2021 (10) TMI 1311 - HC - SEBI

Approval of resolution plan - Settlement, compromise or arrangement before the Debenture Holders seeking their assent in terms of the respective Debenture Trust Deeds - negotiations between the Plaintiffs, debenture holders, the company and the resolution applicant/their advisors - 3rd Defendant, the Debenture Trustee, points out that the Debenture Trust Deeds require a meeting to be called in a certain manner - HELD THAT - Debenture Trust Deed is a contract between the parties to it. They must know the terms of the contract at the time when the execute it. Those terms cannot be later altered except with their consent. The submission by SEBI would amount to saying that a critical term of the contract is always unknown and always liable to change or modification at any given time, conceivably upsetting the entire structure. SEBI s regulations all say that they are with effect from a particular date. It is not possible to read them as operating retrospectively. Correctly read, SEBI s submission is to be understood as meaning that it is the latest of the SEBI resolutions as amended at the time of the Debenture Trust Deed s execution that must compulsorily be incorporated in the Debenture Trust Deed. This is unexceptionable. But this cannot and does not mean that a later regulation after the Debenture Trust Deed can be retrospectively made to govern the Trust Deed. Between the parties the calling and conduct of a meeting and the voting at it are all governed by the terms of Debenture Trust Deed. There is simply no other way of looking at it. In view of this, the 3rd Defendant is directed to call and conduct meeting of all the Debenture Holders under all three Debenture Trust Deeds within 30 days of this order ensuring that the calling and conduct of the meeting/s and the voting at such meetings conforms to the terms of the respective Debenture Trust Deeds. At such meeting/s, the 3rd Defendant will place for consideration and approval of the beneficial owners or debenture holders the settlement offer/compromise/arrangement as envisaged in the approved resolution plan and as modified to the extent provided herein above. If there is any further or later or supplementary trust deed, then the provisions of that supplementary trust deed will also be taken into account. All parties agree and undertake to maintain confidentiality of the settlement and/or compromise and/or arrangement arrived hereto. In view of the above compromise arrived at between the parties, the suit stands disposed off in these terms. It is made clear that the aforesaid order is passed considering the peculiar facts and circumstances of the present case. It also has consent of all the parties. As regards SEBI, making it clear that this order will constitute no precedent against SEBI nor will SEBI be held to the terms of this order for other cases. This order is made on the peculiar facts and circumstances of this case. The demand drafts in question are handed over to the Advocates for the Plaintiffs. Plaintiffs says this order is sufficient to dispose of the Suit itself with all undertakings given to the Court being accepted. So ordered. The suit is disposed of in these terms.

Summary

Issues:
1. Approval and implementation of a resolution plan for payment to secured debenture holders.
2. Additional settlement amount agreed upon between the parties.
3. Transfer of debentures to the resolution applicant.
4. Agreement for settlement and compromise among the parties.
5. Direction to the Debenture Trustee to call and conduct a meeting for Debenture Holders.
6. Interpretation of SEBI regulations in relation to Debenture Trust Deeds.
7. Confidentiality of settlement terms.
8. Disposal of the suit and refund of court fees.

Analysis:
1. The judgment addresses the approval and implementation of a resolution plan for payment to secured debenture holders. The plan proposes to pay 24.96% of the total principal outstanding to secured creditors, with an additional 5% as an "Additional Settlement Amount" to the Plaintiffs, totaling 29.96% of the total principal outstanding.

2. The parties have agreed on the additional settlement amount, and the Plaintiffs are required to transfer their debentures to the resolution applicant upon receiving the full settlement amount. The agreement stipulates that the Plaintiffs shall not raise any further claims or disputes against the parties involved.

3. The Debenture Trustee is directed to call and conduct a meeting for Debenture Holders to seek their assent for the settlement terms. The meeting must conform to the terms of the respective Debenture Trust Deeds, and any supplementary trust deed will also be taken into account.

4. The judgment clarifies the interpretation of SEBI regulations concerning Debenture Trust Deeds. It emphasizes that the terms of the Debenture Trust Deed at the time of execution govern the calling, conduct, and voting at meetings, and subsequent regulations cannot alter the terms retroactively.

5. The parties agree to maintain the confidentiality of the settlement terms and arrangements. The suit is disposed of based on the compromise reached among the parties, with all undertakings accepted by the Court.

6. The judgment also addresses the refund of court fees in accordance with the rules, specifying the date for making a claim for repayment. The Prothonotary & Senior Master is directed to issue a certificate for the refund of court fees upon production of an authenticated copy of the order.

7. Overall, the judgment provides a comprehensive resolution to the issues involved, ensuring compliance with the settlement terms, conducting meetings for Debenture Holders, and clarifying the application of SEBI regulations in the context of Debenture Trust Deeds. The confidentiality of the settlement terms is maintained, and the suit is disposed of with the refund of court fees as per the rules.