Piramal Capital and Housing Finance Ltd v. Atria Brindavan Power Private Limited

This Commercial Suit is instituted for recovery of an amount of Rs.4,64,67,41,242/- along with interest, and a declaration that the transfer of shares of Defendant No. 5 in Defendant No.6-company to Defendant No. 7 and all the documents executed in connection therewith are illegal, null and void, and to set aside the said transfer and also for compensation for the loss caused to the Plaintiffs by virtue of the said transfer.

The material averments in the Plaint, relevant for the determination of the Application for interim relief, can be summarized as under:

2.1 Plaintiff No.1 is an unlisted public company incorporated under the Companies Act, 1956. Plaintiff No. 2 is an Asset Reconstruction Company. Plaintiff No.2 is the assignee of Plaintiff No.1.

2.2 Defendant No.1-(“Atria”) is a private limited company. Defendant No.1 is, inter alia, engaged in the business of generating power through renewable energy sources. Defendant Nos. 2 and 3 (“Raju Brothers”) are promoters and directors of Atria (D1) . Defendant No. 4 is a private (family) trust and also a promoter of Atria (D1). Raju Brothers are SSP/ARS trustees of Defendant No.4-Trust. Defendant Nos. 5 and 6 are the subsidiary companies of Atria (D1). Likewise, Defendant Nos. 12 to 26 -IA-1389-2025.DOC are also the subsidiary companies of Atria (D1).

2.3 Atria (D1) had issued, on a private placement basis, 90,000 debentures of face value of Rs.1 Lakh each, aggregating to Rs.900 crores by way of a Debenture Trust Deed (Atria DTD) dated 5 th December 2016, executed by and between Defendant Nos. 1 to 4 and Axis Trustee Services Limited (D9), the Debenture Trustee. Under the said Atria DTD, the issue of debentures was divided into six tranches aggregating to a principal amount of Rs. 750 Crores with an optional tranche aggregating to Rs.150 Crores.

2.4 Plaintiff No.1 during the period 2016 and 2017 subscribed to 24,250 debentures by advancing an aggregate sum of Rs.242.50 crores, i.e. first tranche of Rs.152.50 Crores on 20th December 2016, the second tranche of Rs.35 Crores; on 7th July 2017, and the third tranche of part subscription amounting to Rs. 55 Crores on 18th December 2017.

2.5 Defendant No.1 was required to make payment of coupon/interest amount to the debenture holders on the dates and rates stipulated under Clause 25 of Atria DTD.

2.6 The principal/redemption amount was required to be paid/redeemed by Atria (D1) as on the dates stipulated under Clause SSP/ARS 23, i.e., 20% on 19th December 2022, and the balance 80% on 19th -IA-1389-2025.DOC December 2023.

2.7 Under Clause 12 of Atria DTD, Defendant Nos. 1 to 4, inter alia, agreed to create, and were required to perfect the security interest on the security created in favour of the debenture Trustee for the benefit of debenture holders. The securities included, inter alia, creation and perfection of pledge over 100% of the issued and fully paid up share capital of the issuer and creation and perfection of pledge over all the unencumbered securities in the subsidiaries whose securities were not pledged to Senior Project Lenders of such subsidiaries, as particularized in part A of Schedule XXIII.

2.8 As a part of the security basket, Defendant Nos. 1 to 4 have executed a Non-Disposal Undertaking (NDU) and a Power of Attorney (PoA) in respect of all the unencumbered securities held by the issuer and/or the promoter, directly or indirectly, in subsidiaries whose securities were pledged to senior project lenders of such subsidiaries, as particularized in Part B of Schedule XXIII and execution of the NDU and PoA in respect of unencumbered securities held by the issuer in securities whose securities were pledged to Senior Project Lenders of such subsidiaries.

2.9 In furtherance of the security package, on 7th December 2016, a Non-Disposal Agreement was executed by and between Atria (D1), WPA SSP/ARS -IA-1389-2025.DOC Clean Energy Private Limited (D5) and Betul Wind Farms Private Limited (D6) and BGSE Financial Limited (D10), the DP Agent, under the NDU, in relation to WPA’s (D5) unencumbered equity shares in Betul (D6).

2.10 Under the terms of NDU, WPA (D5) expressly undertook that it will not sale, transfer assign, dispose of, pledge, mortgage, hypothecate, charge or otherwise encumber the assets in any manner whatsoever, without prior consent of the security trustee. Under Clause 33 of the Atria DTD, Defendant Nos. 1 to 4 also agreed and undertook that they will not, and ensure that the “subsidiaries” shall not be permitted to make, any change in the shareholding of their subsidiaries, issue any debentures or create any security over their assets or shares, without the prior written consent of the debenture holders.

2.11 It is the claim of the Plaintiff that, on 19th December 2023, the final settlement date, Atria (D1) was liable to pay a sum of Rs.408,86,72,718/- comprising of the principal outstanding of Rs. 194 Crores, and interest, as agreed. Atria (D1), however, committed default in the discharge of its payment obligation. Thus an event of default occurred. Plaintiff No.1 reported the event of default on National E- Governance Services Limited (NESL).

2.12 In the meanwhile, pursuant to Clause 34.1.3 of Atria DTD, Plaintiff No.1 entered into a Deed of Assignment with Plaintiff No.2, on SSP/ARS -IA-1389-2025.DOC 13th February 2024, and thereby assigned the debentures exposure along with right, title and interest in favour of Plaintiff No.2. Despite having committed default, Defendant Nos. 1 to 4, the Plaintiffs assert, instituted a frivolous Suit, being Commercial OS No. 298 of 2024, against the Plaintiffs, Baboon Investments Holding B.V. (D11), another debenture holder under Atria DTD, and Axis Trustee (D9), at Bengaluru.

2.13 In the said Suit, the Commercial Court passed an order restraining the Plaintiffs as well as Baboon Investments (D11) from acting and exercising the rights under the Deed of Assignment and Atria DTD. Eventually, by an order dated 9th May 2024, the Karnataka High Court clarified that the said order dated 25th April 2024 passed by the

Commercial Court would not come in the way of the Plaintiffs in initiating joint action against Atria (D1).

2.14 Thereupon, the Plaintiffs filed a joint Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“IBC Code”) against Atria (D1) before the NCLT, Bengaluru, for default in discharge of financial debt.

2.15 It is claim of the Plaintiffs that towards the end of July 2024, upon perusal of the documents filed by Betul (D6), before the Ministry of Corporate Affairs, the Plaintiffs found that Betul (D6) has issued several non-convertible debentures aggregating to Rs. 210 Crores under SSP/ARS -IA-1389-2025.DOC a Debenture Trust Deed dated 27th March 2024 executed between Betul (D6) and Vistra (D8) (“Betul DTD). It further transpired that, WPA Clean Energy’s (D5) 50.01% shareholdings in Betul (D6) was held by Bammco Private Limited (D7). WPA Clean Energy (D5), Plaintiffs aver, surreptitiously, illegally and unauthorizedly transferred its entire shareholding in Betul (D6) in favour of Bammco (D7). The Plaintiffs claim Bammco (D7) purchased the said shares despite notice of encumbrances of the Plaintiffs over the said shares.

2.16 Betul (D6) has further jeopardized the security of the Plaintiffs by issuing secured Non-Convertible debentures (NCDs) aggregating to Rs. 210 Crores under Betul DTD, without obtaining the consent of Axis Trustee (D9), the debenture trustee under Atria DTD. Hence the Suit for diverse reliefs.

2.17 By the instant Application, the Plaintiffs are seeking interim reliefs asserting that Defendant Nos. 1 to 4, in breach of their obligations under Atria DTD and related documents, have taken active steps to jeopardize the securities created in favour of the Applicants. Defendant Nos. 1 to 4 and subsidiaries of Defendant No.1, i.e. Defendant Nos. 5, 6 and 12 to 26 are surreptitiously attempting to alienate their assets with a view to make unlawful gain and profit and/or delay the Plaintiffs from realising their dues, and are also eroding the value of the securities created in favour of the Plaintiffs. SSP/ARS -IA-1389-2025.DOC Thus, in the context of the breach of contractual obligations and illegal actions, the Plaintiffs apprehend that there is a substantial risk that Defendant Nos. 1 to 4 may not honour any judgment or decree rendered in favour of the Plaintiffs and/or securities furnished may not turn out to be sufficient to discharge the debt.

2.18 Therefore, the Plaintiffs are seeking interim relief to direct the Defendant Nos. 1 to 4 to jointly and severally deposit the outstanding amount of Rs. 4,64,67,41,242/- in this Court, permit the Plaintiffs to withdraw the said amount to be deposited and, in the alternative, direct Defendant Nos. 1 to 4 to furnish solvent securities.

2.19 Asserting that the Plaintiffs have a genuine apprehension that Defendant Nos. 1 to 6 and 12 and 26 would continue to deal and/or part with securities created in favour of the Plaintiffs under Atria DTD, the Plaintiffs have prayed for an interim injunction to restrain Defendant No.1 to 6 and 12 to 26 from dealing with, alienating or creating any right, title or interest of any nature in respect of the securities created in favour of the Plaintiffs. Defendant Nos. 7 and 8 are also sought to be restrained from dealing with 38,82,882 shares in Betul (D6), allegedly illegally transferred by WPA Clean Energy (D5) in favour of Bammco (D7), and to direct WPA Clean Energy (D5) to deposit the entire purchase consideration received upon transfer of SSP/ARS those shares in Court. In addition, disclosures are sought from -IA-1389-2025.DOC Defendant Nos. 1 to 7 and 12 to 26.

Affidavits in Reply have been filed by the Defendants.

3.1 In the Affidavit in Reply on behalf of Defendant Nos. 1, 2 and 4, the tenability of the suit is assailed on the ground that this Court has no jurisdiction to entertain, try and decide the suit, as no part of the cause of action has allegedly arisen within local limits of jurisdiction of this Court. The registered office of the Defendant-companies is in Bengaluru. The transactions in question were executed in Bengaluru and the endeavor of the Plaintiffs to draw support from Clause 72 of Atria DTD to invoke the jurisdiction of Mumbai Courts is stated to be misplaced as Defendant Nos. 5, 6 to 12 to 26 are not bound by Atria DTD, being non-signatories thereto.

3.2 The instant Suit is also stated to be barred by the provisions contained in Section 10 of the Code of Civil Procedure, 1908 (“the Code”). The Defendants contend, the subject matter of the suit revolving around the alleged default in payment and transfer of securities under Atria DTD, is directly and substantially in issue in a previously instituted suit, i.e., Commercial OS No. 298 of 2024, before the Commercial Court at Bengaluru. The Plaintiffs have, in fact, resorted to multiple proceedings to agitate the same cause, with intent SSP/ARS to harass the Defendants. Reference is made to the Petition under -IA-1389-2025.DOC Section 7 of the IBC before the NCLT, Bengaluru.

3.3 The Defendants also contend that the interdict contained in Section12A of the Commercial Courts Act, 2015 comes into play. With a view to avoid mandatory pre-institution mediation, the Plaintiffs have concocted a false case of urgency. It is contended that the alleged information regarding transfer of shares was obtained in the month of July 2024 and, yet, the suit came to be instituted on 27 th August 2024. The said claim of knowledge about the transaction in the month of July 2024 is belied by the fact that Form PAS-3 dated 30th March 2024 was publicly available on the website of Ministry of Corporate Affairs since March 2024.Thus, the suit which has been instituted in breach of the mandate contained in Section 12A of the Commercial Courts Act under the pretext of urgency cannot be entertained, and, therefore, the Plaint is required to be rejected under the provisions of Order VII Rule 11 of the Code.

3.4 The Defendants contend, the suit suffers from the vice of suppressio veri and suggestio falsi. The Plaintiffs have not approached the Court with clean hands and have made positive false statements. On this ground alone, the Interim Application ought to be rejected.

3.5 On the merits of the matter, the Defendants contended that Plaintiff No.1 and Baboon (D11) are guilty of repudiatory breaches of SSP/ARS -IA-1389-2025.DOC Atria DTD. The debenture holders failed to perform their most fundamental obligation under the Atria DTD, i.e., to subscribe to all the tranches under Atria DTD. Plaintiff No.1 subscribed to the I, II and a part of the third tranche only. The failure of Plaintiff No.1 to subscribe to all the tranches, defeated the very purpose of issue of debentures. The Defendants found themselves in precarious situation on account of repudiatory breaches committed by Plaintiff No.1 and Defendant No.11, though the debenture holders enjoyed the cover of security created in terms of Atria DTD, far in excess of the funds advanced by the debenture holders.

3.6 On account of the repudiatory breaches by failing to subscribe to all the tranches, the Defendants contend, they stand released from obligations under the Atria DTD. In addition, the unilateral assignment of its rights under Atria DTD by Plaintiff No.1 to Plaintiff No.2, in breach of the terms of Atria DTD, has further compounded the situation.

3.7 In view of the repudiatory breaches and unlawful assignment, the Defendants contend the securities furnished by the Defendants stand fully released and the Defendants, as pledgers stand wholly discharged and, therefore, there is no prima facie case in favour of the Plaintiffs.

3.8 It is further contended that, the Plaintiffs have deliberately not disclosed the payments made by the Defendant No.1. The Defendants have serviced an amount of Rs.393,47,44,809/- and, yet, by suppressing SSP/ARS -IA-1389-2025.DOC such substantial repayment, the Plaintiffs are seeking reliefs in the nature of attachment before judgment. According to the Defendants, the Plaintiffs have miserably failed to make out a strong prima case and the acts which demonstrate that the Defendants, with intent to obstruct or delay the execution of decree, have dealt with the property. Thus, at this stage, a direction for deposit of the alleged outstanding amount or furnishing security in lieu thereof, being clearly in the nature of attachment before judgment, cannot be entertained.

3.9 In any event, the reliefs sought in the Interim Application partake the character of the final reliefs claimed in the suit. Therefore, the grant of interim reliefs, at this stage, would, in effect, amount to final adjudication of the Plaintiffs claim for final relief.

3.10 The Defendants contend the Plaintiffs claim of breach of the NDU is wholly unsustainable. In accordance with Clause 6.1.5 and 33.1.5 of Atria DTD, WPA Clean Energy (D5) and United Sustainable Energy India Private Limited (“USEIPL”) have been permitted to swap their respective shareholdings in the Betul (D6) and Kukru Wind Power Private Limited (D14). Under the terms of Atria DTD, the Defendants were entitled to pay any amount towards settlement of payment with USEIPL, not exceeding Rs.100 Crores, in the event of any valuation difference between the shares of Betul (D6) and Kukru Wind Power (D14), to effect the flip in shareholding in terms of WPA SPV SSP/ARS -IA-1389-2025.DOC Investment Agreements. Thus to honour the pre-existing contractual obligation, which is recorded in Atria DTD and in terms of Atria DTD, WPA Clean Energy (D5) and USEIPL proceeded to swap their respective shareholding in Betul (D6) and Kukru Wind Power (D14). Consequently, Bammco (D7) a nominee of USEIPL has acquired the shareholding of WPA Clean Energy (D5) in Betul (D6). Resultantly, Betul (D6) is no longer a subsidiary of Atria (D1).

3.11 The Defendants alleged that Plaintiff No.1 has exhibited extreme bad faith and adopted coercive tactics despite having committed repudiatory breaches. The failure on the part of the debenture holders to fully subscribe to the debentures starved Atria’s (D1) projects of funds, impacted cashflow and business operations. Yet, Plaintiff No.1 unilaterally demanded an increase in Internal Rate of Return (IRR) from from 16% to 18% in breach of the express terms of Atria DTD. The debenture holders also exerted pressure on the Defendants for premature payments. The debenture holders thus with mala fide design tried to create “self-serving events of default” to wriggle out of their own subscription obligations. Yet, Atria (D1) has discharged its payment obligation and the Plaintiffs continued to enjoy the benefit of security cover far in excess of their actual advance.

3.12 The Defendants claim, Plaintiff No. 1 and Baboon (D11) are already secured far in excess of the debentures held by the debenture SSP/ARS -IA-1389-2025.DOC holders. The assets base of Atria (D1) is substantially sound and, thus, the apprehension on the part of the Plaintiffs that either the Plaintiff would not be in a position to have the fruits of the decree or there is likelihood of depletion of the secured assets is expressed with a view to show a cause of action which does not exist. Therefore, the balance of convenience tilts in favour of the Defendants. As the debenture holders are adequately secured they would not suffer any irreparable loss. Thus, the Application deserves to be rejected.

Defendant No.3 has adopted the Affidavit in Reply filed on behalf of Defendant Nos. 1, 2 and 4.

WPA Clean Energy (D5) has also adopted and affirmed the contentions in the Affidavit in Reply filed on behalf of Defendant Nos. 1, 2 and 4. In addition, it is claimed that since WPA Clean Energy (D5) is not a party to the Atria DTD, there is no cause of action against WPA Clean Energy (D5).

5.1 This Court has no jurisdiction as WPA Clean Energy’s (D5) registered office is not within the jurisdiction of this Court nor the transaction impugned in the suit has taken place within the jurisdiction of this Court.

5.2 With regard to the swapping of the shareholding, WPA Clean Energy (D5) claims that the swapping of shares between WPA Clean Energy (D5) and USEIPL was not violation of Atria DTD. In contrast, SSP/ARS Atria DTD expressly refers to such Agreements. It is contended that, the covenants in Atria DTD will have precedence over the provisions in -IA-1389-2025.DOC NDU.

5.3 Lastly, it is contended that Plaintiff No.1 enjoys the securities meant for securing a debt of Rs.900 Crores, through the value of investment by Plaintiff No.1 is only to the tune of Rs.242.50 Crores. The securities created by the Defendants are thus far in excess of the current holding of debentures by the debenture holders.

Bammco (D7) has also resisted the Application. The territorial jurisdiction of this Court to entertain the Suit qua Defendant No. 7 is questioned. Defendant Nos. 5, 6 and 7 are all based in Bengaluru. The entirety of cause of action is alleged to have arisen outside this Court’s limits, and thus this Court lacks territorial jurisdiction. Secondly, it is contended that, the transactions in question have been completed in compliance with applicable laws and governing Agreements. The Plaintiffs have thus no legal right to challenge the validity of the share transfer to Bammco (D7) or subsequent encumbrances in favour of Vistra (D8). At any rate, NDU, dated 7th December 2016 contains only a personal covenant against WPA Clean Energy (D5). Thus, it would give rise to a claim for damages against WPA Clean Energy (D5) and not against Bammco (D7). SSP/ARS -IA-1389-2025.DOC

Vistra (D8) has also resisted the prayers in the Application. In addition to the grounds of interim reliefs being in the nature of final relief, the delay and laches, in the context of bar under Section 12A of the Commercial Courts Act, sufficiency of existing securities and legal and valid pledge of the shares held by Bammco (D7), Vistra (D8) contends that Vistra (D8) is a third party entirely unconnected, unrelated and unconcerned with the inter se disputes between the Plaintiff and Defendant Nos. 1 to 4. There is no privity of contract between WPA Clean Energy (D5) and Vistra (D8) who is a bona fide pledgee and had no knowledge of the purported NDU. Moreover, the depository participant, BGSE Financials Limited (D10), never raised any objection to treating the WPA (D5) shareholding in Betual (D6) as unencumbered.

7.1 Vistra (D8) contends that due to the failure on the part of the Plaintiffs to comply with the SEBI’s circular dated 14th June 2017, the Plaintiffs action is unsustainable. The Plaintiffs, according to Vistra (D8), through their agent, acquiesced to the transaction.

7.2 Lastly, according to Vistra (D8), at best the Plaintiffs exclusive remedy is a claim for damages against WPA Clean Energy (D5). The nature of NDU which contains only a promise for future security, coupled with a subsequent sale to a third party and the bona fide pledge to Vistra (D8) preclude any relief against the pledged shares. SSP/ARS -IA-1389-2025.DOC

Atria Wind Private Limited (D12) has also contested the Application. All the contentions raised on behalf of Defendant Nos. 1 to 4 have been adopted. In addition, it is contended the swapping of shares is not in violation of Atria DTD since the latter gives express notice of swapping of shares. In any event, Plaintiff No.1 who has subscribed to 2450 debentures for a total sum of Rs.242.50 Crores is adequately secured as the securities crated by the Defendants are far in excess of the current debenture holdings. The Plaintiffs have failed to plead and prima facie demonstrate that existing securities are insufficient. Thus, no interim relief can be granted.

Atria Solar Private Limited (D21) and Atria Hydel (KRS) Private Limited (D26) have also contested the Application on the grounds similar to those raised by the co-Defendants.

Affidavits in Rejoinder have been filed on behalf of the Plaintiffs controverting the contentions on behalf of the Defendants in the aforesaid Affidavits in Reply. Further Affidavits followed. SUBMISSIONS:

Mr. Dhond, the learned Senior Advocate for the Plaintiffs submitted that, this is an open and shut case of flagrant violation of contractual obligations. On the one hand, Defendant Nos. 1 to 4 have SSP/ARS -IA-1389-2025.DOC committed default in payment towards the coupon/interest amount and redemption of debentures. On the other hand, the Defendants have surreptitiously diluted the security of the Plaintiffs by transferring the shareholding of WPA (D5) in Betul (D6) in favour of Bammco (D7), in clear breach of NDU. Yet, in order to further delay and defeat the claim of the Plaintiffs and Defendant No.11, a co-debenture holder, the Defendants have raised all sorts of technical defences. In the face of a clear case of breach of contractual obligations and erosion of the value of security of the Plaintiffs, all the parameters for grant of interim reliefs stand fulfilled. Lest, the Plaintiffs would be left in the lurch with no prospect of realisation of the outstanding dues, even if, eventually, a decree is passed in the suit. Therefore, it is necessary to grant comprehensive interim reliefs to protect the interest of the Plaintiffs.

Mr. Dhond submitted that, none of the grounds sought to be raised to oppose the interim reliefs merit countenance. The defence of repudiatory breach on account of the alleged non-subscription to all tranches of debentures, was raised only after the default on the part of the Defendants to discharge the debt when it fell due. Not only the Defendant Nos. 1 to 4 never raised any dispute about non-subscription to all the tranches of debentures but, by their positive acts, affirmed their contractual obligations even in respect of the exposure of Plaintiff No.1. Defendant No.1 continued to make payment of interest and a SSP/ARS -IA-1389-2025.DOC portion of principal amount, acknowledged the debt under the DTD in its Financial Statements, including for Financial Year 2022-2023, and expressly admitted, vide letter dated 24th November 2022, that it would pay the redemption amount of 80% of debentures, when it fell due on 31st December 2023.

The technical objections to the maintainability of the suit under Section 10 of the Code and Section 12A of the Commercial Courts Act, as well as on the ground of territorial and subject matter jurisdiction, according to Mr. Dhond, have been raised to sidestep the pivotal issues that arise for determination.

Mr. Dhond would urge that, in the facts of the case, the bar under Section 10 of the Code has no application at all as the issues that arise for determination in the Bengaluru suit are substantially and materially different from the issues that crop-up for the consideration in the instant suit. At any rate, Mr. Dhond would submit that, bar of Section 10 need not preclude the Court from considering the prayer for interim prayer as what Section 10 precludes is the trial of the subsequent suit and not grant of interim reliefs to meet exigencies of the situation. Reliance was placed by Mr. Dhond on the judgment of this Court in the case of Sennaji Kapuechand Vs Pannaji Devichand1.

The objection that the suit does not contemplate urgent interim relief and, therefore, the Plaintiff must have resorted to mandatory pre- 1 1921 SCC OnLine Bom 113. SSP/ARS -IA-1389-2025.DOC institution mediation, under Section 12A of the Commercial Courts Act; is far from the hard facts of the case. Incontrovertibly, WPA (D5) transferred its shareholding in Betul (D6) in favour of Bammco (D7) in clear breach of contractual obligations, and Defendant Nos. 1 to 4 have committed default in the discharge of debt even though the date of redemption has passed by. In such situation, it cannot be urged that the suit does not contemplate an urgent interim relief. Such a construction would defeat the legislative object contained in Section 12A of the Commercial Courts Act which dispenses with pre-institution mediation where the suit contemplates an urgent interim relief. A strong reliance was placed by Mr. Dhond on the guiding principles enunciated in Yamini Manohar Vs T.K.D. Keerthi.2

According to Mr. Dhond, the objection to the jurisdiction of this Court, both on the count of territorial and subject matter jurisdiction, is also completely misconceived. As the Plaintiff is seeking enforcement of the obligations of the Defendants under DTD; Clause (72) of which confers exclusive jurisdiction on the Courts at Mumbai, the objection to the jurisdiction of this Court is completely unsustainable even qua the subsidiaries of Defendant No.1.

Mr. Dhond would urge, under the terms of the DTD, ‘Debenture Documents’ include all security documents which, in turn, include the undertaking and every Agreement for pledge of securities executed by 2 (2024) 5 SCC 815. SSP/ARS -IA-1389-2025.DOC Defendant No. 5 and Defendant Nos.12 to 26. In any event, since this Court has granted leave under Clause XII of the Letters Patent and the said leave continues, the objection to the jurisdiction of this Court cannot be now entertained.

Bar of subject matter jurisdiction, according to Mr. Dhond, is equally unfounded. The matter is not confined to rectification of register of members only. In contrast, the instant suit is a comprehensive suit involving multiple parties and multiple causes of action qua the Defendants, and wide ranging reliefs have been sought qua each of the Defendants. Thus, NCLT which is a creature of a statute is not empowered to determine the issues that crop-up for consideration and grant the comprehensive reliefs sought by the Plaintiff. It was urged that it is well-recognized that an inference of exclusion of the civil court’s jurisdiction cannot be readily drawn.

Mr. Dhond took the Court through the documents to demonstrate that both Bammco (D7) and Vistra (D8) had adequate notice of the obligations of WPA (D5) under DTD and NDU and have, yet, entered into the transactions. In view of the constructive, if not direct, notice to Bammco (D7) and Vistra (D8), those Defendants cannot be permitted to raise the defence of bona fide purchaser/pledgee without notice.

The contention that the Plaintiffs are sufficiently secured and, therefore, no interim relief can be granted, is based on an erroneous SSP/ARS -IA-1389-2025.DOC impression. The said contention is in teeth of the contractual obligation to ensure that the security cover at all times is two times (2x) of the value of outstanding debt. An effort was made by Mr. Dhond to draw home the point that the securities on the own showing of Defendant Nos. 1 to 4 are in the range of 919 to 1399 Crores, even before the impugned transfer of the shareholding by WPA (D5), which is far below twice the fair market value cover of the total outstanding debt, required to be maintained under the DTD.

Mr. Dhond submitted, the endeavour on the part of the Defendants to wriggle out of the situation by referring to the extent of the securities would amount to calling upon the Court to rewrite the contract under the guise of balance of convenience. At any rate, the obligation not to dispose of or deal with the pledged securities, without prior written consent of the debenture holders, is not conditioned by the value of security.

A very strong reliance was placed by Mr. Dhond on a judgment of the Supreme Court in the case of Rajasthan State Industrial Development and Investment Corporation and Anr Vs Diamond and Gem Development Corporation Limited and Anr.3

Lastly, Mr. Dhond would submit that, the resistance sought to be put-forth by the Defendants on the ground that the reliefs sought by the Plaintiffs in the interim application are in the nature of final reliefs and, 3 (2013) 5 SCC 470. SSP/ARS therefore, cannot be granted at an interim stage, is also devoid of -IA-1389-2025.DOC substance.

Since a very strong priam facie case is made out and there is imminent possibility of further breach of contractual obligations and erosion of the value of the security, the reliefs sought by the Plaintiffs deserve to be granted at an interim stage as there is substantial risk that the Defendants may not honour any judgment or decree rendered in favour of the Plaintiffs. It was submitted the Court is not denuded of the power to grant such reliefs in the exigencies of the situation. To this end, Mr. Dhond placed reliance on the judgments of the Supreme Court in the cases of Deoraj Vs State of Maharashtra and Ors4 and Nimbus Communications Ltd Vs Board of Control For Cricket in India5

Mr. Jagtiani, learned Senior Advocate for Baboon (D11) supported the submissions on behalf of the Plaintiffs. It was urged that Baboon (D11) is also a subscriber of Debentures issued by Atria (D1) and has subscribed to 24,250 Debentures, like the Plaintiff No.1 under DTD. Baboon (D11) is, thus, identically circumstanced. Mr. Jagtiani would urge that, the security interest primarily comprised of pledge, and NDU over shareholding of Atria (D1) in its subsidiaries for the benefit of both the debenture holders i.e. Plaintiff Nos.1 and 11. Thus, Baboon (D11) is vitally interested in the cause espoused by the Plaintiff 4 5 (2004) 4 SCC 697. 2013 (1) MhLJ 39. SSP/ARS -IA-1389-2025.DOC No.1 and supported the grant of interim reliefs in the Interim Application which pertained to common security interest. It was submitted that, Baboon (D11) specifically supported the grant of interim reliefs in terms of prayer clauses (c) to (h) of the Application.

Mr. Jagtiani would urge, Atria (D1) has committed default in discharge of the obligation under DTD towards Baboon (D11) as well. Defence of repudiatory breach sought to be putforth on behalf of Defendant Nos.1 to 4 is a creature of an after-thought and wholly misconceived.

In any event, right to recover / enforce security for debentures subscribed will not in any manner be circumscribed by non-subscription of the subsequent tranches, for which no notice was issued. Breach of contract by one party, it is trite, does not automatically terminate the obligations under the contract, submitted Mr. Jagtiani. Reliance was placed on the judgment in the case of State of Kerala V/s. Cochin Chemical Refineries Ltd.6

Under the terms of the NDU, Mr. Jagtiani would urge, there was no unilateral right to swap NDU shares without the consent of the debenture holders. Agreement for Swap does not imply that the potential swap shares could not have been encumbered. Only consent granted in terms of clause 6.15, on which Defendants placed reliance, was to utilize upto 100 Crores of the debenture subscription amount 6 AIR 1968 SC 1361 SSP/ARS -IA-1389-2025.DOC towards the settlement of payment with USEIPL. Despite permissibility under the clause 6.1.5 of Atria DTD, no portion of debenture subscription amount has, in fact, been utilized for the said purpose. The endeavour on the part of the Defendants to construe clause 6.1.5 in a manner which enables dilution of security interest or dispenses with prior written consent of the debenture holders / trustees, is completely misconceived.

Refuting the contention of Bammco (D7) and Vistra (D8) that they are bonafide purchaser and pledgee, respectively, Mr. Jagtiani would urge that Defendant Nos.7 and 8 had adequate notice of encumbrances. Firstly, Defendant No.5 created a charge in form CHG-9 dated 7 December 2016. The said charge continues even today, as no document satisfying charge has been filed by Defendant No.5. Secondly, Audited Financial Statements of Defendant No.5, for the year ending 31 March 2023, note that the non-disposal undertaking has been provided by Defendant No.5 in respect of the said shares. Third, the term sheet annexed to Betul DTD also makes it clear that Vistra (D8) was well aware that the said share holding belonged to WPA (D5) prior to the subscription of the debenture under Betul DTD.

Mr. Jagtiani placed a strong reliance on the judgment of the Supreme Court in the case of Videocon Properties Ltd. V/s. Dr. Bhalchandra Laboratories and Ors.7 to lend support to the submission 7 (2004) 3 SCC 711 SSP/ARS -IA-1389-2025.DOC that the buyer is entitled to enforce a charge created under Section 55 6(b) of the Transfer of Property Act, 1882 against the property and, for that purpose, trace the property even in the hands of third party and even when the property is converted into another form by proceeding against the substituted security.

Mr. Ravi Kadam, the learned Senior Advocate for the Defendant Nos. 1 to 4 stoutly opposed the prayers for the interim relief. In a case of the present nature, where Plaintiffs action and conduct suffer from the vice of extreme bad faith, no equitable relief can be granted in favour of the Plaintiff especially when the grant of interim relief would amount to a decree without trial, was the thrust of the submission of Mr. Kadam.

Elaborating the aforesaid submission, Mr. Kadam would urge that, the plaintiff had deliberately suppressed the fact that, a substantial payment of Rs. 393 Crores was made by the Defendant No. 1 towards coupon amount and 20% debentures redemption. In contrast, the Plaintiff No. 1 had subscribed to only 2425 debentures in the sum of Rs.

242.5 Crores, against the promise to subscribe Rs. 900 Crores. Since, the issue proceeds were to be utilized for the purpose of infusion of equity into various projects, the failure on the part of the Plaintiff No. 1 to subscribe to the debentures fully, jeopardised the business of commissioning and operating energy power plants, leading to the strain SSP/ARS -IA-1389-2025.DOC on working capital and seriously impacted revenue. In these circumstances, according to Mr. Kadam, serious triable issues as to the breach of obligations under DTD, arise for determination and can only be adjudicated at the trial.

Mr. Kadam further submitted that, despite not subscribing to the debentures to the tune of Rs. 900 Crores, as agreed, the Plaintiff No. 1 continued to enjoy the security cover for the said amount, with an exposure of Rs. 242.5 Crores only. As the Plaintiff No. 1 is fully secured by the pledge of shares of over Rs. 1,000/- Crores, no case is made out to even seek the interim relief, of the nature sought by the plaintiffs, much less, grant those reliefs. Mr. Kadam assiduously submitted that, in the absence of a pleaded case that, the securities already created in favour of the plaintiff are insufficient to discharge the debt, under no circumstances, interim relief can be granted.

Mounting a serious criticism against the nature of the interim relief, Mr. Kadam would urge, the grant of interim prayers (a) and (b), namely, a direction for deposit of the alleged outstanding sum of Rs.

464.67 Crores, with permission for withdrawal of the said amount, would amount to passing a decree to the fullest, without a trial. It was submitted that, it is rudimentary principle of law that, at an interim stage reliefs in the nature of final reliefs cannot be granted. Reliance SSP/ARS was placed on the decision of the Supreme Court in the case of State of -IA-1389-2025.DOC U.P. and Ors Vs Ram Sukhi Devi8.

Mr. Kadam would submit, the reliance on the decision in the case of Deoraj Vs State of Maharashtra and Ors9 from which support was sought to be drawn on behalf of the plaintiffs, is inapposite. If the ratio therein is correctly construed, the said judgment advances the cause of the defendants rather than the plaintiffs. In any event, no extraordinary and exceptional case is made out by the plaintiffs to seek reliefs in prayer clause (a) and (b) at an interim stage, urged Mr. Kadam.

Mr. Kadam would further submit that, prayer clause (c) is essentially in the nature of an order of attachment before judgment. On the one hand, the pleadings in support of the prayer clause (c) are demonstrably incorrect. On the other hand, no case has been made out to satisfy the stringent conditions for attachment before judgment. To this end, Mr. Kadam placed reliance on the judgment of the Supreme Court in the case of Raman Tech and Process Engg Co and Anr Vs Solanki Traders10 wherein, inter alia, the summary of propositions enunciated in the case of Premraj Mundra Vs. Md Maneck Gazi and Ors11 was approved. 8 9 10 11