Icici Bank Ltd vs Gwalior Bypass Project Ltd. And Ors

P.K. Bhasin, J

The appellant Bank had prayed before the DRT for issuance of a recovery certificate against respondent Nos. 1 to 3 herein in its Original Application (being O.A. No. 805/2016) filed against them and three others, against whom however no relief was being claimed, under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (now Recovery of Debts and Insolvency Act, 1993 and reference to which shall hereinafter be made as 'the Act of 1993'). That prayer was made during the pendency of the O.A. in view of admissions allegedly made by them of their liability towards the appellant Bank for a sum of Rs. 91,15,35,000/-. However, the learned Presiding Officer of the DRT has rejected that prayer only on the ground that the documents which the applicant Bank was claiming to be containing admissions of the said liability by the borrower Company, respondent No. 1 herein, namely, balance sheets of respondent No. 1 borrower Company for two years were yet to be exhibited in evidence and so could not be looked into for deciding the applicant Bank's application (being I.A. No. 931/2017) under Section 19(5-B) of the Act of 1993 read with Order 12 Rule 6 of the Code of Civil Procedure (CPC). At the outset of hearing it was accepted by the learned Counsel representing the respondents against whom interim recovery certificate was being sought by the appellant Bank as also by learned Counsel for respondent No. 4 M/s. L & T Infrastructure Finance Co. Ltd. that the only reason given by the DRT for rejecting this application of the Appellant Bank perhaps may not be sound enough but even otherwise that application was bound to be dismissed and they will demonstrate now before this Appellate Tribunal that there was no clear, unequivocal and unconditional admission of any part of the liability made by any of the respondent Nos. 1 to 3 against whom only interim recovery certificate was being sought during the pendency of the O.A. It was also submitted that the O.A. in any case was at the final stages and for no good reasons the appellant Bank is persisting for issuance of an interim recovery certificate on the basis of alleged admission of liability in their balance sheets when in fact there was no admission or acknowledgement of any liability even in those balance sheets and all that was mentioned in the balance sheets of the borrower Company was the amount of loan taken by it from the appellant Bank and the period during which it was supposed to be repaid and that could not be stated to be an admission of any kind of liability which is a sine qua non for passing of an interim recovery certificate on the basis of admissions by invoking Section 19(5-B) of the Act of 1993 and the principles of Order 12 Rule 6, CPC.

Before proceeding further, the impugned order dated 7.10.2017 of the learned DRT whereby the appellant Bank's prayer for issuance of an interim recovery certificate on the basis of admission of liability by the borrower Company may be noticed. It reads as under:

"This is an application bearing I.A. No. 931 of 2017 filed by the applicant Bank under Section 19(5-B) of the Recovery of Debts and Bankruptcy Act, 1993 and Order 12 Rule 6 of the Code of Civil Procedure, 1908 for issuance of Recovery Certificate.

Succinctly, the case of the applicant Bank for purpose of filing of this application is as follows:

The applicant Bank has filed an Original Application No. 805 of 2016 for recovery of Rs. 98,61,22,876/- from the defendants jointly and severally besides interest from 1st October, 2016 with monthly rests. It is submitted that the liability has been time and again acknowledged and admitted by defendant No. 1 in its communications including letter dated July 30, 2016 filed with the O.A., besides in the audited Balance Sheet for the financial year ending 31st March, 2015 and 31st March, 2016 as approved and signed on May 22, 2015 and May 25, 2016 respectively. Furthermore, the said Balance Sheet also proves that the said loan/credit facilities are secured by the personal guarantee of Mr. H.S. Bharana. It is further submitted that defendant No. 1 has specifically admitted the principle outstanding of the lenders including the applicant Bank, but interest component on these credit facilities has not been specifically captured lender wise in the Balance Sheet reserving its right to claim of balance amount from the defendants in the ongoing Original Application. As per the applicant Bank, defendant No. 1 in its Balance Sheet for the year 2015 has admitted its liability to the tune of Rs. 91,15,35,000 payable to it in the next 12 months as per the original repayment schedule and balance principal to be paid in the subsequent period. Similarly, in the Balance Sheet for the year 2016, defendant No. 1 has admitted its liability towards the applicant Bank to the tune of Rs. 90,35,86,201/- payable to it in the next 12 months as per the original repayment schedule and balance principal to be paid in the subsequent period. The applicant Bank further submits that as per various judicial pronouncements/judgments of the Hon'ble Apex Court and various Hon'ble High Courts, it is no longer res Integra that where admissions are made or can be inferred from the pleadings or documents or even otherwise, the Courts are empowered to make an order or give judgment having regard to the admissions made, invoking the mandatory provisions of Order 12 Rule 6, CPC and it is not necessary to wait for determination of other disputed matters. According to the applicant Bank, in the facts and circumstances of the present case, there are unambiguous and clear admission of liability of defendant No. 1 being borrower and defendant Nos. 2 and 3 being guarantors/pledgers/Security Providers in the documents so as to the outstanding amounts qua the various loan/credit facilities granted to defendant No. 1. Hence, this application.

In response to this application, defendant No. 1 has filed its reply that the same has been filed to mislead this Tribunal by suppressing the material facts. While taking preliminary objections, it is submitted that the present application is liable to be dismissed being not maintainable as it does not disclose any clear or unambiguous admission of debt of the part of defendant No. 1. The answering defendant No. 1 has categorically denied the contents of Para 5.27 of the O.A., wherein the applicant Bank has allegedly mentioned about admission on its part, in its Written Statement Thus, there is no unambiguous or clear admission on the part of defendant No. 1. It is further contended that the balance sheets, at this stage, cannot be looked into as the same have not yet been exhibited and unproved. It is further submitted that the contents of this application are based on false and frivolous grounds in the eyes of law. While relying on the judgment of the Hon'ble Andhra Pradesh High Court, in the matter of Vijaylakshmi v. Hari Hara Ginning and Pressing, Nandigaon, 1999 (3) ALD 624, it is contended that merely showing a debt in a balance sheet cannot, prima facie, be termed to be an acknowledgement in terms of Limitation Act. Quoting a decision of the Hon'ble Supreme Court in case of titled as S.F. Mazda v. Durgaprasad, (1962) 1 SCR 140, it is contended that before acknowledgement. The answering defendant No. 1 further submits that in view of the decision of the Hon'ble Apex Court in case S.M. Asif v. Virender Kumar Bajaj, AIR 2015 SC 3678, the power given under Order 12 Rule 6 of the Code of Civil Procedure is discretionary and cannot be claimed as a matter of right and the judgment on admission is not a matter of right and rather is a matter of discretion of Court and where the defendants have raised objections which go to the root of the case, it would not be appropriate to exercise the discretion under Order 12 Rule 6. The answering defendant No. 1 further submits that the letter dated 30th July, 2016 which pertains to reply of Demand Notice dated 14th June, 2016 cannot be considered as an acknowledgement of debt on its part. One merits, the answering defendant No. 1 has denied all the allegations made in the application and has submitted that the Balance Sheet and the letter dated 30th July, 2016 cannot be the admission on its part and, as such, the present application lacks cause of action and is liable to be dismissed. It is further submitted that an admission must be clear and unequivocal and it must be taken as a whole and it is not permissible to rely on a part of admission ignoring the other part. Furthermore, there are triable issues raised in the Written Statement filed by the answering defendant No. 1. Other contra allegations have also been denied by the answering defendant No. 1. Ultimately, a prayer has been made to dismiss the present application.

I have heard learned Counsel for both sides and have gone through the record.

Now the point for consideration is whether the applicant Bank is entitled for interim Recovery Certificate under Section 19(5-B) of the Recovery of Debts and Bankruptcy Act, 1993 and Order 12 Rule 6 of the Code of Civil Procedure, 1908 against defendant Nos. 1 to 3, as prayed for?

The contention of the applicant Bank is that it has filed an Original Application for recovery of a sum of Rs. 98,61,22,876/- with future interest @ 13.35% per annum with monthly rests as regard to the outstanding in RTL-I and @ 14.85% per annum with monthly rests are regard to the outstanding amount in RTL-II and RTL-III each. It is further contended that defendant Nos. 2 and 3 are the guarantors and there are specific, unequivocal and categorical admissions and acknowledgements made by the defendant Nos. 1 to 3 in respect of the debt of the applicant Bank in their audited balance sheet dated May 22, 2015 for the year ending 31.3.2015 and in the balance sheet for the year ending 31.3.2016 defendant No. 1 has acknowledged an amount of Rs. 90,35,86,201/- as due and payable to the applicant Bank. Furthermore, at Para 5.27 of the Original Application, it has been specifically and categorically pleaded that defendant No. 1 time and again acknowledged its liability to pay the outstanding amount to the applicant Bank in their duly audited balance sheets for the years ending 31.3.2015 and 31.3.2016. In support of his contentions, learned Counsel for the applicant Bank has relied upon the following authoritative pronouncements:

(i) Uttam Singh Duggal and Co. Ltd. v. United Bank of India and Others, VI (2000) SLT 87 : (2000) 7 SCC 120 (Hon'ble Supreme Court).

(ii) Prem Industries and Another v. State Bank of India and Others, I (1994) BC 448 (Hon'ble High Court at Delhi).

(iii) Ultramatrix System Pvt. Ltd. v. State Bank of India and Others, IV (2006) BC 57 (DRAT/DRT) (Hon'ble DRAT, Bombay).

(iv) Ambica Mills Ltd., Ahmedabad v. Commissioner of Income Tax, Gujarat, AIR 1964 Gujarat 208 (Hon'ble High Court of Gujarat).

(v) ESPN Software India (P) Ltd. v. Modi Entertainment Network Ltd., Company Petition No. 209/2004 (Hon'ble High Court at Delhi).

(vi) Sheetal Fabrics v. Coir Cushions Ltd., 120 (2005) DLT 693 (Hon'ble High Court at Delhi), and

(vii) The Motor and General Finance Limited v. Durga Builders Pvt. Ltd. and Another, (2008) ILR Delhi 1326.

The sum and substance of the abovementioned authoritative pronouncements relied upon by the learned Counsel for the applicant Bank is that decree can be passed basing on the admission made in the balance sheet of the Company.

As against the same, defendant Nos. 1 to 3 contend that the application is liable to be dismissed as there is no clear and unambiguous acknowledgement/admission of debts on their part and the original applicant Bank cannot read the pleadings in isolation and where the defendants have categorically raised triable issues which require evidence. The defendants further contend that discretion under the provision of Order 12 Rule 6, CPC must be exercised on the well established principles and the admission must be clear and unequivocal and it must be taken as a whole and it is not permissible to rely on a part of admission ignoring the other part. It is further contended that the applicant Bank relies alleged admission made in the Balance Sheets of defendant No. 1 Company and has not pointed out any alleged admission on the part of defendant Nos. 12 and 3. Defendant No. 2 has never been a Director of defendant No. 1 Company defendant No. 3 is a separate entity. The defendants have specifically denied the case of the applicant Bank in their Written Statement and there is no clear or unambiguous admission on their part and the figures mentioned in the Balance Sheets are not conclusive proof. Even the Balance Sheets, on which the applicant Bank relies upon, have not been tendered in evidence and exhibited. Thus, the Balance Sheet as on date do not stand proved by the applicant Bank and, thus, not exhibited and, as such, the same cannot be looked into for the purpose of admission in isolation of the Written Statement and whether any amount is due or not as claimed by the applicant Bank is the subject matter of trial. It is further submitted that the citation relied upon by the learned Counsel for the applicant Bank are not applicable to the facts and circumstances of the present case as in the cases of those citations besides the entries in the balance sheet, there are Board Resolutions and, as such, the citations are not applicable to the facts of the present case and there is no clear and unambiguous admission on the part of the defendants in this case. In support of his contentions, learned Counsel for the defendants has relied upon a decision in the matter of Maj. (Retd.) Sukesh Behl and Another v. Konniklijke Philips Electronics, 2015 (2) R.A.J. 552 (Del.) wherein it has been held by the Hon'ble High Court at Delhi that "Purport of Order 12 Rule 6 is to enable party to obtain speedy justice to extent of relevant admission. However, before a Court can act under Rule 6, admission must be clear, unambiguous, unconditional and unequivocal." He has further relied upon another judgment of Hon'ble High Court at Delhi in the matter of Durga Builders (P) Ltd. v. Motor and General Finance Ltd. and Another, 2014 (140) DRJ 575 (DB) wherein it has been held "The documents having been tendered in evidence without any demure by defendants, the same coming from proper custody and forming part of official record of the appellant-Corporation and being part of the claim of correspondence can be said to have been proved by P.W. 1 more so when his deposition to the effect that two letters were received from the Federation was not disputed by the defendant-Federation either by directing any cross-examination on that part of the statement or making any suggestion to the contrary indicating the defendant's case as regards the said two letters. In our opinion, the documents were proved and their contents can be read in evidence". Thus, in this reported case of Durga Builders (P) Ltd. (supra), there was exhibition of documents before passing the decree on admission.

In the instant case, on a perusal of the record, it reveals that only evidence affidavit has been filed by the original applicant Bank and the documents have not yet been exhibited. Event an alleged Balance Sheets have not yet been tendered in evidence by way of their exhibition. In these facts and circumstances, in the absence of exhibition of Balance Sheets, the same cannot be taken into consideration and no Recovery Certificate on admission can be passed and the citations relied upon by the learned Counsel for the applicant Bank, in these facts and circumstances, are not applicable to the present case. Therefore, I am of the considered opinion that it is not a fit as for issuing Recovery Certificate on admission as prayed for and the present application is liable to be dismissed.

In the result, the present application bearing LA. No. 931 of 2017 having no merit stands dismissed. No order as to costs."

The submissions which were advanced before the learned DRT by the learned Senior Counsel for the appellant herein and the borrower Company, who have argued before this Tribunal also, have been repeated here also and same set of judicial pronouncements were also cited at the time of arguments in this appeal.

It was argued by Mr. Sudhir K. Makker, learned Senior Counsel for the borrower Company that no recovery certificate could in any event be issued by the learned DRT relying upon the two balance sheets being relied upon by the appellant Bank since unlike under Order 12 Rule 6, CPC, whereunder a decree can be passed on the basis of any admission of liability made by a defendant either in the pleadings 'or otherwise' there is no such provision scope for considering any admission made 'otherwise' except in the pleadings which can be made the basis of passing a decree on admission. It was further submitted that in the written statements of none of the main defendant Nos. 1 to 3 in the O.A. who are the borrower, guarantor and hypothecator respectively, had made any clear and unequivocal admission of any liability towards the appellant Bank.

I have gone through the pleadings of the parties in the Bank's O.A., considered the oral as well as written arguments submitted on behalf of the appellant Bank as also of the respondents.

In my considered view the learned DRT did not proceed in the right direction while deciding the appellant Bank's application for issuance of a recovery certificate on the basis of alleged admission of liability by the borrower Company in its balance sheets and so arrived at a wrong conclusion that unless those balance sheets were first tendered in evidence and exhibited the same could not be looked into for any purpose and which mistake committed by the Presiding Officer has been accepted even by the learned Counsel for the respondent/defendant Nos. 1 to 4 to have crept in the impugned order. The learned Presiding Officer failed to notice that the existence of the two balance sheets of the borrower Company and its contents that the Company had taken loan from the appellant Bank, as was being claimed by it, was not a disputed fact and in fact even before this Tribunal. Mr. Makker, learned Senior Counsel for the borrower Company did not dispute the genuineness of the balance sheets in question. His submission, however, was that the balance sheets did not contain any admission of any liability and all that was recorded therein was that the Company had taken a loan from ICICI Bank which was payable in instalments last of which was to become due in the year 2025. In my view, the learned Presiding Officer ought to have considered as to what were the factual averments made by the applicant Bank (appellant herein) in the O.A. and what was the defence of the borrower, guarantor and hypothecator, defendant Nos. 1-3 respectively, in their respective written statements. Since it is a matter of pleadings of the main parties the same ought to be considered to find out if the borrower Company had admitted its liability for any amount entitling the appellant Bank for an immediate recovery certificate for some amount as claimed by the appellant Bank without waiting for final adjudication of disputed questions.

The relevant averments in the Bank's O.A. are as under:

"That at the request of the defendant No. 1 applicant Bank granted the Rupee Term Loan Facilities i.e. RTL-I, RTL-II and RTL-III with on overall limit of Rs. 915.00 million (Rupees nine hundred fifteen million only) to defendant No. 1 on 5.9,2014, 5.12.2014 and 6.1.2015 and in consideration thereto, defendant No. 1, as Borrower and defendant No. 2 as Guarantor and signed and executed loan/Guarantee/security documents on 5.9.2014, 6.9.2014, 5.12.2014, 8.12.2014, 6.1.2015 and 7.1.2015 in favour of applicant Bank. Defendant No. 3, as Hypothecator, hypothecated its current assets, as mentioned in paragraphs 5.17 of the Original Application, in favour of the applicant Bank. Defendant No. 1 duly availed the aforesaid loan facilities granted to it by the applicant Bank but neglected to maintain the regularity in repayment of the outstanding amounts and neglected to maintain the financial discipline of the aforesaid accounts. Defendant No. 1 time and again acknowledged their liability to pay the outstanding amount to the applicant Bank in their duly audited Balance Sheets including as on 31.3.2015 and 31.3.2016. Defendant No. 1 time and again acknowledged their liability to pay the outstanding amount vide various letters including letters dated 11.11.2015, 27.11.2015 and 30.7.2015 and in Joint Lenders Forum dated 11.5.2015 and 29.10.2015, but failed to do so. Applicant Bank vide various communications in several meetings including the letter dated 14.6.2016 called upon the defendants to pay the outstanding amounts and to regularize the account but the defendants failed to do so. Applicant Bank declared the account of defendant No. 1 as NPA as on 15.4.2016. Applicant Bank was forced to send a Recall Notice dated 19.8.2016 but despite receipt of the Recall Notice the defendants have failed to pay the outstanding amounts as claimed by the applicant...."

"5.18. That consequent to the sanction of the aforesaid limits to defendant No. 1 by the applicant Bank, RTL-I, RTL-II, RTL-III, accounts were opened in the name of defendant No. 1 in the usual books of accounts of the applicant Bank which were regularly kept and maintained and all entries of Debits and Credits were correctly made therein by the applicant Bank in their regular, ordinary and usual course of Banking business inasmuch as all payments by way of advances allowed to the defendants and interest accruing thereon at the contractual rate with agreed rests as also all agreed incidental cists, charges and expenses etc. were duly debited and the payments made by the defendants towards part liquidation of their liabilities were correctly credited to the aforesaid accounts on respective dates.

5.19. That defendant No. 1 duly availed the aforesaid credit facilities granted to them by the applicant Bank. Defendant No. 1 remained irregular in conduct of the aforesaid loan facilities and neglected to maintain their financial discipline.

5.25. That vide letter dated 30.7.2016, defendant No. 1 has informed the applicant Bank that defendant No. 1 has a claim of Rs. 629.68 crores against defendant No. 5 and in February, 2016 defendant No. 1 already submitted letters to the defendant No. 5, for the same. Defendant No. 1 had also initiated arbitration proceedings for the aforesaid claim. Applicant Bank is entitled for recovery of its dues from the said amount.

5.27. That defendant No. 1 time and again acknowledged their liability to pay the outstanding amount to the applicant Bank in their duly audited Balance Sheets for the years ending on 31.3.2015 and 31.3.2016.

5.28. That defendant No. 1 time and again acknowledged their liability to pay the outstanding amount vide various letters including letters dated 11.11.2015, 27.11.2015 and 30.7.2016, but failed to do so.

5.30. That the applicant Bank vide several communications in various meetings held with the representatives of defendant No. 1 and specifically vide letter dated 14.6.2016 called upon the defendant No. 1 to pay the outstanding amounts and to regularize the account but the defendant No. 1 failed to do so.

5.31. That since defendant No. 1 remained irregular in conduct of the aforesaid loan facilities and neglected to maintain their financial discipline, despite several requests and reminders, the applicant Bank was forced to send Recall Notice dated 19.8.2016 but despite receipt of the Recall Notice the defendants have filed to pay the outstanding amount. Recall Notice dated 19.8.2016 was replied by the defendant No. vide letter dated 6.9.2016.

5.32. That now as per books of accounts maintained by the applicant Bank in their regular course of business the following amounts are due and payable by the defendants to the applicant Bank besides accrued interest from 1.10.2016 onwards:-

5.33. That thus as per books of accounts maintained by the applicant Bank in their regular course of business a sum of Rs. 98,61,22,876.00 (Rupees ninety eight crores sixty one lacs twenty two thousand eight hundred and seventy six only), besides interest from 1.10.2016 onwards is due and payable by defendant Nos. 1 to 3, jointly and severally, to the applicant Bank as regards the aforesaid loan/credit facilities granted to defendant No. 1 by the applicant Bank, which the defendants have failed to pay despite repeated requests and reminders of the applicant Bank and their promises and assurances and as such defendant No. 1, as borrower is liable to answer the claim of the applicant Bank. The Statements of account, as duly certified under the Bankers Books of Evidence Act, 1891, duly reflecting principal outstanding in respect of the Rupee Term Loan Facility Accounts i.e. RTL-I, RTL-II and RTL-III, accrued interest in respect of the said accounts as well as the total outstanding amount in respect of the credit facility granted by applicant Bank to defendant No. 1 have been filed alongwith this Original Application as ANNEXURES-A to C which may be read as part and parcel of this Original Application.

5.34 That all the defendant Nos. 1 to 3, are thus jointly and severally, co-extensively and individually liable in their respective capacities as borrower, guarantor/hypothecator/security provider to pay Rs. 98,61,22,876.00 (Rupees ninety eight crores sixty one lacs twenty two thousand eight hundred and seventy six only) to the applicant Bank along with interests, all costs, charges and expenses etc. of this Original Application and pendente lite and future interest from the date of filing of the Original Application till actual and final realization as the liability of the defendant Nos. 1 to 3 has arisen in commercial transactions with the applicant Bank".

"5.36. That the cause of action arose in favour of the applicant Bank and against the defendants when defendant No. 1 requested for grant/renewal/restructuring/of loan/credit facilities from time-to-time which was granted by the applicant Bank to defendant No. 1 and in consideration thereto, defendant No. 1, as Borrower and defendant No. 2 as Guarantor and signed and executed loan/Guarantee/security documents on 5.9.2014, 6.9.2014, 5.12.2014, 8.12.2014, 6.1.2015 and 7.1.2015 in favour of applicant Bank. The cause of action arose when defendant No. 3, as hypothecator hypothecated its current assets, as mentioned in paragraph 5.17 of the Original Application, in favour of the applicant Bank. The cause of action arose when defendant No. 1 duly availed the aforesaid loan facilities granted to it by the applicant Bank but neglected to maintain the regularity in repayment of the outstanding amounts and neglected to maintain the financial discipline of the aforesaid accounts. The cause of action arose when defendant No. 1 time and again acknowledged their liability to pay the outstanding amount to the applicant Bank in their duly audited Balance Sheets including as on 31.3.2016. The cause of action arose when defendant No. 1 time and again acknowledged their liability to pay the outstanding amount vide various letters including letters dated 11.11.2015, 27.11.2015 and 30.7.2016 and in Joint Lender's Forum dated 11.5.2015 and 29.10.2015, but failed to do so. The cause of action arose when the applicant Bank vide various communications in several meetings held with the representatives of the defendant No. 1 and specifically vide the letter dated 14.6.2016 called upon the defendant No. 1 to pay the outstanding amounts and to regularize the account but the defendant No. 1 failed to do so. The cause of action arose when the applicant Bank declared the account of defendant No. 1 had been declared as an NPA as on 15.4.2016. The cause of action arose when the applicant Bank was forced to send a Recall Notice dated 19.8.2016 but despite receipt of the Recall Notice the defendants have filed to pay the outstanding amount. The cause of action arose when defendant No. 1 made part payments towards liquidation of the outstanding amounts in then-accounts, as reflected in the statement of accounts. Even otherwise the defendants have been admitting their liability to pay the outstanding amount in their various documents and communications. Moreover, the cause of action is a continuous and recurring one so long as the defendants do not liquidate the outstanding amount."

Now the relevant paragraphs from the written statement of the borrower Company may also be noticed and the same are re-produced below:

"2. It is submitted that the Answering defendant has been served with a copy of the O.A. No. 805 of 2016 and the Answering defendant has gone through the contents of the O.A. No. 80S of 2016 and have noted and understood, the purport thereof but before going into the merits of the case it would be pertinent to mention herein that the present O.A. No. 805 of 2016 is not maintainable in the eyes of law. It is respectfully submitted that the Answering defendant had firstly availed the Loan Facility for the completion of Gwalior Bypass Project from IDFC Bank in the year 2012 and thereafter L & T Infrastructure Finance Co. Ltd. i.e. defendant No. 4 has taken over the said loan from IDFC Bank in the year December, 2014 and in lieu of the same the defendant No. 4 had got the first pari passu charge over all the securities of Answering defendant. It is further submitted that the Answering defendant had availed the Loan Facility from the applicant Bank (for clearing the outstanding liabilities towards creditor/sundry creditor and for creation of reserved accounts) and the applicant Bank was well versed with the facts that they will get second pari passu charge on the properties been kept as securities. It is settled principle of law that claim of the First Charge-Holder and in the present case the Second Charge Holder approached the Hon'ble Tribunal before the First Charge Holder, hence not maintainable.

That the Answering defendant had availed term loan facilities from the applicant Bank on the terms and conditions as suggested by the applicant Bank and adhered to the said terms and conditions.

That the alleged delay in serving the debt obligations is due to non-cooperation by the applicant Bank, non adherence to the financial discipline by the applicant Bank, severe financial crisis faced by the Answering defendant due to slow market in infrastructure sector and other factors which were beyond the control of the Answering defendant.

That the Answering defendant had availed term loan facilities from the applicant Bank to the tune of Rs. 915 million (Rs. 91.50 crores) in aggregate in different tranches since 6.9.2014 as against sanctioned amount of loan facilities amounting to Rs. 915 million (Rs. 91.50 crores) in terms of Rupee Loan Facility Agreement executed between the Answering defendant and the applicant Bank as per details below:...

That for all the three trenches of the loans, separate loan documents were executed by the Answering defendant as per the direction of the applicant Bank who was at the dominating position. Further, in case of each of the three trenches of the loan the security given was also separately defined or where the same security has been used it has also been clearly mentioned. It would again worth mentioning that in none of the three trenches of the loan availed, first, pari passu charge was given to the applicant Bank meaning thereby the applicant Bank was given the rights over the residual charge on the securities.

That the Answering defendant had been sincere all the time in fulfilling the terms and conditions of the financial documents entered with the applicant Bank for the said facilities.

That the Answering defendant has made its efforts in servicing the loan account with the applicant Bank as an amount of Rs. 145.70 million (Rs. 14.57 crores) towards interest and principal including penal charges has been repaid by the Answering defendant in the loan account till date. Any delay in servicing of term loan was neither deliberate nor intentional on the part of the Answering defendant.

Financial Stress and non-release of project dues

That the Answering defendant had time and again informed the applicant Bank that there are certain reasons beyond the control of the Answering defendant and due to the liquidity issues being faced by it and also by its Sponsor, i.e. Era Infra Engineering Limited, the loan account was not duly served by it. However, the Answering defendant from time-to-time assured the applicant Bank that the expected claims and missed annuity amount to be received from NHAI shall be utilized for the progress of the Answering defendant's business os well as repayment of principal and interest due to all the lenders of the Answering defendant including applicant Bank.

That the main reason for such financial crisis being faced by the Answering defendant was on account of delays in completion of project due to the reasons attributable to the NHAI and non-release of claim amount in the form of missed annuity dues along with interest thereon by NHAI to the Answering defendant.

That it is submitted that if the project had been completed on time, the Answering defendant would have been in a better position to repay its debt obligation.

That with respect to delay in making the payment of dues also as mentioned above has not deliberately been done by the Answering defendant. At the moment due to the liquidity issue faced by the Answering defendant and also by its sponsor i.e. Era Infra Engineering Limited, the Answering defendant was not able to meet its debts.

That in this regard, the Answering defendant had already filed its claim with NHAI for release of balance amount of annuities along with interest on delayed payment of annuities. In addition to these the claims which are to be received, the Answering defendant had also filed claims for the additional amount spent by it due to price escalations for all materials, services, the expenses incurred on non-schedule items, deviations, idling charges etc. in relation to the project.

That it may be noted that the Answering defendant had filed claim of approximately Rs. 6,296.8 million (Rs. 629.68 crores) with NHAI in the month of February, 2016.

That the Answering defendant has taken all initiatives for release of its dues from the Authority as the project has already been completed. Further, as the project has been delayed due to deviances on the part of NHAI, the arbitration clause of the Concession Agreement had been invoked by the Answering defendant and the Arbitration proceeding has been initiated against NHAI. The Answering defendant had raised claim of Rs. 12,026.89 million (Rs. 1202.69 crores) to be received from NHAI under the Arbitration. The details of such claim as filed by the Answering defendant under the Arbitration proceedings are follows.....

That the applicant Bank vide its loan recall notice dated 19.8.2016 alleged that the Answering defendant had breached in complying with other terms and conditions under the financial documents. The said letter like the other letters including recall notices was also appropriately responded by the Answering defendant. In the said response the Answering defendant also informed the applicant Bank that due to unexpected delay in receiving claim from the Authority, the Answering defendant was not able to make payment of interest and term loan on time. Further, it was also informed the applicant Bank that on receiving amount of claims from the Authority, the amount of claims shall be used for the business activities of the Answering defendants and also for the repayment of loans and interest thereon of all the lenders including of the applicant Bank so that the overdues be cleared and account with the applicant Bank will be upgraded.

Request for Restructuring and Revival

That the Answering defendant had again and again requested the applicant Bank to grant some time to revitalize the account with the applicant Bank and also give an opportunity to represent its case before the applicant Bank and not to initiate any legal action/proceedings against the Answering defendant. However, the applicant Bank had neither considered the request of the Answering defendant not granted any opportunity to present the revival plan by the Answering defendant.

That apart from the above, the applicant Bank being one of the major lenders to the Answering defendant have time and again failed to support the Answering defendant in the revival process."

5.12 That the contents of Paragraph No. 5.12 of the Application in so far relating to signing of Credit Arrangement Letter dated 6.9.2014 and execution of Rupee Term Loan Facility Agreement on 6.9.2014 by the Answering defendant in relating to the Term Loan of Rs. 315 million are matter of record..............

5.19 That the contents of Paragraph 5.19 are wrong and denied. It is vehemently denied that the Answering defendant remained irregular in conduct of the loan facilities and neglected to maintain financial discipline. It would be forth mentioning that the Answering respondent has time and again adhered to the terms and conditions of the various loan facilities availed by it from the applicant Bank as contemplated in the facility Agreements. Further, it has also served the debt to the extent of INR 145.70 million despite being in difficult financial crisis. Furthermore, at the time of distress it also requested the applicant Bank to restructure its account. All this shows that the Answering defendant was not negligent in maintaining financial discipline...........

5.25 That the contents of Paragraph No. 5.25 of the Application is so far as relating to the letter dated 30.7.2016 submitted by the Answering defendant to the applicant Bank in response to the demand notice dated 14.6.2016 issued by the applicant Bank to the Answering defendant are matter of record and need no reply. It is submitted that vide this letter dated 30.7.2016, the Answering defendant had assured the applicant Bank that the amount of claims, to be received from the NHAI, the defendant No. 5 shall be utilized for the progress of the Answering defendant's business as well as repayment of all the outstanding dues including that of applicant Bank......

From the aforesaid pleadings of the appellant Bank and the borrower Company and particularly the portions of the written statement which have been highlighted by me, the undisputed picture which emerges is that respondent No. 1 borrower Company had availed of financial facilities to the tune of Rs. 915 million and the borrower Company has simply claimed in its written statement that it was not in a position to clear its liability as per the terms and conditions of the loan because of some financial crisis and there were some disputes with NHAI from whom over six hundred crores of rupees were due to it (borrower Company) and with whom arbitration proceedings were also going on. There is thus unequivocal admission of liability by the borrower Company towards the appellant Bank as far as the principal loan amount is concerned. Respondent No. 1 has clearly admitted in its written statement its entire liability on account of principal amount. The appellant Bank had served upon the respondent borrower Company a notice of demand also after re-calling the entire loan outstandings. The borrower Company had in reply, as noticed already, simply expressed its financial inability to repay the loan amount which had fallen due because it was not receiving its dues from NHAI. The appellant's claim cannot be kept in abeyance during the pendency of any arbitration proceedings between the borrower Company and NHAI. That would-defeat the object of expeditious recoveries of Banks' dues from their defaulting borrowers for the achievement of which object the Act of 1993 was enacted by the Parliament, and DRTs were established. So, this was a fit case for the DRT to have passed a recovery certificate for the undisputed principal amount of Rs. 91,15,35,000 at least straightaway. In these circumstances, I am of the view that without going into the question as to whether the entries in the Balance Sheets of the borrower Company being relied upon by the appellant Bank constitute an acknowledgement of liability or not, the appellant is entitled to the issuance of a recovery certificate for the aforesaid amount of Rs. 91,15,35,000/- which liability clearly is clearly without any reservation admitted by the borrower Company in its written statement. So, even after ignoring appellant's claim for issuance of a recovery certificate based on the entries made in the two Balance Sheets of the borrower Company, the appellant is still entitled to a recovery certificate for the aforesaid amount as against respondent No. 1, the borrower Company.

As far as the rest of the amount claimed by the appellant Bank in its O.A. is concerned and which amount includes interest also in respect of which the respondent No. 1 has raised some disputes, the same can be adjudicated by the DRT at the time of final disposal of the O.A. Similarly, as far as respondent Nos. 2 and 3 are concerned, considering the fact that they have raised some issues regarding their liability including the pleas of undue influence and misuse of dominating position of the Bank by it and exertion of pressure to execute guarantee/security documents as per Bank's dictates etc., it will not be appropriate to exercise the discretion to pass any interim recovery certificate against them just because the principal borrower Company has admitted its liability towards the appellant Bank. Claim against them will also need to be adjudicated by the DRT at the time of final disposal of the O.A. after examining their defences and the evidence adduced by the parties and appreciation of evidence, if any, led by these two respondents in support of their pleas of undue influence, pressure etc. cannot take place at an interim stage.

Similarly, the questions regarding the entitlement of the appellant Bank in respect of annuities to be receivable from NHAI are concerned, appropriate orders in respect thereof shall also be passed by the DRT at the time of final disposal of the O.A. This appeal is accordingly allowed to the extent that there shall now be a recovery certificate issued in favour of the appellant Bank and against respondent No. 1 herein for. a sum of Rs. 91,15,35,000/-. The DRT shall issue necessary recovery certificate immediately on receipt of a copy of this order and forward the same to the Recovery Officer for execution in accordance with law.