Madras High Court
Mahaveer Health Care Private Limited vs Indian Overseas Bank on 26 July, 2018
Bench: S.Manikumar, Subramonium Prasad
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 26/7/2018 C O R A M THE HON'BLE MR.JUSTICE S.MANIKUMAR AND THE HON'BLE MR.JUSTICE SUBRAMONIUM PRASAD W.P.No.16082 of 2018 a n d W.M.P.No.19110 of 2018 Mahaveer Health care Private Limited rep. By its Managing Director Mr.Sushil Kumar Jain No.84/105 Kamdhar Nagar III Street Mahalingapuram Nungambakkam Chennai 600 034. ... Petitioner Vs Indian Overseas Bank rep. By its Branch Manager Mount Road Branch No.807 Anna Salai Chennai 600 002. ... Respondent WRIT Petition filed under Article 226 of the Constitution of India, praying for the issuance of a writ of certiorarified Mandamus, to call for the records pertaining to the letter, dated 7/4/2018, being cancellation of OTS agreement issued by Indian Overseas Bank, Mount Road Branch, respondent herein and quash the same and consequently, direct the respondent to revive the OTS agreement dated 24/7/2017 and thereby accept the OTS amount together with simple interest for the period from 1/1/2018 till 8/6/2018 and release the security documents to the petitioner. For Petitioner ... Mr.A.V.Arun for Mr.R.Sugumaran For Respondent ... Mr.K.S.Sri Giri Prasath - - - - - O R D E R
(Order of the Court was made by S.MANIKUMAR, J) Going through the material on record, and after hearing the learned counsel for the petitioner, on 29/6/2018, we passed the following order:-
OTS amount of Rs.195 lakhs was to be paid, on or before 31/12/1997, with interest, at the rate of 12% p.a. However, the petitioner had taken up the issue relating to payment of interest, with the Bank. OTS amount of Rs.195 lakhs has been paid in April 2018. Bank, vide letter, dated 7/4/2018, has rejected the request regarding further time sought for. Bank has cancelled the OTS. Said letter, dated 7/4/2018, extracted hereunder, is impugned in this writ petition, with a prayer to quash the same and consequently, to direct Indian Overseas Bank, represented by its Branch Manager, to revive OTS agreement dated 24/7/2017.
"We refer to our letter, dated 24/7/2017 advising extension of OTS till 30/9/2017 and also your letter dated 28/9/2017 seeking further extension of time till December 2017.
It is hereby informed that since the Company has failed to settle/pay within the appropriate time period, the OTS/OCS stands cancelled.
In view of the above, we request you to make full payment of dues immediately or else we shall be compelled to initiate recovery actions."
2. On this day, when the matter came up for hearing, Mr.A.V.Arun, learned counsel for the petitioner submitted that whatever interest is charged on the OTS amount of Rs.195 lakhs, as on today, would be remitted to the Bank.
3. In ordinary circumstances, this Court would not entertain any challenge to the cancellation of OTS. Inasmuch as the petitioner has now offered to pay the entire arrears of interest, at the rate of 12% on Rs.195 lakhs, we issue notice to the respondent Bank through Court and privately, returnable by 6/7/2018.
4. Call on 6/7/2018.
2. Material on record discloses that bank has issued notice, under Section 13 (2) of the SARFAESI Act, 2002, dated 9/1/2015, demanding a sum of Rs.2,59,77,698/-, together with future interest and costs, to be paid within sixty days, from the date of receipt of the notice. According to the petitioner, on receipt of the said notice, he has paid Rs.64,46,940/-. Thereafter, Bank has issued a notice, dated 21/9/2015, under Section 13 (4) of the SARFAESI Act, 2002. Challenging the said possession notice, petitioner has filed S.A.No.387 of 2015. Conditional order of stay was granted, directing the petitioner, to deposit a sum of Rs.24 lakhs, which according to the petitioner has been complied with.
3. Subsequently, on the Bank filing a memo, dated 2/11/2015, stating that they are withdrawing the possession notice, S.A.No.387 of 2015 has been dismissed, on 4/11/2015, as infructuous.
4. Material on record discloses that another possession notice, dated 3/11/2016 was published in the newspapers on 4/11/2018, which came to be challenged, in S.A.No.540 of 2016. Debts Recovery Tribunal has passed a conditional order, directing the petitioner, to deposit a sum of Rs.30 lakhs, which according to the petitioner has been complied. However, on 29/6/2017, S.A.No.540 of 2016 has been dismissed. Petitioner has contended that OTS proposal submitted was favourably considered by the respondent, on 26/3/2017, but stipulated that a sum of Rs.189 lakhs to be paid, on or before 31/3/2017. Subsequently on the request of the petitioner, dated 30/6/2017, revised OTS, dated 24/7/2017 was made.
5. Revised OTS, dated 24/7/2017, reads thus:-
We refer to your letter dated 30/6/2017 requesting for extension of time for full and final settlement under OTS.
In this connection, the competent authority has permitted to extend the time limit for payment of the balance amount of OTS on or before 30/9/2017 subject to the following terms and conditions.
1. The entire OTS amount of Rs.195.00 lakhs to be paid in one lumpsum or in instalment before 30/9/2017.
2. Simple rate of interest @ 12% for the delayed period from </2017 to 30/9/2017 or till the entire OTS amount is paid whichever is earlier should be paid.
3. Unpaid lawyer's fees/expenses to be borne by the subjects.
4. Further on default of payment of OTS amount either part or in full as aforesaid OTS will automatically stand cancelled and the bank will be free to initiate/continue legal action for recovery of full dues without any concession whatsoever and without any further notice to the subject in this regard.
5. Any suit/claim/complaint filed by the borrower/guarantors against the bank should be withdrawn before release of the securities.
6. The compromise settlement will not have any bearing whatsoever on the ongoing criminal cases/proceedings, if any, pending in the courts against the borrower/guarantor.
7. The bank reserves the right of recompense of the amount of sacrifice involved in the present settlement and to recover the same in the due course if the subjects turn round and make profit.
We request to the acknowledge receipt by signing the second copy for having accepted the offer.
6. As the petitioner could not make payment, before 30/9/2017, request has been made, for extension, till 31/12/2017. Bank vide, letter, dated 7/4/2018 has replied as hereunder:-
We refer to our letter, dated 24/7/2017 advising extension of OTS till 30/9/2017 and also your letter dated 28/9/2017 seeking further extension of time till December 2017.
It is hereby informed that since the company has failed to settle/pay within the appropriate time period, the OTS/OCS stands canceled.
In view of the above, we request you to make full payment of dues immediately or else we shall be compelled to initiate recovery actions.
7. Though in the said letter, Bank has not specifically granted extension till 30/12/2017, Mr.K.S.Sri Giri Prasath, learned counsel for the Bank submitted that extension was granted unofficially. Submission of the learned counsel for the Bank is recorded.
8. However, it is an indisputed fact that the petitioner has not paid the entire OTS amount of Rs.195 lakhs, on or before 31/12/2017, but paid the same on 8/6/2018. In the meanwhile, Bank had already cancelled the OTS, vide, letter, dated 7/4/2018.
9. Being aggrieved, instant writ petition is filed.
10. During the course of hearing of this writ petition, Mr.A.V.Arun, for Mr.R.Sugumaran, learned counsel for the petitioner submitted that interest, for the belated payment between 1/1/2018 and 8/6/2018, at the rate of 12%, on Rs.195 lakhs would be paid.
11. Responding to the notice, learned counsel for the Bank submitted that as per the calculation of the Bank, a sum of Rs.28 lakhs is payable by the petitioner from 1/10/2012, towards interest, whereas, the petitioner has calculated, a sum of Rs.17 lakhs, representing the interest, for the belated payment. Thus, it could be seen that Bank on principle, has agreed to receive the interest for the belated payment but then, there is a dispute in the quantum/calculation of interest.
12. Earlier, on 29/6/2018, while ordering notice to the respondent, we observed that this Court would not ordinarily entertain any challenge to the cancellation of OTS and directed the Bank to respond for the request of the petitioner, for payment on interest. Bank has agreed for receipt of such interest. In such circumstances, there is no need for cancellation of OTS.
13. Placing on record the submission of both parties, we direct them to work out the quantum/calculation of interest, between 1/1/2018 and 8/6/2018 and resolve the dispute, to avoid further litigation, within a period of ten days, from today. After arriving at a settlement, petitioner is directed to pay the amount arrived at, within a period of fifteen days, thereafter.
14. With the above direction, writ petition is disposed of. No costs. Consequently, the connected Miscellaneous Petition is closed.
(S.M.K., J.) (S.P., J.) 26th July 2018 Index: Yes/No. Internet: Yes Speaking/Non speaking mvs.
Note: Issue order copy on 30/7/2018 To The Branch Manager Indian Overseas Bank Mount Road Branch No.807 Anna Salai Chennai 600 002.
S.MANIKUMAR,J AND SUBRAMONIUM PRASAD, J mvs.
W.P.No.16082 of 201826/7/2018