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2017 Supreme(Del) 4317
IN THE HIGH COURT OF DELHI AT NEW DELHI
SANJIV KHANNA, PRATHIBA M. SINGH, JJ.
M/S Continental Construction Ltd. – Petitioner
Versus
State Bank of India and Ors. – Respondents
WRIT PETITION (CIVIL) No. 9896 & 9914 of 2017
Decided On : 09-11-2017
For the Petitioner:Mr. Aryama Sundaram, Sr. Advocate with Ms. Nivedita Sharma, Ms. Shanta Devi Raman, Ms. Suruchi Mittal, Ms. Palak Mishra & Mr. Arihant Jain, Advocates.
For the Respondent:Mr. S. L. Gupta and Mr. Sharan Kumar, Advocates
The main legal point established in the judgment is the importance of specific reliance on legal documents and the need for parties to present complete answers to the claims made, emphasizing the significance of evidence and arguments in legal proceedings.
Headnote:
Shares - State Bank of India - Companies Act, 1956 - Code of Civil Procedure, 1908 - [Companies Act, 1956, Code of Civil Procedure, 1908]
Fact of the Case:
The petitioner company availed bridge finance from State Bank of India, London, against counter guarantees. The bank invoked the guarantees, leading to recovery proceedings before the Debt Recovery Tribunal (DRT). The petitioner company challenged the recovery in various forums, including the High Court.
Finding of the Court:
The court found that the petitioner company and guarantors failed to pay the dues, leading to the account being declared a Non-Performing Asset (NPA). The DRT held the respondent bank entitled to recovery of Rs.89.21 crores with interest. The court dismissed the interim application seeking stay of the recovery proceedings.
Issues: The primary contention was based on a deed of assignment executed between the petitioner company, the President of India, EXIM, and State Bank of India, Overseas Branch. The petitioners argued that the entire amount due to the respondent bank was to be paid by the Government of India.
Ratio Decidendi: The court observed that the petitioners did not specifically rely upon the deed of assignment as a complete answer to the claim of the respondent bank. The court emphasized that the indenture referred to the figure of Rs.164 crores due to the respondent bank as of 31st March, 1994, and the controversy primarily related to the rate of interest claimed as due and payable.
Final Decision: The court disposed of the writ petitions, stating that the observations made in the order would not be construed as conclusive on the merits. The DRAT was directed to independently apply its mind to the facts and decide the appeal expeditiously.
SANJIV KHANNA, J.
Learned counsels for the parties have been informed that the spouse of one of us (Sanjiv Khanna J.) has some shares in the State Bank of India. Learned counsel for the parties state that they have no objection if this Bench hears the present writ petitions.
2. Continental Construction Limited and Mohinder Verma, legal representative of late C.L. Verma, have filed the afore-captioned writ petitions, which are interconnected and hence are being disposed of by this common order.
3. M/s Continental Construction Limited, is a company incorporated under the Companies Act, 1956. The petitioner company had availed of bridge finance/overdraft facility from State Bank of India, London, United Kingdom, made available against counter guarantees issued by the State Bank of India, Overseas Branch, New Delhi.
4. The undisputed position is that the State Bank of India, London had invoked the aforesaid bank guarantees and was paid by the State Bank of India, Overseas Branch, New Delhi.
5. It is the case of the State Bank of India, Overseas Branch, New Delhi, the respondent bank, that they had paid US$ 114,080,799.82 to the State Bank of India, London. The State Bank of India, Overseas Branch, New Delhi was to receive 50% of the said amount from the Export and Import Bank of India (EXIM, for short) and 50% from the petitioner company. The guarantors, which as per the respondent bank included late C.L. Verma, now represented by his legal representatives, Chander Verma and M.S. Bassi. They were jointly and severally liable.
6. As the petitioner company and the guarantors' had failed to pay the said dues, the account was declared a Non-Performing Asset (NPA).
7. The State Bank of India, Overseas Branch, New Delhi filed OA No. 38/1998 before the Debt Recovery Tribunal (DRT) on 5th February, 1998, for recovery of Rs. 89.21 crores with pendent lite and future interest, costs etc.
8. The aforesaid OA had a chequered history. By final order dated 26th May, 1999, the OA was allowed for Rs.89.21 crores plus interest @ 15% per annum with half yearly rests, which was challenged by the petitioner company and the guarantors, in appeals before the Debt Recovery Appellate Tribunal (DRAT). During pendency of the said appeals, the petitioner company filed a writ petition before the Delhi High Court against an interim order. The said writ petition was allowed vide order dated 5th September, 2011, which had the effect of setting aside the final order dated 26th May, 1999 passed by the DRT. An order of remand was passed to the DRT to adjudicate the OA afresh after recording evidence. However, all attachments and other interim protections in favour of the respondent bank continued.
9. During the pendency of the recovery proceeding before the DRT, there was second round of litigation in the High Court on the question of right of cross-examination, but the prayer made by the guarantors was rejected. The order was upheld, as the Supreme Court did not interfere.
10. DRT by order dated 25th May, 2015 has decided OA No. 38/1998 and has, inter alia, held that the respondent bank is entitled to recovery of Rs.89.21 crores with interest @ 15% per annum on half yearly rests with effect from 5th May, 1998 till payment. Costs of Rs.2,50,000/- was jointly and severally imposed. Decision specifically records that legal heirs of late C.L. Verma would be liable to the extent of property inherited by them. Respondent bank would be entitled to adjust fixed deposit receipt or another amount available with them in the account of the petitioner company with accrued interest. Lastly, order of attachment, in respect of land measuring 57 kanals 9 marlas situated at 14/2, Mathura Road, Faridabad (Faridabad land, for short) together with built up commercial property known as Continental House, Nehru Place, New Delhi alongwith super structure thereon, was made absolute. Recovery certificate was directed to be issued.
11. The petitioner company, Mohinder Verma, Chander Verma a
