The Bombay High Court on Wednesday declined interim relief to the Adani Group in its plea seeking to restrain the Bidvest Group from selling its stake in Mumbai International Airport Limited (MIAL) to GVK Airport Holdings. The Adani Properties Private Limited (APPL) had sought relief to restrain Bidvest from selling its stake to any third party.
The Adani Group had approached the Single Judge Bench of Justice AK Menon in September this year, seeking execution of its agreement with Bidvest for sale of a 13.5% stake in MIAL, run by GVK Group, to Adani.
The Court was informed on Tuesday about the developments that prompted the dispute.
In March this year, Adani Properties and Bidvest had entered into a share purchase agreement for a 13.5% stake in MIAL for around Rs 1,248 crore. Bidvest made a proposal to Adani Properties after GVK Airport Holdings failed to acquire the stake due to its Right of First Refusal under the MIAL shareholders agreement. As a result, GVK Airport Holdings moved an Arbitration Tribunal and challenged the proposed sale of shares between Bidvest and Adani Properties.
Thereafter, in September this year, the Tribunal granted an injunction restraining Bidvest from transferring its shares to the Adani Group. The Tribunal GVK time till October 31 to deposit the purchase price matching Adani’s offer for Bidvest’s stake. GVK was asked by the Tribunal to show its intent to purchase the said stake.
In light of these developments, the Adani Group on Tuesday submitted that it was willing to immediately transfer the agreed-upon price of Bidvest’s shares with certain conditions.
Senior Advocate Darius Khambata, appearing for Adani Properties argued,
“Pendency of arbitration between them (GVK and Bidvest) cannot hold up my client’s transfer. Bidvest must now act in the capacity of a ‘constructive trustee’ as the shareholding between the parties was already executed.”
In this regard, Khambata went on to argue that the acquisition of Bidvest’s shares will be on a condition that the long-stop date for the purchase of shares must be extended to February 7, 2020.
A long-stop date is a deadline by which two parties must execute an agreement, failing which the agreement lapses. Currently, the long-stop date for the Bidvest-Adani Properties share purchase agreement is November 7.
However, since Bidvest refused to extend the long-stop date by 90 days beyond November 7, no relief will be granted to Adani Group in that regard. It was further submitted by Khambata that Bidvest must secure the necessary approval from lenders and other interested parties within the period of 90 days.
He also submitted that the amount can be deposited by Adani Properties strictly in a non-lien escrow account. Senior Advocate Vikram Nankani also appeared for Adani Group.
Senior Advocate Ravi Kadam, appearing for GVK Airport Holdings, informed the Court that a required deposit of nearly Rs 1,248 crore was made into an escrow account on October 29, as per the Tribunal’s directions.
Kadam argued,
“The jurisdiction to ascertain the sufficiency of amount lies with the Arbitral Tribunal and its order expected on November 24 will be binding on GVK and Bidvest and High Court is not competent to decide the same.”
Meanwhile, Senior Counsel Janak Dwarkadas, representing Bidvest, submitted that his client is bound by an injunction order of the Tribunal from transferring shares to Adani Group.
Dwarkadas went on to submit that Adani Properties had no rights under the MIAL consortium, which were available only to the existing shareholders. However, Adani Group is not a shareholder since the sale of shares by Bidvest is pending, said Dwarkadas. He further argued,
“Bidvest is losing out an interest income to the tune of Rs. 70 crore and would end up losing out on all potential buyers due to the delay in the transfer of its shares in MIAL. We have made all endeavors to effectuate the sale.”
To this, it was argued by Adani Group that GVK Airports had failed to deposit an amount of Rs. 1248 crore in a ‘no lien escrow account’ within the stipulated time prescribed by the Tribunal. Adani Properties also sought a direction from the Court to direct Bidvest to issue a notice to GVK to comply with the agreement governing MIAL’s shareholding.
Moreover, Senior Counsel Mustafa Doctor, appearing for GVK Group of Companies, had opposed Adani’s application to implead his client, a parent company of GVK Airport Holdings.
On Wednesday, the Court allowed Adani’s application to implead GVK Group, a parent company of GVK Airport Holdings.
The Arbitration Tribunal is likely to adjudicate on GVK Airport’s plea that challenged the proposed sale of shares between Bidvest and Adani Properties on November 24.
Adani Properties was represented by FZB & Associates. Bidvest is represented by AZB & Partners. MIAL is represented by Wadia Ghandy & Co., while Veritas Legal appeared for GVK Airport Holdings. India Law LLP appeared for the defendants, State Bank of India and SBI CAP Trustee Company Ltd.
[Read Order dated November 6, 2019]