A2Z Infra Engineering Ltd. vs Icici Bank Limited
2017 Latest Caselaw 3127 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                                  Decided on: 10.07.2017

+     CS(COMM) 1563/2016 and IA No.14640/2016
      A2Z INFRA ENGINEERING LTD.                               ..... Plaintiff
                         Through:    Mr Sandeep Sethi, Sr. Adv with
                                     Mr Anish Kapur,Ms. Charu Tripathi
                                     and Mr Navroop Singh Bakshi, Advs.

                         versus

      ICICI BANK LIMITED                                    ..... Defendant
                         Through:    Mr Rajeeve Mehra, Sr. Adv. with Mr
                                     E.R. Kumar, Mr D.P. Mohanty,
                                     Ms Shruti Aggarwal, Ms Raveena Rai
                                     and Ms. Sreeparna Basak, Advs.
      CORAM:
      HON'BLE MS. JUSTICE DEEPA SHARMA

                              JUDGMENT

IA No. 14641/2016 (O. 39 R.1&2 CPC r/w Section 151 CPC)

1. The present suit has been filed by the plaintiff seeking permanent and

mandatory injunction. The plaintiff sought mandatory injunction seeking

directions to the defendant to comply with its obligation under Letter of

Approval dated 28.12.2013 ("LOA"), the Corporate Debt Restructuring

Package ("CDR Package"), the Master Restructuring Agreement dated 27th

March, 2014 ("MRA") and the CDR Guidelines issued by the Reserve Bank

of India (RBI). They sought permanent injunction whereby restraining the

CS(COMM) No.1563/2016 Page 1 defendant from disposing of 81,00,000 equity shares of the plaintiff-

company which were allotted to the defendant under the fraudulent

inducement by them.

2. The case of the plaintiff in brief is that they are primarily in the

business of Engineering Procurement and Construction ("EPC") of building

Distribution & Transmission Infrastructure ("T&D") for domestic and

international power sector clients. The defendant is a Banking Company and

is a party to the CDR Package for restructuring the financial facilities

provided to the plaintiff by 17 lenders, comprising of 16 banks (including

the defendant-bank) and a financial institution. However, four banks and the

financial institution were non-CDR lenders and did not consent to

participate in the CDR Package. The CDR lenders, however, consented to

participate in the CDR package. The defendant is also a party to MRA dated

27.03.2014 along with the plaintiff and 11 other CDR lenders. The said

CDR package was sanctioned and approved by Corporate Debt

Restructuring Empowered Group vide letter dated 28.12.2013 and further

modified vide letter dated 03.02.2014.

3. The primary requirement of the plaintiff for its business is that of non-

refund based facilities such as Letters of Credit ("LCs") and Bank

CS(COMM) No.1563/2016 Page 2 Guarantees ("BGs"). While LCs are required primarily for procurement of

materials and services, BGs are required for the purposes of providing

earnest money deposits, performance bank guarantees and other

guarantees/securities for contracts and tenders. In the absence of access to

BGs and LCs, the Plaintiff would not be able to perform its business and this

will defeat the purpose of CDR Package. On request, the defendant

enhanced the working capital facilities to the plaintiff from INR 12 crores to

INR 36 crores. Out of this, INR 12 crores were fund based and INR 24

crores were non-fund based. These working capital facilities were increased

over a period to INR 180 in the year 2010 of which INR 30 crores were fund

based and INR 150 were non-fund based. The defendant along with 10 other

banks entered into a Consortium Banking Arrangement and sanctioned

facilities aggregating to INR 371 crores to the plaintiff, out of which INR

146 crores were fund based and INR 225 crores were non-fund based. The

same were subsequently enhanced. The defendant also sanctioned a term

loan of INR 88 crores vide sanctioning letter dated 12.04.2010 for erection

of three power plants in Punjab. It is submitted that for reasons beyond

control of the plaintiff, the business of the plaintiff showed downward trends

and they through State Bank of Patiala, New Delhi, the lead Bank of the

CS(COMM) No.1563/2016 Page 3 Consortium, made a reference to the Corporate Debt Restructuring

Empowered Group ("CDR-EG") of Corporate Debt Restructuring Cell

("CDR Cell") for restructuring the facilities provided to the Plaintiff as per

CDR guidelines issued by the RBI. It is submitted that CDR Mechanism is a

voluntary non-statutory mechanism for restructuring of multiple/consortium

advances of Lenders. Various guidelines in the master circulars issued by the

RBI are binding on the defendant and other CDR Lenders. The legal basis to

the CDR Mechanism is contractual based on the terms of the Debtor-Creditor

Agreement, i.e., the MRA in the instant case, and the Inter-Creditor

Agreement ("ICA"). The defendant, however, is a permanent member of the

CDR Standing Forum and the Core Group. Plaintiff's CDR scheme was

approved. The defendant also consented and participated in the CDR Scheme.

The plaintiff also approached the Punjab and Haryana High Court for sanction

of the Arrangement/Reconstruction/Re-Organization (hereinafter referred to as

"the Scheme"); for implementation of the CDR Package. Pursuant to the

Hon'ble High Court's order dated 22.12.2014 in CO.(P) No.164/2014, the,

the defendant bank gave its consent to the Scheme in the meeting of secured

creditors held on 14.02.2015 and the said petition was thus disposed of. The

other petition filed for second motion is pending before the Court. To give

effect to the CDR Package, the plaintiff and the lenders executed MRA

CS(COMM) No.1563/2016 Page 4 dated 27.03.2014. In terms of the LOA and Schedule III of the MRA, the

lenders were under obligation to continue providing the approved fund

based and non-fund based facilities on the cut-off date as well as additional

facilities to the plaintiff. However, the lenders who have opted for exit

option, including the defendant were under no obligation to provide the

additional facilities, but were only to obligate to provide existing sanctioned

facility. The first two years of the CDR Package were the moratorium

period. During this period, no interest was payable by the plaintiff to the

lenders and such interest was to be funded by the lenders and converted into

a term loan called the Funded Interest Term Loan (FITL). It is submitted

that as per the CDR guidelines, the lenders who had opted for exit option

were to create FITL for the third year's interest on the facilities availed by

the plaintiff (in addition to FITL for the first two years). Since the defendant

opted to exit, he was liable to create third year FITL which was to be paid by

the plaintiff in one lump sum payment at the end of the CDR Package term,

i.e., in the year 2023. It is further submitted that in terms of Clause 12.1(xli)

(b) of the MRA, the Lenders were entitled to conversion of the FITL into

equity shares at the price of the equity shares calculated as per ICDR

Regulations 2009 as on the relevant date i.e., 24th December 2013. It is

CS(COMM) No.1563/2016 Page 5 submitted that the plaintiff continued to make the payment as per the

obligation placed upon him, but still the defendant failed to comply with any

of its obligation placed upon him under the CDR Package/MRA and also

failed to follow the directions issued by Monitoring Institution (MI).

Towards July, 2014, the defendant approached the plaintiff for conversion of

FITL aggregating INR 8.10 crores into equity shares in terms of Clause 12.1

(xli)(b) of the MRA and the price of the equity share was to be calculated as

per ICDR Regulations, 2009 as on the relevant date, i.e., 24th December,

2013. The plaintiff objected to the conversion of the FITL into the equity

shares on the ground that the defendant has failed to perform its part of the

obligation, but the defendant persuaded the plaintiff into believing that it

was going to perform its part of the contract. The defendant, for the first

time post LOA, issued a BG for an amount of INR 25 crores on 25th July

2014 and three LCs on 05th August, 2014. A notice of conversion of FITL

into equity shares was also issued by the defendant on 06.08.2014 for

conversion of Defendant's FITL worth INR 8,10,00,000 for 81,00,000

equity shares of the Plaintiff company in terms of Clause 14 (xxvii) (b) of

the Standard Conditions in Annexure I of the LOA and Clause 12.1 (xli)(b)

of the MRA. The plaintiff raised several objections to this act and also wrote

CS(COMM) No.1563/2016 Page 6 letters dated 27.08.2014, 13.10.2014 and 31.12.2014 and 21.01.2015. The

plaintiff held a meeting of its Board of Directors on 17.09.2015 and resolved

to allot 81,00,000 equity shares of the plaintiff company, having market

value of INR 21.50 each at issue price of INR 10 per share on a preferential

basis in terms of the provisions of the CDR Package / MRA and Chapter VII

of the SEBI (ICDR) Regulations, 2009. The said shares were credited to the

Demat account of the defendant. As per SEBI (ICDR) Regulations 2009,

there was a lock-in period of one year which expired on 30th November

2016. Thereafter, the defendant stopped honouring the obligations under the

CDR Package and MRA and stopped issuing BGs and LCs post July, 2015.

The plaintiff in its application under Order 39 Rules 1 and 2, while

reiterating these facts, submitted that the defendant had been acting

fraudulently and induced the plaintiff to part with share worth 81,00,000 and

now they are in the process of selling those equity shares. It has been prayed

that the plaintiff has a prima facie case in its favour, also the balance of

convenience lies in its favour and that the plaintiff shall suffer an irreparable

loss and injury if the stay is not granted. It is prayed that during the

pendency of the suit, the defendant, its servants, agents and employees be

restrained from disposing of, encumbering and transferring 81,00,000 equity

CS(COMM) No.1563/2016 Page 7 shares of the plaintiff-company and also be directed to comply with its

obligation under LOA dated 28.12.2013, CDR Package, MRA dated

27.03.2014 and CDR Guidelines.

4. The suit as well as the application is contested by the defendant. It is

submitted by the defendant that the suit is not maintainable and it is an abuse

of the process of law. It is submitted that the plaintiff has not repaid any

amount whatsoever to the defendant since August, 2015 and is seeking a

relief to deny the defendant from selling the shares which right the

defendant possess under LOA and MRA. It is submitted that the defendant

retaining the right to sell the shares subject to giving an offer to the plaintiff-

company to buy back the said shares (i.e., the right to first refusal). This

right is to the benefit of the promoter. It is submitted that the shares of the

plaintiff-company are listed on the stock-markets and there can be no

impediment in the sale of the same. The plaintiff since a defaulter himself

cannot seek any relief. The plaintiff also has no cause of action. It is

submitted that Edelweiss Asset Reconstruction Company Limited

(hereinafter "Edelweiss") is a necessary party which has not been impleaded

by the plaintiff. It is submitted that para 38 of the plaint shows that plaintiff

was aware that the defendant had assigned the entire fund based debt to

CS(COMM) No.1563/2016 Page 8 Edelweiss, who is now part of the CDR Package and thus to provide FITL

facilities, yet Edelweiss is not made a party to the suit. It is submitted that

the prayer of mandatory injunction cannot be granted against defendant

since liability to provide the facilities under CDR Package, now is that of

Edelweiss. It is submitted that as per the Letter of Approval, which was

signed by the plaintiff, conversion option was available. In terms of the said

LOA, the plaintiff-company, vide Shareholder Resolution dated 24.06.2014,

obtained shareholders' approval for conversion of FITL. It submitted that

since the plaintiff has converted the FITL into the shares only after obtaining

the shareholder's approval it cannot plead that the conversion was done

under inducement by the defendant. The approval of shareholders was

obtained before such transfer and the plaintiff has suppressed these facts

from the knowledge of this Court. The plaintiff transferred its shares as per

Shareholder Resolution dated 24.06.2014. As per the Board Resolution, the

plaintiff company sought approvals from its shareholders for issuance of

shares to its promoters. Vide letters dated 12.12.2014 and 09.05.2015 the

plaintiff disclosed to the Stock Exchange about allotment of equity shares of

1,23,40,000 and 2,22,00,000 respectively at price of Rs.10/- per share.

CS(COMM) No.1563/2016 Page 9

5. Subsequently, the defendant in exercise of its conversion right issued

a conversion notice dated 06.08.2014 to the plaintiff-company for the part

conversion of FITL. 81,00,000 shares were allotted by the plaintiff-company

to the defendant in pursuance of the shareholder Resolution dated

24.06.2014 and a Resolution to this effect was passed by Board of Director

of the plaintiff-company on 17.09.2015. The plaintiff-company also

informed the Bombay Stock Exchange and NSE Limited of such transfer of

shares and also reflected in the communication to the Stock Exchange for

quarters ended 30.09.2015 and 31.12.2015, 31.03.2016, 30.06.2016 and

30.09.2016. In these communications, the plaintiff-company had shown the

defendant as a shareholder. As per the BSE Limited approval letter dated

19.11.2015 and approval of NSE limited dated 18.11.2015 respectively, the

shares were under lock-in-period till 30.11.2016. It is submitted that these

facts have been intentionally concealed by the plaintiff. On these

submissions, it is submitted that the plaintiff has no prime facie case in its

favour and the balance of convenience also does not lie in its favour and it is

the defendant who shall suffer irreparable loss and injury and, therefore, the

application is liable to be dismissed. It is also submitted that the suit is also

bad for misjoinder of necessary party. It is further contended that no

CS(COMM) No.1563/2016 Page 10 mandatory interim injunction can be granted since it would amount to decree

of the suit, moreover all the liabilities of the defendant has been taken over

by Edelweiss and the plaintiff has not made that company a party to the

suit.

6. It is argued on behalf of plaintiff is that the defendant induced him to

convert this FITL aggregating INR 8.10 crores into equity shares and this

was done at a highly subsidized price of INR 10 for each equity share rather

than at the value of the prevailing market price: that the defendant also

promised that to comply with the obligations under the CDR package, if

such transfer is done. Defendant, however, did not honour its obligations

and thus played fraud upon the plaintiff. Now, by threatening to sell the

shares, it is trying to reap the fruit of its fraud.

7. It is, however, argued on behalf of the defendant that there was no

inducement and both the parties had acted within CDR Package and

shareholders' approval was duly obtained and after passing of Shareholder

Resolution, which was approved and Board Meetings on 12.12.2014 and

09.05.2015, the shares were transferred . The prices of equity shares was

also fixed as per the terms of CDR. It is argued that the plaintiff has never

denied that it owed money to the defendant and the plaintiff has the first

CS(COMM) No.1563/2016 Page 11 right to buy back the shares which they are free to exercise and buy back the

shares. It is submitted that the plaintiff has no prima facie case. It is

submitted that huge sum is involved and if stay is granted, it is defendant

who shall suffer irreparable loss and injury. It is further argued that the

plaintiff is not entitled to discretionally relief as he has not come with clean

hands. Though the plaintiff was aware that the defendant had assigned all

its assets to Edelweiss and that on assignment of the entire fund based debt

to Edelweiss by the defendant under the CDR Package it was the obligation

of Edelweiss to provide facilities, yet the plaintiff has come up before this

Court with the prayer to direct the defendant to fulfil its obligation under

LOA, CDR Package and MRA. It is submitted that the Edelweiss has not

been made a party to the present suit and the same is liable to be dismissed.

It is submitted that it is the plaintiff who is trying to play fraud upon this

Court and not only the application, but the suit is liable to be dismissed.

8. I have given thoughtful consideration to the rival contentions of the

parties.

9. The settled proposition of law is that while dealing with grant of

interim injunction, the Court has to see whether the plaintiff has a prima

facie case and the balance of convenience lies in his favour and that he shall

CS(COMM) No.1563/2016 Page 12 suffer an irreparable loss and injury. The Supreme Court in Gujarat Bottling

Co. Ltd. and Ors. vs. Coca Cola Company and Ors. AIR 1995 SC 2372 has

elaborated the principles the Court needs to take into account while dealing

with exercise of its discretion for grant of interim injunction:-

"46. The grant of an interlocutory injunction during the pendency of legal proceedings is a matter requiring the exercise of discretion of the court. While exercising the discretion the court applies the following tests - (i) whether the plaintiff has a prima facie case; (ii) whether the balance of convenience is in favour of the plaintiff; and (iii) whether the plaintiff would suffer an irreparable injury if his prayer for interlocutory injunction is disallowed. The decision whether or not to grant an interlocutory injunction has to be taken at a time when the existence of the legal right assailed by the plaintiff and its alleged violation are both contested and uncertain and remain uncertain till they are established at the trail on evidence. Relief by way of interlocutory injunction is granted to mitigate the risk of injustice to the plaintiff during the period before that uncertainty could be resolved. The object of the interlocutory injunction is to protect the plaintiff against injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial. The need for such protection has, however, to be weighed against the corresponding need of the defendant to be protected against injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately compensated. The court must weigh one need against another and determine where the 'balance of convenience' lies. See: Wander Ltd. and Anr. v. Antox India P. Ltd. 1990 Supp(1) SCC 727. In order to protect the defendant while granting an interlocutory injunction in his favour the Court can require the plaintiff to furnish an under taking so that the defendant can be adequately compensated if the uncertainty were resolved in his favour at the trial."

CS(COMM) No.1563/2016 Page 13 The same principle is further reiterated by the Apex Court in its recent

judgment M. Gurudas and Ors. vs. Rasaranjan and Ors. AIR 2006 SC 327.

This Court in the case of Jaininder Jain and Ors. vs. Arihant Jain and

Ors. 2009(41) PTC 491 (Del) has held as follows:-

"28..... Prima facie case" means that the Court should be satisfied that there is a serious question to be tried at the hearing, and there is a probability of plaintiff obtaining the relief at the conclusion of the trial on the basis of the material placed before the Court. "Prima facie case" is a substantial question raised bona fide which needs investigation and a decision on merits. The Court, at the initial stage, cannot insist upon a full proof case warranting an eventual decree. If a fair question is raised for determination, it should be taken that a prima facie case is established. The real thing to be seen is that the plaintiff's claim is not frivolous or vexatious. The purpose is to preserve status quo until the question before the Court is finally disposed of."

The plaintiff has to establish that it has a prima face case in his

favour. The plaintiff can be said to have the prima facie case if he has

certain rights in his favour which needs protection. The facts which emerge

from the contentions raised by the plaintiff are that it borrowed heavily to

run its business and subsequently could not repay and entered into a CDR

Package, including defendant and 15 other banks and a financial institution.

Under that package, for the first two years, i.e., from 01.01.2013 to

31.12.2014, there was a moratorium period and no interest was payable by

CS(COMM) No.1563/2016 Page 14 the plaintiff to the lenders. Admittedly, the defendant was also one of the

lenders to the plaintiff. Such interest was to be converted into a term loan for

Funded Interest Term Loan (FITL). It is also the admitted case that the

defendant had opted for the exit option under the CDR Package. Under the

CDR Package, the lenders who had opted for the exit option were entitled to

create FITL for the third year's interest for the facilities availed by the

plaintiff in addition to FITL for the first two years as per the CDR

Guidelines. In the third year, FITL was to be paid by plaintiff in one lump

sum in terms of the CDR Package. Admittedly the plaintiff did not pay the

said sum. In terms of the Clause 12.1(xli) (b) of the MRA, the Lenders were

entitled to conversion of the FITL into equity shares at the price of the

equity shares calculated as per ICDR Regulations 2009 as on the relevant

date i.e., 24th December 2013.

There is no dispute to the fact that an amount of INR 8,10,00,000 for

81,00,000 equity shares was due towards the defendant. The defendant was

also within its right as per Clause 12.1(xli) (b) of the MRA to convert the

said FITL into equity share. The said clause reads as under:-

"(b) As regards WCTL and FITL, the conversion option would be available at any time during the restructuring period. The Borrower should provide shareholder resolution under Section 81(1A) for conversion within three months of Master Restructuring Agreement."

CS(COMM) No.1563/2016 Page 15

10. The admitted fact is that the 81,00,000 equity shares were allotted by the

plaintiff-company to the defendant in lieu of the FITL. The contention of the

plaintiff that it was done on account of the fraud played upon them does not

find any support from the document on the record. It is the admitted fact that

the plaintiff obtained the shareholders' approval before such transfer and it was

done by postal ballot. It is also clear that thereafter the plaintiff passed

shareholder Resolution on 24.06.2014. The contents of this Resolution clearly

shows that the plaintiff and its shareholders are very well aware of CDR

package and restructuring of the loan pursuant to the CDR Package and that the

consent of the members was also accorded for allotment of 14,91,40,000 equity

shares of Rs.10/- each from time to time in one or more tranches. The relevant

portion is reproduced as under:-

".....the consent of the members be and is hereby accorded to the Board to create, issue, offer and allot 14,91,40,000 (Fourteen Crore Ninety One Lacs Forty Thousand) Equity Shares of Rs.10/- each from time to time in one or more tranches, Equity Shares to be subscribed by the CDR Lenders, as may be agreed between the Company and the CDR Lenders, in consideration of Rs.149,14,00,000/-

(Rupees One Hundred Forty Nine Crore Fourteen Lacs Only) for (i) Funded Interest Term Loan being the outstanding interest payable by the Company to CDR Lenders from the cut-off date, i.e., 01st January, 2013 ("Curt-off Date") to 30th September, 2013, whether they are members of the Company or not, under a preferential issue through an offer letter and/or circular and/or information

CS(COMM) No.1563/2016 Page 16 memorandum and/or such other documents/writings, in such a manner and on such terms and conditions as may be determined by the Board in its absolute discretion; provided that the price of the Equity Shares so issued shall not be less than Rs.10/- (Rupees Ten only) per Equity Share of Rs.10/- each being not less than the price as calculated with respect to the Relevant Date, i.e., December 24, 2013, in accordance with the Regulations contained in Chapter VII of the Securities and Exchange Board of India (Issue of Capital & Disclosure Requirements) Regulations, 2009 including any Statutory modification or re-enactment thereof for the time being in force and further provided that the aggregate amount of the Equity so issued shall not exceed Rs.149,14,00,000/- (Rupees One Hundred Forty Nine Crore Fourteen Lacs only)."

11. Thereafter, the plaintiff wrote letter dated 12.12.2014 to BSE Limited

which is reproduced as under:-

"REF No.:-AINFRA/SE/2014-15/124

12th December, 2014

To, To BSE Limited National Stock Exchange of India Limited Phiroze Jeejeebhoy Towers Lasting Department Rotuda Building, Dalal Street, Exchange Plaza, 5th Floor, Mumbai-400 001 Plot No.C/1 G Block, Bandra Kurla Complex, Bandra (E), Mumbai-400051

Fax-022-22722039 Fax-022-26598237/38 BSE Code-533292 NSE Code-A2ZMES

Sub: Outcome of the Board Meeting held on Friday, 12th December, 2014 & intimation under clause 22 & 36 of the listing agreement (Preferential allotment of equity shares to Mr Amit Mittal, Promoter of the Company)

Dear Sir,

CS(COMM) No.1563/2016 Page 17 The decision and outcome of the Meeting of the Board of Directors of the Company duly held on Friday, 12th December, 2014 are as follows:-

1. Allotment of 1,23,40,000 (One Crore Twenty Three Lacs Forty Thousand) equity shares of the Company at an issue price of Rs.10/- each per share to Mr Amit Mittal as per CDR Package on Preferential Basis under Chapter VII- Preferential Issue of SEBI (Issue of Capital and Disclosure Requirements) Regulations , 2009 ("ICDR Regulations") in terms of approval granted by shareholders of the Company by way of postal ballot, the results of which have declared on 24th June, 2014 and further in accordance with the scheme Corporate Debt Restructuring ("CDR Package") by and between the Company and the lenders of the Company ("CDR Lenders") that is governed with the Corporate Debt Restructuring Guidelines, which has been approved by Corporate Debt Restructuring Empowered Group ("CDR EG") at its meeting held on 24th December, 2013 and communicated to the CDR Lenders vide Letter of Approval dated 28th December, 2013 ("CDR LOA").

The said 1,23,40,00 equity shares (One Crore Twenty Three Lacs Forty Thousand) shall be locked in for a period of one year from the date of allotment in terms of the ICDR Regulations.

Post aforesaid allotment, the paid up capital of the Company is Rs. 86,51,76,940 (Rupees Eighty Six Crore Fifty One Lac Seventy Six Thousand Nine Hundred Forty) only divided into 8,65,17,694 (Eight Crore Sixty Five Lac Seventeen Thousand Six Hundred Ninety Four) equity shares of Rs.10/- (Rupees Ten Only) each.

2. To consider and recommend for the fresh approval to the Shareholders of the Company by way of Postal Ballot for Issue of 2,22,00,000 (Two crore twenty two lac) Equity Shares on Preferential Basis to M/s Mestric Consultants Private Limited, a Promoter Group Company as per the CDR package.

You are requested to take the above information on record.

Thanking you,

Yours truly,

For A2Z INFRA ENGINEERING LTD.

(Formerly known as A2Z Maintenance & Engineer Services Limited)"

12. Another letter dated 09.05.2015 was written by plaintiff to BSE which

is also reproduced as under:-

CS(COMM) No.1563/2016                                                          Page 18
                                               "REF No.:-A2ZINFRA/SE/2015-16/2015

09th May, 2015

To,                                 To
BSE Limited                         National Stock Exchange of India Limited
Phiroze Jeejeebhoy Towers           Lasting Department
Rotuda Building, Dalal Street,      Exchange Plaza, 5th Floor,
Mumbai-400 001                      Plot No.C/1 G Block, Bandra Kurla Complex,
                                    Bandra (E), Mumbai-400051

Fax-022-22722039                    Fax-022-26598237/38
BSE Code-533292                     NSE Code-A2ZMES

Sub: Outcome of the Board Meeting held on Saturday, 9th May, 2015 and intimation under clause 22 & 36 of the listing agreement (Preferential allotment of equity shares to M/s Mestric Consultants Private Limited, Promoter Group Entity of the Company)

Dear Sir,

The decision and outcome of the Meeting of the Board of Directors of the Company duly held on Saturday, 9th May, 2015 are as follows:-

1. Allotment of 2,22,00,000 (Two crore Twenty Two Lacs Only) equity shares of the Company at an issue price of Rs.10/- each per share to M/s Mestric Consultants Private Limited, a promoter group entity as per CDR Package on Preferential Basis under Chapter VII-Preferential Issue of SEBI (Issue of Capital and Disclosure Requirements) Regulations , 2009 ("ICDR Regulations") in terms of approval granted by shareholders of the Company by way of postal ballot, the results of which have declared on 25th March, 2015 and further in accordance with the scheme Corporate Debt Restructuring ("CDR Package") by and between the Company and the lenders of the Company ("CDR Lenders") that is governed with the Corporate Debt Restructuring Guidelines, which has been approved by Corporate Debt Restructuring Empowered Group ("CDR EG") at its meeting held on 24th December, 2013 and communicated to the CDR Lenders vide Letter of Approval dated 28th December, 2013 ("CDR LOA").

The said 2,22,00,000 equity shares (Two Crore Twenty Two Lacs Only) shall be locked in for a period of one year from the date of trading approval in terms of the ICDR Regulations.

Post aforesaid allotment, the paid up capital of the Company is Rs. 1,08,71,76,940/- (Rupees One Hundred Eight Crore Seventy One Lacs Seventy Six Thousand Nine Hundred Forty) only divided into 10,87,17,694 (Ten Crore

CS(COMM) No.1563/2016 Page 19 Eighty Seven Lacs Seventeen Thousand Six Hundred Ninety Four) equity shares of Rs.10/- (Rupees Ten Only) each.

You are requested to take the above information on record.

Thanking you,

Yours truly,

For A2Z INFRA ENGINEERING LTD.

(Formerly known as A2Z Maintenance & Engineer Services Limited)"

13. This clearly shows that the plaintiff has been acting voluntarly. The

contention of the plaintiff that it had acted because the defendant has

promised to continue providing the facilities under CDR package to it, find

no mention in these documents. The plea of the plaintiff that it had agreed to

assign its equity shares to the defendant under inducement finds no support

from the documents on file. Also, the contention that defendant had induced

it to transfer the equity shares at Rs.10/- instead of the market value also has

no merit in view of the above-mentioned documents which shows that the

plaintiff had agreed to transfer the equity shares at Rs.10/- per equity share

voluntary. In the Resolution of Shareholders, the shareholders had agreed to

transfer Rs.14,91,40,000/- equity shares of Rs.10/- each from time to time to

the CDR lenders as per the agreement between the company and the CDR

lenders, yet out of this, only 81,00,000 equity shares were transferred to the

defendant. This further removes any element of inducement by the

CS(COMM) No.1563/2016 Page 20 defendant. The plea of plaintiff that a fraud had been played by the

defendant by inducing them to transfer the equity shares, therefore, is a bald

statement and has no basis. Since equity shares which the defendant wants to

sell belongs to defendant, plaintiff has no legal right which needs protection

and, therefore, has no prima facie case in its favour. The balance of

convenience also lies in favour of the defendant in view of the admitted fact

that plaintiff does owe such large sum of money to defendant and in terms of

CDR package has first right to purchase it back. It also cannot be said that

the plaintiff is likely to suffer any irreparable loss and injury. Besides this, it

seems that plaintiff has not come before this Court with clean hands. The

plaintiff has also sought following relief in his suit:-

"a. during the pendency of the accompanying suit, direct the Defendant to comply with its obligations under the Letter of Approval dated 28 December, 2013, CDR Package, Master Restructuring Agreement dated 27 March, 2014 and CDR Guidelines"

14. In its plaint, in para 38, the plaintiff has also clearly stated that

liabilities of the defendant under CDR stands transferred to Edelweiss on

29.06.2016 and the defendant had also informed them of such transfer on

21.07.2016 and to the Monitoring Committee on 22.07.2016. As per the said

admission, it, therefore, is clear that the defendant is under no obligation

CS(COMM) No.1563/2016 Page 21 thereafter under CDR Package, MRA and CDR Guidelines, yet the relief is

sought without making Edelweiss a party to the suit. The plaintiff has,

therefore, not come before this Court with clean hands as it is seeking such

benefits from the defendant when it knows that the defendant is not bound to

provide of it.

The application, therefore, has no force and the same is dismissed.

CS(COMM) 1563/2016 and IA No.14640/2016

List before the Roster Bench after obtaining orders from Hon'ble the

Judge-in-Charge (Original Side) on 14.07.2017.

                                                        DEEPA SHARMA
                                                           (JUDGE)

JULY 10, 2017
BG




CS(COMM) No.1563/2016                                                  Page 22