CL-2025-000062 - [2025] EWHC 1506 (Comm)

Part of the prejudice on which Eraaya relies is plainly capable of being adequately compensated in damages. That is the cost of borrowing in relation to the US$ 40m. As to the remaining prejudice, which is said not to be so compensable Eraaya makes two points. The first is that if the VLL Loan is not repaid, it may lose majority control of its (indirect) subsidiary, Ebix UK. However there is some reason to doubt this approach, and (despite its centrality to the application for expedition) it was not pursued with any degree of fervour orally.

The reason for this is that on the face of it this risk has already eventuated. The January date has come and gone. VLL has apparently served the requisite notice. Clause 2(d) of the VLL Loan provides that if Eraaya approaches VLL to accept repayment of the outstanding principal and interest by 2 August 2025, VLL “may” accept that repayment and forego its rights to acquire 51% of Ebix UK. However, VLL is not obliged to do so. It follows that whether Eraaya loses control of Ebix UK is now outside Eraaya’s control. So on its face the grant of the injunction sought cannot be said to have an effect on this. The position is not expanded upon by Eraaya – there is no evidence from VLL directly or indirectly saying that the grant of the injunction would result in VLL not exercising its right. This is particularly striking given that there is an apparent overlap between those in control of Eraaya and those in control of VLL.

There is also an issue as to whether the VLL Loan is invalid, providing Eraaya with a defence to any obligations under the VLL Loan. The Bondholders’ evidence explains that Mr Garg (or the Garg family) exercises effective control over both Eraaya and VLL, on the basis that they are the “Promoters” or “Promoter Group” for each company under Indian law. Eraaya does not challenge that evidence. That is said to have a consequence. Mr Menon explains that, as a result of that connection and other connections identified in the evidence, the VLL Loan was a related party transaction and in the absence of approvals (which were not obtained) it was void (at Eraaya’s instance). While Justice Patnaik (opining for Eraaya) does dispute this point it is entirely fair to say that the VLL Loan is (at least) arguably voidable as a related party transaction. This means that at least arguably it is open to Eraaya to avoid the VLL Loan; at which point this alleged prejudice would fall away.

The net result of these two aspects means that this ground of irremediable prejudice cannot be given much weight.

The second point relied on by Eraaya is the contention that if the injunction is not granted Eraaya faces a real risk of regulatory enforcement proceedings. This was the other limb of the application for expedition. Again this aspect of the case was taken very lightly by the Eraaya team in oral submissions. This reflected the fact that the evidence base for it was slight at best. McDonald 1 exhibited: (i) an email chain between individuals at VLL and individuals at ICICI Bank, which does not mention Eraaya; and (ii) emails with Yes Bank, from November and December 2024. Eraaya’s own evidence is that it does not know whether ICICI or Yes Bank has referred matters to the Royal Bank of India for regulatory investigation. Certainly the “imminent” consequences adverted to in correspondence with the Court have shown no sign at all of materialising.

That is perhaps unsurprising given that the parties’ expert evidence is consistent with the view that the risk of regulatory enforcement against Eraaya is low in circumstances where it is engaged in Court proceedings with a view to obtaining payment of the Unutilised Proceeds.

Mr Menon’s evidence for the Bondholders is that Eraaya will not face regulatory enforcement action if the relevant transaction has been stayed by the Status Quo Order, or there are ongoing Court proceedings concerning payment of the Unutilised Proceeds.

Mr Patnaik’s evidence is not entirely inconsistent with this. He states that Eraaya is required to “take all reasonable steps to realize and repatriate” the Unutilised Proceeds to India; these being the words of the relevant regulation. Mr Menon’s view is that bringing Court proceedings to seek to obtain the release of the Unutilised Proceeds constitutes taking “reasonable steps to realize and repatriate” the Unutilised Proceeds, such that Eraaya is not in breach of the Indian legislation. It therefore seems unlikely that Mr Patnaik’s warning that such a breach may carry a “very drastic penalty” would eventuate in this case.

Finally, the contingent regulatory risk that Mr Patnaik has identified is a fine. Fines are eminently compensable in damages.

It follows from the above that even before one proceeds to the “other discretionary factors” the combined factors on balance of convenience tip decisively away from the grant of this admittedly extraordinary mandatory injunctive relief. The application for an injunction must therefore fail.