The judgment emphasizes the importance of upholding commercial agreements and the consequences of default, highlighting the rights and remedies of lenders in case of default.

ANOOP V. MOHTA, J.

1. Heard finally, by consent of the parties.

2. The Appellants/Original Plaintiffs, in this Commercial Appeal, under Section 13 of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (for short, Commercial Courts Act) have challenged impugned order dated 3 September 2016, pending the Notice of Motion in Commercial Suit whereby, the Appellants-Plaintiffs prayer for an adinterim injunction/the protective reliefs, has refused by the learned Single Judge (Commercial Division), by giving detailed reasons.

3. Appellant No. 1 is a company in the ship building industry. Appellant Nos. 2 to 4 are the subsidiaries and others are the shareholders of the subsidiaries of Appellant No. 1. Respondent No. 1 has acquired 80% of the outstanding secured debts owed by the Appellant No. 1 from 18 consortium banks and is acting in its capacity as trustees of various trusts. Respondent No. 2 is acting as a security trustee for Consortium Bankers who have at material times lent and advanced loan/credit facilities to Appellant No. 1 for its business activities. Respondent No. 3 is the share transfer agent of the Appellants' shares.

4. Appellant No. 1, as facing financial difficulties on account of various reasons made consistent defaults in the payments/obligations, therefore, requested the lender to reconstruct its existing facilities. CDR Forum, a non-statutory voluntary mechanism under the aegis of the Reserve Bank of India, is available for the Appellants being Class A borrower (Category 1). The concerned Respondents have approved for a restructuring package as set out in Letter dated 25 June 2012. A Master Restructuring Agreement (MRA) was executed to give effect to the CDR package. It was amended also. The Appellants could not implement MRA package for various reasons and the issues. In the Joint Lender Meetings, additional facilities were agreed to be issued to Appellant No. 1. However, it could not be utilised by Appellant No. 1 Plaintiff again. The Appellants had created additional security including execution of the personal guarantees of the directors and corporate guarantees, mortgage of various properties and hypothecation of movable assets. The Appellants admittedly, have hypothecated shares in favour of the Respondents which were in addition to the securities provided by the Appellants in order to facilitate the implementation of the CDR/MRA scheme. The CDR mechanism was cancelled on 21 August 2014 for the reasons stated in the communication. The Appellants could not utilise the CDR Scheme. Notice dated 21 August 2014 was issued. The MRA executed between the parties was remained unutilised and so also the Share Pledge Agreements dated 9 January 2013 and 31 March 2014. (The Agreements)

5. Respondent No. 1 has taken over the assignment of debts of 18 banks, thereby is in control of 80% of the debts Consoritum Lenders. Respondent No. 2, by notice dated 25 August 2016 invoked the pledged shares of the Appellants. Based upon the decision taken by the joint members of Consortium at the meeting held on 28 July 2016.

The Appellants, therefore, filed a Commercial Suit on 2 September 2016 in this Court for the reliefs so stated therein along with the Notice of Motion for seeking adinterim reliefs. The Respondents have on 2 September 2016 itself, as invoked, the agreements transferred 1,25,25,692 equity shares i.e. 24.90% of Appellant No. 1. The learned Judge has rejected the adinterim reliefs on 16 September 2016. Hence this Appeal on 16 September 2016.

6. Admittedly, the Motion is pending, which is offshoot of the Commercial Suit where, the basic prayers are for a declaration that Notices dated 25 August 2016 and further the averred unilateral actions taken, by Respondent No. 2 against the Appellants, for an invocation of Pledge Agreements, of 2,14,92,908 shares of the face value of Rs.10/each, pledged by the Appellants in favour of Respondent No. 1, are bad in law, illegal