Hindustan Cleanenergy Ltd. v. MAIF Investments India 2 PTE Ltd & Ors.

6. Having heard learned Senior Counsel at length, I am of the view that the petitioners have been able to make out a prima facie case worthy of consideration and that limited ad interim protection deserves to be granted, so that the present proceedings are not frustrated, even while setting down the petition itself for hearing expeditiously.

7. Accordingly, issue notice, returnable on 28th September, 2021, at 2.15 p.m. The matter shall be taken up for final hearing on the said date. Counter-affidavit be filed within 4 weeks, with advance copy to learned Counsel for the petitioners who may file rejoinder, if any, at least 48 hours in advance of the next date of hearing.

8. It is made clear that, subject to the respondents adhering to the time fixed for filing counter-affidavit, default, on the part of the petitioner, in filing rejoinder within the time fixed therefor would result in vacation of the ad interim order passed today. No further interlocutory applications, by the parties, would be listed by the Registry in this matter, without prior leave of the Court.

9. Learned Counsel for the parties are also directed to place, on record, notes of their submissions, not exceeding 10 pages for each party. Before filing, the submissions would be exchanged with all other learned Counsel as well as Senior Counsel, at their respective email ids. The submissions would be in clear and readable Times New Roman font, not less than Font Size 13. The Court is constrained to so order as it has found, on repeated occasions, that, though parties restrict submissions to the stipulated number of pages, they are crammed and often very difficult to study. This tends to be counterproductive.

10. Parties are also directed to file compilations of the decisions on which they seek to rely, duly indexed, after exchanging copies with all other Counsel and Senior Counsel, The judgements should not be highlighted or otherwise marked.

11. Brief reasons, for the present order, follow.

12. There are 11 respondents. Respondent Nos. 3 to 11 are Special Purpose Vehicles (SPVs) capitalised and funded by the petitioner for executing various solar power projects. The petitioner subscribed to Optional Cumulative Convertible Debentures, (referred to hereinafter as “OCCDs”), as issued by some of the SPVs, as one of the means towards funding of the SPVs.

13. Respondents Nos. 1 and 2 are Investment Management Firms incorporated in Singapore. They have no official presence in India, though they are registered as a Foreign Portfolio Investor and as a Foreign Venture Capital Investor with the Securities and Exchange Board of India (SEBI) under the SEBI (Foreign Portfolio Investor) Regulations, 2014 and the SEBI (Foreign Venture Capital Investors) Regulations, 2020, respectively.

14. On 26th January, 2017, a Framework Agreement was executed among the petitioner and other sellers (collectively referred to, in the Framework Agreement as the “sellers”), Respondent Nos. 1 and 2 (referred to, in the Framework Agreement, as “Purchaser I” and “Purchaser II” respectively) and Respondent Nos. 3 to 11 (referred to, in the Framework Agreement, as “the SPVs”). The Framework Agreement envisaged the acquisition, by Respondent Nos. 1 and 2 of the entire interest of the petitioner in the SPVs, over a period of time. Additionally, the Framework Agreement co-opted M/s Hindustan Power Projects Pvt. Ltd. (HPPL), an affiliate of the petitioner.

15. The controversy in the present case essentially revolves around the various sub-clauses of Clause 8 of the Framework Agreement, which is titled “Management of the Identified Litigations”. There were, at the time of execution of the Framework Agreement, various litigations in which the parties to the Framework Agreement were embroiled. Some of these were defined, in the Framework Agreement, as “Identified Litigations”. The definition of “Identified Litigations”, in the Framework Agreement, read thus: “ “Identified Litigations” collectively means the SESI Litigations, the Kindle Litigation and the Land Litigations;”

16. Of the three kinds of litigations which constituted the “Identified Litigations”, the controversy in the present case revolves around the “SESI Litigations” and the “Kindle Litigation”. The expressions “SESI Litigations” and “Kindle Litigation” were defined, in the Framework Agreement, thus: “ “SESI Litigations” means litigation regarding tariff change for the OCCD SPVs on account of change in operating assumption including but not limited to (i) Civil Appeal NO. 5218 of 2013 in the matter of GUVNL v. Solar Energy Society of India & GERC pending before the Hon'ble Supreme Court of India, and (ii) Appeal No. 217 of 2014 in the matter of GUVNL v. GERC & Others pending before the Appellant[sic] Tribunal for Electricity, in relation to the redetermination of tariff under GERC 2012 Tariff Order;” “ “Kindle Litigation” means litigation regarding tariff change for Kindle on account of accelerated depreciation including but not limited to Petition No. 1596 of 2016 in the matter of Kindle Engineering and Construction Private Limited v. Torrent Power Limited pending before the Gujarat Electricity Regulatory Commission;” (emphasis in original)

17. Orders were passed on the Kindle Litigation, pending before the GERC at the time of execution of the Framework Agreement, on 20th October, 2018. Kindle appealed to the Appellate Tribunal for Electricity (APTEL), before which the litigation was pending on the date of filing of the present petition, and continues to remain pending as on date. 17.[1] Of the two litigations, to which the definition of “SESI Litigations” in the framework agreement refers, Civil Appeal 5218/2013, as per the pleadings, is pending before the Supreme Court and, in so far as Appeal No. 217/2014, which was pending before the APTEL, at the time of execution of the framework agreement is concerned, the order, dated 11th April, 2018, of the APTEL, passed in the said proceedings has, since, been challenged by the Gujarat Urja Vikas Nigam Limited (GUVNL), before the Supreme Court by way of Civil Appeal 5868/2018, which is currently pending. Arguments were also advanced, before me, on the premise that the only pending Identified Litigations were Civil Appeal No. 5218/2013 before the Supreme Court and the Kindle litigation pending before the APTEL.

18. I now advert to the sub-clauses of Clause 8 of the framework agreement, around which the controversy essentially revolves. As this is merely an ad interim order, I refrain from reproducing the said subclauses in extenso. 18.[1] Clause 8.[1] required the petitioner to manage and control the Identified Litigations, including appointment of Counsel and filing of pleadings at its own cost and expense. 18.[2] Clause 8.2(a), set out the scope of authority of the petitioner, while exercising the right to represent the SPV(s) in the Identified Litigations. Clause 8.2(b) clarified that no such authorisations or documents, which gave effect to the right of the petitioner to represent the SPV(s) in the Identified Litigations, would be revoked until

(i) the expiry of three years from the First Completion Date

(ii) the occurrence of one of the events envisaged by Clauses

8.2(k), 8.2(l), 8.[3] or 8.12, whichever was earlier. 18.[3] The FCDs, for, the relevant OCCD SPVs were 26th July, 2017 for Respondent No. 3, 9th August, 2017 for Respondent No. 4, 27th July, 2017 for Respondent No. 5, 16th August, 2017 for Respondent No. 6, 27th July, 2017 for Respondent No. 7, 31st August, 2017 for Respondent No. 8, 28th March, 2018 for Respondent No. 9, 28th March, 2018 for Respondent No. 10 and 28th March, 2018 for Respondent No. 11. 18.[4] Clause 8.[3] sets out three circumstances in which a “Judgment Satisfaction Event” (“JSE”, in short) would be deemed to have occurred, for each of the Identified Litigations. These are (a) procurement, by the petitioner, of a final and nonappealable Judgment in relation to such Identified Litigations, or (b) default, on the part of the opposite party in such Identified Litigation, to file an appeal against any Judgment within the prescribed limitation period, or

(c) Settlement of such Identified Litigation between the SPV and the opposite party, by the petitioner. In all such cases, Clause 8.[3] requires the petitioner to notify all respondents (i.e. Respondent Nos. 1 and 2 as well as the SPVs) of the occurrence of the JSE, in writing, within ten days of such occurrence. 18.[5] Clause 8.[4] defines “Payment Satisfaction Event” (“PSE”, in short). It envisages the PSE, as having occurred, for any Identified Litigation, where

(i) the JSE, in relation to such Identified Litigation, has occurred within three years of the FCD, and

(ii) the SPV(s) receive an amount based on the JSE in relation to such Identified Litigation, in accordance with Schedule 12 to the Framework Agreement, within four years of the FCD. The clause also requires the petitioner, in the event of occurrence of a PSE to notify the respondents, i.e. Respondent Nos. 1 and 2 as well as the SPV(s), of such occurrence, within five days thereof. 18.[6] Clause 8.[5] deals with the course of action to be followed in the event of notice having been issued, by the petitioner, of the occurrence of a JSE or a PSE. As, in the present case, the JSE and PSE have not occurred – which is why the parties have joined issue before this Court – this clause is not of any substantial relevance. 18.[7] Clause 8.[6] deals with a situation in which the JSE has not occurred, in relation to any Identified Litigation. It envisages one of two consequences, in the event of non-occurrence of the JSE. These are

(i) Sale, by the petitioner, to Respondent Nos. 1 and 2 of the “Identified Litigation Securities”, of the SPV(s) in relation to which the JSE has not occurred, for ₹ 1/-, or

(ii) redemption, by the relevant SPV(s), of the Identified

Litigation Securities, again for ₹ 1/-. Such sale or redemption of the Identified Litigation Securities is required to be effected within 15 business days of the expiry of three years from the FCD. The Identified Litigation Securities comprise of (i) 25,92,182 OCCDs issued by Respondent No. 6 to the Petitioner, (ii) 8,43,511 OCCDs issued by Respondent No. 4 to the (iii) 12,60,243 OCCDs issued by Respondent No. 4 to the (iv) 4,41,962 OCCDs issued by Respondent No. 8 to the (v) 17,56,074 OCCDs issued by Respondent No. 4 to the (vi) 28,324 equity shares in Respondent No. 3 (Kindle Engineering and Construction Pvt. Ltd., referred to, hereinafter, as “Kindle”), held by the Petitioner, corresponding to roughly 1.4% of the Petitioner’s shareholding in Kindle (the “Kindle Litigation Securities”, as defined in the Framework Agreement), (vii) 17,75,890 OCCDs issued by Respondent No. 10 to the (viii) 27,86,662 OCCDs issued by Respondent No. 9 to the Petitioner, and (ix) 7,11,100 OCCDs issued by Respondent No. 11 to the valued, totally, at approximately ₹ 304 crores. 18.[8] Clause 8.[8] envisages one of two further possible consequences, in the event of non-occurrence of a JSE in reference to any Identified Litigation(s), within three years of the FCD. These are the following: (a) The first consequence is that Respondent Nos. 1 and 2 would have the right to issue notice to the petitioner to withdraw from such Identified Litigation(s) in respect of which the JSE has not occurred, from all fora. Notice in that regard is required to be issued by the Respondent Nos. 1 and 2 to the petitioner, within 30 days of expiry of three years from the FCD. Any loss, consequent on such withdrawal, is to be borne by the petitioner. (b) In the alternative, the petitioner is required to withdraw such Identified Litigation(s), or withdraw from such Identified Litigation(s), in respect of which the JSE has not occurred, from all fora, on expiry of three years from the FCD. 18.[9] Clause 8.[7] deals with a situation in which the JSE has occurred, but the PSE has not occurred, within four years of the FCD, in relation to any Identified Litigation. The same consequences, as are envisaged by Clause 8.6, stand envisaged by Clause 8.7. In other words, in the event of non-occurrence of the JSE, within four years of the FCD, in relation to any Identified Litigation, either

(i) the petitioner shall sell the Identified Litigation Securities to the Respondents Nos. 1 and 2, or

(ii) the concerned SPV(s) shall redeem the Identified

Litigation Securities for ₹ 1/-. Such sale/ redemption is required to take place within 15 days of the expiry of four years from the FCD.

18.10 Clause 8.[9] deals with the consequence of withdrawal under Clause 8.8(a) or 8.8(b). In respect of all Identified Litigations which are withdrawn by the petitioner under Clauses 8.8(a) or 8.8(b), the respondents (i.e. Respondents 1 and 2 and the SPVs) are not permitted to re-initiate or file new litigations, to obtain the benefits sought in the withdrawn litigations, till the expiry of four years from the FCD.

18.11 Clause 8.[9] further envisages the consequence, which would follow if the respondents re-initiate, or file new litigations, to obtain the benefits sought in the withdrawn litigations, within four years of the FCD. In such an event, if the SPVs procure a final non-appealable judgment in their favour, and receive amounts consequent thereto, in relation to such Identified Litigation Respondent Nos. 1 and 2 are required to purchase the Identified Litigation Securities from the petitioner for an amount calculated in accordance with Schedule 12 to the Framework Agreement.

18.12 Clause 8.[9] further provides that, if the Identified Litigation Securities already stand purchased by Respondent Nos. 1 and 2 from the petitioner under Clause 8.[6] supra, then Respondent Nos. 1 and 2 would pay, to the petitioner, an amount calculated in accordance with Schedule 12 to the Framework Agreement after adjustment of expenses.

18.13 Clause 8.10 and 8.11 deal with voluntary withdrawal or abandonment of one or more of the Identified Litigations by the petitioner and are not, therefore, of relevance to the case at hand.

18.14 Clause 8.12 starts with a non-obstante clause and, therefore, would have precedence over anything to the contrary contained in the Framework Agreement. This Clause deals with the right of the Respondent Nos. 1 and 2 to purchase, and the SPVs to redeem, the Identified Litigation Securities at any time after the FCD, and has no link to the occurrence of any JSE or PSE. The Clause provides that, at any time after the FCD, Respondent Nos. 1 and 2 would have a right to acquire, from the petitioner, and the SPVs (other than Kindle) shall have a right to redeem, the Identified Litigation Securities in relation to any Identified Litigation for an amount calculated in accordance with Schedule 12, as if a final non-appealable order has resulted in such Identified Litigation in favour of the SPVs. Clause 8.13 details the procedure to be followed for exercise of the right conferred by Clause 8.12.

18.15 Clause 8.15, which was introduced by the second amendment dated 15th July, 2017 to the Framework Agreement obligated the petitioner to (i) on the expiry of four years from the FCD or (ii) in the event of exercise, by Respondent Nos. 1 and 2, or the SPVs, of their rights under Clause 8.12, in relation to any Identified Litigation, hand over all litigation papers, correspondence and documents, in relation to such Identified Litigation, to the concerned SPV. This requirement also followed on the occurrence of the events contemplated by Clause 8.2(k) and 8.2(l); however, those clauses are not of relevance to the present case.

19. Having thus set out, in précis, the relevant covenants of the Framework Agreement, I revert to the facts.

20. It is an admitted position that three years, from the concerned FCDs, expired in July/August, 2020 in respect of Respondents 3 to 8 and in March 2021 in respect of Respondents 9 to 11. The petitioners plead that, owing to the intervention of the COVID - 19 pandemic, the effect of which commenced from March, 2020 and continues to be felt till date, it was impossible to comply with the requirement of obtaining a final decision in the Identified Litigations within the period of three years stipulated, in that regard, in the Framework Agreement, especially as functioning of Courts, including the Supreme Court, was severely restricted, and judicial orders were also passed in that regard, even by the Supreme Court, inter alia extending limitation for all causes of action. This circumstance, which was completely unforeseeable at the time of execution of the Framework Agreement, in the petitioner’s submission, attracts Clause 15.[2] thereof, which reads as under: “If, for any reason whatsoever, any term contained in this Agreement cannot be performed or fulfilled, the Parties agree to meet and explore alternative solutions depending upon the new circumstances, but keeping in view the spirit and core objectives of this Agreement.”

21. In these circumstances, the petitioner addressed an e-mail dated 29th May, 2020 to the respondents, seeking nine months’ extension for management of the Identified Litigations. This e-mail, states the petition, evoked no response.

22. On 5th August, 2020, communications were addressed, to the petitioner, by the SPVs (except Kindle), on their behalf as well as on behalf of the Respondent Nos. 1 and 2, stating that, as three years had expired from the relevant FCDs in respect of the Identified Litigations, without a JSE having occurred, under Clause 8.[6]

(i) the SPVs had redeemed the concerned Identified

(ii) the sum of ₹ 1/- was, accordingly, remitted to the petitioner, and

(iii) all authorisations and powers of attorney issued in favour of the petitioner, in respect of the Identified Litigations, stood automatically revoked and terminated, thereby denuding the right of the petitioner to continue to represent the SPVs therein.

23. In respect of Kindle, as the Framework Agreement envisaged sale of the Kindle Litigation Securities by the petitioner on the expiry of three years from the FCD, the notice issued by Kindle to the petitioner, also on 5th August, 2020, proposed acquisition, by Respondent No. 2, of the Kindle Litigation Securities for ₹ 1/-, and remitting of the said amount of ₹ 1/- to the account of the petitioner. The letter also set out the details of the Demat account of Respondent No. 2, to which the petitioner was directed to transfer the Kindle Litigation Securities. As in the case of the letters addressed in respect by the other SPVs, the authority of the petitioner to continue to represent Kindle, in the Identified Litigation in which it was involved, was also revoked and withdrawn and the petitioner was directed to hand over all documents to Kindle within three days.

24. It is in these circumstances that the petitioner has approached this Court.

25. Mr. Rohatgi and Dr. Singhvi, learned Senior Counsel for the petitioner submit that the redemption/acquisition, by the respondents, of the Identified Litigation Securities for ₹ 1/- was ex facie illegal and violative of the terms of the Framework Agreement. They submit that, in the facts of the case, the situation may resolve itself into one of the following possibilities: 25.[1] First possibility: The three year period from the FCD is yet to expire, in view of the orders passed by various Courts to deal with the COVID-2019 pandemic. Reliance has been placed, in this context, on the notifications and judicial orders passed by the Supreme Court and the APTEL, restricting their functioning and directing listing only of select and extremely urgent matters. Reliance has also been placed on the orders passed by the Supreme Court and various High Courts, including this Court, extending the life of existing interim orders during the pendency of the COVID-2019 pandemic. In this context, the petitioners also rely on Clause 15.[2] of the Framework Agreement, stating that the COVID-2019 pandemic was a “new circumstance”, impossible to predict at the time of execution of the Framework Agreement, within the meaning of the said clause. Without “agreeing to meet and explore alternative solutions” as required by the said clause, the petitioner submit that the respondents were not justified in acquiring the Identified Litigation Securities for ₹ 1/-. It is emphasised that achievement of the JSE was necessarily dependent on normal functioning of Courts. 25.1.[1] Reliance has also been placed, in this context, on Section 37 of the Indian Contract Act, 18721 (“the Contract Act”). Following on this argument, learned Senior Counsel for the petitioner submit that the acquisition of the “Identified Litigation Securities” was relatable not to Clause 8.6, but to Clause 8.12 (treating the period of three years from the FCD as yet having to expire). Clause 8.12 entitled the petitioner to payment, against the redemption/transfer of the “Identified Litigation Securities”, to an amount as calculated in accordance with Schedule 12 to the Framework Agreement, following the procedure in Clause 8.13. The respondents were, therefore, submit “37. Obligation of parties to contract. – The parties to a contract must either perform, or offer to perform their respective promises, unless such performance is dispensed with or excused under the provisions of this Act, or of any other law.” the petitioner, not entitled to purchase, or redeem, the “Identified Litigation Securities” for ₹ 1/-. 25.[2] Second possibility: Without prejudice, learned Senior Counsel for the petitioner submit that, even if it were to be assumed that the acquisition of the “Identified Litigation Securities” was relatable, not to Clause 8.12, but to Clause 8.6, as the respondents are continuing to prosecute the Identified Litigations, without any withdrawal thereof, the petitioner would, nonetheless, be entitled to payment as per Schedule 12 to the Framework Agreement, less the cost of managing the “Identified Litigations”, albeit at a later point of time, on the “Identified Litigations” fructifying in decisions in favour of the SPVs.

26. As such, contends learned Senior Counsel for the petitioner, the right of the petitioner to be paid towards the value of the “Identified Litigation Securities”, against the acquisition thereof by the respondents, cannot be denied in any circumstance. The Framework Agreement, submits the petitioner, does not envisage a situation in which the “Identified Litigation Securities” may straightway be acquired by the respondents, at ₹ 1/-, in every case in which the JSE or PSE has not occurred within three or four years of the FCD, irrespective of whether the respondents continue to prosecute the Identified Litigations or not.

27. Learned Senior Counsel for the petitioner have also invoked Sections 73 and 74 of the Contract Act[2], to contend that the provision for acquiring of the “Identified Litigation Securities” for ₹ 1/- is in the nature of penal damages and is a clause in terrorem. Entitlement of any benefits under such a clause, they submit, is dependent on the respondents proving actual loss, for which purpose learned Senior Counsel cite Kailash Nath Associates v. DDA[3] and Fateh Chand v. Bal Kishan Dass[4]. “73. Compensation for loss or damage caused by breach of contract.—When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach. Compensation for failure to discharge obligation resembling those created by contract.— When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract. Explanation.—In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by the non-performance of the contract must be taken into account….” “74. Compensation for breach of contract where penalty stipulated for.— When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for. Explanation.—A stipulation for increased interest from the date of default may be a stipulation by way of penalty. Exception.—When any person enters into any bail-bond, recognizance or other instrument of the same nature, or, under the provisions of any law, or under the orders of the 2[Central Government] or of any State Government, gives any bond for the performance of any public duty or act in which the public are interested, he shall be liable, upon breach of the condition of any such instrument, to pay the whole sum mentioned therein. Explanation.—A person who enters into a contract with Government does not necessarily thereby undertake any public duty, or promise to do an act in which the public are interested….”

28. The petitioner submits that, as the case involves acquisition of assets worth ₹ 304 crores for ₹ 1/- (in the case of each SPV), and the respondents are Singapore based entities, which have no substantial presence in India, unless the respondents are restrained from dealing with the Identified Litigation Securities, which they have acquired, there is every likelihood of an arbitral award, even if ultimately passed in favour of the petitioner, being rendered a futility.

29. As such, contend the learned Senior Counsel for the petitioner, the petitioner has a clear prima facie case in its favour, justifying grant of interim protection under Section 9 of the 1996 Act.

30. Learned Senior Counsel for the respondents have, in response, not chosen to answer the contentions, on merits, advanced by learned Senior Counsel for the petitioner. They have submitted, rather, that these are matters to be examined by the Arbitral Tribunal. Learned Senior Counsel for the respondents have restricted their submissions to disabusing the notion of any such emergent necessity existing, as would justify grant of interim protection by the Court under Section 9 of the 1996 Act. In this context, the following facts are emphasized, both by way of oral submissions as well as by way of a written note, submitted by learned Senior Counsel:

(i) Respondent Nos. 1 & 2 are managed by M/s Macquarie

Infrastructure and Real Assets (“MIRA”), which is a part of the Macquarie Group and is one of the world’s leading financial institutions and assets management companies, headquartered and listed in Australia. The Macquarie Group, it is stated, has a market cap of around US $ 30 billion and approximately US $ 430 billion worth of assets worldwide. MIRA, further, has investments in India to the tune of US $ 2.[4] billion split across different entities. It is further stated that the financial statement of Respondent No. 2, as filed by the petitioner reveals that Respondent No. 2 has assets valued at US $ 81,571,000/- equal to ₹ 6,07,18,14,877/-.

(ii) Respondents Nos. 1 and 2 are companies incorporated in

Singapore and having their registered offices in Singapore. Their investment activities are managed by MIRA through its operations in Singapore. Their bank accounts are at Singapore. The seat of arbitration is Singapore and the arbitration is required to be carried out as per the Singapore International Arbitration Centre Rules (“SIAC Rules”). Any award, which would be passed in arbitration, would, therefore, be enforceable against the respondents in Singapore. Any perceived difficulty in securing enforcement of an arbitral award in India cannot, therefore, submit learned Senior Counsel for the respondents, be a ground to justify grant of interim protection under Section 9 of the 1996 Act. The petitioner is an international commercial entity, which can easily secure enforcement and execution of any arbitral award, even if passed in its favour, in Singapore.

(iii) Pleadings stand filed in Singapore in accordance with the

SIAC Rules. Arbitral proceedings between the parties also stand commenced before the SIAC on 6th July, 2021. Though only two out of the three members, who are to constitute the Arbitral Tribunal have, admittedly, been appointed till date, the third member, submit learned Senior Counsel for the respondents, is likely to be co-opted in the near future, thereby completing the quorum of the Arbitral Tribunal. There is, therefore, no such urgency as would justify interlocutory interdiction by this Court under Section 9 of the 1996 Act, and the petitioner ought to be directed to prosecute its claim for interim relief before the Arbitral Tribunal constituted under the aegis of the SIAC.

(iv) The apprehension of sale of the respondents’ assets is also unjustified as a ground to seek interim protection under Section 9. No process of sale of the assets has commenced. Even if any such process is put in motion, it is likely to take at least 3 to 4 months before it is completed, “by which time the arbitration would be well underway”. It is contended that “in any case, by the time process is commenced or reaches any stage of fruition, an Arbitral Tribunal would be in place, and would have the power to consider the grant of interim relief”.

(v) The prayer of the petitioner is, ultimately, one for money, as they dispute the right of the respondents to acquire the Identified Litigation Securities for ₹ 1/- (per SPV). According to the petitioner, it is entitled to be paid higher amounts against such acquisition. The dispute, therefore, narrows down to a monetary claim. In the case of a monetary claim, any direction for deposit would be justified only if the parameters of Order XXXVIII Rule 5 of the CPC are met. No averments, justifying invocation of Order XXXVIII Rule 5 of the CPC, are contained in the petition.

31. Having considered the submissions advanced by learned Senior Counsel for the petitioner and the respondents, I am of the opinion that there is, clearly, an arguable case in the petitioner’s favour. The petition, therefore, merits detailed hearing, and cannot be dismissed in limine. The applicability of Clause 8.12, vis-a-vis Clauses 8.[6] and 8.[9] of the Framework Agreement, merits serious consideration. If, as the petitioner submits, the right of redemption/acquisition, exercised by the respondents, is relatable to Clause 8.12, the petitioner would, prima facie, be entitled upfront to payment in accordance with Schedule 12 of the Framework Agreement. Even if Clauses 8.[6] and 8.[9] are attracted, these Clauses require the proceedings to be withdrawn and prohibit the respondents from continuing to prosecute the proceedings for a period of four years from the FCD, i.e. for the period of at least one year from the expiry of three years from the FCD. The respondents are, nonetheless, continuing to prosecute the proceedings, after withdrawing the authority of the petitioner in that regard. Clause 8.[9] envisages, in the event of the proceedings, thus continued, resulting in an order favourable to the SPVs, and receipt by the SPVs of payment consequent thereto, payment of a proportionate amount to the petitioner in accordance with Schedule 12 to the Framework Agreement.

32. The submission of learned Senior Counsel for the petitioner that the Framework Agreement does not contain any provision, which completely divests the petitioner’s right to any payment against the “Identified Litigation Securities”, also merits serious consideration.

33. Equally, the effect of the suspension of judicial work, or the severe restriction thereof, in the light of orders passed by the Supreme Court and the APTEL, on the period of three years envisaged by the Framework Agreement for occurrence of the JSE, and the issue of whether, in the light thereof, the said period could be said not to have expired as yet, would also require consideration.

34. These submissions, though advanced in detail by learned Senior Counsel for the petitioners, have not been traversed by learned Senior Counsel for the respondents. The written submissions of the respondents, too, do not answer these contentions.

35. At this stage, therefore, a prima facie case in favour of the petitioner, worthy of consideration, certainly exists, even by application of the principle of non-traverse.

36. The submissions of learned Senior Counsel for the respondents, as advanced at the Bar and as enumerated in para 30 do not, in my view, militate against grant of ad interim protection at this stage, pending disposal of the present petition.

37. The respondents’ reliance on the assets of the Macquarie Group cannot, prima facie, be of significant relevance at this point of time, as the contractual relationship of the petitioner is with Respondents 1 and 2 and the SPVs and not with the Macquarie Group. The extent to which the liabilities of the respondents – were an arbitral award to finally issue in the petitioner’s favour – would be met by the Macquarie Group, is, therefore, purely in the realm of hypothesis, at this stage.

38. On facts, the submission of learned Senior Counsel for the respondents that the Arbitral Tribunal is at the cusp of being constituted, with two members already in place and that, therefore, the petitioner should approach the Arbitral Tribunal for interim relief, also does not commend itself to serious acceptance, even for the sole reason that, at least till the date when orders were reserved in this petition, the Arbitral Tribunal was still not in place. Dr. Singhvi, learned Senior Counsel for the petitioner, in fact, submitted that the petitioner has received a communication from the SIAC, stating that the co-opting of the third member of the learned Arbitral Tribunal was likely to take time. In any event, the learned Arbitral Tribunal is not in place as on date and, therefore, the question of relegating the petitioner to its remedies before the Arbitral Tribunal cannot, and does not, arise.

39. Learned Senior Counsel for the respondents also sought to submit that the arbitral proceedings are in Singapore and any award passed in the said proceedings would be enforceable before the Court at Singapore. As such, it is sought to be contended that the petitioner cannot seek interim protection from this Court on the ground that enforcement of the ultimate arbitral award by this Court would be impeded if such protection is not granted. This submission completely fails to take into account the proviso to Section 2(2) of the 1996 Act[5], which was specifically enacted for the purpose of obviating such a submission. The proviso to Section 2(2) makes it clear that the interim protection under Section 9 is also available in the case of foreign seated arbitrations. This provision, seen in the light of the 246th Law Commission Report, on the basis of which the proviso was added to Section 2(2), indicates that the intent of the proviso to Section 2(2) is to ensure the availability of the remedy of interim protection under Section 9 of the 1996 Act, even in the case of foreign seated arbitrations. The fact that the arbitration is to take place at Singapore and, therefore, any award which may be passed therein may be enforceable before the Singapore Courts, cannot, therefore, be cited as a ground to divest the petitioner of its right to seek interim protection under Section 9 of the 1996 Act.

40. It is not disputed that the Respondent Nos. 1 and 2 are located in Singapore and have no Indian presence. In such a case, the Courts have repeatedly been subscribing to the view that interim protection under Section 9 of the 1996 Act is justified. Besides, in the present case, there is a specific averment, in the petition, that Respondents 1 and 2 are likely to dissipate their assets. Learned Senior Counsel for the respondents have not, in terms, denied this submission, with Mr “2(2) This Part shall apply where the place of arbitration is in India: Provided that subject to an agreement to the contrary, the provisions of sections 9, 27 and clause (b) of sub-section (1) and sub-section (3) of section 37 shall also apply to international commercial arbitration, even if the place of arbitration is outside India, and an arbitral award made or to be made in such place is enforceable and recognized under the provisions of Part II of this Act.” Salve submitting, in response, that any such dissipation is likely to take considerable time.

41. As the respondents have not answered the submissions of the petitioner on merits, and in view of the observations hereinabove, I am of the opinion that a clear arguable case exists. While I am not inclined, at the present ad interim stage, to direct any deposit by the respondents, the interests of justice would, in my view, justify a direction to the respondents to maintain status quo with respect to the Identified Litigation Securities, acquired by them under Clauses 8.[6] of the Framework Agreement, pending disposal of the present petition under Section 9 of the 1996 Act.

42. The respondents are restrained, therefore, from alienating, disposing or creating any third party interest in favour of the Identified Litigation Securities, acquired/redeemed by them, pending further orders of this Court. Respondent Nos. 1 and 2 are also restrained from transferring their interest in Respondent Nos. 3 to 11 pending further orders in the present proceedings.

43. The prayer for ad interim relief stands decided accordingly.

44. It is clarified that this order merely considers the aspect of ad interim protection pending disposal of the present application under Section 9 of the Act. All prima facie views expressed in this order are, therefore, only intended for the said purpose. The present order shall not, therefore, bind or influence the Court, in any manner, while deciding the issue of interim protection pending the arbitral proceedings, i.e. the issue with respect to which substantive prayers have been made in the Section 9 petition. All contentions of fact and law, as available to the parties, remain open.

C. HARI SHANKAR, J.