Cochin International Airport Ltd. v. Presiding Officer & Others

23.12.2009 itself, it has been mentioned that “HUDCO” can either have a claim to the “debt” or to the “shares”, not to both. He, therefore, contended that once the claim to the shares has been held to be outside the purview of “debt” as appearing in Section 2(g) of the said Act, the application filed on behalf of HUDCO before the DRT could be considered de hors the prayer in respect of shares. He further submitted that, therefore, the application before the DRT ought not to have been thrown out log, stock and barrel as being not maintainable.

6. Mr Andhyarujina, the learned senior counsel appearing on behalf of CIAL, submitted that the arguments raised by Mr Chandhiok were clearly untenable. He submitted that prayer (b) of O.A. No.10/2006 filed by HUDCO before the DRT was not independent of prayer (a). He submitted that while prayer (a) sought delivery of 520 lakh shares of ` 10 each, prayer (b), in the alternative, sought a decree / certificate to the tune of ` 780 crores being the value of the said 520 lakh shares calculated @ 150 per share as on 31.01.2006 plus dividend or any other right from the date of issue alongwith interest at the rate of State Bank of India Prime Landing Rate with quarterly rests. Clearly, according to Mr Andhyarujina, prayer (b) was not independent of prayer (a) and was compensation in substitution of the alleged non-delivery of shares

7. Mr Andhyarujina further submitted that insofar as prayer (c) is concerned, the claim was for an amount of ` 2,28,64,566/- representing the balance amount plus interest. He submitted that the petitioner, as would be apparent from paragraph 8 of the judgment dated 23.12.2009, had already deposited with the DRT a sum of ` 73 crores which had represented the entire balance plus interest upto 27.06.2006 and, therefore, the entire liability of CIAL towards HUDCO stood totally discharged.

8. Mr Andhyarujina also took the plea that it was not fair on the part of HUDCO to have filed the present review application when these very pleas had been taken before the Supreme Court by HUDCO and, particularly, in grounds IX and XII of the special leave petition filed by it. Mr Andhyarujina also referred to the affidavit dated 28.05.2010 affirmed by Mr R. Venkiteswaran, who is the Executive Director (Finance) and Company Secretary of CIAL. In the said affidavit, it has been stated in paragraph 3, that in SLP No.3836/2010, HUDCO had

HUDCO has also not specifically denied the statement made by the said Mr Venkiteswaran that the contention had been specifically raised and argued by the counsel for HUDCO at the time of admission of the special leave petition. Thus, it was contended by Mr Andhyarujina that not only is the review petition without any merit, but that once such arguments had been raised before the Supreme Court and the special leave petition was dismissed, it was not fair on the part of HUDCO to have filed the present review petition. In any event, it was submitted that there is no

9. The first issue which arises is – whether a review is permissible after the dismissal of a special leave petition by the Supreme Court ? Insofar as this aspect is concerned, although such a practice may be distasteful leading to multiplicity of proceedings, it is not strictly impermissible in law. The decisions relied upon by Mr Chandhiok [V.M. Salgaocar and Bros (supra) and Kunhayammed & Ors (supra)] are clear on this aspect of the matter. The logic is that the exercise of jurisdiction conferred on the Supreme Court by Article 136 of the Constitution of India consists of two steps – (1) granting special leave to appeal; and (2) hearing the appeal. While hearing the petition for special leave to appeal, as observed in Kunhayammed & Ors (supra), the Supreme Court is called upon to see whether leave is to be granted or not and, in doing so, the Supreme Court does not exercise its appellate jurisdiction, but it merely exercises its discretionary jurisdiction to grant or not to grant leave to appeal. A dismissal of the special leave petition is merely an expression of opinion by the Supreme Court that a case for invoking the appellate jurisdiction of the Supreme Court was not made

10. Thus, we agree with Mr Chandhiok that notwithstanding the dismissal of HUDCO‟s special leave petition on 15.02.2010 by the Supreme Court, it is permissible for this court to entertain the present review application and that there is no bar in doing so.

11. This takes us to the next aspect and that is – whether HUDCO has made out a case for review or not ? It is obvious that the judgment would be reviewed only if HUDCO is able to point out some mistake or error apparent on the face of record or if there exists any other sufficient reason for reviewing the same. For this purpose, it would be necessary to set down the factual backdrop. In O.A. No.10/2006 filed under Section 19 of the said Act, HUDCO, inter alia, claimed the following reliefs:- “a) To direct the defendant No.1 to deliver/issue share certificates of 520,00,000 shares of Rs. 10/- each (equivalent to 26% equity of the authorized capital of the defendant No.1 company) alongwith all other benefits accrued out of such shares since the said agreement for which the entire agreed consideration of Rs. 52 crores has been paid to the defendant No.1 company as on 31.12.2002 as per the Package Loan Agreement dated 07.03.2003; b) In alternative to pass a decree/certificate to the tune of Rs.780,00,00,000 (Rupees Seven Hundred and Eighty Crores Only) being the value of 520,00,000 shares (being 26% of the equity in defendant No.1) @ Rs.150/- as on 31.01.2006 plus dividend or any other right from the date of issue along with interest at the rate of SBI PLR with quarterly rest against the defendants;

12. CIAL had filed an application being I.A. No.458/2006 in the said O.A. No.10/2006 before the DRT, wherein it had taken the following pleas:- “(a) the DRT at Delhi lacked territorial jurisdiction; (b) no cause of action had accrued to the respondent inasmuch as the entire loan amount stood paid on account of exercise of the right of foreclosure; and

(c) the application under Section 19 of the said Act for delivery of shares was not maintainable inasmuch as the said relief did not amount to recovery of a debt as defined in Section 2(g) of the said Act.”

13. It was also contended on the part of CIAL that HUDCO only had the right of recovery of a sum of ` 175.07 crores as per the Package Loan Agreement of 07.03.2003 between the parties and since CIAL had tendered the entire balance due on account of the loan transaction, the respondent had no subsisting right under the loan agreement. The application filed by CIAL was dismissed by the DRT by virtue of its

120 crores, in March 2003 itself, the package loan of ` 175.07 crores stood repaid upto the 17th installment, which, as per the repayment schedule was payable only by 31.03.2007. According to CIAL, as per clause 3 of the Package Loan Agreement, a sum of ` 52 crores had been earmarked by it towards the proposed equity participation by HUDCO in the share capital of CIAL. In this manner, according to CIAL, as on March 2003 itself, only an amount of ` 3.07 crores was outstanding towards the total dues of a sum of ` 175.07 crores and was chargeable to interest @ 11% in terms of the said agreement.

14. According to CIAL, because HUDCO failed to comply with the statutory requirement with regard to obtaining the requisite permission and clearance from the Government and the Governmental agencies, by a letter dated 16.09.2004 it informed HUDCO that the offer of the petitioner for conversion of part of loan amount to the extent of ` 52 crores into equity stood withdrawn. Consequently, CIAL tendered an amount of ` 63,49,00,508 to HUDCO in the following manner:- “1) Demand Draft No. 112472 dated 16.09.2004 for Rs 30,00,00,000/- drawn on the Union Bank of India, Service Branch, New Delhi; 2) Cheque No. 425111 dated 16.09.2004 for Rs 33,49,00,508/- drawn on Punjab National Bank.”

15. The said amount of Rs 63,49,00,508/- was towards settlement of the outstanding loan with interest. HUDCO, however, declined to accept the same and returned the said draft and cheque by their letter dated 23.09.2004. According to CIAL, on tendering the total amount of ` 63,49,00,508/- by CIAL on 16.09.2004, the entire liability of CIAL towards HUDCO stood discharged, although the petitioner had ample time upto June, 2001 to repay the entire outstanding loan in terms of the Package Loan Agreement and, thus, CIAL had time, in exercise of its right to foreclose the loan in terms of clause 12 of the Package Loan Agreement.

16. It is in this backdrop that HUDCO filed the petition under Section 19 of the said Act before the DRT claiming, inter alia, delivery / issuance of share certificates in respect of 520 lakh shares in CIAL. It may also be relevant to note that during the pendency of the application filed by CIAL being I.A. No.458/2006 before the DRT, CIAL had deposited an amount of ` 73,31,49,763/- through a demand draft bearing No.383217 dated 23.06.2006 before the DRT representing the entire balance amount (inclusive of the said amount of ` 52 crores) plus interest upto 27.06.2006.

17. In the first instance, HUDCO, in prayer (a) of O.A. No.10/2006 had sought the delivery / issuance of 520 lakh shares. Insofar as that prayer is concerned, the judgment dated 23.12.2009 makes it clear that it does not fall within the purview of “debt” as appearing in Section 2(g) of the said Act and, therefore, the HUDCO‟s application to that extent was clearly not maintainable. In the alternative, HUDCO in para (b) of the said O.A. No.10/2006 had sought a decree / certificate to the extent of ` 780 crores representing the value of the said 520 lakh shares plus dividends etc. It is obvious that this alternative prayer is nothing but the other side of the coin. This alternative prayer seeking ` 780 crores is merely the alleged money value of the 520 lakhs shares. When HUDCO cannot have a claim to the shares in proceedings under the said Act, it cannot also have a claim to the money value of the shares in the same proceedings. As pointed out in the judgment dated 23.12.2009, HUDCO has already been granted liberty to pursue its remedy with regard to shares / their money value for alleged breach of contract / obligation before the appropriate forum in accordance with law. Both the prayers (a) and (b) go together. It is obvious that prayer (b) has reference to the shares which are mentioned in prayer (a) and, therefore, prayer (b) cannot be divorced from prayer (a). Consequently, the plea taken by Mr Chandhiok on behalf of HUDCO that prayer (b) is

18. Insofar as prayer (c) is concerned, that, once again, represents “the balance amount”. This also is not an independent prayer and is dependent on the result of prayers (a) and (b). By its very nature, it represents „a balance amount‟ and, therefore, has a connection with the amounts claimed under prayers (a) and (b). Therefore, we do not agree with the submission of Mr Chandhiok that the prayers (b) and (c) are distinct and independent from prayer (a). When Mr Chandhiok referred to paragraphs 49 and 50 of the said judgment dated 23.12.2009, in order to advance his point that even this court recognized that HUDCO could either have a claim to the „debt‟ or to the „shares‟ and not to both, what Mr Chandhiok was submitting was that since this court had taken the view that the claim to the shares was not maintainable before the DRT, at least the claim to the debt would have been maintainable and, therefore, the entire O.A. No.10/2006 ought not to have been thrown out and ought to have been continued insofar as prayers (b) and (c) were concerned, because they were in money terms. This argument may, at first blush, appear to be very attractive, but on deeper consideration, it has a flaw

19. There is also another reason as to why review of the impugned judgment dated 23.12.2009 is not called for in the present case. The main point urged before us at the time of the arguments of the writ petition was, as noted in paragraph 1 of the judgment dated 23.12.2009 itself, as to whether “debt” as defined in Section 2(g) of the said Act would include a claim to share certificates. Even in its written arguments filed before us, the plea with regard to prayers (b) and (c) had not been stressed upon. Once a decision has gone against HUDCO on the main plea of delivery of shares not being covered within the expression “debt” as appearing in Section 2(g) of the said Act, it appears to us that HUDCO is making a last ditch effort by way of this review application to save its O.A. No.10/2006, which has been held by us to be not maintainable. Unfortunately for HUDCO, no mistake or error apparent on the face of the record has been pointed out insofar as the judgment dated 23.12.2009 is concerned. Nor have they been able to show any other sufficient reason for us to review the judgment dated 23.12.2009.

20. For all these reasons, the review application is dismissed with costs in favour of CIAL and against HUDCO.

BADAR DURREZ AHMED, J VEENA BIRBAL, J JULY 08, 2011 dutt