Ashok Kumar Jain And Anr vs Sh. Manoj Kumar Gupta And Ors

(Arising out of judgement and order dated 05.02.2024 passed by National Company Law tribunal, New Delhi in CA No.436 of 2023 in CP No.40/2023)

In the matter of:

Ashok Kumar Jain & Other Appellant

Vs

Sh Manoj Kumar Gupta Respondent

For Appellant:Mr.Mohit Chaudhary, Mr RaghavDikshit, Advocates.

For Respondent:Mr. Rakesh Kumar, Ms PritiKashyap, Mr. Ankit Sharma, Advocates. Ms Nishi Choudhary, Ms Yashartha Gupta, Advocates.

WITH

COMPANY APPEAL (AT) NO.69 OF 2024

&

IA No.2119 of 2024

(Arising out of judgement and order dated 05.02.2024 passed by National Company Law tribunal, New Delhi in CA No.436 of 2023 in CP No.40/2023)

In the matter of:

Hotage India Appellant

Vs

Ashok Kumar Jain &Ors Respondent

For Appellant:MrGouravMitra, Ms Kawicka Mittal, Advocates.

For Respondent:Mr Rakesh Kumar, Ms PritiKashyap, Mr Ankit Sharma, Ms Nishi Choudhary, Ms Yashartha Gupta, Advocates. 2

JUDGEMENT

JUSTICE YOGESH KHANNA, MEMBER (JUDICIAL)

These are two appeals filed against an impugned order dated

05.02.2024 passed by the Ld. National Company Law Tribunal, New Delhi CA

No.436 of 2023 in CP No.40/2023.

2. The case of the appellants is as under: -

a)Three companies i.e. M/s. Vardhman Roller Flour Mills Pvt. Ltd., M/s. Raj Sneh Auto India Pvt. Ltd. and M/s.

Raj Sneh Wheels Pvt. Ltd. took a loan from Punjab National Bank. Since these companies defaulted in repayment of the loan and consequently, a notice under Section 13(2) of the SARFAESI was issued by the Bank and physical possession of the secured asset was taken over by the Bank in terms of Section 13(4) of the SARFAESl Act. Subsequently, various OTS proposals were exchanged between the management of the companies and the Punjab National Bank.

b). On 28.09.2022 a combined OTS letter was issued by the Bank with the following terms:

"The Highlights of the OTS are:

i. Amount of Rs. 58.5 crore is to be paid by the borrower companies.

ii. The NOC for sale of immovable properties mortgaged to the Bank shall be issued by the Bank and the entire sale consideration shall be deposited by the purchaser directly with the Bank.

iii. A tripartite agreement will be executed between the borrower, prospective purchaser of the mortgaged property and the Bank and sale proceeds will be directly deposited with the Bank.

iv. Personal guarantee of the borrower(s)/guarantor(s) and charge on

Security/title deeds shall be released only after receipt of the entire amount of OTS along with the delayed period of interest, if any.

v. Complete payments under the said OTS were to be deposited by 27.12.2022."

3 c). as per the said OTS, the amount payable was 58.50 crores out of an outstanding claim of Punjab National Bank amounting to Rs. 91.18 crores and an amount of 32.68 crores plus interest was waived off;

d). thereafter, the Petitioner filed CA-435-2022 seeking permission of this Tribunal to deposit an amount of Rs. 7.25 crores to the Punjab National Bank in terms of the OTS by selling 11 plots which was allowed vide order dated 20.12.2022;

e). thereafter the Petitioner made a request to the Bank during the period from November, 2022 and 15.12.2022 seeking to enter into a Tripartite Agreement' (with the borrower and the prospective purchaser) for the sale of the Flour Mill for a value of Rs. 13 Crores and the payment to be deposited in Bank as per the OTS letter;

f). On 23-12.2022, an agreement to sale was signed between the borrower and prospective and earnest sale consideration of an amount of Rs. 1 Lakh was deposited by the prospective purchaser with the Bank as a token. However, in terms of the OTS letter dated 28.09.2022, the PNB was under an obligation to issue NOC to enable the transaction to be completed;

g). However, due to the inaction of the PNB, the process could not be completed and consequently, a Writ Petition bearing CWP No. 103 of 2023 was filed before the Hon'ble Delhi High Court on 04.01.2023 seeking a direction to PNB to honour the commitment under OTS letter dated 28.09.2022;

h). the Hon'ble Delhi High Court passed an order on 05.01.2023 wherein it was observed that: it would be in the interest of all the parties that the OTS proposal is honoured at the earliest, even if the same involves payment of interest on the delayed amount towards the OTS. "

i). the Applicant No. 2 i.e. M/s. Vardhman Roller Flour Mills Pvt. Ltd., is non-functional and not doing any business due to various Banking issues with the Punjab National Bank and therefore, attempting to go ahead with the OTS proposal with the PNB;

j). the Hon'ble Delhi High Court vide order dated 17.05.2023 permitted the petitioner to approach the concerned Bank with a proposal and in that case, the Bank would consider the same in accordance with the law. Accordingly, the Bank vide letter dated 28.11.2023 4

revised the OTS dated 28.09.2022 with certain terms and conditions;

k). the purchaser of the property in question i.e. 'Arihant Roller Flour Mills' assigned it's right under the Agreement to Sell dated 23.12.2022 to Hot`age India' and thereby the Hotage India became a prospective purchaser and was ready to deposit upfront amount of Rs. 7 Cores to the Bank;

l) vide order dated 06.12.2023, the Hon'ble High Court of Delhi took note of the fact the matter has been amicably settled and the parties will abide by the terms and conditions of the OTS letter dated 28.11.2023 and dismissed the Writ Petition No. 103 of 2023 as withdrawn.

m). the Applicant therefore has prayed that the order dated 28.02.2023 be modified so as to enable the Applicant to proceed with the sale of the property in question and give effect to the OTS letter dated 28.11.2023 by which the OTS was revived by the Bank;

n). The Respondents have denied the allegations made in the application by the Petitioner. The Respondent has contended that the Applicant No. 1 is hatching a conspiracy to park the property in favour of a related entity at throw-away prices and to release his personal property from the financial institutions. Thus, the ultimate beneficiary of the said OTS is the Applicant No. 1 herein;

o). It was further contended the present Respondents were not made a party in the Writ Petition filed before the Hon'ble High Court of Delhi and therefore, the Respondents got themselves impleaded as a party in the said writ petition and apprised the Hon'ble Delhi High Court about the pendency of the present matter before this Tribunal.

p). the Respondents are ready and willing to buy the said property for a consideration of Rs. 16.75 Crores out of which an amount of Rs. 15.75 Crores will be adjusted towards the OTS with the Punjab National Bank and an amount of Rs. 1 Crores can be infused in the company's account which will be in the larger interest of the Company;

3. On the above facts the Ld. NCLT has passed the following order:- 5

17.The Applicant therefore has prayed that the order dated 28.02.2023 be modified so as to enable the Applicant to proceed with the sale of the property in question and give effect to the OTS letter dated 28.11.2023 by which the OTS was revived by the Bank.

18. The Respondents have denied the allegations made in the application by the Petitioner.

22. We have heard the submissions made by the Ld. Counsel appearing for the parties and perused the records.

23. Admittedly, the Applicant has taken steps and negotiated with the prospective buyer of the property in question despite giving an undertaking before this Tribunal which was recorded in the order dated 28.02.2023. Further, it is clear from the averments made in the application and submissions made by Mr. Mohit Chaudhary, Ld. Counsel appearing for the Applicant, that an amount of Rs. 7 Crores has been paid to the Bank by the prospective purchaser on 01.12.2023.

24. According to our considered view this action of the Applicant is contrary to the statement/undertaking made by the Applicant which was recorded in the order dated 28.02.2023. Further, the Applicant has not taken the leave of this Tribunal either for negotiating with the purchaser or for payment of Rs. 7 Crores to the Bank.

25. We, therefore, do not see any reason to modify our order dated 28.02.2023 to enable the Applicant to go ahead with the sale of the property in question and give effect to the OTS which according to our considered view, is not in the interest of the company. On the other hand, the Respondent has made an offer of Rs. 16.75 Crores as against the amount of Rs. 15.75 Crores towards the OTS with PNB.

26. Keeping in view, the interest of the company, we deem it appropriate that the Respondents who are majority shareholders of the Company should be given an opportunity to buy the property by paying Rs. 16.75 Crores. The Respondents are therefore directed to take necessary steps to deposit the said amount and give effect to the OTS within the stipulated time.

4. We have heard the arguments advanced by the learned counsels for the

parties in both the appeals. Admittedly Respondent No.1 to 12 (Anil

Jain/Manoj Gupta Group) are 52.66% shareholder of Vardhman Roller Flour 6

Mills Pvt Ltd and Ashok Jain Group is holding 36.69% shareholding and

balance shareholding of 7.65% is held by some other person(s). There were

14 directors on its Board viz 4 directors from Anil Jain/Manoj Gupta group

and 10 directors from Ashok Jain Group. The issues in both these appeals

are as to if a) the agreement to sell of the subject property which the company

had entered into with M/s Arihant Roller Flour Mills and later the assignment

of its rights to M/s Hotage India vide an assignment deed dated 22.05.2023

are valid documents in view of an interim order dated 28.02.2023 passed by

the Ld. Adjudicating Authority and b) in the circumstances of the case, was

the Ld. NCLT justified to ask the Respondents No.1 to 12 to purchase the

property without giving any notice to M/s Hotage India or M/s Arihant Roller

Flour Mills.

5. Admittedly on 23.12.2022 the appellant had entered into an agreement

to sell the subject property with M/s Arihant Roller Flour Mills. It is the case

of the Respondents No.1 to 12 (the majority shareholders) that such an act

was done without calling any Board Meeting of their company namely M/s

Vardhman Roller Flour Mills Pvt Ltd, specially when the subject property was

the only immovable asset of the company and such action, without taking the

majority shareholders in confidence, was wholly illegal. In such

circumstances the Respondents No.1 to 12, being the majority shareholders

convened an EOGM dated 02.01.2023 for removal of Ashok Jain as a director

for his illegal acts, including trying to sell the only property of M/s Vardhman

Roller Floor Mills (P) Ltd, without prior consent of the majority shareholders. 7

6. Appellant No.1 (Ashok Jain) had challenged his removal by filing CP

No.40/2023 before the Ld.NCLT wherein an interim order was passed on

28.02.2023 on undertaking of Appellant No.1 (Mr. Ashok Jain) that no third

party interest shall be created on the only surviving assets of M/s Vardhman

i.e. land and building situated at Plot No.3, Khasra No. 503, 504,509 and 510

Makhampur Industrial Complex, Phase II, Delhi Road, Meerut.

7. Admittedly despite the interim order dated 28.02.2023, passed at the

instance of Appellant No.1, Mr. Ashok Jain; M/s Arihant Roller Flour entered

into an assignment deed dated 22.05.2023 with M/s Hotage India and

assigned its rights to purchase the sole surviving asset of the company M/s

Arihant (supra).

8. It is the case of the Respondents the said agreement to sell and/or the

assignment was never disclosed either by the appellants herein or by M/s

Hotage India Ltd in any of the Board Meetings of M/s Vardhman (the

company).

9. In the meanwhile OTS was entered into by Ashok Jain Group, appellant

herein with PNB, allegedly without taking into confidence the majority

shareholders viz Respondents No.1 to 12. It was in terms of this OTS dated

28.11.2023, M/s Hotage India was asked to deposit an amount of Rs.2 crores

with PNB and on 01.12.2023 it was deposited.

10. Admittedly in the OTS letter dated 28.11.2023 issued by PNB it was the

condition that a tripartite agreement shall be executed between M/s 8

Vardhman, the prospective purchaser i.e. M/s Hotage India and the Bank and

it shall be subject to the approval/permission of the Ld. NCLT.

11. Thus the main limb of argument of the Respondents No.1 to 12 is M/s

Hotage India, per OTS dated 28.11.2023 was required to take permission from

Ld. NCLT upon entering into any agreement with the appellant (Ashok Jain

Group) for sale/purchase of the subject property of the company and such

permission, admittedly was never obtained by M/s Hotage India, thus it had

no vested right in subject property. Admittedly during the pendency of OTS;

two writ petitions were filed (a) WP(C) No.103/2023, by the appellant Ashok

Jain Group and (b) WP(C) No. 598/2023 filed by M/s Arihant before the High

Court of Delhi.

12. The Respondents No.1 to 12 upon coming to know of the filing of WP(C)

No.103/2023 had filed an impleadment application on behalf of M/s

Vardhman (the company) alongwith a detailed affidavit to challenge the act of

appellant No.1 (Ashok Jain) alleging inter alia Ashok Jain had no authority to

enter into an OTS or any agreement to sell and there already exist an order

dated 28.02.2023 of status quo, passed by Ld. NCLT and the appellant Ashok

Jain Group had concealed the proceedings pending before Ld. NCLT (CP

No.40/2023) and of an order dated 28.02.2023, from the High Court.

13. Interestingly M/s Arihant had assigned its rights under the tripartite

agreement dated 23.12.2022 to M/s Hotage India vide an assignment deed

dated 22.05.2023. It was also done without any intimation to the majority

shareholders. It is to be noted since an affidavit informing above details was 9

filed in WP(C) No.103/2023, it cannot be said M/s Arihant and/or M/s Hotage

India were not aware of the order dated 28.02.2023 passed by the Ld. NCLT.

14. Rather in view of above circumstances, CA No.436/2023 was filed by

appellant (Ashok Jain) before the Ld. NCLT for modification of order dated

28.02.2023, which application was hotly contested by Respondents No.1 to

12. Before the hearing of the said application, M/s Hotage India had filed a

Contempt Petition No.96/2024 before High Court of Delhi seeking a direction

against the appellant i.e. Ashok Jain for execution of the sale deed of the

property, while concealing the fact there exist an order dated 28.02.2023 of

Ld. NCLT of not creating any third party interest in such property. It was

during the course of arguments in CA No.436/2023 on 29.01.2024, the

appellant herein had placed a letter of M/s Hotage India for enhancement of

the offer from Rs.15.75 crore to Rs.16.75 crore

15. Though M/s Hotage India took a stand it was unaware of the

proceedings before Ld. Adjudicating Authority but it cannot be ignored that

both Ashok Jain Group and M/s Hotage India viz the appellants herein were

litigating against Respondents No.1 to 12, their interest being similar. Even

before us the learned counsel(s) appearing in both the appeals made similar

arguments, hence it cannot be said M/s Hotage India is not hands in glove

with the appellant (Ashok Jain) or that Ashok Jain/the appellant No.1 did not

allegedly disclose of the proceedings before the Ld. NCLT to M/s Hotage India.

16. It is to be noted while CA No.436/2023 filed by the Appellant No.1 for

modification of order dated 23.02.2023 was pending, the Appellant No.1

parrallelly on 23.01.2024 had entered into an agreement to sell with M/s 10

Hotage India without disclosing this fact to the Ld. NCLT and thus

Respondents No.1 to 12 filed contempt petition No.7/2023 before Ld.

Adjudicating Authority against the appellant (Ashok Jain Group), M/s Hotage

India, M/s Arihant and PNB wherein notices were issued vide order dated

04.04.2024 and such contempt petition is still pending. Respondents No.1 to

12 had also filed an application under Section 340 CrPC before the High Court

of Delhi viz Cr(Misc) Application No.22818/2024 against the appellants

(Ashok Jain Group), M/s Arihant and PNB wherein also a notice has been

issued by the Hon'ble High Court vide order dated 22.04.2024.

17. Interestingly on 09.02.2024 the appellant No.1, Ashok Jain Group, had

stated they have no objection if Respondents No.1 to 12 deposit the entire

amount of OTS. Admittedly after the impugned order, M/s Hotage India

withdrew its deposit of Rs.7 crore from PNB and whereas the OTS amount

was deposited by Respondents No.1 to 12. Thus upon withdrawal of its

deposit, M/s Hotage India, even otherwise, has no right to escalate the

litigation qua subject property. To our mind M/s Hotage India cannot be said

to be unaware of stay order dated 28.02.2023 as its conduct demonstrate

otherwise.

18. Before us, M/s Hotage India did propose to increase its offer to Rs.19

crores as given in written submissions filed by the appellants (Ashok Jain

Group) and this further clarified Ashok Jain Group and M/s Hotage India are

on same side, acting in concert. Secondly the present proceedings, are not

liquidation/auction proceedings where any one can bid for the purchase of

subject property. Admittedly the subject property belong to a closely knit 11

company and the Ld. NCLT after considering all these facts had given an

opportunity to the majority shareholders to purchase the aforesaid property

as such action appears to be in the interest of the company. The appellants

in both these appeals, since have violated the stay order dated 28.02.2023 of

the Ld. NCLT, cannot claim any equities in their favour.

19. Lastly an argument was raised by appellants in both these appeals qua

applicability of Section 242(2)(f) of the Companies Act, 2013 and a notice

ought to have been issued of the proceedings pending before Ld.NCLT to M/s

Hotage India. Section 242(2)(f) read as under:-

"Section 242. Power of Tribunal; xxx

(1) Xxxx (2) Xxxx

(f) the termination setting aside or modification of any agreement between the company and any person other than those referred to in clause (e);

Provided that no such agreement shall be terminated, set aside or modified except after due notice and after obtaining the consent of the party concerned;

20. A bare perusal of Section 242(f) of the Companies Act, 2013 would show

such provision is not be applicable to the facts and circumstances of this case

for the following reasons; a) an application for seeking modification of order

dated 28.02.2023 was itself filed on 12.12.2023 by appellant No.1 (Ashok

Kumar Jain) viz I.A. No. 436 of 2023 in CP No. 40 of 2023 before the Ld.

NCLT; b). at no occasion the Appellants here ever approached the Ld. NCLT

to seek permission for sale; c). the tripartite agreement dated 23.01.2024

executed between the Appellants was never a part of the record before the Ld

NCLT, thus there was no occasion for the Ld. NCLT to modify it or amend it

or pass any observation in relation to any such agreement; d). the OTS 12

sanction letter dated 28.11.2023 clearly mentioned the settlement was

subject to the permission of the Ld. NCLT. Admittedly, M/s Hotage India

neither sought such permission nor participated in any of the proceedings

before the Ld. NCLT; e). even the alleged Tripartite agreement dated

23.01.2024 was subject to an approval of the Ld. NCLT, which approval

admittedly was never sought by the Appellant. Therefore, there is no question

of any modification/termination of any agreement before the Ld. NCLT in

terms of Section 242(2)(f) of the Companies Act, 2013, as no such agreement

was ever placed by the appellants before the Ld.NCLT. Thus there was no

occasion for the Ld. Tribunal to exercise its powers under Section 242(2)(f) of

the Act, as alleged.

21. Now admittedly, in accordance with the OTS Sanction Letter dated

28.11.2023 and the Impugned Order dated 05.02.2024 of the Ld. NCLT; an

amount of Rs. 15.75 crores has been deposited by the answering

Respondent(s) No.1 to 12. Furthermore, an additional sum of Rs. 1 crore is

ready to be infused into the company in the interest of its shareholders.

Moreso after the passing of the Impugned Order, the Appellant, M/s Hotage

India has since withdrawn its Rs. 7 crores from the bank, hence at this stage,

to upset the entire exercise done by the NCLT, would only be a judicial

adventure and would rather prove detrimental to the interest of the company

as also to its shareholders. Admittedly, the deposited amount is of Rs.15.75

Crore as on 12.02.2024, which along with interest comes to Rs.

18,25,12,754/-, as indicated on Pg. 50 of the affidavit dated 14.05.2025, and

thus with the proposed infusion of Rs. 1 Crore, the Answering Respondent's 13

amount of Rs.19,25,12,754/- is already at stake, hence in the light of the

foregoing facts and circumstances, we are not inclined to interfere in the

impugned order as in our considered opinion that the same is a reasoned one.

22. Thus both these appeals are dismissed. Pending applications are also

disposed of.

(Justice Yogesh Khanna) Member (Judicial)

(Mr. Ajai Das Mehrotra) Member (Technical) Dated: 01-08-2025

BM