2013 (10) TMI 1476 - HC - Indian Laws

Summary

Issues Involved:
1. Relief under Section 9 of the Arbitration and Conciliation Act.
2. Default under the Facility Agreement.
3. Admissibility of unstamped documents.
4. Execution of personal guarantees.
5. Implementation of Corporate Debt Restructuring Scheme.

Summary:

Relief under Section 9 of the Arbitration and Conciliation Act:

By consent of both the parties, both these petitions filed u/s 9 of the Arbitration and Conciliation Act were heard together at the ad interim stage and are being disposed of by a common order. The petitioner seeks an order of deposit, securing the default amount, attachment of properties, appointment of a court receiver, and injunctions against the respondents from finalizing and implementing the Corporate Debt Restructuring scheme.

Default under the Facility Agreement:

The petitioner and respondent executed a facility agreement on 27th September 2011 for a term loan of Rs. 70,00,00,000, with the respondent liable to repay in 30 equal installments. The respondent committed defaults under the facility agreement, including dishonored cheques and failure to maintain minimum escrow account balances. The petitioner recalled the entire default amount and invoked the arbitration clause on 5th September 2013.

Admissibility of unstamped documents:

The respondent argued that the agreements were not sufficiently stamped as per the Maharashtra Stamp Act, and thus, no relief u/s 9 could be granted. The petitioner contended that the documents were executed in Hyderabad and stamped accordingly, and under Section 18 of the Maharashtra Stamp Act, they had three months to pay any differential stamp duty upon receipt in Maharashtra.

Execution of personal guarantees:

The respondent had executed personal guarantees, and the Delhi High Court had previously restrained the guarantor from selling or encumbering properties. The petitioner argued that the respondents failed to disclose the lifting of this interim order, and thus, there was no current injunction against the respondent.

Implementation of Corporate Debt Restructuring Scheme:

The petitioner argued that the respondent's proposed Corporate Debt Restructuring scheme would dilute the securities given to the petitioner without their consent, which was required under the facility agreement. The respondent contended that under RBI guidelines, they did not need the petitioner's consent and that the scheme was essential for the survival of the company and its employees.

Court's Decision:

The court found that all the respondent's assets were fully encumbered, and the petitioner had a justified apprehension that the respondent might dilute these securities. The court directed the respondent to furnish a bank guarantee of Rs. 60 crores within three weeks and restrained the respondent from creating further encumbrances or finalizing the Corporate Debt Restructuring scheme without the petitioner's consent. The petitions were disposed of with no order as to costs.