Partly allowed

Omkara Asset Reconstruction Company Limited v. Chinsha Property Private Limited & Ors.

Delhi HC11 Jan 2024FAO(OS) (COMM)/220/2023

Case brief

AI extract

What is this about?

The High Court allowed appeals challenging a Single Judge order passed without hearing the appellants' replies. The Single Judge order was set aside, and the matter was remanded for rehearing of Section 9 petitions. The Court directed the maintenance of the existing 75:25 shareholding ratio during the pendency and granted liberty regarding the remaining 25% stake.

What did the court decide?

Impugned judgment set aside; Section 9 petitions remanded for rehearing; Status quo regarding shareholding maintained; Liberty granted for interim applications.

Omkara Asset Reconstruction Company Limited Vs Chinsha… — Company and Corporate | Delhi HC (2024)

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$~64-69

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IN THE HIGH COURT OF DELHI AT NEW DELHI

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% Date of Decision: 11.01.2024

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FAO(OS) (COMM) 218/2023 & CM 53276/2023, CM 53277/2023 TWENTY FIVE SOUTH REALTY LTD ..... Appellant Through: Mr Harin P.Raval, Senior Advocate with Ms Aakansha Kaul, Mr Karan Bharihokl and Mr Siddhant Sharma, Advocates. versus

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DLF LIMITED & ORS. ..... Respondents Through: Mr.Rajiv Nayar, Senior Advocate, Mr Darpan Wadhwa, Senior Advocate with Ms Ruby Singh Ahuja, Mr Pravin Bahadur, Mr Vishal Gehrana, Mr Ishan Gaur, Mr Jappanpreet Hora, Ms Kanika Agnihotri, Ms Manjira Das Gupta, Ms Kanika, Mr Saurabh and Ms Karan Jawala, Advocates for respondent no.1.

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Mr Akhil Sibal, Senior Advocate with Mr Ashish K Singh, Mr Amit K Singh, Ms Muskan Malhotra, Mr Rishabh Sharma, Mr Rishabh Darira, Ms Ritika Bhardwaj, Mr Deepak Sethi and Ms Palak Tyagi, Advocates for respondent no.2. Mr Parag P. Tripathi, Senior Advocate, Mr Vijay Nair, Mr.Rajat Joneja, Mr Arpit Dwivedi, Ms Sakshi Kapoor, Mr Anmol Kumar and Ms Vasundhra Bakhru, Advocates for respondent no.3.

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Mr Prateek Seksaria, Senior Advocate with Mr Sajit Suvarna, Mr Nirav

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Signature Not Verified Digitally Signed By:DINESH KUMAR Signing Date19:08:00 :13. 01.2024 FAO(OS) (COMM) 218/2023 and connected matters

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Page 1 of 12

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Shah, Ms Shivani Khanwilkar, Ms Aneesa Cheema, Mr Varun Kalra, Mr Krbhan Kumar, Mr Rohit Agarwal

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and Mr Nishant Chouthani, Advocates for respondent no.5. Mr.Saurabh Kirpal, Senior Advocate with Ms Khushbu Chajeed, Mr Yash Dhruva and Ms Adya Luthra, Advocates for Joyous Ltd.

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+ FAO(OS) (COMM) 219/2023 & CM 53279/2023, CM 53280/2023 TWENTY FIVE SOUTH REALTY LTD

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..... Appellant Through: Mr Harin P.Raval, Senior Advocate with Ms Aakansha Kaul, Mr Karan Bharihokl and Mr Siddhant Sharma, Advocates. versus

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CHINSHA PROPERTY PRIVATE LIMITED & ORS.

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..... Respondent Through: Mr Sandeep Sethi, Senior Advocate with Ms Kanika Agnihotari, Mr Jasmeet Singh, Mr Mahinder Singh Hura, Mr Saif Ali, Mr Pushpendra S. Bhadoriya, Ms Pratiksha Chaturvedi, Mr Vijay Sharma, Mr Amit Mishra, Mr Sumer Dev Seth and Ms Riya Kumar, Advocates for respondent no.1. Mr Akhil Sibal, Senior Advocate with Mr Ashish K Singh, Mr Amit K Singh, Ms Muskan Malhotra, Mr Rishabh Sharma, Mr Rishabh Darira, Ms Ritika Bhardwaj, Mr Deepak

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Signature Not Verified Digitally Signed By:DINESH KUMAR Signing Date19:08:00 :13. 01.2024 FAO(OS) (COMM) 218/2023 and connected matters

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Page 2 of 12

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Sethi and Ms Palak Tyagi, Advocates for respondent no.2. Mr Parag P. Tripathi, Senior Advocate with Mr Vijay Nair, Mr.Rajat Joneja, Mr Arpit Dwivedi, Ms Sakshi Kapoor, Mr Anmol Kumar and Ms Vasundhra Bakhru, Advocates for respondent no.3. Mr Prateek Seksaria, Senior Advocate with Mr Sajit Suvarna, Mr Nirav Shah, Ms Shivani Khanwilkar, Ms Aneesa Cheema, Mr Varun Kalra, Mr Krbhan Kumar, Mr Rohit Agarwal and Mr Nishant Chouthani, Advocates for respondent no.5. Mr.Saurabh Kirpal, Senior Advocate with Ms Khushbu Chajeed, Mr Yash Dhruva and Ms Adya Luthra, Advocates for Joyous Ltd.

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+ FAO(OS) (COMM) 220/2023

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OMKARA ASSET RECONSTRUCTION COMPANY LIMITED

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..... Appellant Through: Mr Parag Tripathi, Mr Vijay Nair, Mr.Rajat Joneja, Mr Arpit Dwivedi, Ms Sakshi Kapoor, Mr Anmol Kumar and Ms Vasundhra Bakhru, Advocates. versus

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CHINSHA PROPERTY PRIVATE LIMITED & ORS.

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..... Respondent Through: Mr Sandeep Sethi, Senior Advocate with Ms Kanika Agnihotari, Mr Jasmeet Singh, Mr Mahinder Singh Hura, Mr Saif Ali, Mr Pushpendra S.

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Signature Not Verified Digitally Signed By:DINESH KUMAR Signing Date19:08:00 :13. 01.2024 FAO(OS) (COMM) 218/2023 and connected matters

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Page 3 of 12

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Bhadoriya, Ms Pratiksha Chaturvedi, Mr Vijay Sharma, Mr Amit Mishra, Mr Sumer Dev Seth and Ms Riya Kumar, Advocates for respondent no.1.

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Mr Akhil Sibal, Senior Advocate with Mr Ashish K Singh, Mr Amit K Singh, Ms Muskan Malhotra, Mr Rishabh Sharma, Mr Rishabh Darira, Ms Ritika Bhardwaj, Mr Deepak Sethi and Ms Palak Tyagi, Advocates for respondent no.4. Mr Prateek Seksaria, Senior Advocate with Mr Sajit Suvarna, Mr Nirav Shah, Ms Shivani Khanwilkar, Ms Aneesa Cheema, Mr Varun Kalra, Mr Krbhan Kumar, Mr Rohit Agarwal and Mr Nishant Chouthani, Advocates for respondent no.5. Mr.Saurabh Kirpal, Senior Advocate with Ms Khushbu Chajeed, Mr Yash Dhruva and Ms Adya Luthra, Advocates for Joyous Ltd.

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+ FAO(OS) (COMM) 221/2023 OMKARA ASSET RECONSTRUCTION COMPANY LIMITED

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..... Appellant Through: Mr Parag Tripathi, Mr Vijay Nair, Mr.Rajat Joneja, Mr Arpit Dwivedi, Ms Sakshi Kapoor, Mr Anmol Kumar and Ms Vasundhra Bakhru, Advocates. versus DLF LIMITED & ORS. ..... Respondents Through: Mr.Rajiv Nayar, Senior Advocate, Mr

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Signature Not Verified Digitally Signed By:DINESH KUMAR Signing Date19:08:00 :13. 01.2024 FAO(OS) (COMM) 218/2023 and connected matters

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Page 4 of 12

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Darpan Wadhwa, Senior Advocate with Ms Ruby Singh Ahuja, Mr Pravin Bahadur, Mr Vishal Gehrana, Mr Ishan Gaur, Mr Jappanpreet Hora, Ms Kanika Agnihotri, Ms Manjira Das Gupta, Ms Kanika, Mr Saurabh and Ms Karan Jawala, Advocates for respondent no.1.

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Mr Sandeep Sethi, Senior Advocate with Ms Kanika Agnihotari, Mr Jasmeet Singh, Mr Mahinder Singh Hura, Mr Saif Ali, Mr Pushpendra S. Bhadoriya, Ms Pratiksha Chaturvedi, Mr Vijay Sharma, Mr Amit Mishra, Mr Sumer Dev Seth and Ms Riya Kumar, Advocates for respondent no.2.

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Mr Prateek Seksaria, Senior Advocate with Mr Sajit Suvarna, Mr Nirav Shah, Ms Shivani Khanwilkar, Ms Aneesa Cheema, Mr Varun Kalra, Mr Krbhan Kumar, Mr Rohit Agarwal and Mr Nishant Chouthani, Advocates for respondent no.5. Mr.Saurabh Kirpal, Senior Advocate with Ms Khushbu Chajeed, Mr Yash Dhruva and Ms Adya Luthra, Advocates for Joyous Ltd.

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FAO(OS) (COMM) 227/2023, CM 54243/2023, CM 61429/2023 PNB HOUSING FINANCE LIMITED ..... Appellant

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..... Appellant

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Signature Not Verified

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Digitally Signed By:DINESH KUMAR Signing Date19:08:00 :13. 01.2024 FAO(OS) (COMM) 218/2023 and connected matters

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Page 5 of 12

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Through: Mr Akhil Sibal, Senior Advocate with Mr Ashish K Singh, Mr Amit K Singh, Ms Muskan Malhotra, Mr Rishabh Sharma, Mr Rishabh Darira, Ms Ritika Bhardwaj, Mr Deepak Sethi and Ms Palak Tyagi, Advocates.

versus

DLF LIMITED & ORS.

Through:

..... Respondents

Mr.Rajiv Nayar, Senior Advocate, Mr Darpan Wadhwa, Senior Advocate with Ms Ruby Singh Ahuja, Mr Pravin Bahadur, Mr Vishal Gehrana, Mr Ishan Gaur, Mr Jappanpreet Hora, Ms Kanika Agnihotri, Ms Manjira Das Gupta, Ms Kanika, Mr Saurabh and Ms Karan Jawala, Advocates for respondent no.1.

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Mr Prateek Seksaria, Senior Advocate with Mr Sajit Suvarna, Mr Nirav Shah, Ms Shivani Khanwilkar, Ms Aneesa Cheema, Mr Varun Kalra, Mr Krbhan Kumar, Mr Rohit Agarwal and Mr Nishant Chouthani, Advocates for respondent no.3. Mr Parag Tripathi, Mr Vijay Nair, Mr.Rajat Joneja, Mr Arpit Dwivedi, Ms Sakshi Kapoor, Mr Anmol Kumar

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Signature Not Verified Digitally Signed By:DINESH KUMAR Signing Date19:08:00 :13. 01.2024 FAO(OS) (COMM) 218/2023 and connected matters

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Page 6 of 12

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and Ms Vasundhra Bakhru, Advocates for respondent no.5. Mr.Saurabh Kirpal, Senior Advocate with Ms Khushbu Chajeed, Mr Yash Dhruva and Ms Adya Luthra, Advocates for Joyous Ltd.

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+ FAO(OS) (COMM) 249/2023 & CM 58598/2023, CM 58599/2023, CM 58600/2023

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PNB HOUSING FINANCE LIMITED ..... Appellant Through: Mr Akhil Sibal, Senior Advocate with Mr Ashish K Singh, Mr Amit K Singh, Ms Muskan Malhotra, Mr Rishabh Sharma, Mr Rishabh Darira, Ms Ritika Bhardwaj, Mr Deepak Sethi and Ms Palak Tyagi, Advocates.

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versus

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CHINSHA PROERERTY PRIVATE LIMITED & ORS.

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..... Respondent Through: Mr Sandeep Sethi, Senior Advocate with Ms Kanika Agnihotari, Mr Jasmeet Singh, Mr Mahinder Singh Hura, Mr Saif Ali, Mr Pushpendra S. Bhadoriya, Ms Pratiksha Chaturvedi, Mr Vijay Sharma, Mr Amit Mishra, Mr Sumer Dev Seth and Ms Riya Kumar, Advocates for respondent no.1. Mr Prateek Seksaria, Senior Advocate with Mr Sajit Suvarna, Mr Nirav Shah, Ms Shivani Khanwilkar, Ms Aneesa Cheema, Mr Varun Kalra, Mr Krbhan Kumar, Mr Rohit Agarwal and Mr Nishant Chouthani,

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Signature Not Verified Digitally Signed By:DINESH KUMAR Signing Date19:08:00 :13. 01.2024 FAO(OS) (COMM) 218/2023 and connected matters

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Page 7 of 12

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Advocates for respondent no.3. Mr Parag Tripathi, Mr Vijay Nair, Mr.Rajat Joneja, Mr Arpit Dwivedi, Ms Sakshi Kapoor, Mr Anmol Kumar and Ms Vasundhra Bakhru, Advocates for respondent no.5. Mr.Saurabh Kirpal, Senior Advocate with Ms Khushbu Chajeed, Mr Yash Dhruva and Ms Adya Luthra, Advocates for Joyous Ltd.

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CORAM: HON'BLE MR. JUSTICE RAJIV SHAKDHER HON'BLE MR. JUSTICE AMIT BANSAL

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RAJIV SHAKDHER, J. (ORAL)

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[Physical Hearing/Hybrid Hearing (as per request)]

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Issue notice.

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1.1 Learned counsels appearing for the respondents in the abovecaptioned matters accept notice.

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With the consent of the counsel for the parties, the appeals are taken up for hearing and final disposal, at this stage itself.

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The above-captioned appeals are directed against the judgment dated 18.09.2023 passed by the learned Single Judge.

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Via the impugned judgment, the learned Single Judge has disposed of the Section 9 petitions preferred under the Arbitration and Conciliation Act, 1996 [in short, “1996 Act”].

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4.1 The aforementioned Section 9 petitions were preferred by the DLF Limited [in short, “DLF”] and Chinsha Property Private Limited [in short, “Chinsha Property”]. It is not in dispute that DLF and Chinsha Property are shareholders of a company named Joyous Housing Ltd. [in short, “JHL”].

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Signature Not Verified

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Digitally Signed By:DINESH KUMAR Signing Date19:08:00 :13. 01.2024 FAO(OS) (COMM) 218/2023 and connected matters

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Page 8 of 12

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Counsels for the appellants submit that the impugned judgment was passed without an opportunity being accorded to them to file replies to the Section 9 petitions.

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The operative directions which the learned Single Judge has issued are contained in Paragraph 42. For convenience, the said directions are extracted hereafter:

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“42. Prayer (b) is inchoate in view of Prayer (a) since the identity of the transferee is not known yet, in view of which, no order can be passed against the unknown transferees. However, it would be appropriate if pledged shares sold to a third party by Omkara are kept in a suspended animation by directing JHL not to recognise further sale, if any, undertaken by Omkara transferees. If any request is received by JHL by further transferees the same shall not be acted upon by JHL and further transferees shall not be recorded as members (shareholders) in the record of JHL .”

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[Emphasis is ours]

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We may note that insofar as the shareholding pattern of JHL is concerned, at the relevant point in time, it was broadly as follows:

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(i) 37.5% equity stake was held by DLF.

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(ii) Another 37.5% equity stake was held by Chinsha Property.

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(iii). The balance 25% equity stake was held by Hubtown Ltd [in short, “Hubtown”].

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We may also note that one of the appellants i.e., Twenty Five South Realty Ltd [in short, “Twenty Five South”] is a transferee, which has acquired the shares held by DLF and Chinsha via yet another appellant before us i.e., Omkara Asset Reconstruction Company Limited [in short, “Omkara”]

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Twenty Five South, thus, acquired 75% of the equity stake in JHL.

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Signature Not Verified

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Digitally Signed By:DINESH KUMAR Signing Date19:08:00 :13. 01.2024 FAO(OS) (COMM) 218/2023 and connected matters

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Page 9 of 12

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9.1. Mr. Harin P. Raval, learned senior advocate, who appears for the said appellant, on instructions, confirms that Twenty Five South continues to hold 75% of the equity stake in JHL.

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9.2. Likewise, Mr. Prateek Seksaria, learned counsel, who appears for Hubtown, on instructions, confirms that the said entity continues to hold 25% shares in JHL.

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Since the appellants before us were not given an opportunity to file replies to the Section 9 petitions, according to us, the matter requires fresh examination by the learned Single Judge.

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Notably, Mr Raval, on instructions, states that to facilitate a fair hearing in the matter, he has instructions to convey to the court that Twenty Five South will continue to hold 75% equity stake in JHL till such time the Section 9 petitions are disposed of by the learned Single Judge.

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Mr Seksaria, however says that since no direction has been issued by the impugned judgment qua Hubtown, he cannot make a statement of the kind that Mr Raval has made before us.

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Mr Rajiv Nayar, learned senior advocate, who represents DLF and Mr Sandeep Sethi, learned senior advocate, who represents Chinsha Property, say that the same directions need to be issued qua Hubtown as well.

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In our view, at this juncture, we would not be able to issue any direction qua Hubtown, especially since Hubtown is not in appeal before us against the impugned judgment.

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15.1. However, liberty is granted to DLF and Chinsha Property to move the learned Single Judge by way of an appropriate application, if deemed fit, for securing their interest vis-à-vis Hubtown.

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Furthermore, Mr. Saurabh Kirpal, learned senior advocate, who

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Signature Not Verified Digitally Signed By:DINESH KUMAR Signing Date19:08:00 :13. 01.2024 FAO(OS) (COMM) 218/2023 and connected matters

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Page 10 of 12

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appears on behalf of JHL, confirms that the shareholding pattern as it obtains today is reflective of the fact that 75% of the equity stake is held by Twenty Five South, while the remaining 25% is held by Hubtown.

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Accordingly, the above-captioned appeals are disposed of with the following directions:

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(i) The impugned judgment is set aside. The learned Single Judge is requested to rehear the Section 9 petitions.

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(ii) Twenty Five South will continue to retain 75% equity stake in JHL till the disposal of the Section 9 petitions. (iii) Since Mr Kirpal says that the optionally-convertible debentures have an unexpired timespan of six (6) months, and therefore, the shareholding pattern would remain unaltered for the next six (6) months, we request the learned Single Judge to dispose of the Section 9 petitions at the earliest, bearing in mind the limiting factor flagged by Mr Kirpal.

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(iv) Twenty Five South and JHL will file affidavits of undertaking before this Court, in the backdrop of the statement made before us by Mr Raval and Mr Kirpal.

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(v) Liberty is given to DLF and Chinsha Property to move appropriate applications before the learned Single Judge to secure their interest vis-à-vi s Hubtown, as deemed fit.

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List the Section 9 petitions before the learned Single Judge for directions on 15.01.2024.

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Needless to add, we have not expressed any view on the merits of the controversy obtaining between the parties.

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Before we conclude, we may indicate that while passing the order dated 10.01.2024, we had noted that Mr Raval who, as indicated above, only

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Signature Not Verified

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Digitally Signed By:DINESH KUMAR Signing Date19:08:00 :13. 01.2024 FAO(OS) (COMM) 218/2023 and connected matters

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Page 11 of 12

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appears for Twenty Five South, will continue to maintain status quo not only with regard to the equity stake held by Twenty Five South, but also Hubtown.

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This direction was issued on account of a communication gap. As indicated above, Hubtown was represented by Mr Seksaria, both on that date and today. Therefore, Mr Raval could not have given any concession qua Hubtown.

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21.1. The order dated 10.01.2024 shall stand corrected to that extent.

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Parties will act based on the digitally signed copy of the order.

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(RAJIV SHAKDHER) JUDGE

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(AMIT BANSAL) JUDGE

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JANUARY 11, 2024 /rt

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Click here to check corrigendum, if any

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Signature Not Verified Digitally Signed By:DINESH KUMAR Signing Date19:08:00 :13. 01.2024 FAO(OS) (COMM) 218/2023 and connected matters

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Page 12 of 12

Omkara Asset Reconstruction Company Limited v. Chinsha Property Private Limited & Ors.

Case brief

What is this about?

What did the court decide?

Omkara Asset Reconstruction Company Limited v. Chinsha Property Private Limited & Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

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