| SooperKanoon Citation | sooperkanoon.com/56230 |
| Court | DRAT Mumbai |
| Decided On | Mar-31-2003 |
| Judge | P Upasani |
| Reported in | IV(2004)BC142 |
| Appellant | i.F.C.i. Ltd. |
| Respondent | U.T.i. Bank Ltd. |
The applicant UTI Bank Limited is a scheduled Commercial Bank constituted under the Companies Act, 1956. The defendant No. 1 IFCI Limited had taken a short-term loan of Rs. 100 crores firm the applicant Bank arid had admittedly executed a line of credit facility agreement on 10.10.2002. As per the terms and conditions of the said agreement, the defendant No. 1 had executed a letter of negative lien on the following receivable:SI. No.Name of the Corporate Amount (Rs. in Crores)13.
United Telecom Ltd. 02.00 Total 114.61 In the original application filed by the applicant Bank against IFCI Limited except the company at Serial No. 3 i.e. Dolphin Hotel Limited, all other companies were joined as respondent Nos. 1 to 12.
3. The defendant No. 1 IFCI Limited had undertaken that as long as the entire loan would not be repaid by the defendant No. 1, they would not at any time create any charge, lien or encumbrance over the said assets and/or transfer, dealing with or otherwise dispose of or seek to dispose of the same or any part there of or to do anything whereby the interest of the applicant UTI Bank Limited would be in any way prejudiced or adversely affected. Those assets were agreed to be kept as the absolute property of the applicant Bank.
It is further the case of the applicant Bank that the defendant No. 1 had committed a breach of the terms and conditions inasmuchas the defendant No. 1 was duty bound not to accept any pre-payment of the said assets. However, the defendant No. 1 without knowledge and consent of the applicant Bank misappropriated the prepayment of one of the negative liened assets (from serial number 3 above Dolphin Hotel Ltd.) and without handing over the same to the applicant Bank, used the said amount for the benefit of the defendant No. 1 and kept the applicant Bank in dark. The said amount was refunded after issuing a notice to the defendant No. 1. In the circumstances, the applicant Bank issued a recall notice dated 1.1.2003 and called upon the defendant No. 1 to clear the entire outstanding within seven days. The defendant No. 1 admitted the said misappropriation and reimbursed the said amount of Rs. 7.16 crores without any interest. Since the defendant No. 1 did not repay the entire amount as per the recall notice, the original application came to be filed in the Debts Recovery Tribunal-I, Mumbai to recover a sum of Rs. 10, 30, 26, 142.32/-.
In the said application, it was stated by the applicant Bank that in view of the recovery proceedings, initiated by the applicant Bank, the defendant No. 1 was likely to deal with the receivables and if they succeeded in their attempt, the entire object of filing the recovery proceedings would be frustrated. The applicant Bank therefore prayed for following interim reliefs- (i) to restrain the defendant No. 1 from in any manner dealing with, disposing of, transferring, alienating, encumbering, receiving any amount or parting with the securities; (v) to direct the defendant No. 1 to disclose on oath details of all amounts already received/realised from the respondent; (vii) to restrain the defendant No. 1 from receiving any further amounts from the respondent; (viii) to restrain the respondent from paying any amount to the defendants; (ix) to direct the respondent to pay the amounts due and payable by them to the applicant directly; 4. The defendant No. 1 IFCI Limited filed their say in which it was contended that the Government of India, Ministry of Finance, Department of Economic Affairs, (Banking Division) and stock holders/share holders of the defendant No. 1 had decided to restructure all the liabilities of the defendant No. 1. In the meetings held on 26.11.2002 and 2.12.2002, it was decided that the loan availed by the defendant No. 1 from various Banks and financial institutions, including the applicant, would be reinvested at a coupon rate of 6% p.a. for 20 years. It was submitted that in view of this, the original application itself was not maintainable, that restructuring package finalised by the Government was binding on all as it was in the interest of all concerned as well as of the economic and industrial growth of the country.
It was further stated in the said say filed by the dependant No.1/appellant herein, that in the light of credit facility agreement, it was decided that pledge of certain debentures of specified corporates and negative line on the satisfied loan assets would be created and documentation for the charge would be completed after a month. It was further submitted that, however, the documents were not executed and no charge was created and since no charge had been created, the defendant No. 1 could not be restrained from claiming the amounts from the respondent Nos. 1 to 12. It was further averred that now that the tenure of short-term loan was enhanced to a period of 20 years, there was no question of repaying the amount immediately as also for granting any interim reliefs, in favour of the applicant UTI Bank Limited. It was submitted that under the circumstances, if the defendant No. 1 was restrained from receiving the amount from respondent Nos. 1 to 12, irreparable loss would be caused to them. It was therefore prayed that the application taken out by the applicant UTI Bank Limited be dismissed.
Though there was no pleading to that effect the said reply Exhibit No.9, it was mentioned during the course of arguments, across the bar by the advocate appearing for the defendant No. 1, that both the applicant and the defendant No. 1 were limbs of the Government and before directly approaching the DRT, the applicant Bank ought to have approached the committee for settlement of disputes between one Government department and other. It was, for this reason also that the original application was not tenable and the applicant Bank ought to first go to such a committee to resolve the dispute.
5. The applicant Bank in the reply stated that it was neither a Government entity nor a public enterprise, that it was a private Bank and, therefore, it was not necessary to refer the matter to such committee. It was also stated on their behalf that for going to the said committee, there must be some 'dispute' but there was no dispute at all, inasmuch as the defendant No. 1 had never disputed the fact of availing the short term loan. It was urged that for this reason, question of referring anything to the said committee would not arise at all.
6. After hearing both the sides and after going through the records, the learned Presiding Officer observed that although there was no dispute about availing short term loan of Rs. 100 crores, there was certainly a dispute abut the manner and period of repayment, otherwise, the applicant Bank would not have come to Debts Recovery Tribunal had there been no dispute.
7. Mr. Kamdar, the learned Counsel appearing for the appellant vehemently submitted that the applicant Bank was a public sector undertaking, which was wholly controlled by the Government and in any case, Banking was apublic function and it was necessary in view of this situation that both the Banks should go to the high power committee instead of litigating in the Debts Recovery Tribunal. He submitted that the applicant Bank is 'State' within the meaning of Article 12 of the Constitution of India. He relied upon Supreme Court judgment reported in 1992 Supp. (2) Supreme Court Cases 432, (Oil and Natural Gas Commission and Anr. v. Collector of Central Excise) to substantiate his argument that it was necessary for both the Banks to approach the High Power Committee. In this case, the Apex Court has observed as follows: "This Court has on more than one occasion pointed out that Public Sector Undertakings of Central Government and the Union of India should not fight their litigations in Court by spending money on fees of Counsel, Court fees, procedural expenses and wasting public time. Court's time is not to be consumed by litigations which are carried on either side at public expenses from the source...." It was further argued by Mr. Kamdar that apart from documents creating negative lien; other documents did not say anywhere that the amount had to be appropriated by the applicant Bank and that at the most charge was created upon the property. He further submitted that the liability was now rolled over for a period of 20 years in view of the decision taken in the meetings held on 26.11.2002 and 2.12.2002 and, therefore, the applicant Bank was not entitled for injunction or to get receivables directly from other respondents.
8. Mr. Shetye, the learned Advocate appearing for the respondent Bank at the outset denied that UTI Bank Limited was a public sector Bank. He forcefully argued that in fact UTI Bank was the first private sector Bank and that the said Bank was not an instrumentality of the State at all. He further submitted that in view of this position it was not incumbent upon the said Bank to approach the so-called High Power Committee as directed by the Supreme Court in the case of Oil and Natural Gas Commission (supra). He drew my attention to the affidavit filed by the Vice-President of the UTI Bank Limited Mr. Gopal Krishnan, who had stated in paragraph 2 of the said affidavit that UTI Bank Limited was a Company incorporated under the Companies Act, 1956 and carrying on business of Banking in terms of a license which was issued by R.B.I. under Section 4 of the Banking Regulation Act, 1949 and was not a public sector Bank or Government-constituted Bank. It is further stated in the said paragraph that UTI Bank Limited is that first private sector Bank (new generation private sector Bank) set up in the year 1994 and that Reserve Bank of India has given licence to it under the Private Sector Banking norms and regulations. Further it is submitted in paragraph 4 of the said affidavit that the applicant Bank is classified as a scheduled Bank included in the second schedule to the Reserve Bank of India Act. Copy of the said letter dated 2.5.1994 in annexed to the said affidavit. Mr. Shetye submitted that this Bank is not being funded from the Government sources and cannot be regarded as instrumentality of the Government within the meaning of Article 12 of the Constitution of India. Relying upon the decision of the Supreme Court reported in VIII (2000) SLT 696=(2001) 1 Supreme Court Cases 43 (Canara Bank and Ors. v. National Thermal Powers Corporation and Anr.), Mr. Shetye submitted that dictum of the Apex Court in ONGC' s case is not applicable as far as present dispute between UTI Bank Limited v.I.F.C.I. Limited, is concerned. He submitted that trustees of a trust (Mutual Fund in this case) constituted by a nationalised Bank, as a settlor, for the benefit of the unit holders, could not be termed to be a Government Company or a Public Sector Undertakings.
9. On facts, Mr. Shetye submitted that UTI Bank was not a signatory to the agreement and to the decision taken in the meetings held on 26.11.2002 and 2.12.2002 between Government of India, Ministry of Finance, Department of Economic Affairs (Banking Division) and Stock holders/hare holder of the defendant No. 1, wherein it was decided to restructure all liabilities of the defendant No. 1.
I have heard both the sides and have gone through the proceedings. It is the contention of the appellant that loan availed by the defendant No. 1 from various Banks and financial institutions including applicant Bank would be reinvested at a coupon rate of 6% p.a. for 20 years. It appears that entire defence of the defendant No. 1 revolves around decision taken in the meetings. Minutes of the said meetings revealed that the applicant Bank i.e. UTI Bank Limited had not participated in the said meetings. Relevant paragraph of the said minutes of the meetings reads as under: "(i) IFCI has availed secured loans, at different rates of interest, by creating a charge on its performing assets as follows: Name of the Institution Amount of Loan (in Rupees Crores)5.
UTI Bank 100 Total 600 (iii) It was agreed that both secured and unsecured loans as at (i) and (ii) above, would get reinvested at a coupon of 6% p.a. for 20 years.
(iv) It was brought out that as a special arrangement, LIC, SBI and IDBI had advanced Rs. 200 crores, Rs. 200 crores and Rs. 100 crores respectively to IFCI for varying tenors in 2001. These institutions agreed to reinvest the advance for a tenor of 20 years at 6% p.a. as in the case of the secured and unsecured loans." It is this clear that meeting was essentially between the stake holders and the defendants with those who were not concerned with the holdings of the defendant, were neither represented nor the meeting was for the purpose including debts and liabilities of non stake holders. It therefore, necessarily follows that the question restructuring the debts of non-stake holder was neither the subject matter of the meeting, nor any decision was taken in that meeting in that respect.
Further careful reading of the minutes of the meetings, shows that only stake holders mentioned in Sub-clauses (I) and (II) were bound by the said decision and that decision was not in respect of non-stake holders and in any case when none of the non stock holders had agreed to such term, they were not bound by the said decision. Thus, interpretation of the defendant No. 1 about the decision taken in the meetings dated 26.11.2002 and 2.12.2002 was incorrect.
Another significant fact which has to be highlighted is that the defendant No. 1 had sent ' letter dated 7.1.2003 to the applicant Bank.
Copy of the said letter is annexed as Exhibit 'L' to the original application. Along with this letter the defendant No. 1 had forwarded a cheque of Rs. 7.16 crores to the applicant Bank. This amount was received by them from Dolphin Hotels Ltd. This amount was sent subsequently to the said meetings dated 26.11.2002 and 2.12.2002. If the defendant No. 1 was so sure that the loan taken from the applicant Bank had been rescheduled, then there was no reason for them to remit the said amount to the applicant Bank. Thus, it is obvious that even the defendant No. 1 knew that only the debts/liabilities of the stake holders would get reinvested for coupon of 6% p.a. for 20 years and this decision had nothing to do with the debts/liabilities of the non-stake holders. Therefore, on the basis of such a decision, the defendant No. 1 did not get time of 20 years to repay the outstanding amount of the applicant Bank and would be bound by the line of credit facility agreement (Exhibit 'E' to the original application) and negative lien (Exhibit 'F' to the original application).
Thus, the applicant Bank has made out a prima facie case that they are entitled for receiving amount payable by the respondents to the defendant No. 1 and since in one case the defendant No. 1 did not pay such amount and, on the contrary now was contending that they were not liable to pay the dues to the applicant Bank for the next 20 years, granting of interim relief was necessary. If such a relief was not granted that would have, at this stage, affected the applicant Bank and because of the dispute between the applicant Bank and the defendant No.1, the respondents would have been benefited inasmuch as they would have stopped paying money either to the applicant Bank or to the defendant No. 1 when as per the agreement the applicant Bank was entitled to receive the same.
In view of the aforesaid discussion, in my opinion, there is no necessity to interfere with the impugned order. I find no error with the impugned order. Appeal therefore fails. Hence, following order is passed.