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TMI Blog2018 (3) TMI 2002X X X X Extracts X X X X X X X X Extracts X X X X ..... urther made clear that the said order is an interim order and common finding recorded in the said order are subject to final award/order that may be passed by the arbitral tribunal. By consent of parties, all three matters were heard together and are being disposed of by a common order :- 2. Learned senior counsel for the petitioners and the learned senior counsel for the respondent No. 1 have argued the Commercial Arbitration (L) No. 253 of 2018 as a lead matter and thus the facts of the said matter are summarized in the latter part of this judgment. 3. The respondent No. 1 had entered into a separate Master Service Agreements (MSAs) with the petitioner and the respondent Nos. 2 and 3 on 25th January 2013. The dispute arose between the parties under the said MSAs. 4. The respondent No. 1 had issued three notices all dated 7th May 2017 under the provisions of the Insolvency and Bankruptcy Code, 2016 to each of the petitioners. It is the case of the petitioners that the parties thereafter discussed the matter and exchanged the proposals. The petitioners vide its letter dated 29th June 2017 recorded the revised payment schedule agreed between the parties. The respondent No. 1 file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned order on 5th March 2018 thereby disposing of the said application filed by the respondent No. 1. The arbitral tribunal did not grant interim measures in so far as the reliefs prayed under clause A of paragraph 44 of the application under Section 17 of the said Act. The arbitral tribunal however restrained each of the petitioners and its affiliates from transferring, alienating, encumbering or disposing off any of its assets without specific permission/leave of the arbitral tribunal. The arbitral tribunal also made it clear that the said impugned order is without prejudice to any order that may be passed by the Board/Courts of competent jurisdiction. It was further made clear that the said order is an interim order and common finding recorded in the said order are subject to final award/order that may be passed by the arbitral tribunal. 8. Being aggrieved by the said order passed by the arbitral tribunal under Section 17 of the said Act, each of the claimants filed three separate commercial arbitration petition under Section 37 of the said Act impugning the part of the order in so far as the reliefs are granted against the petitioners. 9. Mr. Tulzapurkar, learned senior coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose lenders much prior to the date of execution of the MSAs between the parties. It is submitted that the respondent No. 1 being one of the unsecured creditors, cannot stop the process started by the JLF initiated by the large number of secured lenders of the Reliance Group. The respondent No. 1 could not have applied for any injunction in respect of those assets which are proposed to be transferred in favour of the secured creditors. He submits that the amount would be directly paid to the secured creditors towards their dues by the transferees and would not be paid to the Reliance Group. 12. Learned senior counsel submits that in this process, the respondent No. 1 being one of the unsecured creditors, even in ordinary course would not get anything out of those assets as they are encumbered or charged with the secured creditors. He submits that the amount that is going to be received on transfer of the assets is not sufficient to satisfy even the debts of the secured creditors and thus the respondent No. 1 is not likely to get any amount even if all such assets are sold and transferred in favour of the transferee, even in future if the respondent No. 1 succeeds in the arbitral pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... secured claim by the impugned order passed by the arbitral tribunal. Learned senior counsel strongly placed reliance on the judgment of this Court in the case of Tata Capital Financial Services Ltd. (supra) and more particularly paragraphs 8 and 11 and would submit that the disposal of the assets of the Reliance Group pursuant to the decision taken by the JLF cannot be termed as disposal with an intention to defeat any award against the Respondents. 16. It is submitted that in these circumstances, the principles of Order XXXVIII Rule 5 of CPC could not have been extended by the arbitral tribunal to the facts of this case. It is submitted that though the arbitral tribunal in the impugned order has summarized the principles of Order XXXVIII Rule 5 of CPC and has held that the same would be attracted to the facts of this case, the said principles, however, are not applied while dealing with the application filed by the respondent No. 1 under Section 17 of the said Act. He submits that the claim of an unsecured creditor cannot be considered at part with the claim of the secured creditor and thus the respondent No. 1 being outside the JLF, could not seek any relief in respect of those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el that the submissions advanced before this Court today by the learned senior counsel appearing for the petitioners in each of the aforesaid petitions that even if the respondent No. 1 succeeds in the arbitral proceedings, the respondent No. 1 being an unsecured creditor, cannot recover any amount from any of the assets of the Reliance Group is totally contrary to the stand taken in the affidavit-in-reply filed before the arbitral tribunal. He submits that in any event, an unsecured creditor cannot be without a remedy of seeking interim measures in respect of the assets of the Reliance Group so as to secure the claim of the respondent No. 1 to recover its dues from the Reliance Group upon the respondent No. 1 succeeding in the arbitral proceedings. It is submitted that the petitioner has admittedly admitted the dues of the respondent No. 1 to the tune of more than Rs. 1000 crore. 21. Learned senior counsel invited my attention to various averments made by the petitioners in their affidavit-in-reply before the arbitral tribunal, the averments made in the application filed by the respondent No. 1 under Section 17 of the said Act before the arbitral tribunal and also the prima facie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icient assets, it was parting with only part of the assets, liability of the respondent No. 1 was not disputed and factum of sale being not disputed, in these circumstances, the arbitral tribunal was fully justifying in granting interim measures of injunction in favour of the respondent No. 1 with a rider that the property would not be transferred, alienated, encumbered or disposed off any of its assets without specific permission/leave of the arbitral tribunal. The arbitral tribunal had rightly held that balance of convenience was in favour of the respondent No. 1 and not in favour of the Reliance Group. 24. Learned senior counsel for the respondent No. 1 placed reliance on the following judgments :- (i) Judgment of the Supreme Court in the case of Raman Tech & Process Engg. Co. & Anr. v. Solanki Traders (supra) - (paragraphs 4 and 6). (ii) Judgment of this Court in the case of Baker Hughes Singapore Pte. v. Shiv-Vani Oil and Gas Exploration Services Ltd. - 2015 (1) Bom.C.R. 377 (paragraphs 36 to 38, 43, 46, 47, 50, 51 and 52. (iii) Judgment of this Court in the case of Acron Developers Private Limited v. Patel Engineering Limited, 2015 SCC OnLine Bom 4739 - (Paragraphs 11, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eady secured in favour of various lenders much prior to 2010 whereas MSAs were entered into between the parties only in the year 2013. REASONS AND CONCLUSIONS :- 28. A perusal of the correspondence exchanged between the parties prima facie indicates that though the Reliance Group had made promises and assurances and had given undertakings to pay the respondent No. 1 its dues and had submitted payment schedule from time to time, the Reliance Group did not make any payment. The cheques issued by the Reliance Group were dishonoured. The arbitral tribunal has considered these correspondence in the impugned order and has observed that the correspondence and the minutes placed on record show that the claim of the respondent No. 1 had been subjected to the consideration of the referred persons of the companies and was agreed to be paid in installment schedule of payments attached with the recorded minutes dated 10th March 2017. 29. A perusal of the averments made in the application filed under Section 17 of the said Act by the respondent No. 1 clearly indicates that it was a specific case of the respondent No. 1 that the Reliance Group was trying to transfer their assets with the inten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Reliance Group that there is a huge debt which is being restructured, which involves substantial financial sacrifice on the part of the lenders so as to bring the debt position of the Reliance Group and its group companies back on rails. 32. In paragraph 20 of the said affidavit, it is averred that the Reliance Jio Infocomm Limited emerged as the highest bidder in a transparent process conducted under the supervision of a high-powered Bid Evaluation Committee appointed by JLF. The Reliance Group and the Reliance Jio Infocomm Limited had entered into a definitive agreements for the transfer of the assets which is expected to be concluded by 31st March 2018. 33. During the course of arguments, learned senior counsel appearing for all the three petitioners vehemently argued before this Court that even if the respondent No. 1 succeeds in the arbitral proceedings and the substantial part of claim of the respondent No. 1 is not denied by the Reliance Group, the respondent No. 1 will not be able to recover any amount from the Reliance Group. It is thus clear that the liability of the Reliance Group towards the respondent No. 1 had not been disputed. It is also not disputed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance Group was not adhered to and there were persistent defaults in payment. In my view, in these circumstances, grant of relief to the respondent No. 1 would not amount to converting financial status of the respondent No. 1 from unsecured creditor to secured creditor. The arbitral tribunal has rightly held that a creditor who establishes a prima facie case that there was recently a likelihood of succeeding in the claim and shows that the other party was likely to defeat the claim by transferring of assets, such claim would be entitled to protection under the provisions of Order XXXVIII Rule 5 of CPC. The said protection was directed against a non-applicant seeking to defeat the execution of a decree or enabling a successful decree holder from executing the decree in its favour. 36. The arbitral tribunal has also taken a cognizance of the admitted fact that the proceedings under the Insolvency and Bankruptcy Code has been initiated against the Reliance Group, however the said application is yet to be admitted by the National Company Law Tribunal. The arbitral tribunal ultimately held that the respondent No. 1 has made out an arguable case and thus the arbitral tribunal was of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that the plaintiff has to show prima facie case that his claim is bonafide and valid and also satisfy the court that the defendant is about to remove or dispose of the whole or part of his property, with the intention of obstructing or delaying the execution of any decree that may be passed against him, before power is exercised under Order XXXVIII Rule 5 CPC. In this case, the respondent No. 1 has satisfied all these criteria laid down by the Supreme Court in the said judgment. The Reliance Group admitted the substantial part of the claim of the respondent No. 1 and has boldly urged before this Court that even if the respondent No. 1 succeeds, the said party would not be able to recover any amount from the Reliance Group. In my view, this type of stand taken by the Reliance Group has to be rejected at the threshold. 39. Learned senior counsel for the respondent No. 1 is right in placing reliance on the correspondence exchanged between the parties which clearly shows that the Reliance Group went on making promises and undertakings to pay legitimate dues of the respondent No. 1 according to the payment schedule but failed to pay such amount. The petitioners thus cannot be allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal if such case is made out by the applicant. In the said matter, this Court has held that for the purpose of granting interim measures, the arbitral tribunal has to consider whether the claimant has made out a prima facie case that he would succeed finally in the arbitration proceedings and whether had made out a case for grant of interim measures. 43. In my view, the arbitral tribunal in this case, has rightly rendered a prima facie finding that the respondent No. 1 has made out a case that it would succeed finally in the arbitral proceedings and the balance of convenience was in favour of the respondent No. 1. The principles of law laid down in the case of Baker Hughes Singapore Pte. v. Shiv-Vani Oil and Gas Exploration Services Ltd. (supra) squarely applies to the facts of this case. I am respectfully bound by the said judgment. 44. In so far as the other judgments relied upon by the learned senior counsel for the respondent No. 1 referred to aforesaid are concerned, this Court need not multiply the authorities on the same issue and thus though all such judgments would assist the case of the respondent No. 1, this court need not deal with each and every such judgments relied ..... X X X X Extracts X X X X X X X X Extracts X X X X
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