Delhi High Court: The decree holder, Dart Properties (P) Ltd. filed the present Execution Petition seeking plea of this Court to proceed against the directors and promoters of Cinema Ventures (P) Ltd. (‘CVPL’) to pay outstanding amount under the Conciliated Agreement dated 30-10-2021, executed between the parties. Jasmeet Singh, J., opined that the submissions needed consideration and thus, issued notice to the Judgment Debtors, who were the Chairman, Directors, Promoters, FormerDirector, and Officers of CVPL.
The decree holder was an entity duly incorporated and registered under the Companies Act, 1956. The decree holder vide Agreement to Sell dated 24-3-2006, purchased a property from Ansal Properties and Infrastructure Ltd. Thus, the decree holder was the absolute owner of the said property. In terms of the Memorandum of Understanding dated 27-9-2006, the decree holder had granted Reliance Media Works Ltd. (‘RMWL’), formerly known as Adlabs Films Ltd., the right to operate and manage the theatre, on a conducting/Lease basis for the purpose of exhibiting the films and for carrying on associated retail activities on the terms and conditions stated in the Agreements.
The decree holder, vide letter dated 20-11-2014, was intimated regarding the proposal of restructuring of RMWL’s business and the process of transfer of RMWL’s exhibition division to CVPL on a going concern basis. Thereafter, vide letter dated 28-7-2015, the decree holder was informed regarding transfer of business CVPL as per Business Transfer Agreement dated 14-12-2014. Further, it was stated that all the benefits and obligations were assigned to CVPL and since 1-8-2015, CVPL was operating from the aforesaid premises and had stepped into the shoes of RMWL. Due to the continuing breach of its contractual obligations and the constant silence on CVPL’s part, the decree holder issued a legal notice dated 1-2-2021 to CVPL. CVPL replied that due to the outbreak of Covid-19 and their exclusive dealing with Yes Bank and directions issued by RBI in respect of withdrawal/transactional limit, there was an unintentional delay on CVPL’s part in payment of rent/conducting charges.
On 12-5-2021, the decree holder filed Arbitration Petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator and on joint request of the parties, the matters were sent for conciliation/mediation before the Delhi High Court Mediation Centre and thereafter, the parties entered into terms of settlement which were recorded in the Conciliated Agreement dated 30-10-2021. According to Clause 6 of the Conciliated Agreement dated 30-10-2021, CVPL was liable to pay the conducting charges and the amount of installment for the defaulted amount by 7th of each month. However, CVPL failed to pay the said amounts to the decree holder and the aforesaid clause was breached due to non-payment by CVPL on 7-12-2021 and 7-1-2022.
Thereafter, Rs 30 lakh as first instalment of old outstanding dues was made by CVPL, and the possession and keys of the premises were handed over. Further in July 2022, Rs 30 lakhs (approx.) was remitted for the month of June 2022, which according to CVPL was to be made after the theatre “goes live”. However, since then, no payment was remitted and there had been continuous breach. On 21-12-2022, the directors of Dart Properties (P) Ltd. took back the possession from CVPL.
The decree holder had already initiated enforcement/execution proceedings for recovery of Rs. 3.03 crore against CVPL seeking execution of Conciliated Agreement dated 30-10-2021. Since CVPL was undergoing Corporate Insolvency Resolution Process (‘CIRP’) pursuant to the order dated 14-7-2023 passed by the National Company Law Tribunal, Mumbai Bench, all the legal proceedings against CVPL had come to a halt for the time being till Moratorium under Section 14 of IBC was in force.
The decree holder relied on Ansal Crown Heights Flat Buyers Assn. (Regd.) v. Ansal Crown Infrabuild (P) Ltd., 2024 SCC OnLine SC 64 (‘Ansal Crown Infrabuild Case’), wherein the Supreme Court opined that “only because there was a moratorium under Section 14 of the IBC against the company, it could not be said that no proceedings could be initiated against the opposite party for execution, provided that they were otherwise liable to abide by and comply with the order, which was passed against the company. The protection of the moratorium would not be available to the directors/officers of the company and execution proceedings could be filed against them.”.
The decree holder thus submitted that this Court should proceed against the directors and promoters of CVPL for execution of the Conciliated Agreement dated 30-10-2021. It was also submitted that the directors of CVPL, earlier had given various undertakings before this Court that they would abide by/honor the settlements between the decree holder and CVPL in letter and spirit and, therefore, the same was binding on the directors/promoters of CVPL in view of the judgment of the Supreme Court in Anjali Rathi v. Today Homes and Infrastructure Pvt. Ltd., 2021 SCC OnLine SC 729.
The decree holder further submitted that it had already filed its claim before the Resolution Professional under the provisions of IBC. However, the same did not preclude it to file a case for execution/enforcement against the directors/promoter in light of Ansal Crown Infrabuild Case (supra).
The Court opined that the submissions needed consideration and thus, issued notice to the Judgment Debtors. The notice was returnable on 27-5-2024.
[Dart Properties (P) Ltd. v. Shrikant Bhasi, 2024 SCC OnLine Del 1395, Order dated 20-2-2024]
Advocates who appeared in this case :
For the Decree Holder: Malvika Trivedi, Senior Advocate; Sujal Gupta, Shailendra Slaria, Advocates; Adv Swarnendu Chatterjee.
Buy Arbitration and Conciliation Act, 1996 HERE
