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High Court of Delhi
MANMOHAN SINGH
Clearwater Capital Partners India Pvt. Ltd
Versus
Punjab National Bank & Another
I.A. NOS. 5371, 6836 & 6679 OF 2012 IN CS(OS) NO.709 OF 2012
Decided on : 01-06-2012
Pari Passu Deed - Loan Agreement - 29.11.2011 - Summary of Acts and Sections
Fact of the Case:
The plaintiff filed a suit seeking declaration of the validity and subsistence of the Pari Passu Deed dated 29.11.2011 and consequential relief of injunction. The plaintiff claimed that a liquidated amount was due and payable by defendant No.2 to the plaintiff as on 07.02.2012. The plaintiff alleged that the defendant No.1 was providing credit facilities to defendant No.2 and appropriating payments to the detriment of the plaintiff. The plaintiff invoked clause 5 of the agreement and called upon defendant No.1 to decide on the pari passu arrangement. The plaintiff filed an interim application seeking disclosure of monies received by defendant No.1 and a restraint on further credit facilities to defendant No.2.
Finding of the Court:
The court found that the plaintiff's notice dated 07.02.2012 qualified as the calculation date under the Pari Passu Deed. The court interpreted the agreement to allow proportionate distribution of recoveries among the lenders, even without the enforcement of securities. The court balanced the interests of the lenders and the debtor, allowing the defendant No.1 to provide working capital and other credit facilities to defendant No.2, but with restrictions on appropriation of funds towards the subject term loans.
Issues: The issues revolved around the interpretation of the Pari Passu Deed, the calculation date, and the rights and obligations of the lenders in relation to recoveries and appropriations.
Ratio Decidendi: The court held that the notice dated 07.02.2012 qualified as the calculation date, allowing proportionate distribution of recoveries among the lenders. The court balanced the interests of the lenders and the debtor, allowing the defendant No.1 to provide working capital and other credit facilities to defendant No.2, but with restrictions on appropriation of funds towards the subject term loans.
Final Decision: The court modified the earlier order, directing the defendant No.1 to comply with the Pari Passu Deed for proportionate distribution of recoveries and imposing restrictions on appropriation of funds towards the subject term loans. The court also allowed the defendant No.1 to provide working capital and other credit facilities to defendant No.2, with specific accounting and reporting requirements.
Facts in CS(OS) No.709/2012
1. The plaintiff has filed the present suit for declaration seeking declaration that Pari Passu Deed dated 29.11.2011 entered into between the plaintiff and defendant No.1 and defendant No.2 is valid and subsisting and also seeking consequential relief of injunction.
2. The prayers made in the suit reads as under:
“a. declare the Pari Passu Deed dated November, 29, 2011 executed by and between the plaintiff, defendant No.1 and defendant No.2 as valid, subsisting and binding on both defendants herein;
b. pass an order and preliminary decree directing defendant No.1 to disclose on affidavit the Lender B Debt (as defined under the Pari Passu Deed dated November 29, 2011) i.e. monies accruing in favour of defendant No.1 under the Lender B Finance Documents entered into by and between defendant Nos.1 and 2 from time to time for the facilities set out in Schedule 2 of the Pari Passu Deed dated November, 29, 2011 on February 7, 2012 being the Calculation Date;
c. pass an order and preliminary decree to disclose on affidavit the amounts received by defendant No.1 under the Lender B Finance Documents entered into by and between defendant No.1 and 2 from time to time for the facilities set out in Schedule 2 of the Pari Passu deed dated November, 29, 2011, on and from February 7, 2012 being the Calculation Deed till the date of the passing of the decree;
d. pass an order and decree directing defendant No.1 to disclose on affidavit and/or to the plaintiff the amounts received by defendant No.1 under the Lender B Finance Documents entered into by and between defendant Nos.1 and 2 from time to time for the facilities set out in Schedule 2 of the Pari Passu Deed dated November 29, 2011 subsequent to the date of the passing of the decree under prayer clause (c), within 7 days of receipt of the said amounts by defendant No.1;
e. pass an order and decree directing defendant No.1 to pay to the plaintiff monies in accordance with Clause 5 of the Pari Passu Deed dated November 29, 2011 from and out of the amounts received by defendant No.1 under the Lender B Finance Documents entered into by and between defendants No.1 and 2 from time to time for the facilities set out in Schedule 2 of the Pari Passu Deed dated November 29, 2011, on and from February 7, 2012, being the Calculation Date, till date of the passing of this decree together with interest thereon @ 15% per annum till the date of payment thereof;
f. pass an order and decree directing defendant No.1 to pay to the plaintiff monies in accordance with Clause 5 of the Pari Passu Deed dated November 29, 2011, from and out of the amounts that are received by defendant No.1 under the Lender B Finance Documents entered into by and between defendant Nos.1 and 2 from time to time for the facilities set out in Schedule 2 of the Pari Passu Deed dated November 29, 2011, subsequent to the date of passing of the decree under prayer clause (e) within 7 days of receipt of the said amounts by defendant No.1 together with interest thereon @15 % per annum till the date of payment thereof;
g. pass an order and decree of perpetual injunction permanently restraining defendant No.2 from paying any monies to defendant No.1 under the Lender B Finance Documents entered into by and between defendant Nos.1 and 2 from time to time for the facilities set out in Schedule 2 of the Pari Passu Deed dated November, 29, 2011, save and except in accordance with Clause 7 of the Pari Passu Deed dated November 29, 2011;
h. pass an order and decree declaring that the credit facilities disbursed or granted or extended by defendant no.1 to defendant No.2 after the February 7, 2012, being the Calculation Date, which are not listed in Schedule 2 of the Pari Passu Deed dated November 29, 2012 as non-binding, illegal and void;
i. pass an order and decree of perpetual injunction permanently restraining defendant No.1 from granting or disbursing or extending any credit facility of any nature to
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