Calcutta High Court
Allahabad Bank vs Sps Steels Rolling Mills Limited on 1 November, 2017
Author: Sanjib Banerjee
Bench: Sanjib Banerjee, Sabyasachi Bhattacharyya
OD-1
APO No.431 of 2017
GA No.3148 of 2017
In
CS No.182 of 2017
IN THE HIGH COURT AT CALCUTTA
Civil Appellate Jurisdiction
ORIGINAL SIDE
ALLAHABAD BANK
Versus
SPS STEELS ROLLING MILLS LIMITED
BEFORE:
The Hon'ble JUSTICE SANJIB BANERJEE
And The Hon'ble JUSTICE SABYASACHI BHATTACHARYYA Date : 1st November, 2017.
Appearance:
Mr. Malay Kr. Ghosh, Sr. Adv.
Mr. Om Narayan Rai, Adv.
Mr. S. Roy Chowdhury, Adv.
Mr. S. K. Kapur, Sr. Adv.
Mr. Pratap Chatterjee, Sr. Adv.
Mr. Joy Saha, Sr. Adv.
Mr. Ravi Kapur, Adv.
Mr. M. Mukherjee, Adv.
2
The Court : The appeal arises out of an ad interim order passed in a suit by the borrower to enforce a settlement agreement said to have been arrived at with the consortium of banks.
The appeal is by one of the eight banks who have granted credit facilities to the plaintiff. The principal grounds urged are that by the order impugned dated August 28, 2017 the right of the appellant to approach either the appropriate Debts Recovery Tribunal or the adjudicating authority under the Insolvency and Bankruptcy Code, 2016 has been impeded.
When the appeal was received on September 20, 2017, an order was made leaving the appellant free to proceed before the appropriate DRT to prosecute its claim against the plaintiff. Such order was made on the submission of the plaintiff that the order impugned could not be read to imply that the appellant would not be permitted to proceed with its claim before the DRT.
The appellant now presses the other ground. The appellant specifically refers to the last paragraph in the order impugned that provides as follows:-
"In the event any proceeding is filed before the NCLT by Allahabad Bank, the bank shall not proceed with the said proceeding until this matter is disposed of."
According to the appellant, such part of the order may be without jurisdiction and, at any rate, was not warranted on the facts carried to this Court by the plaintiff.
3
According to the appellant, there is no firm agreement between the plaintiff and the consortium of banks, whether collectively or individually, for a specified sum of money to be paid by the plaintiff to the banks, whether on a one-time basis or in instalments. The appellant says that though meetings of the consortium of banks had been held, inter alia, on December 18, 2015, May 5, 2016, and November 16, 2016, where a broad agreement was arrived at, the nitty-gritties and the details have not been worked out. The appellant refers to an application filed by the plaintiff before the DRT-I, Kolkata from which it appears that individual OTS offers were made by the plaintiff to several of the banks at a time after the plaintiff claims that an agreement was arrived at between the plaintiff and the lenders on December 18, 2015.
The appellant refers to the principal prayer made in the plaintiff's application before the DRT and the primary relief sought in the suit. They are at variance.
According to the plaintiff, an in-principle agreement was arrived at between the plaintiff and all the lenders at the several meetings, including on the dates referred to above. The plaintiff claims that a total sum of about Rs.554 crore was to be paid in the proportion indicated in the plaint to the various banks. The plaintiff refers to the first tranche of payment being an amount of 5% of the value of the NPA together with the proceeds of the sale of the plaintiff's factory in Bilaspur. The plaintiff maintains that such part of the payment has already been made since the proceeds from the sale of the Bilaspur factory have been retained and appropriated by the banks and the 5% payment has been tendered by the plaintiff.
4
The plaintiff asserts that only upon the formal acceptance of the proposal that was agreed to in principle between the plaintiff and the lenders, would the plaintiff be in a position to make the monthly or subsequent payments in instalments. The plaintiff says that the mode and manner of payment have not been indicated by the consortium collectively or by the individual banks for further payments to be immediately made; but the plaintiff is not averse to making payment of the committed amount of about Rs.554 crore to the eight banks which had lent and advanced money to it.
The plaintiff refers to what the plaintiff perceives to be the draconian provisions of the IBC. In particular, the plaintiff places Section 7 of the Code and the consequences that visit a corporate debtor when a financial creditor of such corporate debtor approaches the adjudicating authority with a plea for initiation of a corporate insolvency resolution process. Indeed, Section 7(5) of the said Code does not expressly speak of the adjudicating authority being required to refer to the corporate debtor before arriving at a satisfaction that a default had occurred and a corporate insolvency resolution process ought to be put in place.
Whether or not the relevant provision should be read to imply a reference to the corporate debtor, should not detain the present discussion. Equally, whether or not the provisions of the relevant Code are draconian, matters little in the present context. If a creditor or any person has a right to approach an appropriate forum for any remedy, a civil court would scarcely extend its jurisdiction to impede the creditor from exercising its statutory right. That is not to say that the civil court does not have the jurisdiction in any case to 5 interfere with such a process; but only that the civil court must be very cautious before it exercises such authority in extremely extraordinary circumstances.
Such circumstances have not been made out in the present case which would warrant an injunction, even in personam, against any of the defendants by restraining them from proceeding with or prosecuting their claims under any statute. At the highest, there is a nebulous agreement between the plaintiff and the lenders which has been pleaded and there appears to have been some form of an in-principle agreement on the part of the lenders to accept the settlement. However, the contours of the settlement have not been firmed up and it does not appear that the payment that was envisaged to be received by the lenders in December, 2015 has yet been made late in 2017. Further, it is always open to the plaintiff to defend itself in any action instituted before the DRT under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 or before the adjudicating authority under the Code. There cannot be any apprehension that such Tribunals, which have been empowered to take over matters that were once the exclusive domain of civil courts, will not afford an opportunity to the plaintiff to make out its defence before passing any of the perceived draconian orders provided for in the relevant statutes.
On the basis of the facts carried to the Court, the order impugned was not warranted, as the lenders could not have been restrained from proceeding with or prosecuting their claims before the appropriate authorities in accordance with law.
An ancillary point is taken by the plaintiff that the order impugned contains certain conditions for the benefit of the lenders and the lenders have 6 enjoyed such benefit and one of them has now sought to question such order. Nothing turns on such aspect of the matter as the appellant says that it received the payment made by the plaintiff without prejudice to its rights and contentions. Indeed, even if the appellant had received the payment without indicating that it was without prejudice, the rights of the appellant could not have been curtailed thereby.
For the reasons aforesaid, the order impugned dated August 28, 2017, insofar as it puts any fetters on the defendant lenders from approaching any appropriate authority for any claim that they may have, including the Debts Recovery Tribunal and the National Company Law Tribunal, stands vacated.
The observations made herein should be regarded as tentative and should not prejudice the plaintiff either in the proceedings before the appropriate DRT or NCLT or in course of further proceedings before the trial court.
APO No.431 of 2017 and GA No.3148 of 2017 are disposed of as above, but without any order as to costs.
(SANJIB BANERJEE, J.) (SABYASACHI BHATTACHARYYA, J.) bp.