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TMI Blog2014 (3) TMI 756X X X X Extracts X X X X X X X X Extracts X X X X ..... ide and mischievous, and is nothing but an attempt to hijack the jack-up rig. In this scenario, where it does not appear that ICICI Bank’s application has any semblance of bona fides, and is, prima-facie, nothing but an attempt to steal a march on a large body of creditors, both secured and unsecured, I do not see why I should exercise any discretion at all in favour of ICICI Bank. It is not enough, in my view, for an applicant to show that it is a secured creditor and to therefore claim intervention as a matter of right. Were that so, there would be no question of discretion under Section 557 of the Companies Act; every creditor would be instantly legally entitled to intervention. Where an application is found not to bona fide, that discretion cannot be exercised. So it is in this case. The application must, in my view, be dismissed in its entirety. Such an applicant, wholly wanting in bona fides, cannot claim the exercise of discretion in its favour. Application of ICICI Bank dismissed with Cost. - ICICI Bank shall pay to BNYM and GOL Offshore each costs quantified at Rs.2.5 lakhs. - Decided against the petitioner. - Company Application (L) No. 68 of 2014, Company Petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at GOL Offshore proposed to sell Rig V-351 to pay off its creditors. BNYM contended that it was uncertain what GOL Offshore proposed to do with the proceeds of this sale and whether GOL Offshore s creditors would, in fact, be paid. As GOL Offshore sought time to file a reply, the matter was on that day adjourned. However, an ad-interim order was passed directing GOL Offshore to place on record before the court and before the next date of hearing all particulars along with the progress reports of the construction of Rig V-351 including its creation. GOL Offshore was also required to disclose details of its assets and liabilities. It was restrained from disposing of the rig and from entering into any transaction in respect of it without leave of the Court except in the usual course of business. This ad-interim order was continued on 29th November 2013. 6. On 11th December 2013, the Court considered BNYM s application for various reliefs including an injunction against GOL Offshore from disposing of, inter alia, Rig V-351. It noted that the application was based on the apprehension that should the rig be sold, there would be no money left to pay BNYM, whose application for was oppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relief sought is actually for a recall of the entire order and its substitution by the reliefs set out in prayers 1(c), (d) and (e). These read as follows: 1c. this Hon'ble Court be pleased to modify the order dated 11 December 2013 such that (i) the Applicant also has security over Rig V-351 for repayment/pre-payment of al amounts due to the Applicant from the Respondent under the Credit Facility Agreements; and (ii) any proceeds, from the sale of Rig V-351 shall first be utilized by the Respondent for pre-payment of all amounts advanced by the Applicant to the Respondent under the Short Term Loan Facility Agreement dated 24th December 2013; 1d. any proceeds arising from the transfer (in any form) including sale, lease, license, hire or charter or otherwise of Rig V-351 and /or other rigs, owned by the Respondent or its subsidiaries or group companies, be ordered to be forthwith deposited with this Hon'ble Court; 1e. no amount from the proceeds arising from the transfer (in any form) including sale, lease, license, hire or charter or otherwise of Rig V-351 and/or other rigs, owned by the Respondent or its subsidiaries or group companies, be disbursed to the Petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny Application to say that, admittedly, on GOL Offshore s own admissions in these paragraphs, it is in default of payment of an instalment under the Rupee Term Loan Facility and of payment of interest of about Rs.56.36 lakhs under the STL Facility. ICICI Bank must, he says, be made a party to the petition (or allowed to intervene), but also to interpose its rights as a secured creditor over Rig V-351 to the exclusion of others. 11. The foundation of this claim, says Mr. Madon, learned senior counsel for GOL Offshore, with a considerable amount of indignation, is utterly incorrect. ICICI Bank claims, in paragraph 15 of its affidavit in support of the application, to have become aware of the court order of 11th December 2013 only in January 2014. The impression ICICI Bank tries to create, especially in para 12 of the affidavit in support, is that it was wholly unaware of the orders on the petition. This is demonstrably incorrect. The very email that ICICI Bank relies on, of 20th December 2013, indicates that GOL Offshore shared the court orders with all its lender banks, ICICI Bank included. Notably Article V of the STL Agreement, clause 5.1(iv), expressly mentions the present pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his so-called apprehension , and its lack of any basis at all, are both immediately apparent. 14. Faced with this, Mr. Tulzapurkar relies on the decisions of this Court in Bharat Petroleum Corporation Ltd v National Organic Chemical Industries Ltd. Ors. [2004] 120 Com Cas 333, per Dr. D.Y. Chandrachud, J., as he then was and in Hy-Line International v C M Hy-Line Farms P. Ltd., In Re: C M Farming Ltd., [2004] 120 Com Cas 337, per A.M.Khanwilkar, J., as he then was to say that at the very least, following the mandate of Section 557 of the Companies Act, 1956, ICICI Bank Ltd must be allowed to intervene as it is a secured creditor. Bharat Petroleum says that there is no reason why the mandate of Section 557 should not be followed at the stage of admission, and a creditor be asked to wait till a final order on the petition before he is heard. Hy-Line International, a later decision by a few months, relies on Bharat Corporation but states the law slightly differently, in that it says that a court has the discretion to allow interested persons to participate in the proceedings so as to oppose the admission of the petition. Thus, secured creditors such as ICICI Bank can be permitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. ICICI Bank also elides the joint meeting of GOL Offshore s lenders, held well before this application was filed, and at which ICICI Bank was represented. Finally, there is the matter of the peculiar cast of ICICI Bank s prayers, expansive in scope and far-reaching in consequence. They seek nothing less than a complete sequestration of the rig to ICICI Bank to the exclusion of all others. Mr. Dwarkadas and Mr. Madon may not be entirely incorrect in saying, therefore, that the present application is mala fide and mischievous, and is nothing but an attempt to hijack the jack-up rig. In this scenario, where it does not appear that ICICI Bank s application has any semblance of bona fides, and is, prima-facie, nothing but an attempt to steal a march on a large body of creditors, both secured and unsecured, I do not see why I should exercise any discretion at all in favour of ICICI Bank. It is not enough, in my view, for an applicant to show that it is a secured creditor and to therefore claim intervention as a matter of right. Were that so, there would be no question of discretion under Section 557 of the Companies Act; every creditor would be instantly legally entitled to interventi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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