SHAKTI NATH & ORS. V. ALPHA TIGER CYPRUS INVESTMENT NO. LTD. & ORS.

Shakti Nath vs Alpha Tiger Cyprus Investment No. ... on 18 February 2020 Supreme Court of India Shakti Nath vs Alpha Tiger Cyprus Investment No. ... on 18 February 2020 Author: Uday Umesh Lalit Bench: Uday Umesh Lalit Hon Ble Ms. Malhotra Hemant Gupta NON REPORTABLE IN THE CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.1674 OF 2020 whereby a division bench of Signature Not Verified Digitally signed by MUKESH KUMAR Date: 2020.02.18 the Delhi High Court rejected the Appeal. 17:28:20 IST Reason 2. The factual background in which the present Appeal has been filed is as follows : 2.1. The Appellant Promoters entered into a Shareholders Agreementand a Share Subscription and Purchase Agreementwith Respondents No.1 and 2 both dated 21.03.2008 to acquire 50% shareholding in Respondent No. 3 for the development of a Special Economic Zone for Information Technology and Information Technology Enabled Services. The project was to be developed on a plot of land admeasuring approx. 45 202 sq. mts. in NOIDAwhich was allotted to one M s Sarv Mangal Real Tech Pvt. Ltd.and a Restated Share Subscription and Purchase Agreementboth Indian Kanoon Shakti Nath vs Alpha Tiger Cyprus Investment No. ... on 18 February 2020 As per Clause 3.3 and 3.4 of the RSSPA Respondents No. 1 and 2 were required to contribute Rs.45 crore to purchase and subscribe the shares in Respondent No.3 which was brought in by 2.3. The Appellants terminated both the agreements on 17.12.2009. The Respondents No. 1 and 2 invoked arbitration and submitted the Request for Arbitration to the ICC Court under the RSHA and RSSPA. 2.4. The Tribunal vide its awarddated 20.01.2015 allowed the claim of Respondents No. 1 and 2 and awarded the following : a) payment of Rs.45 00 27 747 together with Simple Interest @ 18% p.a. from 31.10.2011 to the date of the award b) payment of Simple Interest @ 15% p.a. on all sums awarded to the claimants in the award till the date of payment c) the Appellants were not entitled to repayment of lease rental paid to NOIDA from Respondents No. 1 and 2 and the Respondent Claimants were under no obligation to share future lease rental d) the Appellant Promoters were directed to pay costs of the arbitration comprising of i. fees and expenses of the arbitral tribunal and the ICC administrative expenses fixed by the ICC Court for the total amount of USD 900 000 ii. Rs.2 39 08 082 towards the legal fees of the Respondent Claimants iii. costs of the hearing venue in the amount of Rs.6 57 635 iv. a sum of Rs.1 274 931 in respect of other costs and expenses of the Respondent Claimants 2.5. The Appellants filed objections under S. 34 of the 1996 Act before the Delhi High Court. The learned Single Judge vide Order dated 09.02.2017 rejected the challenge on merits and held that it was an undisputed fact that Respondents No. 1 and 2 had brought in a sum of Rs.45 00 27 747 for the project. The Appellants had terminated the RSHA and RSPA soon after the funds were brought in by Respondents No. 1 and 2. The Court found the findings of the arbitral tribunal to be consistent with the terms of the agreement 2.6. Aggrieved the Appellants preferred an Appeal under S 37 of the Act before the Division Bench of the Delhi High Court. The Division Bench vide judgment and order dated 08.05.2017 rejected the Appeal as being devoid of any merit 3. The Appellants have challenged the Order passed under S 37 of the 1996 Act by way of the present Special Leave Petition Indian Kanoon Shakti Nath vs Alpha Tiger Cyprus Investment No. ... on 18 February 2020 3.1. This Court vide interim Order dated 15.09.2017 directed the Appellants to deposit an amount of Rs.20 00 00 000 in the Registry of this Court which was directed to be invested in a short term fixed deposit account with a nationalised bank. The Appellants were injuncted from alienating the Project Land so that in the ultimate eventuality if the award was sustained by this Court it could be realised from the sale of the Project Land 3.2. By a subsequent Order dated 01.05.2018 Respondent No.1 was permitted to withdraw an amount of Rs.10 crore unconditionally from the amount lying deposited in this Court. 3.3. By a further Order dated 14.11.2019 the Senior Counsel for the Appellants requested for time to find a suitable buyer for the Project Land. It was made clear that the sale would be under the auspices of a public authority or a court officer and the entire sale consideration would be deposited in the Registry of this Court It was further directed that the balance amount of Rs.10 crore along with the accrued interest which was lying been deposited in the Registry of this Court would be released to Respondent No.1 The counsel for the Appellants made a request to join NOIDA as a party to the present proceedings since the Project Land was leased out by NOIDA. Consequently Notice was issued to implead NOIDA in the proceedings 3.4. The Appellants filed an affidavit dated 05.12.2019 stating that the Project Land was free from any and all encumbrances and was not subject to any pre existing mortgage or charge It was further submitted that the Appellants were able to identify a party which was interested to acquire the sub lease of the Project Land viz. M s. Good Living Infrastructure Pvt. Ltd.for a consideration of Rs. 99 44 55 000 . This would be effectuated by acquisition of shares of Respondent No.3 which holds the aforesaid property under a sub lease executed between NOIDAthe Lessor M s Sarv Mangal Real Tech Pvt Ltd.the Lessee and Respondent No.3the sub lessee under Sub Lease dated 21.10.2009 In the said Affidavit Bhutani Group stated that it is aware of the pending litigation before this Court and is willing to deposit the entire sale consideration with the Registry of this Court including the dues payable to NOIDA 3.6. With respect to the dues of NODIA we requested the Counsel for NOIDA to ascertain whether penal interest on land rent and interest could be waived. 3.7. During the course of hearing on 22.1.2020 the dues payable to NOIDA were crystallised as follows : i) Pending Instalment amounts with Rs.23 21 00 000 Simple Interest @ 14% p.a ii) Lease Rent dues with Simple Interest Rs.11 93 00 000 @ 14% p.a iii)Time Extension charges Rs.6 57 38 900 iv) Additional amount payable to land Rs.93 36 577 owners as compensation @ 64.7 TOTAL Rs.42 64 75 477 4. After having heard the Counsel appearing for all the parties the challenge to the ICC award is hereby rejected. With respect to the amount awarded towards Interest and Penal Interest under the award the same has been modified by consent of parties as a prudent commercial decision in the following terms : i) The Appellants agree to make a total payment of Rs.107.50 Croresto Respondents No. 1 and 2 as full and final settlement of their dues under the award dated 20.01.2005 ii) Out of the total amount of Rs.107.50 crores Respondents No.1 and 2 have already received an amount of Rs.21 53 00 000 pursuant to the Interim Orders dated 01.05.2018 and 14.11.2019 passed by this Court. The balance amount payable to Respondents No.1 and 2 would be Rs.85 97 00 000 M s. Good Living Infrastructure Private Ltd. of the Bhutani Group agreed and undertook to pay Rs.99 44 55 000 for the purchase of the entire shareholding of Respondent No.3 IT Infrastructure Park Pvt. Ltd. from the Appellants and Respondents No.1 and 2 Out of this amount Rs. 42 64 75 477 would be paid directly towards the dues of NOIDA. The Bhutani Group would be at liberty to make a representation to NOIDA within one week for re schedulement as per its prevailing policy which would be decided within a further period of one Indian Kanoon Shakti Nath vs Alpha Tiger Cyprus Investment No. ... on 18 February 2020 iv) The balance sale consideration of Rs.56 79 79 523 would be deposited by M s Good Living Infrastructure in the Registry of this Court. The deposit by M s Good Living Infrastructure would be made in 2 tranches : Rs.10 00 00 000 Upfront payment to be deposited within 10 days of the passing of this Order Rs.56 79 79 523 To be deposited within 6 months from the date of this Order The aforesaid amounts would be made over to Respondent Nos.1 and 2 towards payment of the balance sale consideration v) The balance amount of Rs.29 17 20 477 payable by the Appellants to Respondents Ns.1 and 2 would be carried out within a period of 3 months from the passing of this Order vi) The orders of injunction dated 24.03.2017 and 17.08.2017 passed by the Delhi High Court restraining the Appellants from alienating Industrial Plots No.4 and 5 Block A Sector 16 NOIDA is hereby lifted to enable the Appellants to raise funds for payment of the balance amount as stated in parahereinabove 5. The Appellants were directed to file an Affidavit of Undertaking before this Court with respect to the obligations to be discharged as per the Consent Terms set out hereinabove 6. The Appellant No.1 Mr. Shakti Nath has filed an Affidavit of Undertaking dated 10.02.2020 on behalf of all the Appellants stating that 1. I am the Petitioner No.1 in the above mentioned Petition and am filling this affidavit on behalf of all Petitioners. Petitioners No.2 and 3 are my wife and son respectively and the Petitioner No.4 is a private limited company of which I am the Managing Director and 96.26% shareholder while the remaining shareholding is held by the Petitioners No.2 and 3 respectively 2. Under the kind supervision of this Honble Court the parties have agreed to settle the dispute forming part of the present Petition at a total settlement amount of Rs.107 50 00 000 for Rs.99 44 55 000 out of which an amount of Rs.42 64 75 477 or thereabouts shall be paid to NOIDA directly by GLI towards payments of dues to NOIDA as determined by this Honble Court. The balance amount of Rs.56 79 79 523 Rupees Fifty Six Crore Seventy Nine Lakhs Seventy Nine Thousand Five Hundred Twenty Three only) shall be deposited by GLI with this Honble Court for payment to the Respondents No.1 & 2 Indian Kanoon Shakti Nath vs Alpha Tiger Cyprus Investment No. ... on 18 February 2020 3. Of the total settlement amount of Rs.107.50 Crores the Respondents have already received an amount of Rs.21.53 Crores from the Registry of this Honble Court which comprises the amount of Rs.20 Crores deposited by the Petitioners pursuant to the order dated 15.09.2017 of this Honble Court along with the interest accrued thereon. Thus the total amount now payable to the Respondents No.1 & 2 comes to Rs.85.97 Crores. Since the Respondents No.1 & 2 will receive an amount of Rs.56 79 79 523 from GLI there will be a shortfall of Rs.29 17 20 477 approximately which will be deposited by the Petitioners with this Honble Court 4. The Petitioners undertake to deposit the above mentioned shortfall of Rs.29 17 20 477 or thereabouts within 3 months of the lifting of the status quo upon their immovable properties which has been ordered by the Honble Delhi High Court by its orders dated 24.03.2017 and 17.08.2017 passed in Execution Petition bearing OMP(COMM) No.417. The said status quo is required to be lifted in order to enable the Petitioners to raise loan against the said immovable properties so as to enable them to deposit the shortfall amount with this Honble Court 5. The Petitioners hereby undertake that till such time that the entire settlement amount is paid to the Respondents No.1 & 2 the Petitioners shall not create any third party rights or interest over the above mentioned immovable properties for the purpose of raising loans to deposit with this Honble Court the amounts payable to the Respondents No.1 & 2 as per the settlement reached between the 7. M s Good Living Infrastructure Pvt. Ltd.has also filed an Affidavit of Undertaking dated 10.02.2020 stating that 1. I am the CEO Additional Director of M s Good Living Infrastructure Pvt. Ltd.and have been duly authorized by GLI vide Resolution of Board of Directors dated 20.12.2019 to give the present undertaking on its behalf 2. That GLI undertakes to pay a sum of Rs.99 44 55 000 towards the purchase of entire shareholding of IT infrastructure Park Pvt. Ltd Respondent No. 3) from the Petitioners and Alpha Tiger Cyprus Investment No.2 Ltd. and Alpha Tiger Cyprus Investment No.3 Ltd. in order to acquire the sub lease of the property bearing Plot No. 001B situated at Sector 140A in Noida District Gautam Budh Nagar Uttar Pradesh 3. That out of total sum of Rs.99 44 55000 . GLI undertakes to pay the dues payable to NOIDA amounting to Rs.42 64 75 477 directly to NOIDA. In this regard GLI seeks liberty from this Honble Court to approach NOIDA for reschedulement of payment of the above mentioned sum. GLI undertakes to make the appropriate representation application to NOIDA for such reschedulement within one week of the receipt of the order passed by this Honble Court granting the liberty sought Indian Kanoon Shakti Nath vs Alpha Tiger Cyprus Investment No. ... on 18 February 2020 4. That GLI undertakes to deposit the balance purchase price after deducting the NOIDA dues therefrom with the Honble Court i.e. an amount of Rs.56 79 79 523 in the following manner Rs. 10 00 00 000 Upfront deposit to be made with the Court within 10 days of the signing of the Share Purchase Agreement between all the Parties which shall also be deposited in the custody of the Honble Court Rs. 46 79 79 523 To be deposited within a period of four months with an additional grace period of two months after the passing of the final order by the Honble Court 5. It is prayed that the balance amount of Rs.46 79 79 523 be distributed to Alpha Tiger Cyprus Investment No.2 Ltd. and Alpha Tiger Cyprus Investment No.3 Ltd by this Honble Court after the transfer of the entire shareholding of Respondent No.3 to GLI 6. I say that the above mentioned undertaking is voluntary and unconditional 8. In the event of any default in payment of the amounts by Appellants the entire amount awarded as per the award dated 20.01.2015 would become enforceable. However prior to enforcement a window of 2 months would be granted to the Appellants to make provision for compliance. On the expiry of the aforesaid period of 2 months the entire decree would become executable forthwith 9. M s Good Living Infrastructure Pvt. Ltd. is bound by the unconditional undertaking submitted on Affidavit before this Court. Any default by M s Good Living Infrastructure Pvt. Ltd. would be treated as a breach of the undertaking submitted to this Court The present Appeal is accordingly disposed of as per the aforesaid Consent Terms Pending applications if any stand disposed UDAY UMESH LALIT) ...........................J INDU MALHOTRA) New Delhi February 18 2020 Indian Kanoon 

Summary: “The court also held M/s Good Living Infrastructure Pvt. Ltd. is bound by the unconditional undertaking submitted on Affidavit before this Court. Any default by M/s Good Living Infrastructure Pvt. Ltd. would be treated as a breach of the undertaking submitted to this Court” The present Appeal has been filed to challenge an award passed in an ICC arbitration with its seat in New Delhi. The Appellant has challenged the judgment dated 08.05.2017 passed under Section 37 of the Arbitration and Conciliation Act, 1996 (“Act”), whereby a division bench of the Delhi High Court rejected the Appeal.The factual background in which the present Appeal has been filed is as follows The Appellant-Promoters entered into a Shareholders Agreement (“SHA”) and a Share Subscription and Purchase Agreement (“SSPA”) with Respondents No.1 and 2 both dated 21.03.2008 to acquire 50% shareholding in Respondent No. 3 for the development of a Special Economic Zone for Information Technology and Information Technology Enabled Services.The project was to be developed on a plot of land admeasuring approx. 45,202 sq. mts. in NOIDA (“Project Land”) which was allotted to one M/s Sarv Mangal Real Tech Pvt. Ltd. (“M/s Sarv Mangal”). The Project Land was sub-leased by M/s Sarv Mangal to Respondent No. 3.The SHA and SSPA were terminated. The parties entered into a Restated Shareholders Agreement (“RSHA”) and a Restated Share Subscription and Purchase Agreement (“RSSPA”) both dated 02.07.2009. As per Clause 3.3 and 3.4 of the RSSPA, Respondents No. 1 and 2 were required to contribute Rs.45 crore to purchase and subscribe the shares in Respondent No.3, which was brought in by 17.12.2009.The Appellants terminated both the agreements on 17.12.2009. The Respondents No. 1 and 2 invoked arbitration, and submitted the Request for Arbitration to the ICC Court under the RSHA and RSSPA.The Appellants filed objections under S. 34 of the 1996 Act before the Delhi High Court. The learned Single Judge vide Order dated 09.02.2017 rejected the challenge on merits, and held that it was an undisputed fact that Respondents No. 1 and 2 had brought in a sum of Rs.45,00,27,747/- for the project.Aggrieved, the Appellants preferred an Appeal under S. 37 of the Act before the Division Bench of the Delhi High Court. The Division Bench vide judgment and order dated 08.05.2017 rejected the Appeal as being devoid of any merit. ISSUES RAISEDWhether Appellants is allowed to able to acquire the sub-lease of the Project Land, viz. M/s. Good Living Infrastructure Pvt. Ltd or not? RATIO DECIDENDI:During the course of hearing on 22.1.2020, the dues payable to NOIDA were crystallised as follows-Pending Instalment amounts with Simple Interest @ 14% p.a. Rs.23,21,00,000Lease Rent dues with Simple Interest @ 14% p.a. Rs.11,93,00,000Time Extension charges Rs.6,57,38,900Additional amount payable to land – owners as compensation @ 64.7% Rs.93,36,577, TOTAL Rs.42,64,75,477 After having heard the Counsel appearing for all the parties, the challenge to the ICC award is hereby rejected. In the event of any default in payment of the amounts by Appellants, the entire amount awarded as per the award dated 20.01.2015, would become enforceable. However, prior to enforcement, a window of 2 months would be granted to the Appellants to make provision for compliance. On the expiry of the aforesaid period of 2 months, the entire decree would become executable forthwith.The court also held M/s Good Living Infrastructure Pvt. Ltd. is bound by the unconditional undertaking submitted on Affidavit before this Court. Any default by M/s Good Living Infrastructure Pvt. Ltd. would be treated as a breach of the undertaking submitted to this Court. DECISION HELD BY COURTThe present Appeal is accordingly disposed of as per the aforesaid Consent Terms.Pending applications, if any, stand disposed. 
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