Madras High Court
G.Rajasuria vs Meyer And Another] Is Not Applicable To ...
Author: G.Rajasuria
Bench: G.Rajasuria
O.A.Nos.1220 to 1224 of 2009 and Application No.6352 of 2009 in C.S.No.1054 of 2009 G.RAJASURIA,J.
Compendiously and concisely, the relevant facts, which are absolutely necessary and germane for the disposal of all these applications would run thus:
a) The applicant/plaintiff filed the suit seeking the following reliefs:
- to declare that all the defendants acting jointly and severally are bound by the terms and conditions of the Facility Agreement and the Escrow Agreement and all other agreements/documents executed and/or modified pursuant thereto or as consequence thereof including PVP Debenture Agreements, PEL Debenture Agreements and NCCPPL Debenture Agreements.
- to grant permanent injunction against defendants, their servants and agents, restraining them from violating the terms and conditions (including negative covenants) contained in Facility Agreement and the PVP Debenture Agreements, PEL Debenture Agreements and NCCPPL Debenture Agreements including taking any steps or further steps in any manner whatsoever dealing with, disposing or alienating in any manner any assets, properties, rights or interests (including but not limited to each of their investments in their subsidiaries) held by such defendants as per the negative covenants contained in the Facility Agreement, in any manner whatsoever till the discharge by such defendant No.2 of its obligations/liabilities undertaken by them under the Facility Agreement in the manner specified therein;
- to grant permanent injunction against each of the defendants and each of them against the other, restraining the defendants, their servants and agents or any other persons claiming or acting under them from waiving, relinquishing, surrendering, releasing, reducing or in any manner whatsoever doing away with the covenants, duties and obligations imposed on any of their subsidiaries under the facility Agreement, the PVP Debenture Agreements, PEL Debenture Agreements or NCCPPL Debenture Agreements, as the case may be, till the discharge by defendant No.2 of its obligations/liabilities under the Facility Agreement in the manner specified therein;
- to declare that the fourth defendant's action in selling the shares of PVP Ventures Limited without obtaining the consent of the Debenture Director in a validly convened Board meeting is illegal and ultra vires the provisions of the Articles of Association of the fourth defendant.
- to declare that the resolution dated 11.9.2009 passed by the Board of Directors of defendant No.4 company for increase of authorized share capital from Rs.2 crores to Rs.6 crores are ultravires the Articles of Association and contrary to the PEL Debenture Agreements and are therefore illegal and bad and such resolutions and any action taken in pursuance of the same are illegal and shall not be given effect to.
- consequently to grant permanent injunction restraining the defendants, its legal representatives, assigns, administrators, men servants or employees or assigns or any one acting through or under them from in any manner proceeding with or giving effect or further effect to the resolution dated 11.9.2009 passed by the Board of Directors of Defendant No.1 company for increase of authorised share capital from Rs.2 crores to Rs.6 crores and any action taken in consequent to or in pursuance there of.
- to declare that the purported Board Resolution dated 12.9.2009 purportedly deciding the conversion of debentures held by defendant No.3 into shares are fraudulent and illegal and in case ultra vires the Articles of Association and in contravention of the PEL Debenture Agreements and therefore such resolutions and any action taken in pursuance of the same are illegal and bad and shall not be given effect to.
- To grant a permanent injunction restraining the defendant No.4, its legal representatives, assigns, administrators, men, servants or employees or assigns or any one acting through or under them from in any manner proceeding with or giving effect or further effect to the purported Board Resolution dated 12.9.2009 to the extent it purports to convert debentures held by Defendant No.3 into shares and/or provides for cessation of Debenture Director in the Board of Defendant No.4.
- To declare that the Board Resolution dated 3.10.2009 purportedly issuing and allotting shares of Defendant No.4 to Defendant No.3 is in contravention of the PEL Debenture Agreements and ultra vires the Articles of Association and therefore illegal and bad and such resolutions and any action taken in pursuance of the same are illegal and shall not be given effect to.
- consequently to grant a permanent injunction restraining the defendant No.4 Company, its legal representatives, assigns, administrators, men, servants or employees or assigns or any one acting through or under them from in any manner proceeding with or giving effect or further effect to the Board Resolution dated 3.10.2009 purportedly issuing and allotting shares of Defendant No.4 to Defendant No.3 and any action taken in consequent to or in pursuance thereof.
- To pass an order in the nature of mandatory injunction directing the defendants, its legal representatives, assigns, administrators, men, servants to continue to treat Mr.Daniel Matthew Anderson or any other person recommended by the plaintiff as an existing Debenture Director, and complying with all statutory requirements in that regard, thereby enabling him to exercise his rights as a Debenture Director as morefully set out under the provisions of the Articles of Association.
- To grant a permanent injunction restraining the defendant No.4, its servants and agents or any other persons claiming or acting under the Defendant No.4 from in any manner removing Mr.Daniel Matthew Anderson, who is presently a Debenture Director in the Board of the Defendant No.4 from such directorship without the prior written consent of the plaintiff.
- To grant a mandatory injunction directing the Defendant No.2, its servants and agents or any other persons claiming or acting under the Defendant No.2 to provide information to the plaintiff in relation to the sale of the shares of PVP Ventures Limited (Defendant No.3) by the Defendant No.4 and the utilization, if any, of the consideration received therefrom by the Defendant No.4
- To direct the defendants to jointly and severally to pay to the plaintiff the costs of the present suit.
(extracted as such)
b) The same applicant/ plaintiff also filed these six applications with the following prayers:
O.A.No.1220 of 2009 - to grant an order of ad interim injunction restraining the respondents, their legal representatives, assigns, administrators, men, servants or employees or assigns or any one acting through or under them from violating the terms and conditions (including negative covenants) contained in Facility Agreement and the PVP Debenture Agreements, PEL Debenture Agreements and NCCPPL Debenture Agreements including taking any steps or further steps in any manner whatsoever dealing with, disposing or alienating in any manner any assets, properties, rights or interests (including but not limited to each of their investments in their subsidiaries) held by such defendants as per the negative covenants contained in the Facility Agreement, in any manner whatsoever till the disposal of the suit.
O.A.No.1221 of 2009 -to grant an order of ad interim injunction restraining the respondents, their legal representatives, assigns, administrators, men, servants or employees or assigns or any one acting through or under them from in any way proceeding with or giving effect or further effect to the Resolution dated 12.09.2009 to the effect it provides for cessation of applicant's office as Debenture Director with effect from 12.9.2009 till the disposal of the suit.
O.A.No.1222 of 2009 - To grant an order of ad interim injunction restraining the respondents, their legal representatives, assigns administrators, men servants or employees or assigns or any one acting through or under them from in any manner removing Mr.Daniel Matthew Anderson, who is presently a Debenture Director in the Board of the respondent No.4 from such directorship without the prior written consent of the applicant, till the disposal of the suit.
O.A.No.1223 of 2009 - to grant an order of ad interim injunction restraining the respondents, their legal representatives, assigns, administrators, men servants or employees or assigns or any one acting through or under them from in any manner proceeding with or giving effect or further effect to the resolution dated 11.9.2009 passed by the Board of Directors of respondent No.4 for increase of authorised share capital from Rs.2 crores to Rs.6 crores and any action taken in consequent to or in pursuance there of, till the disposal of the suit.
O.A.No.1224 of 2009 - to grant an order of ad interim injunction restraining the respondent No.1 Company, its legal representatives, assigns, administrators, men, servants or employees or assigns or any one acting through or under them from in any manner proceeding with or giving effect or further effect to the Board Resolution dated 3.10.2009 purportedly issuing and allotting shares of respondent No.1 to PVP Ventures Limited, pending disposal of the above suit.
Application No.6352 of 2009 to pass an order in the nature of interim mandatory injunction directing the respondent No.4,its legal representatives, assigns, administrators, men, servants to continue to treat the applicant as an existing Debenture Director, by complying with all statutory requirements in that regard, thereby enabling the applicant to exercise his rights as a Debenture Director as morefully set out under the provisions of the Articles of Association till the disposal of the suit.
(extracted as such)
3. For convenience sake, the parties are referred to here under according to their litigative status and ranking in the suit.
4. Counters have been filed refuting and remonstrating, denying and gainsaying the averments/allegations in the affidavits accompanying these applications as well as in the plaint. Rejoinders also have been filed by the defendants.
5. Heard the learned senior Advocates Mr.P.S.Raman, Mr.Arvind P.Datar, Mr.A.L.Somayajji, Mr.Vaidyanathan and the learned counsel Mr.Murari and Mr.Karthik Seshadri.
6. The points for consideration are as to:-
1. Whether this court is having jurisdiction to entertain these applications?
2. Whether the plaintiff is entitled to get injunction as against the defendants from violating the terms and conditions (including negative covenants) contained in the Facility Agreement and the PVP Debenture Agreements, PEL Debenture Agreements and NCCPPL Debenture Agreements including taking any steps or further steps in any manner whatsoever dealing with, disposing or alienating in any manner any assets, properties, rights or interests (including but not limited to each of their investments in their subsidiaries) held by such defendants as per the negative covenants contained in the Facility Agreement, in any manner whatsoever till the disposal of the suit?
3. Whether the plaintiff is entitled to get injunction as against the defendants from in any way proceeding with or giving effect or further effect to the Resolution dated 12.09.2009 to the effect it provides for cessation of applicant's office as Debenture Director with effect from 12.9.2009 till the disposal of the suit?
4. Whether the plaintiff is entitled to get injunction as against the defendants from from in any manner removing Mr.Daniel Matthew Anderson, who is presently a Debenture Director in the Board of the respondent No.4 from such directorship without the prior written consent of the applicant, till the disposal of the suit?
5. Whether the plaintiff is entitled to get injunction as against the defendants from in any manner proceeding with or giving effect or further effect to the resolution dated 11.9.2009 passed by the Board of Directors of respondent No.4 for increase of authorised share capital from Rs.2 crores to Rs.6 crores and any action taken in consequent to or in pursuance there of, till the disposal of the suit?
6. Whether the plaintiff is entitled to get injunction as against the defendant No.1 company from in any manner proceeding with or giving effect or further effect to the Board Resolution dated 3.10.2009 purportedly issuing and allotting shares of respondent No.1 to PVP Ventures Limited, pending disposal of the above suit?
7. Whether the plaintiff is entitled to get mandatory injunction directing the fourth defendant to continue to treat the applicant as an existing Debenture Director, by complying with all statutory requirements in that regard, thereby enabling the applicant to exercise his rights as a Debenture Director as more fully set out under the provisions of the Articles of Association till the disposal of the suit?
7. The indisputable and indubitable, unassailable and unarguable facts concerning this case, would run thus:
1. The plaintiff is a company registered in a foreign country, viz., Cayman Island. D1 Prasad Potluri was a Non-resident Indian but now a resident Indian. D2- Platex is a foreign company registered in the Island of Mauritius; Earlier, the PVP Ventures Private Limited got amalgamated with the company by name M/s.SSI Limited as per the order of this court dated 01.10.2007 in Company Petition Nos.69 and 90 of 2008 and now it is D3- P.V.P.Ventures Ltd., happened to be an Indian company registered in India, which happened to be the subsidiary of the said foreign company D2.
2. D4, D5 and D6 are the subsidiaries of D3. D1 is owning 100% shares in the D2 company,which is having 62.02% equity shares in PVP Ventures Ltd. (D3). D3 is having 99.99% equity shares in each of its subsidiaries viz., D4, D5 and D6.
3. Earlier D1 and D2 had some financial transactions with a foreign bank and subsequently by virtue of some transfers etc.emerged, the plaintiff, viz., Citadel Equity Fund Ltd., happened to be the lender of money to D2 and D1 is the guarantor.
4. At present, this court is not concerned with Spinnaker, the one other lender of money to D2 but only with the plaintiff, the Citadel Equity Fund Ltd. The defendant No.2 availed 158 million US$ from the plaintiff under the agreement viz., Facility Agreement dated 22.12.2006, which is found enclosed in the plaintiff's typed set of papers (pg 19 to 94) and an Escrow agreement dated 22.12.2006, a copy of which is found enclosed in the same typed set of papers (page Nos.106 to 151).
5. The plaintiff is doing mainly finance business so to say, money lending business. Whereas D2 Platex is an investment company. D1 at the time of entering into that Facility Agreement was an NRI and continued to be so till 31.03.2007. Thereafter, he became an Indian resident having his residence in Hyderabad. However, he is having his place of business in Chennai within the jurisdiction of this court. D3 is a public limited company doing business in real estate development. D4 is a private limited company involved inter alia in the business of managing, supervising and controlling the business of generation, transmission, supply and distribution of electricity from various sources. D5 is a private limited company doing business in the development of real estate and D6 is a private limited company involved in the business concerning I.T.Parks. D3 to D6 are the companies registered under the Companies Act, 1956.
8. Placing reliance on the plaint and the affidavits accompanying these applications and also the typed set of papers filed by the plaintiffs, the learned senior Advocates Mr.Arvind P.Datar and Mr.P.S.Raman have set forth and put forth their arguments; the tour d' horizon of them would run thus:
a) In pursuance of the Facility Agreement, referred to supra entered into between the plaintiff on the one hand and the defendants 1 and 2 on the other hand along with D1 came forward to undertake that he would be the guarantor towards repayment of the loan lent by plaintiff to D2 and pledged his entire shareholding in D2 company. D1 also in some of the financial documents specifically undertaken as follows:
"The promoter shall procure that any company controlled by him directly or indirectly through affiliates and/or in which it has a majority holding directly or through affiliates shall abide by and honour the terms of any contract entered into by the promoter".
Such assurance made by D1 constituted the basis for the contract,which actually emerged. In pursuance of the said Facility Agreement only, the said Escrow agreement emerged. The purpose of the Facility agreement is found spelt out in para No.2.2, which is extracted here under for ready reference:
"a. The Borrower shall apply the Advance drawndown under clause 2.1(a) towards the acquisition of the PVP Securities, Transaction Costs and the funding of the Minimum Reserve.
b. The Borrower shall procure that the proceeds of the acquisition of the PVP Securities received by PVP shall be applied by PVP towards the acquisition of the PEL securities and the CCPPl Securities.
c. The Borrower shall procure that the proceeds of the acquisition of the CCPPL Securities received by CCPPL shall be applied by CCPPL for the acquisition of land and development of 908 acres of land at Shamshabad, Hyderabad, Andhra Pradesh, India (which shall be complaint with applicable Indian Law governing foreign direct investment).
d. The Borrower shall procure that the proceeds of the acquisition of the PEL Securities received by PEL shall be applied by PEL as follows:
(i) up to US$ 150,000,000 for the acquisition of the Target shares and
(ii) in the event that the maximum aggregate amount of the Facility is increased as referred to in the proviso to Clause 2.1, the amount of such increase shall be applied towards the acquisition of the Offer shares validly tendered by the holders thereof pursuant to the Open Offer."
c) Inconcinnity with the undertaking given by D1 and D2 in the Facility agreement, D2 gave directions to the erstwhile D2's subsidiary viz., PVP Ventures Private Ltd., to go ahead in the process of getting itself amalgamated with the target company, viz., SSI and as per the order of this court dated 01.10.2007 the said Pvt.Ltd company and SSI got amalgamated and presently it is D3 under the name and style PVP Ventures Ltd., which is a listed company.
d) The defendants 1 to 6 had constituted one economic unit and D1 happened to be the promoter of all the companies viz., D2 to D6 and D1 happened to be the Managing Director of D3 and he is the Director in the rest of companies.
e) Inparimetria and inconsonance with the Facility Agreement and the Escrow Agreement, various Debenture Agreements emerged, so to say one between D2 and D3 and in turn D3 entered into two Debenture Agreements with D4 and D5 respectively.
f) The gist and kernel, the pith and marrow of all these arrangements are for the purpose of safe guarding the prompt repayment of the loan lent by the plaintiff by giving the plaintiff the opportunity of appointing his own appointing as Debenture Director in all the companies, viz., D3, D4, D5 and D6.
g) As per the instruction of D2, the Articles of Association of D3 to D6 were amended by way of incorporating the clause to the effect that the Debenture Director shall continue in office till the Debentures are discharged or converted fully as shares;
h) Daniel Mathew Anderson, virtually as representative of plaintiff was appointed as Debenture Director in D4 to D6 so as to safe guard the rights of the plaintiff and to see that in the subsidiary companies of D2, the assets are not dissipated or siphoned off to the detriment of the lender of the money, viz., the plaintiff.
i) There are clauses in the Facility Agreement, the Escrow Agreement and consequently, in the Debenture Agreements and also in the Articles of Association to the effect that the Debenture Director's consent should necessarily be obtained before any significant step is taken by those companies concerned and there shall not be any alienation of movable and immovable properties and also there shall not be any increase in the share capital, without the permission of the Debenture Director.
j) All these measures have been stipulated in various documents purely for the purpose of safe guarding the rights of the plaintiff.
k) Whereas throwing to winds all those safeguards, Daniel Mathews Anderson was arbitrarily removed from his Debenture Directorship in D4 by recording that he automatically ceased to be Debenture Director consequent upon the conversion of debentures into shares.
l) No notice of it was given to the Debenture Director. Only D1 and his wife, being the Directors of D4 company arbitrarily removed in the aforesaid manner, the Debenture Director, viz., Daniel Mathews Anderson from D4 company without informing him even though the Articles of Association 39 and 42 of D4 contemplates prior notice.
m) As per the Articles of Association concerned, consent of Debenture Director should necessarily be obtained before effecting changes de hors clauses 39 and 42.
n) As such the removal of Debenture Director was undertaken purely for the purpose of the defendants acting in their own way by keeping the plaintiff in the dark.
o) In fact, even before the removal of Daniel Mathews Anderson the Debenture Director, the share capital was increased on 11.09.2009 in violation of the Articles of Association. The property of D6 in Vadapalani was sold without getting the consent of the Debenture Director Daniel Mathews Anderson.
p) The accounts furnished relating to the sale proceeds before the court do not reflect the true picture even as per their own documents filed earlier before this court.
q) The plaintiff caused to issue acceleration notice and for that matter Spinnaker also one other lender caused to issue acceleration notice.
q) As per para 33 it is not necessary for the plaintiff to institute proceedings in the form of issuance of acceleration notice and recovering the dues or that steps should only be taken for taking over the administration of the D2 and other subsidiaries.
r) D4 was holding shares in D3 and D4 who unauthorisedly without getting consent of the Debenture Director, viz., Daniel Mathews Anderson sold such shares in bulk on 04.09.2009.
s) For immediate relief, the plaintiff has got the right to approach this court with the aforesaid prayers. As such, there is enough cause of action for this court to interfere.
Accordingly, he prays for passing the order as prayed for in the interim applications.
9. By way of torpedoing and pulverising the arguments as put forth on the side of the plaintiff, the learned senior counsel Mr.A.L.Somayajji for D1 and D2 would put forth and set forth the following arguments:
1. This court has got no jurisdiction to entertain the suit itself.
2. The only course open for the plaintiff is to resort to the modes contemplated in the facility agreement itself.
3. Para 21.1 and 21.2 of the Facility Agreement contemplates the remedial measures which could be taken by the plaintiff, in the event of the committing of default in any manner by D1 or D2 and the suits of this nature, are not at all contemplated.
4. Absolutely, there is no cause of action for the plaintiff to approach this court. As prayed by the plaintiff, if injunction is granted, the activities of the defendants would come to a grinding halt and no one would be benefited by it.
5. In the debenture agreements, plaintiff is not all a party and it cannot try to seek virtually specific performance of the covenants contemplated there in; once debenture have been converted into shares there is automatic cessation of Debenture Director and he cannot continue further.
6. In fact, the plaintiff who is a money lender was fully aware of the risk involved in the business and the plaintiff was aware of the liabilities of the target company. It is too late in the day on the part of the plaintiff to plead ignorance as though they were not aware of the liabilities etc of the target company or the activities to be undertaken by the defendants.
7. The plaintiff is having no direct connection or nexus with D3 to D6, which are Indian companies and D2 is a foreign company and for that matter, the plaintiff is also a foreign company. Between those two foreign companies Facility Agreement emerged and they cannot try to seek enforcement of the covenants in the Facility Agreement by filing this suit in India as against, as many as four Indian Companies, viz., D3 to D6.
8. The money obtained under the Facility Agreement was utilised for the purpose for which, it was borrowed.
9. There is nothing to indicate that there is any contractual relationship between the plaintiff and D3 to D6, which are Indian companies and quite antithetical to the Indian laws and regulations, more specifically FEMA and SEBI laws, the plaintiff cannot trace its alleged money in India and under the pretext of tracing its money, it cannot come to this court and seek for remedies so as to prohibit the defendants from selling their assets. Certain assets were sold purely for the purpose of discharging the loans incurred by the target company viz., SSI.
10. The sale proceeds of the Vadapalani property were utilised only for the genuine purpose of discharging the loans incurred by the said target company SSI. The email correspondences would exemplify and expatiate, establish and demonstrate that plaintiff was put on notice about the proposal to sell Vadapalani property and even the plaintiff expressed his consent for that and the plaintiff was happy about the sale and now it cannot veer round and turn turtle and take a plea quite antithetical to the correspondences, which emerged between D1 and the plaintiff;
11. After the automatic removal of the Debenture Director, whatever performed by the company concerned cannot be questioned by the plaintiff.
12. In fact, the properties contemplated as securities in the Escrow Agreement are not sold and in such a case, there is no reason for the plaintiff to get allegedly panic-stricken and approach this court seeking relief.
13. IDBI is the trustee and the original documents are with IDBI and as such, the plaintiff's apprehension that those properties would be alienated is baseless.
Accordingly, he prays for dismissal of these applications filed by the plaintiff.
10. A summation and summarisation of the arguments as put forth by the learned senior counsel Mr.Vaidyanathan for D3 to D6 and Mr.Murari, who also advanced argument on their behalf would run thus:
- D3 to D6 are companies, which got registered in India as per the Companies Act, 1956. No Indian company can guarantee any debt for the due repayment in favour of a foreign company. Placing reliance on virtually para No.3 of the Foreign Exchange Management (Guarantees) Regulations, 2000 which runs as under:
3. Prohibition: - Save as otherwise provided in these regulations, or with the general or special permission of the Reserve Bank, no person resident in India shall give a guarantee or surety in respect of, or undertake a transaction, by whatever name called, which has the effect of guaranteeing, a debt, obligation or other liability owed by a person resident in India to, or incurred by, a person resident outside India"
the counsel for D3 to D6 argue that the above provision is an embargo and accordingly the plaintiff cannot try to interpret the Facility Agreement in such a way as though D3 to D6 have guaranteed for the prompt repayment of the loan in favour of the plaintiff.
- The prayer of the plaintiff for injunction if granted, it amounts to enforcing a guarantee, allegedly furnished by the defendants 3 to 6 in favour of the plaintiff and such a thing in fact did not take place at all and there was no guarantee furnished by D3 to D6 in favour of the plaintiff.
- In D3 company, Anderson is not a Debenture Director at all. Only Tarun Gandhi was the Debenture Director and he voluntarily resigned and went away and D3 is a listed company and no steps was taken by the plaintiff even earlier to get appointed any Debenture Director, in it.
- The defendants 3 to 6 are having nothing to do with the liabilities of D2. Even though D3 might be a subsidiary of D2, the assets of D3 to D6 are in India and it is their own properties and in such a case, the doctrine of lifting the wheel cannot be pressed into service and as per the decision of the Hon'ble Calcutta Court reported in AIR 1969 CALCUTTA 238 [Turner Morrison & Co.., Ltd. v. Hungerford Investment Trust Ltd.], identity of subsidiary companies should not be ignored.
Accordingly, he prayed for the dismissal of all the applications.
11. Mr.Karthik Seshadri, the learned counsel for the proposed parties with the permission of the Court wanted to address on these applications and he represents the applicants in A.Nos.6480 to 6486 of 2009 for impleading the minority shareholders of D3 as parties in the suit.
12. The sum and substance of his argument would run thus:
- The plaintiff on the one side and the defendants on the other side are indulging in shadow fighting to the detriment of the interest of the said minority shareholders and thereby putting their safety in doldrums.
- The public issue inviting purchase of shares in D3 Company, did not disclose any of the transactions which emerged between D2 and the plaintiff and the consequential effect on D3.
- The minority shareholders are having interest in safeguarding the interest of D3 Company. Albeit they do have the right of derivative action, nonetheless, they want to get themselves impleaded and see that the plaintiff by making misrepresentation to the Court does not snatch away any order from this Court to the detriment of minority shareholders. According to him, D3 is an independent Indian company and foreign companies like D2 and Citadel, cannot try to intervene into the affairs of D3 and that too to the detriment of the D3's shareholders.
- D1 happened to be the Managing Director of D3 and he also happened to be the guarantor under the Facility Agreement and naturally, in order to save his own skin, he might even act to the detriment of D3's interest.
- Accordingly, he prayed for the dismissal of all these applications.
I would like to discuss the aforesaid points under the following captions:
(1) Jurisdiction (2) Cause of action (3) Relief JURISDICTION:
13. Paragraphs 21, 21.1, 21.2, 33, 41.1 and 41.4 of the Facility Agreement should be read together regarding the jurisdiction point is concerned. Paragraphs 41.1 and 41.4 demonstrate and exemplify that specifying the jurisdiction of the Court at England, is not an exclusive one, but non-exclusive in nature and that itself is sufficient to point out that this Court has got territorial jurisdiction to entertain this case.
14. The learned Senior Advocates for the defendants would argue that certain modes of enforcing the right of the plaintiff is contemplated in the Facility Agreement itself; when that be the position, it is not open for the plaintiff to approach this Court by filing a suit and seek for common law remedies such as injunctions. In this connection, I would like to refer to paragraph 33 of the said Facility Agreement, which is extracted here under for ready reference:
"33. Remedies and Waivers No failure to exercise, nor any delay in exercising, on the part of the Finance Parties or any of them, any right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise thereof or the exercise of any other right or remedy. The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by Law."
A mere poring over and perusal of it would unambiguously and unequivocally, pellucidly and palpably, plainly and axiomatically, make the point clear that over and above the remedy contemplated under the Facility Agreement, the plaintiff herein, the lendor, could resort to any other legal remedy. When such is the position, it will not lie in the mouth of the defendants to state that the plaintiff if at all feels aggrieved, he should only resort to the modalities of actions as contemplated under the Facility Agreement.
15. On the defendants' side, it was contended that as per the agreement, which emerged between the plaintiff on the one hand and D1 and D2 on the other hand, properties were mortgaged with IDBI trustee and in such a case, there is no necessity for the plaintiff to seek for any interim orders. I am of the view that simply because it is stated across the bar that some securities are available for the plaintiff to proceed against those properties, it does not mean that alternative measures should not be resorted to. There is also nothing to indicate that the Securities as such available with IDBI are sufficient to pay off the debt of the plaintiff.
16. No doubt, acceleration notice was issued by the Facility Agent at the instance of the plaintiff and for that matter, even Spinnaker, one of the lendors also resorted to such a procedure. The contention on the side of the defendants is that D1 is owning cent percent shares in D2 and he in turn pledged them in favour of the plaintiff and that the plaintiff can exercise administrative control over D2 and ultimately through D2, the plaintiff could lay his hand on D3 subject to the laws of India and ultimately the subsidiaries of D3, namely, D4 to D6; however without resorting to such a procedure, the plaintiff is simply now approaching this Court for injunctions.
17. To the risk of repetition, but without being tautologous, I would once again refer to paragraph No.33 of the Facility Agreement and highlight and spotlight that the last sentence in paragraph No.33 is so clear, as clarity could be that when the rights and remedies provided in the said agreement are cumulative and not exclusive of any right or remedies provided by law. No more elaboration in this regard is required; whereby I hold that this Court has got jurisdiction to entertain this matter and the plaintiff cannot be turned out at the threshold itself of this Court on the ground that the plaintiff should only resort to the remedies contemplated in the Facility Agreement.
Hence I proceed to discuss the point 'cause of action'.
CAUSE OF ACTION:
18. The learned Senior Advocate appearing for the plaintiff by inviting the attention of this Court to three distinct incidents would implore and entreat, pray and request, that interference of this Court is warranted, because there is valid cause of action which has arisen within India for the plaintiff to file this present suit. Those three incidents are:
(1) The removal of the plaintiff's representative Daniel Mathew Anderson as Debenture Director from D4 company arbitrarily.
(2) Even before and after the removal of the said Debenture Director from D4, the act of D4 in selling its holding of shares in D3 company.
(3) Selling of Vadapalani property, so to say, the assets of D6 without obtaining permission from the Debenture Director.
19. Before venturing to discuss this point, there are other points mixed with law and fact, raised by the learned Senior Advocates on the defendants' side which should necessarily be considered. The defendants contention is that the plaintiff, which is a foreign Company had transaction with D2, which is also a foreign Company cannot trace its alleged money which came into India with the help of D3.
20. Mr.Aravind Datar, the learned Senior Counsel inviting the attention of this Court to Section 15Y of Securities and Exchange Board of India Act,1992, which is extracted here under for ready reference, "15Y. Civil Court not to have jurisdiction:
No Civil Court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which an adjudicating officer appointed under this Act or a Securities Appellate Tribunal constituted under this Act is empowered by or under this Act to determine and no injunction shall be granted by any Court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act."
would develop his argument that SEBI has got independent right to take action concerning SEBI violations and it is not open for the defendants to raise their accusative finger as against the plaintiff. It is also his argument that absolutely there is no violation of any of the Indian Laws by D2 in having put the money which it had obtained from Citadel, i.e. the plaintiff, in D3. The contention on the side of the defendants that D3 alone is the subsidiary of D2 in my opinion fails to carry conviction with this Court for the reason that the term 'subsidiary' has been defined in the Facility Agreement itself and it is extracted here under for ready reference.
"Subsidiary" of a company or corporation means any company or corporation:
a. more than 50% of the issued share capital of which is legally or beneficially owned, directly or indirectly, by the first-mentioned company or corporation; or b. where the first-mentioned company owns the right or ability to control directly or indirectly the affairs or the composition of the board of directors (or equivalent of it) of such company or corporation ; or c. which is a Subsidiary of another Subsidiary of the first-mentioned company or corporation.
A mere reading of that itself would display and evince that the subsidiary of a subsidiary, is subsidiary only. Once it is admitted that D3 is the subsidiary of D2, then D4, D5 and D6 who are admittedly subsidiaries of D3 should also be taken as the subsidiaries of D2.
21. The learned senior counsel for D3 to D6 would set forth in his arguments that by incorporating para 20.6 of the Facility Agreement, the tenor of the said clause was to the effect that it was only D2, which agreed for certain negative covenants and the word 'it's used in that clause also refers only to D2.
22. I could not countenance and uphold such an argument for the reason that the words group and subsidiaries and various other terms found defined and described in the Facility Agreement would demonstrate and highlight that D2 on behalf of its subsidiaries undertook and agreed for those negative covenants and even the immovable property measuring an extent of 1300 acres in New Cyberabad City Projects Private Limited in Hyderabad belonging to D5 also was included in clauses 20.6 of the Facility Agreement, which would also go against the arguments as advanced on the side of defendants 3 to 6.
23. Over and above that, the learned counsel for the plaintiff also would invite the attention of this Court to the definition "group" as found in the Facility Agreement, which is extracted here under for ready reference:
"Group" means the borrower, PVP, PEL, CCPPL and their respective Subsidiaries from time to time (including, after the acquisition of the Target Shares, the Target Group).
A mere reading of it would clearly exemplify and connote that the term borrower cannot be confined only to D2 Platex, because the term "group" includes all D2's subsidiaries. As such, when the lender is trying to take action as against its borrower D2, the principal company, it could also proceed as against the D2's subsidiaries to which the amounts borrowed have been ploughed into and wherever the money of the plaintiff had been put into or poured into, could be traced by the plaintiff and proceeded against for the process of safeguarding its interest.
24. Relating to violation of the foreign laws are concerned, I would like to point out that the Facility Agreement was entered into in the cold light of the day and as has been correctly pointed out by the Advocates appearing on both sides, the Facility Agreement is not an ordinary agreement, but it emerged out of the intelligence, radiance and resplendence of various experts in the field of Company law, financial laws and business administration. When such is the position, it is too late in the day on the part of the defendants to raise their accusative finger as against any of the clauses in those agreements. At this juncture, I recollect and call up the following maxims:
(i) Nullus commodum capere potest de injuria sua propria: No one can gain advantage by his own wrong.
(ii) Nul prendra advantage de son tort demesne : No one shall take advantage of his own wrong.
25. A person cannot rely upon his own fault for the purpose of wriggling out his liability. As such, D1 or D2 cannot pit against the plea of the plaintiff by stating that those covenant clauses as contained in Facility Agreement cannot be enforced in Indian soil, as those agreements emerged in a foreign country. The pith and marrow of the Facility Agreement is that the plaintiff must be in a position to have a check in the administration of D2 as well as its subsidiaries in India. I am at a loss to understand as to how the defendants 1 and 2 after committing themselves in black and white under the definition "group" which includes D2's Indian Companies, now could veer round and take a plea quite antithetical to such commitment. So it is obvious that forthrightly and plainly, directly and distinctively D1 and D2 at the time of entering into such Facility Agreement had in their mind that if anything goes wrong, then the plaintiff is having a right to proceed as against the borrower's subsidiaries in India. Over and above that, the various clauses also in the Facility Agreement, Escrow Agreement and the consequential Debenture Agreements referred to supra, would clearly demonstrate that for the purpose of safeguarding the right of the plaintiff, its agent/representative Daniel Mathew Anderson should be the Debenture Director in D4 to D6. When such is the understanding and interpretation of the Facility Agreement, Escrow Agreement and other Debenture Agreements, it cannot be contended that the defendants never intended that the Indian Companies should not be proceeded as against by the plaintiff and that if the plaintiff do so, it would be against SEBI Regulations or FEMA Regulations.
26. I would like to point out that it is a common or garden principle that if a Court passes order and it affects the power of the authority under the special enactment, then such authority is having a right to come before this Court and get that order of this court annulled, modified or recalled. As such, it is not open for the defendants to point out that there are certain laws in India which are acting as embargo for the plaintiff to enforce its rights under those agreements. In this background, I proceed to discuss the causes of action which have arisen within the jurisdiction of this Court. Incidentally, at the time of argument, the learned Advocates made a supine submission that by 31.03.2007, D1 ceased to be a non-resident Indian and subsequently, he is having his place of business in Chetpet and in such a case, it is deemed that he is within the jurisdiction of this Court and on that basis also, it could be held that this Court has got territorial jurisdiction to deal with this matter.
27. Irrefutably and indubitably, it was D1 actually in various documents projected himself as the person who is responsible for carrying out the terms of the Facility Agreement. Wherefore, D1 on behalf of D2, in which D1 is holding 100% share, cannot be heard to contend that the plaintiff is having no right to interfere in this manner.
28. The learned senior Advocates for the defendants would try to pick holes in the arguments on the plaintiff's side by pointing out that once Debenture shares were converted into shares automatically there is cessation of the Debenture Directorship in D4 and no notice is contemplated; in fact, if at all there was any default, 15 days notice as contemplated in para 21.2 of the Facility Agreement should have been given but that was not done so. On the side of the defendants, it has been argued that in Para 14.2 of the Debenture agreement,which emerged between D3 and D4, there is a clause that conversion of Debentures should also be with the permission of the lender. Whereas in the amended Articles of Association of D4, there is no such clause even though there is a clause to obtain consent of Debenture Director for increase of share capital.
29. My mind is reminiscent and redolent of the following maxim Jura naturae sunt immutabilia The laws of nature are unchangeable. Accordingly, the principle of natural justice cannot be dispensed with under any circumstances and it is more so in the case of contractual obligations also when between the lender and the borrower there are voluminous clauses in the interest of the lender, the same should be protected.
30. Here, the learned senior counsel for the plaintiff inviting the attention of this court to the Resolution concerning the removal of the Debenture Director would point out that D1 and his wife alone simply signed the resolution and virtually removed him and it is not even at the Board Meeting. According to the learned senior Advocate Mr.P.S.Raman that itself is indicative of the fact that they were not justified in simply removing the Debenture Director and they did not even had the courtesy to inform the plaintiff even though virtually Daniel Mathews Anderson happened to be the representative of the plaintiff. At this juncture, I recollect the plea as put forth on the side of the defendants that as per e-mail communications, the Chief Executive of the plaintiff was informed about the proposal to sell the Vadapalani property and if that be so, I am at a loss to understand as to why before conversion of debentures and the consequent removal or cessation of Debenture Directorship, the plaintiff or the Debenture Director was not informed earlier or put on prior notice.
31. He has also convinced this court by pointing out that even before such Resolution being passed by them for such removal, the shares were sold to an extent of 1.75 million and that is indicative of the fact that D1 and D2 had mala fide intention to remove their Debenture Director and deal with the affairs of the company to the detriment of the plaintiff's interest. The extracts taken from the web site would reveal that on 4.9.2009 1.75 million shares of D3, which were held by D4 were sold in bulk. The learned counsel for defendants 3 to 6 would try to expound that 1.75 million bulk shares represents only a pococurante or insignificant portion of the shares of D3 held by D4 so to say 5% of the total shares held by D4 in D3's company.
32. Be that as it may, whether it is 5% or even less, the lender who parted with the money got alarmed by that because even though its Debenture Director was very much available as on that date in the company, his permission was not obtained as per the Articles of Association of D4.
33. The learned senior counsel for the defendants also would submit that not even a single meeting was attended by the Debenture Director and that therefore, it would not lie in his mouth now to say that no notice was given to him. Even assuming that D4 did not attend any of the meetings as per the Articles of Association, he cannot arbitrarily be removed; without notice to him. No doubt, on conversion of Debenture into shares, automatically cessation of Director ship would result, but even then this is a singularly singular case because the Debenture shares were subsequently converted into equity shares so as to increase the share capital, which should not have been carried out without the consent of the Debenture Director. It is therefore, deducible and inferable that the plaintiff's representative was caused to lose his Debenture Directorship for the purpose of the defendants proceeding with their affairs in their own way. After cessation of the Debenture Director ship increasing of the share capital resulted. The plaintiff would correctly submit that those are two sides of a coin, so to say, conversion of debentures into shares and increasing of share capital and in such an eventuality, the consent of the lender in some form should have been obtained.
34. Albeit the defendants might contend that punctiliously and meticulously the clauses in the agreement were adhered to, nonetheless, the circumstances exposed their real intention and motive. I call up and recollect the following maxim:
Acta Exteriora Indicant Interiora Secreta Acts indicate the intention.
35. It is the contention of the defendants that D3 is the one who appointed Daniel Mathews Anderson as the Debenture Director and it is D3 who communicated to D4 that they were having no objection for conversion of Debentures into shares. Consequently, everything had happened and in such a case, the plaintiff cannot raise its accusative finger.
36. In my opinion that contention is based on hypothetical situation. It is not as though the plaintiff is not capable of seeing the wood for the trees. The court has to apply its mind and see the realities and arrive at a conclusion and in that context alone, this court is of the opinion that the plaintiff should have been put on notice either directly or through Anderson. It is therefore clear that the very act of selling away the said shares by D4 even before the removal, constitutes the cause of action, warranting interference by this court.
37. The virtual removal of the Debenture Director also in the aforesaid manner, even though described by the defendants as automatic cessation constitutes a cause of action to institute this lis.
38. The learned Advocates for the defendants placing reliance on the additional typed set of papers, filed by them on 14.12.2009, which comprises of six documents, would develop their argument that after selling the said Vadapalani property by D6 to the tune of Rs.140 crores, the sale proceeds were utilised for the following purpose:
--------------------------------------------------------------------------Loan Repayment of UBI-Perambur 16,77,01,865 Loan Repayment of UBI-Vadapalani 55,06,49,753 Loan Repayment of SBM-KRM Centre 4,22,61,876 Loan Repayment of Holding Company PVP Ventures 32,70,00,000 Provision for repayment of TCS & Tech Mahindra deposits 10,00,00,000 Developmental expenditure on Vadapalani property 3,10,00,000 Property Taxes, other statutory dues etc 90,00,000 Other administrative expenditure 1,00,00,000 Investments in Jagati Publications 16,28,00,000
-------------------- 1,40,04,13,494 ===========
--------------------------------------------------------------------------
39. Whereas by way of torpedoing such a contention, the learned senior counsel Mr.Datar for the plaintiff would invite the attention of this court to page No.423 of the plaintiff's typed set of papers that is the accounts sent through e-mail and develop his argument that the Statement of accounts as found enclosed in the typed set of papers of 14.12.2009 do not tally with the said earlier one referred to supra.
40. As such, by referring to those two sets of accounts, the learned senior counsel for the plaintiff would develop his argument that the said two statements do not tally with each other and furthermore, there is nothing to indicate as to what prompted D6 to invest in Jagati Publication a sum of Rs.16 crores and 28 lakhs out of the sale proceeds of the Vadapalani property.
41. The learned Advocates for the defendants would try to expound by pointing out that it was the independent decision of D6 to invest its money at its own discretion, in the said publication. No doubt, normally a company can have its own decision but even then it is bound by its memorandum and Articles of Association.
42. The learned senior Advocates for the defendants in unison would submit that there was absolutely transparency in dealing with this matter and the plaintiff or the Debenture Director Daniel Mathews Anderson was not kept in the dark as alleged by the plaintiff.
43. D6's object is IT Park. It is not readily known whether such investment in the said publication is for furthering the interest of the said purpose of the company or for some other purpose. Be that as it may, one thing is clear that it was not for the repayment of any pre-existing debt. As such, the lender has also made out a cause of action for interference by this court that the sale proceeds prima facie and ex facie were not utilised for discharging the bank loans or any other pre-existing loans alone. Therefore, on this count also interference of this court is warranted.
44. The learned counsel for the defendants would submit that in the E-mail communication dated 02.07.2009, full details could not be given and only in the typed set of papers dated 14.12.2009 they could give the full details. Be that as it may, a mere look at the accounts would enable even a man on the top of a claphem omnibus to note that there are differences and it is quite obvious by a mere perusal of them and I need not elaborate on that.
45. Relating to the fact of the plaintiff having been put on notice about the proposal of the sale of the Vadapalani property by D6, no doubt, the learned counsel for the defendants would rely upon the e-mail communications. Whereas the learned counsel for the plaintiff would submit that all those e-mail communications were up to September 2008 and only in June 2009, actual sale transaction fructified and even the name of the purchasers were not informed also by any of the defendants to the plaintiff or the Debenture Director.
46. Whereas the learned counsel for the plaintiff would submit that on 28.04.2009, the e-mail was received from defendants' side sent as to how D6 was constrained to take action maintaining secrecy. Whereas the learned counsel for the plaintiff would also submit that only through the newspaper, Economic Times the plaintiff came to know of the said sale; whereupon when it contacted D1, he sent reply that the sale was constrained to be undertaken under stealth mode because there were lot of pressures.
47. In none of the communications earlier to the sale, the name of the proposed purchaser was found disclosed. As such, I am of the view that the lender had genuine doubts about the transactions, which the defendants had undertaken and all those things alone actuated and accentuated, propelled and impelled the plaintiff to resort to the filing of these applications.
48. At one point of time, the learned senior counsel Mr.Vaidyanathan for D3 to D6 argued that even before amending the Articles of Association in the subsidiary companies concerned, major part of the amounts were released and only when there was a small portion yet to be released under the Facility Agreement, those amendments took place and as such those amendments effected in the Articles of Association cannot be taken as condition imposed by the plaintiff as a sine qua non for the release of the loan amounts.
49. In my opinion, simply because belatedly, the amendments in the Articles of Association had been carried out in the subsidiary companies, it cannot be labelled or dubbed as the ones which were not undertaken in pursuance of the Facility Agreement or Escrow Agreement.
50. It would not be out of place also to point out that in pursuance of the Facility Agreement, the Escrow Agreement and the various other Debenture Agreements and that too at the instance of the plaintiff alone, the Articles of Association of D4, D5 and D6 were got amended, so as to appoint the Debenture Director in those companies.
51. To the risk of repetition, I would like to point out that when once there is an arrangement, which is palpably and pellucidly clear in the agreement emerged between the plaintiff on the one side and D1 and D2 on the other side that such sort of amendments should be carried out in the Articles of Association of the Subsidiary companies, they have to abide by it and now the defendants cannot try to explain away by projecting that those amendments were not in pursuance of the arrangement arrived at between the plaintiff and D1 and D2.
52. The learned senior counsel for the plaintiff would also invite the attention of this court to 18th Annual Report of D3 (in additional typed set of papers page 188) and an excerpt from it would run thus:
"6. The net worth of five subsidiaries of the company, namely New Cyberabad City Projects Private Limited (NCCPPL), PVP Malaxmi Energy Ventures Private Limited (PMEL), Telephoto Entertainments Limted (TEL), AGS Hotels and Resorts Private Limited (AHRL) and Telephoto International Pte Limited, Singapore has fully eroded as March 31, 2009. The financial statements of these subsidiaries reflect excess of liabilities over assets of Rs.85051.82 lakhs. ................"
A mere reading of it would demonstrate that the lender has been given to understand that the assets of D3 and its subsidiaries are lesser than their liabilities and that also constituted the reason for the lender to approach this court to see that in no way the defendants are dealing with their assets in a non-transparent manner.
53. In respect of the contentions raised by the proposed third parties, I would like to point out that the decision reported in (1958)3 W.L.R. 404 (In the House of Lords) [Scottish Co-operative Wholesale Society Ltd. vs. Meyer and another] is not applicable to the facts and circumstances of this case as here, the facts are entirely different.
54. In my opinion, D1 is the person, who happened to be the Managing Director of D3 and no doubt, he also happens to be the the guarantor for the prompt repayment of the loan by D2 in favour of the plaintiff and simply because, he is having those responsibilities that it does not mean that D1 would act in detriment to the interest of D3 and thereby thwart and spike the guns of the shareholders and put them in trouble.
55. I could see absolutely no shadow fight between the plaintiff and the defendants here. Whereas the learned counsel for the plaintiff would say meaningfully that there is only shadow fight between the proposed parties and the defendants. Be that as it may, I could firmly hold that absolutely, there is no iota or shred, shard or miniscule, molecular or jot of evidence to demonstrate and display that there is any shadow fight between the plaintiffs and the defendants.
56. The one other decision of the Hon'ble Apex Court reported in AIR 1955 SC 74(1) (Mrs.Bacha F.Guzdar Bombay vs. Commissioner of Income Tax, Bombay) which also is not germane for deciding this case. It is concerning the shareholder's right in participating in the proceedings and at the time of considering the application for impleading the parties, this would be considered on merits.
57. Mr.P.S.Raman, the learned senior counsel also by inviting the attention of this court to the Public announcement of D3 inviting people to purchase the shares of D3 would argue that it had been made clear in para No.3.1.7 as well as in 10.1 of it about the various agreements. Those paras are extracted here under for ready reference, which emerged among plaintiff, D1 and D2 and others.
"3.1.7. Salient Features of the Facility Agreement entered into by Platex are as follows:
1. The use of proceeds under the Facility Agreement, subject to certain conditions precedent, is as under:
a. Platex would utilize the term loan towards acquisition of equity linked securities of PVP Ventures;
b. PVP Ventures would utilize the proceeds for the acquisition of fully convertible debentures of PVP enterprises and towards acquisition of non convertible debentures of Cyberabad City Projects Private Limited.
c. PVP Enterprises would utilize an amount of upto USD 175 million (assuming exercise of UDS 25 million option) for the acquisition of the Shares of the Target company.
2) The said facility is secured by the following:
a. A fixed and floating charge over the assets of Platex which comprises, inter-alia 80% shareholding in PVP Ventures;
b. Mr.Prasad V.Potlouri has also pledged his shareholding in Platex and has provided a personal guarantee in respect of the above facility.
3) Platex has also, subject to applicable laws, agreed to integrate the Target Company's operations with the acquirer or its holding company, including a possible merger or consolidation, for commercial reasons and operational efficiencies.
4) The said facility is to be repaid in the following manner:
a) In a way that the total outstanding immediately after the repayment remains USD 120 million on the third anniversary of the Closing Date.
b. The balance loan amount is to be repaid on the final maturity date (48 months from the Closing Date).
c. The Borrower also has an option, subject to the terms of the Facility Agreement, to prepay provided the total outstanding is not reduced to less than USD 120 million.
5) The interest on the said facility is payable in June and December. The interest rate applicable to be paid by Platex for a particular interest period is as follows:
a. LIBOR+ 750 basis points, till the borrower is required to mandatory prepay the facility amount.
b. Beyond that period the interest rate is reset to LIBOR+900 basis point.
6) Platex or any of its subsidiaries shall not without the prior written consent of the Facility Agent, either in a single transaction or in a series of transactions, sell, transfer, lease or otherwise dispose of any shares held by it in any of its subsidiaries.
7) Platex shall at all times maintain a minimum shareholding in PVP Ventures of 80% of the total issued share capital.
8) Platex has issued 1,200,000 warrants aggregating USD 120 million to the Lender. The pre-payment would get accelerated in the event and to th extent of conversion of warrants.
9) Platex, its subsidiaries and the Target company (following the acquisition of shares by the Acquirer) without the prior written consent of the Facility Agent shall not:
a. Incur, create or permit any type of financial indebtedness other than under the provisions of the Facility Agreement.
b. Declare of pay any dividend, repay or distribute any dividend or share premium reserve, issue warrants, notes or bonds which are convertible into shares, issue or alter its share capital and repay a part of any shareholder's loan.
c. Make any change or cease any part of its business, including enter into any joint venture or similar arrangements, make any acquisitions and any type of investments.
10.1 Material Documents for inspection by the Public will be available at PVP Enterprises Private Limited, 8-2-609/K, Avenue 4, Street No.1, Road No.10, Banjara Hills, Hyderabad 500 034 between 2:00 pm to 4:00 pm on any day except Saturdays, Sundays and the Public Holidays, till the closure of the Offer."
58. A mere perusal of them would demonstrate and evidence that the proposed parties cannot plead that they were totally unaware of the agreement i.e.the Facility Agreement and other agreements referred supra. Hence, I am of the considered view that this court has got jurisdiction and interference of this court is warranted, in view of the causes of action having arisen as detailed supra.
59. It is an admitted fact by both sides that as of now Mr.Anderson was removed only from D4 company and not from D5 and D6 companies; even as on date, he continues to be the Debenture Director of D5 and D6 and in such a case, injunction could rightly be granted to the effect that the defendants shall not in any manner deal with D5 and D6 assets, so to say, movable and immovable properties including shares in any manner otherwise than in accordance with the Articles of Association and more specifically Article 42 of the amended Articles of Association and the related agreements referred to supra in this order.
60. Relating to the prayer of the plaintiff for reinstating the Debenture Director in D4, I am of the view that pending suit, this court need not resort to such a measure. However, in view of the ratiocination adhered to above, the interest of the plaintiff should be protected in D4 by passing necessary orders that the shares held by D4 in D3's company could be sold only at the market rate by D4 and the sale proceeds shall not be utilised by D4 without the permission of the court pending disposal of the suit.
61. Relating to D3, it is an admitted fact that D3 and one Unitech Cestos Realtors Private Limited entered into a joint venture agreement relating to a considerable extent of land and the interest of the plaintiff as well as D3 could well be protected by passing the order to the effect that the subject matter of the said joint venture agreement shall not be alienated without the permission of this court pending disposal of the suit.
RELIEF:
62. In the result, the points are decided as under:
(i) This court has got jurisdiction to deal with these applications.
(ii) No mandatory injunction could be granted for reinstatement of the Debenture Director in D4's company and accordingly, O.A.No.1222 and Application No.6352 of 2009 of 2009 are dismissed.
(iii) Without the consent of this court, the interest of D3 in the subject matter of the Joint Venture Agreement emerged between D3 and M/s.Unitech Cestos Realtors Private Limited shall not be alienated by the defendants concerned.
(iv) The shares held by D4 in D3's company could be sold at the market value but the sale proceeds of them shall be utilised by the defendants concerned only after getting the permission from the court regarding the mode of using such sale proceeds.
(v) There shall be order of interim injunction restraining the defendants from in any manner dealing with the assets of D5 and D6, so to say, movable and immovable properties including the shares in any manner otherwise than in accordance with the Articles of Association and more specifically Article 42 of the amended Articles of Association and the related agreements referred to supra in this order.
Accordingly, O.A.Nos.1220, 1221, 1223 and 1224 of 2009 are ordered to the limited extent as set out supra.
14.12.2009 vj2 Note: Issue order copy on 18.12.2009 Index : Yes Internet: Yes G.RAJASURIA,J. vj2 O.A.Nos.1220 to 1224 of 2009 and Application No.6352 of 2009 in C.S.No.1054 of 2009 14.12.2009