Back
2009 Supreme(Guj) 442
2010 (1) GCD 588 (Guj) (DB)
Hon’ble Mr. Chief Justice K.S. Radhakrishnan &
Hon’ble Mr. Justice Akil Kureshi
Central Bank of India
Versus
Parkar Securities Limited & Ors.
Letters Patent Appeal No. 992 of 20091—Decided on 27/07/20092
Appearance :
Ms. Nalini S. Lodha, for the Appellant No. 1.
Mr. J.A. Adeshra, for the Respondents No. 1 - 3.
Point in Issue :
Whether in the facts order to stay suit filed for issuance of recovery certificate — Sustainable?
Headnote:Head Note :
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Central Act 54 of 2002) — Sections 17 and 13(2) — Non-payment of outstanding by respondents — Notice to invoke provision under the Act — Bank filed suit for issuance of recovery certificate before D.R.T. Ahd. — Order of Single Judge of stay of proceeding in suit — Held, all actions of respondents indicate attempt on their part to delay proceeding — Order of Single Judge not justified — Set aside.
Held :
In Court view that there is no justification in holding up the proceedings pending before the DRT, Ahmedabad. Special Civil Application No. 2791 of 2009 was filed on 23.03.2009 to hold up the proceedings in OA No. 177 of 2003 after a period of six years. Further, the respondents had participated in the proceedings before the DRT without any demur, filed written statement and adduced evidence and the matter was posted for final hearing and it was at this juncture, respondents have approached this Court. Respondents had also earlier approached this Court by filing Special Civil Application No. 6496 of 2001 seeking directions to restrain NSCCL from invoking bank guarantee and this Court passed order on 10.08.2001 restraining the NSCCL from invoking bank guarantee. NSCCL had to send a letter dated 14.08.2001 to the appellant bank invoking bank guarantee, but subject to the outcome in Special Civil Application No. 6496 of 2001. Special Civil Application No. 6496 of 2001 was disposed of on 27.12.2001. Further, it is relevant to note that first respondent had also preferred Special Civil Application No. 6429 of 2002 invoking the writ jurisdiction of the High Court of Delhi against the notice issued by the Bank under Section 13(2) of the Securitisation Act. Prayer was made before the DRT to hold up proceedings in the DRT. All these facts would clearly indicate that the attempt on the part of the respondents was always to delay proceedings in OA No. 177 of 2003. Special Civil Application No. 2791 of 2009 was also filed after period of six years after institution of proceedings in the DRT. That being factual situation, in Court view, this Court sitting in writ jurisdiction under Articles 226 of the Constitution, will not be justified in holding up the proceedings pending before the DRT. [Para 8]
Law Laid Down :
Having participation in proceedings submission of application to stay proceedings not justified.
K.S. Radhakrishnan, CJ.—Central Bank of India has come up with these Letters Patent Appeals against interim order passed by the learned Single Judge in Special Civil Application No. 2791 of 2009 on 09.04.2009 and against the order passed in Civil Application No. 4137 of 2009 staying the proceedings in OA No. 177 of 2003 pending before the Debt Recovery Tribunal, Ahmedabad (for short ‘DRT’). Special Civil Application No. 2791 of 2009 was preferred by the respondents herein for staying further proceedings in OA No. 177 of 2003 pending before the DRT till final disposal of the Summary Civil Suit No. 3233 of 2002 pending before the City Civil Court at Ahmedabad and also for other consequential reliefs. When these Letters Patent Appeals came up for hearing, on consent of the parties, we called for Special Civil Application No. 2791 of 2009 as well for final disposal.
2. Central Bank of India (for short ‘Bank’) granted credit facility by way of bank guarantee limit of Rs. 25 lakhs to the first respondent company for its business activities of share and securities against the security by way of mortgage of immovable properties belonging to second and third respondents and personal guarantees of Directors and issued Bank Guarantee 90/100 dated 16.05.1998 favouring National Securities Clearing Corporation Ltd. (for short ‘the NSCCL’). First respondent was clearing member of said NSCCL initially for a period of 12 months i.e. upto 15.05.1999 which was later extended upto 15.05.2001. One of the conditions of the bank guarantee which is of importance is extracted hereunder for easy reference.
“The Bank undertakes that it shall, on first demand of NSCCL, without any demur, protest or contestation and without any reference to the Clearing Member and notwithstanding any contestation by Clearing Member, pay to NSCCL such sums not exceeding Rs. 25,00,000-00 (Rupees Twenty Five Lakhs only) as may be demanded by NSCCL. The decision of NSCCL as to the obligations or liabilities or commitments of the Clearing Member and the amount claimed shall be conclusive as regards the amount due and payable by the Bank under the guarantee.”
Letter of Extension also provided that “the Bank shall be liable to pay the guaranteed amount only if NSCCL serves upon the Bank a claim or written claim or demand on or before 15.08.2001”.
3. First respondent later received a letter dated 07.08.2001 from NSCCL requesting to either submit fresh bank guarantee or renew existing bank guarantee for a further period of one year on or before 10.08.2001, failing which it was informed that the Bank guarantee would be invoked. First respondent then filed Special Civil Application No. 6491 of 2001 before this Court against the National Stock Exchange of India Ltd. and the Bank and this Court on 10.08.2001 passed an order restraining them from invoking bank guarantee. Consequently, NSCCL vide letter dated 14.08.2001 informed the bank that the letter be treated as an invocation letter and the intention for invocation of bank guarantee and the bank was requested to pay the amount upon vacating the injunction order granted by this Court. Special Civil Application No. 6496 of 2001 was disposed of as withdrawn vide order dated 27.12.2001. Consequently, interim order was also vacated.
4. NSCCL then wrote to the bank and also sent a notice through their Advocate reminding about their letter dated 14.08.2001 and called upon the Bank to honour their request. Consequently, Bank honoured the request of the NSCCL and paid amount of Rs. 25 lakhs on 04.02.2002 to the NSCCL. Bank has also vide their letter dated 05.02.2002 informed the first respondent that Bank has honoured the bank guarantee and also requested the first respondent to pay outstanding amount of Rs. 14,94,173.82 ps.. Since the amount was not paid, bank invoked its powers under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short ‘Securitisation Ac
