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TMI Blog2021 (12) TMI 155X X X X Extracts X X X X X X X X Extracts X X X X ..... Technical) 1. GVFL Trustee Company Pvt Ltd (GVFL) is an Applicant who have filed Section 7 Petition bearing CP No. CP(IB)-4129/2018 against Hubtown Limited for a debt by way of equity investment in shares of Hubtown Bus Terminal (Mehsana) Pvt Ltd for a total amount of Rs. 4,30,54,200/- as principal and Rs. 9,96,95,800/- as Internal Rate of Return (IRR) calculated at 26% of the principal up to 31.08.2018. As per the Petitioner there is a default under Section 7 of IBC, 2016 as its "put option" was not entertained when the said demand notice dated 02.01.2018 was sent to the Respondent M/s. Hubtown Limited demanding exit by way of "put option". 2. The Respondent (Corporate Debtor) in the main CP has separately filed the present Miscellaneous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IIRF invested in HBT Mehsana by subscribing to Class 'A' equity shares, Class 'B' equity shares and Class 'D' equity shares. Subsequent to this investment the shareholding in HBT Mehsana was as under:- Name of Shareholders No. of Shares at the fact value Rs. 10 each % Class A Hubtown Limited 50000 50.00 IL & FS Trust Company Limited 1395 1.40 IIRF India Realty XVIII Limited 48605 48.61 Total 100000 100.00 Class B IL & FS Trust Company Limited 2790 2.79 IIRF India Realty XVIII Limited 97210 97.21 Total 100000 100.00 Class C Hubtown Limited 100000 100 Total 100000 100.00 Class D IL & FS Trust Company Limited 1395 2.79 IIRF India Realty XVIII Limited 48605 97.21 Total 50000 100.00 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause 13.1 of the SHA which reads as under:- "13.1. The Investor No.3 shall have the following rights which the Investor No.3 shall be free to exercise at any time in the manner specified in the said clauses: 13.2. Annual Put Option; 13.3. Listing; 13.4. Buy-back of all shares held by the Investors No.3 in the Company; 13.5 Accelerated Put; and 16 - Strategic Sale and Withholding of Sale of Project Assets." 7. Here it may be noted that these options are part of a shareholder's right. The claim of GVFL is that the payments by GVFL was to purchase shareholding in HBT Mehsana. The GVFL has sought to exercise its right under the "Put" option for the first time in December 2013 and this Petition was filed by them in November 2018 pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price and for calculating the value of any derivative transaction, only the market value of such transaction shall be taken into account. (h) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, documentary letter of credit or any other instrument issued by a bank or financial institution; (i) the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred to in sub-clauses (a) to (h) of this clause;" 9. This Bench, therefore, has to see whether the claim of GVFL as a Shareholder of HBT Mehsana in exercise of its 'put option' tantamount to a financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. The Bench is of the view that share purchase in HBT Mehsana by GVFL with exit option of inter alia "Annual Put Option" cannot be considered as a debt which is disbursed against consideration of time value for money. The Bench also notes that Internal Rate of Return (IRR) cannot be equated with interest payments. The relevance of IRR for an investor in shares is in relation to expected profit and dividend pay out and capital appreciation of the shares which is totally different to the interest which is return for any investment by way of loan. 12. The Bench is of the view that the GVFL may be entitled to this claim under the SHA as a Shareholder of HBT Mehsana. However, the Bench has no doubt that the claim of GVFL cannot be termed as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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