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2020 Supreme(Del) 1241
IN THE HIGH COURT OF DELHI AT NEW DELHI
Jayant Nath, J.
S.A.R.R. Public Company Ltd - Appellant
Versus
Avon Infracon Pvt Ltd & Ors. - Respondent
Interlocutory Application No. 14239 of 2018, 15097 of 2018, 15130 of 2018, 15149 of 2018, 11779 of 2019; Civil Suit (Comm) No. 1179 of 2018
Decided On : 08-01-2020
Abhinav Vashisht, Advocate, Rajshekhar Rao, Advocate, Amit Singh Chauhan, Advocate, Amit Sibal, Advocate, Jayant Mehta, Advocate, Nitin Wadhwa, Advocate, Prateek Sisodia, Advocate, Kumar Sambhav, Advocate, Saurabh Batra, Advocate, Anupam Lal Das, Advocate, Rajiv Nayar, Advocate, Ranendra Barot, Advocate, Ashim Sood, Advocate, Atul N, Advocate, Apoorva Gupta, Advocate, Arvind Nigam, Advocate, Amit Kr Mishra, Advocate, Etisha Srivastava, Advocate, Akshat Hansaria, Advocate, Yash Kumar, Advocate, Mihil Sarda, Advocate, Mehtab Singh Sandhu, Advocate, Siddharth Dutta, Advocate, Davesh Kumar Chauvia, Advocate, Sameer Kumar, Advocate, Nidhi Sahah, Advocate, Sandeep Sethi, Advocate, Vijay Nair, Advocate, Manoranjan Sharma, Advocate
Headnote:(A) Code of Civil Procedure, 1908 - Order II Rule 2; Jurisdiction - Exclusive jurisdiction clause - Plaintiff seeks numerous reliefs including declarations against securities and assets related to the Facility Agreement dated 14.05.2018 among defendants. Court considers relationship between plaintiff and subsidiaries to determine jurisdiction and enforceability of agreements (Paras 2-4, 20-25).
(B) Legal Relations - Standing of affiliates - The court deliberates on whether subsidiaries are bound by parent company's purchase agreement, ruling they are separate entities, and mere undertaking to create a lien does not create enforceable security (Paras 24-28, 46-50).
(C) Jurisdictional Issues - The court affirms the need for a prima facie finding regarding jurisdiction, stating pending lawsuits in foreign courts do not oust local jurisdiction under certain conditions (Paras 38-40).
(D) Interim Relief - The court modifies prior interim orders, allowing subsidiaries to raise funds for completing ongoing projects while ensuring transparency (Paras 48-50).
Findings of Court:
The reimbursement to Defendant No.20 by the Plaintiff was acknowledged. The court stated that agreements from the SARE group need thorough examination, rejecting the outright enforceability of liabilities from the Purchase Agreement.
Result: The application for interim relief is modified; relief granted under specified conditions.
| Table of Content |
|---|
| 1. relief sought by plaintiff. (Para 1 , 2) |
| 2. background on plaintiff and agreements. (Para 3 , 4 , 5) |
| 3. details on defaults and appointment of receiver. (Para 6 , 7 , 8 , 9 , 10) |
| 4. legal proceedings initiated against plaintiff. (Para 12) |
| 5. defendants' objections raised. (Para 13) |
| 6. arguments against maintainability of the suit. (Para 14 , 15) |
| 7. jurisdiction-related contentions. (Para 16 , 17 , 18) |
| 8. arguments on defendants' rights and agreements. (Para 19 , 20 , 21) |
| 9. court observations on defendants' obligations. (Para 22 , 23) |
| 10. discussion on privity and legal standing. (Para 24 , 25 , 26) |
| 11. clarification on ownership and agreements. (Para 27 , 28 , 29 , 30) |
| 12. extrinsic evidence in contractual interpretation. (Para 31 , 32) |
| 13. legal doctrines on privity and conduct. (Para 33 , 34) |
| 14. judicial observations on corporate structures. (Para 35 , 36 , 37) |
| 15. jurisdiction and governing law considerations. (Para 38 , 39 , 40) |
| 16. conclusion on jurisdiction clauses. (Para 41 , 42) |
| 17. final considerations on the case. (Para 43 , 44) |
| 18. court's decision on interim order. (Para 48 , 49 , 50) |
JUDGMENT
Jayant Nath, J. - By this order I will dispose of IA No. 14239/2018 filed by the plaintiff and other connected applications.
2. This suit is filed seeking following reliefs:
"a. Grant leave to the plaintiff under Order II Rule 2 of the Code of Civil Procedure, 1908 to sue for any additional relief against the defendants herein or any other person(s) in terms of the application being filed along with the present suit;
b. Pass a decree of declaration declaring that any and all the securities and or documents whatsoever such as power of attorneys, non-disposable undertakings, charge on assets, encumbrance, mortgage, lien, pledge of shares, etc. already created / sought to be created by the defendant Nos.1 to 15 in favour of defendant No. 16 to 19 or any other person or entity pursuant to and/or in furtherance of the Facility Agreement dated 14.05.2018 or any other agreement are non-est, null and void:
c. Pass a decree of declaration declaring all terms and conditions of the Facility Agreement dated 14.05.2018 by which the defendants No.1 to 15 have undertaken to create securities in relation to their assets, properties as non-est, null and void;
d. Pass a decree of permanent injunction directing the defendants Nos.1 to 15 not to pledge, mortgage, encumber, dispose of, sell or alienate any of their assets, shares, properties (moveable and immovable), in any manner whatsoever without obtaining the prior written permission of the Receiver of the plaintiff;
e. Pass a decree of permanent injunction directing the defendant Nos.1 to 15 not to enter into any new contract, agreement, loan agreement, financing agreement of any kind without obtaining the prior written permission of the Receiver of the plaintiff; f. Pass a decree of permanent injunction directing the defendant Nos.1 to 15 not to give effect to any security, mortgage, pledge, lien, charge, encumbrance already created in favour of the defendant Nos. 16 to 19 or any other person or entity in furtherance of the Facility Agreement dated 14.05.2018 or any other agreement."
3. The case of the plaintiff is that the said plaintiff, i.e., S.A.R.E. Public Company Limited (hereinafter referred to as SARE) is a company exiting under the laws of Cyprus. It is originally incorporated under the laws of the Isle of Man and is presently continuing and existing under the laws of the Republic of Cyprus. The present suit is filed by Sh.Augoustinos Papathomas who is appointed as a Receiver and Manager by defendant No.20 (hereinafter referred to as Wafra) of all the secured assets of the said plaintiff company.
4. The case of the plaintiff is that in 2011 defendant No.20 invested 50 million USD in convertible bonds issued by SARE i.e. the plaintiff through one of its managed funds. The funds were to be utilized by SARE solely or indirectly through its controlled subsidiaries to acquire, develop
