Mobile View
Main Search Advanced Search Disclaimer
Cites 7 docs - [View All]
Section 433(e) in The Companies Act, 1956
Section 434 in The Companies Act, 1956
Section 439 in The Companies Act, 1956
Section 454 in The Companies Act, 1956
Sugar Mills vs State Trading Corporation on 30 July, 1982

User Queries
View the actual judgment from court
Delhi High Court
Australia And New Zealand Banking ... vs Tulip Telecom Ltd. on 25 April, 2013
Author: S. Muralidhar

IN THE HIGH COURT OF DELHI AT NEW DELHI

CCP (Co.) No. 3 of 2013 in CO.PET. No. 395 of 2012

AUSTRALIA AND NEW ZEALAND BANKING

GROUP LTD. ..... Petitioner Through: Mr. Neeraj Kishan Kaul, Senior

Advocate with Mr. Rajendra

Barot and Mr. Gaurav Kothari,

Advocates.

versus

TULIP TELECOM LTD. & ORS. ..... Respondents Through: Mr. G.L. Rawal, Senior

Advocate with Mr. Kuljeet

Rawal and Mr. Himanshu

Singh, Advocates with Mr. H.S.

Bedi, MD in person.

AND

CO.PET. No. 395 of 2012 & CO. APPL Nos. 454&455 of 2013

AUSTRALIA AND NEW ZEALAND

BANKING GROUP LTD. ..... Petitioner Through: Mr. Neeraj Kishan Kaul, Senior

Advocate with Mr. Rajendra

Barot and Mr. Gaurav Kothari,

Advocates.

versus

TULIP TELECOM LTD. ..... Respondent Through: Mr. G.L. Rawal, Senior Advocate with Mr. Kuljeet

Rawal and Mr. Himanshu

Singh, Advocates with Mr. H.S.

Bedi, MD in person.

CORAM: JUSTICE S. MURALIDHAR

CCP. (Co.) No. 3 of 2013 and Co. Pet. No. 395 of 2012 Page 1 of 20 ORDER

25.04.2013

1. Co. Pet. No. 395 of 2012 was filed by the Petitioner, Australia and New Zealand Banking Group Ltd. ('ANZ'), under Section 433(e) and (f)read with Sections 434 and 439 of the Companies Act, 1956 ('Act') seeking the winding up of Tulip Telecom Ltd. ('TTL'), on the ground that TTL was unable to pay its debts.

2. Pursuant to a facility agreement dated 3rd August 2011, ANZ sanctioned TTL a working capital facility aggregating to Rs. 50,00,00,000 of which Rs. 20,00,00,000 were in the form of overdraft facility and Rs. 30,00,00,000 in the form of short term loan. TTL executed a demand promissory note of the same date in favour of ANZ for a sum of Rs. 50,00,00,000. According to ANZ, as on 29th June 2012, the total outstanding dues of TTL were Rs. 49,22,89,203 along with interest @ 4% p.a. over and above the applicable rate of interest. A legal notice dated 29th June 2012 was issued by ANZ, followed by reminders on 13th and 24th July 2012.

3. It is stated that on or around 26th July 2012, ANZ received a proposal from TTL setting out a repayment schedule agreeing to pay Rs. 50,00,00,000 and in addition, a sum of Rs. 2,50,00,000 towards interest in four instalments, beginning 7th August 2012 and ending 7th November 2012.ANZ, in response, offered a revised repayment schedule which was agreed to by TTL by a letter dated 1st August 2012. TTL also issued post dated cheques ('PDCs') and furnished a personal guarantee dated 31st July 2012 issued and executed by its Managing Director ('MD') Lt. Col. Hardeep Singh Bedi (hereinafter referred to as 'Lt. Col. Bedi'). A request was made by TTL to ANZ to defer depositing PDCs by ten days but the said request was declined. CCP. (Co.) No. 3 of 2013 and Co. Pet. No. 395 of 2012 Page 2 of 20 When ANZ presented the first PDC in the sum of Rs. 12,50,00,000 on 7th August 2012 for payment, it was dishonoured. Thereafter, the winding up petition was filed.

4. At the first hearing of the petition on 31st August 2012, Mr. G.L. Rawal, learned Senior counsel along with Mr. Himanshu Singh, learned counsel, appeared on behalf of TTL. The following order was passed by the Court on that date:

"CO.PET. No. 395/2005 (sic. 2012) & C.A. No. 1606/2012 Petitioner seeks winding up of the respondent company; the parties had entered into a facility agreement on 03.8.2011 pursuant to which respondent had borrowed a sum of Rs.50 crore which has been sanctioned under the aforenoted agreement. On 02.5.2012 the respondent had agreed to pay the outstanding dues to the petitioner (page 69 of the paper book); thereafter post dated cheques issued by the respondent stood dishonoured; the details of these cheques find mention at para 98 of the paper book. Submission being that in spite of issuance of legal notice the amount has not been liquidated.

At this stage learned counsel for the respondent has put in appearance; he accepts notice. Complete set of paper book has been furnished. Learned counsel for the respondent under instructions from his client states that a sum of Rs. 8 crores would be paid within two weeks from today and another sum of Rs.2 crores will positively be paid within 10 days thereafter. The proposal for paying the balance amount in a time bound frame shall be placed before the Court on the next date. In case the undertaking so given before this Court is not honoured, learned counsel for the petitioner states that he would press for orders on his application for interim relief. Counsel for the petitioner further points out that the respondent has committed default qua other creditors also and he wishes to bring this fact on record; additional affidavit is permitted to be filed by the petitioner within a period of one week from today.

Renotify on 18.09.2012."

5. On 18th September 2012, the following order was passed: "Learned counsel for the petitioner points out that the undertaking CCP. (Co.) No. 3 of 2013 and Co. Pet. No. 395 of 2012 Page 3 of 20 given by the respondent in terms of the last order has not been complied as the cheque issued by the respondent stood dishonoured.

Learned counsel for the respondent undertaking on behalf of his client undertakes that the said payment will be made through banker's cheque/demand draft to the petitioner tomorrow; he requests that the matter be listed for directions only for that purpose for tomorrow.

Learned counsel for the petitioner presses his interim application C.A. No.1606/2012. Additional affidavit of the petitioner dated 12.9.2012 is also on record detailing the liabilities of the respondent qua other persons. In view of the aforenoted circumstances which have now emanated it would be expedient that the respondent is restrained from transferring, alienating or dissipating his assets immovable and moveable except in the normal course of business till further orders.

Renotify for directions for 19.9.2012."

6. On 19th September 2012, the Court noted that a sum of Rs. 8,00,00,000 had been paid to learned counsel for ANZ by way of a demand draft. The Court directed that "the payment schedule as contained in the earlier order of this Court be adhered to."On 12th October 2012, the following order was passed in CA No. 1961 of 2012:

"Learned counsel for the petitioner points out that the sum of Rs.2crores which had to be paid by 25.9.2012 has not been paid. Payment schedule has also not been furnished.

Learned counsel for the respondent undertakes (on behalf of his client) that he shall pay this amount of Rs.2 crores within 10 days from today and the payment schedule shall also be furnished within 10 days.

Reply be also filed within 10 days.

For compliance; renotify for 02.11.2012."

CCP. (Co.) No. 3 of 2013 and Co. Pet. No. 395 of 2012 Page 4 of 20

7. On 2nd November 2012, the following order was passed: "C.A. No. 1961/2012 in Co.Pet.395/2012

In terms of the last direction Rs.2 crores have since been paid by the respondent to the petitioner.

The respondent has tendered a submission duly supported by the affidavit of the Mr. Hardeep Singh Bedi, Managing Director of the respondent company. The proposal states that the balance sum of Rs.40 crores shall be paid in monthly instalments of Rs.2 crore each with interest at the agreed rate on the reducing balance; which figure is disputed by the learned counsel for the petitioner who has drawn attention of this Court to Page 98 of the paper book wherein the agreed amount to be repaid by the respondent to the petitioner is Rs.42.5crores. This proposal is not acceptable to the learned counsel for the petitioner who states that the sum involved is heavy and he is not agreeable to this proposal and the respondent himself in the month of August had issued post dated cheques up to 07.11.2012 for complete payment and he cannot now wriggle out of this proposal. He is asking for enlargement of time which is not acceptable to the petitioner.

This Court has put a proposal to the respondent which is to the effect that the entire payment be paid by the respondent to the petitioner within an outer limit of 10 months from the next date of hearing with interest at the agreed rate on the reducing balance. Learned counsel for the petitioner will also take instruction on this proposal which has been put to the respondent by the Court. Learned counsel for the respondent also seeks time to take instruction in this regard. In case this proposal does not to fructify arguments will be heard on merits.

Reply if any be filed within 10 days with advance copy.

List for direction on 21.11.2012."

8. Subsequent to the above hearing, when the case was listed on 21st November 2012, the Court was informed that the parties had arrived at a settlement and that the Respondent was willing to pay the balance sum along with interest at the agreed rate on the reducing balance basis. The following order was passed on that date: "The parties have arrived at a settlement. Respondent shall pay a CCP. (Co.) No. 3 of 2013 and Co. Pet. No. 395 of 2012 Page 5 of 20 sum of Rs. 45.50 crores along with interest at the agreed rate on the reducing balance within a period of 14 months from today. Complete payment shall be made by 31.12.2013; the payment shall be made by installment i.e. Rs. 3 crores per month; the first installment of Rs. 3 crores shall be paid by the respondent to the petitioner on or before 30.11.2012; second installment shall be paid on or before 31.12.2012 and so on; the last installment will be in the sum of Rs. 3.50 crores along with interest at the agreed rate on the reducing balance and as noted supra this complete payment shall be made by 31.12.2013.

An affidavit to the said effect of the Director of the Company shall be filed within one week from today detailing the schedule of these payments; in case of even one single default the petitioner shall be at liberty to take appropriate action under the contempt law; in such an eventuality, the provisional liquidator shall also stand appointed.

Both the parties agreed that this order shall not be communicated or used in the Media or Press by either party. This order may not also be uploaded on the net.

With these directions, this petition as also the pending applications stand disposed of."

9. An affidavit dated 5th December 2012 was filed by Lt. Col. Bedi in terms of the above order dated 21st November 2012 detailing the schedule of paymentsas agreed between the parties. Subsequently, an application, CA No.2438 of 2012 was filed for correcting the figure of Rs. 45.50 crores to Rs. 42.50 crores in the order dated 21st November 2012. The said application, with the consent of both the parties, was by an order dated 17th December 2012, allowed and the figure was corrected accordingly. Another application, CA No. 2424 of 2012, for directions was disposed of on the same day by the following order: "Co. Application No. 2424/2012

Averments contained in the application have been denied by the respondent. Submission of the applicant is that the settlement amount of Rs.42.50 crores which has to be paid along with interest at the agreed rate on the reducing balance in terms of the directions of this Court dated 21.11.2012 had clearly stipulated CCP. (Co.) No. 3 of 2013 and Co. Pet. No. 395 of 2012 Page 6 of 20 that the interest on the reduced balance shall be paid along with each instalment. Learned counsel for the respondent states that the order was ambiguous. This is now clarified. It is made clear that the interest on the reduced balance at the agreed rate on each instalment shall be paid along with the instalment. Learned counsel for the respondent points out that the instalment of November, 2012 has since been paid; admittedly interest on the said instalment has not been paid; learned counsel for the respondent states that this interest shall be paid positively on or before 31.12.2012 and the interest falling due on the instalment of December, 2012 shall be cumulatively paid along with interest due for January, 2013 instalment.

Application disposed of in the above terms.

Order dasti."

10. It appears that against the order dated 21st November 2012, TTL filed an appeal, being Co. Appeal No. 5 of 2013, which was disposed of by the Division Bench ('DB') on 28th January 2013 by the following order:

"Co.App. 5/2013 & CM No. 1361/2013 (Stay)

The impugned order dated 21.11.2012 refers to and incorporates the settlement arrived at between the parties. The appellant herein has agreed to pay a sum of Rs. 45.50 crores along with interest at the agreed rate on the reducing balance within a period of 14 months from 21.11.2012in instalments of 3 crores each per month. The last instalment is to be paid on or before 31.12.2013.

Learned counsel for the appellant submits that instalments for the month of November and December, 2012 have already been paid with interest and the instalment for the month of January, 2013 will be paid by31.01.2013.

The grievance of the appellant herein is that the learned Company Judge while recording the settlement has observed that in case there is a default of even one single instalment, the respondent would be at liberty to take appropriate action under the contempt law and in such an eventuality the provisional liquidator should also be appointed. We notice that interests of the appellant have also been protected by observing that the order passed by the CCP. (Co.) No. 3 of 2013 and Co. Pet. No. 395 of 2012 Page 7 of 20 Court would not be communicated or used in the Media or Press by either party or uploaded on the net.

We do not think there is any need for this Court to interfere with the impugned order as it is based upon the settlement arrived at between the parties. In case the appellant requires any clarification or modification for any reason including the said term/condition was not agreed or accepted, they can approach the Company Court for the said clarification/modification.

Keeping in view the nature of the order, we are not inclined to issue notice. The appeal is disposed of accordingly. Pending application also stands disposed of.

Dasti."

11. Following the above order of the DB, ANZ filed CA No. 455 of 2013 seeking revival of Co. Pet. No. 395 of 2012.CA No. 454 of 2013 was for appointment of the Official Liquidator ('OL') as the Provisional Liquidator ('PL') of TTL. The other prayer was that pending the final hearing and disposal of the said application TTL should be restrained from in any manner transferring, selling, disposing off, parting with possession of or encumbering any of its assets. It must be noted at this stage that although the DB granted TTL leave to file an application seeking modification of the order dated 21stNovember 2012, TTL filed no such application. It was ANZ who filed the aforementioned two applications. Notice was directed to issue in the said two applications by the Court on 22nd March 2013, and they were listed on 18th April 2013.

12. Simultaneously, ANZ also filed CCP (Co.) No. 3 of 2013 against TTL in which notice was directed to issue by the Court on 22nd March 2013. At that hearing, Mr. Sheetesh Khanna, Advocate accepted notice on behalf of TTL. The Court directed replies to be filed both to CA Nos. 454 and 455 of 2013 as well as CCP (Co.) No. 3 of 2013 by 10th CCP. (Co.) No. 3 of 2013 and Co. Pet. No. 395 of 2012 Page 8 of 20 April 2013 and rejoinder to be filed before the next date. When the matter was listed on 18th April 2013, the Court noted that no reply had been filed by TTL, and passed the following order: "1. The Court finds that despite opportunity granted on 22nd March 2013 to the Respondent in this contempt petition to file a reply on or before 10th April 2013 no reply has been filed by the Respondent till date.

2. Mr. G.L. Rawal, learned Senior counsel appearing for the Respondent prays for some more time to file a reply.

3. The Court had enquired of Mr. Rawal whether the Respondent would be willing to, as a condition for being granted more time to file a reply, and considering that this is a contempt petition arising out of the earlier orders passed by the Court on 21st November 2012, offer security in the form of unencumbered fixed assets of the Respondent for the outstanding amount of over Rs. 32 crores owing to the Petitioner. The matter was passed over till 2.15 pm for this purpose. At 2.15 pm Mr. Rawal was unable to make a categorical statement on whether any of the fixed assets that are sought to be offered by the Respondent as security are unencumbered.

4. The Court finds that the order dated 21st November 2012 stated that in case of "even one single default" by the Respondent the Petitioner would be at liberty to take appropriate action under the contempt law, and "in such an eventuality the provisional liquidator shall also stand appointed".

5. Mr. Rawal submitted that the order appointing the provisional liquidator should not be passed today and that the Respondent should be given an opportunity of placing on record certain documents concerning a corporate debt restructuring ('CDR') Scheme that has been arrived at with the secured creditors. He, however, is candid that the said CDR Scheme does not deal with the liability owing to the Petitioner. In the circumstances, the Court finds no justifiable reason for the Respondent not filing a reply to the contempt petition till date.

6. The Court has been shown a copy of order dated 28th January 2013 of the Division Bench in Company Appeal No. 5 of 2013 which was filed by the Respondent against the order dated 21st November 2012. While dismissing the said appeal the Division CCP. (Co.) No. 3 of 2013 and Co. Pet. No. 395 of 2012 Page 9 of 20 Bench gave liberty to the Respondent to apply to this Court for clarification or modification of the order dated 21st November 2012. Till date the Respondent has not filed such an application for modification or clarification of the said order.

7. In the circumstances, the Court sees no reason why further indulgence should be granted to the Respondent. Consequently, for necessitating today's adjournment, the Respondent will pay to the Petitioner a sum of Rs. 25,000 as costs by the next date. The Managing Director of the Respondent is directed to remain present in Court on the next date, i.e., 22nd April 2013 at 10.30 am.

8. List on 22nd April 2013 at 10.30 am.

9. Order be given dasti to learned counsel for the parties under the signature of the Court Master."

13. On 22nd April 2013, Lt. Col. Bedi appeared in Court. Mr. Rawal tendered an affidavit of that date of Lt. Col. Bedi. The opening para of the affidavit stated that the MD of TTL was making "submission for dropping the notice of contempt and modification" of the order dated 21st November 2012 regarding appointment of the OL. Inter alia, it was stated that TTL had already made a total payment to ANZ of Rs. 20,01,68,000 and that this showed that TTL had "all bonafide to pay the amount to the petitioner." It was pointed out in para 6 of the affidavit that TTL is in the field of providing internet and data service; it is servicing to more than 5,000 customers across 200 cities on wireless and across 300 cities through 16,000 km fibre network; it has a market capitalization of over Rs. 30 billion; it has an investment of Rs. 32.8 billion partly funded and partly through operational cash flows; that 4000 families are surviving by direct employment provided by TTL while more than 6-7000 people are earning their livelihood besides providing business to TTL suppliers of raw material and services; that TTL is contributing a huge amount of direct and indirect revenue by way of taxes running into thousands of crores of rupees CCP. (Co.) No. 3 of 2013 and Co. Pet. No. 395 of 2012 Page 10 of 20 and that the present turnover of TTL is Rs. 2,000 crores. It was pleaded that due to severe economic crisis worldwide and adverse situation in the market, TTL took a temporary blow to its working and its market capitalization fell from Rs. 30 billion to Rs. 5 billion. Consequently, there had been an adverse impact on the cash flow of TTL.

14. It was stated in para 9 of the affidavit that various banks and financial institutions, who were secured lenders of TTL, "in or about January 2013" , participated in a corporate debt restructuring ('CDR') mechanism, at the instance of TTL. These included Bank of India, Indian Overseas Bank, Punjab National Bank, Axis Bank Limited, IDBI Bank, Canara Bank, Bank of Baroda, Dena Bank, Central Bank of India, Andhra Bank, LIC of India and others. It was stated that TTL's failure to make payment to ANZ in terms of the settlement entered into between the parties as recorded in the order dated 21st November 2012 was not intentional and was beyond the control of TTL. It was added that even the payment of salaries of the employees of TTL has been delayed. It was stated in para 13 of the affidavit that the valuation by an independent valuer of the assets of TTL was undertaken at the instance of the secured lenders, of which the leading was ICICI bank ('ICICI').The valuation exercise so undertaken placed the value of the assets of TTL as Rs. 4,426.19 crores, whereas the liabilities owing towards CDR and other lenders, inclusive of ANZ, worked out to Rs. 3067.63 crores. On this basis, it was stated that the money owing to ANZ constituted 1.44% of the sum owing to other lenders. It is stated that "now in terms of CDR no preferential payment can be made as such in these circumstances respondent hands are tied as the survival of the respondent on the strength of CDR." In para 17 of the affidavit it was stated as under:

CCP. (Co.) No. 3 of 2013 and Co. Pet. No. 395 of 2012 Page 11 of 20 "I say respondent has all intend and bonafide to pay the amount to the petitioner though at present the petitioner is unsecured lender and the respondent is ready to make it secured lender and to create pari pasu (sic. pari passu) charge towards liability of about Rs. 32 crores (and interest as may have accrued) out of the various assets of respondent company as detailed in the valuation report."

15. In the above circumstances, it is stated that any disruption of TTL's business will shut down the operations of a large number of banks who would not be accepting the payments. In para 19 of the affidavit it is stated that TTL applied for CDR on 31st December 2012 covering the period from 1st October 2012 to 31st December 2012 and its request has been accepted by all the major banks who have lent it Rs. 2,300 crores. It is stated that "it is advisable" that ANZ should become a "secured lender" at par with other secured lenders. In paras 20 and 21, Lt. Col. Bedi states that he was responsible for computerization of the Army Headquarters at Delhi for about three years during his service in the Army and that he was awarded the Vishisht Seva Medal for that work. He stated in para 21 that he is a law abiding citizen and respects the orders of the Court and "have taken all my best and bonafide efforts to comply with the orders, however, for the reason as above said further amounts could not be paid as CDR prohibits, respondent from making any preferential payments and now CDR is requirement for the survival of the respondent company." In the above circumstances, in para 22 of the affidavit, it was prayed that "the order dated 21.11.2012" may be modified/varied "to the extent of directions" having been issued for the appointment of the OL and further that the Court should withdraw the notice of contempt.

16. Enclosed with the affidavit is a letter dated 12th April 2013 written by Mr. Prakash Joshi, Dy. General Manager of CDR Cell to Mr.

CCP. (Co.) No. 3 of 2013 and Co. Pet. No. 395 of 2012 Page 12 of 20 Naveen Atrishi, Dy. General Manager, ICICI communicating the decision taken by CDR in its EG meeting held on 25th March 2013. It is stated that the CDR Scheme of TTL has been approved. Inter alia, various proposals for repayment of term loans of the secured lenders have been set out. The manner of restructuring of the holders of fully convertible commercial bonds ('FCCB') has also been set out. In para (x) of the said letter, it is stated as under:

"(x) The company has to ensure that all non-CDR lenders including FCCB are to be restructured as stipulated in final scheme. The company to provide undertaking for the same."

17. Enclosed with the letter is the CDR Scheme that has been approved. Sub-para VI of para 1.5, which is relevant for the present purpose, reads as under:

"VI. TTL should open a Current Account with the MI, to be designated pre-TRA account and all transactions to be routed through this account. Company should submit cash budget for 3 months. "Holding-on-operations" shall be allowed in the Pre TRA account by the lenders till implementation of the package."

18. In para 4.4 titled "Unsecured loans, lessors etc." the CDR Scheme notes that, as on 30th September 2012, a sum of Rs. 42 crores is due to ANZ. The said para notes in a foot note that "TTL has paid Rs.15 Crore to ANZ under a court order. The balance amount is proposed to be restructured in line with other TL lenders."

19. Considering that Lt. Col. Bedi has in his affidavit stated that TTL had applied for the CDR on 31st December 2012, more than a month after the order dated 21st November 2012 was passed, the Court enquired whether he had told the secured lenders' participating in the CDR about the Court orders, and in particular the order dated 21st November 2012. In response, Mr. Rawal drew the attention of the Court to the foot note in para 4.4 of the CDR Scheme which has been CCP. (Co.) No. 3 of 2013 and Co. Pet. No. 395 of 2012 Page 13 of 20 extracted hereinbefore. It simply notes that a sum of Rs. 15 crores has been paid under 'Court orders'. It is, therefore, not clear at all whether the CDR members were aware of the order dated 21st November 2012 and its true import.

20. In response to another query whether TTL had informed ANZ of its complying with CDR on 31st December 2012 and further whether it informed ANZ that as a result of CDR it would be unable to make any payment, Lt. Col. Bedi stated that several meetings have been held by ANZ when it was asked to participate in the CDR, but it failed to do so. The above submission was denied, on instructions, by Mr. Neeraj Kishan Kaul, learned Senior counsel for ANZ. He submitted that in any event, irrespective of whether ANZ was informed by TTL, which it was not, TTL ought to have accepted the order dated 21st November 2012, which recorded TTL's undertaking to make payment in terms of the settlement recorded in that order.

21. By way of an application dated 22nd April 2013, supported by an affidavit dated 23rd April 2013 of Lt. Col. Bedi (tendered in the Court by Mr. Rawal at the time of mentioning on 23rd April 2013) two documents were sought to be placed on record. The first is a letter dated 2ndJanuary 2013 addressed by ICICI Bank to the lenders of TTL, including ANZ, inviting them to a meeting on the CDR Scheme on 8th January 2013 at New Delhi. The second is a letter dated 10th January 2013 addressed by ICICI Bank to the lenders of TTL, including ANZ, enclosing the minutes of the meeting held on 8th January 2013. It is stated in the application that despite the said notice ANZ did not attend the meeting of the lenders. It is further stated that "as per understanding and bonafide belief further amount could not be released" to ANZ in terms of the order dated 21st November 2012. In CCP. (Co.) No. 3 of 2013 and Co. Pet. No. 395 of 2012 Page 14 of 20 the application and in the affidavit dated 23rd April 2013 of Lt. Col. Bedi in support thereof it is stated that the MD of TTL tenders "unconditional apology and throw(s) himself at the mercy of the Court."

22. The Court is not a little surprised that despite the unambiguous language of the order dated 21st November 2012, TTL did not seek directions from this Court when it became plain to it that it would be unable to adhere to the undertaking given to the Court in the event that the CDR Scheme was approved. On the contrary, it is pointed by ANZ that part-payments were made of the January 2013 instalment by TTL in February 2013. Also, Lt. Col. Bedi was unable to produce any document whereby any of the other secured lenders of TTL had expressly prohibited TTL from making the payment to ANZ.

23. The reasons stated in the affidavits filed by Lt. Col. Bedi by way of explanation as to why TTL was unable to adhere to the undertaking given by it to the Court, as recorded in the order dated 21st November 2012, are neither satisfactory nor convincing. The said order was affirmed by the DB on 28th January 2013. As already noted, despite the DB giving TTL liberty to apply to the Court for modification of the order dated 21st November 2012, including the condition regarding appointment of the PL, TTL filed no such application. It is only in the affidavit tendered in Court that TTL has made a prayer for modification of the order but without indicating what modification is being sought. It is difficult to believe that when the Court passed the order dated 17th December 2012, the CDR Scheme was not already in contemplation and yet, neither ANZ nor the Court was informed of it at that stage. Independent of any notice that ICICI may have sent ANZ about the meeting of secured lenders, it is inexcusable that having filed CCP. (Co.) No. 3 of 2013 and Co. Pet. No. 395 of 2012 Page 15 of 20 an affidavit undertaking to make payments in terms of the agreement recorded in the order dated 21st November 2012, TTL made no effort to inform the Court of its inability to honour that commitment.

24. Despite sufficient opportunities and time granted to TTL, it has been unable to satisfactorily explain the disobedience of the order dated 21st November 2012. If, indeed, TTL was not in a position to adhere to its commitment, as recorded in the order dated 21st November 2012, it ought to have informed the Court, making a full disclosure of the application made by it for the CDR Scheme and sought modification in terms of the leave granted by the DB. It is not even clear whether the DB was made aware of the CDR mechanism when the appeal was heard by it.

25. An officer of TTL dealing with finance was present in the Court. He explained that the current bank balance of TTL is only Rs. 10 lakhs and that the daily income to the tune of around Rs. 60 lakhs is being utilised to pay statutory and other dues. It is plain that given the fund position, TTL would be in no position to repay its debt owing to ANZ.

26. Even according to CDR, TTL is expected to restructure the debt owing to ANZ. Till date, TTL has not even proposed any such restructuring. Mr. Rawal states that some time may be given for that purpose. He has also tendered a synopsis of submissions in which reliance is placed on the decisions in Madhusudan Gordhandas and Co. v. Madhu Woollen Industries Pvt. Ltd. 1972 (42) Company Cases 125, New Swadeshi Mills of Ahmedabad Ltd. v. Dye-Chem Corporation 1986 (59) Company Cases 183 (Guj),In Re: Rishi Enterprises 1992 (73) Company Cases 271 (Guj). Mr. Kaul on the other hand presses for the appointment of the PL as that was an CCP. (Co.) No. 3 of 2013 and Co. Pet. No. 395 of 2012 Page 16 of 20 eventuality already stipulated in the order dated 21st November 2012.

27. Significantly, the CDR does not envisage creating any pari passu charge in favour of ANZ for the amount owed by TTL to ANZ. Lt. Col. Bedi states that there is no such restriction on TTL. However, the Court would not like to go by that statement since there is nothing in the CDR Scheme to suggest that creation of a pari passu charge in favour of an unsecured lender is permissible.

28. From the affidavits tendered in Court it is clear to the Court that as of now, TTL is not in a position to repay the outstanding amounts which it owes ANZ. A case for passing orders under Section 433(e) and (f) read with Sections 434 and 439 of the Act is made out. While it is possible that the CDR Scheme grants a moratorium to TTL on repayments of loans of the secured lenders, the payment of the dues owing to TTL is entirely governed by the order dated 21st November 2012 (as corrected by the order dated 17th December 2012) which has not been varied till date and, having attained finality, is binding on TTL. The CDR Scheme approved by the lenders does not deal with this aspect at all except requiring TTL to restructure the liability. TTL has not taken the first step in that direction. Only in response to the notice issued to it in the contempt petition, and after two adjournments it has come up with a vague prayer for modification of the order dated 21st November 2012. Again, TTL has not been able to explain how it proposes to clear the outstanding dues of ANZ and within what time frame.

29. The order dated 21st November 2012 is unambiguous about the consequences of any default committed by TTL in making payments to ANZ in terms of the agreement recorded in that order. The relevant CCP. (Co.) No. 3 of 2013 and Co. Pet. No. 395 of 2012 Page 17 of 20 portion of the order reads thus:

"An affidavit to the said effect of the Director of the Company shall be filed within one week from today detailing the schedule of these payments; in case of even one single default the petitioner shall be at liberty to take appropriate action under the contempt law; in such an eventuality, the provisional liquidator shall also stand appointed."

The affidavit dated 5th December 2012 filed by Lt. Col. Bedi on behalf of TTL, in terms of the above order, reaffirmed the agreement between the parties and was in the nature of an undertaking to stand by the agreement. The consequence of the failure to do so was spelt out in the order dated 21st November 2012 itself. One was the appointment of a PL and the other the initiation of contempt proceedings against TTL.

30. The fact that there has been disobedience by TTL of the above order is plain. The conduct of TTL in not making any move to have the order varied, despite the order of the DB, despite TTL applying for the CDR Scheme and despite TTL knowing that it was going to be unable to adhere to the payment schedules stated in the affidavit dated 5th December 2012, leads the Court to conclude that the disobedience of the order dated 21st November 2012 by TTL is wilful and not bonafide. The background to the passing of the order dated 21st November 2012 has also to be kept in view. The apology now offered by Lt. Col. Bedi is unconvincing and cannot be accepted. TTL does appear to have taken it for granted that the CDR Scheme somehow absolved TTL of the responsibility of having to honour its commitments to the Court. The binding nature and the solemnity of the undertaking given by parties to the Court has to be enforced if there has to be respect for the rule of law.

31. In light of the above discussion, the following conclusions and

CCP. (Co.) No. 3 of 2013 and Co. Pet. No. 395 of 2012 Page 18 of 20 directions are issued:

(i) CA No. 455 of 2013 is allowed and Co. Pet. No. 395 of 2012 is revived.

(ii) Co. Pet. No. 395 of 2012 is admitted. A copy of the petition be served on the OL attached to this Court within five days.

(iii) The OL is appointed as the PL of TTL. The OL is directed to take over all the assets, books of accounts and records of TTL forthwith. The OL shall also prepare a complete inventory of all the assets of TTL before sealing the premises in which they are kept. He may also seek the assistance of a valuer to value the assets. He is permitted to take the assistance of the local police authorities, if required.

(iv) Publication of the citation of the petition be effected in the Official Gazette, 'The Statesman' (English) and 'Veer Arjun' (Hindi) in terms of Rule 24 of the Companies (Court) Rules, 1959 ('Rules'). The cost of publication shall be borne by ANZ.

(v) The Directors of TTL are directed to strictly comply with the requirements of Section 454 of the Act and Rule 130 of the Rules and furnish to the OL a statement of affairs in the prescribed form verified by an affidavit within a period of 21 days from when this order becomes operational. They will also file affidavits in this Court, with advance copies to the OL, within four weeks setting out the details of all the assets, both movable and immovable, of TTL and enclose therewith the balance sheets, profit and loss accounts and copies of the statements of all the bank accounts for the last three years.

CCP. (Co.) No. 3 of 2013 and Co. Pet. No. 395 of 2012 Page 19 of 20 (vi) The order and directions at (ii) to (v) above will not be given effect to for a period of nine weeks from today to enable TTL to make payment of the outstanding amount to ANZ by that time. It will also be open to both ANZ and TTL to approach the Court for further directions in that regard.

(vii) In the event that no payment is made and/or neither party applies to the Court for any directions, the above order appointing the PL will become operational on the expiry of nine weeks from today. In that event, ANZ will forthwith inform the OL who will thereafter proceed to take steps in terms of this order without delay. In such event the OL will file a status report by the next date.

(viii) TTL represented by Lt. Col. Bedi is found to have wilfully disobeyed the order dated 21st November 2012, as modified by the order dated 17th December 2012. TTL through Lt. Col. Bedi will now show cause on the next date as to why TTL should not be punished for contempt of Court. Lt. Col. Bedi, as MD of TTL, is permitted to file an affidavit on this aspect before the next date. He shall also be personally present in the Court on the next date.

32. List on 10th July 2013.

S. MURALIDHAR, J.

APRIL 25, 2013

tp

CCP. (Co.) No. 3 of 2013 and Co. Pet. No. 395 of 2012 Page 20 of 20