CPI INDIA LIMITED Vs. BPTP LIMITED

JUDGEMENT

(1.) CPI India Ltd., the appellant of FAO(OS) No.538/2012 had filed a petition under Section 9 of the Arbitration and Conciliation Act 1996 impleading 25 respondents, three of which are BPTP Ltd. and its directors Kabul Chawla and Anjali Chawla. The other 22 respondents are companies stated to be affiliates of BPTP Ltd. It was the case of CPI Ltd. that relying upon representations and warranties made by Kabul Chawla, it had invested Rs.322.5 crores in BPTP Ltd. by subscribing to 13,551,971 equity shares as well as 22,500,000 Compulsorily Convertible Preference shares on the terms set out in the Share Subscription Agreement dated August 10, 2007 (SSA), and as on the date of the petition it held 5.67% of the Paid Up Capital of BPTP Ltd. It was asserted that the rights are further governed by a Memorandum of Understanding (MOU) dated December 19, 2009. The dispute projected was that on the respondents failing to achieve the Qualified Initial Public Offering by July 08, 2011, a requirement under clause 4 and 10 of the MOU dated September 19, 2009, followed by unauthorized debts being raised, CPI India was entitled to the remedies of the Swap Option rights or under the Put Option or to enforce the right under clause-10 of the MOU; as per which the eight projects listed in Schedule-A to the Agreement had to be executed by putting the money generated in an escrow account and share of CPI India in the profits generated would be as listed in Schedule-A. We highlight that CPIs share in the profits range between 50% to 58%. Grievance made was that out of the 8 projects, the respondents had commenced unilateral development and booking pertaining to project ,,M at Faridabad and ,,A at Gurgaon.

(2.) IN a nutshell the case was that the last alternative i.e. right under clause-10 of the MOU was violated by BPTP Ltd. and funds were being siphoned away. Resolutions passed on June 29, 2012 at the Board Meeting were prayed to be stayed alleging that the effect thereof would be to dilute the interest of CPI India.

(3.) THE OMP filed by CPI India Ltd. has been disposed of vide impugned order dated October 03, 2012 by passing the following directions:-