1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY APPLICATION NO.1543 OF 2008 IN COMPANY PETITION NO.343 OF 2007 WITH COMPANY APPLICATION NO.482 O 2007 Raytheon Company USA ..Applicant. vs. JSW Energy Ltd. ..Respondents. Mr.Sohail Dutt with Ms.Merlyn Monterio and Mr.Mittal for the Applicant. Mr.Shyam Mehta i/b. M/s. Rajesh Shah & Co. or the Respondents. CORAM : S.J. VAZIFDAR, J. DATE : 17TH MARCH, 2009. P.C. :- 1. The Applicant seeks the modification of a crucial term in the minutes of an order which was consented to by all the parties, including the Applicant. I have rejected the above Company Application. 2. The Respondent herein, was the Petitioner in the above Company Petition. The Company Petition was filed seeking the sanction of this Court to a scheme of arrangement between the 2 Petitioner and JSW Energy Investments Pvt. Ltd. It is not necessary for the purpose of this order to deal with the scheme in detail. Suffice it to state that the scheme involved the de-merger of the investment division of the Petitioner, the transferor company, into JSW Energy Investments Pvt. Ltd., the resulting company. The resulting company also filed a petition being Company Petition No.344 of 2007 seeking the sanction to the said scheme. 3. The scheme was opposed by the Applicant. According to the Applicant, the Petitioner is indebted to it in the sum of about Rs.23,32,19,199/-. 4(A). Minutes of the order were executed between the Petitioner, the resulting company and the Applicant, which were taken on record. There is no dispute that the terms and conditions contained therein had been agreed to between the parties. By an order and judgment dated 1.11.2007 passed in the above Company Petition and in Company Petition No.344 of 2007, the learned Judge sanctioned the scheme. In the judgment, the learned Judge took the said minutes of the order on record, and recorded that the terms and conditions contained therein had been agreed to between the parties. (B). The relevant part of the minutes of the order which were 3 also extracted in the said judgment read as under :- “JSW Energy "JSW Energy Limited (`JSW Energy' or `the Petitioner') will deposit with the Prothonotary and Senior Master of this Hon'ble Court out of Rs.23,32,19,199 being the amount received from the Income Tax Department a sum of Rs.22,38,75,476 (Rs.23,32,19,199 - Rs.93,43,723) within 10 days of receipt of the Order. The sum of Rs.93,43,723 is the tax withholding at source in respect of the interest component which shall be deposited simultaneously by JSW Energy with the Income Tax Department and TDS Certificate shall be provided to Raytheon. Out of the said sum of Rs.22,38,75,476 amount of Rs.20,81,84,091 (Rs.22,38,75,476 less Rs.1,56,91,384) would be remitted by Prothonotary and Senior Master to Raytheon Company, USA (Raytheon Company) in United States Dollars (US Dollars) at the current exchange rate on the following terms: ? "(i)? Raytheon Ebasco Overseas Ltd. hereby gives its consent to the above payment being made to Raytheon Company in accordance with the Heads of Agreement dated December, 10, 2003. (ii)? JSW Energy undertakes that it shall within 10 days from the date of receipt of this Order, simultaneously apply to the Reserve Bank of India (RBI), Mumbai, seeking their approval for remittance in US Dollars and shall make all 4 reasonable and best efforts to obtain the approval from the RBI for remitting Rs.20,81,84,091 in US Dollars to Raytheon Company. JSW Energy shall also simultaneously with the application to the RBI give a letter of authority to Mr.Rajiv Tiwari, Power of Attorney holder of Raytheon Company to follow up with the RBI. (iii)? That the amount of Rs.1,56,91,384 shall be retained by Prothonotary and Senior Master and kept in a fixed deposit. In the event there is a demand by the Income Tax Department, in respect of this amount or any other amount of tax, interest and penalty on amount of refund received shall be released to JSW Energy to be paid to the Income Tax Department. In the event no demand is raised or raised for a lesser amount, then the same shall be remitted to Raytheon by the Prothonotary and Senior Master on April 1, 2011 after obtaining any approval of JSW Energy. (iv)? In the event the sum of Rs.1,56,91,384 is paid to the Income Tax Department by JSW Energy pursuant to demand by the IT Authorities, JSW Energy through Raytheon Company shall challenge any such demand and in the event such demand is set aside, then the amount of Rs.1,56,91,384 shall be refunded to Raytheon forthwith after obtaining any approval by JSW Energy. (v)? Upon receipt of approval by the RBI, the Prothonotary and Senior Master of this Court shall upon Raytheon Company providing Stand-by Letter of Credit (SLOC) for amount of Rs.23,32,19,199 and an undertaking as per the terms mentioned hereunder, remit Rs.20,81,84,019 to 5 Raytheon Company. The Prothonotary and Senior Master of this Court shall hand over the SLOC and the undertaking to JSW Energy. (vi)? Raytheon Company shall furnish to JSW Energy an irrevocable SLOC in favour of JSW Energy given by foreign bank and confirmed by the State Bank of India, Mumbai Branch which shall be encashable/payable to JSW Energy within a period of four weeks of the demand notice from the Income-tax Department pursuant to Karnataka High Court Judgment unless stay order is obtained, under the provisions of the Income-tax Act for the payment of Rs.23,32,19,199 less Rs.1,56,91,384 in case the same is lying with the Prothonotary and Senior Master of this Court. However, in case the amount of Rs.1,56,91,384 has been remitted by the Prothonotary and Senior Master of this Court to Raytheon Company USA the SLOC shall be encashable for Rs.23,32,19,199. (vii)? It is agreed that the SLOC shall be kept valid initially for a period of 3 years and shall be kept alive until Twenty Four months from the date of the Karnataka High Court judgment and in the event any appeal being filed in the Supreme Court, till the final outcome of the Appeal and for a period of two weeks thereafter. The SLOC shall also be encashable by JSW Energy in the event of the demand for penalty being upheld by the Supreme Court of India. (viii)? In the event the SLOC is not renewed one month before its expiry date, JSW Energy shall be at liberty to encash the 6 SLOC and to retain the amount as security for payment. (ix)? Raytheon Company shall provide an undertaking from a responsible officer preferably in India undertaking that the SLOC shall be encashed by JSW Energy in accordance with the above terms and the terms of the SLOC. (x)?JSW Energy shall immediately cooperate with Raytheon Company in filing and conducting of the Special Leave Petition/tax appeal in the Supreme Court of India and for seeking any interim order relating to the stay of the judgment of the Karnataka High Court. (xi)? Remittance to Raytheon Company in US Dollars shall be made by the Prothonotary and Senior Master details thereof are as under: (a)Name of the Company Raytheon Company, USA (b) Address of the 870, Winter Street company Waltham, MA024811449 USA. (c) Name of the Bank Bank of America, NA (d) Name of the Branch Bank of America, NA (e) Address of the Bank 100, West 33rd Street New York, NY, USA (f) Account Number 1233245954 (g) Type of Account Checking 7 (h) Swift Code BOFAUS3N (i) ABA Number 026009593 (xii)? It is clarified that interest amount if any payable by JSW Energy Ltd. to Raytheon in respect of refund already received and retained by them as well as interest claim if any which may arise on JSW Energy from Income Tax Authority in the event of Income Tax Department succeeding in the pending appeals in the Karnataka High Court are both kept open to be decided in appropriate proceedings.” (C). Paragraph 6 of the judgment accepted the said minutes of the order and treated the same to be a part of the said order and judgment. The statements and undertakings of the parties contained in the minutes of the order were accepted and it was ordered that the objection of the Applicant accordingly stood disposed of. 5. The present application seeks a modification of clause (vi). Clause (vi) provides for the irrevocable SLOC to be given by the foreign bank, to be confirmed by the State Bank of India. The Applicant, by this modification, seeks to substitute the State Bank of India by the Bank of America. The Applicant also seeks an order directing the Petitioner to pay the confirmation charges of the bank. The 8 justification stated in prayer (b) of the application is that the confirmation was proposed and insisted upon by the Petitioner and that the Petitioner is already protected by the SLOC, to be provided by a foreign bank. Alternatively, the Petitioner seeks an order dispensing with the condition of confirmation allegedly to save huge costs and to avoid formalities connected therewith. 6. The above terms had been agreed to between the parties. It is not permissible to dispense with the terms to the detriment of the Petitioner without the consent of the Petitioner. In any event, it is not unreasonable or unnatural for a party in this Court to seek to be protected by a guarantee of a nationalised bank. It is obviously for that reason that the confirmation of the SLOC to be given by the foreign bank was required to be confirmed by the State Bank of India. This is never a casual requirement. It is one of utmost importance to a party agreeing to the other withdrawing amounts otherwise to be deposited in this Court and to be invested by this Court. This investment is almost invariably in a nationalised bank. In any event, this was a term of a bargain between the parties. The Petitioner insisted, as it was entitled to, on the SLOC being confirmed by the State Bank of 9 India and the Applicant agreed to furnish the same. Having so agreed, it is not now open to the Applicant to seek a modification of the term. 7. As far as the Applicant is concerned it is fully protected by the deposit of the said sum of Rs. 22,38,75,476/- in this Court. If the Applicant is unable to obtain the confirmation from the State Bank of India the only consequence is that the amount will remain deposited in this Court and be invested in a nationalised bank thereby fully securing the interests of all the parties. 8. On the other hand, in the event of the Applicant being permitted to take the money away, without the confirmation of the State Bank of India, which was expressly agreed to between the parties, it would be unfair and, to the detriment of the Petitioner, apart from being contrary to the terms of the agreement embodied in the minutes of the order and in terms whereof the order and judgment dated 1.11.2007 was passed. I am not inclined to force the Petitioner to be exposed to a risk it has not agreed to take. 9. It is important to note that under the above terms, it is the Applicant who had agreed to obtain the confirmation of the State Bank of India to the SLOC. That this may have been at the instance of the Petitioner is irrelevant. The Applicant agreed to the term and is now bound by it. 10 10. The State Bank of India has not refused to confirm the SLOC to be issued by the foreign bank. The State Bank of India has insisted on certain terms and conditions, including that the SLOC should be a demand guarantee payable on simple demand. Apart from the fact that this is entirely a matter for the State Bank of India to decide upon, the requirement is not only reasonable but quite usual and normal. 11. That the State Bank of India may have demanded from the Applicant commission at a rate higher than what the Applicant is willing to pay, is not a ground for altering the terms and conditions, arrived at with the consent of the parties. This appears to be the main reason why the Applicant has been unable to obtain the confirmation of the State Bank of India. Under the terms of the minutes of the order, the Applicant had agreed to obtain confirmation without any qualification as to the commission payable to the State Bank of India. This is a matter of negotiation between State Bank of India and the Applicant and the Petitioner is not concerned with the same. This, therefore, cannot be a ground for varying the terms to which the parties had consented. 12. In any event, there is no prejudice whatsoever to the Applicant. If the Applicant is unable to obtain the confirmation of 11 the State bank of India, the only consequence is that the money will continue to be invested by this Court with a nationalised bank. I am informed that the amount has already been invested by the Prothonotary and Senior Master. In the event of it not having been so done, the Prothonotary and Senior Master shall forthwith invest the same in fixed deposit in any nationalised bank initially for a period of one year and thereafter for the like periods of one year each. In the event of the amount having been invested, the same shall upon maturity be reinvested in fixed deposit in a nationalised bank for a period of one year and thereafter for like periods of one year each. 13. In the circumstances, the application is dismissed.