SUPREME INFRASTRUCTURE INDIA LIMITED AND ORS Vs. SAN JOSE SUPREME TOLLWAYS DEVELOPMENT PVT LTD AND ORS

JUDGEMENT

(1.) This is an application which has been filed by the petitioners in the main Company Petition in relation to the regulation of the conduct of the affairs of the company particularly in relation to the urgent necessity of Board Meeting being convened for moving ahead with the implementation of the project undertaken by the First Respondent Company sanctioned by the Jaipur Development Authority (JDA). Further, in the application it is also claimed as a relief that a receiver is required to be appointed to enable requisite dispersal of the payments in relation to the bills approved and submitted by Engineering Procurement and Construction (EPC) contractor which had been duly vetted and approved by Lenders Independent Engineers (LIE) for getting necessary payments as well as to avoid termination of the agreement by JDA. Before going into the merits of the above reliefs sought for by the applicant, it is necessary to delineate the resume of facts in order to appreciate the background of the case. The petitioner is a participant in the bidding process of the development and operation/maintenance of 6 laning of Jaipur Ring Road from Ajmer Road to Agra Road Section at Jaipur in the State of Rajasthan (for the sake of brevity known hereby as project) along with respondents 2 and 3 being companies having their origin in Spain forming a consortium. The petitioners and the respondents 2 and 3 have come together specifically to participate in the bidding process floated by JDA for the purpose of the project. A Special Purpose Vehicle (SPV) seems to have been incorporated in the form of a company, namely the First Respondent Company on 21.6.2011. In the said company, as per the agreement between the petitioners and respondents No. 2 and 3 dated 21.09.2011, the petitioner was supposed to hold 40% of the share capital of the First Respondent Company and respondents 2 and 3 the balance share capital of 60% of the First Respondent Company, but however till date has not subscribed to the agreed extent thereby resiling on its promise and crippling the financial resources of the Respondent 1 company. According to the petitioners for availing financial assistance of Rs. 7,90,00,00,000/- a Common Loan Agreement was entered into with a consortium of Banks and in relation to which a short fall support undertaking had been given by petitioners and Respondents 2 and 3. The First Respondent Company seems to have been successful in the bidding process in relation to the project floated by JDA as per the Letter of Award issued by JDA on 16.05.2011. Even though it has been almost 5 years since the award of the contract to the First Respondent Company, the project is yet to be completed primarily envisaged for the benefit of the public. The major reason stated for the non-completion of the project by the petitioner in the petition is that of the non-co-operation of Respondents No. 2 and 3 to contribute to the project and abide by its commitments which has created an impasse and coupled with the attitude of the respondents in the non-approval of the bills to enable the First Respondent Company to submit to the concerned authorities for clearance for payment, as approval, both by petitioners and respondents 2nd and 3rd is a pre-requisite for releasing payments. The above acts of mismanagement, on the part of respondents 2 and 3 it is contended by the petitioners has virtually resulted in crippling the affairs of the company. It is also contended by the petitioners/applicant herein that repeatedly they have expressed their readiness before both JDA as well as lenders that it is prepared to go out of the First Respondent Company handover the project in its entirety to the 2nd and 3rd respondents for its due completion as the same is for the benefit of the public. However, it is submitted by the applicant-petitioner that neither the 2nd and 3rd respondents are allowing the company to move ahead in relation to the execution of the project by certifying the bills, they have not made any progress on the said lines nor despite their expression of interest in taking over the project before the lenders and JDA. Thus an impasse has been created in the execution of the project. Under the circumstances, the applicant/petitioner contends that it has been forced to come out with the above application seeking the relief as sought for, in the interest of the company and the public, to break the deadlock.

(2.) The respondents No. 2 and 3 vehemently deny the allegations of the applicants/petitioners by urging that they are instrumental in creating an impasse in the completion of the project and the affairs of the company. On the other hand, it is contended by the respondents No. 2 and 3 that in view of the lack of proper accounting of the project expenditure by the petitioners who are the Engineering, Procurement & Construction (EPC), contractors have misused and amassed huge amounts of public money from nationalized banks and financial institutions and hence respondents No. 2 and 3 in view of enormous amounts spent without proper accounts by the petitioners were perforce prevented from certifying the bills. It is further contended that approval of the bills certified by the EPC contractor as well as of the LIE by Respondents 2 and 3 will further saddle the First Respondent Company with added liabilities and it will not be in the interest of First Respondent Company or its shareholders.

(3.) Be that as it may, the short question for consideration by this Tribunal at present is that whether the actions of the 2nd and 3rd respondents were justified in non-participation in the Board Meeting for the purpose of considering agendas which were proposed by the applicant on 10.10.2016 in relation to the Board Meeting proposed to be held on 23.10.2016 for taking further action in the implementation of the project and also to consider delay of the respondents No. 2 and 3 in certifying the bills thereby causing delay in the execution of the project and resulting in the likely termination of the project by JDA. At this stage a perusal of proposed agenda by the petitioners applicant for 23.10.2016 for the Board Meeting must be read and the same is extracted hereunder.