Delhi High Court - Orders
Indiabulls Housing Finance Limited vs Mohit Singh & Ors on 30 November, 2022
Author: Najmi Waziri
Bench: Najmi Waziri
$~28, 29 & 30
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ FAO(OS) (COMM) 172/2021, CM APPL. 45066/2021, CM APPL.
45069/2021 & CM APPL. 34080/2022
INDIABULLS HOUSING FINANCE LIMITED ..... Appellant
versus
MOHIT SINGH & ORS ..... Respondents
+ FAO(OS) (COMM) 173/2021, CM APPL. 45070/2021, CM APPL.
45073/2021 & CM APPL. 34079/2022
INDIABULLS HOUSING FINANCE LIMITED ..... Appellant
versus
KADAM DEVELOPERS PRIVATE LIMITED & ORS.
..... Respondents
+ FAO(OS) (COMM) 174/2021, CM APPL. 45074/2021, CM APPL.
45077/2021 & CM APPL. 34084/2022
INDIABULLS HOUSING FINANCE LTD. ..... Appellant
versus
SHIPRA ESTATE LIMITED & ORS. ..... Respondents
Through: Mr. Rajiv Nayar, Sr. Advocate with
Mr. Karan Luthra, Ms. Vishrutyi
Sahni, Mr. Ankit Banati and Mr.
Saurabh Seth, Advocates for
Indiabulls Housing Finance Ltd.
Mr. Rakesh Tiku, Sr. Adv. with Mr.
Rudra Pratap, Ms. Mrinalini Sharma
Signature Not Verified
Digitally Signed By:KAMLESH
KUMAR
Signing Date:06.12.2022
09:54:56
and Mr. Shubhanshu Gupta, Advs. for
Shipra Estate.
Mr. Ayush Aggarwal, Ms. Mamilan
Sidhu, Mr. Vikrant and Mr. Ankit
Tyagi, Advocates for Kadam
Developers.
Mr. Pravin Bahadur, Ms. Meghna
Mishra, Mr. Ankit Rajgarhia and Ms.
Aishwarya Chaturvedi, Advocates for
DLF Home Developers.
Mr. Rudra Pratap, Mr. Shubhanshu
Gupta and Ms. Mrinalini Sharma,
Advocates for Mr. Mohit Singh.
Mr. Jatin Sehgal, Ms. Devna Soni and
Mr. Shivashish Dwivedi, Advocates
for Creative Souls Technology India
Private Limited.
CORAM:
HON'BLE MR. JUSTICE NAJMI WAZIRI
HON'BLE MR. JUSTICE GAURANG KANTH
ORDER
% 30.11.2022 The hearing has been conducted through hybrid mode (physical and virtual hearing).
1. The appellant has reservations about the following observations passed by the learned Single Judge in O.M.P. (I) (COMM.) 213/2021, OMP (I) COMM NO. 222/2021 & O.M.P. (I) (COMM.) 225/2021 dated 08.11.2021:
"...
44. The contention that there is lack of transparency in the manner in which the Pledged Shares have been sold to Creative is prima facie merited. Although it is stated that Mr. Mohit Singh was a party to the discussions Signature Not Verified Digitally Signed By:KAMLESH KUMAR Signing Date:06.12.2022 09:54:56 between Indiabulls and Creative/M3M for sale of the Pledged Shares, there is no document on record to establish that any notice/letter had been issued by Indiabulls informing the petitioners that it intends to sell the Pledged Shares to Creative. Thus, prima facie, it is difficult to accept that SEL/Kadam/Mohit Singh were either informed of the intended sale of the Pledged Shares to Creative or the agreed consideration.
45. In addition to the above, Indiabulls had not disclosed that it has, in fact, funded Creative for purchase of the Pledged Shares. The bank accounts produced by Indiabulls to show that transaction for sale of the Pledged Shares was complete and it has received the sale consideration also indicated that it had on the same date
- that is, on 03.07.2021 paid a sum of ₹900 crores to another entity. During the course of the arguments, Indiabulls had conceded that it had funded M3M and the said loan was secured by mortgage of certain assets belonging to M3M. However, the same is also not free from controversy as the documents in respect of creating of charge in respect of those assets were filed with the concerned authorities much after 03.07.2021.
46. Mr. Sethi‟s contention that the Pledged Shares have been sold for a consideration of ₹900 crores is also not entirely correct. The sale consideration for the Pledged Shares paid by Creative is only ₹749.11 crores. The Pledged Shares have been sold on „as is where is basis‟. Creative had agreed to infuse a sum of ₹150.22 crores into Kadam Post-acquisition of the Pledged Shares, Kadam would be the wholly owned subsidiary of Creative. It is difficult to accept that this payment would constitute the purchase consideration for the Pledged Shares. It was conceded by Mr Sethi that the same would be correctly reflected as an Inter Corporate Deposit by M3M/Creative and not as the cost of the Pledged Shares. Kadam would utilize the funds of ₹150.22 crores to repay Signature Not Verified Digitally Signed By:KAMLESH KUMAR Signing Date:06.12.2022 09:54:56 its debt as this would ensure that Creative acquires Kadam as a debt free company. It is relevant to note that Kadam has not entered into any agreement with Indiabulls that would discharge its loan to SEL. However, it is apparent from the arrangement worked out between Indiabulls and Creative that, Creative would infuse ₹150.22 crores and the said money would be used to repay the debt owed by Kadam to SEL, which in turn would be appropriated by Indiabulls against repayment of the loans extended by Indiabulls to the Borrowers. Sensu Stricto, the payment of ₹150.22 crores cannot be considered the consideration for the sale of Pledged Shares. Although the Pledged Shares are stated to have been sold, this amount has not been paid to Kadam.
47. Although, it is contended that in terms of the MOU dated 01.07.2021, Creative had also agreed to provide SEL inventory of developed real estate valued at ₹350 crores. Clearly, the same is not the agreed consideration for sale of the Pledged Shares. In terms of the impugned notice, the Pledged Shares have been sold at ₹900 crores.
48. It was also contended on behalf of Indiabulls that the value of Kadam‟s shares is derived from the value of the Property. Concededly, the value of the Property is at least ₹1250 crores. This is clear because DLF had agreed to pay an amount of ₹900 crores besides agreeing to allot developed property of a value of ₹350 crores to SEL/Kadam. In addition, DLF had undertaken to pay the dues and other transfer charges to YEIDA. Thus, prima facie, the consideration for the Pledged Shares does appear to be at an under-value.
....
51. Indiabulls is not required to repeatedly invoke the pledge in respect of the Pledged Shares. It was Indiabulls unambiguous stand in the earlier round of proceedings under Section 9 of the A&C Act, that it had invoked the Signature Not Verified Digitally Signed By:KAMLESH KUMAR Signing Date:06.12.2022 09:54:56 pledge of the Pledged Shares in terms of the Sale Notice. The invocation of pledge cannot be made on multiple occasions. During the course of the proceedings before this Court in OMP(I)(COMM) No.113/202 and other connected matters (which culminated in the judgement dated 20.05.2021), SEL and other entities of the Shipra Group had sought for further time to pay the dues. However, Indiabulls had not accepted the same and insisted that its action regarding invocation of the pledge was complete. The Coordinate Bench of this Court had accepted the same and not interfered with the Sale Notice. Thus, insofar as the sale of the Pledged Shares are concerned, it would not be apposite to interdict any transaction regarding the same. This Court is prima facie of the view that the Pledged Shares have been sold to Creative at an under-value and in a non-transparent manner. Notwithstanding the same, the sale of the Pledged Shares is not required to be interdicted for the aforesaid reason. In view of the above, it is also not necessary to decide whether the invocation of pledge of the Pledged Shares is violative of the SEBI (Depositories and Participants) Regulations, 2018 in these proceedings. ..."
2. He submits that this may well influence the Arbitral process. The said observations were made in a petition filed under s.9 of the Arbitration and Conciliation Act, 1996. However, the observations have been made with a clarification, which reads as under:
"...
55. It is clarified that all rights and contentions of the parties are reserved and any observations made by this Court are only prima facie and solely for the purposes of these petitions."
3. Surely, the aforesaid paragraph clarifies the contextual observations in the order. It requires no elucidation by this court.
Signature Not Verified Digitally Signed By:KAMLESH KUMAR Signing Date:06.12.2022 09:54:564. In view of the above, nothing survives in these appeals. They are disposed-off accordingly.
NAJMI WAZIRI, J GAURANG KANTH, J NOVEMBER 30, 2022 SS Signature Not Verified Digitally Signed By:KAMLESH KUMAR Signing Date:06.12.2022 09:54:56