O.A. No. 26/2007. Case: Bank of Maharashtra Vs Champagne Indage Ltd.. Mumbai Debt Recovery Tribunals
|Case Number:||O.A. No. 26/2007|
|Party Name:||Bank of Maharashtra Vs Champagne Indage Ltd.|
|Counsel:||For Appellant: Mr. Pradeep Sancheti, Sr. Counsel and Mr. K.K. Shroff, i/b. Singhi & Co., Adv. and For Respondents: Mr. Rajesh Nagori, i/b. Sharma Syndicate, Adv.|
|Judges:||K.J. Paratwar, Presiding Officer|
|Issue:||Recovery of Debts Due To Banks And Financial Institutions Act, 1993 - Section 2(g)|
|Judgement Date:||March 03, 2009|
|Court:||Mumbai Debt Recovery Tribunals|
K.J. Paratwar, Presiding Officer
This is an application for recovery of Rs. 24,45,26,215/- with interest @ PLR + 4% p.a. at quarterly rests from the date of filing the Original Application till full realization. The uncommon facts of the case are thus: The Champagne India Ltd. [CIL] was the Applicant's constituent enjoying certain Credit Facilities prior to 1996. Its account had become Non Performing Asset [NPA]. On or about 10.12.1996, One Time Settlement [OTS] was arrived at under which the said Company paid about Rs. 270.89 Lacs and the Bank waived Rs. 449.56 Lacs. The waiver however was not absolute or unconditional in as much as the Bank reserved the rights of re-compensate in case the operations of the Company turn profitable in future/net worth becoming positive.
Subsequently, by order Dt. 12.12.1997, Hon'ble High Court of Judicature at Bombay in Company Petition No. 842 of 1997 connected with Company Application No. 337 of 1997, approved a scheme of arrangement. Under the same, Winery division of CIL was amalgamated into the Defendant Company. All the assets and liabilities were taken over and properties of Winery division of CIL stood vested in the Defendant Company. The re-organized entity [Defendant] had on 10.01.2002 executed undertaking inter alia that in the event of operation of the Defendant Company turning profitable or in the event of net worth of the Company becoming positive, the Defendant shall be bound and liable to recompense the Applicant with costs and interest. The undertaking was ratified in the Board of Directors of the Defendant's on 21.08.2002. On or about 22/27.08.2002, the Defendant gave continuing undertaking in which brake up of waiver amount was recorded and all the facts are noted in details. The Defendant reiterated its commitment to recompense. The Defendant gave several undertakings including to invite the Bank at the Annual General Meeting [AGM], informing it about the grant of dividend. Thereupon, the Bank issued No Dues Certificate in favour of the Defendant.
The Applicant further contends that in May/June 2005, it found that Defendant was not adhering to the undertaking. It has declared the dividend but did not inform the Applicant. The Applicant thereupon issued notice through advocate calling upon it to make payment as per the undertaking to recompense. The Defendant did not oblige where because this O.A. is filed.
The Defendant by Written Statement at Exh. 14 resisted the O.A. It has raised several issues namely (1) the right to recompense is not debt within the meaning of Section 2(g) of R.D.D.B. Act; (2) the OTS under Reserve Bank of India guidelines is full and final settlement and as such rider in the OTS to recompense is against the law; (3) the dues allegedly payable by CIL cannot be recovered from the Defendant particularly when only Winery undertaking has been acquired by the Defendant; (4) the right to recompense does not survive after the scheme of arrangement was approved by the Hon'ble High Court of Judicature at Bombay; (5) the O.A. is not within limitation. After these points, parawise replies are given in which aforesaid contentions are reiterated. It is even denied that re-organized entity is the Defendant. The contention is that the original Borrower Company CIL is renamed as Champagne Vineyards Ltd. [CVL]. The contention is also that the condition for exercise of right of recompense has not been fulfilled. The contention is further that some part of the loan to the CIL was consortium and the other part was for agriculture. Therefore, no recovery can be made from the Defendant. The dismissal of the O.A. is sought on these grounds.
In proof of its case, the Applicant relies on Claim Affidavit of Mr. R.K. Gupta (Exh. 16) who has put oath behind the Applicant's case. The relevant documents are Sanction Letter Dt. 10.12.1996 [Exh. 18], Defendant No. 2's Board Resolution Dt. 21.08.2002 [Exh. 19]...
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