Bombay High Court
Sterling And Wilson Renewable Energy ... vs Axis Bank Limited on 1 December, 2025
Author: Abhay Ahuja
Bench: Abhay Ahuja
2025:BHC-OS:23021
SJ 15 OF 2024 .doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
SUMMONS FOR JUDGMENT NO. 15 OF 2024
IN
COMMERCIAL SUMMARY SUIT NO. 68 OF 2023
Sterling and Wilson Renewable
Energy Limited and another ... Plaintiffs
Versus
Axis Bank Ltd ... Defendant
Mr. Sharan Jagtiani, Senior Advocate with Mr. Sunil Gangan and Mr.
Swapnil Shikhare i/b RMG Law Associates for the Plaintiff.
Mr. Shiroz Rustomjee, Senior Advocate with Mr. Shyam Kapadia, Mr.
Chaitanya D. Mehta, Ms. Sonali Aggarwal and Mr. Tanjul Sharma i/b
Dhruve Liladhar & Co. for the Defendant.
CORAM : ABHAY AHUJA, J.
DATE : 1st DECEMBER, 2025
P.C. :
1. The Suit has been filed seeking recovery of Rs. 64,10,40,393/-
being the principal amount together with interest at the rate of 11.25%
per annum calculated from the due date of payment till 26 th September
2023 i.e. Rs.34,19,13,212/- aggregating to Rs.98,29,53,605/- with
further interest from 27th September 2023 at the rate of 11.25% per
annum on the principal amount or at such other rate as this Court
deems fit to grant till the payment and/or realization as set out in the
Particulars of Claim at Exhibit GG on the basis of Irrevocable Letter of
Credit.
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2. Mr. Sharan Jagtiani, learned Senior Counsel, appearing for the
Plaintiffs has submitted that the outstanding amounts involve the
payment under an Irrevocable Letter of Credit ("Letter of Credit") that
was issued by the Defendant in view of the supply agreement between
IL & FS and the Plaintiff No.2. That the material has been supplied and
accepted without any demur or complaint. Mr. Jagtiani submits that
under the terms of the said letter of credit, the Defendant-Bank had
agreed to honour the drafts for payment of the invoices on the
presentation within the terms of the credit at maturity. That although
the Defendant-Bank has admitted the documents submitted by the
Plaintiff No.2 and accepted the same for payment stating that the
payments against the invoices would be made on the due date,
however, in view of the Interim Order of the National Company Law
Appellate Tribunal ("NCLAT") dated 15th October 2018 which stays the
acceleration, premature withdrawal/withdrawal, invocation of any
term loan, corporate loan, bridge loan, commercial paper, debentures,
fixed deposits, guarantees, letter of support, commitment or comfort
and other financial facilities or obligations availed by IL & FS and its
348 group companies whether in respect of the principal or interest or
hedge liability or any other amount contained therein, the payment of
the amounts claimed in this suit have not been made to the Plaintiffs.
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The relevant portion of the said order is quoted as under :
"Taking into consideration the nature of the case, larger
public interest and economy of the nation and interest of
the Company and 348 group companies, there shall be
stay of
(i) The institution or continuation of suits or any
other proceedings by any party or person or Bank or
Company, etc. against IL & FS and its 348 group
companies in any Court of Law/Tribunal/Arbitration
Panel or Arbitration Authority; and
(ii) Any action by any party or person or Bank or
Company, etc. to foreclose, recover or enforce any
security interest created over the assets of 'IL&FS' and its
348 group companies including any action under the
Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002;
(iii) The acceleration, premature withdrawal or other
withdrawal, invocation of any term loan, corporate loan,
bridge loan, commercial paper, debentures, fixed
deposits, guarantees, letter of support, commitment or
comfort and other financial facilities or obligations
availed by 'IL&FS' and its 348 group companies whether
in respect of the principal or interest or hedge liability or
any other amount contained therein.
(emphasis supplied)
3. In support, Mr. Jagtiani, learned Senior Counsel, has also cited a
relevant portion from the Structure Financial Messaging System
("SFMS") of the Defendant to the Plaintiff No.2 as under :
"77A. Narrative
LC No. 1394LCO-0011281
Due Date : 14/12/2018
We confirm the captioned documents has been accepted
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for payment. The payment will be made for bill amount
less discrepancy charges if any as per LC Terms on the
above mentioned due date. Please quote our IBC
Reference No. in all future correspondence."
4. It has been submitted on the basis of the aforesaid that the said
SFMS amounts to an admission by the Defendant of its liability to pay
the outstanding amount to the Plaintiffs. Mr. Jagtiani submits that the
NCLAT order does not apply to the Defendant-Axis Bank, in as much as
an Irrevocable Letter of Credit is an independent stand alone contract
between the Defendant-Bank and has been invoked by the Plaintiff,
therefore, the moratorium in favour of the IL & FS cannot protect the
Defendant-Bank.
5. Mr. Jagtiani further submits that in a communication dated 9 th
May 2019 by the Defendant-Bank to the Plaintiff No.2, the Defendant
has also admitted the liability but in view of the NCLAT order refused
to make payments. The relevant admission from the said
communication is extracted as under :
"Axis Bank had opened LCs to the tune of Rs.64.41 Crores
on 17.10.2017. The bills drawn under the LCs were then
discounted by ICICI Bank after obtaining our confirmation
on acceptability of documents.
...
In view of the above NCLAT Order, we are constrained to
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honour the commitments under the LCs opened by us,
despite having full capacity to do so. Hence the payments
to ICICI Bank against the bills accepted under our LC and
drawn by your company has remained unpaid. ..."
(emphasis supplied)
6. Mr. Jagtiani submits that although the Defendant had sought a
clarification from the NCLAT, however the NCLAT has reiterated its
order dated 15th October 2018.
7. Mr. Jagtiani also submits that there is another issue raised by the
Defendant and that is, on the interest claimed by the Plaintiffs,
however, fairly submitting that although there is no contractual rate of
interest specified in the Letter of Credit, the interest is being claimed on
the basis of the underlying contract, although he could persuade his
clients to give up pre-suit interest and claim interest only from the date
of the decree.
8. On the other hand, Mr. Rustomjee, learned Senior Counsel,
appearing for the Defendant has submitted that although pursuant to
an application sought by the Defendant before the NCLAT, the NCLAT
has observed that the order dated 15 th October 2018 has already been
confirmed on 12th March 2020 and closed the applications seeking
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clarification/modification/exemption of the order dated 15 th October
2018, thereby refusing to interfere with the moratorium order passed
by the NCLAT, the issue does remain whether the moratorium applies
only to IL & FS or to the Defendant herein as well in as much as the
Interim Application Diary No. 15182 of 2019 in Company Appeal No.
346 of 2018 filed by the Plaintiffs seeking clarification before the
NCLAT with respect to the applicability of the moratorium order to the
Defendant is still pending and although the liability is admitted, in
view of the language of the moratorium order, the Defendant is
constrained not to honour the commitments under the Letter of Credit
deposit having full capacity and the bills accepted under the Letter of
Credit have remained unpaid to the Plaintiffs and therefore, this Court
may grant leave to the Defendant to file written statement in view of
the pendency of this issue.
9. Mr. Rustomjee further submits that there is no rate of interest
prescribed in the Letter of Credit, although, the Plaintiffs have claimed
interest at the rate of 11.25% p.a. which cannot be permitted and this
also raises a triable issue entitling the Defendant leave to defend.
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10. Mr. Rustomjee, learned Senior Counsel appearing for the
Defendant-bank further clarifies that the principal amount that has
been admitted to be due is not 64.41 Crs. but Rs. 61,40,32,471/- and in
the event this Court is inclined to pass a conditional order, this Court
may consider the said figure. In support, Mr. Rustomjee draws this
Court's attention to the rejoinder filed on behalf of the Plaintiffs and in
particular to paragraph 3(e), where it has been stated on behalf of the
Plaintiffs that the principal amount under the four invoices is Rs.
61,40,32,471/-, but since the Plaintiffs availed the bill discounting
facility with its banker i.e., the ICICI Bank and the ICICI Bank has
charged Rs. 2,70,07,922/- towards interest, the said amount has been
added to the outstanding principal amount and therefore, the figure of
Rs. 64,10,40,393/- has been arrived at and claimed by the Plaintiffs as
the principal amount. Mr. Rustomjee, learned Senior Counsel for the
Defendant-bank submits that his client disputes the addition of this
interest to the principal amount.
11. Mr. Rustomjee submits that, therefore, in view of the decision of
the IDBI Trusteeship Services Ltd Vs.Hubtown Ltd1, as well as BL
Kashyap and Sons Ltd Vs. M/s. JMS Steels and Power Corporation and
1 MANU/SC/1490/2016
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Anr2, where it has been held that grant of leave to defend is the rule
and denial of the same is an exception, this Court may grant leave to
defend the suit.
12. I have heard the learned Senior Counsel.
13. It is not in dispute that the Defendant has admitted its liability,
however the Defendant has submitted that it is constrained not to
honour its commitments to make payment, in view of the moratorium
under the NCLAT order, extracted above.
14. It has also been submitted that the Interim Application Diary No.
15182 of 2019 filed by the Plaintiff in the NCLAT seeking clarification
as to the applicability of the aforesaid moratorium to the Defendant is
pending. This in my view raises a triable issue.
15. Further admittedly, the Letter of Credit on the basis of which this
summary suit has been filed does not provide for any interest which has
been claimed by the Plaintiffs. Even the principal amount as claimed by
the Plaintiffs has been disputed by the Defendant, when Mr. Rustomjee
2 (2022) 3 SCC 294
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has submitted that the amount of interest of Rs. 2,70,07,922/- charged
by ICICI Bank cannot be added to the principal amount admitted by the
Defendant-Bank, which also raise triable issues.
16. Therefore, although the liability has been admitted, however the
Defendant has expressed its inability to honour the commitment under
the Letter of Credit and the Plaintiff's Interim Application for
clarification as to the applicability of the moratorium to the Defendant
also pending, in view of the principles laid down by the Hon'ble
Supreme Court in the case of IDBI Trusteeship Services Ltd Vs.
Hubtown Ltd. (supra), as well as in the case of BL Kashyap and Sons
Ltd Vs. M/s. JMS Steels and Power Corporation and Anr. (supra), I am
inclined to grant conditional leave to defend to the Defendant.
17. Accordingly, the following order is passed :-
ORDER
(i) Leave to defend the present Suit is granted to the Defendant subject to their depositing a sum of Rs.61,40,32,471/- (Rupees Sixty One Crores Forty Lakhs Thirty-Two Thousand Four Hundred and Seventy One Only) within a period of six weeks from the date of this Order.
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(ii) If the aforesaid deposit is made within the stipulated period, this suit shall be transferred to the list of Commercial Causes and the Defendant shall file written statement within a period of four weeks from the date of deposit.
(iii) If this conditional order of deposit is not complied with within the aforesaid period, the Plaintiffs shall be entitled to apply for an ex- parte decree against the Defendant after obtaining a Non-deposit Certificate from the Prothonotary and Senior Master of this Court.
(iv) Summons for Judgment stands disposed in the aforesaid terms.
(ABHAY AHUJA, J.) Digitally signed by NIKITA NIKITA YOGESH YOGESH GADGIL GADGIL Date:
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