DEUTSCHE TRUSTEE COMPANY LTD Vs. TULIP TELECOM LTD

JUDGEMENT

(1.) M/s Tulip Telecom Ltd. (hereinafter referred to as "TTL" or the "respondent-company") is a company incorporated in India. It issued an offering circular for foreign currency convertible bonds (FCCBs) for USD 150 million, to be redeemed on maturity at 144.56% of the principal amount. A trust deed was entered into between TTL and M/s Deutsche Trustee Company Ltd., the petitioner herein, under which the petitioner was appointed the trustee for the bondholders. The bonds were to be redeemed on 26th July, 2012. They had been partly redeemed and the principal value of the unredeemed bonds on the date of maturity was USD 97 million. After aggregating the premium payable on maturity, the amount payable by TTL as on the above date on the bonds came to USD 140 million. It is common ground that when the maturity date arrived, the unredeemed bonds were not redeemed by TTL. Assurances were given to the Bombay Stock Exchange and the National Stock Exchange that the bonds would be redeemed by 10th September, 2012. The trustee for the bondholders i.e. the petitioner in these proceedings, sent a fax message to the respondent on 28th August, 2012 informing the latter that the bonds were not redeemed on the date of maturity. Action was contemplated by the petitioner and this was also intimated to TTL. In October, 2012 there was an announcement to the bondholders about the development. On 19.3.2013 the petitioner sent the statutory demand notice contemplated by section 434(1)(a) of the Companies Act, 1956 which was followed up by reminders sent in the month of April, 2013.

(2.) On 8th May, 2013, TTL obtained a letter of approval for a Corporate Debt Restructuring Scheme, a copy of which is placed as annexure C to CA 1688/2013. The petitioner on coming to know of the CDR scheme, filed a winding up petition before this Court on 31st May, 2013 under section 433(e) of the Companies Act seeking winding up of TTL on the ground of inability to pay its debts. CA 1529/2013 is an application filed by the petitioner to restrain TTL from modifying in any manner any security interest granted by TTL to the CDR lenders in the past. CA 1688/2013 is an application filed by ICICI Bank Ltd., which is the lead bank in the consortium of banks, seeking impleadment in the present proceedings.

(3.) When the company petition No.329/2013 was listed for hearing, on 16th September, 2013, the learned senior counsel appearing for TTL undertook before the Company Judge that the CDR scheme will not be given effect to till the disposal of the interim applications. When the matter was listed for arguments on 7th October, 2013, there was initially some dispute raised on behalf of the respondent as to whether any such undertaking was given to this Court, but after some time the learned senior counsel appearing for the respondent-company made a statement that if any such undertaking had been given earlier by the senior counsel who appeared before this Court on the earlier date, the same would be honoured. Thereafter CA 1529/2013, which is an application for stay of the CDR scheme was taken up for consideration. Even here initially there was some objection raised on behalf of the respondent as to whether CA 1529/2013 was in fact an application for stay of the CDR scheme. However, the learned senior counsel for the petitioner pointed out that a prayer for stay of the CDR scheme had been made in para 15 of the company petition. After this statement was made, the parties addressed arguments as to whether the CDR scheme should be stayed, pending admission of the company petition. The position therefore is that this Court has not passed any order as to whether the company petition No.329/2013 should be admitted or not; arguments were heard at length only on the question whether the CDR scheme which was approved by letter dated 8th May, 2013 and was followed up by a Master Restructuring Agreement (MRA) dated 17th July, 2013 should continue or should be stayed till further orders.