Del. HC restrains BPTP from effecting Board meeting resolutions

[Pankaj Rawat]

http://www.lawetalnews.com/article/4486 ... utions.htm

The Delhi High Court has extended its interim order restraining real estate company BPTP from giving effect to the decisions taken at a Board Meeting held on June 29 last. The stay will continue till an order is passed by the three-member arbitral tribunal formed to adjudicate the shareholders agreement dispute with CPI India Limited.

The court's direction came even as BPTP contended that the interim order was 'starving' it of 'possible borrowing' from financial institutions to deal with the 'liquidity crunch'.

In meeting of the Board of Directors of BPTP held on 29 June 2012, without CPI's Directors approval, BPTP proceeded to approve incurrence of following debts - Term loan from Syndicate Bank for Rs 90 crores, Corporate loan of Rs 125 crores from IFCI Limited, and raising fresh debt of upto Rs 730 crores.

This decision was stayed by the High Court on July 4 last after CPI India approached the court alleging BPTP of raising "unauthorized" debt without its affirmative vote in the board of directors.

The court also directed BPTP to keep a complete account of all the monies collected by it so far through sale of units in Projects A and M (group housing projects in Faridabad), and to furnish the details to CPI.

"Till further orders that may be passed by the arbitral Tribunal, BPTP will cease further activity in relation to Projects A and M and maintain status quo in relation to the Selected Projects," the court added.

Observing that CPI has not had any return on monies invested in the shares of BPTP the Court said, "CPI, a foreign investor, after investing over Rs. 300 crores in BPTP and waiting for over five years is faced with a situation where there is neither a QIPO nor the prospect of any of the Selected Projects being brought immediately to sale."

BPTP and CPI India are presently going through a shareholders agreement dispute, which started after BPTP failed to achieve a Qualified Initial Public offering by July 2011, prompting CPI India to invoke the arbitration clause in the shareholders agreement.

CPI India, in turn had approached the High Court seeking interim relief to protect its rights and entitlement arising out of the Rs 322.5 crores worth investment made in BPTP.

In the petition, CPI India has alleged BPTP of raising "unauthorized" debt without its affirmative vote in the board of directors.