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(i) Under this deal confirmation, a Mark to Market ("MTM") and margin condition was also agreed upon between the Petitioner Bank and the Respondent Company. It was agreed between the parties that any time after six months from the trade date (25 June, 2008) till the expiry / maturity of the deal, if negative MTM of the options transaction exceeded Rs.5 Crores, the Petitioner Bank would be entitled to make a margin call on the Company for excess of the negative MTM over the amount of Rs.5 Crores. In accordance with this agreement the Company also furnished a post-dated cheque for an amount of Rs.5 Crores that was to be encashed by the Petitioner Bank only after the margin call arising under the aforesaid options transactions was not complied with and the Respondent Company failed to make alternative arrangements within 30 days from the date of demand. It is the case of the Petitioner that since the Company failed to comply with the margin call arising Pg 9 of 52 HDFC BANK CP320 OF 2013.docx under the aforesaid options transactions despite expiry of 30 days from the date the Respondent Company was called upon to do so, the Petitioner presented the said cheque on 4 December, 2012 which was dishonoured for the reason "insufficient funds".

(j) One such incident of negative MTM took place on 26 December, 2008 that is six months after the date of execution of the said options transactions due to fluctuations in the foreign currency exchange rates. The MTM value in respect of said options transaction exceeded its limits of Rs.5 Crores and touched the value of Rs.10 Crores. In this view of the matter, the Petitioner, vide their letter dated 30 December, 2008 issued a margin call in terms of the deal confirmation. Since, there was no reply, the Petitioner Bank addressed another letter dated 13 May, 2009 to the Respondent Company, once again making a margin call and requested the Respondent Company to comply with its obligations under the deal confirmation.

(k) The Respondent Company vide its letter dated 20 May, Pg 10 of 52 HDFC BANK CP320 OF 2013.docx 2009 expressed its inability to comply with the margin call made by the Petitioner Bank citing the reason that due to cash constraints, global slowdown in the market and prior business commitments, it was unable to cater to the margin call made by the Petitioner Bank. However, what is important to note is that in this very letter the Respondent Company expressed its intention to continue with the options transaction entered into with the Petitioner Bank and expressed its commitment to clear all dues and outstanding at the relevant expiry -

9. After carefully considering the argument canvassed by Mr Cama, I am unable to agree with the aforesaid submissions. As Pg 23 of 52 HDFC BANK CP320 OF 2013.docx noted earlier, under the Deal Confirmation, it was agreed between the parties that any time after six months from the trade date (25 June, 2008) till the expiry / maturity of the deal, if negative MTM of the options transaction exceeded Rs.5 Crores, the Petitioner Bank would be entitled to make a margin call on the Company for excess of the negative MTM over the amount of Rs.5 Crores. Since the negative MTM exceeded Rs.5 Crores, the Petitioner Bank by its letter dated 13 May, 2009 called upon the Respondent Company to fulfill its obligations and make up the shortfall in the margin as contemplated under the Deal Confirmation. In reply to this letter, the Respondent Company by its letter dated 20 May, 2009 (Exh P to the Petition) expressed its inability to comply with the margin call citing the reason that due to cash constraint, global slow down in the market and prior business commitments, the Respondent Company was unable to cater to the margin call made by the Petitioner Bank.