000/- : Rs.57,00,00,000/- by cheques and Rs.
13,00,00,000/- by allotment of 86,66,667 equity shares of the
Respondent No. 3-company for a total amount of Rs.13,00,00,000/- at
face value of Rs.10/- and share premium of Rs.5/-. That since the
payments could not be made, by virtue of the arbitration clause for
resolution of disputes, an Arbitrator came to be appointed vide order
dated 9th June 2021 of this Court, in which arbitration, consent terms
dated 9th June 2021 came to be filed. Under the said consent terms, in
full and final settlement of all the claims, the Respondent No. 1 agreed
to pay the Applicant No.4 an aggregate sum of Rs. 35,00,00,000/- in
three installments in 17 months and 15 days, failing which the
Respondent No.1 would pay to the Applicant No.4 an aggregate
923. IAL 6231-24.doc
amount of Rs.48,00,00,000/-, being the default settlement
compensation and the Respondent No.3 would allot and transfer to the
Applicant No.4, 86,66,667 equity shares of the Respondent No.3 for
face value of Rs.10/- per share and share premium of Rs.5/- per share,
amounting to total Rs.13,00,00,005/-. These consent terms were also
taken on record by the arbitrator and the same also became an award.
As there was a default of the said consent terms as the Respondent
No.1 could neither pay Rs.35,00,00,000/- within a period of 17
months and 15 days i.e. by 23rd November 2022 and also did not pay
Rs.48,00,00,000/- nor issued and allotted 86,66,667 equity shares of
Respondent No.3 to the Applicant No.4 for a face value of Rs.10/- per
share and the share premium of Rs.5/- per share, amounting to Rs.
13,00,00,005/-, the Applicants and Respondents re-negotiated and
entered into consent terms dated 19th July 2023.
8. Mr.Tamboly would submit that these consent terms were taken
on record by this Court on 21st July, 2023. That, by these consent terms,
Respondents have paid Rs.7,00,00,000/- out of the total sum of Rs.
48,00,00,000/-. In respect of the balance of Rs. 41,00,00,000/- and in
respect of the allotment of shares of Respondent No. 3 to the Applicant
No. 4 of a face value of Rs.10/- per share and a share premium of Rs.
923. IAL 6231-24.doc
5/- per share amounting to a total of Rs. 13,00,00,005/-, the parties
negotiated and agreed that the Respondents jointly and severally would
pay the Applicants a sum of Rs. 31,00,00,000/- instead of Rs.
41,00,00,000/- by 30th June, 2023, as agreed, as per the previous
consent terms dated 22nd December, 2023, which was signed and
confirmed by the Respondents. Mr.Tamboly would submit that since
the Respondents did not comply with the payment schedule of the
earlier consent terms, the present consent terms were filed and the
amount crystallized as jointly and severally due and payable by the
Respondents No. 1 and 2 was Rs. 33,00,00,000/- (Rs. 31,00,00,000/-
as principal and Rs. 2,00,00,000/- as interest on delayed payment as
there was an interest leviable @ 18% per annum under the previous
consent terms). Mr. Tamboly, would submit that, therefore, as per the
consent terms under execution, it was agreed and undertaken that
towards full and final settlement of the obligations of the Respondents
towards the Applicants, the Respondents No. 1 and 2 would jointly and
severally pay a sum of Rs. 33,00,00,000/- on or before 10 th November,
2023 and the Respondent No. 3 agreed to allot and transfer 86,66,667
equity shares of Respondent No. 3 to the Applicant No. 4 for face value
of Rs.10/- per share and share premium of Rs. 5/- per share amounting
to a total of Rs.13,00,00,005/-.
923. IAL 6231-24.doc
9. Mr. Tamboly would submit that as provided in paragraph 7 of the
said consent terms, it was agreed that if the Respondents No. 1 and 2
jointly and severally pay a sum of Rs.33,00,00,000/- to the Applicant
No. 4 by 10th November, 2023, then the Applicants would treat the
obligations even with respect to the issuance of 86,66,667 equity shares
to the Applicant No. 4 as full and final satisfaction and would also not
claim a balance amount of Rs.8,00,00,000/- from Respondents No. 1
and 2 nor seek interest at the rate of 18% from 24 th November, 2022 on
the outstanding amount till its realisation. Learned Counsel submits
that this intention of the parties is clearly articulated in paragraph 8 of
the consent terms, which clearly record that a sum of Rs.
33,00,00,000/- is payable by the Respondent No. 1 or Respondent No.
2 jointly or severally on or before 10th November, 2023.
10. Mr. Tamboly would submit that since the Respondents No. 1 and
2, admittedly, subject to a moratorium under the Insolvency and
Bankruptcy Code, 2016, have not been able to make the payments by
10th November, 2023, it is incumbent upon the Respondent No.3 to
issue and allot 86,66,667 equity shares to the Applicant No. 4. Learned
Counsel would submit that it is quite clear that the value of Rs.
13,00,00,005/- is the amount that is due by the Respondents to the
923. IAL 6231-24.doc
Applicants and 86,66,667 equity shares of Respondent No. 3 is simply a
quantification of the said amount, which is owed by the Respondents to
the Applicants and today the Respondents cannot turn around and give
a different interpretation to the understanding between the parties.
11. Coming to Mr. Andhyarujina's submissions that shares cannot be
allotted by a company unless consideration is received as the same
would be in violation of Section 62 of the Companies Act, 2013, Mr.
Tamboly would submit that the Hon'ble Supreme Court in the case of
Vijay Karia and Others Vs. Prysmian Cavi E Sistemi SRL and Others 3
although in the context of the Foreign Exchange Management Act,
1999 (FEMA) adopted and applied the principle that the contention
that the enforcement of an award must be refused on the ground that it
violates any one or the other provisions of the FEMA cannot be
accepted. Mr.Tamboly would, therefore, submit that applying the same
principle, this Court cannot refuse execution merely on the basis of
violation of Section 62 of the Companies Act, as that would not be for
an executing Court to go into.
3 (2020) 11 SCC 1
923. IAL 6231-24.doc
12. With respect to the judgments relied upon by Mr.Andhyarujina,
Mr.Tamboly, would submit that it is the duty of the executing Court to
correctly interpret the decree, so as to give effect to the decree and
cannot be oblivious of the factors leading up to the decree. That, the
present consent terms in execution have a history, which has been
recounted in paragraphs 1 and 2 of the said consent terms and which
clearly indicates that if the payments cannot be made, the shares would
have to be issued to the Applicant No. 4 and by no stretch of
imagination it can be interpreted or construed that the shares would be
allotted on payment of Rs. 13,00,00,005/-. Learned Counsel, therefore,
urges this Court to direct the Respondent No.3 to allot 86,66,667 equity
shares for face value of Rs. 10/- per share and share premium of Rs. 5/-
per share to the Applicant No. 4.
13. I have heard the learned Senior Counsel / learned Counsel.
14. There can be no doubt that the whole purpose of execution
proceedings is to enforce the verdict of the Court and the executing
Court while executing the decree should be concerned with the
execution part of the decree and nothing else. The Court has to take
the judgment in its face value. The executing Court cannot go beyond
923. IAL 6231-24.doc
the decree. When there is ambiguity in the decree with regard to the
material aspects, then it becomes the bounden duty of the Court to
interpret the decree for giving a true effect to the decree and at that
juncture, the executing Court has to be very cautious in supplementing
its interpretation and be conscious of the fact that it cannot draw a new
decree. The executing Court has to strike a fine balance while
exercising this jurisdiction in the process of giving effect to the decree.
The aforesaid principles have been enunciated by the Hon'ble Supreme
Court in the case of Meenakshi Saxena and Another Vs. ECGC Limited
(Formerly known as Export Credit Guarantee Corporation of India
Limited) and Another (supra).
15. In Kanwar Singh Saini Vs. High Court of Delhi (supra), the
Hon'ble Supreme Court has stated that it is settled legal proposition
that the executing court does not have power to go behind the decree
and in the absence of any challenge to the decree, no objection can be
raised in execution.
16. It is not in dispute that by Memorandum of Understanding
("MOU") dated 22nd June 2016 entered into between the Applicants
and the Respondents for settlement of accounts for the business
923. IAL 6231-24.doc
transactions, upon execution of the said MOU, the Respondents agreed
to pay the Applicants an amount of Rs.70,00,00,000/- :
Rs.57,00,00,000/- by cheques and Rs. 13,00,00,000/- by allotment of
86,66,667 equity shares of the Respondent No. 3-company for a total
amount of Rs.13,00,00,000/- at face value of Rs.10/- and share
premium of Rs.5/-. That since the payments could not be made by the
Respondents, by virtue of the arbitration clause for resolution of
disputes, an arbitrator came to be appointed by this Court, in which
arbitration, consent terms dated 9 th June 2021 came to be filed. Under
the said consent terms, in full and final settlement of all the claims, the
Respondent No. 1 agreed to pay the Applicant No.4 an aggregate sum
of Rs. 35,00,00,000/- in three installments in 17 months and 15 days,
failing which the Respondent No.4 would pay to the Applicant No.4 an
aggregate amount of Rs.48,00,00,000/-, being the default settlement
compensation, and in addition, the Respondent No.3 would allot and
transfer to the Applicant No.4, 86,66,667 equity shares of the
Respondent No.3 for face value of Rs.10/- per share and share
premium of Rs.5/- per share, amounting to total Rs.13,00,00,005/-.
These consent terms were also taken on record by the arbitrator and
the same also became an award. Again, as there was a default of the
said consent terms also as the Respondent No.1 could neither pay
923. IAL 6231-24.doc
Rs.35,00,00,000/- within a period of 17 months and 15 days i.e. by
23rd November 2022 and also did not pay Rs.48,00,00,000/- nor issued
and allotted 86,66,667 equity shares of Respondent No.3 to the
Applicant No.4 for a face value of Rs.10/- per share and the share
premium of Rs.5/- per share, amounting to Rs. 13,00,00,005/-, the
Applicants and Respondents re-negotiated and entered into consent
terms dated 19th July 2023. These consent terms were taken on record
by this Court on 21st July 2023 and these are the consent terms in
execution. Paragraphs 1, 2, 4, 5, 7 and 8 of the said consent terms are
usefully quoted as under :
"1. Agreed and confirmed that under the Consent Award
dated 9 June 2021 executed between the Applicants on
one hand and Respondents on the other hand, the
Respondent No.1 in full and final settlement of all the
claims of the Applicants, had agreed to pay to Applicant
No.4 an aggregate sum of Rs.35,00,00,000/- (Rupees
Thirty-Five Crores Only) within a period of 17 months and
15 days from the date of Award dated 9 June 2021 i.e. by
23 November 2022. The Consent Award dated 9 June
2021 (hereinafter referred to as "Award") is hereto
annexed and marked as Exhibit '1' passed by the Ld. Sole
Arbitrator.
2. As per the Award if Respondent No.1 could not pay
Rs.35,00,00,000/- (Rupees Thirty-Five Crores Only) by 23
November 2022, then Respondent No.1 would pay
Applicant No.4 a sum of Rs.48,00,00,000/- (Rupees Forty-
Eight Crores Only). Further, under the Award, if
Respondent No.1 did not pay Rs.48,00,00,000/- then: (a)
Respondent No.2 would pay Rs.48,00,00,000/-; and (b)
Respondent No.3 would allot and transfer 86,66,667
923. IAL 6231-24.doc
equity shares of Respondent No.3 to Applicant No.4 for
face value of Rs.10 per share and share premium of Rs.5
per share, amounting to total of Rs.13,00,00,005/-.
4. The Respondents jointly and severally through its
sister concern have in partial satisfaction of the Award
plaid to the Petitioner an aggregate sum of
Rs.7,00,00,000/- (Rupees Seven Crores Lakhs Only) out of
total sum 48,00,00,000/- (Rupees Forty Eight Crores
Only). There remained a balance sum of Rs.41,00,00,000/-
(Rupees Forty One Crores Only) and the Respondent No.3
had to allot to Applicant No.4 for face value of Rs.10 per
share and share premium of Rs.5 per share, amounting to
total of Rs.13,00,00,005/-. The parties negotiated and
agreed that the Respondent jointly and severally pay the
Applicants a sum of Rs.31,00,00,000/- instead of
Rs.41,00,00,000/- (Rupees Forty One Crores Only) by 30
June 2023 as agreed as per the previous Consent Terms 22
December 2022, which was signed and confirmed by the
Respondents. The Respondents agreed that in previous
Consent Terms in case they would compensate the
Applicants with interest at the rate of 18% per annum
from the dated of Award till its realization. The
Respondents did not comply with the payment schedule,
therefore the present Consent Terms is filed to now
crystalize the amount which is due and payable by the
Respondent Nos.1 and 2 jointly and severally for a sum of
Rs.33,00,00,000/- (Rs.31 Crores is the principal sum plus
Rs.2 Crores interest on delayed payment, calculated on a
lumpsum basis) till 10 November 2023.
5. Agreed and undertaken that towards full and final
Settlement of the obligations of the Respondents has
towards the Applicants:
5-1. Respondent Nos.1 and 2, jointly or severally, agree
to pay to Applicant No.4 a sum of Rs.33,00,00,000/-
(Rupees Thirty Three Crores Only) on or before 10
November 2023 and
5-2. Respondents No.3 agrees to allot and transfer
86,66,667 equity share of Respondent No.3 to Applicant
No.4 for face value of Rs.10 per share and share premium
923. IAL 6231-24.doc
of Rs.5 per share amounting to a total of
Rs.13,00,00,000/-.
7. Agreed that if Respondent Nos.1 and 2 jointly
and/or severally pay a sum of Rs.33,00,00,000/- (Rupees
Thirty Three Crores) to Applicant No.4 on or before 10
November 2023, then Applicants shall treat the obligations
under Clause 5-1 read with Clause 5-2 as fully and
completely satisfied and will not claim the balance amount
of Rs.8,00,00,000/- (Rupees Eight Crores) from
Respondent Nos.1 or 2 or seek the performance of the
obligation under Clause 5-2 from Respondent No.3 or seek
interest at the rate of 18% per annum from 24 November
2022 on the outstanding amount till its realization.
8. Agreed that the sum of Rs.33,00,00,000/- is payable
by Respondent No.1 or Respondent No.2 (jointly or
severally) on or before 10 November 2023. The present
proceedings shall be disposed of in terms of these Consent
Terms."
17. By these consent terms, Respondents have paid Rs. 7,00,00,000/-
out of the total sum of Rs. 48,00,00,000/-. In respect of the balance of
Rs.41,00,00,000/- and in respect of the allotment of shares of
Respondent No. 3 to the Applicant No. 4 of a face value of Rs.10/- per
share and a share premium of Rs. 5/- per share amounting to a total of
Rs.13,00,00,005/-, the parties negotiated and agreed that the
Respondents jointly and severally would pay the Applicants a sum of
Rs. 31,00,00,000/- instead of Rs. 41,00,00,000/- by 30th June, 2023 as
agreed, as per the previous consent terms dated 22 nd December, 2023,
which was signed and confirmed by the Respondents. Since the
Respondents did not comply with the payment schedule of the earlier
923. IAL 6231-24.doc
consent terms, the Respondents no.1 and 2 have jointly and severally
agreed to pay Rs.33,00,00,000/-; Rs.31,00,00,000/- as principal and
Rs.2,00,00,000/- as interest on delayed payments, in view of the
interest leviable at the rate of 18 percent per annum under the earlier
consent terms, on or before 10 th November 2023, and if the
Respondents no.1 and 2 paid Rs.33,00,00,000/- to the Applicant no.4
by the said date, then the Applicants would treat the obligations even
with respect to the issuance of 86,66,667 equity shares to the Applicant
no.4 to be in full and final satisfaction and would also not claim the
balance of Rs.8,00,00,000/- nor seek interest at the rate of 18% from
24th November 2022 on the outstanding amount till its realization,
thereby meaning that if the payment of Rs.33,00,00,000/- is not made
by 10th November 2023, then in addition to the obligation to pay the
outstanding payment of Rs.33,00,00,000/-, the Respondent no.3 is to
issue 86,66,667 equity shares of a face value of Rs.10/- per share and a
share premium of Rs. 5/- per share for a value of Rs.13,00,00,005/-.
Admittedly, the Respondents no.1 and 2 have not made the said
payments by 10th November 2023 and as on date are subject to a
moratorium under the Insolvency and Bankruptcy Code, 2016.
Rs.13,00,00,005/- is the amount that was to be received by the
Applicants from the Respondents in the form of 86,66,667 equity
923. IAL 6231-24.doc
shares (of a face value of Rs.10/- per share and a share premium of Rs.
5/-) of the Respondent no.3 and not that those shares would be issued
by the Respondent no.3 only upon receiving Rs.13,00,00,005/-.
18. Mr.Andhyarujina has sought to rely on the decisions in the case
of Meenakshi Saxena and Another Vs. ECGC Limited (Formerly known
as Export Credit Guarantee Corporation of India Limited) and Another
(supra) and Kanwar Singh Saini Vs. High Court of Delhi (supra) and
has submitted that this Court cannot go beyond or behind the decree
and has to take the judgment in its face value. Very true, that an
executing Court cannot go beyond the decree and it is only concerned
with the execution part of it, and has to also take the judgment in its
face value. By referring to the MOU or the previous consent terms,
does not mean that this Court is going behind or beyond the decree.
Infact, paragraphs 1 and 2 of the consent terms, as quoted above, itself
give a background to the consent award and to the earlier consent
award dated 9th June 2021 executed between the Applicants and the
Respondents. Therefore, reference to the consent award dated 9 th June
2021, which in turn refers to the MOU dated 22 nd June 2016 whereby
the amounts for business transactions between the Applicants and the
Respondents were settled for an amount of Rs.70,00,00,000/- and the
923. IAL 6231-24.doc
Respondents had agreed to pay the Applicants a sum of
Rs.70,00,00,000/-: Rs.57,00,00,000/- by cheque and Rs.13,00,00,000/-
by allotment of 86,66,667 equity shares of the Respondent no.3-
company of a face value of Rs.10/- and share premium of Rs.5/- is not
an exercise of going behind or beyond the decree or supplementing its
interpretation, but an exercise in discharge of the bounden duty of the
executing Court to interpret the decree in the process of giving the true
effect to the decree in execution and cannot be said to be drawing a
new decree, particularly, considering the true interpretation of
paragraphs 2, 4 and 5 of the consent terms under execution as above.
Mr.Andhyarujina has submitted that the use of the word "for" in the
said paragraphs would mean that the Respondent no.3 would allot and
transfer 86,66,667 equity shares of the Respondent no.3 to the
Applicant no.4 for face value of Rs.10/- and share premium of Rs.5/-
per share in exchange for, or in consideration of Rs.13,00,00,005/- and
that only if the Applicants pays the sum of Rs.13,00,00,005/-, the
Respondent no.3 would be happy to issue 86,66,667 equity shares to
the Applicant no.4. No doubt, the dictionary meanings, as submitted
by Mr.Andhyarujina of the word "for" means in consideration for, as an
equivalent for, in exchange for something, cannot be disputed but the
context in which the word "for" has been used in the above quoted
923. IAL 6231-24.doc
paragraphs of the consent terms cannot be ignored. In my view,
86,66,667 equity shares of the Respondent no.3 represent
Rs.13,00,00,005/-, which means that by issuance of 86,66,667 equity
shares, the Respondent no.3 would be paying Rs.13,00,00,005/-, which
is owed by the Respondents to the Applicants. The Respondents cannot
today turn around and give a different interpretation to the intention of
the parties. It is the duty of this Court to strike a fine balance while
exercising jurisdiction in the process of giving effect to the decree.
Clearly, the intention of the parties under the present consent terms is
to pay Rs.33,00,00,000/- to the Applicants by 10th November 2023 and
if that could not be done, not only that the Applicants would be entitled
to Rs.33,00,00,000/- but also issuance of 86,66,667 equity shares of a
face value of Rs.13,00,00,005/-. In order to give true effect to the
consent order under execution, even if the said consent terms are not
happily worded by use of the word "for" in paragraphs 2, 4 and 5, the
same has to be read as "of". In my view, therefore, the reliance by
Mr.Andhyarujina on the decisions of Meenakshi Saxena and Another
Vs. ECGC Limited (Formerly known as Export Credit Guarantee
Corporation of India Limited) and Another (supra) and Kanwar Singh
Saini Vs. High Court of Delhi (supra) does not assist the case of the
Respondents but infact lend support to the case of the Applicants.
923. IAL 6231-24.doc
19. I am, therefore, unable to agree with the submissions made by
Mr.Andhyarujina.
20. Further, in my view, the reliance by Mr. Tamboly on the decision
of the Hon'ble Supreme Court in the case of Vijay Karia and Others v.
Prysmian Cavi E Sistemi SRL and Others (supra) may not be entirely
relevant in this case. In that case, the Hon'ble Supreme Court while
considering the enforcement of a foreign award was dealing with an
objection under the FEMA that since the shares were required to be
sold by a resident to a non-resident at a sum not less than the market
value and the foreign award directed that the shares be sold at less
than the market value, the foreign award, without the permission of the
Reserve Bank of India ("RBI") would be in breach of the fundamental
policy of Indian law and not enforceable. The Hon'ble Supreme Court
repelled the said objection holding that since a breach under FEMA
would not render any transaction void and either the RBI could step in
and condone the breach or direct that the shares be sold only at market
value and therefore non-obtention of the RBI permission could not be
said to be a breach of the fundamental policy of Indian law and that
resistance to the enforcement of the foreign award could not be made
on this ground.
923. IAL 6231-24.doc
21. The facts in the present case are clearly distinguishable as Mr.
Andhyarujina has sought to rely upon Section 62 of the Companies Act,
2013, relating to further issuance of capital to submit that any further
issuance of capital can only be for consideration, and therefore,
Applicant No.4 would have to pay Rs.13,00,00,005/- for issuance and
allotment of 86,66,667 shares by Respondent No.3 as that is the value
of the said equity shares of a face value of Rs.10/- each and a premium
of Rs.5/- each, as agreed between the Parties. However, in view of
what this Court has held above with respect to the interpretation of the
Consent Terms under execution, on the basis of the intention of the
parties to pay Rs.13,00,00,000/- by way of transfer and issuance of
86,66,667 equity shares of a face value of Rs.10/- each and a premium
of Rs.5/- each, there would be no breach of Section 62 of the
Companies Act, 2013, in as much as the Company is required to issue
86,66,667 equity shares in lein of Rs.13,00,00,005/- that was to be
paid to the Applicants by the Respondents, and therefore, this cannot
be said to be a case of lack of consideration as sought to be made out
by Mr. Andhyraijuna and therefore, the question of violation of Section
62 of the Companies Act, 2013, in my view, would not arise. In any
event, this Court is concerned with the execution of the consent terms
dated 19th July 2023 and nothing else. Moreover there has been no
923. IAL 6231-24.doc
challenge to these consent terms / consent order under execution and
at this stage, no such objections can be raised in execution, especially
considering that on 20th March 2024, Counsel for the Respondent no.3
had sought time to file reply inter alia for submitting the plan and the
timeline in which the Respondent no.3 would allot 86,66,667 equity
shares of face value of Rs.10/- and share premium of Rs.5/- per share
to the Applicant no.4.
22. Being aware and conscious that the executing Court cannot go
beyond or behind the decree and cannot in the process draw a new
decree as sought to be argued on behalf of the Respondents, and in
view of the above discussion, I am inclined to direct the learned
Prothonotary and Senior Master of this Court to proceed with the
execution and direct the Respondent No. 3 to take steps to allot
86,66,667 equity shares of face value of Rs.10/- per share and share
premium of Rs.5/- per share to the Applicant No. 4 in accordance with
law. Ordered accordingly.
(ABHAY AHUJA, J.)
NIKITA
GADGIL
