Ess Ess Exim Private Limited And Ors. vs IFCI Limited

S.N.H. Zaidi, J

This appeal has been directed against the order of DRT-I, Delhi dismissing I.A. No. 483 field by the defendant/appellant Rajiv Goyal in O.A. No. 52/2012 for restraining the applicant/respondent from selling the share of M/s. Surya Pharmaceuticals Ltd. (SPL) pledged with it was collateral security. The factual matrix of the case, in brief, is that the appellant company had obtained a corporate loan of Rs. 50 crores from the respondent FI and pledged the shares of SPL wroth Rs. 100 crores as collateral security with it besides furnishing personal security of the guarantors and executing corporate loan agreement and other security documents on 22.0.2011. As the borrower company neglected to maintain the Security cover and default in repayment of the principal and interest amount, the respondent recalled the loan vide letter dated 16.5.2012 and issued a notice to the borrower company calling upon it to pay Rs. 49,57,00,312/- and thereafter filed O.A. No. 53/2012 for the recovery of Rs. 49,20,24,818/- after making the adjustment of the sale proceeds of certain pledged shares. During the pendency of the O.A., the defendant/appellants filed application I.A., No. 483/2012 for restraining the respondent from selling further pledged shares of SPL. The application was contested by the respondent and the learned Tribunal below has dismissed it by the order impugned dated 16.8.2012, which has been assailed by the defendants in the instant appeal.

I have heard Mr. Rajiv Bansal, the learned counsel appearing for the appellants and Mr. Dinkar Singh, the learned counsel for the respondent and perused the record.

Mr. Bansal has contended that the brand and image of SPL was badly tarnished by indiscriminate selling of its pledge shares by the respondent. He has pointed out that SPL, which was the flagship company of defendant/appellant No. 1, had been admitted to Corporate Debt Restructuring (CDR) mechanism before the CDR Cell due to the liquidity problems faced by it on account of various external and internal factors, He further pointed out that the respondent had required the appellants, vide letter dated 25.1.2011, to pledge shares of SPL of the value of not less than 200% (two times) of the drawn amount and to furnish an irrevocable power of attorney in this favour to sell/dispose of the shares goes down to 20% for sanctioning the loan and despite the fact that the borrower/appellants had accordingly pledged the shares of SPL wroth Rs. 100 Crores as collateral security for the corporate loan of Rs. 50 crores and after executing the agreement had also furnished the irrevocable power of attorney as required, but the respondent, after selling 28,70,790 shares and adjusting the sale proceeds thereof, had wrongly issued demand notice dated 16.5.2012. He has also contended that the respondent had further sold the shares before filing the O.A. and due to indiscriminate selling of the pledged shares of the value of about Rs. 2 crores, the value of SPL share, which at the time of the pledge was Rs. 25.80 per share, as per the National Stock Exchanges (NSE), and Rs. 26/- per share, as per the Bombay Stock Exchange (BSE), had fallen down to Rs. 2.20 per share. It was also contended by him that since the share value of SPL was letter picking up and there was likelihood of its further appreciation, an application (I.A. 483/2012) was filed for restraining the respondent from further selling the pledged share, but the learned Tribunal below has wrongly dismissed that application without properly appreciating the circumstances of the case.

Mr. Dinakar Singh has, per contra, contended that since the defendant/appellants had willfully default in making the repayment of the loan amount despite having sufficient resources, as such, according to the RBI guidelines, they were not entitled to any relief. He has pointed out that the defendant/appellants had admitted the factum of default in repayment of the loan amount as well as their liability towards the applicant/respondent in their pleadings. He has further contended that as the appellant company was neither a group company of SPL nor it was a party to the CDR mechanism, therefore, it was not bound by the orders of the respondent was not going to be benefited. Mr. Singh also pointed out that as the value of the SPL shares was depreciated, the appellants were asked to furnish the same despite the fact that the share value of SPL had come down to Rs. 2 per share on 19.11.2012 as per the NSE quote. According to him, the respondent had no concern with SPL and the borrowers had only pledged its shares as a collateral security. He has also contended that the share value of SPL had not gone down because of the sale of its pledged shares by the respondent, but it had depreciated due to its own bad performance as SPL was heavily indebted to the tune of about Rs. 1000 crores owing to the loans taken by it from several creditors and there was no likelihood of any appreciation in the value of its shares. He has further contended that, as per the terms of the loan agreement, the appellants were required to repay the loan in monthly instalments after the moratorium period of one year, but all the postdated cheques given by the appellants towards the instalments were dishonored and an amount of more than Rs. 9.77 crores of the defaulted instalments had become due on them. It was also pointed out that the pledged shares were the only security available with the respondent besides the personal guarantee of the Directors of the appellant company.

Having given my considered thoughts to the submission of the parties counsel and looking to the facts and circumstances of the case, I am of the considered view that the appellants have failed to show sufficient prima facie case for the pledged shares, as it is not disputed that the sanctioned amount of the loan was fully availed by the appellants and they had defaulted in repayment of the same. There is also nothing on record to controvert the respondent's contention that the post-dated cheques given by the appellants had admittedly given an instalment were dishonoured and an amount of more than Rs. 9 crore had become due on this count. The appellants had admittedly given an irrevocable power of attorney to the respondent to sell the pledged shares if its value of SPL had come down from Rs. 26 in January 2011 to Rs. 2/- on 19.11.2012 as per the NSE quote. The respondent was thus well within its right to sell the pledged shares to recover its dues and it had not acted against the terms of the agreement in selling those shares. In view of these circumstances, the dismissal of the application by the Tribunal below by the order impugned cannot be said to be suffering with any infirmity or illegality.

The legal authorities cited at the bar by Mr. Bansal, being on different facts and circumstances have no application to the case at hand. On the basis of the foregoing discussion, this appeal being devoid of any force is liable to be dismissed and is dismissed accordingly with cost. Interim order stands vacated.

Copy of the order be furnished to the parties as per law.