Supreme Court - Daily Orders
Kishor Shah vs Urban Infrastructure Trustees Ltd. on 2 March, 2021
Bench: Uday Umesh Lalit, Indira Banerjee, K.M. Joseph
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ITEM NO.6 Court 4 (Video Conferencing) SECTION IX
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Petition(s) for Special Leave to Appeal (C) No(s). 3179/2021
(Arising out of impugned final judgment and order dated 14-12-2020
in IA(L) No. 6647/2020 passed by the High Court Of Judicature At
Bombay)
KISHOR SHAH & ORS. Petitioner(s)
VERSUS
URBAN INFRASTRUCTURE TRUSTEES LTD. & ORS. Respondent(s)
(FOR ADMISSION and I.R. and IA No.26373/2021-EXEMPTION FROM FILING
C/C OF THE IMPUGNED JUDGMENT )
Date : 02-03-2021 This petition was called on for hearing today.
CORAM :
HON'BLE MR. JUSTICE UDAY UMESH LALIT
HON'BLE MS. JUSTICE INDIRA BANERJEE
HON'BLE MR. JUSTICE K.M. JOSEPH
For Petitioner(s) Dr. AM Singhvi, Senior Advocate
Mr. Mukul Rohatgi, Senior Advocate
Mr. Kunal Vajani, Advocate
Mr. C. Rashmikant, Advocate
Mr. Nikhil Rohtagi, Advocate
Mr. Amit Bhandari, Advocate
Mr. Rohan Dakshini, Advocate
Mr. Shikhar Khare, Advocate
Ms. Etika Srivastava, Advocate
Mr. Shahzeb Ahmad, Advocate
Mr. Kunal Mimani, AOR
For Respondent(s) Mr. Pratap Venugopal Advocate
Ms. Surekha Raman, Advocate
Mr. Aditya Mehta, Advocate
Signature Not Verified
Digitally signed by Mr. Akhil Abraham Roy, Advocate
Indu Marwah
Date: 2021.03.03
18:39:36 IST
Mr. Vijay Valsan, Advocate
M/S. K J John And Co, AOR
Reason:
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UPON hearing the counsel the Court made the following
O R D E R
The Arbitral Award dated 19.05.2019 (Corrected on 13.08.2019) rendered unanimously by the Arbitral Tribunal is under challenge in Commercial Arbitration Petition No.1435 of 2020 before the High Court in its Commercial Division.
Interim application (L) No.6647 of 2020 seeking stay of the implementation and enforcement of the Award was rejected by the High Court by order dated 14.12.2020 which is presently under challenge.
Paragraph 65 of the order passed by the High Court reads as under:
“(a) The impugned award will be stayed upon, and only upon, the Applicants depositing with the Prothonotary and Senior Master no later than by 20th January, 2021.
(i) The entire amount of Rs.106.61 crores with interest calculated as per the Award up to the date of deposit.
(ii) The entire amount of Rs.16.56 crores with interest as per the Award up to the date of deposit.
(iii)The entire amount of Rs.7,04,90,666/- with interest as per the Award upto the date of deposit.
(b) it is clarified that interest ‘as per the Award’ will mean the enhanced rate in paragraph 27
(iv) of the Award;
(c) Upon deposit, the Prothonotary & Senior Master will invest the amounts separately in a nationalized bank at an optimal rate of interest initially for a period of six months, and then to renew each deposit for one year thereafter until further orders of the Court.
(d) Optionally, the Shahs shall be at liberty to furnish a single unconditional bank guarantee for 3 all the amounts mentioned above and interest accrued, as also future interest, such bank guarantee to be to the satisfaction of the Prothonotary & Senior Master and to be issued by a nationalized bank; OR separate bank guarantees for one or more of the amounts mentioned above on like terms.
(e) If deposits are made as directed above, Respondent Nos. 1 and 2 shall be entitled to withdraw the whole or part of the amounts deposited upon furnishing a similar unconditional bank guarantee of a nationalized bank to the satisfaction of the Prothonotary & Senior Master covering the amounts withdrawn and further interest.
(f) This order will continue pending the final disposal of the Section 34 petition.” Sub-para (a) of paragraph 65 refers to three components whch in turn were dealt with in the operative part of the Arbitral Award as under:
“27. The Claimants are held entitled to the following reliefs:
(i) Award is passed for specific performance of Clause 5.2(ii) of the Shareholder’s Agreement (Exh. C with the SoC). The Promoter-Respondents shall in 30 days from the date of passing of this award pay an amount of Rs. 106.61 crores and interest calculated @ 12% p.a. with effect from 28.03.2012 till the date of payment as purchase price to purchase the Claimants’ securities described in Exh. D. with the Soc.
(ii) In addition to the award for specific performance as above, the Promoter Respondents are directed to pay an amount of Rs.16.56 crores (by way of compensation for breach of contract, in addition to the award for specific performance) with interest calculated @ 12% p.a. with effect from 01.05.2012 till the date falling 30 days from the date of the award.
(iii) The Promoter-Respondents shall pay an amount of Rs.7,04,90,066/- by way of costs of these proceedings to the Claimants.
(iv) The Promoter-Respondent Nos. 1 to 3 are allowed 4 30 days’ time to satisfy the award failing which, the awarded amount shall carry interest calculated @ 18% p.a. w.e.f. the date of the Award.
(v) All the Counter Claims are rejected. Respondent Nos. 1 to 3 and Respondent No. 4 shall bear their own costs.” Some of the paragraphs of the Award touching upon first two components were:
“20.24 The amount invested by the Claimants is Rs.110.39 crores. The amount of compensation for breach of contract calculated @ 15% comes to Rs.16.56 crores. The claimants are held entitled to the recovery of this amount with interest calculated @ 12% p.a. w.e.f. 01.05.2013, the date falling 30 days after the date of service of notice dated 28.03.2012 (Exh.G with the SoC).
The interest shall be calculated upto a date falling 30 days after the date of the award.
20.25 The SSA specifically provides for the equity shares and OFCDs held by the Claimants being purchased by the Promoters at a price equal to the subscription price plus interest @ 12% p.a. Even otherwise, for the purpose of sub-section (7)(a) of Section 31 of A&C Act, 1996 the interest @ 12% p.a. is considered to be reasonable. This would be simple interest and not compound interest. The principal investment of the Claimants is Rs.70.39 crores. After adding the amount of interest i.e. Rs.36.22 crores calculated @ 12% p.a. from the respective dates of subscription upto the date 28th March, 2012, the purchase price payable as on 28 th March, 2012 was Rs.106.61 crores. The calculation are to be found in Exh. K. with the SoC (at page 266). The Respondent Nos.1 to 3 have not disputed the correctness of the calculation although the entitlement of the claimants to receive the interest has been disputed. The above amount of Rs.106.61 crores would carry interest calculated @ 12% p.a. from 29 th March, 2012 till the date falling 30 days after the date of this award whereafter the interest shall be calculated @ 18%.
….
20.27 As per Exh. K with the Statement of Claim, the Claimants are entitled to payment of Rs.106.61 crores by way of purchase price of the securities as per the details given hereunder:
5PURCHASE PRICE IN TERMS OF CLAUSE 5.2(II) OF SHAREHOLDER’S AGREEMENT PARTICULARS AMOUNT AMOUNT (RS.) (RS.) (IN CRORES) Principal Investment Equity 1.00 OFCD 68.00 Debenture Application 1.39 70.39 Add: Interest @12% p.a. from 36.22 the respective dates of subscription to 28th March, 2012 (the date of notice) Purchase price payable as on 106.61 28th March, 2012 20.28 The consideration for specific performance payable by the Promoter-Respondents to the claimants shall be Rs.106.61 crores plus interest calculated @ 12% p.a. on the said amount.
20.29 The Claimants are held entitled to Specific Performance in terms of Clause 5.2 (ii) of Shareholders Agreement. The Promoter-Respondents shall jointly and severally pay to the Claimants a sum of Rs.106.61 crores with interest as directed hereby. In addition, the Promoter-Respondents shall also compensate the Claimants by award of Rs.16.56 crores by way of compensation for breach of contract with interest as directed.” Heard Dr. Abhishek Manu Singhvi and Mr. Mukul Rohatgi, learned Senior Advocates in support of this petition and Mr. C.U. Singh, learned Senior Advocate for respondent Nos.1 & 2 on caveat.
Various submissions were advanced by the learned counsel for the petitioner. However, since the basic challenge is still 6 pending consideration before the High Court, we do not deem it appropriate to deal with those contentions at this stage.
Considering the entirety of the matter, in our view, directions issued by the High Court in sub-paras (a) to (f) of paragraph 65 of its order do not call for any alteration/change except to the extent indicated hereafter whereunder an additional option in sub-para (d) of Paragraph 65 shall be made available by incorporating sub-para (d-I) in said paragraph 65 as under:
“(d-I) the Shahs shall also be at liberty to furnish a single or separate bank guarantee(s) or furnish such security to the satisfaction of the Prothonotary and Senior Master of the High Court with regard to the elements of interest calculated as per award in respect of three components referred to in sub-para (a)”.
Thus, insofar as the principal amounts of Rs.106.61 crores, Rs.16.56 crores and Rs. 7,04,90,666/- are concerned, they shall be governed by the basic postulates in sub paras (a) to (f) of Paragraph 65. However, the amounts of interests in respect of these three components may, at the option of the Shahs can be secured by furnishing security to the satisfaction of the Prothonotary and Senior Master of the High Court.
Except for the modification as detailed above, rest of the Order of the High Court remains intact.
This SLP stands disposed of in aforesaid terms.7
Pending applications, if any, stand disposed of.
(INDU MARWAH) (VIRENDER SINGH) COURT MASTER (SH) BRANCH OFFICER