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Global Emerging Markets India Ltd vs Lepakshi Knowledge Hub Pvt Ltd & Ors on 24 May, 2021

Author: Vibhu Bakhru

Bench: Vibhu Bakhru

                         $~20
                         *      IN THE HIGH COURT OF DELHI AT NEW DELHI
                         +      ARB. A. (COMM.) 23/2021
                                GLOBAL EMERGING MARKETS INDIA LTD        ..... Petitioner
                                            Through Mr Amit Sibal, Sr. Advocate with
                                                    Mr Aditya Bharech, Ms Swati Mehta,
                                                    Mr Rishabh Sharma, Ms Aishvary
                                                    Vikram, Mr Kaustubh Prakash and
                                                    Mr Vinamra Kopariha, Advocates.

                                                   versus

                                LEPAKSHI KNOWLEDGE HUB PVT LTD
                                & ORS.                                  ..... Respondents
                                            Through  Mr R.V. Yogesh and Ms Snigdha
                                                     Singh, Advocates for R-1 to R-3.
                                                     Ms Rashmi, Advocate for R-4.

                                CORAM:
                                HON'BLE MR. JUSTICE VIBHU BAKHRU
                                           ORDER

% 24.05.2021 [Hearing Held Through Videoconferencing] I.A. 6586/2021

1. Allowed, subject to all just exceptions.

ARB. A. (COMM.) 23/2021, I.A. 6587/2021 & 6588/2021

2. Issue notice. The learned counsel for the respondents accept notice.

3. The appellant has filed the present appeal under Section 37(2)(b) of the Arbitration and Conciliation Act, 1996 (hereafter referred to as 'A&C Act) impugning an order dated 30.03.2021 whereby the Arbitral Tribunal has disposed of the appellant's application under Section 17 of the A&C Act.

4. Mr Sibal, learned Senior Counsel appearing for the appellant submitted that the Arbitral Tribunal has granted limited relief to the appellant. It has directed that status quo be maintained regarding the equity shares held by respondent no.1 in respondent no.2, which are placed with an escrow agent, but has rejected its prayer for directing that status quo be maintained regarding the subject land/assets held by respondent no.2 and 3. The Arbitral Tribunal has also not secured the appellant's claim for a sum of ₹5 Crores, which was paid by the appellant as an Inter Corporate Deposit (ICD) carrying an interest @ 18% per annum.

5. He submits that there is no dispute that the appellant had paid ₹5 Crores to respondent no.2. The impugned order also clearly reflects that the same was acknowledged. Whereas, the appellant had claimed that the sum of ₹5 Crores was paid as an ICD and remains outstanding, respondent no.2 contends that the same is reflected as investments in respondent no.2. Mr Sibal submits that the said payment was made in terms of the Memorandum of Understanding (MoU) which is the subject matter of dispute before the Arbitral Tribunal. However, even if it is held that the MoU is invalid, as is claimed by the respondents, the appellant requires to be protected to the extent of ₹5 Crores and the interest thereon.

6. He has also referred to the paragraph 24 of the impugned order whereby the Arbitral Tribunal had held that it was not possible to restrain the Respondents from alienating the land as granting such relief would require to be preceded by leading of evidence and establishing a prima facie case on merits of the claim. He submits that since the execution of the MoU is not disputed, the appellant has established a prima facie case based on rights and obligations as agreed under the MoU.

7. Next, Mr Sibal states that the apprehension in the present case arises from the communication issued by the Resolution Professional appointed in the insolvency proceedings relating to the parent company of respondent no.1 (Indu Projects Limited, hereafter IPL) He submits that a Resolution Plan involving all assets of IPL as well as assets of the step-down subsidiaries including respondent nos.1 and 2, is being formulated and the corporate structure of the subsidiaries are being disregarded. He submits that a Resolution Professional/Creditors of IPL cannot deal with the assets of the step-down subsidiaries, which are independent entities and also require to meet their obligations.

8. Mr Yogesh, the learned counsel appearing for the respondent nos. 1 to 3 states that insofar as respondent no.1 is concerned, the shares held by respondent no.1 in respondent nos.2 are subject matter of an Escrow Agreement and the same have been protected by the Arbitral Tribunal. He states that the land held by respondent no.2 and 3 has been attached by Enforcement Directorate in proceedings under the Prevention of Money Laundering Act, 2002 and in any case respondent nos. 2 and 3 cannot deal with the same. He also states that the respondent no.2 and 3 will not voluntarily deal with any assets or subscribe to any Resolution Plan dealing with any of the aforesaid assets. The said respondents are bound down to the said statement.

9. The Arbitral Tribunal had noted that the parent company of respondent no.1 (Indu Projects Limited) is not a party to the Arbitral proceedings and therefore no order with regard to the said entity can be passed. Undeniably, there can be no cavil with this finding as it would not be open for the Arbitral Tribunal to pass any orders with regard to the Signature Not Verified Digitally Signed By:DUSHYANT RAWAL Resolution Plan of IPL.

10. This Court is informed that the insolvency proceedings have not been admitted against respondent no.2 and 3, therefore, the appellant's grievance that the assets of respondent no.2 and 3 cannot be included in the Resolution Plan relating to IPL, is not insubstantial.

11. The appellant is already protected in respect of the shares held by respondent no.1 in respondent no. 2, which are placed in Escrow. Since respondent no 2 and 3 are bound down to the statement that has been made on their behalf that they will not voluntarily alienate any of their assets or voluntarily subscribe to any Resolution Plan dealing with their said assets; no further orders are required to be granted in favour of the appellant in these proceedings.

12. It is clarified that in the event the assets of the respondent no.2 and 3 are included in any Resolution Plan in respect of IPL, all rights and contentions of the appellant to contest the same are reserved and the appellant would not be precluded to raise the same before the concerned forum.

13. There is some controversy in regards to the authority of Mr R.V. Yogesh, the learned counsel who appears for the respondent no.1 to 3 to represent them. Mr Yogesh states that he appears on the authority of the Director of the said companies, who is also otherwise entitled to represent the company. He also states that there would be no difficulty for him to obtain the authority by a valid Resolution of the Board of Directors of respondent nos. 1 to 3 as well as the Resolution of their shareholders in an Extraordinary General Body Meeting. He states that meetings (EGM as well as Board's Meeting) of respondent nos. 1 to 3 would be convened for Signature Not Verified Digitally Signed By:DUSHYANT RAWAL securing and ratifying his authority to represent them and he shall file a certified copy of the Resolutions ratifying his authority to make the statements as recorded in this order, within a period of four weeks from today.

14. Let the Resolution(s) authorising Mr Yogesh to represent respondent nos. 2 and 3 in this court be filed electronically within a period of four weeks, with a copy to the learned counsel for the appellant.

15. The appeal is disposed of with the aforesaid observations. The pending applications are also disposed of.

VIBHU BAKHRU, J MAY 24, 2021 nn Signature Not Verified Digitally Signed By:DUSHYANT RAWAL