Section 9 AA Petition of 90 years old USA resident for interim measures

The petitioner – USA resident and aged 90 years – infused USD 1 million in Respondent No.1 Kapani Resorts as per Share Subscription and Shareholders Agreements dated 11.2.2022, to enable the respondent nos.2 and 3 to clear debt obligations of OTS with SIDBI and to relieve them as guarantors.  Thus, the stake of the petitioner was increased from 13# to 51%.

Accordingly, the guarantors were released and the assets of Kapani Resorts & the property at Greater Kailash New Company were also released from mortgage. However, the respondents did not transfer the shares and ownership stake of 51%.

 The petitioner filed section 9 petition for interim measures.    The question, therefore, was whether the Court can intervene in respect of property owned by Virendra released from the funds of the petitioner.

HELD that this is a prima facie a clear misappropriation of funds in the eyes of company law – it requires that share application money not be used for anything other than adjustment against share capital and refund of share application money when the deadline to allot is missed.

Order and Directions until completion of the arbitration proceedings to the respondents jointly and severally deposit amount equivalent to USD 1 million with 12% interest in the High Court, they are prohibited from directly or indirectly selling or alienating or creating third party interest over any and every property of Kapani resorts; respondent nos.2 and 3 are prohibited from alienating Greater Kailash property.

Judgment dated 18.3.2025 of the High Court of Bombay in Arbitration Petition No.119 of 2024 of Manmohan Kapani   Vs.  Kapani Resorts Pvt Ltd and others

Costs of Rs.2.5 lakhs were imposed on the respondents for their unreasonable conduct including steadfast refusal even to commence arbitration without forcing a 90-year old individual living outside India to approach the Supreme Court for an arbitral tribunal.