Bombay High Court
Hotel Horizon Private Limited vs Union Bank Of India on 30 April, 2024
Digitally signed
LAXMIKANT by LAXMIKANT
2024:BHC-OS:7090-DB
GOPAL
GOPAL CHANDAN
CHANDAN Date: 2024.05.03
10:28:39 +0530 1 (6) APP-85.24-IA1328.24.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL NO.85 OF 2024
IN
INTERIM APPLICATION (L) NO.11371 OF 2024
IN
SUIT (L) NO.11235 OF 2024
Hotel Horizon Pvt. Ltd. : Appellants/
and ors. Original Plaintiffs.
Vs.
Union Bank of India : Respondents/
and ors. Original Defendants.
WITH
INTERIM APPLICATION NO.1328 OF 2024
IN
APPEAL NO.85 OF 2024
Hotel Horizon Pvt. Ltd. : Applicants/
and ors. Appellants.
In the matter
Hotel Horizon Pvt. Ltd. : Appellants/
and ors. Original Plaintiffs.
Vs.
Union Bank of India : Respondents/
and ors. Original Defendants.
-----
Mr. Cyrus Ardheshir a/w Mr. Munaf Virjee and Mr. Akash Agarwal
i/by AMAR Law for the Appellants/Applicants.
Mr. Charles De Souza & Roshan Gaud a/w Rupak Sawangikar
i/by Orbit Law Services for the Respondents.
-----
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CORAM : DEVENDRA KUMAR UPADHYAYA, CJ. &
ARIF S. DOCTOR, J.
DATE : 30th APRIL, 2024
P.C. :
1. The present Appeal impugns an order dated 12 th April
2024 by which Learned Single Judge has dismissed the Interim
Application [being Interim Application (L) No.11371 of 2024]
filed by the Appellant in which the Appellant had sought the
following reliefs, viz.
"a) That pending the hearing and final disposal of the
Suit, the Defendants by themselves, their servants
and agents be restrained by an order and injunction
of this Hon'ble Court from in any manner dealing
with, disposing of, alienating, encumbering, selling,
creating third party interest, or entering into any
other arrangement in respect of the loan account of
the Applicants or any of the asset of the Applicants in
any manner whatsoever pending the hearing and
disposal of this Suit;
b) That pending the hearing and final disposal of the
Suit, the Defendants by themselves, their servants
and agents be restrained by an order and injunction
of this Hon'ble Court from in any manner from
conducting the purported auction scheduled on
3.4.204;
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c) That pending the hearing and final disposal of the
Suit, the Defendants by themselves, their servants
and agents be restrained by order and injunction of
this Hon'ble Court from taking any steps and from
doing acts, deeds and things so as to in any way
affect the rights of the Applicants in respect of the
said loan account including assets thereof and/or
under the said Agreement inter-alia, doing any act so
as to affect the continuance and validity of the said
Agreement and/or which may be contrary to the
understanding arrived at between the Applicants and
Defendants under the said Agreement;"
2. The Appellants, are the Applicants in the captioned
Suit in which Appellants have inter-alia sought specific
performance of an Oral Agreement stated to have been arrived
at on 18th January 2024 between the Appellants and the
Respondents by which according to the Plaintiffs the
Respondents had agreed to a One Time Settlement (OTS) in the
following terms, viz.
"(a) That the account of the Defendant and all claims of
the bank against the company and guarantors stands
settled by for One-Time Settlement (hereinafter to
referred to as "OTS") for a sum of
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Rs.200,00,00,000/- (Rupees Two Hundred Crores
only)
(b) That the said sum of Rs.200,00,00,000/- (Rupees
Two Hundred Crores only) shall be paid by the
Plaintiff to the Defendant within a period of 90 days
from the date of issuance of the firm letter
sanctioning OTS proposal of the Borrower.
(c) That the parties shall withdraw their respective cases
filed against one another.
(d) That the Defendant shall issue a Letter of Acceptance
to the Plaintiff to enable the Plaintiff to get the
amount paid through its Investor, one M/s. Kotak
Alternate Asset Manager Ltd. (being a AAA rated
financial institution).
(e) That the Defendant will, upon receipt of the
payment, release all securities, guarantees, pledged
shares, movables, hypothecated assets, receivables
and all other entitlements in favor of the Plaintiff.
The defendant shall, upon receipt of the OTS
amount, issue no dues certificate to the
company/guarantors and shall cancel indenture of
mortgages/pledges/personal guarantees etc.
(f) That the Defendant shall return Cheques/
instruments etc. if any lying with them to the
Plaintiff.
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(g) That till the said period of 90 days, the Defendant
shall keep its actions for recovery in abeyance.
The aforesaid terms are collectively referred to as
"The Agreement".
3. Simply put, it is the case of the Appellants that on
18th January, 2024 the Respondents had agreed to an OTS of the
Appellants dues on the aforesaid terms. Mr. Ardheshir, Learned
Counsel appearing on behalf of the Appellants, invited our
attention to letters dated 28th December 2023 and 5th January
2024 addressed by the Appellants to the Deputy General
Manager of Respondent No.1 in which the Appellants had sent
their proposal for a OTS. He submitted that the same culminated
into an agreement when the aforesaid terms were accepted on
18th January, 2024 as more particularly set out from paragraph
4(a) to 4(g) of the Plaint. He then submitted that a settlement
had been arrived at in the aforesaid terms was evidenced by the
fact that on 19th January, 2024 the Respondent No. 1 had infact
withdrawn a proceeding filed against the Appellants in the
National Company Law Tribunal, Mumbai on the basis that the
matter had been amicably settled between the Parties.
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4. Mr. Ardheshir then submitted that the Respondent had
on 29th February, 2024 addressed a letter with the OTS proposal
which was different in terms to what had been agreed upon by
the Parties on 18th January 2024. The principle difference he
pointed out was that vide the said letter the Appellants were
required to make a payment of 20 crores within 15 days of the
issuance of the said letter which was contrary to what was
agreed upon by the Parties on 18th January, 2024. He submitted
that the Appellants had an investor in place who was ready and
willing to make payment of the entire sum of Rs. 200 crores
upon the sanction of OTS.
5. Mr. Ardheshir then pointed out that since the
Respondents had reneged on the agreement arrived at on 18 th
January, 2024 and it was thus that the Appellants were
constrained to file the present Suit. Mr. Ardheshir submitted that
the Appellants were and continued to be ready and willing to
adhere to the terms of OTS arrived at between the Parties on
18th January, 2024.
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6. Basis the above, Mr. Ardheshir submitted that the
Learned Single Judge had erred in passing the Impugned Order.
He submitted that if the property of the Appellants was
auctioned by the Respondents, the Suit itself would become
infructuous and thus, the present Appeal was required to be
allowed and interim reliefs as prayed for, be granted.
7. Per contra, Mr. De Souza, Learned Counsel appearing
on behalf of the Respondents, submitted that Appellants entire
case that an OTS had been arrived at on 18 th January, 2024 was
entirely false and misconceived.
8. He submitted that the OTS proposal was sent to the
Appellants vide the Respondents letter dated 29th February, 2024
and since the Appellants did not accept the same in the time
prescribed the Respondents had vide their letter dated 16 th
March 2024 informed the Appellants as follows, viz.
"This has reference to your email dated 14.03.2024,
we wish to inform you that Bank has sanctioned
yourselves One Time Settlement (OTS) of Rs. 200.00
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crores against a principal outstanding of principal
outstanding of Rs. 213.00 crores and an interest of
Rs. 131.95 crores.
As per the sanction letter no. SAMB/OR/1093 2023-
24 dated 29.02.2024 conveyed to yourselves on
29.02.2024, an amount of Rs.20.00 crores were
required to be deposited within 15 days from the
date issuance of the sanction letter. The sanction
letter was received by yourselves on 29.02.2024
We regret to inform you that despite a lapse of the
above period, you have failed to deposit the upfront
amount of Rs. 20.00 crores with the Bank as per
sanction terms.
In view of the above, the OTS sanctioned in your
favour by the Bank stands cancelled. Further, Bank
reserves the right to recover its dues through
available legal procedures."
Mr. De Souza then invited our attention to the Appellants letter
dated 14th March 2024 and pointed out that after receipt of the
Respondents letter of 29th February, 2024 the Appellants had, for
the first time written to the Respondents stating viz.
"You will kindly appreciate that the company has
been working tirelessly to resolve its account with
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the Bank along with the Investor. As requested by
the Bank, the term-sheet executed between the
Company and Investor has also been provided to the
bank vide letter of the company dated 26.02.2024.
The Bank has also expressed satisfaction in the
financial ability of the Investor who is well renowned
Financial Institution of repute. The Discussions with
other ARCs is at very advanced stage with their
senior management. In view of their increased
demands post the OTS with UBI, the investor along
with company has also provided them a settlement
structure which meets their financial objectives.
During the joint interactions with investor and
company, the ARCs have conveyed that the said
structure seems to be in principle acceptable to them
and have assured to conclude the same at the
earliest. We are also pleased to inform you that the
other major CPs as stipulated by the Investor for
disbursement have already been complied with by
the Company during this period. The Company has
the requisite funding arrangement in place to enable
it to pay its OTS amount to the Bank.
Therefore, in view of the above and in the interest of
all stakeholders we request your goodselves to kindly
align the terms and conditions of the OTS letter
issued by Bank on 29.02.2024 to the terms as
proposed by the Company vide its letters/ email
dated 28.12.2023, 02.01.2024 & 05.01.2024."
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From the above he pointed out that had there been any
settlement arrived at between the Parties on 18 th January 2024,
the same would have been specifically referred to in the said
letter. He submitted that this had admittedly never been done by
the Appellants. He then submitted that the Respondents had
made an application before the NCLT to correct the statement of
the Respondents Counsel as recorded in the Order of the NCLT
dated 19th January, 2024.
9. Mr. De Souza then submitted that since the Appellant
were defaulters in terms of certain credit facilities granted to
them, Respondent No. 1 was compelled to initiate proceedings
under the provisions of the Securitization and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002
("the SARFAESI Act"). He submitted that the Appellants had a
remedy under the SARFAESI Act and the present Suit was thus
itself not maintainable. He pointed out that the Appellants had
approached the Debts Recovery Tribunal ("the DRT") seeking
inter alia a stay of the auction .
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10. Mr. De Souza pointed out that the present Suit was
filed only on 1st April 2024 and was nothing more than an
attempt to scuttle the recovery proceedings instituted by the
Respondents against the Appellants under the provisions of
SARFAESI Act and nothing more. He invited our attention to the
Impugned Order and pointed out there from the Learned Judge
had after considering the rival contentions, came to the prima
facie conclusion that the parties were not ad idem and thus
there was no concluded contract.
11. We have heard Learned Counsel and after considering
rival contentions find absolutely no infirmity in the Impugned
Order. From what has been shown to us, it is clear that the
Appellants' own understanding was not that any contract had
been arrived at on 18th January, 2024, the same would have
found a mention in the Appellants' letter dated 14 th March, 2024
but the same however does not. Also, we must note that
reliance placed by the Learned Counsel for the Appellants on the
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fact that the order of the NCLT dated 19 th January, 2024 is also,
in our view, plainly untenable for two reasons, one, that the
same is silent on what the terms of this so called settlement
were and second, the Appellants' own letter dated 14 th March,
2024, which we have already referred to and was admittedly
addressed well after 18th January, 2024 makes absolutely no
mention of any settlement arrived at on 18th January, 2024.
12. Thus for the aforesaid reasons we are in complete
agreement with the following findings of the Learned Single
Judge viz.
"For coming into force of a valid contract, it is
necessary that the parties should agree as to the
terms and they must be ad idem on the terms of
settlement, but what is noted by me is, the offer of
OTS of the Plaintiff was hedged with a condition of
making the payment within 90 days from receipt of
the firm sanction from the bank. But this condition of
making the payment is not accepted by the Bank and
on the contrary, it accepted the proposal of OTS,
provided payment is made within a period of 30 days
of the issuance of communication by it i.e.
29.02.2024.
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Since no consensus could be arrived between the
parties, no concluded contract come into existence
and I do not deem it appropriate that the Defendant
Bank should be restrained from prosecuting its
remedies before the DRT, which include the remedy
of auction, which it has already resorted to.
It is also informed by Mr. Dsouza that the Bank is
now armed with an order under Section 14 of the
SARFAESI Act and is ready with a mechanism to
follow."
13. We are of the view that the conduct of the Appellants
is entirely lacking in bonafides. We say so because Respondent
No.1 on 29th February 2024 sent the Appellants the OTS
proposal. The Appellants thereafter addressed a letter for the
first time only on 14th March 2024, in which no mention
whatsoever was made of any settlement/agreement having been
arrived at on 18th January 2024. The Respondents thereafter
withdrew/cancelled the OTS offer on 16 th March 2024 and the
suit was filed only on 1 st April 2024. To our mind, this conduct is
telling and by itself would dis-entitle the Appellants from any
interim/ad-interim reliefs. Having found the conduct of the
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Appellants wanting in bonafides, costs must follow. Hence, we
pass the following order, viz.
:ORDER:
i. Appeal dismissed with cost of Rs. 1,00,000/- (Rupees One Lakh only).
ii. Interim Application is also dismissed. iii. Cost to be paid to Armed Forces Battle Casualties Welfare Fund within eight weeks from today, failing which the same to be recovered as arrears of land revenue. The bank account details of Armed Forces Battle Casualties Welfare Fund are as follows :-
Armed Forces Battle Casualties Welfare Fund Bank Name Canara Bank Branch South Block, Defense, Head-Quarter New Delhi - 110 011 IFSC Code CNRB0019055 Account Number 90552010165915 Type of Account Saving LGC 14 of 15 ::: Uploaded on - 03/05/2024 ::: Downloaded on - 15/05/2024 02:04:38 ::: 15 (6) APP-85.24-IA1328.24.doc
14. Before parting, we make it clear that the observations made in the present order are only for the purpose of deciding the present Appeal and nothing else.
(ARIF S. DOCTOR, J.) (CHIEF JUSTICE) LGC 15 of 15 ::: Uploaded on - 03/05/2024 ::: Downloaded on - 15/05/2024 02:04:38 :::