Calcom Cement India Ltd. Vs Binod Kumar Bawri & Ors. (Delhi High Court)
Delhi High Court held that rewriting of a contract between two parties, especially a commercial contract, is completely impermissible in law. Accordingly, an arbitral award which rewrites the contract is bound to be set aside.
Facts-
Various agreements were executed among Calcom, Dalmia, the Bawris and SSPL. Once the cobwebs are brushed away and the air is cleared, the controversy is essentially found to relate to Clause 9.1 of the Share Holder Agreement (SHA) dated 16th January 2012 and Clause 3.20 of the Amendment to the SHA dated 30th November 2012 executed among the parties.
The arbitral proceedings, wherefrom the present petitions emanate, were initiated by the Bawris against Dalmia and Calcom. Dalmia filed counter-claims before the learned Arbitral Tribunal. Dalmia alleged that the amounts claimed by the Bawris, in its claims before the learned Arbitral Tribunal, were not payable by Dalmia in view of the admitted failure, by the Bawris, to comply with the Project Conditions as required by Clause 9.1 of the SHA. Rather, contended Dalmia, the failure of the Bawris to comply with the Project Conditions entitled Dalmia to the relief sought by it in its counterclaims.
That there has been no complete compliance, by the Bawris, with the Project Conditions, as required by Clause 9.1 of the SHA, is not in dispute.
The learned Arbitral Tribunal has held against Damlia and in favour of the Bawris essentially on two grounds.
The first is that the Project Conditions enumerated in Clause 9.1 of the SHA were required to be fulfilled, by the Bawris, only so long as the Bawris retained control of Calcom. Control over Calcom, which was initially held by the Bawris, shifted to Dalmia in October 2012. This, according to the learned Arbitral Tribunal, resulted in two consequences. The first was that the Bawris were no longer obligated to comply with the Project Conditions as required by Clause 9.1 of the SHA. The second was that, consequent on shifting of control, the requirement of fulfillment of the Project Conditions became the responsibility of Dalmia.
Conclusion-
Held that finding of the learned Arbitral Tribunal clearly amounts to rewriting Clause 9.1, which specifically required the Bawri group to fulfil the obligations envisaged therein. Rewriting of a contract between two parties, especially a commercial contract, is completely impermissible in law, as held in a plethora of decisions.
Various judgements holds that rewriting of the contract between the parties by an Arbitral Tribunal would be against the law of the land. An Arbitral Tribunal is required to arbitrate within the four walls of the contract, and an arbitral award which does otherwise, or rewrites the contract, “is bound to be set aside”.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The dispute in the present case pertains essentially to three entities/group of entities. They are Dalmia Cement (Bharat) Ltd (Dalmia), Calcom Cement India Ltd (Calcom), a group of companies/individuals comprising “the Bawri Group” (“the Bawris”) and Saroj Sunrise Pvt Ltd (SSPL), which is a company of the Bawris.
2. The issue in conspectus
2.1 Various agreements were executed among Calcom, Dalmia, the Bawris and SSPL. Once the cobwebs are brushed away and the air is cleared, the controversy is essentially found to relate to Clause 9.1 of the Share Holder Agreement (SHA) dated 16th January 2012 and Clause 3.20 of the Amendment to the SHA dated 30th November 2012 executed among the parties. These clauses read as under:
Clause 9.1 of the SHA
“9.1 The Bawri Group undertakes to complete or ensure the completion of the following conditions (“Project Conditions”) to the reasonable satisfaction of the Dalmia Group on or before June 30, 2013:
(a) The Company shall have obtained necessary clearance and renewals, as the case may be from the Ministry of Environment and Forests with respect to its operations and use of land at: (i) Grinder Plant in Lanka, District Nagaon, Assam; (ii) Clinker Plant at Jamunanagar, Umrangshu, Assam for 0.75 mtpa; and (iii) cement grade limestone mining unit at New Umrangshu, North Cachar Hills, Assam.
(b) The Company shall obtain “consent to operate” as required under Water (Prevention and Control of Pollution) Act, 1974 and with respect to (i) cement grade limestone mining unit at New Umrangshu, North Cachar Hills, Assam; (ii) Clinker Plant at Umrangshu; and (iii) the Grinder Plant in Nagaon, Lanka, as may be required.
(c) The Company shall secure electricity supply through 132 KVA line to be set up by ASEB for the Clinker Plant at Jamunanagar, Umrangshu.
(d) The Company shall have renewed and have valid Mining Lease for the Project and obtained necessary authorizations for running the mines of the Project at its installed capacity, including but not limited to clearance from the Ministry of Environment and Forests and consent to operate.
(e) Subject to funding being made available to the Company, the Company shall have constructed the railway siding at the Project.
(f) Consent of NC Hill council for the surface rights over the area comprised in the Mining Lease.
(g) Company shall have completed all actions and procedural formalities; required under the Central Government and the State Government subsidy schemes (except where such actions are required to be completed after commencement of commercial production), such as obtaining registrations and eligibility certificates with respect to all its units including but not limited to eligibility certificate for VAT remission/incentives for the Company and registration of Haflong unit for transport subsidy.
(h) Registration of Mining Lease as well as the lease deed for the factory land situated at Umrangshu, Assam.
In case of unforeseen delays to the completion of the Project Conditions, the time period to ensure completion of the Project Conditions to the satisfaction of the Dalmia Group shall stand extended to March 3l, 2014 (“Project CP Satisfaction Date”). However, if the clinker unit is ready to commence production during the period July 1, 2013 and March 31, 2014 but unable to commence production because of non-availability of lime stone, then the last date for the completion of the Project Conditions i.e. the Project CP Satisfaction Date shall be the date on which the clinker unit is unable to operate because of non-availability of lime stone.
On or before the Project CP Satisfaction Date, the Bawri Group shall issue a notice to the Dalmia Group stating in the Project Conditions have been completed. Within 10 (ten) days, the Dalmia Group shall issue a notice (“Project CP Satisfaction Notice”) to the Bawri Group, indicating that (i) all the Project Conditions have been completed to its satisfaction; or (ii) the Project Condition which have not been completed to the reasonable satisfaction of the Dalmia Group and giving the Bawri Group a time period of 10 (ten) Business Days to complete such Project Condition. If within the aforesaid period of 10 (ten) Business Days, Bawri Group are unable to complete such Project Conditions to the reasonable satisfaction of the Dalmia Group, the Dalmia Group shall have the right, at its sole discretion, to exercise the rights set out in Clause 9.2.”
(Emphasis supplied)
Clause 3.20 of the Amendment to Share Holder Agreement
“3.20 The Parties hereby agree that within 60 (sixty) days from the Effective Date, the Parties shall mutually agree on the amendments to Clause 9.1 with respect to Project Conditions, the support required to be given by the Parties for completion of the Project Conditions and the effect thereof, if any. Such amended Project Conditions shall be deemed to form a part of this Agreement. The Parties hereby agree to forthwith effect necessary changes to the articles of association of the Company to give effect to the change in understanding with respect to the amended Project Conditions.”
(Emphasis supplied)
2.2 The arbitral proceedings, wherefrom the present petitions emanate, were initiated by the Bawris against Dalmia and Calcom. Dalmia filed counter-claims before the learned Arbitral Tribunal. Dalmia alleged that the amounts claimed by the Bawris, in its claims before the learned Arbitral Tribunal, were not payable by Dalmia in view of the admitted failure, by the Bawris, to comply with the Project Conditions as required by Clause 9.1 of the SHA. Rather, contended Dalmia, the failure of the Bawris to comply with the Project Conditions entitled Dalmia to the relief sought by it in its counterclaims.
2.3 That there has been no complete compliance, by the Bawris, with the Project Conditions, as required by Clause 9.1 of the SHA, is not in dispute.
2.4 The learned Arbitral Tribunal has held against Damlia and in favour of the Bawris essentially on two grounds.
2.5 The first is that the Project Conditions enumerated in Clause 9.1 of the SHA were required to be fulfilled, by the Bawris, only so long as the Bawris retained control of Calcom. Control over Calcom, which was initially held by the Bawris, shifted to Dalmia in October 2012. This, according to the learned Arbitral Tribunal, resulted in two consequences. The first was that the Bawris were no longer obligated to comply with the Project Conditions as required by Clause 9.1 of the SHA. The second was that, consequent on shifting of control, the requirement of fulfillment of the Project Conditions became the responsibility of Dalmia.
2.6 This finding, in the opinion of this Court, clearly amounts to rewriting Clause 9.1, which specifically required the Bawri group to fulfil the obligations envisaged therein. Rewriting of a contract between two parties, especially a commercial contract, is completely impermissible in law, as held in a plethora of decisions, including Union Territory of Pondicherry v. P.V. Suresh1, Shree Ambica Medical Stores v. Surat People’s Co-operative Bank Limited2, IFFCO Tokio General Insurance Co. v Pearl Beverages Ltd.3¸Tata Consultancy Services v. Cyrus Investments (P) Ltd.4 and Maharashtra State Electricity Distribution Co. v. Maharashtra Electricity Regulatory Commission5. N.H.A.I. v. Bumihiway DDB (JV)6 holds, moreover, that rewriting of the contract between the parties by an Arbitral Tribunal would be against the law of the land. An Arbitral Tribunal is required to arbitrate within the four walls of the contract, and an arbitral award which does otherwise, or rewrites the contract, ―is bound to be set aside‖, as held in P.S.A. Sical Terminals Pvt Ltd v. Board of Trustees7, later followed in I.O.C.L. v. Shree Ganesh Petroleum8.
2.7 The second ground on which the learned Arbitral Tribunal holds against Dalmia and in favour of the Bawris with respect to the fulfillment of the Project Conditions, is predicated on Clause 3.20 of the Amendment to the SHA. According to the learned Arbitral Tribunal, Clause 3.20, as framed, resulted in two consequences. Firstly, holds the learned Arbitral Tribunal, Clause 3.20 altered Clause 9.1 of the SHA, and resulted in Clause 9.1, as well as the requirement of fulfillment of the Project Conditions, contemplated therein, effectively being eviscerated. Secondly, it amounted to waiver, by Dalmia, of Clause 9.1 of the SHA as well as Clause 9.2 thereof, which envisaged the consequences of non-compliance with Clause 9.1.
2.8 It is not in dispute that no amendments to the SHA, in terms of Clause 3.20 of the Amendment to the SHA, were ever agreed upon, among the parties. In that view of the matter, the above interpretation of Clause 3.20 of the Amendment to the SHA, as accorded to it by the learned Arbitral Tribunal, appears to this Court to be “patently illegal” within the meaning of Section 34(2A) of the Arbitration and Conciliation Act, 1996 (“the 1996 Act”). All that Clause 3.20 envisaged, at the highest, was mutual agreement, among the parties, on the amendments to Clause 9.1 of the SHA. When the terms of the proposed amendments were themselves not agreed upon, it would be impossible, with profound respect to the learned Arbitral Tribunal, to hold that Clause 9.1 stood altered, or that the obligations contemplated thereby stood wiped away.
2.9 Nor does Clause 3.20 of the Amendment to the SHA indicate any intention, of Dalmia, to waive the requirement of fulfilment, by the Bawris, of their obligations as cast by Clause 9.1 of the SHA. Waiver of any clause of the SHA has, as per Clause 22.9 thereof, to be in writing and signed by all parties. Moreover, waiver of a contractual right, in law, has to be a conscious act, and intention to waive must be unmistakable. This Court is unable to agree with the finding of the learned Arbitral Tribunal that, even before any terms of amendment of the SHA were finalized among the parties, Clause 3.20 of the Amendment to the SHA resulted in waiver, by Dalmia, of its rights under the SHA, consequent to failure, by the Bawris, to fulfil the Project Conditions as required by Clause 9.1.
2.10 This, in substance, is the essential controversy in issue in the present OMPs. The conclusion of this Court, thereon, has also been indicated, in precis, hereinabove. Detailed findings in that regard follow.
2.11 Once this controversy is resolved, all that would remain would be to work out the consequences, inasmuch as the resistance, by Dalmia, to the claims of the Bawris, as also the counter-claims of the Dalmia, are entirely predicated on the premise that Bawris failed to comply with the Project Conditions as required by Clause 9.1 of the SHA.
Facts
3. With the aforesaid prefatory recitals, one may proceed to the facts in somewhat greater detail.
4. Calcom was incorporated on or around 20th September 2004 by the Bawris with Assam Industrial Development Corporation (AIDC), to build and operate a cement plant in Assam. As the cost of the project increased, Calcom desired to bring in an outside investor to meet the enhanced costs. Dalmia evinced its interest to collaborate. Following mutual discussions and negotiations, a Term Sheet was drawn up among the Bawris, Dalmia and Calcom on 2nd December 2011, setting out the mechanism of the proposed transaction. On the heels of the Term Sheet, the following agreements (hereinafter collectively referred to as ‘Definitive Agreements’) were executed among the Bawris, Dalmia, SSPL and Calcom:
(i) Shareholders’ Agreement (SHA) executed by and among the Bawri Group including SSPL, Calcom and Dalmia,
(ii) Debenture Subscription Agreement (DSA) executed by and among the Bawris, Dalmia and SSPL,
(iii) Share Pledge Agreement – I (Pledge Agreement-I) executed by and among the Bawris and Dalmia,
(iv) Share Pledge Agreement – II (Pledge Agreement-II), executed among SSPL, Dalmia and Calcom,
(v) Share Purchase Agreement – I (SPA-I) executed by and among SSPL, Dalmia and Calcom,
(vi) Share Purchase Agreement – II (SPA-II) executed by and between SSPL, Dalmia and Calcom, and
(vii) Share Subscription Agreement (SSA) executed by and among the Bawri Group, SSPL, Calcom and Dalmia.
5. Various supervening circumstances necessitated a change in the management of Calcom. On 8th October 2012 Binod Kumar Bawri, then Chairman of Calcom circulated the following email:
From: Binod Bawri <[email protected]>
Date: Mon, Oct 8, 2012 at 12:39 PM
Subject: Important News
To: CCIL ALL [email protected]
Dear Friends,
As all of you are aware, we collectively started Vinay Cement in 1987. The dream was to build an organization that we could all be proud of, one where we took pride in our culture as much as any success that we created along the way. I have been privileged to work with the finest human beings, people who brought a human touch, to an otherwise competitive environment. Along the way we built an institution that people felt ownership in, an organization that could provide a great working environment to professionals. We succeeded in doing many things and failed in many; this is part of the process of building any organization. Through it all, we maintained our sense of values, our sense of right and wrong and gave it our best possible at all times. I want to thank each and every one of you who are part of this organization today and also all the countless people who have at some point participated in this journey to bring us to where we are today. Also, I want to thank the family members who have made great sacrifices, oftentimes unknown and unrecognized. Thank you!
In order to realize our vision of being the dominant cement player in East India, we had earlier this year partnered with the Dalmia family. Dalmia Bharat has recently acquired another cement company, in the North East. I believe that it would be beneficial to create a common management to drive the full benefit of synergy between the two companies. This will create value for employees, shareholders and stakeholders. Dalmia Bharat brings a rich history of over 80 years of experience in running cement companies successfully. They also bring the same sense of values and sensitivity to people that have made your company so unique, the reason why we partnered with them.
I have therefore requested Mr. Puneet Dalmia to create a common management which will look after the interest of Calcom. I am therefore very pleased to announce that Mr. Chandrasekhar Kini is being appointed as CEO of the cement business in the North East, to look after both the companies. Under him there will be a common team to look after businesses of both the companies. Mr Kini has rich experience of 33 years in the industry. I have met him personally and have a lot of faith in entrusting the responsibility of the business and our employees to him. I am sure he will lead Calcom to a new orbit of success. Our prayers are with him and we wish him great success.
All employees of Calcom who were reporting to Bawri family will now report to Mr Kini with immediate effect. As Mr Kini takes over his responsibility, he will interact with all of you and will be more than happy to address any concerns. With our rich history of over 140 years in the North East, I, along with the family, will continue to play a role in steering the company in the role of a significant shareholder.
All the best!
Binod Kumar Bawri
6. Following the aforenoted email, a fresh set of agreements were executed among Calcom, Dalmia, Bawris and SSPL on 30th November 2012. Of this, the present dispute concerns itself only with
(i) a new SPA which, vide Clause 17.89 thereof, superseded all prior agreements with respect to the subject matter thereof, which would include SPA-I and SPA-II dated 16th January 2012 and
(ii) the “Amendment to Shareholder Agreement”, whereby the earlier SHA dated 16th January 2012 was amended.
7. The new SPA executed on 30th November 2012 was further amended vide ―Amendment to New SPA” dated 1st December 2012.
8. The relevant clauses of the aforesaid agreements may be reproduced thus:
SHA dated 16th January 2012
Opening recitals
“SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS’ AGREEMENT (the “Agreement”) dated this 16th day of January, 2012 (the “Execution Date”) by and between:
1. BAWRI GROUP, comprising of individuals and entities as set out in Schedule I hereto represented by Mr. Binod Kumar Bawri, by virtue of an irrevocable power of attorney dated December 01, 2011, hereinafter collectively referred to as the “Bawri Group”, which expression shall, unless repugnant to the meaning or context thereof, be deemed to include their successors, legal heirs; executors, administration and permitted assigns;
AND
2. SAROJ SUNRISE PRIVATE LIMITED, a private limited company incorporated under the Companies Act, 1956 having its registered office at 31, Padmavati Complex, H. No. 38, G.S. Road, Dimapur-797112, Nagaland, hereinafter referred to as the “Hold Co-1 “, which expression shall, unless repugnant to the meaning or context thereof be deemed to include its successors and permitted assigns;
AND
3. DALMIA CEMENT (BHARAT) LIMJTED, a public limited company incorporated under the Companies Act, 1956 having its registered office; at Dalmiapuram, 621651, District Tiruchirapalli, Tamil Nadu, hereinafter referred to, as the “Dalmia Group”, which expression shall, unless repugnant to the meaning or context thereof, be deemed to include its successors and permitted assigns:
AND
4. CALCOM CEMENT INDIA LIMITED, a company incorporated under the Companies Act, 1956 having its registered office at “Miri”, Silpukhuri South Bank. Silpukhuri, Guwahati – 781003, Assam, hereinafter referred to as the “Company”, which expression shall, unless repugnant to the meaning or context thereof, be deemed to include its successors and permitted assigns.
(Hold Co-1 and the Bawri Group shall collectively be referred to as the “Promoter Group”.)
(The Promoter Group, the Dalmia Group and the Company are hereinafter collectively referred to as “Parties” and individually as “Party”).
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1.2(x) For the purpose of calculating the Shareholding .of a Shareholder in the Company, including for determining the rights and privileges available to such Shareholder in the Company, the Shareholding of the Affiliates of such Shareholder shall be aggregated to the Shareholding of such Shareholder, provided however that (i) Vinay Ce1tlents Limited and RCL Cement Limited shall .not constitute an Affiliate of either Shareholder; and (ii) the Shareholding of the Persons set out in Schedule XII or any transferee thereof shall be aggregated to the Shareholding of the Promoter Group;
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6.5.1 At any time after July 31, 2017 and for a period upto July 31, 2020 (the “Put Option Period”), the Promoter Group shall have the right to but not the obligation to issue a notice (“Put Notice”) to the Dalmia Group, to sell all, and not less than all, of the Equity Shares held by it in the Company (“Promoter Put Option Shares”) to the Dalmia Group or its Affiliates or any Person nominated by the Dalmia Group (the “Put Option Purchaser”), as applicable at the Promote: Group Pm Option Price, on the terms and Conditions contained in this Agreement (the “Promoter Group Put Option”). Such Put Notice shall only be issued by the Promoter Group after the accounts for the previous Financial Year has been approved by the Board. Such Put Notice shall specify the date on which such Transfer shall take place (“Put Date”), which shall· not be less than 180 (one hundred and eighty) days from the issuance of the Put Notice.
The Promoter Group Put Option Price ·shall be arrived at in accordance with the formula and the terms set out in Schedule VI.
6.5.2 Upon the exercise of the Promoter Group Put Option the Dalmia Group shall have the obligation to purchase at its discretion either (i) the Promoter Put Option Shares; or; (ii) the entire Shareholding of the Promoter Group in the Company on a Fully Diluted Basis less 5% (five percent) of the Shareholding of the Promoter Group in the Company (such that the Promoter Group shall retain 5% (five percent) of the Share Capital of the Company on a Fully Diluted Basis post the exercise of the Promoter Group Put Option.
In the event the Promoter Put Option Shares are pledged by the Promoter Group with the Lenders in accordance with Clause 6.2C, the Dalmia Group shall be obliged to purchase these Equity Shares subject to (i) the pledge on these Equity• Shares in favour of the Lenders; and (ii) the Lenders consenting to such Transfer. In such cases the Dalmia Group also agrees to make best efforts to obtain the consent of the Lenders for such Transfer.
6.5.3 The Dalmia Group will indicate if it wishes to acquire the Promoter Put Option Shares or the entire Shareholding of the Promoter Group in the Company on a Fully Diluted Basis less 5% (five percent) of the Shareholding of the Promoter Group in the Company (such that the Promoter Group shall retain 5% (five percent) of the Share Capital of the Company on 11 Fully Diluted Basis post the exercise of the Promoter Group Put Option (“Primary Put Option “Shares”) in the notice issued to the Promoter within 15 (fifteen) days of the issuance of the Put Notice (“Put Acceptance Notice”). The Put Acceptance Notice will also disclose the identity of the Put Option Purchaser. For the avoidance of doubt, it is hereby clarified that upon the exercise of the Promoter Group Put Option, the Dalmia Group shall only be obliged to purchase the Primary Put Option Shares at the Promoter Group Put Option Price.
6.5.4 On the Put Date, the following events shall take place:
(a) the Put Option Purchaser shall pay the Promoter Group the amount calculated in accordance with and on the terms set out in Schedule VI by wire transfer to the bank account of the Promoter Group, details of which shall be intimated in writing by the Promoter Group to the Dalmia Group 3 (three) days prior to Put Date;
(b) the Promoter Group shall deliver: (A) signed instruction slips instructing their respective depository participants to debit it, relevant demat account to the extent of all, and not less than all, of the Primary Put Option Shares in favour of the Put Option Purchaser’s demat account in accordance with the rules and bye laws of the relevant depository; and (B) deliver to the Put Option Purchaser a certified copy of such delivery slip evidencing acceptance of instructions from the respective depositary participants to transfer the Primary Put Option Shares from the Promoter Group’s demat accounts to the Put Option Purchaser’s demat account; and
(c) the Board shall be reconstituted in accordance with the terms of this Agreement.
6.5.5 At the time of such Transfer, the Promoter Group shall represent to the Put Option Purchaser that the Equity Shares being Transferred by them are free of any Encumbrances (save and except for any preemptive rights in favour of the Dalmia Group contained in this Agreement and the Company’s Organizational Documents) and that the Put Option Purchaser shall acquire clear tide to the Primary Put Option Shares. Each Party shall bear its own costs (except stamp duties) in relation to such Transfer of Equity Shares. The stamp duty however on such Transfer shall be borne by the Put Purchaser.
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6.7.1 At any time after July 31, 2011 and for a period upto July 31. 2020 (the “Call Option Period”), the Dalmia Group shall have the right to but not the obligation to issue a notice (“Call Notice”) to the Promoter Group, to sell to the Dalmia-Group or any nominee or Affiliate of the Dalmia Group (“Call Option Purchaser”), at its sole discretion, either (i) all, and not less than all, of the Equity Shares held by the Promoter Group in the Company; or (ii) the entire Shareholding of the Promoter Group in the Company on a Fully Diluted Basis less 5% (five percent) of the Shareholding of the Promoter Group in the Company (such that the Promoter Group shall retain 5% (five percent) of the Share Capital of the Company on a Fully Diluted Basis post the exercise of the Dalmia Group Call Option (“Call Option Shares”) at the Call Option Price, on the terms and conditions contained in this Agreement (the “Dalmia Group Call Option”). Such Call Notice shall only be issued by the Dalmia Group after the accounts for the previous Financial Year has been approved by the Board, Such Call Notice shall specify the date on which such Transfer shall take place (“Call Date”), which shall not be less than 30 (thirty) days and not more than 90 (ninety) days from the issuance of the Cal! Notice, the identity of the Call Option Purchaser, the Call Option Price and the number of Call Option Shares.
The Call Option Price shall be arrived at in accordance with the formula and the terms set out in Schedule VIII.
6.7.2 For the avoidance of doubt, it is hereby clarified that upon the exercise of the Dalmia Group Call Option, the Promoter Group shall only be obliged to sell the Call Option Shares at the Call” Option Price.
In the event the Dalmia Group exercises the Dalmia Group Call Option and the Call Option Shares are verified by the Promoter Group with the lenders in accordance with Clause 6.2C, then Dalmia Group shall purchase these Equity Shares Subject to (i) the pledge on these Equity Shares in favour of the Lenders; and (ii) the Lenders consenting to such Transfer in such cases the Dalmia Group also agrees to make best efforts to obtain the consent of the Lenders for such Transfer.
6.7.3 On the Call Date, the following events shall take place:
(a) the Call Option Purchaser shall pay the Promoter Group the amount calculated in accordance with and on the terms set out in Schedule VIII by wire transfer to the bank account of the Promoter Group, details of which shall be intimated in writing by the Promoter Group to the Dalmia Group 3 (three) days prior to the Call Date;
(b) the Promoter Group shall deliver: (A) signed instruction slips instructing their respective depository participants to debit its relevant demat account to the extent of all, and not less than all, of the Call Option Shares in favour of the Call Option Purchaser’s demat account (details of which account shall be intimated in writing by the Dalmia Group to the Promoter Group 3 (three) days prior to the Call Date, in accordance with the rules and by laws of the relevant depository; and (B) deliver to the Call Option Purchaser a certified copy of such delivery slip evidencing acceptance of instructions from the respective depositary participants to transfer the Call Option Shares from the Promoter Group’s demat accounts to the Call Option Purchaser’s demat account; and
(c) the Board shall be reconstituted in accordance with the terms of this Agreement.
6.7.4 At the time of such Transfer, the Promoter Group shall represent to the Call Option Purchaser that the Equity Shares being Transferred by them are free of any Encumbrances (save and except for any pre-emptive rights in favour of the Dalmia Group contained in this Agreement and the Company’s Organizational Documents) and that such Call Option Purchaser shall acquire clear title to the Call Option Shares. Each Party shall bear its own costs (except stamp duties) in relation to such Transfer of Equity Shares. The stamp duty however ·on such Transfer shall be borne by the Call Option Purchaser.
6.7.5 The Parties agree to provide all such assistance and support to each other as may be requested by either the Promoter Group or the Dalmia Group to achieve the Transfer of the Call Option Shares.
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9.1 (Reproduced supra)
9.2 The Parties agree that upon the happening of any of the following events:
(a) the Bawri Group are unable to complete the Project Conditions in accordance with Clause 9.1 above;
(b) the Bawri Group and/or the Company issues a notice, in-writing, to the Dalmia Group, that the Project Conditions will not be completed on the Project CP Satisfaction Date;
then notwithstanding the provisions of Clause 6, the Dalmia Group shall have the right, at its sole discretion, to either:
(i) Purchase, by itself or through any nominee, Affiliate or Third Person nominated by the Dalmia Group, at its sole discretion, all and ·not less than all of the Shareholding of the Promoter Group in the Company for an aggregate consideration of Re. 1 (Rupee One Only) and upon exercise of such right by the Dalmia Group, the Promoter Group shall be obliged to sell, and the Bawri Group shall cause Hold Co-1 to sell, all and not less than all of its Shareholding in the company to the Dalmia Group for an aggregate consideration of Re.1 (Rupee One Only); or
(ii) Exercise the right to convert the Warrants issued to it; such that the Warrants shall be converted upto 99% (ninety nine percent) of the Share Capital of the Company. The Company shall be obliged to, and the Promoter Group shall be obliged to cause the Company to, undertake all necessary actions and obtain all necessary approvals, to effect the conversion of the Warrants.
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11. BRAND NAME
The Dalmia Group shall have the right to decide the brand to be used for the Company as well as decide on the use of the Brand Names currently being used or owned or registered in the name of the Company and the time period or its use. In the event, the Dalmia Group decides to completely phase out the Brand Names, then the Bawri Group shall retain the Brand Names and the Shareholders shall cause the Company to assign the Brand Names to a member of the Bawri Group or any nominee of the Bawri Group for a consideration of Re.1 (Rupee One Only). Subject to the provisions of Clause 12 below, such entity will be free to use the aforesaid Brand Names in any part of India, or abroad, for any business other than the Business.
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15. PERSONAL GUARANTEE OF THE BAWRI GROUP
15.1 The Bawri Group shall, during the term of this Agreement, provide and continue to provide the personal guarantees in relation to the existing and future loans and finances of and for the benefit of the Company and its Subsidiaries, provided that, upon the appening of any of the following two events, the Dalmia Group shall exercise all its powers, to the extent reasonably possible, to enable the release of the personal guarantees of the Bawri Group:
(a) The Promoter Group holding less than 26% (twenty-six percent) of the Voting Shareholding in the Company; or
(b) The Promoter Group Transfers 1 (one) or more Equity Shares of the company, other than in accordance with Clause 6.2A, Clause 6.2C and Clause 10 below and to any Person other than to a Permitted Transferee.
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18. CONFIDENTIALITY
18.1 Without the prior written consent of the other Party, each of the Parties agree not to divulge any information (directly or indirectly) in relation to this Agreement or the Company or any of its Affiliates to any Third Party other than
(i) strictly on a need to know basis to their own representatives, accountants, financial, legal advisors, banks and financial institutions who shall be bound by the confidentiality obligations set out under this Clause 18; and
(ii) disclosure required under any Applicable Law or any order of a court or appropriate Governmental Authority (including appropriate tax authorities).
18.2 None of the Parties hereto shall issue a press release or make any public announcement or other public disclosure with respect to any of the transactions contemplated herein without obtaining the prior written consent of the other Party. The provisions of this Clause 18.2 shall not apply in relation to any announcement or disclosure as may be required by Applicable Law or any Governmental Authority.
18.3 The restrictions in this Clause 18 shall not apply:
(ii) to the extent that any of such information is/are later acquired by a Party from a source not obligated to any other Party hereto, or its Affiliates, to keep such information confidential, provided that the Party receiving such information from the source has made best efforts to verify that the source acquired such information lawfully and has the legal right to disseminate it;
(iii) to the extent that any of such Information was previously known or already in the lawful possession of a Party, prior to disclosure by any other Party hereto, subject to such Party, which already has the information, in its possession, notifies in writing the same to the disclosing Party immediately upon such disclosing Party sharing the information with it.
(iii) in relation to any information that is or enters the public domain other than pursuant to a breach of this Clause;
18.4 Each Party acknowledges that damages alone would not be an adequate remedy for any breach of the provisions of this Clause18 and, accordingly, without prejudice to any and all other rights or remedies that a Party might have, each Party shall be entitled without proof of special damage to the remedies of injunction and other equitable relief for any threatened or actual breach of the provisions of this Clause.
18.5 The provisions of this Clause 18 will survive the termination of this Agreement for a period of 3 (three) years.
19. TERMINATION
