DCIT, Central Circle 20 vs Hindustan Clean Energy Ltd.

v.

The salient features of this Agreement are as under:

a. The total purchase consideration towards purchase of shares of Miyar Hydro Electric Power Limited from Peridot Power Ventures Limited was Rs 72,38,24,192/-. The break up of this total consideration is as under:

Name of the transferor	Name of the Transferee	Name of the Company	Type of Security	No. of Securities	Purchase Consideration (Amount in Rs)
Peridot Power Ventures Limited	Hindustan Cleas energy Limited	Miyar Hydro Electric Power Company Limited	Equity Shares	50,000	5,00,000/-
			Compulsorily Convertible Preference Shares (CCPS)	6,34,860	6,34,86,00,000/-
			Receivables & other unsecured loans	-	8,84,64,192/-
TOTAL					72,38,24,192/-

b. The payment terms were as under:

- Adjustment of Rs.71,66,28,226/- by the appellant company against the receivables from M/s Peridot Power Ventures Limited.

- Receipt of Rs. 71,95,966/- i.e. the balance amount from M/s Peridot Energy Services Ltd who in turn will adjust this amount against the amount payable to M/s Peridot Power Ventures Limited.

vi.

All these details were also filed by the appellant during assessment proceedings.

vii.

From the above discussion, it is observed that the process of purchase of shares of MHEPCL by the appellant company from M/s Peridot Power Ventures Limited was completed on 31.07.2018 i.e. during AY 2019-20. Therefore, whether the purchase consideration was adequate or excessive or whether transaction was genuine or sham, could have been examined only in the assessment for the AY 2019-20. In my opinion, the purchase consideration or genuineness of purchase can not be decided in the assessment for AY 2021-22 particularly when the same has been accepted/not disturbed in AY 2019-20 & 2020-21.

viii.

During the year, the appellant company has sold shares of MHEPCL to M/s Devarsi Constructions Pvt. Ltd., the details of which is as under:

Name of the transferor	Name of the Transferee	Name of the Company	Type of Security	No. of Securities	Purchase Consideration (Amount in Rs)
Hindustan Clean energy Limited	M/s Devarsi Constructions Limited	Miyar Hydro Electric Power Company Limited	Equity Shares	24,500	100/-
			Compulsorily Convertible Preference Shares (CCPS)	6,34,860
			Receivables & other unsecured loans	-	1,43,55,000/-
TOTAL:					1,43,55,100/-

ix.

This transfer of shares has been performed on 26.03.2021 on the basis of following valuation report:

M/s Hindustan Cleanenergy Limited, AY 2021-22

Miyar Valuation for sale of Shares to Devarsi Constructions Private Limited Valuation as on 28.03.2021 (Date of Sale 26.03.2021)

Particulars	Amount in Lakhs
Property, plant and equipment	14.40
Current tax assets (net)	0.02
Other non-current assets	4.38
Cash and cash equivalents	1.53
Other financial assets	2.07
Other current assets	0.15
Total Asset	22.55
Borrowings	769.46
Trade Payable	3.75
Other financial liabilities	198.30
Short term Provisions	0.04
Other current liabilities	0.05
Long Term Provisions	0.39
Preference Capital	-
Total Liability	971.98
Net Shareholders Fund (in Lakhs)	-949.43
Net Shareholders Fund (In Rs)	-9,49,43,411.42
No. of Shares	6,35,36,000.00
Per Value of Shares sold	-1.49
No. of Shares Sold	6,37,31,000.00
Value of Shares (in Rs)	-

As value of Shares is negative and hence treated as Zero.

Calculation of number of shares

Particulars	Number	Conversion Ratio	Diluted number of shares	Number of shares sold
Equity Shares	50,000	1	50,000	2,45,000
Optionally Convertible Preference Shares	6,34,860	100	6,34,860	6,34,860
Total Diluted Number of Shares			6,35,36,000	6,37,31,000

x.

To substantiate its case, the appellant has also filed the copy of Share Transfer Certificates and copy of Balance Sheet of MHEPCL as on 31.03.2021 showing the transfer of shares from the account of the appellant company. The copy of the above documents are as under:

FORM SH-4				Securities Transfer Form
				Pursuant to section 56 of the Companies Act, 2013 and sub-rule (1) of rule 11 of the Companies (Share Capital and Debentures) Rules 2014
				Date of execution 26.03.2021
FOR THE CONSIDERATION stated below the 'Transferor(s)' named do hereby transfer to the 'Transferor(s)' named the securities specified below subject to the conditions on which the said securities are now held by the Transferor(s) and the Transferor(s) do hereby agree to accept and hold the said securities subject to the conditions aforesaid.
CIN U 4 5 2 0 6 4 P 2 0 0 8 P L C 0 3 1 3 7 7
Name of the company (in full) MINAR HAYRO ELECTRIC POWER COMPANY LIMITED
Name of the stock exchange where the company is listed, if any: NOT APPLICABLE
DESCRIPTION OF SECURITIES
Kind / Class of Securities (1)	Nominal Value of each unit of security (2)	Amount called up per unit of security (3)	Amount paid up per unit of security (4)
EQUITY	Rs 10/-	Rs 10/-	Rs 10/-
No. of securities being transferred		Consideration received (Rs.)
In figures	In words	In words	In figures
24,500	TWENTY FOUR THOUSAND AND FIVE HUNDRED
Distinctive number	From 25495
	To 49994
Corresponding Certificate Nos.		9
Transferor's Particulars
Registered Folio Number		23
Sl. No.	Nomination No.			Signature(s)		Signature(s)
1.	HINDUSTAN CLEANENERGY LIMITED			[Signature]
2.
3.
I hereby confirm this the Transferor has signed before me.
Signature of Winner [Signature]
Name of Winner Kamna
Name & Address Kamna, 239 Orkla Industrial Estate,
Phone - 111, New Delhi - 110020 Pincode 110020

Transferee's Particulars

Name in full

1 Father's / Mother's / Spouse Name

2 Address & E-mail ID

3

(1)

DEVAPOL CHAMBER

(2)

CHANG P.T. LTD.

4 N.A

(2)

(3)

Occupation

4 Existing Folio No. if any

5 Signature

(1)

COMPANY N.A

(2)

(3)

Folio No. Transferee

4.3

Specimen Signature of Transferee(s)

1.

[Signature]

2.

[Signature]

3.

Value of stamp affixed : Rs. __________ Rs. __________

Stamps

Enclosures :

(1)

Certificate of shares or debentures or other securities

(2)

If no certificate is issued, letter of allotment.

(3)

Others, specify __________

For office use only

Checked by [Signature] signature tallied by [Signature]

Entered in the Register of Transfer on 26/03/2021 vide Transfer No. T-38

Approval Date 26/03/2021

Power of Attorney / Probate / Death Certificate / Letter of Administration

Registered on __________ at No. __________

On the reverse page of the certificate

Name of the Transferee Name of the Transferee No. of Shares Date of Transfer

H. T. HUSTON

(2)

DEVAPOL CHAMBER

(2)

CHANG P.T. LTD.

24 (1) 26/03/2021

Signature of the authorised signatory

FORM SH-4 Securities Transfer Form Pursuant to section 56 of the Companies Act, 2013 and sub-rule(1) of rule 11 of the Companies (Share Capital and Debentures) Rules 2014 Date of execution 26/03/2021 FOR THE CONSIDERATION stated below the "Transferor(s)" named do hereby transfer to the "Transferor(s)" named the securities specified below subject to the conditions on which the said securities are now held by the Transferor(s) and the Transferor(s) do hereby agree to accept and hold the said securities subject to the conditions aforesaid. CIN U452OGHP200BPLC031B77 Name of the company (in full): MIYAR HYDRO ELECTRIC POWER COMPANY LIMITED Name of the stock exchange where the company is listed, if any: NOT APPLICABLE DESCRIPTION OF SECURITIES Kind / Class of Securities (1) | Nominal Value of each unit of security (2) | Amount called up per unit of security (3) | Amount paid up per unit of security (4) PREFERENCE SHARES | Rs. 10/- | Rs. 10/- | Rs. 1.0/- No. of securities being transferred | Consideration received (Rs.) In figures | In words | In words | In figures 634860 | SIN LACS THIRTY FOUR THOUSAND FORT HUNDRED NINE-SIXTY Distinctive number | From | CORP 1 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Corresponding Certificate No. | CORP 1 | & CORP 2 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Transferor's Particulars Registered Folio Number | CORP 3 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Sl No. | Name(s) in full | First/Last/Last (in full) | Signature of Owner | Signature of Owner

1 | HINDUSTAR OCEAN ENERGY LIMITED | [Signature] | [Signature]

2 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

3 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | I, hereby confirm that the Transferor has signed before me. Signature of Witness | [Signature] Name of Witness | Kamna Name & Address | Kamna, 239 Okhla Industrial Estate, Phone - 111, New Delhi - 110020 | Pincode | 110020 233

Transferee's Particulars
Name in full	Father's / Mother's / Spouse Name	Address & E-mail ID
(1) DEVARSI CONSTRATIONS INT. LTD.	N.A.
(2)
(3)
Occupation	Existing Folio No. if any	Signature
(4) COMPANY	N.A.	Director
(5)
(6)
Folio No. Transferee 0 of 4		Specimen Signature of Transferee(s) 1. 2. 3.
Value of stamp affixed : Rs. 2
Rs. 2
Stamps
Exclusions :
(1) Certificate of shares or debentures or other securities
(2) If no certificate is issued, letter of allotment.
(3) Others, specify
For office use only
Checked by signature called by X
Entered in the Register of Transfer on 26/03/2021
vide Transfer No. T-39
Approval Date 26/03/2021
Power of Attorney / Probate / Death Certificate / Letter of Administration
Registered no. as No.
On the reverse page of the certificate
Name of the Transferee	Name of the Transferee	No. of Shares
HINDUSTAN CLEANENBERG (LIMITED)	DEVARSI CONSTRATIONS INT. LTD.	634866 For More Inside Elicited Page (2023) or (3)
Signature of the authorised signatory

Major Hydro Electric Power Company Limited Summary of significant accounting policies and other explanatory information for the year ended 31 March 2021 (A) Amounts in Rs. 1000s, unless stated otherwise

As at 31 March 2021		As at 31 March 2020
No. of shares	%	No. of shares	%
25,500	11%	50,000	100%

As at 31 March 2021		As at 31 March 2020
No. of shares	%	No. of shares	%
25,500	11%	50,000	100%
24,500	10%	-	0%

c)

The Company has not issued equity shares pursuant to contract without payment being received at cash, any bonus shares not less than twice as a year back of shares in the current year and five years immediately preceding the balance sheet due.

14. Investments entirely equity in nature

a) Optionally convertible preference shares (OCPS)

As at 31 March 2021		As at 31 March 2020
No. of shares	Amount	No. of shares	Amount
700,000	10.00	700,000	10.00
700,000	10.00	700,000	10.00

As at 31 March 2021		As at 31 March 2020
No. of shares	Amount	No. of shares	Amount
634,000	63.49	634,000	63.49
634,000	63.49	634,000	63.49

a)

Reconciliation of the member of optionally convertible preference shares and amount outstanding at the beginning and on the end of the year

As at 31 March 2021		As at 31 March 2020
No. of shares	Amount	No. of shares	Amount
634,000	62.49	634,000	63.49
634,000	63.49	634,000	63.49

b) Terms of optionally convertible preference shares

The OCPS shall:

(i)

Carry a prefunded right view on Equity Shares of the Company with respect to payment of dividend or repayment of capital;

(ii)

Be non-participating in the surplus funds' surplus assets & profits on winding up which may remain after the entire capital has been repaid;

(iii)

The same, for shall carry a preference dividend of Rs. 1/-;

(iv)

Be paid dividend on non-cumulative basis;

(v)

Be redeemable/convertible into equity shares of the Company at any time within a period of 18 years from the date of issue at the option of the Company;

(vi)

Subject to the provisions of the Companies Act, 1973, the OCPS shall not carry voting rights;

(vii)

Every OCPS will be exercised into 100 Equity Shares.

c) Shares of the Company held by holding company

As at 31 March 2021		As at 31 March 2020
No. of shares	%	No. of shares	%
-	-	634,000	100%

d) Details of shareholders holding more than 5% shares in the Company

As at 31 March 2021		As at 31 March 2020
No. of shares	%	No. of shares	%
634,000	100%	634,000	100%

e)

The Company has not issued shares pursuant to contract without payment being received at cash, any bonus shares not less than twice as a year back of shares in the current year and five years immediately preceding the balance sheet due.

R

xi.

The diminution in valuation of shares is justified by the appellant as under:

"Your honour, investing in Miyar Hydro Power Electric Company Limited was a calculated investment decision. However, not all investments pan out. There are always high risks involved in the acquisitions. Similarly, the decision of acquiring Miyar Hydro Power Electric Power Company was not fruitful. There were continuous losses reported after the acquisition. The appellant company was expecting a turnover which failed to happen thus compelling the appellant company to sell off a significant portion of its holdings in Miyar Hydro Power Electric Company Limited. Further, the appellant company was facing several adversities regarding the hydel project which ultimately rendered the entire project as technologically and economically unviable. The appellant company had undertaken a detailed survey and on the basis of the preliminary reports the entire hydel project was scrapped. The appellant company submitted its withdrawal from the Miyar HEP (3C40 MW=120MW) project in District Lahaul & Spiti of Himachal Pradesh. The letter dated 14.06.2018 to the Director of Directorate of Energy, Government of Himachal Pradesh alongwith the preliminary reports wherein it substantiates the unviability of the hydel project is hereby enclosed at page number 286-297 of the paper book for your honour's kind perusal. The Assessing Officer in 8(a) to para 8(c) of Assessment Order has questioned the business prudence of acquisition on 31.07.2018 in the light of above letter dated 14.06.2018 of MHEPL to Government of Himachal Pradesh. However, the assessee company was of the firm assessment that the problems relating to the project can be sorted out and the MHEPL had in its possession two valuable assets i.e., the Land and the permission to undergo with the Hydel Project thereon. Therefore, with the said letter pending decision of the Government and negotiations still on, on the viability of the project with the state Government, the decision to acquire the Investment held by Peridot Power Ventures Limited was taken by the appellant company on 31.07.2018. However, the Directorate of Energy, Government of Himachal Pradesh vide letter dated 18.09.2019 had passed the termination order, cancelling the sanction of the government project to the appellant company. Since the hydel projects were stalled and the fact that the appellant company significantly lacked the technological and infrastructural facility to undertake any future projects, it decided to sell off the projects to the next market player in the energy sector in the relevant assessment year 2021-22. The land acquired for the purpose of setting up the project was earmarked for a particular purpose and could not be further sold or utilized for any other purpose than setting up a hydel project. Furthermore, there were several litigations on-going on the land acquired for the purpose of setting up the project before the Hon'ble High Court of Himachal Pradesh. To summarize several adversities faced by the appellant company towards the setting up of the hydel project are as follows:

1.

i. Technical Challenges involving non-finalization of Barrage Axis for the project

2.

ii. Lack of Infrastructure facilities including difficulties in access to the project site due lack of roads in Manali to carry heavy construction equipment/ machinery and adverse climatic conditions in Rohtang Pass leading to significant delay in construction activities.

3.

iii. Absence of power grid to support the construction and running of the project. The DG power sets batteries being extremely expensive affects the economies of the project.

4.

iv. Non-availability of Diesel and Petrol Depot suitable to the location for running construction equipment like jumbos, loaders, dozers and cranes. The nearest petrolpump being located at 45 kms away from the project site created an unnecessary economic burden on a daily basis.

v.

Miyar HEP envisaged to generate 440.48 MU annually. However, it was supposed to provide Royalty to the GoHP @ 13% for the first 12 years and 19% for the next 18 years & 31% for the last 10 years alongwith additional free energy annually at a uniform rate of 18.01% of the power generated. Thus, rendering the project economically unfeasible.

- vi. Delay in clearance under Forest Rights Act, 2006.

- vii. Withdrawal of deemed export benefits by the Directorate of Foreign Trade.

- viii. Additional Ad-Valorem charges imposed by the GoHP on the hydel projects.

- ix. Change in the requirement of minimum environment flow.

x.

Significant increase in the cost of debt.

- xi. Changes in the tax laws from service tax to GST leading to additional tax of 18%.

The Ld. Assessing Officer in para 8(g) of the impugned assessment order had mentioned that the appellant company had failed to submit the details of all the companies who showed interest in buying out the stake of MHECPL held by the appellant company except the details pertaining to M/s Devarsi Constructions P Limited. Your honour, in such grim market conditions the bid tenders were extremely uncompetitive by the AY 2021-22. The hydel projects were overall rendered to be unviable and it was impossible to find prospective buyers in such a market scenario. The net worth of the company had significantly plummeted over the period of holding. Thus, the appellant company took a well-planned decision to cut-off its losses at the right time. The appellant company found a potential buyer and grabbed the opportunity with both hands. The appellant company undertook the valuation of the investment in Miyar Hydro Power Electric Company Limited as on 28.02.2021. The value of the investment was Rs (9,49,43,411.42/-). Thus, the value per share was Rs (-)1.49/-. Being a negative valuation and the hydel projects being stalled for an unforeseeable future the appellant company decided to sell the significant portion of the investment for a nominal price of Rs 100/- and claimed a long term capital loss of Rs 68,27,37,775/-.

vii.

The termination of the Project by the Government of Himachal Pradesh and its subsequent after effects have not been denied by the ld. AO. In fact, ld. AO has not disputed the valuation of shares as well as of the company as on 26.03.2021. Therefore, once valuation and sale consideration has been accepted by the ld. AO, then calculation of the capital gain/loss is a mere processing formality.

5.3

In view of the above discussion, it is held that disallowance on account of Long-Term Capital Loss of Rs.68,27,37,775/- on transfer of shares, made by the ld. AO for AY 2021-22 is not found to be sustainable and therefore same is deleted and this ground of appeal is hereby allowed.

“vii.

From the above discussion, it is observed that the process of purchase of shares of MHEPCL by the appellant company from M/s Peridot Power Ventures Limited was completed on 31.07.2018 i.e. during AY 2019-20. Therefore, whether the purchase consideration was adequate or excessive or whether transaction was genuine or sham, could have been examined only in the assessment for the AY 2019-20. In my opinion, the purchase consideration or genuineness of purchase can not be decided in the assessment for AY 2021-22 particularly when the same has been accepted/not disturbed in AY 2019-20 & 2020-21.”

“It is hard to believe that M/s Devarsi Constructions Private Limited has undergone the said transaction just to self-inflict/manufacture a loss of amount of Rs. 1,43,55,000/- within the period of 4 days followed by sale of such shares. It is safe to say, the amount of Rs. 1,43,55,000/- is assessees’ unexplained income which has been routed into the books of assessee company through this sham transaction. From the above discussion it is clear that neither M/s Devarsi Constructions P Ltd has creditworthiness nor the transaction is genuine. Thus, as the complete transaction between the assessee and M/s Devarsi Constructions Private Limited is sham, therefore, this amount of Rs. 1,43,55,000/- is unexplained credit in the books of the assessee and is added back to the income of the assessee u/s 68 of the Act”

ASSIGNMENT AGREEMENT

This Assignment Agreement ("Agreement") is made on 30th June, 2020 ("Execution Date") by and among:

1.

HINDUSTAN POWERPROJECTS PRIVATE LIMITED, a company incorporated in India and having its registered office at 239, Okhla Industrial Estate, Phase III, New Delhi- 110020 (from now on referred to as "HPPL" which expression shall, unless repugnant to the context or meaning thereof, be deemed to mean and include its successors, nominees and permitted assigns);

2.

HINDUSTAN CLEANENERGY LIMITED, a company incorporated in India and having its registered office at 239, Okhla Industrial Estate, Phase III, New Delhi- 110020 (from now on referred to as "HCEL" which expression shall, unless repugnant to the context or meaning thereof, be deemed to mean and include its successors, nominees and permitted assigns);

3.

MIYAR HYDRO ELECTRIC POWER COMPANY LIMITED, a company incorporated in India and having its registered office at Uttam Niwas, 5th floor Sector-4, New Shimla, Shimla- 171009 (from now on referred to as "Miyar" which expression shall, unless repugnant to the context or meaning thereof, be deemed to mean and include its successors, nominees and permitted assigns);

4.

SELL HYDRO ELECTRIC POWER COMPANY LIMITED, a company incorporated in India and having its registered office at Uttam Niwas, 5th floor Sector-4, New Shimla, Shimla- 171009 (from now on referred to as "Sell" which expression shall, unless repugnant to the context or meaning thereof, be deemed to mean and include its successors, nominees and permitted assigns);

5.

DEVARSI CONSTRUCTIONS PRIVATE LIMITED, a company incorporated in India and having its registered office at 61, Ground Floor, Bhagwan Buddha Apartment, Parwana Road, Pitampura New Delhi- 110034 (from now on referred to as the "Assignee" which expression shall, unless repugnant to the context or meaning thereof, be deemed to mean and include its successors, nominees and permitted assigns).

HPPL and HCEL are hereafter collectively referred to as the "Assignors". Miyar and Sell are hereafter collectively referred to as the "Companies". The Assignors, the Assignee and the Companies are collectively referred to as the "Parties" and individually as a "Party".

RECITALS:

A. The Companies have certain outstanding unsecured loans and Claims (as defined hereinafter) payable to the respective Assignors and / or their Affiliate(s), the details of which are provided in Clause 2.1 of this Agreement. B. The Assignee is now desirous of acquiring the Claims of the Companies and the Assignors for themselves and on behalf of their Affiliate(s) have agreed to assign the Claims to the Assignee or its Affiliates for the Consideration (as defined hereinafter).

C. The Parties are now entering into this Agreement to set forth the terms and conditions agreed between them for the assignment of the Claims to the Assignee or its Affiliates and the rights and obligations of the Parties.

NOW THEREFORE, in consideration of the mutual agreements herein contained, and other good and valuable consideration, the Parties hereby agree as follows:

1. DEFINITIONS AND INTERPRETATION

1.1 Definitions

In this Agreement, (i) capitalised terms defined by inclusion in quotations and / or parenthesis have the meanings to ascribed; and (ii) the following terms shall have the meanings assigned to them herein below:

"Affiliate" means, in respect of any person, any other person directly or indirectly Controlling or Controlled by or under direct or indirect common Control with such specified person;

"Business Day" means any day (other than a Saturday, a Sunday or any day on which banks of New Delhi are permitted to be closed) on which banks are open for the conduct of normal banking business;

"Claims" means and includes any claims, receivables, demands, debts, advance payments or any other amounts payable under any contract or arrangement, by the respective Companies to the respective Assignor and / or their Affiliate(s), whether present or arising in the future at any time until the Effective Date;

"Conditions Precedent" shall have the meaning ascribed to it in Clause 3.1 of this Agreement;

"Consideration" shall have the meaning ascribed to it in Clause 2.1 of this Agreement;

"Deed of Adherence" shall mean the deed of adherence in the form set forth in Schedule 1 (Deed of Adherence);

"Designated Bank Accounts" shall mean the bank accounts of the Assignors for the receipt of the Consideration, details of which are set out in Schedule 2;

"Dispute(s)" shall have the meaning ascribed to it in Clause 8.2.1 of this Agreement;

"Dispute Notice" shall have the meaning ascribed to it in Clause 8.2.1 of this Agreement;

"Disputing Party" shall have the meaning ascribed to it in Clause 8.2.1 of this Agreement;

"Effective Date" shall mean the latter of: (i) payment of the aggregate Consideration by the Assignee or its Affiliate(s) to the Assignors and / or their Affiliate(s); or (ii) transfer of identified securities of the Companies to the Assignee or its Affiliates(s);

"Execution Date" means the date of execution of this Agreement;

"HCEL-Miyar Claim" shall have the meaning ascribed to it in Clause 2.1(i) of this Agreement;

"HPPL-Sell Claim" shall have the meaning ascribed to it in Clause 2.1(i) of this Agreement;

"Long Stop Date" shall have the meaning ascribed to it in Clause 4.1 of this Agreement;

"Respondent Party" shall have the meaning ascribed to it in Clause 8.2.1 of this Agreement; and

"Reverse Break-Fee" shall have the meaning ascribed to it in Clause 7.2 of this Agreement.

1.2 Interpretation

1.2.1

All references in this Agreement to statutory provisions shall be construed as meaning and including references to:

(a)

any statutory modification, consolidation or re-enactment made after the Execution Date and for the time being in force;

(b)

all statutory instruments or orders made pursuant to a statutory provision; and

(c)

any statutory provisions of which these statutory provisions are a consolidation, re-enactment or modification;

1.2.2

Words denoting the singular shall include the plural and words denoting any gender shall include all genders;

1.2.3

Headings, subheadings, titles, subtitles to clauses, sub-clauses and paragraphs are for information only and shall not form part of the operative provisions of this Agreement or the annexures hereto and shall be ignored in construing the same;

1.2.4

The terms "hereof", "herein", "hereto", "hereunder" or similar expressions used in this Agreement mean and refer to this Agreement and not to any particular clause of this Agreement;

1.2.5

References to Recitals, Clauses, Schedules or Annexures are, unless the context otherwise requires, references to recitals, clauses, schedules and annexures to this Agreement;

1.2.6

Reference to days, months and years are to calendar days, calendar months and calendar years, respectively, unless defined otherwise or inconsistent with the context or meaning thereof;

1.2.7

Unless otherwise specified, time periods within or following which any payment is to be made or act is to be done shall be calculated by excluding the day on which the period commences and including the day on which the period ends and by extending the period to the next Business Day if the last day of such period is not a Business Day; and whenever any payment is to be made or action to be taken under this Agreement is required to be made or taken on a day other than a Business Day, such payment shall be made or action taken on the next Business Day;

1.2.8

Any reference to "writing" shall include printing, typing and other means of reproducing words is visible form, but shall exclude text messages via mobile phones;

1.2.9

References to "INR", "Rupees", and "Rs" are references to the lawful currency of the Republic of India;

1.2.10

Time is of the essence in the performance of the Parties' respective obligations. If any time period specified herein is extended in writing by the Parties, such extended time shall also be of the essence; and

1.2.11

No provisions of this Agreement shall be interpreted in favour of, or against, any Party by reason of the extent to which such Party or its counsel participated in the drafting hereof or by reason of the extent to which any such provision is inconsistent with any prior draft hereof.

2. ASSIGNMENT OF THE CLAIMS

2.1

The Assignors and its Affiliates have extended the following Claims to the Companies:

(i)

An unsecured loan of INR 8,84,64,346 provided by HCEL to Miyar in terms of the loan agreement dated 31 March 2016 and other Claims of HCEL or its Affiliate(s) ("HCEL-Miyar Claim"); and

(ii)

An unsecured loan of INR 15,79,70,000 provided by HPPPL to Seli in terms of the loan agreement dated 31 March 2016 and other Claims of HPPPL or its Affiliate(s) ("HPPPL-Seli Claim").

2.2

The Assignee or its Affiliate(s) shall pay the following amounts by way of electronic funds transfer to the Assignors' respective Designated Bank Accounts or to the bank accounts of the Affiliate(s) of the Assignors, the details of which shall be provided by the Assignors or their Affiliate(s) to the Assignee in writing, at any time after the Execution Date but before the Long Stop Date:

(i)

for the assignment of HCEL-Miyar Claim, the Assignee or its Affiliate shall pay an aggregate amount of INR 1,43,55,000 to HCEL or its Affiliate(s); and

(ii)

for the assignment of HPPPL-Seli Claim, the Assignee or its Affiliate shall pay an aggregate amount of INR 2,96,45,000 to HPPPL or its Affiliate(s), collectively referred to as "Consideration".

In accordance with all the applicable laws and subject to payment of the Consideration from the Assignee or its Affiliate(s) to the Assignors and completion or waiver of the Conditions Precedent, on and with effect from the Effective Date, the Assignors hereby for themselves and on behalf of their Affiliate(s) assign, transfer and release to the Assignee or its Affiliate(s) absolutely, unconditionally and irrevocably the Claims and all the rights attached thereto, including the right to file a suit or institute such other recovery proceedings and take such other action as may be required for the purpose of recovery of the Claims in its own name and the Assignee or its Affiliate(s) shall have the right to exercise all rights of the Assignee and / or their Affiliate(s) under the respective loan agreements or arrangements in relation thereto.

2.4

The Assignors agree that they shall procure assignment of the relevant Claims, extended by their respective Affiliates to the relevant Companies, to the Assignee or its Affiliate(s) in the event any other Claims are identified after the Execution Date for the purpose of assignment by the Affiliates of the respective Assignors to the Purchaser or its Affiliate under this agreement, the Assignors and their Affiliate(s) shall ascertain and agree on the pro-rata division of the Consideration between themselves and their Affiliate(s), and notify the split of the Consideration payable by the Assignee or its Affiliate(s) to the Assignors or their Affiliates in writing on or before the date of payment of the Consideration.

2.5

The Assignors agree that they shall procure the assignment of the Claims by their Affiliate(s) to the Assignee or its Affiliate(s) in accordance with this Agreement.

2.6

The Assignee agrees that on and from the Effective Date, all rights of the Assignors and their Affiliate(s) in respect of the Claims under the respective loan agreements or arrangements ceases and the entire credit risks associated with the Claims shall stand transferred to the Assignee or its Affiliate(s) from the Effective Date.

2.7

The Assignee shall duly intimate the Companies of this assignment and the Companies agree and acknowledge that all dues payable under the said Claims are now payable to the Assignee or its Affiliate(s) and not to the Assignors and / or their Affiliate(s).

3. CONDITIONS PRECEDENT

3.1

The assignment of the Claims in accordance with Clause 2 is subject to completion of the following conditions:

(i)

The Assignors shall have procured a legal opinion from a reputed senior advocate practicing in India stating that assignment of Claims by the Assignors or their Affiliates to the Assignee or its Affiliate(s) will not impact the rights of the Assignee or its Affiliate(s) to pursue any of the Claims against the respective Companies; and

(ii)

The Assignors and their Affiliates shall have obtained approval from their respective board of directors for undertaking the transactions contemplated under this Agreement, collectively referred to as "Conditions Precedent".

3.2

The Parties may mutually agree in writing to waive any of the Conditions Precedent in whole or in part or extend the time period for completion of any of them at any time.

4. WARRANTIES

4.1

Each of the Assignors and the Assignee hereby warrant to each other, as on the Execution Date and Effective Date:

(i)

that it has been duly incorporated and is validly existing under exists under the laws of its jurisdiction;

(ii)

that this Agreement contains its valid and binding obligation and is enforceable against it in accordance with its terms. All actions on its part and all corporate action on the part of its board and the shareholders, if any, necessary for the authorization, execution, delivery of and the performance of the material obligations under this Agreement have been taken;

(iii)

that the execution and delivery of this Agreement by it does not, and the consummation of the transactions and performance of the material obligations contemplated in this Agreement, does not:

a. constitute a material breach or constitute a material default under its constitutional documents; or

b. result in a material violation or material breach of or material default under any applicable laws, order, judgment or decree of any court of competent jurisdiction to which it is a party or by which it is bound.

(iv)

that it: (a) is not the subject of any voluntary or involuntary petition under bankruptcy, insolvency or similar law affecting creditors generally, or (b) has not had a receiver or similar person or entity appointed for any of its property.

4.2

The Assignee also warrants to the Assignors that it or its Affiliate(s) has sufficient financial resources or has made bona fide legal funding arrangements to meet the transactions contemplated under this Agreement including for acquisition of the Claims and there are no conditions precedent or other contingencies for such funding arrangements.

4.3

The Assignors shall not be responsible for breach of warranties contained herein arising out of a fact which is already brought to the notice of the Assignee or its Affiliate(s).

4.4

The Assignee confirms that it has undertaken inspection of the accounts and all other documents, letters, papers and writings including the due diligence exercise in relation to the Claims to enable the Assignee or its Affiliate(s) to acquire the Claims based on a considered decision by it without recourse to the Assignors.

4.5

Except for the warranties contained in Clause 4.1, the Assignors have not made and do not make any other express or implied warranty, either written or oral, including any representation as to the successful repayment of Claims from the Companies. All other warranties of any kind or nature, express or implied, which are not expressly set out in Clause 4.1, are hereby specifically disclaimed by the Assignors.

4.6

The Assignee acknowledges that performance by the Assignors and / or Companies of any of their obligations under this Agreement shall not be deemed to result in breach of any of their warranties.

5. TERM AND TERMINATION

5.1

This Agreement may be terminated only by mutual written consent of the Parties or, if the Consideration is not paid by the Assignee or its Affiliate(s) to the Assignors on or prior to 29 June 2021 ("Long Stop Date"), then this Agreement shall be automatically terminated without any further action by the Parties.

5.2

The Long Stop Date may be extended by the Parties by mutual agreement in writing at any time prior to the expiry of the Long Stop Date.

5.3

Upon termination of this Agreement, the Assignee, its Affiliates and / or their authorized representatives will immediately cease use of any Confidential Information and, within 15 (fifteen) days of termination either return to the Assignors or upon request of the Assignors, destroy (and certify as to such destruction) all Confidential Information, including any copies thereof.

5.4

Notwithstanding the termination of this Agreement, Clause 6 (Confidentiality), Clause 7 (Breach Fee), Clause 8 (Governing Law, Jurisdiction and Dispute Resolution) and Clause 9 (Miscellaneous) shall survive termination of this Agreement.

6. CONFIDENTIALITY

6.1

The Assignee and its Affiliates agree and undertake that they shall not reveal, and shall ensure that their directors, officers, managers, employees, Affiliates, legal, financial and professional advisors to whom any Confidential Information is made available do not reveal, to any third party any Confidential Information without the prior written consent of the Assignors or the Companies, as the case may be.

6.2

The Assignee shall be liable for any breach of Confidentiality provision by itself or its Affiliates or any other person with which it shares any Confidential Information.

6.3

The consent referred to in Clause 6.1 above shall not be required for disclosure of any Confidential Information, if and to the extent such Information is required to be disclosed pursuant to any requirements of any applicable law or to any governmental authority; provided in each case, the Assignors and the Companies are consulted in advance of such disclosure.

7. BREAK-FEE

7.1

If the Assignors and / or their Affiliate(s) do not consummate the transactions contemplated in this Agreement with the Assignee or its Affiliate(s) for whatever reason by the Long Stop Date, unless due to a default which is solely attributable to the Assignee, then the Assignors shall jointly and severally be liable to pay to the Assignee a maximum amount equal to INR 5,00,00,000 (Indian Rupees Five Crores) which amount shall be pro-rated for each failed transaction as mentioned under Clause 2.2 of this Agreement.

7.2

If the Assignee or its Affiliates do not consummate the transactions contemplated in this Agreement with the Assignor and their Affiliate(s) for whatever reason by the Long Stop Date, unless due to a default which is solely attributable to the Assignor, then the Assignee shall be liable to pay to HPPPL a maximum amount equal to INR 1,50,00,000 (Indian Rupees One Crores Fifty Lakhs) ("Reverse Break-Fee") which amount shall be pro-rated for each failed transaction as mentioned under Clause 2.2 of this Agreement.

7.3

The Assignee agrees that in order to secure the payment of the Reverse Break-Fee, the Assignee or its Affiliate(s) shall provide a cheque equivalent to the amount of the Reverse Break-Fee in the name of HPPPL, the details of which are provided hereunder: Cheque Number: [+] Drawee Bank: [+]

7.4

The Assignee further agrees that at least 10 (ten) Business Days prior to the expiry of the validity of the said cheque, the Assignee shall issue a new cheque of the same amount in favour of HPPPL and shall continue to substitute the expired cheques within the timelines prescribed above in favour of HPPPL until the Effective Date.

8. GOVERNING LAW, JURISDICTION AND DISPUTE RESOLUTION

8.1

This Agreement including the provisions of this Clause 8 (Governing Law, Jurisdiction and Dispute Resolution) shall be governed by, and construed in accordance with, the laws of India, without regard to the principles of conflicts of law of any jurisdiction and subject to Clause 8.2, the courts at New Delhi shall have exclusive jurisdiction to entertain and dispose of any proceeding arising out of or from this Agreement, including the right to seek interim relief, at any time before, during or after the arbitration process referred to in this Clause 8 (Governing Law, Jurisdiction and Dispute Resolution) has been initiated.

8.2 Dispute Resolution

8.2.1

A Party raising any claims, disputes, questions or controversies arising out of or in connection with or relating to this Agreement ("Disputing Party"), including questions in relation to the existence, execution, interpretation, validity, performance, breach or termination hereof including the provisions of this Clause 8 (Governing Law, Jurisdiction and Dispute Resolution) (collectively, "Disputes"), shall by a notice in writing ("Dispute Notice") inform the other Parties (as applicable) of the Dispute ("Respondent Party"). Upon receipt of a Dispute Notice, the Disputing Party and the Respondent Party shall use their best efforts to resolve the Dispute through mutual consultation.

8.2.2

Any Dispute which is not settled to the satisfaction of the Disputing Party and the Respondent Party under Clause 8.2.1 within 20 (twenty) Business Days from the date of receipt of the Dispute Notice shall be referred to and finally resolved by arbitration under the provisions of the (Indian) Arbitration and Conciliation Act, 1996 for the time being in force.

8.2.3

The arbitral tribunal shall consist of 1 (one) arbitrator, appointed jointly by the Disputing Party and the Respondent Party.

8.2.4

The seat and venue of arbitration shall be New Delhi. The language of arbitration shall be English.

8.2.5

Subject to applicable law, any award made by the arbitrator shall be final and binding on the Disputing Party and the Respondent Party. If more than 1 (one) arbitration is initiated under this Agreement and any party to any of those arbitration proceedings contends that 2 (two) or more such arbitrations relate to substantially similar questions of law and / or fact and should be heard in one proceeding, the arbitrators appointed in the first arbitration proceeding under this Agreement shall have the power to order consolidation of proceedings. The Parties hereby consent to such consolidation.

8.2.6

The costs of the arbitration shall be borne by the Disputing Party and the Respondent Party (as applicable) to the Dispute as decided by the arbitrator.

9. MISCELLANEOUS

9.1 Notices

9.1.1

All notices required to be issued by the Parties to each other under this Agreement shall be in writing and shall be first transmitted by electronic mail and then confirmed by personal delivery or postage / prepaid registered post / internationally recognised courier service, to the addresses mentioned herein below:

In case of notice to Miyar Address: Uttam Niwas, 5th floor Sector-4, New Shimla, Shimla- 171009 Attention: Sanjay Khosla Email: [email protected]	In case of notice to Sell Address: Uttam Niwas, 5th floor Sector-4, New Shimla, Shimla- 171009 Attention: Sanjay Khosla Email: [email protected]
In case of notice to HCEL Address: 239, Okhla Industrial Estate, Phase III, New Delhi- 110020 Attention: Sumit Singh Email: [email protected]	In case of notice to HPPPL Address: 239, Okhla Industrial Estate, Phase III, New Delhi- 110020 Attention: Ratul Puri Email: [email protected]
In case of notice to Assignee Address: 61, Ground Floor, Bhagwan Buddha Apartment, Parwana Road, Pitampura New Delhi- 110034 Attention: Jitender Jain Email: [email protected]

9.1.2

Any notice, demand or other communication so addressed to the relevant Party shall be deemed to have been delivered: (a) at the time of delivery, if delivered in person or by messenger, when proof of delivery is obtained by the delivering Party; (b) if sent by speed post within the same country, on the 5^th (Fifth) day following posting, and if sent by speed post to another country, on the 7^th (Seventh) day following posting, and (c) by electronic mail, upon despatch of such email.

9.1.3

Each Party may, from time to time, change its address for receiving notices at any time by giving other Parties not less than 10 (Ten) days prior written notice of such address change pursuant to this Clause 9.1.3.

9.2 Further Assurances

The Parties to this Agreement shall from time to time execute and deliver all such further documents and do all acts and things as the other Party may reasonably require to effectively carry on the full intent and meaning of this Agreement and to complete the transactions contemplated hereunder.

9.3 Severability

If any provision of this Agreement is held to be invalid or unenforceable, then such provision shall (so far as it is invalid or unenforceable) be given no effect and shall be deemed not to be included in this Agreement but without invalidating any of the remaining provisions of this Agreement. If any invalid, unenforceable or illegal provision would be valid, enforceable or legal if some part of it were deleted or modified, the provision shall apply with modification as necessary to give effect to the commercial intention of the Parties.

9.4 Relationship

None of the provisions of this Agreement shall be deemed to constitute a partnership between the Parties hereto and no Party shall have any authority to bind the other Party otherwise than under this Agreement or shall be deemed to be the agent of the other in any way.

9.5 No Third Party Rights

Nothing expressed or implied in this Agreement is intended or shall be construed to confer upon or give any person, other than the Parties hereto any rights or remedies under or by reason of this Agreement or any transaction contemplated by this Agreement.

9.6 Expenses

Each Party will bear and pay its own expenses in connection with due diligence in relation to the Claims and negotiation and execution of this Agreement. The Assignee or its Affiliate(s) shall bear stamp duty costs in relation to execution of this Agreement and assignment of the Claims.

9.7 Cumulative Remedies

In the event the Parties, for any reason whatsoever, fail to consummate the transactions contemplated in this Agreement, the non-defaulting Party shall be entitled to a suit for specific performance or such other equitable relief as a court of competent jurisdiction may deem necessary or appropriate to restrain the defaulting Party from committing any violation or to enforce the performance of the covenants and obligations contained in this Agreement. These remedies are cumulative and are in addition to any other rights and remedies that the Party may have in law or in equity, including without limitation a right for damages.

9.8 Amendments

No modification or amendment to any of this Agreement shall be valid or binding unless made in writing and duly executed by or on behalf of the Party.

9.9 Assignment

This Agreement, or any rights, interests or remedies herein, shall not be assignable or transferable by any Party, other than to its Affiliates, except with the prior written consent of the other Parties. Provided that the Assignee may assign its rights, interests, obligations or remedies under this Agreement to its Affiliates only upon the execution of the Deed of Adherence in the form set out in Schedule 1.

9.10 Entire Agreement

This Agreement constitutes the whole agreement between the Parties and supersedes any previous arrangements or agreements between them relating to the assignment of the Claims.

9.11 Counterparts

This Agreement may be executed in one or more counterparts, each of which when so executed and delivered shall be deemed an original but all of which together shall constitute one and the same instrument. The delivery of signed counterparts by electronic mail in 'portable document format' ('.pdf') shall be as effective as signing and delivering the counterpart in person.

The Parties have caused this Agreement to be executed on the date first written above.

For and on behalf of: Hindustan Clean Energy Limited

Name: Manaj Ahuja Designation: Company

For and on behalf of: M/s Devarsi Construction Pvt Ltd

Name: Suthun P. Kumar Designation: Director

For and on behalf of: Devarsi Construction Private Limited

Name: J. J. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P.

For and on behalf of: Hindustan Power Products Private Limited

Name: S. V. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P.

For and on behalf of: Sali Hydro Electric Power Company Limited

Name: S. V. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P. P.

"It is hard to believe that M/s Devarsi Construction Private Limited has undergone the said transaction just to self-inflict/manufacture a loss of amount of Rs. 1,43,55,000/- within the period of 4 days followed by sale of such shares."