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Judgment
The Applicant Bank filed the present Original Application u/s.19 of the Recovery of Debts and Bankruptcy Act, 1993 for recovery of a total amount of Rs.30,27,93,139,16 ps (Rupees Thirty Crores Twenty Seven Lakhs Ninety Three Thousand One Hundred Thirty Nine and Paise Sixteen only) as on 31.01.2019 with interest @ 15% p.a. with monthly rests from date of application till the date of realization, together with costs from defendants jointly and severally and in default for sale of OA schedule properties.
The case of applicant bank, in brief, is that 1st defendant is a private limited company engaged in the business of coal mines and related infrastructural facilities' It approached the applicant bank for financial assistance for acquiring shares from Lehman Brothers who was holding 20% share capital in M/s KSK Energy Ventures Limited. The applicant bank sanctioned term loan of Rs.100 crores towards part finance vide sanction letter dated 06.07.2011 out of the total requirement of Rs.475 crores to be financed by other consortium lenders viz., Industrial Finance Corporation of India, Indian Overseas Bank, L&T Infrastructure and Finance Co. Ltd. The loan is secured by pari passu charge of all fixed and current assets of 1st defendant company and equity shares of M/s. KSK Energy Ventures Limited worth Rs.200 crores proposed to be acquired, The loan facility is also secured by way of corporate guarantee provided by 2nd defendant - M/s. KSK Energy Limited, Mauritius. The 1st defendant company furnished its undertaking dated 15.10.2011, resolution and undertaking of 2nd defendant dated 14.10.2011, hypothecation agreement dated 15.10.2011, pledge of shares / debentures dated 15.10.2011 and guarantee of 2nd defendant dated 15.10.2011. The 1st defendant executed balance and security confirmation documents dated 13.12.2012, 22.04.2014, 23.05.2015, 13.03.2017 and 2nd defendant also executed balance and security confirmation letters dated 31.12.2012, 28.07.2014, 23.05.2015 and 13.03.2017. After availlng the term loan, the 1st defendant company failed to clear the dues as per agreed terms and the loan account was declared as NPA on 31.08.2017, followed by a recall notice dated 12.02.2018. After recovering an amount of Rs.7.41 crores by invoking the pledged shares, the outstanding amount due to the applicant bank works out to Rs.30,27,93,139.16 as on 31.01.2019, hence the present OA.
The 1st defendant filed written statement which has been adopted by the 2nd defendant. The submissions of the defendants as per the written statement, in brief, are;- that the loan facility was not availed under a consortium arrangement but it is under multiple banking arrangement. If the loan is under consortium arrangement, other consortium lenders would have been made parties in the OA in which case, the OA is bad for non-joinder of necessary parties. When the loan is availed by two parties, the applicant bank sought relief against four defendants which is a misleading fact. The loan availed from applicant bank is repayable in 24 months. Defendants serviced both the principal as well as interest regularly till May, 2017 and August, 2017 respectively. The defendant company could not generate sufficient funds due to several other factors which are beyond its control. However, the defendant company is hopeful of revival and will be able to meet its requirements in view of the above position, OA is devoid of merit and liable to be dismissed.
In order to prove its claim, applicant bank examined Wafi Aziz Safwi, Assistant Manager, as AW.1 and marked 25 documents through him as Exhibits A-1 to A-25.
The 1st defendant examined its Assistant Legal Manager Ugesh Kumar as DW.1 to substantiate its defence.
Heard learned counsel appearing for the applicant bank, learned counsel appearing for the defendant and perused material brought on record'
It is contended by learned counsel appearing for the applicant bank that the 1st defendant availed term loan of Rs.100 crores for acquiring 20% share capital of Lehman Brothers in M/s KSK Energy Ventures Ltd which is a listed company. The 2nd defendant stood as guarantor for the term loan availed by the 1st defendant company from the applicant bank and executed Ex.A.9 guarantee agreement. The 1st defendant company hypothecated its shares in M/s KSK Energy Ventures Ltd and executed Ex.A.8 agreement of hypothecation of assets. The 1st defendant also availed credit facilities from Industrial Finance Corporation of India (IFCI), Indian Overseas Bank, L&T Infrastructure and Finance Co. Ltd. The 1st defendant committed default in repayment of instalments and therefore the loan account has been classified as NPA. The applicant bank disposed of the hypothecated shares and realized Rs.7.41 crores and adjusted the same to the loan account. The defendants executed balance and security confirmation letters which have been marked as Exs.A.12 to A.19. The applicant bank issued Exs.A.20 and A.21 recall notices to defendants 1 and 2. The applicant bank examined AW-1 and marked 25 documents through him as Exs.A.1 to A.25 to substantiate its case. According to learned counsel, the evidence of AW-1 coupled with recitals in Exs.A.1 to A.25 substantiates the OA claim and therefore, the OA deserves to be allowed against the defendants and OA schedule property.
Per contra, learned counsel appearing for the defendants submits that the applicant bank granted loan under multiple banking arrangement but not under consortium agreement. The amount realized by sale of pledged shares is not reflected in the statement of account. There are only two defendants in the OA whereas relief sought for in the prayer column is against four defendants and therefore, prayer in the OA is defective' The applicant bank sold the pledged shares at the most inappropriate time thereby caused substantial loss to the 1st defendant company. To substantiate their defence, the 1st defendant examined its Assistant Legal Manager as DW-1. With these submissions, learned counsel sought for dismissal of the OA.
Now, the points that arise for adjudication are:-
i) Whether the applicant bank proved the OA claim against the defendant and OA schedule property?
ii) To what relief?
Point No.(i):-
Availment of term loan of Rs.100 crores by the 1st defendant for acquiring 20% shares in M/s KSK Energy Ventures Ltd is not under dispute. DW-1 is the Assistant Legal Manager of the 1st defendant company. In para 8 of the chief evidence, DW-1 admits of 1st defendant availing term loan of Rs.100 crores. DW-1 also admits of pledging of equity shares by 1st defendant company in M/s KSK Energy Ventures Ltd. AW-1 is the Authorized Officer of the applicant bank. He speaks of execution of the loan documents by the 1st defendant company and guarantee agreement by the 2nd defendant company. The main plea advanced by the defendants is that the amount realized by sale of pledged shares is not reflected in the statement of account (Ex.A.24). Entries in Ex.A.24 statement of account reflect the adjustment of sale proceeds of the pledged shares. Therefore, the plea advanced by the defendants does not deserve acceptance.
In the given facts and circumstances of the case, whether the loan sanctioned to the 1st defendant is under pari passu arrangement of multiple banking arrangement does not matter much.
The evidence of AW-1 coupled with recitals in Exs.A.1 to A.25 amply proves the OA claim against the defendants 1 and 2 jointly and severally and OA schedule property and therefore, the OA deserves to be allowed against the defendants jointly and severally and OA schedule property.
Point No.(ii):-
In the result, the present Original Application is allowed with costs, as under:-
i) The defendants 1 and 2 are jointly and severally liable to pay to the applicant bank a sum of Rs.30,27,93,139.16 ps (Rupees Thirty Crores Twenty Seven Lakhs Ninety Three Thousand One Hundred Thirty Nine and Paise Sixteen only) with future interest @13% p.a. simple from the date of filing of the OA till the date of realization;
ii) The claim of the applicant bank is secured by way of hypothecation of OA schedule-A property and the applicant bank is entitled to proceed against the same for realization of its debt;
iii) The applicant bank is also entitled to proceed against the properties of the defendants 1 and 2 companies towards realization of its debt;
iv) The applicant bank is entitled to the costs of the OA.
The applicant bank is directed to file Cost Memo within 2 weeks from the date of this Order.
Issue Recovery Certificate accordingly.
Communicate a copy of this order to the parties concerned.
(Dictated to the PS, transcribed by him, corrected, signed and pronounced by me in the open court on this the 01st June, 2020).