Madras High Court
M/S.Zylog Systems Ltd vs M/S.State Bank Of India on 7 October, 2016
Author: S.Manikumar
Bench: S.Manikumar, N.Authinathan
THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 07.10.2016 CORAM: THE HONOURABLE MR.JUSTICE S.MANIKUMAR and THE HONOURABLE MR.JUSTICE N.AUTHINATHAN W.P.No.35917 of 2016 W.M.P.Nos.30862 and 30863 of 2016 M/s.Zylog Systems Ltd., rep. by its Official Administrator, Justice S.Rajeswaran, Chennai. .. Petitioners versus M/s.State Bank of India, SAM Branch, Red Cross Buildings, 32, Montieth Road, Egmore, Chennai-8. .. Respondents Writ Petition filed under Article 226 of the Constitution of India, praying for a Writ of Certiorarified Mandamus, to call for the records of the respondent's impugned letter, bearing No.SBI/SAMB/CHE/CLO-II/2016-17/853, dated 09.08.2016, quash the same, inasmuch as it is arbitrary and illegal and further, to direct the respondent not to sell or otherwise advertise the sale of shares of the petitioner company in M/s.Zylog BV Ltd., pledged to the respondent as security for the credit facility availed, on the strength of the ex-parte order, dated 03.08.2015, passed in O.A.No.137 of 2014, by the DRT-I, at Chennai, as the same is subservient to the order of admission passed in C.P.No.373 of 2012. For Petitioner : Mr.PH.Aravind Pandian for Mr.Kumarpal R.Chopra ORDER
(Order of the Court was made by S.MANIKUMAR, J.) M/s.Zylog Systems Ltd., Chennai, has sought for a Certiorarified Mandamus, to quash the impugned letter, bearing No.SBI/SAMB/CHE/CLO-II/2016-17/853, dated 09.08.2016, of State Bank of India, and further, to direct the respondent not to sell or otherwise advertise the sale of shares of its company, pledged to the respondent, as security for the credit facility availed, on the strength of the ex-parte order, dated 03.08.2015, passed in O.A.No.137 of 2014, by the DRT-I, at Chennai, as the same is subservient to the order of admission passed in C.P.No.373 of 2012. Impugned letter of the State Bank of India, dated 09.08.2016, is extracted hereunder:
"This is in continuation of our letter No.SBI/SAMB/CHE/CLO-II/2016-17/368, dated 7-Jun-16, and also innumerable communications we had with the directors of the company on the captioned subject.
Despite our repeated reminders, you have failed to pay the remittance of US $ 50,000/- as hitherto from June' 16. In our telecon, you had informed us that owing to Remadan and Dubai Government holidays, you could not mobilize resources for meeting payment. Even though Ramzan festival has already been over, we are yet to receive the instalments from June' 16. We also note with concern that we used to receive US $ 50,000/- monthly till May' 16 only after the undersigned makes repeated phone calls to you. Of late, both of you are not even answering our phone calls.
Please, therefore, arrange to remit the overdue monthly payouts immediately without fail. Inasmuch as the total dues are not much when compared to the valuable shares of your Dubai Company pledged to us, we are hopeful that you would see reason and increase the monthly quantum of payment and remit the overdue instalments from June' 16 immediately.
In the event of the company not paying the overdue instalments from June' 16 on or before 16th Aug' 16 as promised by you, we would pursue legal measures already intiated against the company quite aggressively besides making arrangements for sale of the above referred shares pledged to us, which may not be in the interests of your company.
We would also arrange to declare the Borrower-Corporate, all its whole time directors eversince the account slipped into NPA category besides guarantors as wilful defaulters, attach the unencumbered properties of the borrower and its guarantors, impound the passports of all whole-time directors and guarantors, etc., which may not be in the interests of the company.
Kindly confirm having noted the contents of this letter for meticulous compliance. Awaiting your confirmation in this regard."
2. Authorised signatory of M/s.Zylog Systems Ltd., Chennai, is stated to have sent a reply, dated 22.09.2016, which is extracted hereunder:
September 22, 2016 State Bank of India Stressed Assets Management Branch 32, Montieth Road, Egmore Chennai 600 008 Dear Sirs, This is with respect to our earlier communication dated 15-09-2016 and our subsequent meetings at your office on 15-09-2016, 21-09-2016 and 22-09-2016 with regard to finalising the balance amount payable to State Bank of India.
Attaching herewith our calculation on the net loan liability as on date towards this loan. We explain below the contents of this worksheet as follows;
1. Amount taken as ECB from SBI, Frankfurt - USD 5,300,000.
2. Amount debited to the loan account towards interest and other charges till 30-jun-2013 is USD 267,867. The company has paid a total amount of USD 3,769,911, leaving a balance of USD 1,797,956.
3. This outstanding amount of USD 1,797,956 was converted to Rs.11,25,12,831 and transferred to CAG, Chennai in Oct' 13 and the loan account was moved to DRT in Dec' 14.
4. The company was paying the monthly dues regularly even after the transfer and conversion to INR.
5. The outstanding amount as on the OA filing date i.e. 25-Apr-14 shown by the bank in their statement of accounts is Rs.10,61,35,945. Copy of it is enclosed herewith for ready reference and records. Understandably, the bank has charged Rs.88,06,800 in May' 13 which was told to us as reversal of nostro account, this amount was included in the outstanding balance shown by the bank as on the OA date. We are unable to understand the reasons for this reversal, hence this amount has not been considered in our calculation. Therefore, as per our calculation the net amount due to the bank as on the OA date is Rs.1,80,29,674. But the bank has claimed the outstanding amount as Rs.12,01,37,379 and DRT also has passed the order on 3-Aug-15 based on the amount claimed by the bank.
6. Since the DRT order was passed, the company has been regular in paying USD 50,000 equivalent amount monthly and has paid Rs.7,93,11,299 as on date.
7. The interest calculated based our working i.e. Rs.1,80,29,674 @ 6% as per the DRT order, from the date of OA to till date is Rs.79,59,247 and thereby the total loan liability as on date is Rs.2,60,00,749.
While the bank had also agreed to all our payments made till date but the issue comes only in the way these amounts have been applied. This has also mainly comes out of the fact that multiple branches and various regions of SBI hanling our accounts leading to the disconnects in the total liability calculation.
We will cooperate fully with your bank towards this effort of reconciling and arriving at the correct outstanding amount, which cannot be more than Rs.2.60 crores as per the calculation sheet attached herewith. Once this outstanding amount is agreed and frozen we will start paying the dues after mutually agreeing the revised terms.
Thanking you, Yours faithfully, For Zylog Systems Ltd., Sd/-.
Authorised Signatory.
3. In O.A.No.137 of 2014, the Debt Recovery Tribunal-I, has passed an ex-parte order on 03.08.2015. Subsequently, a Debt Recovery Certificate, bearing DRC.No.131 of 2016, dated 22.02.2016, has been issued by the Presiding Officer, DRT-I, Chennai, in terms of the order, dated 03.08.2015, in O.A.No.137 of 2014, specifying an amount of Rs.12,94,70,486.69. Thereafter, a demand notice in DRC.No.131/2016/DN, dated 31.03.2016, has been issued.
4. Material on record further discloses that Application No.46 of 2015 in O.A.No.137 of 2014, has been filed to set aside the ex-parte order, dated 03.08.2015 and that on 06.04.2015, the same has been allowed with costs. Since costs directed has not been paid, another application is stated to have been filed on 24.06.2015, with a delay of 48 days and it has been numbered as M.A.No.43 of 2016. In the above background, the present writ petition has been filed and the petitioner has sought for the relief, as stated supra.
5. Certiorari, under Article 226 of the Constitution, is issued for correcting gross errors of jurisdiction, i.e., when a subordinate court is found to have acted (i) without jurisdiction - by assuming jurisdiction where there exists none, or (ii) in excess of its jurisdiction by overstepping or crossing the limits of jurisdiction, or (iii) acting in flagrant disregard of law or the rules of procedure or acting in violation of principles of natural justice where there is no procedure specified, and thereby, occasioning failure of justice. Extract of the above makes it clear, as to how, the petitioner has made an attempt to circumvent the orders passed by the Tribunal. Letter of the Bank, cannot give rise to cause for filing a Writ of Certiorari. When the petitioner has taken steps before the forum, it is not open to them to circumvent the same, and seek for a Mandamus.
S.MANIKUMAR, J.
AND N.ATHINATHAN, J.
skm
6. Prayer made to quash the letter of the Bank to the petitioner is not maintainable and hence, the writ petition is dismissed. No costs. Consequently, connected Miscellaneous Petition is also closed.
(S.M.K.,J) (N.A.N.,J) 06.10.2016 skm W.P.No.35917 of 2016