Gujarat High Court
Sebacic India Limited vs State Bank Of India on 25 June, 2021
Author: Ashutosh J. Shastri
Bench: Ashutosh J. Shastri
C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 7158 of 2021
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SEBACIC INDIA LIMITED Versus STATE BANK OF INDIA ========================================================== Appearance:
MR SN SOPARKAR SR ADVOCATE with MR MONAAL J DAVAWALA(6514) for the Petitioner(s) No. 1 MR PRANAV G DESAI(290) for the Respondent(s) No. 1 MR. SANDIP C BHATT(6324) for the Respondent(s) No. 2 ========================================================== CORAM:HONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI Date : 25/06/2021 CAV ORDER
1. By way of this petition under Article 226 of the Constitution of India, the petitioner has prayed for the following reliefs :-
"7(a) quash and set the impugned letter and subsequent email at Annexure-A to this petition to the extent of restricting the petitioner's withdrawals from its CC account resulting in stoppage of operations and direct the respondent Banks to allow usage of the CC limits forthwith ; and /or
(b) as an interim arrangement for a maximum period of 3 months, direct the Respondent Banks to accept the petitioner's offer to surrender 10% of export collection made by the Company which would immediately reduce the CC limits till the strategic investor steps in; and/or ;
(c) pending the admission, hearing and final disposal of this petition, to stay implementation and operating of the impugned letter and email at Annexure-A to this petition;
(d) any other and further relief deemed just and proper be granted in the interest of justice;
(e) to provide for the costs of this petition."Page 1 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022
C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021
2. It is the case of the petitioner that the petitioner is an unlisted public Company incorporated under the provisions of the Companies Act, 1956 and is engaged in the production of sebacic acid which is manufacture from castor oil with a plant with an installed capacity of 10,000 MTPA with by-products such as 2-Octonal, Glycerine, Fatty Acids and Sodium Sulphate. The plant of the petitioner is the largest in the country and is ranked among the top ten in the world. Sebacic acid is a niche product and there is only one another company operating in India which has an installed capacity of 8,000 MTPA and rest all companies producing sebacic acid are based in China.
The whole world depends only on India and China for manufacturing this product.
2.1. It is the case of the petitioner that primary raw material required for the production of the sebacic acid is castor oil and India produces 80-85% of the world's castor oil of which Gujarat produces 70% and supplies to the rest of the world including China and castor oil is classified as a commodity and is purchased on a spot basis without any credit. The petitioner has asserted that certain other materials such as caustic soda, sulphuric acid and catalysts are also required as a part of the process for the production of sebacic acid and the demand for sebacic acid across the world is 1,00,000 MTPA of which 50% is consumed in China and balance is supplied to the world. The petitioner caters to the markets in North America, EU and Japan and has a marquee clientele base which regularly buys the product from the petitioner. Once the clients start using this product, it is difficult to change their manufacturing process and hence it is critical source of raw material even for them as well.
2.2. The petitioner has further asserted in the petition on oath that Page 2 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022 C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021 with the capacity outlay of Rs.65.20 crores, of which respondent no. 1
- State Bank of India (Rs.37 crores) and respondent no.2 i.e. Central Bank of India (6.20 crores) extended term loans totalling to Rs.43.20 during the year 2010-11. In addition to this the respondent - Banks have also granted cash credit facilities to the tune of Rs.28 crores and due to project delays, the debt was restructured in the year 2013 and the term loans were rescheduled and the total term loan debts outstanding as on May, 2013 of Rs.42.88 crores were to be repaid on March, 2019. It is imperative to point out even at this stage restructuring stage TEV report conducted on the behest of the respondents clearly showed that the petitioner's company unit was technically feasible and economically viable and which is also case till date. After analyzing to this consortium approval letter dated 10.05.2013 came to be issued restructuring the petitioner's debt.
2.3. During the passage of this period, the working capital facilities (CC Limits) have also been reduced from the earlier Rs.28 crores and currently stand as below :
Bank Sanctioned O/s as on
Limit (in crs.) 19/4/21 (in
crs.)
State Bank of India 12.50 12.37
Central Bank of India 3.43 3.36
Total 15.93 15.73
2.4. Thus, according to the petitioner, the petitioner has already paid an amount of Rs.42.88 crores of term loans and of Rs. 12.27 crores of working capital along with interest on the respective due dates. Even though the petitioner was continued to incur losses, it secured the requisite funds through foreign and Indian private equity investors during this period and repaid the entire term loans as per Page 3 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022 C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021 the committed restructuring terms with the final payment in June, 2019. The total repayment including interest is approximately Rs.90 crores over six years .
2.5. To strengthen the grievance raised in the petition, it has further been asserted by the petitioner - Company that it has provided primary and collateral security in the following form :
Primary Security - Hypothecation of Current Assets; All land, buildings owned by the petitioner with fair market valuation by the banks at Rs.11.40 crores;
Third party property with fair market valuation by the banks at Rs.6.30 crores;
Lien on deposits - Rs.0.20 crores;
Share pledge of the promoter group - 66,00,000 shares @ Rs.10 each totalling Rs. 6.60 crores;
Plant and machinery and other movable property of more than Rs.40 crores as per the last audited books of accounts."
2.6. Thus, according to the petitioner, the respondent - Banks are sufficiently holding securities worth Rs.64 crores which comes to around four times of their exposure of Rs.15.73 crores as stated herein above. The fair market valuation report is also attached to the petition compilation. The petitioner has submitted that the share holders of the company has given their personal guarantee and the present controversy has arisen only on account of the issue related to personal guarantee. The details of the said personal guarantee are stated hereunder on the basis of t he avermets made in the petition, which reads as under :Page 4 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022
C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021
Name of the Number of Shares Personal
Shareholder pledged Guarantees given
Mr. Pankaj Pandya 20,25,000 YES
(promoter)
Mr. Tushar Patel 20,66,500 YES
Mr. Mahendra Patel 12,76,000 YES (to the extent of
shareholding)
Mr. Ashwin Patel 8,40,000 YES (to the extent of
shareholding)
Mr. Sanjiv Parikh 3,92,500 YES (to the extent of
shareholding)
Mr. Jashubhai Patel ----- YES
(Third Party)
TOTAL 66,00,00
2.7. The above 66 lakh shares held by by individual shareholders constitute only around 10.20% of the total shareholding of the petitioner - Company and the remaining 88.32% is jointly held by Wayzata III Indian Ocean Ltd., a foreign private equity fund and India Nivesh Renaissance Fund, an Indian based private equity fund along with Avalokiteshvar Valinv Limited. The petitioner has further submitted that for the year 2020-21, due to onset of the pandemic COVID-19, RBI had granted moratorium on interest payments and respondent no. 1 SBI had granted 78.74 lakh as Funded Interest Term Loan (FITL) for the period spanning 1st March, 2020 until 31st August, 2020 with bullet repayment to be done by March, 2021. The aforesaid individual shareholders holding 10.20% (minority shareholders after the investment by the investors) in the compnay were not keen to extend their personal guarantees and are settled outside India. Hence, the respondent - Banks insisted on payments which the petitioner honoured on time by making full payment even Page 5 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022 C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021 though the company continued to make losses due to the adverse impact of COVID-19. The private equity funds infused money to repay the amount. The petitioner has stated clearly that this individual shareholders holding minority shareholding after the investment by the investor only to the extent at 10.20%.
2.8. It has further been stated that due to the legal structure of Private Equity Funds, no pledge or guarantees can be given and hence both Wayzata and India Nivesh cannot do so even if they are willing. As a result of this, one of the PE funds even issued a comfort letter dated 18.09.2020 to respondent no. 1 - State Bank of India for expressing the inability by the petitioner - Company to reach out to the personal guarantees and confirmed to honour any shortfall in the payment by the petitioner Company against the FITL amount of Rs.78,74,479/-, but the same was not accepted by the Bank. In para 2.10 the sequence of events following the aforesaid non-acceptance of the comfort letter are narrated chart-wise , which indicates series of correspondence and deliberations which took place between the petitioner - Company and the respondent - Banks.
2.9. The petitioner - Company aggrieved by the letter dated 13.04.2021 and subsequent E-mail dated 17.04.2021 issued by respondent no. 1 - Bank seeking to restrict the petitioner's withdrawals from its CC account resulting into stoppage of operations. The impugned letters, according to the petitioner are not only illegal, bad in law, but clearly arbitrary and by raising grievance, the petitioner - Company may not be left to the whims and fences/mercy of the respondent - Banks for every transaction and, therefore, left with no other alternative, has approached this Court, by way of present petition under Article 226 of the Constitution of India.Page 6 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022
C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021
3. This petition appears to have been submitted on 30.04.2021, came up for consideration on 06.05.2021, on which date, the Court was pleased to pass the following order is passed.
"Heard Mr. Navin Pahwa, learned Senior Advocate with Mr. Monaal Davawala, learned advocate for the petitioner. An advance copy of the petition may be served to Mr. Siddharth Samal, who usually appears on behalf of State Bank of India.
Issue Notice to the respondents, returnable 12.05.2021."
3.1. Subsequently, the matter came up for consideration before the Court on 12.05.2021 , wherein, the learned Senior Adviocate then was appearing has stated before the Court, which declaration is deduced in writing, and hence, the Court deems it proper to reproduce the said order dated 12.05.2021 hereunder:-
"1. Heard learned Senior advocate Shri Navin Pahwa for the petitioners assisted by learned advocate Mr. Monaal Davawala and Mr. Siddharth Samal, learned advocate for the respondentState Bank of India.
2. Mr. Siddharth Samal, learned advocate for the respondent seeks time for filing reply.
3. Learned Seior Advocate Mr. Navin Pahwa states that, "to enable the bank to de-freeze the CC account of the petitioner, the petitioner is ready and willing to reduce the CC limit as suggested by the bank. In that direction the bank may directly appropriate an amount equivalent to 10% from every export proceeds until the limit is reduced to an amount of Rs. 3 crores."
S.O. to 20.05.2021.
3.2. It appears further that thereafter the matter came up for consideration on 20.05.2021, on which, also the Court was pleased to pass the following order :-
Page 7 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021 "1. Heard learned Senior Advocate Mr.Navin K. Pahwa with learned advocate Mr.Monaal J. Davawala for the petitioner and learned advocate Mr.Siddhartha Sama and Mr. Sandip C. Bhatt for the respondents.
2. Today, learned advocate Mr.Samal stated that he has filed affidavit-in-reply in the petition. However, the affidavit-in- replyis not on record, and therefore, the soft copy of the affidavt-in-reply was shared by learned advocate Mr.Davawala for the convenience of Court. The affidavit-in-reply runs into more than 100 pages and therefore, the Court thought it fit to suggest learned Senior Advocate Mr. Pahwa to respond to the aforesaid affidavit-in-reply.
3. Learned Senior Advocate Mr. Pahwa stated that he has some urgency as his CC Account is freezed and, therefore, the matter may be adjourned for the shortest possible period. He has even shown his willingness to file affidavit-in-rejoinder during the course of the day.
4. At this juncture, upon instruction by learned advocate Mr. Davawala, learned Senior Advocate Mr. Pahwa submitted that the petitioner is required to pay electricity bill to MGVCL and this is the only account which the petitioner is having and therefore, the electricity bill is required to be paid from the aforesaid account directly in the account of MGVCL and therefore, at least for this purpose, permission may be granted for withdrawal of amount for payment of bill to MGVCL.
5. In view of the aforesaid genuine request, the respondent no. 1 bank is directed to permit the petitioner to pay the electricity bill to MGVCL either by way of cheque or through e-payment before the next date of hearing.
6. Considering the urgency, the affidavit-in-rejoinder may be filed by tomorrow and the matter is directed to be listed on 24.05.2021."
3.3 The matter thereafter travelled further and ultimately on the last occasion, on 27.05.2021 upon submissions of learned advocates and willingness, the Court passed the following order, which reads as under :-
Page 8 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021 "1. Heard learned Senior Advocate Mr. Navin Pahwa assisted by learned advocate Mr. Monaal Davawala, learned advocate Mr. Ashish Parwari, learned advocate Mr. Devesh Javekar, learned advocate Mr. Dikshit Mehra and learned advocate Ms. Gitika Makhija for the petitioner and learned advocate Mr. Pranav Desai for learned advocate Mr. Siddhartha Samal for respondent No.1 and learned advocate Mr. Sandip Bhatt for respondent No.2 through video conference.
2. Pursuant to the order dated 25.05.2021, the respondent-State Bank of India has filed an affidavit stating that after issuance of the letter dated 13.04.2021 by communication through email dated 17.04.2021, the petitioner was informed that no further transaction would be allowed for the facility of cash credit account which is recalled by the respondent-State Bank of India.
3. The petitioner has filed further affidavit on 26.05.2021 wherein the petitioner has, without prejudice to the rights and contentions as an interim arrangement, made a proposal to the bank in para 25 of the further affidavit which reads as under:
"25. Without prejudice to the rights and contentions of the petitioner, I say and submit that as an interim arrangement, the petitioner is ready and willing to pay/deposit an amount of Rs.50 Lakhs with this Hon'ble Court or with the Respondent No.1 Bank. This deposit would be in addition to the undertaking by the petitioner to remit 10% from all the export proceeds until the CC Limit is reduced by an amount of Rs. 3 crores. I say that to enable the Bank to reduce the working capital by Rs. 3 crores, the Bank may also consider to invoke the pledge of shares offered by the promoter shareholders which are worth more than Rs. 1.98 crores. I say and submit that during this entire period, the petitioner additionally undertake to continue to service the CC Account. This arrangement can be made for a period of 3-6 months during which period the strategic investor may negotiate fresh/renewed terms with the Bank and work out/determine a wholesome solution to the problem."
4. Learned advocate Mr. Pranav Desai states that he has received the further affidavit of the petitioner yesterday Page 9 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022 C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021 evening and therefore, it is forwarded to the bank to consider the aforesaid proposal made by the petitioner by way of an interim arrangement. Learned advocate Mr. Desai further states that the petitioner can open another the account in the State Bank of India to receive the export proceeds of the sale made by the petitioner so as to enable the petitioner to run its business and make urgent payments which are required to be made by the petitioner during the course of the business till the proposal of the petitioner is considered by the Bank.
5. In view of the above statement, learned Senior Advocate Mr. Pahwa states that the petitioner shall approach the State Bank of India for opening another account in order to receive the sale proceeds from the exports made by the petitioner so that outstanding payments may be made by the petitioner company to run the business till the proposal of the petitioner is considered by the Bank.
6. In view of the above facts, put up the matter on 9th June, 2021 for further consideration."
3.4. With the aforesaid background of facts, the petition came up for consideration before this Court on 09.06.2021, on which day, extensive hearing has taken place. Mr. S.N. Soparkar, learned Senior Advocate has canvassed his submissions with the assistance of Mr. Monaal Dave, learned advocate appearing for the petitioner and Mr. Pranav Desai, learned advocate has represented the contesting respondent no. 1 - Bank and after hearing at length, the matter is reserved for orders and with the aforesaid chronology, the Court has heard the learned counsels.
4. Mr. S.N. Soparkar, learned Senior Advocate assisted by Mr. Monaal J. Dave, learned advocate appearing for the petitioner has vehemently submitted that the respondent - Bank has acted clearly in Page 10 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022 C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021 a high handed manner and has shown a clear arbitrariness and on account of hypet technical approach by the respondent - Bank, the petitioner - Company of such a magnitude has been at grinding halt on account of unfair attitude shown by the respondent - Bank. It has been submitted that the petitioner - Company is dealing in production of such a sensitive and significant product as stated above and is a largest Company operating in India and the background of the Company is not such where the Bank should have taken such kind of drastic step having serious consequences. There are more than 220 employees on account of this arbitrary action has been facing financial crunch in this hard times and on account of this stoppage, though the respondent - Banks were sufficiently safeguarded more than adequately, still on account of trivial issue, the Bank has stopped the facility to be provided to the petitioner though fully well that the respondent - Banks are sufficiently safeguarded as stated in initial para of the petition on oath and since they are sufficiently covered by huge securities, practically four times then what has been stated to be outstanding, still on the whims of the officers of the Bank has chosen to stop and as such, such arbitrary action on the part of the respondent - Banks have brought the petitioner before this Court by way of the present petition.
4.1. Mr. Soparkar, learned Senior Advocate has submitted that primary and collateral securities which have been provided to the Bank which are clearly narrated in para 2.6. on oath, are such which does not inspire any suspicion that their moneys may not be recovered or may be in danger. When that be so, the respondent - Bank ought to have acted reasonably, at least in such a pandemic situation where practically, all the Banks are acting liberally with their respective customers, the attitude which has been shown by the Page 11 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022 C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021 respondent - Bank is clearly too technical and reflects clear arbitrariness and arm-twisting method which requires this Court to kindly intervene for the best interest of the Company, its survival and large employees who are sustaining on the existence of the Company.
4.2. Mr. Soparkar, learned Senior Advocate has further submitted that the petitioner is ready and willing to abide by any of the terms which may be imposed upon it to see that the Company must exist, survive, especially looking to the product, which the Company is dealing and as, such, significant impact of at least production item, the Bank ought to have considered reasonably.
4.3. Mr. Soparkar, learned Senior Advocate has submitted that, out of this entire controversy which has been erupted, the only apprehension which has been in the mind of the respondent - Bank is that the personal guarantee will be evaporated, since some persons have shown not to continue with their guarantee, the Bank ought to have appreciated that the personal guarantee is to what extent, as against the huge securities which are already provided and lying with the Bank which the petitioner - Company will not disturb. Hence, the consideration of the respondent - Bank on the issue of continuance of personal guarantee is ill-founded. Mr. Soparkar, learned Senior Advocate at the time of hearing has drawn attention of this Court to few of the documents precisely, the documents of deed of personal guarantee and by drawing attention to some of the clauses contained in the said deed, has submitted categorically that the said personal guarantee is continuing guarantee and simply because at subsequent stage some guarantors has expressed inability to continue, the same would not disturb the Bank and put the Bank in uncleared stage. Mr. Soparkar, learned Senior Advocate has drawn attention to a deed of Page 12 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022 C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021 guarantee reflecting on page 141 and by referring to the column which is contained on page 143 has drawn attention to page 3, 8, 9, 11, 14, 15, 18 and 20 and thereby, has submitted that conjoint reading of these clauses and deed of guarantee is clearly suggesting that this guarantee is continuing, it has clear nexus to the original credit facility and such continuing guarantee will not be evaporated in view of the effect of the clauses. Mr. Soparkar, learned Senior Advocate has submitted that even in this kind of clauses, statutory provisions contained under Section 133 of the Contract Act, will have also no adverse effect on the Bank, particularly, when there is a waiver on the part of the guarantors and as such, has submitted that there is a clear misconception on the part of the officers of the respondent - Bank who led to initiate an action which is assailed in the present proceedings. Mr. Soparkar, learned Senior Advocate to strengthen his submissions on this issue of guarantee has relied upon the decision delivered by the Apex Court in the case of H.R. Basavaraj (Dead) by His Lrs., and Anr., v. Canara Bank & Ors., reported in (2010) 12 SCC 458 and after drawing attention to the observations made in para 12, 13, 14 and 15 has canvassed submission that the Bank is under misconception that simply because, few of the guarantors have requested not to continue guarantee. The law is absolutely clear on the issue and hence a conjoint effect of clauses contained in the deed of guarantee coupled with the proposition of law laid down by the Apex Court on the issue as stated above is the reason which has been put-forth by the Bank to initiate action against the petitioner - Company has no legs to stand and in substance is merely reflecting an arbitrary exercise of power,which violates Article 14 of the Constitution of India and as such, this Court is having ample power to strike down the action which is initiated.
Page 13 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021 4.4. Mr. Soparkar, learned Senior Advocate has further submitted that it is absolutely not in dispute that the account of the Company has become irregular or NPA and before taking action against the petitioner, not a single default has taken place in scheduled repayment and on the contrary, substantial amount is in credit and have been repaid. Thus, the Bank ought to have seen this conduct of the petitioner, which clearly indicates the bona fide efforts of the petitioner to keep interest of the Bank intact. It has been submitted that to take abrupt action and putting the petitioner in such a precarious position practically seizing the account and putting the business at grinding halt is not only unjust and arbitrary, but a clear unreasonable exercise of power. It has been submitted that to see that the Banks apprehension may not become genuine since even the comfort letter has also been given to the Bank clearly indicating that the Bank would not be at jeopardy. It has been further submitted that in hot and hurried manner, the respondent - Banks have chosen to initiate proceedings against the petitioner - Bank as if, the petitioner is robust defaulter and is not in a position to meet with the liability. In fact, the averments which are made in the petition indicating the strength of the petitioner - Company and his valuable business, have not been considered and practically not in dispute at all and as such, if reliefs sought is not granted, this valuable plant of such a significance will virtually irreversibly close down, not only there will be a damage to the plant for want of production activity, but even more than 220 families would be thrown in the jaws of dearness and this is simply on mere apprehension that personal guarantee is being withdrawn by some of the guarantors. But bank has not visualized that the said step, even if more than adequate safe guard is already available four times more than alleged liability and, as such, the Bank is acting absolutely in unfair manner with the petitioner and, as such, Page 14 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022 C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021 some urgent orders be passed directing the respondent - Bank to reconsider and restructure the account in the best interest of the concern. It is submitted that by virtue of the impugned action from April 2021, huge plant is unworkable and if this situation will continue further, serious implications will be there, not only on the image of the petitioner - Company but, not in the interest of the trading a business in the Country which is providing to customers abroad as stated and reiterated by the learned Senior Advocate that since this kind of Company is the only major Company dealing with the product of sebacic acid and is the largest plant in the Country which is top 10 in the world. If the whims of the authority are to be allowed to be operated further, the image which has already been built up would be tarnished which has a far reaching consequence and, therefore, irrespective of any issue, it is expected from a Bank not to act as a power charged authority and to see that some workable formula be made available, which can be reasonably mitigated by the Company as the bona fides of the Company are absolutely clear and the apprehensions voiced out by the Bank have no legs to stand. Hence, under the circumstances, a request is made not to allow the Bank to act in such a cavalier manner. Ultimately, after referring to the overall circumstances from the documents on record, a request is made by Mr. Soparkar, learned Senior Advocate that the pending proceedings inter se between the Directors and NCLT or the proceedings which have been initiated by the Bank before Debts Revenue Tribunal will not be prejudically affect, if the Bank will consider the case in a pragmatic and positive manner. Those cases are always without prejudice to the stand of the petitioner and as such, the reliefs prayed for deserve to be granted.
4.5. At this juncture, Mr. Soparkar, learned Senior Advocate has Page 15 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022 C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021 also placed reliance on the issue of principle of estopple decided by the Apex Court in the case of Gujarat State Financial Corporation v. M/s. Lotus Hotels Pvt. Ltd., reported in (1983) 3 SCC 379 and by referring to para 9, a request is made that the Bank be stopped from taking such unreasonable and arbitrary stand by encircling the circumstances from the record and the averments. Mr. Soparkar, learned Senior Advocate has submitted that powers under Article 226 of the Constitution of India are not so circumscribed that the Court cannot intervene to the action which is apparently arbitrary, unreasonable and cavalier in nature. Hence, requested the Court to grant the reliefs as prayed for. At this stage, Mr. Soparkar, learned Senior Advocate has submitted that though on 27.05.2021, the petitioner had some suggestion about approaching the Bank with some opening of another account, nor received the sale proceeds from the exports, but then on account of paucity of time and on account of the fact that the Bank has put the petitioner Company at grinding halt from 17.04.2021 the said opening of account could not be possible. Hence, in true letter and spirit, the respondent - Bank is required to consider the grievance of the petitioner in true sense without being biased on the issue of guarantee. The stand of the respondent - Bank in overall, if to be looked into the only trivial issue is that personal guarantee is not being made available to the petitioner - Company as against this, Mr. Soparkar, learned Senior Advocate on instructions has stated that primary and collateral guarantees and securities which are already provided, the same would stand as it is and the Banks interest will not be at jeopardize in any form. On the contrary, the petitioner - Company is ready and willing to file an undertaking before the Bank that they will not put the Banks interest at jeopardy.
Page 16 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021 4.6. Mr. Soparkar, learned Senior Advocate has then submitted that during the pendency of this petition, a decision is taken by the respondent - Bank of rejecting the request/representation of the petitioner is also revolving at main issue, about continuance of the guarantee. In substance, otherwise, there was neither any default in past by the petitioner in repayment nor the account has become NPA, nor the securities have been lapsed in any form, except few of the guarantors who on account of some enforced circumstance has sought to keep disturbance to the petitioner - Company. Mr. Soparkar, learned Senior Advocate has submitted that this is a fit case in which, no unreasonable stand deserves to be taken by the respondent - Bank. Hence, the decision taken by the respondent - Bank placed on record dated 08.06.2021 is required to be reconsidered.
4.7. The tenor of the said decision on proposal of the petitioner - Company is revolving around the provisions of Section 133 of the Contract Act and has voiced out apprehension that without consent of the guarantors, the Bank will not be able to take any legal recourse against the guarantors. When that be the situation, it is difficult for the petitioner - Company to sustain such kind of unreasonable stand of the Bank. Hence, a request is made to exercise the jurisdiction by granting some relief even in moulded form or with some appropriate conditions.
4.8. Mr. Soparkar, learned Senior Advocate has submitted that freezing of CC account has got severe impact on the business of the petitioner - Company and if such facility is not being provided or continued, the process of manufacturing and securing of raw material and to produce finish product and to export it, will severely affect Page 17 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022 C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021 and as such, testing action of respondent - Bank from every aspect, it is not possible to be digested for bank has acted reasonably and non arbitrary way. Hence, appropriate order be passed in the interest of justice. No other submissions have been made.
5. As against this, Mr. Pranav Desai, learned advocate appearing on behalf of the respondent -Bank has strenuously opposed to the petition and the stand taken by Mr, Soparkar, learned Senior Advocate for the petitioner. Learned advocate Mr. Desai, has vehemently submitted that the Bank has absolute power to deal with its own account on the basis of its viability and such commercial decision which is being taken by the Bank may not be the subject matter of judicial review under the normal circumstance. It has been submitted that the High Court has no jurisdiction to entertain the petition in the present form, where the Bank has seriously apprehended that since the guarantors backed out that the Bank could be at risk and as such, no Court may intervene in such kind of commercial decision which is taken in the interest of the Bank, because the Bank is ultimately dealing with the public money and as such, remotely, whenever there is found that interest of the public money will be at jeopardy, Bank is empowered to take any recourse permissible and since that step has been taken, it is outside the purview of the judicial review and hence, the petition deserves to be dismissed and not entertainable.
5.1. Learned advocate Mr. Desai has further submitted that it is not the case that abrupt action is taken by the Bank. It is only after giving full accommodation and ample opportunity time and again having been given only thereafter, the impugned action is taken especially when the Bank found clearly that there is a serious apprehension that Page 18 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022 C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021 the debt could be without any security. Hence, such decision may not be interfered with in any form. Learned advocate Mr. Desai has further submitted that to examine the validity of the guarantee, is normally outside the purview of the High Court's jurisdiction and, therefore, the learned advocate for the petitioner cannot insists for interpreting the clauses contained in deed of guarantee as per his wish. Learned advocate Mr. Desai has vehemently contended that this matter was argued before the Court time and again and on every hearing issue related to guarantee was the subject matter of controversy and that is the reason why the previous learned advocate appearing for the petitioner has conceded to the fact and invited an order dated 27.05.2021 and as such, now it is not open for the petitioner to desists from such proposal which has been given by the petitioner themselves after extensive hearing. It has been submitted that though an opportunity was given neither any account is opened up so as to facilitate the sale proceeds to exports, but even no other workable formality has been worked out and, therefore, on the contrary this conduct on the part of the petitioner is clearly raising suspicion and rather strengthening the apprehension which has been voiced out on the issue of continuance of the guarantee.
5.2. Learned advocate Mr. Desai has submitted that a detailed affidavit-in-reply is filed objecting clearly that individual opportunities have been given to the Bank, more than one alternatives have been given to the petitioner indicating substantiating of guarantee as well, but it is the petitioner - Company who for the reasons best known to them is not accepting any of the proposal which is being made by the respondent - bank to see that the account is properly taken care of by them and the Company can survive. A business having been at grinding halt is not on account of Page 19 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022 C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021 the action by the Bank, but it is on account of their mismanagement and their inter-se conflict and as such, the Bank may not be held responsible especially, when enough opportunities have been given to the petitioner - Company. It is submitted that if the amount payable by the petitioner - Company is not supported by any guarantee, then it is not open for the respondent - Bank to put public money in danger and that is the reason why conscious decision is taken by the respondent - Bank in not allowing the proposal which has been made by the petitioner - Company.
5.3. Learned advocate Mr. Desai has further contended that it is the policy decision of the respondent - Bank not to consider the grievance of the petitioner in the largest interest of the public money and such policy decision in absence of any arbitrariness may not be disturbed in view of the settled proposition of law. It is ill-founded on the part of the petitioner to go on agitating that the Bank's action is arbitrary or unreasonable, But, detailed affidavit-in-reply if to be looked into, and the chronology of events to be examined, the action initiated by the Bank may not be said to be in any form unreasonable or arbitrary and there is no mala fide intention of the part of the respondent - Bank to place the petitioner in any precarious situation. The Bank is quite conscious about the fact that the petitioner - Company is dealing with the product which is of national importance and significant one and that is the reason that facilities have been provided uptill now. But when the petitioner's guarantors are not inclined to continue with their guarantee, no fault can be found of the respondent - Bank.
5.4. Learned advocate Mr. Desai has submitted that it is not that no choice is given or no alternative is given to the petitioner. The Bank Page 20 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022 C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021 has given more than one alternative which can be availed by them, but deliberately for some unforeseen reasons the petitioner - Company has chosen not to adopt any of the suggestions of the respondent - Bank and now insisting the Court that action of the Bank is unjust and arbitrary. According to learned advocate Mr. Desai, on the contrary, the circumstances which have been projected by the petitioner - Company themselves which has led the Bank to file suit against the petitioner Company. It is always open for the petitioner - Company to make appropriate application in the pending proceedings, but certainly, no parallel action be invoked in extra ordinary jurisdiction. By referring to few of the averments of the further affidavit-in-reply, a contention is raised that more than enough accommodation is given to the petitioner, it is only at later stage, when it has been found that the guarantors are not inclined to continue with their guarantee, the Bank somehow has to act promptly and to initiate action to save the interest of the public money and, therefore, in no circumstance the action can be said to be arbitrary or ill founded in any circumstances. By referring to various documents attached to the petition compilation, and after referring to several exchange of correspondence, a contention is raised that the Bank has never acted at whims of officers, on the contrary have given enough accommodation to the petitioner to survive its force. It is only when the petitioner themselves have invited such kind of circumstance which has led the Bank to initiate steps. By referring to page 100 and 104, a contention is raised that despite opportunities having been given, nothing has been processed by the petitioner - Company to keep the interest survive of the respondent - Bank. Hence, no order be passed of any nature in favour of the petitioner.
5.5. Learned advocate Mr. Desai has submitted that in a situation Page 21 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022 C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021 like this, it is not open for the petitioner - Company to seek writ of mandamus, especially, when they themselves have not obeyed their own stand which is clearly reflecting even in previous order. It is not that the Bank is acting in an unfair manner with the petitioner. According to learned advocate Mr. Desai though time limit was over in March, 2021, this situation of accommodating the petitioner continued even upto 17.04.2021 and only at last resort when Bank was running against the issue of limitation, suit was required to be filed and, therefore, when the suit itself is pending before the DRT, such kind of grievance can also be permissible for the petitioner to carry out. It has been submitted that no doubt the concept of continuing the guarantee is self explanatory and clear, but the said issue of continuance of guarantee has a direct nexus with original amount for which deed of guarantee was executed and the same cannot be for any former liability or possible to such new outstanding amount in question and, therefore, irrespective of the concept of continuing guarantee, if any arrangement is taking place automatically that right of Section 133 of the Contract Act, will come into play and, therefore, the submissions made by Mr. Soparkar, learned Senior Advocate, are not inspiring any confidence and on the contrary, it appears that systematic design might have been made probably on account of the fact that there is a pending controversy inter se between the present management and the original guarantors and the same is pending before the National Company Tribunal as well (NCLT). Hence, under this set of peculiar circumstance, no writ of mandamus is available to the petitioner. It is not open for the petitioner to contend remotely that in a high handed manner the action is taken by the respondent-Bank, particularly, when upto the stage of filing of suit before the DRT for the opportunities having been given to the petitioner, it is the petitioner - Company itself who Page 22 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022 C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021 has not availed such accommodation and has not offered any guarantee in view of the alternatives which have been submitted by the Bank and this disobedience is reflecting in previous order dated 27.05.2021. By referring to certain averments from the affidavit-in- reply filed by the Central Bank of India attached to the petition compilation on page 269, preliminary objection has also been raised about the maintainability of the petition in the present form. Hence keeping in view the propositions which have been mentioned in the said affidavit-in-reply propounded by the Apex Court, no relief deserves to be granted. Ultimately the CC limit has also already been expired long back on March, 2021 there is hardly any scope available for the petitioner to seek any relief related to such kind of commercial decision taken in best interest of the public money and cannot be allowed or interfered with in exercise of extra ordinary jurisdiction, especially, when the same is not visible as arbitrary and capricious in any form. The concept on writ of mandamus is well defined by series of decision which need not be cited before the Court. Hence a request is made to dismiss the petition.
5.6. Learned advocate Mr. Desai has referred to several documents which are attached to justify that there is no arbitrariness shown by the respondent Bank hence, the petition is outside the purview of judicial review. Accordingly, has requested the Court to dismiss the petition. A further affidavit has also been tried to be emphasized by learned advocate Mr. Desai and ultimately contended that if any relief is granted to the petitioner even by moulding the same, it may not be in the interest of the public money. Hence, by taking into consideration the overall circumstances, a request is made to dismiss the petition.
Page 23 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021 5.7. At last after extensively arguing for quite some time, learned advocate Mr. Desai has referred to ultimately a decision which has been taken against the petitioner - Company on the proposal which has been forwarded. It has been contended that this decision has been taken after full application of mind, after considering the every aspect of controversy in question and the decision is a well reasoned decision and as such, the apprehension which has been reflected by the respondent - Bank cannot be substituted in exercise of extra ordinary jurisdiction. There are several issues about disputed question of facts and, therefore, also the petition does not deserves to be entertained, According to learned advocate Mr. Desai, the decision of the Bank on proposal submitted by the petitioner is self explanatory decision and the same cannot be interfered with. Hence requested to dismiss the petition at the outset.
5.8. Learned advocate Mr. Desai has then submitted the scope of judicial review and has clearly requested by submitting that this commercial decision is outside the purview of the judicial review in any form and even if it may be found to be arbitrary for the petitioner even then, the High Court may not substitute its view, in view of the aforesaid peculiar background of fact. Hence, the petition is meritless, is aimed at buying away time and made an attempt to seek writ of mandamus upon the respondent - Bank by furnishing credit facility in any other form. This compulsion cannot be made upon the respondent - Bank on multiple reasons which have been stated herein-above. That being so, the petition deserves to be dismissed.
5.9. Learned advocate Mr. Desai has conveyed and contended that there are several decisions on the issue which are cited by the learned advocate for the petitioner since the documents are self explanatory Page 24 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022 C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021 and the action of the bank is not arbitrary, such decision need not be thrust upon the Court. Hence, in view of the aforesaid background of fact, the petition be dismissed with no relief in any form.
6. Having heard the learned advocates appearing for the respective parties and having considered the overall submission, few circumstances which are emerging from the record are not possible to be ignored by the Court.
6.1. First of all it appears that on previous extensive hearing, it is the petitioner - Company who had shown readiness to the State Bank of India for opening another account in order to receive sale proceeds from the exports made by the petitioner so that the outstanding payment may be made by the petitioner - Company to run the business till the proposal of the Bank being considered. Further, without prejudice to the arrangement which was made as reflecting in an order dated 27.05.2021, is also appeared to have not been acted upon by the petitioner as stated by learned advocate Mr. Desai, which is not in dispute. The readiness which was shown by the petitioner to deposit an amount of Rs.50 lacs and the further process which was to be carried out has also not been adhered to and as such, since the petitioner - Company though have invited such course of action has not protest any further and now has come forward with a request to grant the relief as prayed for in its absolute form.
6.2. Pursuant to the proposal, the Bank appears to have considered the proposal of the petitioner - Company and after considering every material, it appears that a detailed reasoned decision is taken by the Bank and looking at such a reasoned order, this Court is not inclined to entertain the petition.
Page 25 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021 6.3. It may be that the petitioner may found non acceptance of proposal by the Bank is arbitrary or unreasonable, but then, the Bank when dealing with the public money is taking all course of action in its commercial decision and it is not for this Court to review the situation and as the Bank is the best person to see the viability of its account and its prospects and taking a suitable commercial decision it appears to this Court that pursuant to the order passed by this Court on 27.05.2021, the Bank has given a conscious thought to the proposal as it reflects from the decision making process and having found that the proposal is not worth acceptable, a decision is taken which has been communicated to the petitioner. Since a detailed reasoned decision is taken and cogent justification is given, the Court would like to reproduce the same hereunder for immediate perusal :-
"The Hon'ble High Court vide its order dated 27.05.2021 has directed the Respondent Bank to consider the following proposal of the Petitioner Company:
"25. Without prejudice to the rights and contentions of the petitioner, I say and submit that as an interim arrangement, the petitioner is ready and willing to pay/deposit an amount of Rs.50 Lakhs with this Hon'ble Court or with the Respondent No.1 Bank. This deposit would be in addition to the undertaking by the petitioner to remit 10% from all the export proceeds until the CC Limit is reduced by an amount of Rs. 3 crores. I say that to enable the Bank to reduce the working capital by Rs. 3 crores, the Bank may also consider to invoke the pledge of shares offered by the promoter shareholders which are worth more than Rs. 1.98 crores. I say and submit that during this entire period, the petitioner additionally undertake to continue to service the CC Account. This arrangement can be made for a period of 3-6 months during which period the strategic investor may negotiate fresh/renewed terms with the Bank and work out/determine a wholesome Page 26 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022 C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021 solution to the problem."
The aforesaid proposal of the Petitioner is considered by the Bank in view of the relevant facts and circumstances. After considering all aspects of the proposal, we are unable to accept the proposal of the Petitioner Company on the following grounds:
1. The Bank has sanctioned/continued the limits of credit facilities and conveyed to the company vide. sanction letter letter no. CBA/AMT-V/2020-21/523 dated 09.09.2020. The terms and conditions, though agreed and accepted by the company, have not been complied with, by the company. All the guarantors have not accepted the terms and conditions of the sanction letter and complied with requirement of revival of guarantee. The period of sanction conveyed to the company has expired on March 9", 2021 as per the terms of the sanction letter.
2. The Bank is unable to accept the proposal of the Company to deposit the amount of Rs. 50 lakhs since the credit limits have already expired and the account is recalled. The Bank has filed Original Application No. 282/2021 before the learned DRT-II on 23.04.2021, prior to filing of the present petition.
The liability of the Company and the guarantors have been crystalized on filing of the Original Application No. 282/2021 before the learned DRT-II. It is important to note that in terms of Section 133 of the Contract Act, any variance made in the contract between the principal debtor and the creditor without the surety's consent will discharge the surety. Hence, acceptance of any proposal of the Petitioner Company, without consent of the guarantor will adversely affect the legal recourse of the Bank against the guarantors.
3. The Bank has extended more than sufficient time to the company to comply with the terms and conditions of the sanction. However, the company failed to get the terms and conditions of the sanction duly accepted by the guarantors and also arrange to execute revival letters by the guarantors in spite of various reminders vide e-mails, letters and meetings held 21.05.20,30.06.20,06.08.20, 14.08.20,25.08.20. Even in the consortium meeting dated 10.07.2020, the Company promised that the revival letter will be executed by the guarantors by Page 27 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022 C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021 31.07.2020, However, one of the guarantor Shri. Tushar Patel vide e-mail dated 02.09.2020 informed the Bank about his unwillingness to execute the revival letter.
4. The Bank has also provided option for suitable substitution / replacement of guarantees to company in all the meetings, but the company failed to comply with the same at the relevant period.
5. The petitioner Company has been reiterating the fact that they will bring in the strategic investor and settle the bank dues on previous several occasions. This fact was recorded in the minutes of consortium meetings held on 10.07.2020, 28.12.2020 and 08.04.2021. The Company also vide. email dated 05.01.2021 & 12.012021 assured that the entire settlement of bank dues would take place on of before 31.03.2021. However, the company failed to comply to their own statements.
6. Lastly, in the consortium meetingheld on 08.04.2021, the Bank has also given opportunity to the company to keep as security in the form of FD, an equivalent amount to the guarantor's net worth, out of the up fornt primary funds brought in by the strategic investor. However, the company again failed to utilize the said opportunity also.
'7. The petitioner Company has failed miserably on all previous occasions to honour their commitments. The Bank has given ample time and opportunity to the company, but the petitioner Company has always kept the bank in dark and attempt to misguide the bank. The company continuously failed to comply with their promises till the date of recall of the account.
8. The Bank is also informed that a serious legal dispute is going on between original promoters of the company and present management. One of the promoter, Shri Tushar Patel has filed petition against the company before Honourable NCLT vide C.P(I.B) No. 52/ NCLT/AHM/2020.
9. Since the company failed to honour its commitments on continuous basis and the time period for credit facilities have lapsed and the guarantors failed to execute the necessary documents, the Bank has left with no other option but to initiate legal proceedings for recovery of its due. The validity of Page 28 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022 C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021 the last revival was to expire on 06.05.2021 and the Bank was forced to recall the account and file suit before the DRT vide original application 282/2021 dated 23.04.2021.
10. The proposal of the Petitioner Company to invoke the pledge of shares offered by the promoter shareholders is also not feasible at this juncture as the Bank has already filed Original Application before the Ld. DRT and the sale of the securities charged to the Bank shall be conducted only with the approval/order of the Ld. DRT. Further the proposal is not accompanied by consent of all the ledgor of the shares, agreeing and accepting that those shares should be immediately sold to satisfy the Bank's dues. The proposal is submitted without the consent and acceptance of the pledgor of the shares. Further, the shares cannot be continued to be valued at Rs. 1.98 Cr. as it is privately held company and the shares are not tradable in the exchange. Therefore, there should be a proposal of purchase of those of shares by members of management with the consent and approval by pledgor, which is not indicated in the proposal.
11. It is important to mention that as per the request of the company received vide. e-mail dated 24.04.2021, Bank has provided all support and co-operation in allowing the operation of the account to make need based urgent payment till the filing of the suit before the Ld. DRT. Since, Bank has already been filled Original Application before the Ld. DRT = II, Ahmedabad vide. OA no. 282/2021 on 23.04.2021, no further transactions were allowed in the account. The copy of the Original Applications along with its enclosures were already served on the company .The hearing of the Original Application before Ld. DRT-II was posted on 02.06.2021, however, it is informed that no one has appeared on behalf of Respondent no. 1. Now, the next hearing of the OA is fixed on 12-08-2021.
In the light of the aforesaid facts and circumstances, the Bank is unable to accept the proposal."
6.4. It further appears to this Court that, may be that production of the Company is of vital importance, but on account of the situation which has been erupted it cannot be said that the Bank has to ignore Page 29 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022 C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021 the apprehension which has been voiced out simply because the Company is dealing with such kind of product. The minutes of the meeting which took place between the Bank and the petitioner on 09.09.2020, reflecting on page 60 is also clearly reflecting that deliberation also took place with regard to the continuance of the guarantee of the present guarantors and it was clearly informed to the Company that " Company to ensure the continuance of guarantee till the tenor of the loan else arrange for substitution of guarantee" and at that time, also exists conflict between the Company and the shareholders, which is the subject matter of some proceedings before NCLT and have also been taken into consideration. It can't be unnoticed that even the revised sanctioned letter also came to be issued on 09.09.2020. The terms contained therein were also bound to be observed by the Company. So from the overall reading of the material on record and the communication exchanged between the Bank and the petitioner - Company, it appears that this issue related to the guarantors and its substitution was time and again the subject matter of the controversy which was deliberated and after having found not viable, the Bank took conscious decision and as, such, it cannot be said that suddenly very abrupt action is taken which can be said to be arbitrary. From the overall reading it appears that enough opportunity is given to the petitioner - Company, due consideration had been given to the various issues which have been discussed, this Court is unable to come to the conclusion that the Bank has acted in an unreasonable or arbitrary manner. When the Company is inclined to continue with the commercial activity with the aid and financial assistance of the Bank, it would be obligatory on the part of the Company to observe the terms on which such facilities are being provided. Even in post consortium meeting on 28.12.2020, the Company on 04.01.2021 with trailing mails has indicated that our Page 30 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022 C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021 fund is closely working with majority foreign investors and parameters to attract strategic investor and thereby, entire settlement of Bank facilitate can take place on or before 31.03.2021, mainly to overcome his primary guarantee and collateral issues and as such, it was reiterated and assured to the Bank that uptill 31.03.2021 an amicable solution is likely to take lace. So, it is not that the Bank has not waited, the Bank has given enough time to the petitioner - Company to take all possible measures. Hence, it is not justified on the part of the petitioner to brand a decision as arbitrary or capricious in any form. It would also be bound and rather duty of the Bank to protect the public funds and when that has been done by them, this Court under self imposed limited jurisdiction is not inclined to substitute any view in place of view which has been taken by the Bank in its best interest.
7. Additionally, the Court from the record it is found that there are proceedings pending before the NCLT and the next listing date of the said proceedings is 29.06.2021 reflecting on page 233, which clearly reflects inter-se conflict which is not likely to so easily overcome and this aspect is also appears to have been considered by the Bank and as such, the decision making process arrived at by the Bank cannot be said to be unreasonable in any form. In any case, now it appears that the proceedings are already initiated before the DRT and it appears to have been numbered as Original Application No. 282 of 2021 and as such also, it is not possible for this Court to examine the issue any further. About the continuing guarantee or about the applicability of the provisions related to continuing guarantee as well as revocation of the continuing guarantee in view of Section 129 of the Contract Act, 1872 onward, this Court would not like to much dwell upon it in view of the aforesaid peculiar Page 31 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022 C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021 background of facts, no reliefs deserve to be considered and hence, no case is made out by the petitioner to call for any interference.
8. In the background of the aforesaid circumstances, which are prevailing on record, the decisions which have been cited by the learned advocate for the petitioner - Company on the issue of continuing guarantee as well as on the issue of promissory estopple, the background of facts were totally different and as such, this Court is not inclined to apply the same since facts are totally different as appearing from the record. Had it been the case that pursuant to the order dated 27.05.2021, if the petitioner would have taken any remote step, probably bona fide could have been ascertained by the Court, but despite the said order having been invited, the petitioner has not stepped further, which is not in dispute and as such, in the background of aforesaid facts, this Court is not in a position to give any equitable consideration to the petitioner. So from the conjoin reading of the aforesaid material on record, the submissions made by the learned advocate for the petitioner - Company are not impressed upon.
8.1. In addition thereto, undisputedly the CC limit has already expired way back in March, 2021, despite repeated opportunities having been given to resolve the controversy, the petitioner - Company has not forwarded an inch further and hence, in view of this background of peculiar nature, issuance of writ of mandamus is also impossible.
9. At this stage looking to the scope of judicial review spelt out by catena of decisions delivered by Hon'ble Apex Court, the scope appears to be circumscribed and when the decision making process of Page 32 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022 C/SCA/7158/2021 CAV ORDER DATED: 25/06/2021 the Bank is found to be not irregular or illegal or arbitrary in any form this Court is unable to exercise the discretion.
10. Further, while parting with the present order, since the petitioner - Company has approached before the Court with assertion that the Company is engaged in manufacturing and production of sebacic acid and the plant is largest in the country and ranked amongst top ten in the world, it would be open for the petitioner - company to again approach the Bank to offer some viable solution which may protect the interest of the Bank as well and it is hoped that the Bank may consider the same looking to the structure of the Company, particularly, when 220 employees and families are surviving on the petitioner - Company. As projected by the learned counsel for the petitioner that as against the outstanding amount as indicated in para 2.5, there are huge securities primary and collateral in form are available with the Bank as indicated in para 2.6, the Bank may reconsider the same without being influenced by present order of this Court. But it is made clear that this Court has not expressed any opinion on such and it is independently open and within the domain of the respondent - Bank to take suitable decision in the interest of justice.
11. In view of the aforesaid discussion, no case is made out. Accordingly, the petition stands dismissed with no order as to costs.
(ASHUTOSH J. SHASTRI, J) phalguni Page 33 of 33 Downloaded on : Sat Jan 15 08:33:25 IST 2022