Bombay High Court
L And T Finance Limited vs Diamond Projects Limited And 3 Ors on 2 December, 2019
Author: G. S. Patel
Bench: G.S. Patel
8-CARBP1430-19.DOC
Arun
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMM ARBITRATION PETITION NO. 1430 OF 2019
L&T Finance Limited ...Petitioner
Versus
Diamond Projects Limited And Ors ...Respondents
Mr Akash Rebello, with Ms Hubab Sayyed, Mr Nadeem Sharma and
Mr Salman Athania, i/b Triumph Legal, for the Petitioner.
S Pandey, with Vipin C Pandey, for the Respondents.
CORAM: G.S. PATEL, J.
DATED: 2nd December 2019 PC:-
1. The respondents are served and are represented by Mr Pandey.
2. The petition is under Section 9 of the Arbitration and Conciliation Act 1996. The 1st respondent is a company that manufactures conductors, cables, transmission towers and transformers. It also undertakes projects for power infrastructure. The 2nd respondent is another private limited company in a similar business. Respondents Nos. 3 and 4 are the directors of the respondents Nos. 1 and 2 and have given personal guarantees as set out below.
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3. One Diamond Power Infrastructure Limited, evidently a sister concern of the 1st respondent, desired to raise funds by issuing secured non-convertible redeemable debentures ("NCDs"). The petitioner subscribed to these NCDs of Rs. 30 crores. In March 2011, the petitioner sanctioned credit facilities against the NCDs to Diamond Power Infrastructure with a limit of Rs. 30 crores. The petitioner entered into a debenture trust deed executed in favour of the Unit Trust of India Investment Advisory Services Limited.
4. Diamond Power Infrastructure had availed of a loan from various fnancial institutions including a consortium. It were also fnanced by other entities including the petitioner who had subscribed to the NCDs.
5. Diamond Power Infrastructure could not repay its loans and a joint lenders' forum came to be formed to restructure its debts. In March 2015, there was a meeting of this joint lenders forum. The NCD-holders including the petitioner were present. A decision was taken to realign Diamond Power Infrastructure's debt. A facility sanction letter was issued by the petitioner and signed by the managing director of Diamond Power Infrastructure on 26th March 2015 approving the terms. There followed a realignment agreement of 27th March 2015 for restructuring the existing facilities.
6. In consideration of this, and to secure this repayment under the realignment, four guarantees came to be executed. Two are corporate guarantees by the 1st and 2nd respondents and two are personal guarantees by 3rd and 4th respondents. All four guarantees Page 2 of 6 2nd December 2019 ::: Uploaded on - 03/12/2019 ::: Downloaded on - 03/12/2019 23:46:07 ::: 8-CARBP1430-19.DOC dated 27th March 2015 are unconditional and irrevocable. They extend to the entirety of the principal borrower's debt. It is to recover these dues on the basis that the principal borrower has not discharged its liabilities that the present petition is fled.
7. The four guarantees contained identical arbitration provisions in Clause 24. Any one will sufce for our purposes today.
Clause 24
(i) "Any claims or dispute or diferences that arises between the parties or any of them touching or concerning this Deed or any condition herein contained or as to the rights, duties or liabilities of parties hereto or any of them either during the continuance of the Agreement or after termination or purported termination hereof shall be referred to the sole Arbitrator to be appointed by Lender. The provisions of Arbitration & Conciliation Act, 1996 and rules thereunder and any amendment thereto from time to time shall apply"
(ii) It is agreed between the parties hereto that nothing contained in Sec 17 of the Arbitration and Conciliation Act, 1996, shall in any way, afect the right of any of or preclude the parties to/from seek/seeking such interim relief/s in any court of competent jurisdiction, including interim relief u/s 9 of the Arbitration and Conciliation Act, 1996, and the rules frame thereunder.
(iii) The award of the arbitrator shall be fnal, conclusive and binding on all the parties, and all the parties undertake to carry out the award immediately without any delay. The venue of the arbitration shall be Mumbai;
(iv) ..... Page 3 of 6 2nd December 2019 ::: Uploaded on - 03/12/2019 ::: Downloaded on - 03/12/2019 23:46:07 ::: 8-CARBP1430-19.DOC (v) This Guarantee is governed by Indian Law and
subject to non-exclusive jurisdiction of the Courts at Mumbai.
8. The total amount claimed by the petitioner is approximately Rs. 33.23 crores. The limited prayer by Mr Rebello for the petitioners is for an order of disclosure and an injunction against all four respondents.
9. A sufcient prima facie case is made out is clear from the foregoing narrative. Clearly, the balance of convenience is with the petitioners to whom irretrievable prejudice will be caused if reliefs are refused.
10. Keeping all contentions open, the following order is, in my view, both just and necessary.
(a) The four respondents will make a disclosure of their respective assets in the follow terms.
(i) Immovable properties: The disclosure will be of all immovable properties wherever situated, whether in India or overseas with complete details sufcient to identify the properties. If any of these are in any way encumbered, full particulars of such encumbrance/s and the amounts yet due as secured by those properties will also be disclosed.
Page 4 of 6 2nd December 2019 ::: Uploaded on - 03/12/2019 ::: Downloaded on - 03/12/2019 23:46:07 ::: 8-CARBP1430-19.DOC (ii) Movable Assets (A) Non-financial: They will also disclose all non-fnancial movable assets of the
acquisition or replacement value of more than Rs. 50,000/- including all particulars as described above.
(B) Financial assets: They will also disclose all investments and demat accounts with full particulars, including all holdings and encumbrances.
(C) Bank accounts: All bank accounts with account numbers, bank names, branches, account types and holding patterns are to be disclosed. Bank statements for the last one year are required for all accounts.
(D) Bank Lockers: contents of all safety deposit vaults and bank lockers will be disclosed.
(iii) Tax and Financial Returns: Copies of all tax and fnancial returns for the last three years are to be disclosed.
(iv) Disclosures to be on Afdavit:
(A) All disclosures must be on properly sworn
afdavits.
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(B) Each deponent will make a separate afdavit.
(C) Every afdavit is to be afrmed before a court ofcer.
(D) Afdavits to be serially paginated.
(E) Each afdavits to have its own detailed index identifying each disclosure.
11. In the meantime the respondents are also restrained from directly or indirectly alienating, encumbering, parting with possession or creating any third party rights hereafter in respect of any of their immovable and movable properties. This order of injunction will continue until 9th January 2020.
12. Afdavit in reply including the statement of disclosure noted above is to be fled and served on or before 20th December 2019. No rejoinder without leave of the Court. List the matter for hearing and fnal disposal on tth January 2020.
13. All contentions are left open.
14. Mr Rebello makes a statement on instructions that the petitioner will invoke arbitration within 90 days from today. The statement is noted and accepted.
(G. S. PATEL, J) Page 6 of 6 2nd December 2019 ::: Uploaded on - 03/12/2019 ::: Downloaded on - 03/12/2019 23:46:07 :::