\u0935\u093e\u092f\u0938 \u0906\u092b \u0907\u0902\u0921\u093f\u092f\u093e \u0928\u094d\u092f\u0942\u091c \u091a\u0948\u0928\u0932 \u092a\u0930 \u0915\u092c\u094d\u091c\u0947 \u0915\u0940 \u0932\u0921\u093c\u093e\u0908 \u0924\u0947\u091c \u0939\u094b \u0917\u0908 \u0939\u0948. \u0924\u094d\u0930\u093f\u0935\u0947\u0923\u0940 \u092e\u0940\u0921\u093f\u092f\u093e \u0914\u0930 \u0938\u0930\u094d\u091a\u0932\u093e\u0907\u091f \u092e\u0942\u0935\u0940\u091c \u0915\u0947 \u092c\u0940\u091a \u0935\u0940\u0913\u0906\u0908 \u092a\u0930 \u0915\u092c\u094d\u091c\u0947 \u0915\u094b \u0932\u0947\u0915\u0930 \u091a\u0932 \u0930\u0939\u0940 \u0932\u0921\u093c\u093e\u0908 \u092e\u0947\u0902 \u0928\u092f\u093e \u092e\u094b\u0921\u093c \u0924\u092c \u0906 \u0917\u092f\u093e \u091c\u092c \u0905\u0926\u093e\u0932\u0924 \u0928\u0947 \u0938\u0930\u094d\u091a\u0932\u093e\u0907\u091f \u092e\u0942\u0935\u0940\u091c \u0915\u0947 \u0905\u092e\u093f\u0924 \u0938\u093f\u0928\u094d\u0939\u093e \u0915\u094b \u092c\u0915\u093e\u092f\u093e \u091a\u0941\u0915\u093e\u0928\u0947 \u0915\u093e \u0906\u0926\u0947\u0936 \u0926\u093f\u092f\u093e. \u0924\u094d\u0930\u093f\u0935\u0947\u0923\u0940 \u092e\u0940\u0921\u093f\u092f\u093e \u0915\u094b \u0939\u0930 \u092e\u0939\u0940\u0928\u0947 \u091c\u094b \u092a\u0948\u0938\u0947 \u0926\u0947\u0928\u0947 \u0925\u0947, \u0935\u0939 \u0915\u0908 \u092e\u0939\u0940\u0928\u094b\u0902 \u0938\u0947 \u0928 \u0926\u093f\u090f \u091c\u093e\u0928\u0947 \u0915\u0947 \u0915\u093e\u0930\u0923 \u092e\u093e\u092e\u0932\u093e \u0915\u094b\u0930\u094d\u091f \u092e\u0947\u0902 \u092a\u0939\u0941\u0902\u091a\u093e. 10 \u0905\u0917\u0938\u094d\u0924 \u0915\u094b \u0905\u0926\u093e\u0932\u0924 \u0928\u0947 \u0907\u0938 \u092e\u093e\u092e\u0932\u0947 \u092a\u0930 \u092b\u0948\u0938\u0932\u093e \u0938\u0941\u0928\u093e\u092f\u093e. \u0915\u094b\u0930\u094d\u091f \u0928\u0947 \u0905\u092e\u093f\u0924 \u0938\u093f\u0928\u094d\u0939\u093e \u0915\u094b \u0905\u092c \u0924\u0915 \u0915\u0940 \u092c\u0915\u093e\u092f\u093e \u0930\u0915\u092e \u0926\u0947\u0928\u0947 \u0915\u094b \u0915\u0939\u093e \u0939\u0948. \u0907\u0938 \u0906\u0926\u0947\u0936 \u0915\u0947 \u092c\u093e\u0926 \u0924\u094d\u0930\u093f\u0935\u0947\u0923\u0940 \u092e\u0940\u0921\u093f\u092f\u093e \u0915\u0940 \u0924\u0930\u092b \u0938\u0947 \u092e\u0927\u0941\u0930 \u092e\u093f\u0924\u094d\u0924\u0932 \u0928\u0947 \u0905\u092e\u093f\u0924 \u0938\u093f\u0928\u094d\u0939\u093e \u0915\u094b \u090f\u0915 \u092a\u0924\u094d\u0930 \u0932\u093f\u0916\u0915\u0930 \u0938\u093e\u0924 \u0915\u0930\u094b\u0921\u093c \u0930\u0941\u092a\u092f\u0947 \u0926\u0947\u0928\u0947 \u0915\u094b \u0915\u0939\u093e \u0939\u0948.<\/p>\n
\u092a\u0924\u094d\u0930 \u092e\u0947\u0902 \u092f\u0939 \u092d\u0940 \u0915\u0939\u093e \u0917\u092f\u093e \u0939\u0948 \u0915\u093f \u0905\u0917\u0930 \u0905\u092e\u093f\u0924 \u0938\u093f\u0928\u094d\u0939\u093e \u092f\u0939 \u0930\u0915\u092e \u0928\u0939\u0940\u0902 \u091a\u0941\u0915\u093e\u0924\u0947 \u0939\u0948\u0902 \u0924\u094b \u0915\u094b\u0930\u094d\u091f \u0915\u0947 \u0928\u093f\u0930\u094d\u0926\u0947\u0936\u093e\u0928\u0941\u0938\u093e\u0930 \u0935\u0940\u0913\u0906\u0908 \u092a\u0930 \u092b\u093f\u0930 \u0938\u0947 \u0924\u094d\u0930\u093f\u0935\u0947\u0923\u0940 \u092e\u0940\u0921\u093f\u092f\u093e \u0915\u093e \u0915\u092c\u094d\u091c\u093e \u0939\u094b \u091c\u093e\u090f\u0917\u093e. \u0906\u0907\u090f, \u092e\u0927\u0941\u0930 \u092e\u093f\u0924\u094d\u0924\u0932 \u0926\u094d\u0935\u093e\u0930\u093e \u0905\u092e\u093f\u0924 \u0938\u093f\u0928\u094d\u0939\u093e \u0915\u094b \u0932\u093f\u0916\u0947 \u0917\u090f \u092a\u0924\u094d\u0930 \u0935 \u0939\u093e\u0908\u0915\u094b\u0930\u094d\u091f \u0915\u0947 \u0906\u0926\u0947\u0936 \u0915\u094b \u092a\u0922\u093c\u0947\u0902.<\/p>\n
Important<\/p>\n
Through: Email, Speed Post, UPC & Registered A.D<\/p>\n
Friday, August 27, 2010<\/p>\n
To,<\/p>\n
Mr. Amit Sinha<\/p>\n
(Proprietor)<\/p>\n
M\/s Searchlight Movies<\/p>\n
Sub: Intimation of Judgment pronounced by the Hon\u2019ble High Court of Delhi in OMP No. 391\/2010.<\/p>\n
Dear Amit ji,<\/p>\n
Please find attached herewith Copy of the Judgment pronounced by the Hon\u2019ble High Court of Delhi in OMP No. 391\/2010. The relevant Operative part has been highlighted for your ready reference i.e. para 42 to be read along with para 2 and para 7 of the Judgment.<\/p>\n
As per the Judgment, you have been directed to pay ours Complete Outstanding Dues along with the interest and also been asked to discharge all the liabilities of TML incurred by you on TML within 30 days i.e. latest by 9th of September 2010 (the date on which period of 30 days expires from the date of order). Failing which relief granted by the Hon\u2019ble High Court to us will automatically come into the force.<\/p>\n
Further Note that as on today (i.e. Friday, August 27, 2010) the Outstanding amount due to us under the SPA\/Supplementary Agreement is Rs. 4,25,00,000\/- (Rs Four Crores Twenty Five Lacs) plus Interest as per clause 4 (a) of the SPA. Note that on 7th September 2010 (the day on which September Installment falls due), this outstanding amount due to us under the SPA will increase to Rs. 7,00,00,000\/- (Rs Seven Crores) plus interest as per clause 4 (a) of the SPA.<\/p>\n
In light of the above stated Situations and Circumstances, you are herby called upon to state that by which date you will clear our all Dues as per the directions given by the Hon\u2019ble High Court, so the interest can be calculated and send to you.<\/p>\n
Further you are also herby called upon to give us your valuable appointment, so we jointly sit and mutually quantify the Liabilities incurred by you on TML. This exercise will help both of us to avoid any last moment hassles\/confusions\/quantifications in regards to liabilities, as you have to clear these liabilities within the specified time as per the directions given by the Hon\u2019ble High Court.<\/p>\n
We look forward for an early and positive reply,<\/p>\n
With Best Regards,<\/p>\n
Madhur Mittal<\/p>\n
(For and On Behalf of Sumit Mittal Group)<\/p>\n
Enclosed: Copy of Order dt 10th August 2010 in OMP No. 391\/2010.<\/p>\n
\u00a0<\/p>\n
\u00a0<\/p>\n
IN THE HIGH COURT OF DELlil AT NEW DELHI<\/p>\n
O.M.P. 391\/2010 & I.A. NO.10280\/2010<\/p>\n
SUMIT MITTAL & ORS.<\/p>\n
Through:
Petitioners<\/p>\n
Mr. Arvind Nigam, Senior Advocate<\/p>\n
with IVlr. Amit Sibal & Mr. Alok k. Agarwal, Advocates<\/p>\n
versus<\/p>\n
AMIT SINHA Respondent<\/p>\n
Through: Mr. T.K. Ganju, Senior Advocate<\/p>\n
with l”1r. Anshul Narayan & Mr. Prem Prakash, Advocates<\/p>\n
CORAM:<\/p>\n
HON’!8LE MR. JUSTICE VIPIN SANGHI<\/p>\n
ORDER<\/p>\n
10.08.2010<\/p>\n
1. Arguments have been heard at length. I proceed to dispose
of this petition filed under Section 9 of the Arbitration and Conciliation
Act, 1996 (the Act).<\/p>\n
2. The petitioner has preferred this petition to seek the following
interim measures:
Hi) Restraining the respondent, their
servants, agents, nominees, employees,
assigns from ali.enating, transferring, dealing
with, damaging the media equipment and such
other properties of TML lying at the premises
situated at A-37, Sector-60, Noida, and other
Bureau offices of TML throughout India;
ii) Direct the respondent to Iland over
physical possession of the assets and
properties of TML including the media
equipment lying at the premises situated at<\/p>\n
AOMP No.391\/2010 Page 1 of 26<\/p>\n
37, Sector-60, Noida, and other Bureau offices
of TML throughout India along with the
management. of TML including the premises
situated at A-37, Sector-60, Noida in terms of
Clause 10 of Supplementary Agreement dated
3′” June, 2010;
iii) Pending hearing and disposal of the
present petition to appoint a Local
Commissioner to immediately visit the
premises situated at A-37, Sector-60, Noida
(U.P.) and other Bureau offices to prepare
inventory & reconcile the list of equipment
installed therein with list of equipmellts filed as
Annexure B in the Supplementary Agreement
to take photographs\/videography of the same
and to report the condition thereof to this
Hon’ble Court.’ The local Commissioner be
permitted to take the assistance of the local
police, in case so requires;
iv) Pending hearing and disposal of the
present petitiofl restrain the respondent, his
agents, assigns, nominees, employees,
servants, etc from entering into the premises
bearing No.A-37, Sector-60 Noida 9UP);”<\/p>\n
3. The admitted position is that the petitioners are the original
share holders and promoters of Triveni Media Limited (hereinafter
referred to as ‘TML’), a company incorporated under the Companies
Act, 1956 with the object of carrying out business of television media
i.e. running and operating satellite television channels.<\/p>\n
4. The parties entered into a share purchase agreement on
25.10.2009. This agreement contained. an arbitration clause. Under
this agreement. it was agreed that the respondent would purchase the
entire shareholding of the petitioners in TML fora total consideration of
RS.68.52 crores. The company, upon the transfer of the shareholdirig,<\/p>\n
OMP No.391\/2010 Page 2 of26<\/p>\n
was to vest in the respondent, free from all debt and pending
litigations. The aforesaid amount was payable by the respondent in
installments. The agreement also provided for payment of interest on
delayed payment.<\/p>\n
5. It appears that the payments, as provided for in the schedule
O’f payments under the share purchase agreement dated 25.10.2009,
were not made. This led to the petitioner filing OMP NO.334\/2010
before this Court claiming reliefs similar to those claimed in these
proceedings. During the pendency of the said OMP the parties arrived
at a settlement which is contained in a supplementary agreement
dated 03.06.2010. The aforesaid OMP was disposed of by this Court on
04.06.2010 upon recording of the compromise contained in the
application filed under Order 23 Rule 3 CPe. The parties, who were
pl-esent in Court, made their respective statements to abide by the
agreement and undertook to the Court that they shall honour their
commitments under the supplementary agreement dated 03.06.2010.
6. According to the petitioners, the respondent once again
defaulted and did not make payments as envisaged under the
supplementary agreement. I may note that under the supplementary
agreement, the total consideration payable by the respondent to the
petitioners stood reduced by RS.5 crores from the amounts payable
under the share purchase agreement dated 25.10.2009. The first
installment payable after execution of the supplementary agreement
dated 03.06.2010, fell due on 07.06.2010. Thereafter, installments fell<\/p>\n
OMP No.391\/2010 Page 3 of 26<\/p>\n
due on 07.07.2010 and thereafter on 07.08.2010. Admittedly, neither
of these installments have been paid. When the petitioner approached
this Court by filing the present petition, the installments which were
due on 07.06.2010 & 07.07.2010 had fallen in default.<\/p>\n
7. The petitioners have premised the relief sought in \u00b7this
petition on clause 10 of the supplementary agreement, which reads as
follows:
“10. That in the event SLM defaults in any of
the payments contemplated under the present
agreement and not restricted to the payment
as per revised\/restructured payment schedule
and not cured as per the SPA dated
25\/10\/2009, the Sumit Mittal Group is
unequivocally entitled to forthwith takeover the
possession of all the assets including
management of TML. On default of payments
by SLM payable under the agreement and not
cured as per SPA, SMG or its nominee or
representative shall have full right to deal with
all the “7 Licences of Channels” owned by TML
and will have unfettered rights of broadcasting
of the same which includes uplinking, down
linking and related actions thereof. The said
broadcasting rights would solely vest with the
Sumit Mittal group without taking recourse to
the legal remedies. However in the event the
default is cured to the satisfaction of the Sumit
Mittal Group the assets and broadcasting rights
shall be restored back to SLM forthwith.”<\/p>\n
8. The petitioners have also placed reliance on the handwritten
letter signed by the respondent on 25.06.2010 which is addressed to
the petitioner, wherein the respondent had stated that on or before
25.07.2010 the respondent shall pay in the High Court a sum of Rs.l
crore on behalf of the petitioners and Rs.50 Lacs into the account of<\/p>\n
OMP No.391\/2010 Page 4 of 26<\/p>\n
the petitioners. It was further stated that if the respondent was not
able to pay, then respondent would hand over the entire channel and
TML to the petitioners. The break-up ofthe amount of Rs.50 Lacs to be
paid to the petitioners was also contained in this communication.<\/p>\n
9. At this stage, I may also refer to earlier judicial proceedings
contained in OMP No.192\/2009. This was a petition filed under Section
9 of the Act by Zoom Communication Private Limited (for short
‘Zoom’) against TML, The grievance of Zoom was that it had financed
the lease of various equipments to TML. TML had defaulted in
payment of the lease rentals and the leased equipments were also not
returned by TML. In those proceedings, it was informed to the Court
that the promoters of TMI_ had entered into the share purchase
agreement with the respondent herein. The Court, accordingly,
impleaded the respondent herein as a proforma respondent. Taking
note of the amount payable by the respondent herein under the share
J’lurchase agreement to the petitioner herein, the arrangement worked
out by the Court was that the respondent herein would deposit in this
Court, in monthly installments, an amount of Rs. 4 crores, as recorded
in the said order, for discharge of the petitioners’ liability owed to
Zoom. Tilis obligation undertaken by the respondent Mr. Sinha at the
time of passing of the order dated 18.01.2010 was also incorporated in
the supplementary agreement dated 03.06.2010 in clause 8 which
reads as follows:<\/p>\n
8. That SLM shall abide by his undertaking
given to the Hon’ble Delhi High Court in OMP<\/p>\n
OMP No.391\/2010 Page 5 of 26<\/p>\n
No.l96 of 2009 and in compliance thereof shall
continue to deposit the amounts payable as
per the order dated 1B.1.2010 passed by the
Hon’ble High Court.”<\/p>\n
10. Upon issuance of notice, the respondents have filed their
reply. The parties have also filed various sets of documents in support
of their respective submissions.<\/p>\n
11. The submission of the petitioners is that at the time of
signing of the share purchase agreement, they had handed over
possession of the leasehold premises, capital, equipment and movable
and immovable properties of TML to the respondent. However, under
clause 2(C} it has been agreed that till final payment of RS.6B.S2 crores
had been made in 36 installments, the respondent shall only be a
custodian of the properties and assets of TML, and in case of default all
assets had been agreed to be returned to the petitioners in working
condition forthwith. The submission of the petitioners is that despite
the under.taking given to tile Court firstly in OMP NO.196\/2009 and
again on 04.06.2010 in OMP No.334\/2010, tile respondent has failed to
make payments. Consequently, it is argued by Mr. Arvind Nigam,
learned senior counsel for the petitioners that the petitioners are
entitled to seek interim measures of protection on account of breach of
this fundamental obligation by the respondent to make timely
payments of the installments.<\/p>\n
12. In response, though the respondentdoes not deny its failure
to make payment of the installments in terms of the share purchase<\/p>\n
OMP No.391\/2010 Page 6 of 26<\/p>\n
agreement and the supplementary agreement, the. submission of Mr.
Ganju, learned senior counsel for the respondent, is that the
petitioners have themselves been in default of the share’ purchase
agreement and the supplementary agreement. Grievance is made
with regard to the non-transfer of the share holding of TML even after
receipt of partial payment. Under clause 2.1 of the share purchase
agreement, it had been agreed between the parties that the share
certificates, which have been placed in the custody of the Escrow
agent along with blank transfer deeds shall be handed over to the
respondent in trenclles on receipt of written confirmation signed’ by
SLM i.e. the respondent and Sunil Mittal Group i.e. the petitioners at
such intervals depending upon the receipt of the sale consideration for
the said shares.<\/p>\n
13. The grievance of the I-espondent is that even though the
respondent has made payment of RS.5,49 crores approximately, no
shares at all had been transferred in the name of the respondent. Mr.
Ganju submits that communications had been issued in this respect
both to the petitioners as well as to the Escrow agent. The petitioners
have responded to the same as late as on 05.08.2010. The petitioners
have agreed to the transfer of only about 2.2% of their shareholding,
and it is not explained as to how and why deductions had been made
from the amount paid by the respondent.<\/p>\n
14. The second submission of Mr. Ganju is that though under the
share purchase agreement, the petitioners have disclosed the<\/p>\n
OMP No.391j2010 Page 7 of 26<\/p>\n
pendency of only 11 cases against the company TML, in fact, there are
large number of cases which are pending. He submits that as it is the
respondent which is taking over the company TML, the respondent
would be saddled with all pending claims .and litigations if they are not
settled by the petitioner from out of the funds provided\/to be provided
by the respondent. He submits that it would become the obligation of
the respondent to pursue all such litigations and meet the liability
arising therefrom, unless a complete disclosure is made by the
petitioners in this regard, and the liabilities discharged from the
amounts that the respondent would pay under the share purchase
agreement and the supplementary agreement.<\/p>\n
15. It is further submitted by Mr. Ganju that the petitioners had
breached their obligations contained in clause 2.P(a), (c) & (d) of the
share purchase agreement. The petitioners did not close the various
bank accounts of TML. Under the agreement only two bank accounts,
namely, with Barclays Bank; and Punjab National Bank were to remain
operative. Moreover, the bank account with lOBI Bank was to be
operated by the respondent in which all past receivables were to be
credited. Mr. Ganju submits that the petitioners had agreed riot to
make any representation to any third party, media members or of the
press and\/or interested parties, as representatives of TML. However,
the petitioners continue to function as the members of the board of
directors of TML. Mr. Ganju further submits that under Clause 2.P(d)
the board of dil-ectors of TML had to be reconstituted. However, the<\/p>\n
OMP No.391\/2010 Page 8 of 26<\/p>\n
petitioners have not taken steps in this regard. It is further submitted
that under Clause 2 P(f) the petitioners were required to extend their
assistance in obtaining clearance and approvals from Ministry of Home
Affairs and Ministry of Information and Broadcasting for fresh induction
of directors. However, the petitioners have not extended assistance in
this regard.<\/p>\n
16. Mr. Arvind Nigam, Senior Advocate has responded to each of
the aforesaid submissions of Mr. Ganju. He submits that the breaches
pointed out by the respondent are mere excuses for non-compliance of
his obligation by the respondent to make payments under the share
purchase agreement. The so called breaches, according to him, are
either non-existent or trivial .and the respondent has not suffered any
prejudice on account of the alleged non-compliance of some of the
contractual terms. Even it is assumed that there has been some lapse
in compliance of those terms by the petitioner, Mr. Nigam submits that
under the supplementa!”y agreement dated 3.6.2010 the respondent,
had agreed to pay the first installment on 7.6.2010. The Court had
passed orders recording the compromise of the parties founded upon
the supplementary agreement on 4th june, 2010 which was a Friday.
Thereafter, two holidays intervened on 5th and 6th june, 2010 being
Saturday and Sunday. The first installment was payable on 7th june,
2010, i.e. on Monday. The respondent was conscious of the so-called
non-compliance of some of the trivial terms and conditions of the share
purchase agreement even on 3’d and 4th june, 2010. Yet, under the<\/p>\n
OMP No.391\/2010 Page 9 of 26<\/p>\n
supplementary agreement, the respondent had undertaken to make
payment of the first installment on 7th June, 2010. Had the respondent
been seriously aggrieved by the so-called non-compliance of some of
the trivial terms of agreement, certainly the respondent would have
insisted upon their compliance before agreeing to make payment of
the first installment on 7′” June, 2010.<\/p>\n
17. Mr. Nigam points out that the entire shareholding of TML
stands delivered to Escrow agent in terms of clause 2 (H) of the share
purchase agreement and clause 2(1) of the share purchase agreement,
the petitioners have also delivered the blank share transfer deeds in
favour of the respondent with the Escrow agent. The release of the
blank share transfer deeds by the Escrow agent to the respondent has
to take place in terms of the agreement. Mr. Nigam submits that the
payments made belatedly by the respondent were adjusted towards
interest payable under the agreement and thereafter towards the
principal liability. It is further submitted that the petitioners had
agreed to transfer of about. 2% share holding in favour of the
respondent in consideration of the payment made by the respondent.
He submits that, in any event, the shares and the blank transfer deeds
are lying with the Escrow agent and the petitioners have no control
over the same.<\/p>\n
18. Mr. Nigam submits that the Escrow Agent had fixed a
meeting For the purpose of delivering the shares with the blank share
transfer deeds to the respondent on 5.8.2010. However, the<\/p>\n
OMP No.391j2010 Page 10 of26<\/p>\n
respondent did not even come in the said meeting. Therefore, it is
argued, that the aforesaid excuse is simply an eyewash. Mr. Nigam
further submits that the petitioners have absolutely no objection to the
transfer of the shares of TML to the respondent in accordance with the
share purchase agreement and the supplementary agreement, and
after taking into account the interest payable on delayed payments.
No grievance with regard to the shares not being transferred in the
name of the respondent was ever raised by the respondent and the
said issue could not have been raised, in any event, in respect of the
payment which became due on 7.6.2010 and which, admittedly, was
not paid.<\/p>\n
19. Attention is drawn by Mr. Nigam to Clause 8 and 9 of the
supplementary agreement dated 3cd June, 2010 whereunder the
respondent had agreed to abide by his undertaking given to this Court
in OMP No.196\/2009 and to continue to deposit the amounts payable
as per the order dated 18.1.2010. Under clause 9 of the
supplementary agreement the respondent had undertaken to payoff
and clear the past dues of TML, more particularly towards rent of the
premises situated at Noida, dues towards salary, arrears of electricity
charges for the Noida premises, statutory payments towards provident
fund, income tax dues and other taxes, uplinking charges etc. in terms
of the MOU and the share purchase agreement both dated 25.10.2009.
He submits that the .respondent was\u00b7 in default of payment of the
aforesaid charges, including the uplinking charges and electricity dues.<\/p>\n
OMP No.391\/2010 Page 11 of 26<\/p>\n
He places reliance on the Local Commissioner’s report in this regard,<\/p>\n
20. So far as the apprehension of the respondent with regard to
pending cases and pre-existing liabilities is concerned, Mr. Nigam
submits that under the share purchase agreement it had been agreed
that as on and from the date of the execution of the said Agreement.
“,_”, …. alf pending lawsuits, arbitrations, administrative or other
proceeding or governmental investigations pending or to the best of
the knowledge of the Party including but not limited to Annexure E,
which are existing, discovered in the course of take over and are
against the Sum it Mittal Group in their personal capacity will be the
exclusive liability of the sumit Mittal Group.” (see clause 2Q(f))<\/p>\n
21. He further points out that under Clause 4(d) of the share
purchase agreement it had been agreed:-
“d) That in the event sumit Mittal Group fails to pay the
liabilities of TML equivalemnt to 75% with a period of
30 months starting from the date of signing of this
agreement, sLM would be entitled to withhold the
balance payment till such time Sum it Mittal Group
furnishes proof of the said liability being paid. It is
further agreed that sumit Mittal Group shalf pay to the
maximum 50% of the receivables towards payment of
liabilities per month. “<\/p>\n
22. Mr. Nigam submits that under Clause 5 of the share purchase
agreement the petitioners had\u00b7 indemnified the respondent from and
against all actions, suits and proceedings and all costs, charges,
expenses, losses or damages which may be incurred or suffered or<\/p>\n
OMP No.391\/2010 Page 12 of 26′<\/p>\n
caused to the respondent by reason of any breach, default,
contravention, non-observance by the petitioners in breach or default
of their obligations under the said agreement.<\/p>\n
23. Mr. Nigam has then drawn my attention to clause 3 of the
supplementary agreement dated 3.6.2010. The said clause records
that tile respondent has carried out detailed verification and due
diligence of the liabilities of TML prior to the execution of the MOU and
share purchase agreement dated 25.10.2009. The list of the said
liabilities was annexed as Annexure-A to the supplementary
agreement. The petitioners have agreed that the responsibility for
payment of the said liabilities would be their obligation. The
supplementary agreement further provides that in case it is
subsequently found that there are other liabilities of any third party
pertaining to the period prior to the execution of the share purchase
agreement, then the onus to discharge the said liability would be that
of the petitioners in terms of the share purchase agreement. The
petitioners have also indemn\u00b7ified the respondent against any other
liability of TML coming to light after the completion of the terms and
conditions of the share purchase agreement.<\/p>\n
24. Mr. Nigam submits tllat the apprehensions expressed by the
respondent with regard to pending litigations against TML is wholly
misplaced in the light of the express obligations undertaken by the
petitioners, as aforesaid. He submits that tile respondent had
conducted due diligence and satisfied itself with regard to the pending<\/p>\n
OMP No.391\/2010 Page 13 of 26<\/p>\n
cases and litigations against TML and about its liabilities. In any event,
the petitioners have taken upon themselves the obligation to discharge
the existing liabilities. Mr. Nigam submits that, at this stage, by
expressing such apprehensions the respondent cannot seek to alter
the terms of the share purchase agreement as modified by the
supplementary agreement. The endeavour of tile respondent to
withhold payment premised on its pretended apprehensions
constitutes a breach of\u00b7 the share purchase agreement and the
supplementary agreement by the respondent and entitles the
petitioners to invoke, inter alia, clause 10 of the supplementary
agreement.<\/p>\n
25. I may note at this stage that the respondents have sought to
place on record a list of large number of cases which, according to
them are pending against TML in various courts. A perusal of the said
list shows that most of these litigations are against another company,
namely, Triveni Infrastructure Development Company Limited and not
against TML i.e. Triveni Media Limited. The two are separate and
distinct legal entities and the agreements in question pertain to Triveni
Media Limited (TML) and to Triveni Infrastructure Development
Company limited.<\/p>\n
26. Regarding the respondent’s grievance that its directors have
not been brought on the board of Directors of TML in accordance with
the share purchase agreement, Mr. Nigam points out that before the
directors of the respondent can’ be appOinted to the Board of TML,<\/p>\n
OMP No.391\/2010 Page 14 of 26<\/p>\n
necessary clearances are required from the Ministry of Home Affairs
and Ministry of Information and Broadcasting. He has drawn my
attention to clause 2 P(d) and 2P(f) of the share purchase agreement.
Clause 2P(d) provided that on the date of execution of the share
purchase agreement the petitioners shall submit to the ESCROW agent
their resignations from the Board of Directors of TML and hand over
free possession and control over the Management, functioning,
broadcasting and operations of TML to the respondent. He submits
that accordingly all the petitioners have already tendered their
resignations as directors of TML, which are lying with the ESCROW
agent. He submits that it was entirely the obligation of the respondent
to get clearances from Ministry of Home Affairs and Ministry of
Information and Broadcasting for induction of the nominee Directors of
the respondent. The only obligation of the petitioners was that they
had to extend their assistance in obtaining the clearances and
approvals. Mr-. Nigam submits that the petitioners never backed out of
the said obligations and the respondent has failed to point out as to
how the petitioners have failed in their obligation to render assistance
for the said purpose. He submits that the parties had executed a joint
undertaking dated 25.10.2009 at the time of execution of the share
purchase agreement wherein it had been undertaken that the
respondent shall nominate seven directors on the board of directors of
TML after the Ministry of Information and Broadcasting\/Ministry of
Home Affairs have granted clearance\/approval.<\/p>\n
OMP No.391\/2010 Page 15 of 26<\/p>\n
27. Mr. Nigam points out that grievance with regard to operation
of various bank accounts is also totally unfounded. He submits that
the respondents are well aware that the various bank accounts of TML
are not being operated and are lying dormant. Summary of the
various bank accounts and the amounts lying therein has been filed on
record on 3.8.2010 along with various other documents. The same
shows that there are hardly any amounts in the various bank accounts
of TML, which the parties have agreed would be closed. Only in one
bank account i.e. Axis Bank at Allahabad a sum of RS.2,78,034\/- was
lying and this was on account of issuance of various post dated
<:heques issued in the name of TML towards satisfaction of outstanding
dues. Mr. Nigam points that the petitioners had acted on behalf of the
company TML and on their own behalf while entering into a settlement
with Kotak Mahindra Bank Limited witll a view to discharge the
liabilities owed by them and the company by entering into a
memorandum of understanding dated 8.12.2009. Under the said MOU,
the petitioners agreed to make payment of the amounts due in
installments which were payable upto 30.7.2010. He points out that
the said MOU was entered into on 8.12.2009 i.e. much before the
execution of the supplementary agreement. The said MOU and the
payment schedule has been placed on record along with the summary
of events filed by the petitioner on 3.8.2010.<\/p>\n
28. Mr. Nigam points out that under Clause 4(d) of the share
purchase agreement the petitioners were obliged to continue the<\/p>\n
OMP No.391\/2010 Page 16 of 26<\/p>\n
discharge of the liabilities of TML and to discharge 75% of the liabilities
within a period of 30 months from the date of the said agreement. He
submits that the respondent can not have a grievance with the action
of the petitioner in discharging the said liability.<\/p>\n
29. Having heard Learned counsels for the parties, I am of the
view that the respondent has been in default of his obligation to make
payment of the installments as per the supplementary agreement
dated 03.06.2010. The justification offered by the respondent appears
to be mere afterthoughts and, to my mind, were not good enough to
relieve the respondent of his obligations to make payment of the
amounts due from him in installments.<\/p>\n
30. The grievance with regard to non transfer of the shares,
despite the respondent having made part payment, does nqt appear to
carry much force. The ‘petitioners have already deposited with the
escrow agent the shares along with blank transfer deeds. The
petitioners have no control over the same. The petitioners have also
given their consent for transfer of over 2% of the shareholding to the
respondent. Despite the date being fixed for that purpose by the
escrow agent, the respondent, it appears did not present himself to
collect the shares and the share transfer deeds.<\/p>\n
31. The submission of the respondent that the petitioners have
agreed to transfer only about 2% of the shareholding, even though a
much larger amount stands paid, does not even appear to’have been<\/p>\n
OMP No.391\/2010 Page 17 of 26<\/p>\n
agitated by the respondent before the petitioners. Admittedly, the
respondent failed to make payment of the installments on the due
dates, and the share purchase agreement’ as well as the
supplementary agreement provided for payment of interest on
defaulted payments. If the respondent had any issues with regard to
the accounting of the amounts paid by him, he should have raised the
said issue with the petitioners. Merely because he feels justifie,d in
demanding a larger proportion of shares at this stage, is not a reason
good enough to stop payment of the installments. The payment of
installments by the respondent is a fundamental obligation of the
respondent. On the representation of the respondent that he would
make payment of the consideration, the respondent has been put in
possession and control of all the assets of the company TML.
Moreover, the obligation of the petitioners to discharge the existing
debts and liabilities of the company which existed on the date of the
share purchase agreement can be honoured only if the respondent
makes payment of the consideration. If the said amounts are not paid,
obviously, the petitioners cannot be expected to discharge the said
liabilities. I, therefore, reject this excuse furnished by the respondent
for not making payment of the installments which have fallen due
under the supplementary agreement. However, it shall be open to the
respondent to seek from the petitioners the manner of accounting of
the amount of RS.5.49 crores that the respondent ,claims to have paid
to the petitioners and to s.eek the petitioners consent for allotment of a<\/p>\n
OMP No.391\/2010 Page 18 of 26<\/p>\n
larger proportion of shares of TML, if it is found that the consent given
by the petitioners for transfer of 2.2% of the shareholding is not in
proportion with the consideration paid by him.<\/p>\n
32. The submission of Mr. Ganju that there are a large number of
pending cases against TML which have not been disclosed in the share
purchase agreement or the supplementary agreement, and that on
account of the apprehension of the respondent that the petitioners
may not settle all such pending cases, which were pending on the date
of the share purchase agreement, he is not obliged to make payment
of the installments as fixed under the supplementary agreement, does
not appear to be justified. As I have already noticed the details of the
pending cClses filed by the respondent shows that most of them pertain
to a different company, namely, Triveni Infrastructure Development
Co. Ltd and not to TML. In any event, even if there are some
litigations filed against the company TML, which have not been
disclo5ed in the share purchase agreement or the supplementary
agreement, the same cannot provide a justification to the respondent
to breach its obligation to make payment under the agreements, as
the petitioners have undertaken the responsibility to deal with all such
cases and settle them and the respondent has also been indemnified in
this regard.<\/p>\n
33. The suggestion made by Mr. Ganju that to the extent of the
amount involved in the pending litigations against TML, the respondent
may deposit the amount in this Court rather than paying the same to<\/p>\n
OMP No.391\/2010 Page 19 of 26<\/p>\n
the petitioners cannot be accepted, as the same would tantamount to
making a material alteration in the terms and conditions of the share
purchase agreement and supplementary agreement. The respondent
had accepted the representations and promises made by the
petitioners that they would discharge their obligations and pay the
liabilities of TML, which were ‘owed as on the date of the share
purchase agreement. The parties had expressly agreed that the
amounts would be paid by the respondent to the petitioners. ‘There is
no justifiable reason for the respondent to start doubting the intention
of the petitioners and to seek a variation of the terms and conditions of
the share purchase agreement and the supplementary agreement and
to stop payment of the agreement installments.<\/p>\n
34. The direction sought by the respondent that the petitioners
should make a complete disclosure of pending litigations also does not
appear to be justified, since the respondents have conducted their due
diligence before entering into the share purchase agreement and
supplementary agreement, and the pending litigations have already
been disclosed in the said agreements. The petitioners have’ also
undertaken that if there are any other litigations against TML, they
would discharge the liability insofar as those obligations pertain to the
period prior to the date of the share purchase agreement.<\/p>\n
35. The grievance of the respondent that only two bank accounts
vyere to be operated and others were to be closed also appears to be
only a ruse to deny the payment of the installments’ under the<\/p>\n
OMP No.391\/2010 Page 20 of 26<\/p>\n
aforesaid agreements. From details filed by the petitioners, it is
evident that the accounts opened in various banks have remained
inoperative with hardly any balances in them. Only in one bank,
namely, Axis Bank, Allahabad Branch, an amount of RS.2,78,034\/- is
lying to honour the post dated cheques issued by TML in discharge of
its obligations.<\/p>\n
36. Pertinently, no grievance in this regard appears to have been
ever raised by the respondent before stopping payment of the
installments due from him. Similar is the position with regard to the
respondent’s grievance that the bank account with lOBI Bank is not
being operated by the respondent. What steps the respondent has
taken in this regard has not been stated. If the respondent were to
take steps and the petitioners were to renege from its said obligation,
the respondent may have had a grievance. That does not appear to be
the case.<\/p>\n
37. The grievance with regard to the board of directors of TML
not being constituted with th.e nominee directors of the respondent
also appear to be totally unjustified. The respondent does not appear
to have taken any effective steps to obtain clearance from the Ministry
of Home Affairs and Ministry of Information and Broadcasting for the
appointment of its nominee director on the board of TML. Pertinently,
the petitioners have already tendered their resignation from the board
of TML and have deposited the same with the escrow agent. The
obligation of the petitioners was limited to rendering assistance to the<\/p>\n
OMP No.391\/2010 Page 21 of 26<\/p>\n
respondents to obtain clearance from the aforesaid Ministries.
However, the respondent had to make the applications, and to follow
them up with the said Ministries. This responsibility lay entirely with
the respondent.<\/p>\n
38. As pointed out by Mr. Nigam, the settlement agreement was
executed on 03.06.2010 and the compromise was recorded by this
Court on 04.06.2010 in OMP NO.334\/2010. The first payment under
the settlement agreement became due on 07.06.2010, i.e. barely 3
days later. 5th and 6th June, 2010 were Saturday and Sunday.
Therefore, nothing transpired between 4th and 7th of June, 2010, and no
steps were expected to be taken by the petitioners during this period.
Therefore, the respondent cannot claim that the petitioners were in
breach of any obligation post the execution of the supplementary
agreement dated 03.06.2010. The payment ofthe first installment had
to be rrade by the respondent on 07.06.2010. However, he defaulted
in making the said payment. Had the grievances of the respondent for
not making payment been justified, he would have raised those
grievances squarely before the petitioners after making payment of
the first installment, which became due on 07.06.2010. However, he
has n.ot done the same. On the contrary, the respondent had given his
handwritten letter on 25.06.2010 again undertaking to make
payment\/deposit of RS.1.50 crores in installments, which have also not
been paid.<\/p>\n
OMP No.391\/2010 Page 22 of 26<\/p>\n
39. Mr. Nigam has submitted that the respondent was not even
making payment of the electricity dues and the uplinking charges,
which would lead to disconnection of the electricity supply and the
seven licenses owned by TML’ being with\u00b7drawn. Mr. Ganju had
submitted that the payment of the dues towards electricity and license
fee had been made. However, documentary evidence has not been
produced by him before this Court. In this regard, I may refer to the
report of the local commissioner, who had been appointed by this
Court to visit the premises of TML. The local commissioner has
reported that the electricity connection of the premises was lying
disconnected for about one month. Even the diesel generator set was
not operable as there was no diesel in it. The hall, studio, newsroom
and rooms, wherein machinery were stocked\/kept, green room, master’
control room, production room etc. were lying in darkness. The local
commissioner executed the commission in torch light and under the
arc light of video camera. The local commissioner found no business
activity at the premises of TML at the time of his visit, and the news
channel was found not working\/operational. The store keeper, Mr.
Oanvir Khatri informed the local commissioner that there was no
uplinking and downlinking facility and the news channel “Voice of
India” was not operational for about a month. The news channel was
found to be completely off air. The studio premises were being used
for shooting of cinematograph films and not for production of its own
programmes.<\/p>\n
OMP No.391\/2010 Page 23 of 26<\/p>\n
40. The.consequences of the respondent not making payment of
the installments under the share purchase agreement and
supplementary agreement are set out in those agreements. The
assets and equipments etc. of TML delivered to the respondent are
being held by him are not his property. The ownership in those assets
certainly does not vest with the respondent. Clause 10 of the
supplementary agreement provides the consequences of default in
payment of the amounts due under the said agreement. There is
every justification for giving effect to clause 10 of the supplementary
agreement.<\/p>\n
41. In my view, if the respondent is allowed to continue to retain
the physical possession of the assets and property of TML including the
media equipment, without payment of the amounts due under the
supplementary agreement, the same would lead to irreparable .Ioss
and injury. to the petitioners, as the respondent is neither making
payment of the installments due from him, nor discharging the other
liabilities which are being incurred from time to time after the date of
the share purchase agreement. The balance of convenience is in
favour of the petitioner and against the respondent. The petitioners
have also made out a strong prima facie case to seek the reliefs as
sought by them.<\/p>\n
42. Accordingly, I allow the present petition and grant reliefs (iJ.
(ii) and (iv) as prayed for in this petition. This order would come into
effect, in case the respondent does not pay the outstanding dues<\/p>\n
OMP No.391\/2010 Page 24 of 26<\/p>\n
under the supplementary agreement along with upto date interest and
discharge all the liabilities of TML incurred after the execution of the
share purchase agreement, within 30 days from today. However, in
case, the amount is so paid and liabilities discharged, this order shall
not take effect. Needless to say, that any observation made by me in
this order is tentative, and shall not prejudice the case of either party
in the arbitration proceedings.<\/p>\n
43. At this stage, learned counsels for the parties state that since
there is an arbitration agreement contained in the share purchase
agreement between the parties, which is not disputed, and considering
the fact that disputes have arisen between them, they are agreeable to
the appointment of a sole arbitrator by this Court to adjudicate the
claims and counter claims of the parties herein. Both parties have
given a joint memorandum giving their consent to the conduct of the
arbitration under the (ules of the Delhi High Court Arbitration Centre.
The same is taken on recorcl.<\/p>\n
44. With the consent of parties, I appoint Hon’ble Mr. Justice A.P.
Shah, retired Chief Justice of Delhi High Court to be the sole arbitrator
to adjudicate the claims and counter claims of the parties. The
arbitration shall be conducted under the rules of the Delhi High Court
Arbitration Centre.<\/p>\n
OMP No.391\/2010 Page 25 of 26<\/p>\n
45. A copy of this order be communicated to the learned
arbitrator as well as to the Delhi High Court Arbitration Centre.<\/p>\n
46. Petition stands disposed of.<\/p>\n","protected":false},"excerpt":{"rendered":"
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