Back
HIGH COURT OF DELHI
S. MURALIDHAR, J.
BPTP Limited & Another - Appellants
Versus
CPI India I Limited & Others - Respondents
Arb. A. No. 8 of 2015 & IA No. 3496 of 2015
Decided On : 03-07-2015
Arbitration and Conciliation Act, 1996 - Section 9, 17, 37 - Preliminary objection - Interim order - Maintainability - CPI's application under Section 9 of the Act - Preliminary objection is raised by BPTP to its maintainability - Scheme of Section 37 of the Act is that an order denying or granting relief under Section 17 of the Act could be challenged by way of an appeal - While Section 17 itself may not result in an order enforceable by a Court - Exercise of getting the AT to pass interim orders under Section 17 is not rendered futile - Statutory remedy under Section 17 cannot be allowed to be frustrated if the alternate dispute resolution mechanism of arbitration has to be effective and efficacious - Petition under Section 9 of the Act, to the extent it seeks reliefs not sought in the application filed under Section 17 of the Act before the AT, would be maintainable - Order of the AT, affirmed by this Court in appeal, adequately protects CPI's interests at this stage - Court does not consider it necessary to grant any of the further interim reliefs prayed for in the Section 9 petition by CPI - Petition under Section 9 of the Act is dismissed.
Arbitration and Conciliation Act, 1996 - Section 17 - Civil procedure Code, 1908 - Order 38 Rule 5 - Agreement - Recovery - Sale of units - Damage - Scope of - An agreement between the parties as to the method of carrying forth the MoU - Neither party has yet resiled from the MoU - BPTP has not complied with the requirements of the MoU - Because the swap option value is identified as Rs. 381.62 crores it is owed that amount is misconceived - After accounting for interest, ED/ID charges etc. the total amount would work out to approximately Rs. 500 crores - 50% of which would only be Rs. 250 crores - AT was fully justified in requiring BPTP to deposit the entire sum collected by it from the sale of the units in Projects A and M - Mere fact that BPTP may not be in a position to comply with the order, is not a reason to set it aside - Damages would be an adequate remedy - Expectation of the CPI in making the FDI in BPTP was that the commitments under the SSA, SHA and later the MoU would be honoured - Impugned order passed by the AT suffers from any illegality - Appeal is dismissed with costs of Rs. 50,000.
1. Arbitration Appeal No. 8 of 2015 by BPTP Ltd. (‘BPTP’) is directed against an order dated 5th January 2015 passed by the Appellate Tribunal (‘AT’) in an application filed by CPI India I Ltd. (‘CPI’) under Section 17 of the Arbitration and Conciliation Act, 1996 (‘Act’). By the said interim order the AT directed BPTP to deposit a sum of Rs.251.2 crores in an escrow account.
2. OMP No. 79 of 2015 is a petition filed by CPI under Section 9 of the Act seeking interim reliefs against BPTP and 24 others.
3. Since both the appeal and the petition arise out of a common set of facts, they are being disposed of by this common judgment.
4. At the outset it requires to be noted that there have already been several rounds of litigation between the parties prior to and during the course of the arbitration proceedings involving them and which is still in progress.
Background facts
5. The background facts are that CPI is a company incorporated under the laws of Mauritius. It invested a sum of Rs.322.5 crores in BPTP by subscribing to 5.67% of its paid up equity capital. BPTP is a real estate development company engaged, inter alia, in constructing residential and commercial real estate projects. Kabul Chawla and Anjali Chawla (Proforma Respondents 2 and 3 in Arbitration Appeal No. 8 of 2015 and Respondents 2 and 3 in OMP No. 79 of 2015) are the promoters of BPTP. Respondents 2 to 12 (in Arbitration Appeal No. 8 of 2015) together form the promoter group. Kabul Chawla is the promoter group representative. Proforma Respondents 13 to 25 are affiliates of BPTP, who according to CPI hold title development rights and/or development licences for the ‘selected projects’ that form the subject matter of the agreements between the parties.
6. On 10th August 2007, two agreements were entered into between CPI on one hand and BPTP together with its promoter group on the other. The first was a share subscription agreement (‘SSA’) and the second was the shareholders agreement (‘SHA’). While the SSA concerns the investment by CPI of a sum of Rs.322.50 crores in BPTP by purchase of equity shares constituting 5.67% of its equity paid up share capital, the SHA sets out the rights of CPI including its right to receive dividend and to an affirmative vote on all major decisions of BPTP. It is stated that as of date CPI holds 1,45,68,368 equity shares in BPTP. It is also stated that the investment was in full compliance with the regulations regarding foreign direct investment (‘FDI’) issued by the Reserve Bank of India (‘RBI’).
7. Schedule 2 to the SSA listed out all the current real estate projects of BPTP. According to CPI, it was represented by BPTP as well as its promoters that they would make best efforts to complete the listing of BPTP?s shares under a qualified and initial public offer (‘QIPO’) within 24 months of 18th August 2007 which was defined as the 'closing date' under Clause 5.1 of the SSA. Under Clause 4.2 of the SHA which was executed on the same date, it was agreed that the proceeds from the shares subscribed by CPI would be utilised by BPTP only for FDI compliant real estate projects, hotels and special economic zones and to fund the capital expansion and/or land acquisition for expanding the business of BPTP in relation to such FDI compliant real estate projects.
8. Under Clause 4.10 of the SHA it was provided that in the event BPTP failed to achieve QIPO within 24 months following the closing date, CPI shall, within six months from the expiry of the said 24 months, have a swap option. Inter alia this involved an obligation on BPTP or the promoter special purpose vehicle (‘SPV’) companies to buy back the investor’s share in BPTP. The manner of issuing the swap option was set out in Clause 4.10.3 of the SHA. Under the swap option, CPI was entitled to select the projects within 30 days from the receipt of the ‘Company Fair Market Value from the Auditor’ by giving a written notice to BPTP and the promoters. Separate companies were to be incorporat
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
