In Brief
IDBI Trusteeship Services sought to enforce a corporate guarantee from Hubtown Ltd to recover Rs. 532 crores owed under optionally partially convertible debentures. Hubtown alleged the underlying investment structure—where FMO (a Dutch company) invested €418 crores through Vinca (an Indian company) via compulsorily convertible debentures to ultimately earn a fixed 14.75% return—violated FEMA Regulations. The High Court granted unconditional leave to defend. The Supreme Court held that while Hubtown raised arguable triable issues, the defence was plausible but improbable, leaving doubt about its good faith. Consequently, the court allowed the appeal but made leave to defend conditional: Hubtown must deposit or secure Rs. 418 crores within three months.
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