BVM Finance Private Limited v. Vistra ITCL (India) Ltd

11. The BVM Finance has filed this appeal challenging the order dated 7 August 2020. BVM Finance had also filed an appeal challenging the order dated 3 August 2020. However, the same was disposed of since leave was granted by the order dated 7 August 2020 and the same was challenged in the present appeal.

12. In this appeal, BVM Finance had filed an Interim Application No.2 of 2020 seeking to bring certain additional documents on record. The application was directed to be heard along with the appeal at the time of hearing. During the hearing, both the parties relied upon additional documents and by consent, by order dated 25 September 2020, the application for additional documents was allowed and the documents were considered.

13. We have heard Mr.DeVitre, Senior Advocate for the Appellant BVM Finance; Mr. Kamdar, Senior Advocate and Mr. Kotwal for Respondent Nos.[2] to 6 and for Respondent Nos. 7 to 14- the supporting Respondents and Mr. Madon, Senior Advocate and Mr. Sharan Jagtiani for Respondent No.1-Vistra.

14. Mr. Kotwal, learned counsel for Respondent Nos.[2] to 6 and Mr. Kamdar, learned Senior Advocate for Respondent Nos.[7] to 14 clarified that they would advance legal contentions to support BVM Finance and not argue their individual cases as they have filed applications before the learned Single Judge which are being heard.

15. The learned Single Judge disposed of two applications by a common order. One, the grant for interim injunction and second, the grant of leave. The Registry has pointed out that separate appeals ought to have been filed. The learned Senior Advocate for the BVM sought liberty to prosecute one appeal. The counsel for the Respondents left it to the discretion of the Court. The Appellants have paid additional court fees and therefore we have permitted the Appellants to continue the challenge to the orders in one appeal.

16. The challenge in this appeal can be broadly classified as follows. First part is a challenge to the grant of leave to file the suit and its maintainability in this court. Second is the challenge to the direction to deposit the amount in the Court and grant of interim injunction.

17. The challenge to the grant of leave is under three heads: first, that no material cause of action has arisen in the jurisdiction of this Court; second, the contract between the parties contained a clause which excludes the jurisdiction of this Court; and third, an arbitration clause exists in the agreement between the parties.

18. Clause-12 is contained in the Letters Patent of the High Court of Judicature at Bombay. Clause-12 ordains that High Court of Judicature at Bombay in its exercise of ordinary civil jurisdiction shall be empowered to receive and determine suits of every description and proceeds to innumerate the contingencies thereof. The ambit of Clause-12 of Letters Patent of Calcutta High Court had come up for consideration of the Supreme Court in the case of Indian Mineral and Chemicals Company and Ors. v. Deutsche Bank[1]. This clause is identical with the clause 12 of Letters Patent of this Court. The learned Single Judge of the Calcutta High Court had dismissed the application for revocation of grant of leave and held that part of cause of action had arisen within the jurisdiction of the High Court. The Division Bench accepted the submission of the respondents therein that though there were pleadings which show that the High Court had jurisdiction, the averments were not borne out by necessary documentary evidence. The Supreme Court disproved the view taken by the Division Bench observing that assertion in a plaint must be assumed to be true to determine whether the leave is liable to be revoked on the point of demurrer. The Supreme Court observed that the Court's jurisdiction must be determined ex facie the plaint and detailed defense regarding jurisdiction is a matter that will have to be decided on evidence and cannot be decided on an application for leave. The Supreme Court observed that generally the appropriate way to treat the jurisdiction 1(2004) 12 SCC 376 of the Court is to take plea in the written submission except in the clearest cases that should be the course. The arguing counsel agreed that this is the guiding principle, that the case should be the clearest case. The dispute obviously is whether a clearest case exists.

19. In paragraph-76 of the plaint, Vistra pleaded as to how the suit is maintainable in this Court and how the cause of action exists. Paragraph-76 of the plaint reads thus:-

20. Clause-8.[3] of the Debenture Trust Deed provides that all amounts will be routed through this account in Mumbai. Demand notice issued by Vistra specifies the bank account of debenture holder in Mumbai. All notices for recall were issued from Mumbai.

21. According to BVM Finance, Vistra mislead the Court falsely claiming that the designated account under Clause-8.[3] was in Mumbai. It is contended that since the factual position is not correct. The designated account under Clause-8.[3] is at Ahmadabad. The learned Single Judge has gone by this misrepresentation made to it and the leave needs to be revoked. Even assuming that some part of the payment was to be made in Mumbai that would not constitute a material cause of action in Mumbai. The Defendant Nos.[1] to 4 reside/ carry on business outside Mumbai. All the securities being pledge of shares and mortgage of immovable properties are situated outside Mumbai. It is further contended that there is a difference between the account from which the payment is required to be made and the account into which payment is made. Though the designated account is defined “any other account as may be specified by the Debenture Trustee”. These accounts are source from which payment is to be made and routed through and not an account which is a destination account of payment.

22. This position is disputed by Vistra. It is contended that BVM Finance had to make all the payments in Mumbai and the demand notice also specified bank account of debenture holders in Mumbai. Clause 8.[3] specifies that all payments due and redemption account shall be routed through designated account or such account may be specified by the Debenture Trustee. Clause 59.[9] specifies that all payments of redemption amount, amount due by the issuer shall be by cheque drawn by the issuer on its bankers in Mumbai.

23. Main dispute raised by BVM Finance is to where the designated account would actually deemed to be located. In paragraph-76 of the plaint a reference is also made to demand notice of 15 November 2019. The demand notice was issued to Defendant Nos.[2] and 3 Amit Patel and Rahul Patel. The notice referred to the guarantee executed in favour of Vistra. Name of beneficiary was specified and it was directed that the amount should be paid in a bank account maintained at Mumbai. According to BVM Finance, this was not notice to it and therefore, it cannot be said that monies were directed to be deposited in Mumbai. However, it is not stated on oath by BVM Finance that they were never paid any amount in Mumbai. The assertion of Vistra that since the BVM Finance were making payments in Mumbai, it was unnecessary that they should be informed again, has gone untraversed. Vistra points out that because BVM Finance had failed in their obligation and the defaulted, the Defendant Nos.[2] and 3 were asked to make payment because of their personal guarantee and the account specified was in Mumbai. Therefore, it is not possible for us to hold that Vistra mislead the Court by stating that designated account was in Mumbai. Vistra not only relied upon Clause 8.[3] but also on other facets, such as notice to the guarantors and factum of payment in Mumbai.

24. At this stage, therefore, we will accept the contention Vistra that the foundation of cause of action is the assertion that the monies had to be paid and was being paid by BVM Finance in the jurisdiction of this court.

25. Next point would be whether payments by a debenture would be a material cause of action for determining jurisdiction of the Court. BVM Finance has relied upon the decision of the Supreme Court in the case of ABC Laminart (P) Ltd. v. A.P. Agencies[2]. In the case of ABC Laminart, the appellant was a manufacturer and supplier of yarn having registered office within the jurisdiction of Civil Court, Kaira, Gujarat. The appellant entered into a contract with the respondent therein who at Salem, Tamil Nadu. A dispute arose from the contract and the respondent filed the suit against the appellant at Salem. The trial Court held that it had no jurisdiction. The High Court reversed the finding and the matter was taken up by the Supreme Court in appeal. The issue before the Supreme Court was the jurisdiction of the Court in the matter of contract, situs of the contract and cause of action. The Supreme Court observed that there may be causes of various kinds, such as performance of the contract which can be a part of the cause of action. While illustrating what would constitute a cause of action, the Supreme Court observed that part of cause of action arises where monies are expressly and impliedly payable.

26. The supporting Respondents relied upon the decisions in the case of Crown Frozen Foods v. Silver Frozen Foods[3] and Voltas Ltd. v. State Bank of India[4]. Based on the decision in Crown, it was contended that merely because the accounts were maintained at Mumbai, it cannot be said that cause of action arose in Mumbai. The decision of Voltas Ltd was relied upon to contend that where a contract is performed is where material cause of action would have arisen. There are various contingencies and facets of the cause of action. The judgments cited which do not deal with the case of payment in the accounts of the Creditors as a material cause of action. 3(2002) SCC Online Bom. 541 4(2001) SCC Online Bom. 563

27. It is a common law principle that debtors seeks the creditor in a contract essentially for money. Payment of money is the most relevant aspect in such a contractual relationship. Where the money is paid would be a material cause of action. Once Vistra had specified that the money is to be paid in bank account in Mumbai and there is no denial that the money was actually being paid, the dispute raised by the BVM Finance interpreting the phrase “designated account” is unwarranted. No clause is shown to us which clearly and unequivocally states that all payments must be done in an account located outside the jurisdiction of this Court. Therefore, for Vistra, since the amount was received in Mumbai, the material part of cause of action had arisen in Mumbai.

28. The BVM Finance has contended that its objection to jurisdiction is not based only on the aspect of payment but it is to be read along with Exclusion Clause No.54 contained in the document executed by the parties, that is the Debenture Trust Deed. Clause 54 reads thus:- “54. Governing Law The Trust Deed shall be governed under the laws of India and shall be subject to the exclusive jurisdiction of the courts in Delhi. The provisions of this Clause are for the benefit of the Debenture Trustee/Debenture Holders only. As a result, the Debenture Trustee/Debenture Holders shall not be prevented from taking proceedings relating to a dispute in any other courts with jurisdiction. To the extent allowed by law, the Debenture Trustee/Debenture Holders may take concurrent proceedings in any number of jurisdictions. For the avoidance of doubt, it is hereby clarified that the issuer and/or the other Obligators can only take proceedings to the courts of Delhi.” The clause states that Deed will be governed by laws of India. It shall be subject to exclusive jurisdiction of Courts in Delhi. The parties have agreed that this clause are for benefit of Vistra and Aditya Birla Finance only. It is clarified that Vistra will not be prevented from taking the proceedings relating to a dispute in any other court with jurisdiction.

29. According to BVM Finance, the first sentence of Clause- 54 lays down an absolute proposition regarding exclusive jurisdiction at Delhi, rest being deviation cannot be read in isolation. It is stated that the word “court” referred to in Clause-54 will have to be understood, given the definition of the word “Court”. Phrase “Court” is defined in the Deed as under:- “Court” shall mean any court, tribunal, any judicial/quasi-judicial body or authority possessing the power to investigation and issue show cause notices or notices of like nature.” BVM Finance contends that the definition indicates that the Court referred to will be a court to be approached for supplementary purposes such as criminal prosecution, SERFAESI Act, etc. Vistra contends there is no necessity of any interpretative process as language of the clauses is clear. Clause-54 gives liberty to the Debenture Trustee to approach any court with jurisdiction. It is contended that under Clause-54 reference to the power to investigate and issue notices is to a authority.

30. The phrase under debate is in a contract between the businessmen. The definition of Court includes any court, Tribunal or quasi-judicial or judicial body. It also includes all authorities. Then there is a reference to power to investigation and issue show cause notices or notices of like nature. As regards Courts, Tribunals and Judicial/Quasi-Judicial bodies the reference to power to issue notices etc. is superfluous as such bodies already possess these powers. There are, however, different kinds of authorities. Some may possess the power of investigation and to issue notices under the enactments that establishes them. Others may not. The Phrase ‘possessing the power to investigation and issue show cause notices or notices of like nature’ therefore is for the Authorities and not to the Court. The attempt of BVM Finance to restrict the meaning of the word “court” to criminal actions, etc. is artificially perverting language of the clause otherwise plain. We agree with the interpretation placed by Vistra.

31. BVM Finance relied upon the decision of the Single Judge of Karnataka High Court in the case of The Bank of New York v. Cranes Software International Limited[5] was relied upon. It was contended that exclusive clause in this case is identical as Clause-54 in the Debenture Trust Deed. The learned Single Judge interpreting this clause restricted the option to approach the Court with jurisdiction to take criminal or quasi criminal proceedings against the respondents therein. Vistra placed on record the judgment of the Division Bench of Karnataka High Court by order dated 11 December 2015 in OSA No.22/2014 set aside the decision of the learned Single Judge in Bank of New York. The parties also relied upon the decision in the case of Punjab Chemicals Pvt.Ltd. and Corp. Protection Ltd. v. Repar Corporation[6]. We have looked at Clause-54 of the Debenture Trust Deed independently and, according to us, for the reasons which we have given above, there is no such embargo. It cannot be the interpretation that the Debenture Trustee's recourse to the other Courts with jurisdiction will be only in criminal and quasi criminal matters. The language of Clause-54 is plain and simple. Therefore, as regards the issue of territorial jurisdiction and exclusion clause, BVM Finance has failed to demonstrate any error in the conclusion of the learned Single Judge. Clause-54 of the Debenture Trust Deed gives liberty to the Vistra, the Debenture Trustee to approach any Court with 5 ILR 2014 Kar. 895 6 (2015t) SCC Online P & H 16714 jurisdiction. We have already held that for the purpose of granting leave under Clause 12, material cause of action has arisen in the jurisdiction of this Court.

32. Elaborate arguments were advanced regarding an arbitration clause appearing in some agreements which are on record. Based on this agreement clause, Section 8 of Arbitration and Conciliation Act, 1996 was invoked. For this aspect of the dispute, reference will have to be made to the various documents on record.

33. The documents are Credit Arrangement Letter, Information Memorandum, the Board resolutions of BVM Finance,Debenture Trustee Appointment Agreement, Debenture Trust Deed, Disbursement Memorandum. The documents regarding both transactions as of issuance of debentures are similar.

34. The Credit Arrangement Letters are signed by BVM Finance and Aditya Birla Finance. It refers to the proposal of Aditya Birla Finance for its subscription to nonconvertible debentures. The terms and conditions are annexed to the CAL. The Promoter Group is defined, issue size is specified, security is specified as shares, personal guarantees and security top-up are specified. Certain conditions precedent to the subscription have also been provided. These are receipts of relevant shareholders and Board approval, Information Memorandum. The Debenture Trustee was to be mutually agreed insurer and subscriber. Transaction documents mentioned were: Information Memorandum, Debenture Trustee Agreement, Debenture Trust Deed, Share Pledge Agreement and such other documents required to consummate the transaction. In this clause, the CAL is called the term sheet. In the column regarding governing law and jurisdiction the clause reads thus: The Issue documents would be governed by an construed in accordance with Indian law including Arbitration Act. The courts at Delhi/Gujrat shall have jurisdiction in respect of all matters related to the Financing Agreements. It is stated that the Issue documents will be governed by and construed in accordance with the Indian law including Arbitration Act. The Courts at Delhi/Gujarat are stated to have jurisdiction in respect of the matters related to the financing agreements.

35. The Information Memorandum is issued by BVM Finance regarding debentures. Detailed information regarding issue of debentures is listed. Securities and guarantees, conditions precedent to subscription, governing law and jurisdiction are referred to. The resolutions are passed by the members of Board of BVM Finance. These resolutions authorize the Company to enter into transactions regarding debentures. Vistra is not a signatory to these documents.

36. A Debenture Trustee Appointment Agreement dated 17 July 2007 is entered into between BVM Finance and Vistra. Clause-2 of the said agreement states that Vistra is appointed by BVM Finance as Debenture Trustee for the benefit of debenture holders. BVM Finance has reiterated with Vistra that it shall create security in favour of Vistra. Special provisions relating to pledge are mentioned. The contingency of value of pledged shares falling within the stipulated limit and liability of BVM Finance is stipulated. The Debenture Trustee Appointment Agreement specifies governing law in Clause-7.[1] as thus: 7.[1] Governing Law: The Agreement shall be governed under the laws of India and shall be subject to the exclusive jurisdiction of the courts in Delhi. The provisions of this Clause are for the benefit of the Debenture Trustee only (acting for and behalf of the Debenture Holders). As a result, the Debenture Trustee shall not be prevented from taking proceedings relating to a dispute in any other courts with jurisdiction. To the extent allowed by law, the Debenture Trustee may take concurrent proceedings in any number of jurisdictions. For the avoidance of doubt, it is hereby clarified that the Company can only take proceedings to the courts of Delhi. On the same date, personal guarantees were executed by Mr. Amit Patel and Mr. Rahul Patel as guarantors. The personal guarantee in Clause-12 specifies governing law as under:

12.

GOVERNING LAW AND JURISDICTION

(i) This Guarantee shall be governed by and construed in accordance with the laws of India.

(ii) The courts of Delhi shall have exclusive jurisdiction to settle any dispute arising out of or in connection with this Guarantee (including a dispute regarding the existence, validity of termination of this Guarantee) ("Dispute").

(iii) The Parties agree that the courts of Delhi are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary.

(iv) This Clause 12 is for the benefit of the Secured

Parties only. As a result, the Secured Parties shall not be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by Applicable law, the Secured Parties may take concurrent proceedings in any number of jurisdictions.

(v) For the avoidance of doubt, it is hereby clarified that the Issuer and/or the other Obligors can only take proceedings to the courts of Delhi. Share Pledge Agreement was executed on 17 February 2020 amongst BVM Finance, Vistra and the persons listed in Schedule-I. The Share Pledge Agreement contains clauses for governing law and jurisdiction which read as under:

23.

24.

JURISDICTION 24.[1] The Parties agree that the courts and tribunals in Delhi shall have exclusive jurisdiction to settle any disputes which may arise out of or in connection with this Agreement and that accordingly any suit, action or proceedings (together referred to as “Proceedings”) arising out of or in connection with this Agreement may be brought in such courts or the tribunals and the Pledgors and the Parties, jointly and severally irrevocably, submit to and accept, generally and unconditionally, the jurisdiction of those courts or tribunals to the extent permissible under Applicable Law in respect of the Pledged Shares and further irrevocably agree that a judgment in any Proceedings brought in the courts and tribunals at Delhi shall be conclusive and binding upon each such Party and may be enforced in the courts of any other jurisdiction (subject to the laws of such jurisdiction) by a suit upon such judgment, a certified copy of which shall be conclusive evidence of such judgment, or in any other manner provided by law. 24.[2] Nothing contained in this Clause shall, subject to Applicable Law, limit any right of the Secured Parties to take proceedings in any other court or tribunal of competent jurisdiction, nor shall the taking of proceedings in one or more jurisdiction preclude the taking or proceedings in any other jurisdiction whether concurrently or not and each Pledgor irrevocably waives any objection it may have now or in the future to the laying of the venue of any proceedings and any claim that any such proceedings have been brought in an inconvenient forum. 24.[3] Each Pledgor hereby consents generally in respect of any proceedings arising out of or in connection with any Debenture Document to the giving of any relief or the issue of any process in connection with such proceedings including, without limitation, the making, enforcement or execution against any property whatsoever (irrespective of its use or intended use) of any order of judgment which may be made or given in such proceedings. The power of attorney, pro-notes and promotes’ undertakings were also executed. Disbursement Memorandum was executed by BVM Finance on 27 February 2017. It refers to the Debenture Trust Deed, Share Pledge Agreement, Power of Attorney, Promoters’ Undertakings, personal guarantees etc.

37. Now to the main document that is the Debenture Trust Deed, this deed is executed between BVM Finance as the Issuer and Vistra as the Debenture Trustee. None else is party to this deed. In the recital, the purpose of raising funds and the offer level are referred. That Vistra and BVM Finance have entered into Debenture Trustee Agreement on the same date is referred. Clause- 1 deals with definition and interpretation. Applicable law is defined as Indian statute and law. Certain other terms such as business deed, charter document, clearances etc. are specified. Some relevant clauses are: “Debenture Documents” means all or any one of the following documents: (a) Trust Deed; (b) Debenture Trustee Agreement;

(c) Corporate resolutions of the Issuer;p

(d) Information Memorandum;

(e) Offer Letter; (f) Personal Guarantee; and (g) All other agreements, letters and writings that are executed/ may be executed by the Parties and designated as Debenture Documents by the Debenture Trustee. *** “Event of Default” means any event or circumstance specified as such in Clause 21. *** “Information Memorandum” means the information memorandum issued on or around the date of this Deed by the Issuer for the issue of the Debentures on a private placement basis. Clause-2 of the Trust Deed deals with appointment of debenture trustee. Clause-2.[1] states that Vistra is appointed as Debenture Trustee to act on behalf of the debenture holders and Vistra agreed to act in accordance with the terms and conditions set forth in the deed and the debenture documents. The terms and conditions of the Trust Deed are made binding on the Issuer and all the persons claiming by it. The Debenture Trustee is entitled to enforce obligations pursuant to the Trust Deed and other obligations under respective debenture documents. Clause-5 speaks of initial conditions precedent where the Debenture Trustee has acknowledged having received certain documents. Covenant to pay and redeem debentures are specified in Clause-8. In clause-9, the Issuer has undertaken to continue to observe the terms of the Information Memorandum, Offer Letter and Trust Deed. Securities and mortgage are specified in Clauses-13.[1] and 14.1. Clause-14.[1] refers to the mortgage in respect of immovable properties. Events of defaults are specified in Clause-21. Remedies are provided in Clause-22. Vistra as a Debenture Trustee is given right to carry on business. Its powers in relation to securities are elaborated. Vistra is given power to borrow and also to appoint a Receiver. Various other powers have been entrusted upon Vistra as Debenture Trustee. Clause-54 deals with governing laws. It reads thus:-

54.

GOVERNING LAW The Trust Deed shall be governed under the laws of India and shall be subject to the exclusive jurisdiction of the courts in Delhi. The provisions of this Clause are for the benefit of the Debenture Trustee/Debenture Holders only. As a result, the Debenture Trustee/Debenture Holders shall not be prevented from taking proceedings relating to a dispute in any other courts with jurisdiction. To the extent allowed by law, the Debenture Trustee/Debenture Holders may take concurrent proceedings in any number of jurisdictions. For the avoidance of doubt, it is hereby clarified that the issue and/or the other Obligors can only take proceedings to the courts of Delhi. Clause-59.[1] under the heading “Entire Agreement” specifies as under: 59.[1] Entire Agreement This Trust Deed constitutes the entire understanding amongst the Parties as to the subject matter hereof. Notwithstanding anything to the contrary contained in any prior arrangements, agreements, representations or undertakings between the Parties regarding the subject matter of this Trust Deed, this Trust Deed shall prevail. This Trust Deed shall inure for the benefit of the Debenture Holder’s respective successors, assigns and transferees. Clause-59.[7] deals with contingencies of the conflict and lays down as under: 59.[7] Conflict All the powers, remedies and other rights of the Debenture Trustee as set forth in this Trust Deed may be exercised by the Debenture Trustee in respect of any Security Document as though set forth in full therein. This Trust Deed is intended to be a supplement to, and not in limitation of, the documents, and the rights and remedies of the Debenture Trustee contained herein and therein are intended to be cumulative. However, in the event of actual and irreconcilable conflict between the provisions hereof and the provisions of any other agreement or document relating to the Secured Properties, the provisions of this Trust Deed shall prevail. Other terms have been defined with which does not concern this dispute.

38. The contention of BVM Finance is that all these documents i.e. CAL, Information Memorandum, Resolutions, Debenture Trustee Appointment Agreement, Disbursement Memorandum, Credit Agreement Letter along with various securities, documents have to be read together. BVM Finance relies on CAL and Information Memorandum to contend that these documents include arbitration and exclusive jurisdiction clauses. It submitted that CAL is the main document between BVM Finance and Aditya Birla Finance. BVM Finance contends that since Aditya Birla Finance is disclosed principal of Vistra and since Aditya Birla Finance is bound by CAL and Information Memorandum which refer to arbitration law, Vistra cannot contend otherwise. It is contended that even in paragraph-10 of the plaint, Vistra has acknowledged that key terms were contained in CAL. Thus, BVM Finance contends CAL is the main document which contains arbitration agreement and all these documents must be read collectively.

39. The supporting Respondents and BVM Finance have elaborated the concept of composite transaction relying upon the decisions of the Supreme Court in the cases of Chloro Controls India (P) Ltd. v. Seven Trent Water Purification Inc.7, Ameet Lalchand Shah v. Rishabh Enterprises[8]; Mahanagar Telephone Nigam Ltd. v. and the decision of the Division Bench of this Court in Midland Overseas Wind World India Ltd. v. Enercon GMBH and others10. The contentions are that: CAL is to be read along with the Information Memorandum and Debenture Trust Deed and it forms one composite transaction. It does not matter if a party is not a signatory of the document which refers to arbitration. If there is a composite transaction interconnected with other documents, and one of them has an arbitration clause then dispute arising out of

9 (2019) SCC Online SC 995 10 (2019) SCC Online Bom. 1064 composite transaction has to be referred for arbitration. What is material is the intention to arbitrate and the same is clarified from the documents, if read together. The Debenture Trustee Deed arose from CAL and the Debenture Trust Deed itself mentions that what debenture documents are. The Debenture Trust Deed is not a standalone document. Vistra's suit itself is filed on and behalf of Aditya Birla Finance who is bound by the arbitration agreement. It is inconceivable that a principal is bound by arbitration clause and its agent can file suit anywhere. The Supreme Court has emphasized that the Courts should give effect to arbitration clause and should not encourage escape routes. The Debenture Trust Deed itself contains various clauses such as Recital-F, Clauses-12(O), 2.1, 5, 6.3, 13.1, 18 which show that Vistra has to act upon the instructions of the debenture holders. There is no conflict or inconsistency between governing law clauses in the Debenture Trust Deed and in CAL on one hand and CAL and Information Memorandum on the other. Thus, the Debenture Trust Deed does not exclude application of arbitration law.

40. The response of Vistra is as follows: The Debenture Trust Deed is the final document and supersedes all earlier documents by virtue of Clause-59.1,the “Entire Agreement” clause. The concept of Entire Agreement clause is referred to in the decision of the Supreme Court in the case of Joshi Technologies International Inc. v. Union of India11.Also by learned Single Judge of this Court in the case of Neelkanth Mansions and Infrastructures Pvt.Ltd. v. Urban Infrastructure Ventures Capital Ltd.12. Concept of Entire Agreement clause is elaborated in observations in the case of Entrepreneur Pub Co. Ltd. v. East Crown Ltd.13 relied upon by the Delhi High Court in the case of Thyssen Krupp Materials AG v. Steel Authority of India14. The Debenture Trust Deed created a mortgage, in the light of the observations of the Supreme Court in the case of Booz Allen & Hamilton Inc. Vs SBI Home Finance Ltd.15, that arbitration cannot be resorted to in case of mortgage which operates in rem, the parties may not intended to include arbitration clause. None of the documents to which Vistra is signatory contain the arbitration clause and it has been consciously omitted. It is submitted that the intention of the parties to omit specific reference to arbitration is clear.

41. Thus, the core issue is whether the Debenture Trust Deed should be treated as a final document governing the rights of the parties.

42. The agreements executed between the parties can be placed in two categories. One, the documents executed between BVM Finance and its group with Aditya Birla Finance. Second, the

12 (2018) SCC Online 5970 13 (2000) 2 Lloyd’s Rep. 611 14 2017 SCC Online Del. 7997 documents to which Vistra is party. These are: Share Pledge Agreement, Guarantee documents, Debenture Trustee Appointment Agreement and Debenture Trust Deed. There is a reference to arbitration law in CAL and Information Memorandum executed between BVM Finance and Aditya Birla Finance. There is no reference to Arbitration Act in the agreements to which Vistra is a party. Reference is only to governing laws in India.

43. Vistra has placed heavy reliance on clause 59.[1] of the Debenture Trust Deed named: Entire Agreement.The Clause states that the Trust Deed constitutes the entire understanding amongst the Parties as to the subject matter thereof and notwithstanding anything to the contrary in any prior arrangements, agreements, representations or undertakings between the Parties regarding the subject matter of Trust Deed, Trust Deed shall prevail. Entire Agreement clause is a commonly used clause in commercial agreements where there are multiple agreements between the parties. This clause is used with different nomenclatures and different combinations of phrases. The object of the Entire Agreement clause is to ensure that all the terms and conditions are incorporated one document. The intention is to prevent confusion by refereeing to other instruments and correspondence.

44. The effect of Entire Agreement has come up for consideration of the before the Supreme Court in the case of Joshi Technologies, the Ministry of Petroleum had issued a notice inviting tenders. The appellant before the Supreme Court had entered into product sharing contracts. The Income Tax Department had allowed the special deductions for first three production years, but declined the same for fourth year and thereafter reopened the assessment for all years and issued notices. Out of various issues raised before the Supreme Court, one was the interpretation of a clause in the agreement under the heading “Entire Agreement”. After analysis, the Supreme Court held that intention behind such clauses is not to look into any other document or correspondence which takes place between the parties before signing the agreement.

45. The ambit of Entire Agreement clause is considered in the case of Entrepreneur Pub Co. Ltd. v. East Crown Ltd.16 (Chancery Division) which decision has been relied upon by the Delhi High Court in the case of Thyssen Krupp Materials AG v. Steel Authority of India17. The observations in the case of Interpreter Club are reproduced in the case of Thyssen Krupp Materials AG.The Court held that the purpose of an entire agreement clause constitutes a binding agreement between the parties that the full contractual terms are in the document 16(2000) 2 Lloyd’s Rep. 611 172017 SCC Online Del. 7997 containing the clause and not elsewhere. It observed that the Entire agreement clauses come in different forms. Once the formula used is sufficient and constitutes an agreement that the parties agree to bind themselves are in the Agreement and nowhere else. This concept is applied to the Indian context. The purpose of final agreement will be defeated if parties keep arguing referring to other documents.

46. There is a reason for making the Debenture Trust deed as a Final agreement The clauses of the Debenture Trust Deed show that Vistra as a Debenture Trustee is placed on a different pedestal. The Share Pledge Agreement also shows the separate status of Vistra. The Share Pledge Agreement and the Debenture Trust Deed both give various powers to Vistra as a Debenture Trustee to enforce all or any part of securities to exercise owing rights to all acts it may consider necessary. Vistra as a Debenture Trustee, besides right of enforcement, is given power to sell the pledged shares without notice and without prejudice to its other rights. Vistra as a Debenture Trustee is given power to sell in its discretion. It is agreed that the pledgor shall raise no objection regarding sale or action taken by Vistra as a Debenture Trustee. The pledgor, except in certain contingencies, would have no claim against Vistra regarding any loss arising from such sale. Unrestricted rights of enforcement are vested. Thus, Vistra as a Debenture Trustee has been given several overriding powers, therefore, the documents to which Vistra is a party contain a different covenant and clauses. Such provision regarding a debenture trustee inculcates a sense of security for the debenture holder.

47. BVM Finance contends that Vistra enjoys no separate status and it is merely an agent of Aditya Birla Finance, which is its disclosed Principal. There is no merit in this contention. The Debenture Trust Deed states that Vistra is appointed by BVM Finance. Therefore, the appointment of Vistra is not by Aditya Birla Finance but by BVM Finance. Though the plaint states that Vistra is suing on behalf of Aditya Birla Finance, it is doing so in terms of its obligation as a Debenture Trustee. A debenture trustee has a specific role in law to perform. Therefore, it cannot be said that Vistra has no independent rights other than Aditya Birla Finance and there is relationship of principle and agent between them in a classic sense.

48. BVM Finance contend, relying upon the FAQs issued by Securities and Exchange Board of India that a debenture trustees are agents of the debenture holders. We have gone through the FAQs placed on record. Question-11 is regarding role of the Debenture Trustee in creating and enforcing the security in a debenture issue. The answer would indicate that the debenture trustee is not an agent but holds the secured property on behalf of the issuer of the security and benefit to all debenture holders as a trustee. If default occurs, debenture trustee has the power to bring the secured property to sale. As rightly contended by Vistra if it was merely an agent then the power to bring the secured property to sale under the Transfer of Properties Act would be retained by Aditya Birla Finance, if it was the principal. Therefore, the FAQs relied upon by BVM Finance does not further its case but it is to the contrary.

49. BVM Finance has relied upon Regulation 15(1)(a) of SEBI (Debenture Trustees) Regulations, 1993 and Rule 18(3)(a) of Companies (Share Capital and Debentures) Rules, 2014. According to BVM Finance, these rules and regulations place an obligation on Vistra that there should be no inconsistency amongst terms of issue of debentures and to take steps with promptitude. Nothing turns on this argument as that the provisions require that a Debenture Trustee should ensure the terms of offer are consistent. Once we conclude that Debenture Trust Deed supersedes other documents there is no question of any inconsistency.

50. When BVM Finance, in one set of documents specifically referred to arbitration law and in other documents executed with Vistra did not refer to it and gave Vistra wide powers, a presumption arose that the parties omitted the reference to arbitration in those documents. Not only this presumption is not displaced but is substantiated by incorporation of Clause 59.[1] of the Debenture Trust Deed. The first part of Clause 59.[1] declares that the Debenture Trust Deed constitutes the entire understanding of the parties as to the subject matter and then it refers that notwithstanding anything contrary to the prior agreement, the Trust Deed shall prevail. The placement of Clause-59.[1] is important. It is placed at the end after narration of the history of past transactions. The debenture documents have been referred to only in the definition part of the earlier part as and by way of narration. If the Debenture Trust Deed was not a final document, the final understanding despite earlier agreements, then Clause-59.[1] was unnecessary. In interpreting commercial contracts executed by a prudent businessman, it is not necessary to resort to interpretive process, if the language of their agreement and their intentions are plain and clear. The language of Clause-59.[1] is clear. It constitutes the entire agreement between the parties. This agreement contains no reference to arbitration. There was no reason for the parties not to incorporate reference to arbitration law and then resort to a lengthy interpretative process to demonstrate how it stands incorporated in the Debenture Trust Deed. The documents are executed by experienced businessmen and they reflect their commercial understanding. Thus, the reference to arbitration clause was consciously omitted by the parties in the Debenture Trust deed and the document executed by Vistra.

51. BVM Finance argued that Vistra did not annex CAL to the plaint and by doing so it suppressed arbitration clause from the learned Single Judge. There is no merit in this contention as in paragraph-10 of the plaint CAL has been specifically referred. Further, since it is the case of Vistra that Debenture Trust Deed is the final document which did not contain arbitration clause and that Vistra was not a party to CAL, it was not necessary for Vistra to aver any further. It was the defence of BVM Finance based on CAL which BVM Finance argued before the learned Single Judge and before us.

52. BVM Finance argued that arbitration clause stood incorporated in the Debenture Trust Deed from CAL as there was nothing contrary in the Debenture Deed to exclude reference to arbitration and when the Trust deed referred to Indian law it included Arbitration Act as well. In the case of M.R.Engineering and Contractors Pvt.Ltd. v. Som Dutt Builders Ltd.18, the question arose before the Supreme Court regarding incorporation of arbitration clause from another document. The Supreme Court analyzed sections 2, 7 and 11 of the Arbitration Act and summarized the scope of section 7(5) and laid down guiding principles. But it is not necessary for us to decide this aspect as the main argument 18(2009) 7 SCC 696 of Vistra is that the Debenture Trust Deed is the final document and which omits the arbitration clause. Since we have held that the Debenture Trust Deed by virtue of Final Agreement clause has superseded all earlier documents and since it contains no arbitration clause and the suit is filed based on the Debenture Trust Deed, it is not necessary for us to decide whether the arbitration clause stands incorporated by virtue of other documents such as CAL. Once the conclusion is reached that it was not consciously provided for, there is no question of incorporation.

53. It is settled position of law that when the parties have agreed to get their disputes resolved through arbitration, then all efforts be made to encourage and facilitate resolution of dispute through arbitration. For that purpose the arbitration agreement must exist between the parties and the intention of the parties to arbitrate must be discernible. First what is to be seen is the subjective intention of the parties, if it is not clear then mutually shared common intention. The intention of the parties not to include arbitration clause in the Debenture Trust Deed is confirmed by incorporation of Clause-59.7. Clause-59.[7] deals with conflict and states that if conflict occurs, the Trust Deed shall prevail. The argument of BVM Finance and the supporting Respondents that there is no conflict between two sets of agreements as the Trust Deed does not specifically exclude arbitration clause, in our opinion, cannot be a touchstone to decide. Reference to arbitration clause was omitted. Therefore, it is not possible for us to refer the parties for arbitration or to conclude that the learned Single Judge ought to have referred the parties for arbitration.

54. Another aspect debated was whether it was necessary for BVM Finance (assuming arbitration agreement exists) to make an application under section 8 of the Arbitration Act to refer the parties for arbitration. Admittedly there is no application made by BVM Finance before the learned Single Judge under section 8 of the Arbitration Act to refer the parties for arbitration nor it is made before us. Section 8 of the Arbitration Act states that a judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration.

55. Vistra submits that even assuming that the arbitration clause exists in the Debenture Trust Deed that by itself will not take away the jurisdiction of the Court and an application under section 8 of the Arbitration Act to refer the parties to arbitration must be made. It is contended that wherever BVM Finance has referred to section 8 of the Arbitration Act, it is to contend that the Court has no jurisdiction. It is submitted that there may be cases where despite existence of arbitration clause the parties may not want to go for arbitration. Vistra relies upon the decision of the Supreme Court in the case of Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya19; Ameet Lalchand Shah v. Rishabh Enterprises20 and Emmar MGF Land Ltd. v. Aftab Singh21 to contend that despite amendment of 2018 to the Arbitration Act, section 8 of the Arbitration Act requires an application to make reference. It is contended that even otherwise, the present case is not a simple case unlike the cases where there is no dispute about arbitration clause, and here various complicated issues arise and assertions will have to be made on oath.

56. BVM Finance has relied upon the decision of the Delhi High Court in the case of Sharad P. Jagtiani v. Edelweiss Securities Ltd.22 and two judgments of learned Single Judge of this Court in Sesa Sterlite Ltd. v. BLR Logistiks (I) Ltd. (Civil Application No.952/2014) and Rohit Ishwar Chogani v. Vinod J. Mehta23. It is contended that these judgments lay down that no specific application is required. According to BVM Finance, it was incumbent upon the Court to read all the agreements together and refer the parties for arbitration irrespective of whether there is any specific application.

57. It is not necessary to finally conclude the legal question raised before whether it is mandatory to file an application under section 8 of the Arbitration Act or it is the duty of the Court the moment it comes across to arbitration clause to refer the parties for arbitration. We have held that the Debenture Trust Deed by virtue of final agreement clause has superseded all earlier documents and since it does not contain any arbitration clause and the suit is filed based on the Debenture Trust Deed. Even proceeding on the basis that an application is not necessary that does not mean it cannot be filed. There can be circumstances, where there are no disputes and filing an application under section 8 is a formality. There could be cases where the court may require a stand to be taken on oath by way of a written application. As of today, BVM Finance has not taken any stand on the merits on affidavit. The affidavit was filed before the leaned Single Judge refers to section 8 in respect of objection to jurisdiction. Thereafter one affidavit is filed in this appeal on which only refers to arbitration already filed. Even the arguments of BVM Finance before the learned Single Judge, as the impugned order will show, are only raising objections to the maintainability. BVM Finance could have argued before us that it will make a formal application before the learned Single Judge and get a decision thereupon. However, no such submission was made and, on the other hand, BVM Finance has proceeded ahead unilaterally to appoint an Arbitrator. However in view our finding based on the Entire Agreement clause, this aspect has lost significance.

58. In view of our finding that Debenture Trust Deed is the final agreement and parties have consciously omitted the reference to arbitration, the line of arguments of the BVM Finance and supporting Respondents based on composite transaction does not survive. Whatever may have been the agreements between BVM Finance and its group with Aditya Birla Finance, they cannot be read as one composite transaction leading to Debenture Trust Deed. Separate documents are executed with Vistra and the Debenture Trust Deed,based on which suit is filed, is the Entire Agreement. Once the parties do not intend that all the documents to considered as one composite transaction, contrary interpretation cannot be forced upon them. CAL, stated to be the mother document by BVM Finance, admittedly uses the phrase- Term Sheet in the document itself.

59. Therefore, to conclude, the conclusion of the learned Single Judge that reference to arbitration was not necessary and that there is no such agreement in the Debenture Trust Deed, is correct. The oral request made by Vistra and supported by the Supporting respondents during the arguments before us to refer the parties for arbitration is rejected.

60. Ancillary issues debated such as BVM Finance applying for speaking to minutes and Vistra circulating judgments in respect of arbitration clause before the learned single judge will not have any bearing on the final outcome.

61. Now we come to the second part of the appeal that is the challenge the grant of injunction.

62. Vistra had taken out an interim application wherein various interim prayers were sought such as appointment of independent auditor, court receiver and deposit of the entire outstanding amount of Rs.41,75,57,031/-. Further prayer was made for direction to the defendants not to create third party rights and injunction to that effect was also sought.

63. Serious grievance is made by BVM Finance that a very little time was given to put forth its case and drastic order of deposit of entire amount at the interim stage was passed. It is contended follows: No prima facie case existed in favour of Vistra to pass order of drastic nature. BVM Finance was given only 48 hours to state on oath the amount which, according to it, was payable. The time given was woefully short and merely because the affidavit was not filed, entire amount was directed to be deposited. No reasons were given in the impugned order as to why such order was required and restrain order was required. Vistra contends: the time given by the learned Single Judge was adequate as BVM Finance had to place only on record was how much amount, according to it, was payable. The accounts were available with BVM Finance. and no complicated calculations had to be made for this purpose and BVM Finance avoided to take a stand on oath.

64. The learned Single Judge in the order dated 3 August 2020, issued directions to BVM Finance to also disclose what is the amount according to them that is payable to plaintiff and the same shall be stated in an affidavit of the Managing Director or Whole time director of BVM finance and the affidavit to be filed and copy served by 12.00 noon on 5.8.2020. The matter was adjourned to 6.8.2020. The affidavit was filed by Mr. Amit K. Parekh. BVM Finance stated that it is filing this affidavit without prejudice to its contention that the order dated 3 August 2020 could not have been passed without granting leave to Vistra to institute a suit. As regards the amount stated to be payable, BVM Finance has stated as under:

2. I say that Defendant No.1 has requisitioned information from Defendant No.15 for reconciliation of sums purportedly due in relation to debentures subscribed by Defendant No.15, including ledger account supportings, by email dated 2 July 2020, i.e. prior to the filing of the suit. In this regard, I rely on the Compilation of Documents filed by Defendant No.1 (electronically) on 4 August 2020 (I am informed by the advocates for Defendant No.1 that physical filing was not capable of being achieved, owing to inclement weather in Mumbai, and as a corollary the registry of the Hon’ble Court was reportedly closed shortly after noon on 4 August 2020). Within the limited time-frame granted by the Hon’ble Court, I have been able to secure certain correspondence in relation to attempts at reconciliation engaged in with the Plaintiff and/or Defendant No.15, including by Sintex Industries Limited, from which it is apparent that full and sufficient information and particulars have not been forthcoming. I crave leave (without prejudice to the principle jurisdiction objection) to file up such further correspondence and/or documentation as may be available, if further opportunity were granted.

3. At 1932 hours on 4 August 2020, a drop-box link was delivered by the advocate for the Plaintiff to the Advocate for Defendant No.1 purporting to contain information concerning sale of pledged shareholding.

4. In view of the direction of this Hon’ble Court (on 3 August 2020) to file the present affidavit by 12 noon on 5 August 2020, there has not been sufficient time to review the 116 pages (122 electronic pages) supplied by the Plaintiff, under directions of this Hon’ble Court. I reserve liberty to file an additional affidavit after completion of review of the 116 pages supplied by the Plaintiff, subject to this Hon’ble Court deeming it necessary after hearing Defendant No.1’s objections to jurisdiction.

5. At this juncture, therefore, absent reconciliation, Defendant No.1 is unable to provide an amount payable, in manner directed by the Hon’ble Court’s order dated 3 August 2020; upon completion of reconciliation, the Defendant No.1 will quantify its claim against the Plaintiff. Thereafter when the mater came up before the learned Single Judge, the learned Single Judge disapproved the conduct of BVM Finance and issued a direction to deposit entire outstanding amount failing which the injunction was to operate.

65. Since grievance was made in appeal that adequate time was not given by the learned Single Judge, by order dated 3 September 2020, we kept it open to BVM Finance to file an affidavit. On 5 September 2020, an affidavit was filed by BVM Finance through Mr. Amit Parekh. The affidavit is of two paragraphs which read as under:

1. I am competent to execute this affidavit, by virtue of being familiar with the records of the Appellant, and am filing this affidavit in terms of the direction of 3 September 2020 by this Hon’ble Court, for the Appellant to file an affidavit in relation to the directions of 3 August 2020.

2. In the event this Hon’ble Court were to conclude that directions of 3 August 2020 were not coram non judice (liberty to pursue reserved to the Appellant vide order dated 14 August 2020 in Appeal no.__ of 2020 (LD-VC-Appeal No. 277 of 2020)), then without prejudice to the Appellant’s jurisdictional challenge in the present appeal, the Appellant asserts no sum is payable to Respondent No.1 by the Appellant. The Appellant’s notice of commencement of arbitration dated 25 August 2020, copy filed into LD-VC-IA 3/2020, sets forth a claim of Rs.141.74 crores. This is all the response of BVM Finance before us. Besides this, the case is urged at length orally before us.

66. It is not the case of BVM Finance nor it can be urged that learned Single Judge had no power to issue a direction to deposit the outstanding amount. In any other case, time of 48 hours may appear to be short but after having heard the parties at length and giving full opportunity to BVM finance we do not find that the direction issued by the learned Single Judge needs to be set aside in appeal only on that count.

67. The argument now made in appeal made before us is that nothing is payable by BVM Finance but Vistra owes Rs.141.74 crores to BVM Finance. BVM Finance argues that had the pledged shares been sold at the correct time, entire outstanding amount would have been wiped out. The learned counsel for the parties have addressed elaborate arguments on law as to whether the claim set off can be made of unliquidated damages. Vistra has relied upon the decision in the case of Union of India v. Raman Foundary24 to contend that unless the liquidated damages are ascertained by the Court, it cannot be asked to put forth as claim for set off. BVM Finance argued that the decision in the case of Raman Foundary has been overruled by the larger Bench of Supreme Court in H.M.Kamuddin Ansari v. Union of India25 to which Vistra has contended that though the decision in the case of Raman Foundary has been overruled on other grounds and the dicta relied upon by it continues to hold the field.

68. As far back in September 2019, Vistra had raised the claim that the pledged shares have to be sold. Had it been the case that Vistra owes Rs.141.74 crore to BVM Finance because of

25(1983) 4 SCC 412 incorrect sale of shares and undervalued sale, it would have been immediate response of BVM Finance. Steps would have been taken to recover such loss. No steps have been taken. A sketchy one line defence is put up that Vistra owes Rs.141.74 crore to BVM Finance. The deponent has not bothered to explain how. Theory put up lacks credence.

69. The BVM Finance is a financial company. It is not urged before us that that the BVM Finance is unaware of the legal procedure. Every financial company maintains digital data and it has not been argued by BVM Finance to the contrary. Aided by powerful computers and advanced financial accounting software, data and analytical reports are available in matter of minutes. BVM Finance was not taken by surprise. By a recall notice dated 6 September 2019, Vistra recalled the debentures and claimed Rs.41,75,57,031/-. Notice was issued on 12 July 2019 by Vistra expressing its intention to pledge the said shares. Under Regulation 29(2) of Securities Exchange Board of India (Substantial Classification of Shares and Takeover) Regulations, 2011, BVM Finance and other supporting Respondents addressed a discloser letter dated 12 October 2019 to stock exchange regarding invocation. It was stated that 2 lakh equity shares of SPTL credited in favour of Vistra be invoked. Details were provided in the communication. Therefore, it is not as if the alleged mis-match between the possible price and the sale price was something that BVM Finance had to calculate within 48 hours. The data was available with it. The communication dated 17 July 2018 between Sintex and Aditya Birla Finance shows that all the data was already available. It is not possible to believe that the account and details of transaction of such nature are not readily maintainable. Therefore the conclusion of the learned Single Judge that BVM finance has avoided to state particulars on oath is correct and the same conduct continues even in appeal.

70. Admittedly, debentures were issued, moneys were received by BVM Finance and Vistra issued notices in July 2019. Not only the balance mount was not paid but there is no case put up by BVM Finance on oath except two paragraphs affidavit. The balance sheet of BVM Finance for the financial year 2018-19 discloses that an aggregate sum of Rs.17661404/- was outstanding. BVM finance has not proposed any schedule of repayment. No stand is taken before us on oath to show how Rs.141.74 crore are due to BVM Finance. Clause-3 of the Debenture Trustee Appointment Agreement and in Clause-3.[2] of the Share Pledge Agreement, BVM Finance and others had specifically agreed to pledge their shares to secured debentures and the value of the shares was twice the value of the debentures. In Clause-4.4(b) of the Debenture Trustee Appointment Agreement and Clause-3.2(iv) of the Share Pledge Agreement, BVM Finance and others agreed that they would provide top up to maintain security cover. Vistra issued notice dated 25 August 2020, with details as to how security cover had fallen. There was no response or contradiction that this was not correct.

71. Further, the Share Pledge Agreement stipulated that the Debenture Trustee had all the powers to enforce the securities if default occurred and absolute right was given to it in that regard. Share Pledge Agreement specified that the pledgee could not question the power exercised by the Debenture Trustee. Whenever there was a default and the value of total pledged shares fell before the minimum cover and the top up pledge was not done, the Debenture Trustee had an irrevocable right to sell. Pledgee could not question the judgment of Debenture Trustee. The value of the shares fell below the stipulated limit. Vistra redeemed the shares to cover its loss.

72. The arguments of BVM Finance that immunity to the Vistra is limited and does not cover the acts of negligence by it. It is contended that the security of Rs.300 was reduced 14 crore because of the negligence by Vistra in selling the securities at wrong time. This argument has no merit. The shares were of the group of companies of the Promoter Group and it is because of action of the promoters themselves the prices of the shares fell.

73. Thus the argument now made in appeal for the first time of ‘set off’ is not bonafide. Nothing is placed on record on oath, the details of the amount payable. A two paragraphs affidavit is filed. The matter has been heard by us at length on different dates and at least in the appeal no grievance can be made by BVM Finance regarding short of time. There is no reason why in the appeal all the calculations were not placed on record on oath. The only assertion that is made on oath is that no amount is payable, and the reference to Rs.141.74 crore is that it is a claim in the arbitration petition. It is not necessary to conclude finally on the legal position whether unascertained liquidated damages can be claimed for set off, as on the facts, we do not find the claim of BVM Finance as bonafides.

74. The argument that the order dated 12 August 2020 was passed without any jurisdiction since leave under Clause-12 was not granted, has lost its significance. The order dated 3 August 2020 was challenged in an appeal which was disposed of since leave was subsequently granted. Since we have held that leave under Clause-12 was rightly granted, nothing survives in this contention.

75. The second direction issued by the learned Single Judge is an injunction not to create third party rights. This injunction would come in operation if the BVM Finance does not deposit the outstanding amount as directed. If the outstanding amount is deposited in the court then the injunction would automatically stand lifted.

76. BVM Finance contends there is no finding by the learned Single Judge there will be any alienation or disposal of the property. It is contended that BVM Finance has paid Rs.100 crore and is not a habitual defaulter.

77. The grievance made by BVM finance that there was no material before the learned single Judge to grant the restraint injunction is not correct. Vistra had placed its apprehension on record that the Defendants with an intention to delay or nullify execution of any decree may attempt to dispose off and remove the property. Vistra had learnt that shares of SIL and SPTL were likely to be released from the pledge by a creditor of the Sintex Group and will soon be unencumbered. Vistra needed to be protected with a minimum cover of two times from total issue but because of the conduct of the Defendants, Vistra apprehended that the shares will be further devalued. Vistra stated that Defendant Nos.[2] and 3 have also disposed of several valuable assets. One of the public sector banks had reported SIL as a fraud account. Vistra pleaded there is a strong likelihood of the admission of the petition under the Insolvency and Bankruptcy Code, 2016. The financial conditions of the Sintex Industries Ltd. the flag-sheet company of the promoter group of which BVM Finance is a member, had become poor. No reply affidavit is filed specifically controverting these factual assertions. As regards the assertion that BVM finance is not a habitual defaulter, there is no detailed affidavit filed by BVM Finance setting out the facts and the calculations. During the course of hearing, it was also pointed by Vistra that as on 30 September 2020, the Punjab National Bank has reported a fraud of Rs.1,203.23 crore in Sintex Industries Ltd. There was therefore no error in restraining BVM Finance from creating any third party rights.

78. The argument that the injunction granted will bring the day to day business of BVM Finance to stand still is orally made. No attempt is made to place any details on record. There is no request made to modify the injunction to pay the salaries of employees by placing any material on record. In absence of any material,this argument cannot be considered.

79. To conclude, the averments in the plaint, agreements between the parties and the correspondence show that the amount was to be deposited in the bank account situated within the jurisdiction of this Court. For a suit filed by the creditor, where the amount is received would constitute a material cause of action. Present case cannot be considered as clearest case for revocation/ setting aside the leave granted to institute suit. The Debenture Trust Deed permits Vistra to institute proceedings in any Court with jurisdiction. The Debenture Trust Deed is a final document and it does not contain any arbitration clause. In view of the final agreement clause, the Debenture Trust Deed has to be read as standalone document, and not as a part of composite transaction. Therefore, the parties cannot be referred for arbitration. The direction issued to deposit the amount is in consonance with the agreement between the parties and the correspondence on record. The argument that Vistra owes money to BVM Finance and is entitled to set off is found to be not bonafide. The direction not to create third party rights was warranted in the facts and circumstances of the case. The discretion used by the learned Single Judge cannot be termed as perverse.

80. Thus, the challenge to both the impugned orders must fail. Appeal is dismissed. No costs.

81. In view dismissal of appeal, interim application does not survive and stands disposed of accordingly.

82. This judgment/order will be sonal Assistant/ Private Secretary of this Court. All concerned to act (MILIND JADHAV, J.) (NITIN JAMDAR, J.) Sanjay K.