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1. CPI India Ltd., the appellant of FAO(OS) No.538/2012 had filed a petition under Section 9 of the Arbitration and Conciliation Act 1996 impleading 25 respondents, three of which are BPTP Ltd. and its directors Kabul Chawla and Anjali Chawla. The other 22 respondents are companies stated to be affiliates of BPTP Ltd. It was the case of CPI Ltd. that relying upon representations and warranties made by Kabul Chawla, it had invested `322.5 crores in BPTP Ltd. by subscribing to 13,551,971 equity shares as well as 22,500,000 Compulsorily Convertible Preference shares on the terms set out in the Share Subscription Agreement dated August 10, 2007 (SSA), and as on the date of the petition it held 5.67% of the Paid Up Capital of BPTP Ltd. It was asserted that the rights are further governed by a Memorandum of Understanding (MOU) dated December 19, 2009. The dispute projected was that on the respondents failing to achieve the Qualified Initial Public Offering by July 08, 2011, a requirement under clause 4 and 10 of the MOU dated September 19, 2009, followed by unauthorized debts being raised, CPI India was entitled to the remedies of the Swap Option rights or under the Put Option or to enforce the right under clause-10 of the MOU; as per which the eight projects listed in Schedule-A to the Agreement had to be executed by putting the money generated in an escrow account and share of CPI India in the profits generated would be as listed in Schedule-A. We highlight that CPI‟s share in the profits range between 50% to 58%. Grievance made was that out of the 8 projects, the respondents had commenced unilateral development and booking pertaining to project „M‟ at Faridabad and „A‟ at Gurgaon.

7. The grievance of CPI India is that admittedly, as per the documents filed by BPTP, it had collected `213 crores for projects „A‟ and „M‟ and had not deposited the same in an escrow account as per the MOU. With reference to a cash flow statement showing status of the projects up to September 30, 2012 it was highlighted that it appears to be a case where `111.3 crores out of `213 crores generated from projects „A‟ and „M‟ had been diverted by BPTP Ltd. It was thus urged that the appeals filed by BPTP Ltd. and Kabul Chawla deserved to be dismissed and appeal filed by it need to be allowed and directions be issued that `213 crores generated by BPTP Ltd. be directed to be deposited with this Court.

19. We note that the learned Single Judge, in the first part of direction No.(ii), has directed accounts to be furnished with respect to monies collected by sale of units in projects „A‟ and „M‟ and in the second part of direction No.(ii) has restrained BPTP Ltd. from continuing with any activity in relation to the two projects. This would mean that BPTP cannot collect any further money payable towards installments by the flat buyers and construction activity has to cease with respect to the under-construction flats. This direction is likely to invite litigation by the flat buyers against BPTP Ltd. and would be detrimental to the interest of even CPI India Ltd.

(i) be permitted to raise `125 crores by way of loan from IFCI Ltd. but without altering the shareholding of BPTP Ltd.;
(ii) the loan would be used to pay Government dues by BPTP Ltd. or its associate companies and details would be furnished to the learned Arbitrator;
(iii) BPTP Ltd. shall continue with the ongoing projects pertaining to the lands mentioned as Project „A‟ and Project „M‟ in the Schedule to the MOU, which would entitle BPTP Ltd. to enlist further flat buyers for the remaining towers proposed to be constructed in the two projects and BPTP Ltd. would be permitted to receive money from the existing flat buyers and further enroll flat buyers but would open an escrow account within a week from today, details whereof would be furnished to the learned Arbitrator and the amounts realized would be deposited in the said account; utilization whereof would be as per interim orders obtained from the learned Arbitrator;