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2022 Supreme(Mad) 2269

IN THE HIGH COURT OF JUDICATURE AT MADRAS
T. RAJA, D. BHARATHA CHAKRAVARTHY, JJ.
L. Jayakumar - Appellant
Versus
Central Bank of India, Rep. by its General Manager, Chennai & Another - Respondent
W.A. No. 536 of 2015
Decided On : 21-06-2022

Advocates appeared:
For the Appellant:T.R. Rajaraman, SC, V. Karthikeyan, Advocates. For the Respondents:T.M. Hariharan, Advocate.

Disputed contract terms should be adjudicated by the Civil Court, not through a writ petition.

Headnote:

Incentive - Legal Fees - SICK Industrial Companies (Special Provision) Act, 1985 - Section 5, Section 20(1) - Companies Act, 1956 - Section 391 - Indian Penal Code - Sections 405, 415, 418, 463, 468 read with 34 - Recovery policy of the Bank

Fact of the Case:

The appellant, an advocate, sought payment of legal fees and an incentive from the respondent bank for assisting in the recovery of a loan from a sick unit. The bank refused the incentive, leading to the appellant filing a writ appeal.

Finding of the Court:

The court found that the recovery made was far below 25% of the contractual dues, as per the terms of the engagement. It held that the disputed contract terms should be adjudicated by the Civil Court, not through a writ petition.

Issues: Dispute over payment of incentive and legal fees, interpretation of contract terms, jurisdiction of the Civil Court in contract disputes.

Ratio Decidendi: Disputed contract terms should be decided by the Civil Court, not through a writ petition. Recovery below 25% of contractual dues disentitles the appellant from the incentive.

Final Decision: The writ appeal was dismissed, with the appellant given liberty to approach the Civil Court for relief.

JUDGMENT

(Prayer: Writ Appeal has been filed under Section 15 of Letter of Patent against the order dated 20.10.2014 passed in W.P.No.17177 of 2011 by the learned Single Judge of this Court.)            T. Raja, J.

1. Unsuccessful appellant has brought this appeal challenging the correctness of the impugned order passed by the learned Single Judge in W.P.No.17177 of 2011, dated 20.10.2014.

2. It is the claim of the appellant before the learned Single Judge that the respondent bank refused to pay the arrears of legal fees and remuneration to a sum of Rs.26,42,615/- along with interest. Therefore, he filed W.P.No.17177 of 2011 seeking for issuance of a writ of mandamus to direct the respondent bank to pay the above said payment. Learned Single Judge refused to accept the said prayer of the writ petitioner/appellant. Aggrieved by the same, the appellant/writ petitioner has filed the present writ appeal.

3. Learned Senior counsel for the appellant submitted that the appellant is an Advocate and Senior Member in the Bar having practice in the Madras High Court for over 36 years. He was in the panel of Advocates nearly 36 years in most of the nationalized banks and corporate including Central Government undertaking Companies. The appellant and his brother were partners in a registered legal firm M/s.L.Jayakumar & Associates, in which, the appellant was having 80% share till 2008. The said firm is one among the panel of Advocates for various nationalized Banks, Central Government and State Government Undertaking and the appellant was to appear at Delhi, Mumbai, Bangalore, Hyderabad and Kerala.

4. Whileso, in the year 2001, the appellant was requested to assist a Nationalized Bank (Canara Bank) to collect confidential particulars of a chronic defaulter in London while he was in London. In the middle of 2003, the respondent bank approached the appellant and informed that M/s.S&S Power Switch Gear Limited was their customer, however, since the said Concern became a Sick Unit, the respondent bank was to find a way to recover a sum of Rs.472.24 lakhs in the recovery proceeding pending on the file of DRT, Madras, in O.A.No.223/03 (New No.526/07). The appellant, after studying various factors, opined that the said Company might have created an artificial loss with an intention to prevent the creditors from realising their investments and loan, therefore, unless all the consortium of all the banks, who have advanced loan, make a joint effort expeditiously before the alleged winding up proceeding, it would be difficult to recover the said loan. Thereafter, based on the advise of the appellant, the respondent bank decided to initiate necessary legal action, for which, the respondent bank offered payment of 5% as fees to the appellant in the event of succeeding in his efforts to recover atleast 25% of the book debt. Thereafter, the appellant had explored all the possibilities to recover the loan from the said Company with a condition that the respondent bank should cooperate with his efforts to proceed against all the Directors of the said Company both in the Insolvency Court and Criminal Court under Sections 405, 415, 418, 463, 468 read with 34 IPC. Agreeing with the said suggestions made by the appellant, the respondent bank by their letter dated 30.07.2004 offered Rs.60,000/- as fees plus 5% from and out of the recovery made either through the Court or through compromise, provided the recovery exceeds 25% of the amount due in the account as per prescribed norms of the Bank. Although the appellant initially demanded higher payment of fees and incentive, after holding discussion with the officials of the Bank, he had agreed to take efforts to recover the loan amount by initiating insolvency proceedings and criminal proceedings against the Directors of the Company. The Respondent bank had also agreed to pay separate fees for insolvency proceeding and other proceedings filed against the said Company both in the High Court and DRT.

5. In the meantime,

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