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IN THE HIGH COURT OF DELHI AT NEW DELHI
Sanjeev Narula, J.
Shipra Leasing Private Limited & Ors. - Appellants
Versus
Indiabulls Housing Finance Limited & Ors. - Respondents
O.M.P.(I) (Comm.) 113/2021,O.M.P.(I) (Comm.) 114/2021,O.M.P.(I) (Comm.) 115/2021,O.M.P.(I) (Comm.) 116/2021,O.M.P.(I) (Comm.) 154/2021,O.M.P.(I) (Comm.) 155/2021,O.M.P.(I) (Comm.) 156/2021 and O.M.P.(I) (Comm.) 157/2021
Decided On : 20-05-2021
| Table of Content |
|---|
| 1. overview of case facts and context. (Para 3 , 4) |
| 2. arguments for the petitioners against the event of default. (Para 5) |
| 3. respondent's counterarguments on event of default and impairment. (Para 6) |
| 4. court analysis on event of default considerations. (Para 8 , 9 , 10 , 11 , 12) |
| 5. court evaluation of share valuation and pledge execution. (Para 28 , 29 , 30 , 31 , 32) |
| 6. conclusion on negligence and final orders. (Para 33 , 34 , 35 , 36) |
Judgment
Sanjeev Narula, J. (Oral). - I.A. 6276/2021 (u/S 151 of the CPC, 1908 for revival of the cavtioned petition) in O.M.P.(I) (COMM.) 113/2021
I.A. 6278/2021 (u/S 151 of the CPC, 1908 for revival of the captioned petition) in O.M.P.(I) (COMM.) 114/2021
I.A. 6274/2021 ((u/S 151 of the CPC, 1908 for revival of the captioned petition) in O.M.P.(I) (COMM.) 115/2021
I.A. 6268/2021 (u/S 151 of the CPC, 1908 for revival of the captioned petition) in O.M.P.(I) (COMM.) 116/20211.
1. For the grounds and reasons stated therein, the applications are allowed and the above mentioned petitions are revived.
2. The applications are disposed of.
O.M.P. (D (COMM.) 113-116/2021 & 154-157/2021
| Table of Contents |
| Factual Matrix..................6 The Parties In Dispute..................6 The Loan..................6 The Collaterals /Securities..................7 The Controversy.................................9 Cure Notice.........................................9 Recall of loans..................................10 Legal Proceedings............................11 Contentions of the Petitioners. 14 No event of default............................14 2x security cover maintained............16 No financial defaults inpayments.....17 Indiabulls' mala fide conduct...........20 Pledged shares of KDPL..................21 Relief under Section 9 .......................22 Contentions of the Respondent.23 Impairment of the securities is an Event of Default..............................................................23 Indiabulls should not be injuncted under section 9..............................................................24 2x security cover requirement is distinct from creation of security......................................26 Financial default has occurred.........28 Regarding pledged shares of KDPL.28 Rejoinder Submissions...................31 Analysis and findings.....................33 Whether 'impairment of the security' is an Event of Default?.............................................35 Whether Clause 2.2 can be interpreted in the way suggested by the Petitioners?............35 Whether an impairment of securities can occur when 2x security cover exists?..................38 Whether an Event of Default has occurred?.........................................................................41 Whether financial default has occurred?..............................................................................45 Whether shares of KDPL are under-valued?.......................................................................47 Whether relief ought to be given under Section 9 ? ..................513. |
3. The Shipra Group of companies - as the borrowers in a loan facility, faced with a recall notice, by way the present batch of petitions under Section 9 of the Arbitration and Conciliation Act, 1996 [hereinafter referred to as the 'Act'] seek restraining orders against the lender - Indiabulls Housing Finance Limited [hereinafter referred to as 'Indiabulls"] from transferring/selling/alienating and creating any third-party rights or parting with the securities provided in the respective Loan Agreements entered into between the contracting parties.
Factual Matrix
4. A brief conspectus of the facts giving rise to the present petitions, is as follows:
The Parties In Dispute
4.1. Shipra Estate Limited ['SEL], Shipra Leasing Private Limited [SLP
AI
The invocation of pledge had become final and any dispute regarding the value of the shares could be adjudicated by the Arbitral Tribunal. The agreement to accept the consideration for the Property i....
A pledgee has the unfettered right to invoke the pledge and sell pledged shares upon default, governed by the Indian Contract Act, regardless of prevailing economic conditions.
Interim relief under Section 9 requires showing real apprehension of irreparable loss; mere speculation does not justify injunctions against debtor actions.
24. Point of Law : One notice in contradistinction to giving a shorter period in another notice for shares of the same company that are pledged with the defendant does not stand to reason and is acco....
Sale of pledged shares by creditor during CIRP moratorium violates Section 14 despite possession transfer on invocation; ownership remains with debtor. Sold listed shares unrestorable; debt reduces b....
The judgment emphasizes the requirement of reasonable notice for the sale of pledged goods and highlights the impact of the Depositories Act on the rights of redemption against third parties.
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