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DEEPALI DESIGNS & EXHIBITS PRIVATE LIMITED vs PICO HONG KONG LIMITED & ANR.

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$~7
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 07th November, 2023
+ CS(COMM) 77/2020, I.As. 2329/2020, 2330/2020,
10350/2020, 10351/2020, 10353/2020, 10354/2020, 10355/2020, 10356/2020, 11595/2020, 11685/2020

DEEPALI DESIGNS & EXHIBITS PRIVATE LIMITED
….. Plaintiff
Through: Mr.Raghvendra Singh, Advocate with Mr.Abhishek Gupta and Mr.Gyanendra Rathour, Advocates.
versus
PICO HONG KONG LIMITED & ANR.
….. Defendant
Through: Ms.Ginny J.Rautray, Advocate with Ms.Tanvi Bansal, Advocate for D-1.
Mr.Ritin Rai, Sr. Advocate with Ms.Tahira and Mr.Navdeep Singh, Advocates for D-2.

CORAM:
HON’BLE MS. JUSTICE NEENA BANSAL KRISHNA

J U D G M E N T (oral)
IA 2330/2020 (under Order XXXIX Rules 1 and 2 CPC filed by the plaintiff)

1. An application under Order XXXIX Rules 1 and 2 CPC has been filed on behalf of the plaintiff seeking ex-parte ad-interim injunction against the defendants.
2. It is submitted in the application that the plaintiff is a Company incorporated under the Companies Act, 1956. Defendant No.1 is a Company incorporated under the laws of Hong Kong and is a wholly owned subsidiary of defendant No.2 Company, incorporated in Cayman Islands having its registered office at Hong Kong. It is asserted that the defendants are threatening to remove and dispose of the suit property with a view to defraud the creditors and are exercising rights under the terminated Contract to the detriment of the plaintiff. They are illegally using the Trade name “Pico Deepali Overlays Consortium”. Presently, defendant No.1 has no asset in India except a share in an Arbitral Award dated 03.12.2015 of Rs. 81,97,02,898/- and the interest on award amount. An Execution Petition OMP (ENF)(COMM) 3 of 2016 has been filed by defendant No.1, while the other two Decree Holders of this Arbitral Award are the plaintiff which has filed an Execution Petition OMP (ENF) (COMM) 75 of 2017. The Pico Event Marketing (India) Private Limited has filed the Insolvency Petition bearing EA(OS)815/2019, through Resolution Professional under the Insolvency and Bankruptcy Code, 2016, in respect of their respective shares in the Arbitral Award. The defendant No.1 has restored its Execution Petition of 2016 on 10.08.2018 with a prayer that the entire Arbitral Award including the share of the plaintiff and Pico Event Marketing (India) Private Limited be paid exclusively to defendant No.1.
3. The plaintiff has further submitted that he has filed the present CS(OS) 2528/2010 (later renumbered as CS (COMM) 1590/2016) before Delhi High Court against defendant No.1 and others for recovery of Rs.6,99,24,861/- on the premise that though defendant No.1 has received the entire money for and on behalf of the plaintiff from the Organizing Committee of Commonwealth Games 2010, it has failed to make complete payment to the plaintiff in terms of the Agreement dated 01.06.2010. It is claimed that defendant No.1 has accumulated Income Tax liabilities of Rs. 317,32,91,222/- and interest for Assessment Year 2011-12, 2013-14, which has remained unpaid. It has not even bothered to file the Statutory Appeals against the Assessment Orders by the Income Tax Authority. Likewise, Pico Event Marketing (India) Private Limited, sister concern of defendant no. 1 and subsidiary of defendant no. 2, has continuously defaulted in complying with the requirements of Companies Act, 2013 and its name has been struck-off from the Register of Companies by the Registrar of Companies, NCT of Delhi and Haryana, on 07.06.2017, under Section 248 of the Companies Act, 2013. Moreover, it defaulted in making payments to its creditors on account of which NCLT has admitted the application for Insolvency on 23.08.2019 and has commenced the Corporate Insolvency Resolution Process under Section 10 of Insolvency and Bankruptcy Code, 2016 (IBC). The Income Tax liability is in the sum of Rs. 52,04,36,805/- and also interest for the AYs 2011-12 to 2013-14.
4. It is asserted that though defendant No.1 and 2 are foreign Companies, they have significant assets across all the cities in India. However, they have been removing their assets outside India. They have also failed to pay the outstanding tax and the penalty. Furthermore, it has failed to make complete payment to the plaintiff in terms of the Agreement dated 01.06.2010. Hence, a prayer is made that the defendants be injuncted from removing or disposing the whole of the share of defendant No.1 in Arbitral Award dated 03.12.2015 in the Execution Petitions that have been filed and also grant prohibitory injunction restraining the defendants from acting for and on behalf of the plaintiff. Further, ex-parte prohibitory Injunction is sought for restraining the defendants from using and/ or associating itself with the Trade name “Pico Deepali Overlays Consortium”.
5. The defendant No.1 in its reply to the application has denied all the averments made in the application. It is explained that the disputes arose out of the Consortium Agreement and Addendum dated 19.12.2019 and 06.01.2010 respectively. “Pico Deepali Overlays Consortium” (PDOC), an unincorporated Joint Venture Consortium (JVC) was formed by defendant No.1 and defendant No.2 along with the plaintiff on 19.12.2009 and made a bid for the Overlays work for the Delhi Commonwealth Games Venues, for which it was declared successful.
6. The disputes eventually arose and the parties were referred to Arbitration on 18.05.2012. The learned Arbitral Tribunal passed an unanimous Award in favour of PDOC inter-alia awarding a sum of Rs.79,24,31,448/- along with the interest @ 12% w.e.f 23.09.2011.
7. It is asserted that in terms of the Agreement dated 19.12.2009, defendant No.1 had only a limited role limited to Clause 2.4 of the Addendum dated 01.06.2010; PDOC was the only concern before the Organizing Committee. The cause of action, therefore, if any was only against PDOC and not defendant no. 1. The final settlement of the accounts in terms of Clause 7.4 of the Consortium Agreement could be done only after the complete payments had been received from OC. Since the complete payment has not been received, there can be no finalization and settlement of accounts and thus, the share of plaintiff cannot be ascertained. Moreover, Attachment Orders had been issued by Income Tax Department. The present application, therefore, is not maintainable and the plaintiff is not entitled to any relief.
8. The defendant No.2 by way of its reply has also essentially taken the similar defence. It is asserted that there is no privity of contract between the plaintiff and defendant No.2 and no interim injunction is liable to be granted.
9. Learned counsel for the plaintiff has submitted that it has filed the suit for recovery of Rs.14,12,79,765/-. It has been submitted that in terms of the Consortium Agreement, the plaintiff was given its share of the work done, minus 23% towards the cost/commission of defendants No.1 and 2. However, defendant No.1 and 2 failed to discharge its obligations under the Consortium and thus, the plaintiff is entitled to recover 23% of the amount which had been deducted by the Consortium. It is further asserted that there are Tax liabilities of more than Rs.200 crores which have been incurred by defendant No.1, but it has failed to discharge its Income Tax liabilities. In fact, defendant No.1 and 2 have failed to pursue the proceeding before Income Tax authorities, which has been vociferously contended by the plaintiff before the Income Tax Department. It is asserted that with such outstanding liabilities, the defendant No.1 and 2 cannot be permitted to take the entire Award amount as has been claimed by them in their Execution Petitions.
10. Learned Counsel on behalf of defendant No.1 has submitted that the entire amount in terms of the Award, that was due from Organizing Committee, has already been deposited by it in the Court and the Execution Petitions are pending in the Court. Moreover, the defendants have duly pursued the discharge of Income Tax liability with the Department and about Rs.44 crores which was found due has already been paid. There can be no apprehension of the defendants absconding or taking away the money.
11. Submissions heard.
12. It is evident from the averments made that by virtue of the Award dated 03.12.2015 the Organizing Committee has already deposited the entire amount, which is about Rs.200 crore (Principal and the interest), in the Court in the pending Execution Petitions. Once, the money has already been secured, no further injunction, as claimed by the plaintiff, is warranted. The plaintiff, as per his own submissions, has filed Execution Petition. No ground is made for grant of interim injunction.
13. It has also been submitted that defendant No.1 has erroneously been using the name of Consortium despite the Joint Venture Agreement having come to an end. However, it has been clarified on behalf of defendant No.1 that the name of Joint Venture is being used only in respect of the entitlements and liabilities which flow from the Joint Venture Agreement and not in respect of any transaction independent of the Joint Venture Agreement.
14. The plaintiff has also not been able to show if defendant No.1 has used the name of Joint Venture in any transaction which is not connected to their Agreement of 2009-10.
15. There is no prima facie case made out on behalf of the plaintiff and there is no ground for granting interim injunction. The application under Order XXXIX Rules 1 and 2 is hereby dismissed.

(NEENA BANSAL KRISHNA)
JUDGE
NOVEMBER 07, 2023
Va/JN

CS(COMM) 77/2020 Page 1 of 6