Daily Orders for Case AP.

IM 4/2023
Sl. Judge(s) Date of Daily Order
No Name Order
1 S.R.KRISHNA 12/06/2023 Not before me. In view of the urgency pleaded by the learned Senior counsel for
KUMAR the petitioner, re-list on 13.06.2023, after obtaining necessary orders from the
Hon’ble Chief Justice.
2 RAVI V 14/06/2023 ORDER Sri. Dhyan Chinnappa, learned Senior Counsel, appearing for
HOSMANI Mohammed Sameer, counsel for petitioner submitted that fresh affidavit verifying
contents of petition was filed, which would cure inconsistency regarding date of
signature and swearing of verifying affidavit. Accepting submission, affidavit
filed is taken on record as part of petition. Heard. Learned Senior Counsel for
petitioner submitted that this petition is filed under Section 9 of Arbitration and
Conciliation Act 1996 (for short 'Act') for interim measure prior to initiation of
arbitration proceedings. It was submitted that petitioner (IRFS-2) had invested a
sum of Rs.3,40,00,000/- in respondent no.1-company (PIPL) by subscribing to
Rs.10,00,000/- in equity shares, Rs.3,09,90,000/- in compulsory convertible
debentures and Rs.30,00,00,000/- in equity shares (colly. Equity Securities).
Petitioner and respondents had entered into various agreements including
Shareholders Agreement dt.27.09.2021 (SHA for short) containing various rights
and obligations of parties thereto. Terms of said Agreement provided petitioner
with right to invoke Put option to compel respondents to acquire/buyback
petitioner's securities in respondent no.1 within specific timeline on occurrence of
stipulated trigger events. It was submitted that in view of certain trigger events
having occurred petitioner had invoked Put option by issuing notice dated
14.12.2022. Despite receipt of said notice, respondents instead of complying with
demands made in notice, opposed invocation by their letter dt.05.06.2023. It was
submitted that under a separate agreement dt.27.09.2021, between petitioner,
respondent no.2 and respondent no.3 Manipal Technologies Ltd. (MTL), petitioner
had right to sell 35% shares of MTL (hereinafter referred to as 'specified shares')
to a permitted acquirer after compliance with sale process as envisaged in
agreement. In view of respondent no.1 disputing invocation of Put option, and
SHA containing arbitration clause in case of dispute, pending initiation of
arbitration proceedings, right of petitioner for exit consideration amount require to
be protected. Therefore, petitioner had filed separate interlocutory applications. It
was submitted that since respondent no.1 had not acted in terms of letter and
spirit of SHA by complying with demand made in Put notice, had failed to take any
action as required of it. It was further submitted that failure of respondents no.2
to 5 to invest additional mandatory funding amount of Rs.75,00,00,000/- in PIPL
before 30th of June, 2022, failure to extinguish MVP guarantee etc., had posed
grave risk to petitioner's investment and hence, sought for granting ad interim
order. Said prayer was made in light of possibility of change in shareholding of
MMNL and subsequent event of O.S.no.431/2023 filed by Shivally Investment
Company Ltd., before I Addl. Civil Judge & JMFC., Udupi and obtaining ex-parte
order of injunction against petitioner herein enforcing clause 9.3(b) of SHA read
with Schedule-5; clause 9.3(f) of SHA, Clause no.5 of MTL Agreement
dt.27.09.2021; clause no.3.3 of MTL Secure Storage Agreement dt.27.09.2021 as
well as Put notice dt.14.12.2022, had placed grave fetters on petitioner against
initiation of arbitration proceedings. It was submitted fact that interim injunction
was granted in suit on same day when respondent no.1 herein failed to obtain
interim protection in petition AP (IM)no.3/2023 would amplify requirement of
interim protection. In response, Sri S.S. Naganand, learned Senior Counsel
appearing for Sandeep Lahiri and Deepika Joshi, learned counsel submitted that
they were instructed appear on behalf of respondents no.2 to 5. Learned Senior
Counsel while seeking opportunity to file objections and oppose main petition as
well as interlocutory applications, submitted that present case did not qualify for
grant of ad interim order. It was submitted that respondent no.2 was an individual,
while respondents no.4 and 5 were foreign entities beyond jurisdiction. Therefore,
interim measure sought against them were grossly disproportionate, if not
unjustified. It was submitted that though petitioner had alleged non-cooperation
on basis of past conduct, it was submitted very fact that no action was taken by
petitioner immediately on occurrence of alleged trigger events would indicate that
there was no dearth of trust. It was submitted that in fact, correspondence
Sl. Judge(s) Date of Daily Order
No Name Order
between parties would indicate parties keeping channel for discussion,
negotiation etc., to sort out their differences. Therefore, there was no basis for
interim measure and also for ad interim orders. It was further submitted that when
petitioner had made investment in equity, seeking of interim measure far greater
than in case of secured debt was wholly uncalled for. Referring to various prayers
for interim measures, as also prayers sought in interim applications, it was
submitted that they were in nature of strangulating affairs of respondents and
also affect their day-to-day business. It was submitted that since there were
twelve different individual and institutional entities, who had investments in
Primacy Industries Ltd.- respondent no.1, possibility of change in shareholding
suddenly, with intention to dilute value of petitioner's investment was highly
unlikely to occur. In any case, there was absolutely no material to substantiate
such allegation. In any case, to mitigate concerns of petitioner until respondents
filed objections to petition and interim applications, it was submitted that no
change in shareholding would be resorted to without giving 14 days notice of
intention, to petitioner as well as this Court. In reply, it was submitted by learned
Senior Counsel for petitioner that as per list of shareholders, it is seen that
overwhelming majority of shares in respondent no.1 was held by members of
same family and therefore cause for concern expressed by petitioner was
genuine. It was further submitted that failure on part of respondents to fulfill any
of conditions mandated under SHA was also material factor. Issue emergent
notice. Since respondents no.2 to 5 are represented, petitioner to pay process for
issuance of notice to respondents no.1 and 6 only, within three days. Registry to
dispatch notice forthwith returnable by 11.07.2023. Objections to I.As and main
petition by 04.07.2023. Pending consideration of applications, there shall be an
ad interim order against changing shareholding in respondent no.1, existing as on
today, without notifying petitioner and this Court fourteen days in advance of their
intention to do so. Since, said order would effectively protect interests of both
parties, consideration of other prayers is deferred. Re-list this matter on
11.07.2023.