The main legal point established in the judgment is the jurisdiction, powers, and authority of Tribunals under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, and the validity of interim orders passed by the DRAT.

These petitions have been preferred by the State Bank of India (for short, the SBI), the Indian Bank (for short, the IB), the Central Bank of India (for short, the Central Bank) and the other Banks, challenging the interim order, dated 3. 2008 passed by the Debts Recovery Appellate Tribunal (for short, the DRAT), Chennai in I.A.No.165 of 2008 in M.A.No.35 of 2008, whereby and whereunder, the DRAT directed that out of Rs.180 crores lying with the IB, a sum of Rs.8 crores be disbursed to the Southern Petrochemical Industries Corporation Limited (for short, SPIC) until further orders, pending disposal of the appeal, to meet the urgent needs of SPIC towards electrical consumption charges, salary of the employees, provident fund, payment of superannuation amount, gratuity amount, tax and duties and minimum plant maintenance charges.

2. Since the issue involved is common, these cases are being disposed of by this common order.

3. The main plea taken by the petitioners-Banks is that the Original Applications have been filed by the two Banks and other Banks being the respondents, for recovery of its duties, at the instance of the borrower, one of the corresponding Banks, cannot be directed to disburse the funds for meeting the physical expenses of the borrower, particularly when the assets are declared as non-performing assets (for short, the NPA). The SPIC cannot seek for such a direction in an Original Application for recovery of money from its Banker, when the assets available as on the date are not sufficient to meet the existing liability.

3(a). The SPIC, which is a fertiliser and petroleum company of South India, is in existence since 1969. Its production capacity is of one million tonnes of fertilisers per annum and the plant is spread over 1000 acres of lands in Tuticorin (Tamil Nadu). It is engaged in manufacture of urea, ammonia, complex fertilisers, phosphoric and sulphuric acid and aluminium fluoride.

According to SPIC, as per the last audited balance sheet as on 30.9.2006, the asset of SPIC stood at gross value of RS.3,329 crores. SPIC has been availing of the working capital facilities from a consortium of Bank, approximately 21 in number, for which Indian Bank is the lead Bank. There are fixed assets and current assets, which have been charged to all the secured lenders, 36 in number, there are 21 Banks, and 15 financial institutions, on a pari-passu inter-se basis without any preference or priority of one over the other.

The Reserve Bank of India (for short, RBI) in 2001 introduced Corporate Debt Restructuring Scheme (for short, the CDR) to make a timely and transparent mechanism for restructuring of corporate debts of viable entities facing problems. As per the CDR scheme, SPICs financial re-construction application was approved on 13. 2003 and confirmation of pari-passu agreement was made on 212. 2004 between participating financial institutions and the Banks. In terms of the CDR package, a Trust and Retention Account (for short, the TRA) was opened with the lead Bank i.e. Indian Bank, to facilitate the nodal monitoring of the Companys business receivables. The consortium of banks also appointed a concurrent auditor of SPIC to report to the lead Bank by giving a monthly report.

As per SPIC, the cost of production per tonne of urea of fertiliser is Rs.21,500/-, but in view of the Fertiliser (Control) Order, the SPIC can sell it only at the levy price of Rs.4,830/- and the balance of about RS.16,700/-is to be reimbursed by the Government of India, subject to the norms under the Fertiliser Retention Price Scheme. This reimbursement takes about 3 to 9 months. The receipt of subsidy amount takes about 75 days.

In respect of phosphatics (Di-ammonium phosphaste), the percentage of market collection is 50% and the balance 50% is receivable by way of subsidy from the Government of India. Of this 50% subsidy, 85% is received after 2 to 3 months and the remaining 15% after certification from the State Government,