Delhi High Court - Orders
Axis Trustee Services Limtied & Ors vs Sanjeev Mahajan & Ors on 29 February, 2024
Author: Prathiba M. Singh
Bench: Prathiba M. Singh
$~26 & 27
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(COMM) 28/2022 and I.A. 689/2022, 690/2022, 7402/2022,
13189/2022, 14569/2022, 16692/2022, 16715/2022, 2104/2024
AXIS TRUSTEE SERVICES LIMTIED & ORS. ..... Plaintiffs
Through: Mr. Sandeep Sethi & Mr. Jayant
Mehta, Sr. Advs. with Mr. Prateek
Kumar, Mr. Madhav Khosla, Ms.
Apeksha Dhanvijay, Mr. Sumer Dev
Seth and Riya, Advs. (M:
7011802423).
versus
SANJEEV MAHAJAN & ORS. ..... Defendants
Through: Mr. Amit Sibal & Mr. Rajshekar Rao,
Sr. Advs. with Mr. Nakul Mohta, Mr.
Vinayak Bhandari, Mr. Sanat Garg,
Mr. Mayank Bhargav, Mr. Rishabh
Sharma, Mr. Darpan Sachdeva, Ms.
Vishaka Gupta, Ms. Alina Merin
Mathew, Mr. Puneet Pathak, Ms. Riya
Dhingra & Ms. Teesta Mishra, Advs.
(M:9810896389)
27 WITH
+ CS(COMM) 881/2022 and I.A. 21613/2022, 21614/2022,
1765/2024, 2754/2024
AXIS TRUSTEE SERVICES LIMITED & ORS. ..... Plaintiffs
Through: Mr. Sandeep Sethi, Mr. Jayant
Mehta, Sr. Advs. with Mr. Prateek
Kumar, Mr. Madhav Khosla, Ms.
Apeksha Dhanvijay, Mr. Sumer Dev
Seth and Riya, Advs. (M:
7011802423).
versus
NIMITAYA INFOTECH PRIVATE LIMITED &
ORS. ..... Defendants
Through: Mr. Amit Sibal & Mr. Rajshekar Rao
CS(COMM) 28/2022 & 881/2022 Page 1 of 25
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Sr. Advs. with Mr. Nakul Mohta, Mr.
Vinayak Bhandari, Mr. Sanat Garg,
Mr. Mayank Bhargav, Mr. Rishabh
Sharma, Mr. Darpan Sachdeva, Ms.
Vishaka Gupta, Ms. Alina Merin
Mathew, Mr. Puneet Pathak, Ms. Riya
Dhingra & Ms. Teesta Mishra, Advs.
CORAM:
JUSTICE PRATHIBA M. SINGH
ORDER
% 29.02.2024
1. This hearing has been done through hybrid mode.
2. The present suit has been filed by the Plaintiffs seeking various reliefs, including declaratory reliefs, reliefs of permanent and mandatory injunction, rendition of accounts and other ancillary benefits.
3. The Plaintiffs in the present case are Debenture Trustees registered with Securities and Exchange Board of India (hereinafter, 'SEBI'). Plaintiffs No.2 and 3 are Foreign Portfolio Investors. Non-Convertible Debentures (hereinafter, 'NCDs') worth Rs.365 crores were issued by the Defendant No.l- Nimitaya Infotech Private Limited and Defendant No.2- Bluebird Software Private Limited, which were subscribed equally by the Plaintiffs Nos. 2 and 3 on 30th March, 2019. Accordingly, a sum of Rs.365 crores was disbursed by the said Plaintiffs to the Defendants Nos. l and 2. The following documents were executed to give effect to the aforesaid transactions:
(a) Debenture Subscription Agreement dated 27th March, 2019 (hereinafter, 'DSA').
(b) Debenture Trust Deed dated 28th March, 2019 ('DTD')
(c) Account Bank Agreement dated 28th March, 2019 ('ABA') CS(COMM) 28/2022 & 881/2022 Page 2 of 25 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/03/2024 at 20:30:46
(d) Security documents including Memorandums of Entry evidencing the creation of equitable mortgages over 5 properties immovable properties, are listed herein below:
(i) I.T. Park Building at 108, Udyog Vihar, Gurgaon-
122016 ('UV108'),
(ii) I.T. Park Building at 183, Udyog Vihar, Gurgaon- 122016 ('UV183'),
(iii) Plot no. l, NWA Main Club Road, West Punjabi Bagh, New Delhi- 110026 ('the Punjabi Bagh Property'),
(iv) Khasras no. 291 Min (1-0), 295 (4-16), 296 Min (2-13), 297 Min (0-7), Village Rajokri, Tehsil Vasant Vihar, Kapashera, New Delhi- 110038 ('Farm House 2') and
(v) Khasras no. 220 Min (1-00), 215 Min (1-10), 215 Min (1-16), 215Min (1-10), 206/1 (0-07), 206/2 (1-02), 206 Min (0-17), 206/2 (2-10), 202 Min (1-04), 219 Min (0-03) at Golden Gate no.6, Westend Green Rajokri, New Delhi- 1100038 ('Farm House 6').
(e) Other Security Documents, including a deed of hypothecation dated 29th March, 2019, a share pledge agreement dated 29th March, 2019, a personal guarantee and corporate guarantee both dated 29th March, 2019. All the above-mentioned documents from (a) to (e) are the transaction security documents, which were included to give effect to the agreements.
4. Defendants Nos. l, 2 and 3 are engaged in the business of leasing out the premises of two commercial properties i.e., UV108 and UV183. In terms of the DSA, the Defendant No.3 was to collect revenues from leasing out portions of the premises at UV108 and UV183, and the Defendants Nos. l and 2 were to collect revenues from leasing out portions of the premises at CS(COMM) 28/2022 & 881/2022 Page 3 of 25 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/03/2024 at 20:30:46 UV108 and UV183 respectively. Defendant No.4 is stated to provide maintenance services to the tenants of UV108 and UV183.
5. It is the case of the Plaintiffs that the Defendants defaulted in their payment obligations from December, 2019 and no payments whatsoever either towards principal repayments or interest have been made since April, 2020. A default notice was sent on behalf of the Plaintiffs to the Defendant Nos. 3, 4, 6, 7 and 8 amongst others on 16th August, 2021 and thereafter, an acceleration notice was sent on 24th August, 2021 under Clause 13.3 of the DTD for the entire remaining debt immediately due and payable. Since no payments were forthcoming, the Plaintiffs instituted a suit for enforcement of equitable mortgage over two immovable properties that were offered as a 'Transaction Security', being the Punjabi Bagh Property and Farm House 2. The said suit before this Court, being CS(Comm) 28/2022, titled Axis Trustee Services Ltd. v Sanjeev Mahajan & Ors., has been filed seeking the enforcement of equitable mortgages created by Sanjeev Mahajan and Anita Rani Mahajan over the Punjabi Bagh Property, and by Sanjeev Mahajan and Brij Mohan Mahajan over Farm House 2 ("Mortgage Suit").
6. The mechanism contemplated in the agreements for safeguarding the interest of the Plaintiffs was to create and maintain a bank account as an Escrow account i.e., a collection account wherein the rentals and other incomes received from the mortgaged properties was to be deposited.
7. The following applications in the suits are being heard from time to time and the previous orders dated 7th April, 2022, 23rd December, 2022 as also the order dated 9th February, 2023 in CS(COMM) 881/2022 make it clear that the Defendants had to make several compliances which, admittedly, they have not done. Details of the applications are as under:
CS(COMM) 28/2022 & 881/2022 Page 4 of 25This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/03/2024 at 20:30:47 I.A. No. 3123/2022 (O-I R-10 CPC) LA. No.689/2022 (O-XXXlX R-1 & 2) I.A. 21614/2022(O-XI R-2(3I of CPC) I.A. 21613/2022 (O-XXXIX R-1 & 2 of CPC)
8. On behalf of the Plaintiffs, the documents filed by the Defendants on 27th February, 2024 have been referred to. It is submitted by Mr. Sandeep Sethi, ld. senior Counsel, that even on the basis of the same very documents, it becomes clear that the Defendants are not coming clean with the Court. According to Mr. Sethi, ld. Sr. Counsel, even though the three properties, which were offered as transaction security, were claimed to be valued for Rs.344 crores, as per the Defendants themselves, the same are not more than Rs.270 crores in value. He relies upon the settlement offer, which was handed over on the previous date on 19th February, 2024 and page 36 of the documents dated 27th February, 2024. In comparison, he points out that debenture trustee valued these very properties at Rs.270 crores. Thus, he submits that the properties which are being offered, do not even satisfy the Plaintiffs' principal that has been paid, let alone interest that is payable.
9. Mr. Sibal, however, on the other hand, submits that in agreement with the recommendations/ advise of Edelweiss Alternative Asset Advisors Ltd., which is a debenture trustee and due to Edelweiss's insistence, the properties have been valued lower. The valuations, which have been given in the settlement offer, are given by a reputed agency M/s Knight Frank India Private Limited, therefore, they are the correct valuations and these three properties have been valued at Rs.344 crores.
10. The second submission on behalf of the Plaintiffs is that the bank statement of Indian Bank Sector-4, Gurgaon in respect of Blue Bird CS(COMM) 28/2022 & 881/2022 Page 5 of 25 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/03/2024 at 20:30:47 Software Pvt. Ltd., has not been filed on record despite specific directions that all bank statements shall be filed.
11. According to ld. Senior Counsel for the Defendants, the said account is only a loan account, which has been closed and which has not been disclosed to the Court.
12. It is further argued on behalf of the Plaintiffs that the maintenance and other charges, which are the expenses, which have been incurred from the rental amounts being received, as per Mr. Mahajan are also not tenable as in terms of the lease and license agreements being entered into with the tenants, all the development works have to be undertaken by the tenants and not by the Defendants.
13. According to the Defendants, however, refurbishment has to be done by the Defendants and not by the tenants.
14. On behalf of the Plaintiffs, it is further argued that the Defendants ought to be first directed to purge themselves of the contempt of the orders and they cannot be heard on merits. Reliance is placed upon paragraph 24 of the judgment in Prestige Lights Ltd. v. State Bank of India [(2007) 8 SCC 449]. The said paragraph is set out below:
"24. An order passed by a competent court - interim or final- has to be obeyed without any reservation. If such order is disobeyed or not complied with, the Court may refuse the party violating such order to hear him on merits. We are not unmindful of the situation that refusal to hear a party to the proceeding on merits is a "drastic step" and such a serious penalty should not be imposed on him except in grave and extraordinary situations, but some time such an action is needed in the larger interest of justice when a party obtaining interim relief intentionally and deliberately flouts such CS(COMM) 28/2022 & 881/2022 Page 6 of 25 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/03/2024 at 20:30:47 order by not abiding the terms and conditions on which a relief is granted by the Court in his favour."
15. On behalf of the Defendants, however, Division Bench orders dated 7th February, 2023, 4th March, 2023, 2nd May, 2023, 20th September, 2023, 8th December, 2023 and 23rd February, 2024 are placed to argue that firstly the maintainability of the suit would have to be considered. Reliance is placed upon the following judgments:
• Modern Food Industries (India) Ltd. v. Sachidanand Dass [1995 Supp (4) SCC 465] • Atma Ram v. Charanjit Singh [2020 3 SCC 311] • Dalpat Kumar v. Prahlad Singh [1992 1 SCC 719] • Cotton Corporation v. United Industrial Bank [1983 4 SCC 625] • Bombay State of J&K v. Mohd. Yaqoob Khan [1992 4 SCC 167]
16. It is also argued that the maintainability would have to be decided first before any interim relief can be granted. Ld. Sr. Counsel for the Defendant relies on the Supreme Court Judgement in Asma Lateef v. Shabbir Ahmad [2024 INSC 36]. The relevant paragraphs of the said judgement are set out below:
"39. Although not directly arising in the present case, we also wish to observe that the question of jurisdiction would assume importance even at the stage a court considers the question of grant of interim relief. Where interim relief is claimed in a suit before a civil court and the party to be affected by grant of such relief, or any other party to the suit, raises a point of maintainability thereof or that it is barred by law and also contends on that basis that interim relief should not to be granted, grant of relief in whatever form, if at all, ought to be preceded by formation and recording of at least a prima facie satisfaction that the suit is maintainable or that it is not barred by law. Such a CS(COMM) 28/2022 & 881/2022 Page 7 of 25 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/03/2024 at 20:30:47 satisfaction resting on appreciation of the averments in the plaint, the application for interim relief and the written objection thereto, as well as the relevant law that is cited in support of the objection, would be a part of the court's reasoning of a prima facie case having been set up for interim relief, that the balance of convenience is in favour of the grant and non-grant would cause irreparable harm and prejudice. It would be inappropriate for a court to abstain from recording its prima facie satisfaction on the question of maintainability, yet, proceed to grant protection pro tem on the assumption that the question of maintainability has to be decided as a preliminary issue under Rule 2 of Order XIV, CPC. That could amount to an improper exercise of power. If the court is of the opinion at the stage of hearing the application for interim relief that the suit is barred by law or is otherwise not maintainable, it cannot dismiss it without framing a preliminary issue after the written statement is filed but can most certainly assign such opinion for refusing interim relief. However, if an extraordinary situation arises where it could take time to decide the point of maintainability of the suit and non-grant of protection pro-tem pending such decision could lead to irreversible consequences, the court may proceed to make an appropriate order in the manner indicated above justifying the course of action it adopts. In other words, such an order may be passed, if at all required, to avoid irreparable harm or injury or undue hardship to the party claiming the relief and/or to ensure that the proceedings are not rendered infructuous by reason of non-interference by the court."
17. Heard. A perusal of orders dated 23rd February, 2022 as also subsequent orders passed by various predecessor Benches and this Court dated 9th February, 2023, 25th January, 2024, 5th February, 2024 and 19th February, 2024, would show that the crux of this case is that the Plaintiffs CS(COMM) 28/2022 & 881/2022 Page 8 of 25 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/03/2024 at 20:30:47 have lent Rs.365 crores by way of a debenture subscription agreement dated 27th March, 2019. The Defendants have not paid back any of the amounts and defaults have occurred in terms of the said agreement. This fact also finds mentions in the Division Bench order dated 7th February, 2023. The bank statements, which have been placed on record, would show that the Defendants no longer are adhering to the methodology, which was agreed with the Plaintiffs i.e. of depositing all the revenues in an agreed account i.e. the collection account and using only portion of the same for maintenance and other upkeep of the buildings UV 108 and UV 183.
18. As on date, there are 47 rental agreements, which have been executed by the Defendants and the entire rental amounts are being collected in the Defendants' own bank accounts, over which the Plaintiffs have no control.
19. This would be completely contrary to the arrangement as contemplated in the debenture agreement itself.
20. Moreover, repeatedly it has been put to the Defendants, including Mr. Sanjeev Mahajan, whose statement was recorded by the Court on 25th January, 2024, that a joint account operation ought to be agreed to so as to ensure that there is some supervision as to the manner in which the amounts being received are being expended by the Defendants. However, this has not been accepted by the Defendants.
21. Even on the last date on 19th February, 2024, the Court recorded as under:
"2. A proposal has been placed before the Court today, as per which, the Defendants are willing to sell the following three properties:
S. No. Name of the Asset Amount
(Rs. In
Crore)
CS(COMM) 28/2022 & 881/2022 Page 9 of 25
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/03/2024 at 20:30:47
1. Punjabi Bagh Property, Plot 92.30 No.1, NWA, Main Club Road, Punjabi Bagh, New Delhi-
110026.
2. Farm House No.2 102.40 2A, Avenue Cassia, Westend Greens, Rajokri, New Delhi-
110038.
3. Farm House No.6 149.60 No.6, Golden Gate, Westend Greens, Rajokri, New Delhi-
110038.
Total 344.30
3. According to the Defendants, the value of these properties is Rs.344.30 crores as per the above chart. It is also stated that Defendants have also paid a sum of Rs. 14.04 crores towards partial payment, which leads to a cumulative payment of Rs. 358.34 crores for settlement.
4. The Court has put to ld. Counsel for the Defendants that while the Defendants may be permitted to explore auction for sale of these properties, the entire revenue of the Defendant Nos.1 to 4 from the project of building UV 108 and UV 183 ought to be deposited into a designated bank account as directed by the Court, and signatory to the bank account would be Mr. Sameer Mahajan and one Court Commissioner. The amount, which was given in the bank account, would now be utilized to the extent of 20% for the purpose of maintenance of the said two buildings and any other business expansion qua the said two towers. However, this proposal is not acceptable to Mr. Sameer Mahajan, who is present in Court. Let the matter proceed further on the applications filed by the Plaintiff."CS(COMM) 28/2022 & 881/2022 Page 10 of 25
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/03/2024 at 20:30:47
22. The argument of the Plaintiffs is that more than Rs. 80 crores has been received in by the Defendants but no amount is being paid to the Plaintiffs. Even today, the Defendants are only willing that a portion of the rentals i.e., for e.g., 20% being received can be kept separately and paid to the Plaintiffs. The arrangement as per the Agreement was 80%-20%.
23. Under such circumstances, various orders have been passed from time to time to secure the interest of the Plaintiffs who have lent substantial sums. Irrespective of whether the amounts as alleged by the Plaintiffs of Rs.80 crores and above have been received or not, one thing is clear that there is complete non-compliance of most of the directions passed by the Court in the orders dated 23rd December, 2022 and subsequent orders which is evident from the following.
Directions Status Direction as per order dated 23rd Not complied. December 2022 "44. Admittedly, Rs.28,25,34,119/- Rs. 15 crores as per the order has have been received in the account of not been deposited. the defendant no.3, out of which 80% of the amount, being approximately Rs.22 crores was to be deposited in the NIPL and BBSPL Debenture Accounts under the DSA. As per the defendants, a sum of Rs.7,08,26,806/- has already been deposited in CS(COMM) 28/2022. Therefore, the defendants are liable to deposit a further sum of around Rs.l5 crores in the aforesaid Debenture Accounts. Taking into account the submissions made on behalf of the defendants that they are CS(COMM) 28/2022 & 881/2022 Page 11 of 25 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/03/2024 at 20:30:47 negotiating with another financing entity so as to re-finance the present debt owed to the plaintiffs and also trying to sell some of their properties, I deem it appropriate to grant a reasonable time to the defendants to deposit the aforesaid amount.
Accordingly, the defendants are directed to deposit the aforesaid sum of Rs.l5 crores with the Registry of this Court within six weeks from today."
Direction as per order dated 23rd Not complied. December 2022 "45 (i) The defendants no. l to 4 and 6 As per the direction, Defendant to 8 are restrained from opening or Nos. 1 to 4 and Defendant Nos. 6 operating any new bank accounts, to 8 could not open or operate any other than the Collections Accounts, new bank accounts other than the without the prior written consent of the collection accounts. Ld. Counsel Plaintiffs." for the Defendants submit that no new bank accounts have been opened by the Defendants.
However, from the bank statements and from the statement of Mr. Mahajan, it is clear that no amounts are now being deposited in the collection accounts on the ground that they are already closed. Mr. Sibal, ld. Sr. Counsel submits that this issue has been clarified in the affidavit dated 19th February, 2024.
However, there is clearly no compliance of the said directions, as amounts are clearly not being deposited in the Collection accounts but in the Defendants' CS(COMM) 28/2022 & 881/2022 Page 12 of 25 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/03/2024 at 20:30:47 own accounts. No consent has been obtained from the Plaintiff to do so.
Direction as per order dated 23rd Not complied. December 2022:
"45( ii) The. Defendants 1 to 4 and 6 From the paragraph 45 (ii), as per to 8 are restrained from creating or this direction, no third party rights attempting to create third-party rights or encumbrances including leases or encumbrances, including leases, in in respect of any immovable respect of any of the immoveable property could have been executed properties forming part of the including in respect of UV108 and Transaction Security, including but not UV183. limited to UV108 and UV183, other As per the disclosures now made than with the express, prior, written by the Defendants, there has been consent of the Plaintiffs." continuous execution of leases.
More than 25 leases/rental contract have been executed post the order dated 23rd December, 2022.
According to Mr. Sibal, ld. Sr. Counsel there is no embargo on entering into rental contracts which is clear from subsequent directions in terms of paragraphs 46(i) of the said order. According to the ld.
Counsel for the Defendants, all the rental contracts have been disclosed to the Plaintiff.
However, it is the stand of the Plaintiff that no express prior written consent has been sought as required under paragraph 45(ii), and no disclosure has been made in respect of the rental contracts and not even the revenues have been disclosed. This is disputed by the Respondent.CS(COMM) 28/2022 & 881/2022 Page 13 of 25
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/03/2024 at 20:30:47 The direction is clear to the effect that even for executing leases, consent of Plaintiff was required, which has clearly not been taken.
Direction as per order dated 23rd Complied December 2022:
45(iii) The defendants no. 1 and 2 to As per the Defendants no sale deed restrained from executing sale deeds has been executed in terms of the or taking any action further to or order. relating to the Memorandums of Understanding and Agreements to Sell executed in favour of the defendant no.5 or otherwise transferring any portion of UV108 and/or UV183, whether in pursuance of the aforesaid agreements or otherwise.
Direction as per order dated 23rd Not Complied. December 2022:
This condition has not been 46(i) deposit 80% of all revenues, compiled with. The Defendants monies, incomes, including security continued to receive a substantial deposit and lease rental income in amount of revenues from the relation to UV108 and/or UV183, various rental contracts and no generated through Rental Contracts amount has been deposited with and/or Maintenance Contracts, the Court. Admittedly, as per Mr. st received/receivable w.e.f 1 January, Sibal, 80% of the revenues, in 2023 with the Registry of this Court. terms of directions of paragraph 46(i), have not been submitted. He submits that during the period of settlement negotiations, the Plaintiffs did not insist on this condition.
The justification offered cannot in any manner be a ground for not complying with the order passed CS(COMM) 28/2022 & 881/2022 Page 14 of 25 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/03/2024 at 20:30:47 by the Court. The non-deposit of 80% is resulting in considerable prejudice to the Plaintiffs' interests as the Defendants are utilising the amounts in a completely unhindered manner.
Direction as per order dated 23rd Not Complied December 2022:
As of 27th February, 2024, the 46(ii) disclose all Rental Contracts Defendants have disclosed on and/or Maintenance Contracts, record 47 current rental contracts, entered into by any and/or all of the but no maintenance contracts have defendants herein, in relation to been disclosed as per the Plaintiff. UV183 and/or UV108, till date and on Mr. Sibal on behalf of Defendants an ongoing monthly basis, within three submits that there are no weeks from today. maintenance contracts, thus, there has been compliance of this direction. He, however, concedes that all the earlier rental and maintenance contracts have not been disclosed. Defendants are willing to comply the same within one week.
Direction as per order dated 23rd Not Complied December 2022:
46(iii) disclose on affidavit details of According to the Plaintiffs, this any and all documents by way of which condition has not been complied the defendants no. 1 to 4 and 6 to 8 with. According to the Defendants, herein have sought to or attempted to no encumbrances have been create third party rights or created. Defendants are willing to encumbrances, including leases in disclose the rental contracts within respect of any and all of the a week.
immoveable properties forming part of the Transaction Security, within three weeks from today.CS(COMM) 28/2022 & 881/2022 Page 15 of 25
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/03/2024 at 20:30:47 Direction as per order dated 23rd Not Complied December 2022:
46(iv) disclose on affidavit, all The allegation on behalf of the monies, payments in whatever form, Plaintiffs is that this condition has received directly or indirectly and not been complied with. On behalf relating to Rental Contracts or of the Defendants, it is submitted Maintenance Contracts, from the that all the bank statements have execution of the DSA, till date and on been filed except for Allahabad an ongoing monthly basis, within three Bank for pre 2019 period. weeks from today. The payments received have not been disclosed on a monthly basis as was directed. Mere giving of bank statements cannot be treated as compliance of this direction
24. As is evident from the above, the Defendants have not complied with most of the earlier directions passed by the Court. Under such circumstances, the amounts of the Plaintiffs deserve to be secured in some form so that the revenues are not frittered away by the Defendants of their own accord and as per their own whims and fancies. There ought to be an arrangement put in place to ensure that the revenues are secured and the continuation of the business is also not adversely affected or jeopardized.
25. Mr. Sanjeev Mahajan has admitted that he has not complied with various directions, which have been passed by this Court, in his statement, which was recorded by the Court on 25th January, 2024. The statement reads:
"The nature of the transaction with the Plaintiff is for the purposes of pledging of debentures and a debt- equity swap, which is in respect to a business for co- working spaces called 'Go Works'. The Plaintiff stepped into the shoes of the earlier lenders which were Allahabad Bank and IndiaBulls and paid a sum of CS(COMM) 28/2022 & 881/2022 Page 16 of 25 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/03/2024 at 20:30:47 Rs.365 crores as investment into these two companies namely M/s. Nimitaya Infotech Private Limited and M/s. Bluebird Software Private Limited. The said two companies are the owners of the Gurgaon properties at I.T. Park, Building at 108, Udyog Vihar, Gurgaon- 122016 and 183, Udyog Vihar, Gurgaon-122016 described in short as UV 108 and UV 183. The investment was brought in by the Plaintiff in March, 2019. The business of these two companies and related companies is being run by me. The shareholders and Directors of these two companies are myself and my father Mr. Brij Mohan Mahajan. I take care of the day to day working of these two companies.
At the time when the Debenture Subscription Agreement was entered into, M/s. Cox & Kings was the tenant and the monthly rental was Rs. 2 crores. However, the said company went into bankruptcy and Rs.17 crores is still recoverable from M/s. Cox & Kings. During the Covid-19 pandemic, for six months there was no access to the property itself and the rental fell to Rs.50 lakhs per month, by the end of 2021, due to the change in the business framework in IT and ITES and because of the work from home concept, very few tenants were available.
However, one M/s. IndiaBulls again took Rs.1 lakh square feet i.e., three floors of the property for which a substantial investment of Rs.15 crores was made by me. However, after four months of occupying the property they vacated, violating the lock-in period. There was a dispute between us and M/s. IndiaBulls for recovery of a sum of Rs.30 crores. The dispute with M/s. IndiaBulls has now been resolved and they have taken back one floor of the property at a rent of Rs.22 lakhs per month. There are multiple tenants in the property right now. There are no escrow accounts as was contemplated in the agreement with the Plaintiff as the same have been closed. Accordingly, the amounts are now being credited into the accounts in IDFC Bank CS(COMM) 28/2022 & 881/2022 Page 17 of 25 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/03/2024 at 20:30:47 and Indian Bank under control of me and my father.
The escrow account has been closed which was in the CitiBank and the amounts which were lying there have been paid to the Petitioner. Since the loan was recalled in 2021 we have not opened any escrow account after that. Presently, we are receiving a sum of Rs. 2 crores per month as rentals from various tenants and lessees. The buildings are now at 35% occupancy. In view of the change of the business model, we are required to make enormous investments to suit the tenants who are willing to occupy the property, for example, for Urban Clap, a substantial investment of Rs.17 to 18 crores was made for renovating the property, for letting out 50,000 square feet. The details of the bank accounts of the two companies where the revenues of the tenants/lessees are received are as under:
S. Bank Name Nature Account Active/ Date of No. & Branch of Number Closed operation Account
1. NIPL-IDFC Current 1001780338 Active 21.03.2018 Bank, Account Udyog Vihar, Gurgaon
2. NIPL- Current 54205003245 Active 24.09.2021 ICICI Bank Account
3. NIPL- Current 50126633020 Active 13.12.2021 Allahabad Account Bank, Gurgaon
4. BBSPL- Current 50038014677 Active 01.10.2010 Allahabad Account Bank, Gurgaon
5. BBSPL- Current 54205003248 Active 24.09.2021 ICICI Bank Account CS(COMM) 28/2022 & 881/2022 Page 18 of 25 This is a digitally signed order.
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6. BBSPL- Current 10148088994 Active 16.08.2023 IDFC Bank, Account Udyog Vihar Gurgaon I have emailed the bank statement of these accounts for the period from 1st October, 2022 till 24th January, 2024.
I have not deposited the sum of Rs.15 crores as directed on 23rd December, 2022, with the Registry of this Court. The bank accounts set out above were opened prior to COVID-19 pandemic except NIPL- ICICI Bank, BBSPL-ICICI Bank, NPPL ICICI Bank as mentioned above. However, after the recall notice dated 16th August, 2021, the escrow accounts were closed in June, 2023. However, from the time of COVID-19, we have been depositing the income arising out of the said two buildings in the independent accounts and not in the escrow accounts.
Both the companies have three bank accounts each, of which the complete bank statements I undertake to file on record since the date of opening till today, within a period of two weeks.
We have not opened any fresh bank accounts after 23rd December, 2022. We have not tried to create any third party interest in UV 108 and UV 183 after the order dated 23rd December, 2022. We have also not executed any sale deeds, agreements to sell, memoranda or any other agreements for transferring any portion of UV 108 and UV 183 after the order dated 23rd December, 2022.
We have not deposited the revenues, monies and incomes arising out of the renting or leasing of spaces in UV 108 and UV 183 with effect from 1st January, 2023.
We have not filed rental contracts, maintenance contracts or any other details including the affidavit as CS(COMM) 28/2022 & 881/2022 Page 19 of 25 This is a digitally signed order.
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We have executed lease agreements to rent out the property even after 23rd December, 2022.
Instructions were given by me for the remittance of the Kids Clinic India Pvt. Ltd. to be made into the ICICI Bank in place of the escrow account in CITI Bank. We have not deposited the rentals from Kids Clinic India Pvt. Ltd. before the Court in terms of the order dated 7th April, 2022. I have not filed any affidavit in terms of paragraph 26 of order dated 7th April, 2022. I have only filed an affidavit giving some information but not the entire information as per the said order.
Few of the accounts mentioned at Annexure II at page 106 to the Debenture Subscription Agreement dated 27th March, 2019 are still in operation and are currently being used by the companies. In addition to the above accounts, further accounts were opened for the said two companies of Defendant Nos. 1 to 4, details of which are as under:
S. Bank Nature Account Active/ Date of
No. Name & of Number Closed operation
Branch Account
2. NIPL- Current 54205003245 Active 24.09.2021
ICICI Bank Account
3. BBSPL- Current 54205003248 Active 24.09.2021
ICICI Bank Account
4. BBSPL- Current 10148088994 Active 16.08.2023
IDFC Account
Bank,
Udyog
Vihar
Gurgaon
5. NI- IDFC Current 10149836350 Active 31.08.2023
Bank, Account
Udyog
CS(COMM) 28/2022 & 881/2022 Page 20 of 25
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6. NPPL- Current 54205003243 Active 21.09.2023 ICICI Bank Account From the companies' bank accounts, there are no transfers to the personal accounts of me or my family. However, in fact we have made transfers to the companies' accounts in order to sustain the companies. The investments that we made into the companies' accounts may have been returned to the personal accounts of the promoters.
I undertake to file the bank account statements of all the four individuals, namely, Defendant Nos. 6 to 9 and the companies - Defendant Nos. 1 to 4, within a period of two weeks."
26. Prima facie, Mr. Mahajan is in violation of most of the directions of the Court, as he and his father are in charge of all the bank accounts, where the monies are being deposited but the directions of the Court are not being complied with.
27. Before this Court proceeds to pass any orders in respect of the consequences of such conduct on behalf of the Defendants, while the matter is pending hearing before this Court on various issues including on maintainability, there is an urgent and immediate need to protect the interest of the Plaintiffs. Accordingly, the following interim arrangement is put in place in the matter.
CS(COMM) 28/2022 & 881/2022 Page 21 of 25This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/03/2024 at 20:30:47 (1) An Administrative Committee is constituted consisting of the following members:
• Justice Sanjay Kishan Kaul (Retd.) - Chairperson • Ms. Pooja M Saigal, Advocate - Member (Mob:-9810137113) • Mr. Sanjeev Mahajan, Defendant no.6 - Member. The inclusion of Mr. Mahajan in the Committee is merely to ensure continuity and also not to jeopardize the business interest as he is most aware of the clients and the manner in which the business is being conducted. The administrative committee shall be in-charge of all the bank accounts of the Defendants henceforth. All income including lease rentals, from the three properties viz., UV 108, UV 183 and the Punjabi Bagh property shall be deposited in the designated bank accounts which are:
Defendant Name of Defendant Name of Bank Bank Nos. Account No. 1 Nimitaya Infotech IDFC First 10017803381 Private Limited Bank 2 Bluebird Software IDFC First 10148088994 Private Limited Bank 3 Nimitaya Promoters IDFC First 10007759466 Private Limited Bank 4 Nimitaya IDFC First 10149836350 Infrastructure Bank Private Limited (2) The Chairperson and Mr. Sanjeev Mahajan shall be joint signatories to the bank accounts. No withdrawal or debits shall be permitted from any of the bank accounts of the Defendants without the consent of the Chairperson.CS(COMM) 28/2022 & 881/2022 Page 22 of 25
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/03/2024 at 20:30:47 (3) The administrative committee shall ensure that 80% of the revenues, which are coming to the bank accounts, shall be retained and only 20% is permitted to be used for whatever purpose including for growth of the business and customization for tenants as Mr. Mahajan may recommend.
(4) No other fresh bank accounts shall be opened by the Defendants except the bank accounts, which are designated as mentioned above.
(5) The committee shall direct all tenants to deposit the rental amounts and any other amounts being paid to the Defendants in the designated bank accounts.
(6) 80% of the revenues coming in the bank accounts shall be kept in fixed deposit on automatic renewal mode so that the interest can accrue on the same.
(7) The bank statement of accounts on a monthly basis of all the bank accounts where the monies are to be deposited shall be supplied to the Plaintiff from the Chairperson's office. (8) If the administrative committee is of the view that any further amounts beyond the threshold set out above is required to be expended to any particular purpose including for the purpose of customization of the premises, the Plaintiffs shall be taken into confidence by the Committee for such expenses. It shall be only with the express approval of the Chairperson of the Committee that such extra expense over and above 20% would be permitted. (9) The Chairperson shall intimate all the tenants, occupants, lessees or any other parties who are in occupation of any portion of the CS(COMM) 28/2022 & 881/2022 Page 23 of 25 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/03/2024 at 20:30:47 properties UV 108 and UV 183 or Punjabi Bagh property of today's order so as to ensure that there is complete compliance and all the amounts are deposited only in the designated accounts mentioned above.
(10) All the banks shall be intimated by the Joint Administrator in view of the order passed today.
28. The fee of the Ld. Administrator is fixed at Rs. 5 lakhs per month and the fee of the Advocate member is fixed at Rs. 1 lakh per month, exclusive or any expenses. The same shall be payable by the Defendants from any of the bank accounts designated above. The fees paid shall be treated as expenses.
29. Mr. Sibal has made an offer that the Defendants are willing to secure the Plaintiffs by offering the three properties as stated in the previous order dated 19th February, 2023. The same are -
S. No. Name of the Asset Amount
(Rs. In
Crore)
1. Punjabi Bagh Property, Plot No.1, 92.30 NWA, Main Club Road, Punjabi Bagh, New Delhi-110026.
2. Farm House No.2 102.40 2A, Avenue Cassia, Westend Greens, Rajokri, New Delhi-
110038.
3. Farm House No.6 149.60 No.6, Golden Gate, Westend Greens, Rajokri, New Delhi-
110038.
Total 344.30 CS(COMM) 28/2022 & 881/2022 Page 24 of 25 This is a digitally signed order.
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30. The Plaintiffs are not willing to take these properties towards monies owed to them. In view thereof, if the Defendants wish to reduce their liabilities, they are free to explore sale of these properties along with the Joint Administrator appointed today for the purpose of clearing of any of the amounts, which are owed to the Plaintiffs.
31. Henceforth, any rental agreements or lessees or any other agreements to be entered into by the Defendants in respect of any portion of the building UV 108 and UV 183 shall be jointly signed by the Defendants as also the Chairperson of the Committee.
32. The above arrangement shall be without prejudice to the rights and contentions of both the parties and is only an interim arrangement.
33. Mr. Sibal submits that his client is still willing to make an attempt to comply with the directions given by the Court. If so, let the said compliances be undertaken within two weeks. On the basis of the said compliances, further submissions shall be held on the next date of hearing.
34. A report be filed by the Committee by 15th March, 2024.
35. List for further hearing on action, if any, to be taken against the Defendants, as also on the maintainability, and on all other applications on 20th March, 2024.
36. Parties to appear before the Chairperson of the Administrative Committee after confirming his convenience. The Advocate member may coordinate the said meeting.
PRATHIBA M. SINGH, J.
FEBRUARY 29, 2024/mr/dk/bh CS(COMM) 28/2022 & 881/2022 Page 25 of 25 This is a digitally signed order.
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