Punjab National Bank and 8 o vs M/s.IL and FS Financial Serv

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2022 Supreme(Online)(MAD) 25630

IN THE HIGH COURT OF JUDICATURE AT MADRAS Order reserved on 11.08.2022 Order pronounced on 28.09.2022 CORAM The Hon'ble Mr. Justice SENTHILKUMAR RAMAMOORTHY Application Nos.4974 & 4975 of 2021 and A.Nos.1073 to 1076, 1642 to 1645 & 1647 of 2022 in C.S.No.950, 303,401 and 403 of 2017
1.Punjab National Bank (A body corporate, constituted by and under the Banking Companies(Acquisition and Transfer of Undertakings) Act, 1970 and having its Head Office at Plot No.4, Dwarka, Sector 10, New Delhi and one of its branches at Zonal Sastra, 1st Floor, 7, Bhikaiji Cama Place, New Delhi -110066.
2.Canara Bank (A body corporate, constituted by and under the Banking Companies(Acquisition and Transfer of Undertakings) Act, 1970 having its Head Office at 112, J.C. Road, Bangalore -560 002 and Branch Office at Corporate Finance Branch, 1st Floor, 170, Eldams Road, Teynampet, Chennai - 600 018.
3.UCO Bank (A body corporate, constituted by and under the Banking Companies(Acquisition and Transfer of Undertakings) Act, 1970 having its Head Office at 10, B.T.M. Sarani, Kolkata-700 001, India and its Flagship Corporate Branch at first Floor, Mafatlal Centre, Nariman Point, Mumbai – 400 021.
4.Bank of Baroda (A body corporate, constituted by and under the Banking Companies(Acquisition and Transfer of Undertakings) Act, 1980 and having its head office at Baroda House, PB No.506, Mandvi, Baroda – 390 006, and one of its branches amongst others at 178/180, Jawahar Nagar Phataka, Road No.2, Goregaon (West) Mumbai-400 062, Maharashtra.
5.State Bank of India (A body corporate, constituted under the State Bank of India Act, 1955 having its Corporate Centre at State Bank Bhavan, Madame Cama Road, Nariman Point, Mumbari – 400 021 and one of its branches at No.155, Anna Salai, Chennai- 600 002.
6.AXIS Bank Limited (A banking company incorporated under the Companies Act,1956 and carrying on its business in terms of the Banking Regulation Act, 1949 and having its registered office at Trishul, 3rd Floor, Opposite Samartheshar Temple, Law Garden, Ellisbridge, Ahmedabad – 380 006 and having its branch office at 82, Dr.Radhakrishnan Salai, Chennai.
7.Bank of India ( A body corporate, constituted by and under the Banking Companies(Acquisition and Transfer of Undertakings) Act, 1970 and having its head office at Star House, Bandra Kurla Complex, Bandra East, Mumbari – 400 051 and having a Branch Office amongst other places at Mid Corporate Branch, Bank of India Building, 27/80, M.G.Road, Mumbari – 400 023.
8.Indian Bank (A body corporate, constituted by and under the Banking Companies(Acquisition and Transfer of Undertakings) Act, 1970 and having its Corporate Office at 254-260, Avvai Shanmugam Salai, Royapettah, Chennai, Tamil Nadu-600 014 and one of its branches at New Delhi Main Brancch, G-14, Cannaught Circus, New Delhi- 110 001.
9.Asset Reconstruction Company of India Limited (the successor of L & T Infrastructure Finance Company Limited). A company having its registered office at the Rebu, 10th floor, 29th Senapati Bapat Marg, Dadar(West), Mumbai-400028. ... Applicants/Proposed Respondents vs.
1.M/s.IL & FS Financial Services Limited, No.498, Karumuttu Centre, 3rd Floor, South Wing, Anna Salai, Nandanam, Chennai – 600 035. ... Respondent/Decree Holder
2.M/s.Ind Barath Thermal Power Limited, New No.20, (Old No.129), Chamiers Road, Nandanam, Chennai – 600 035. ... 2nd Respondent/Judgment Debtor
3.M/s.Trimex Industries Pvt. Ltd.
Trimex Tower No.1, Subbaraya Avenue, C.P. Ramasamy Road, Alwarpet, Chennai – 600 018. ... 3rd Respondent
4.M/s.Millennium Steel India Pvt. Ltd., No.96, Halls Road, 3rd Floor, Kilpauk, Chennai – 600 010. ... 4th Respondent
5.M/s.Black Burn Fuels Pvt. Ltd., No.7, Temple Street, New Avadi Road, Kilpauk, Chennai – 10. ... 5th Respondent PRAYER IN A.No.4974 of 2021: This Application is filed under Order XIV Rule 8 of O.S. Rules r/w Order 1 Rule 10(2) CPC praying to implead the proposed respondents 1 to 9 as respondents in E.P.No.69 of 2018.
Applicants : Mr.E.Om Prakash, Senior Counsel for Mr.Dinesh Kumar Respondents : Mr.P.V.S.Giridhar for M/s.Giridhar & Sai for R1 Mr.Chandramouli Prabhakar for R2 Mr.T.R.Rajagopalan Senior Advocate Assisted by Mr.V.Ananda Natarajan For R-3 Mr.A.R.L.Sundaresan, Senior Advocate for R-4 Assisted by Mrs.Revathi Manivannan Mr.Yashod Vardhan, Senior Advocate for R-5 Assisted by Mrs.Revathi Manivannan

C O M M O N O R D E R

Four suits were filed by creditors of Ind Barath Thermal Power Limited (Ind Barath) seeking to recover amounts due and payable by Ind Barath. In each suit, at the pre-trial stage, orders were passed against a common garnishee, TANGEDCO. Later, each suit was decreed. The details of the said suits, the amounts deposited by the garnishee and the decrees passed therein are set out below:

S.No.	Suit No.	Parties to the Suit	Amount deposited by garnishee	Amount Decreed
1.	C.S.No.950 of 2017 and A.No.8276 of 2017	IL&FS Financial Services Ltd. v. Ind Barath Thermal Power Ltd. & Ors.	-	Rs.103,60,84,933 (17% further interest on the sum of Rs.94,25,38,482)
2.	C.S.No.401 of 2017 and A.Nos.3680/2017, 1429 and 4500/2018	Millenium Steel India Pvt. Ltd. v. Ind Barath Thermal Power Ltd.	Rs.34,94,04,036	Rs.33,05,02,000 (10.5% interest from 09.11.2018 till the date of realisation)
3.	C.S.No.303 of 2017 & O.A.No.1110 of 2017 & A.Nos.3843 of 2017, 4499 of 2018, 6206 of 2018, 3962 of 2019	Trimex Industries Pvt Ltd. v. Ind Barath Thermal Power Ltd.	Rs.28,46,18,581	Rs.22,17,05,264 (10.5% interest from 08.11.2018 till the date of realisation)
4.	C.S.No. 403 of 2017	Black Burn Fuels Private Ltd. v. Ind Barath Thermal Power Ltd.	Rs.26,22,72,567	Rs.12,42,27,000 (11% interest from the date of suit till the date of realisation)

E.P.No.69 of 2018 was filed to execute the decree in C.S.No.950 of 2017 and the petitioner therein prayed for attachment of the entire sums lying to the credit of C.S.Nos.303, 401 and 403 of 2017 and for payment of the sums lying therein towards satisfaction of the decree passed in the suit. Separately, Application Nos.3605, 3606, 3923 of 2021 in C.S.Nos.401, 403 and 303 of 2017, respectively, were filed by the respective plaintiff seeking payment out of monies lying to the credit of the respective suit. By order dated 29.11.2021, the Court ordered rateable distribution to the creditors in the manner set out below:

Name of Party	Amount in %	Amount to be paid (in Rupees)
Trimex Industries Pvt. Ltd.	14.99%	16,84,31,151.00
Millennium Steel India Pvt. Ltd.	22.32%	25,09,60,166.00
Blackburn Fuels Pvt. Ltd.	9.51%	10,69,27,920.00
IL & FS Financial Services Limited	53.18%	59,79,41,831.00

Pursuant to the above mentioned order, it appears that the amounts directed to be paid to the four decree holders were paid to them. In these facts and circumstances, a consortium of banks of which Punjab National Bank is the lead bank has filed multiple applications. These applications may be classified into three categories: (a) applications to implead the banks as respondents in E.P.No.69 of 2018; (b) applications to stay the operation of the order dated 29.11.2021; and (c) applications to set aside the order.

2. Oral arguments were made by Mr.E.Om Prakash, learned senior counsel for the consortium of banks; Mr.P.V.S.Gridhar, learned counsel for M/s.IL & FS Financial Services Limited(IFIN); Mr.Chandramouli Prabhakar, learned counsel for Ind Barath; Mr.T.R.Rajagopalan, learned senior counsel for Trimex Industries Pvt Ltd (Trimex); Mr.A.R.L.Sundaresan, learned senior counsel for Millennium Steel India Pvt Ltd (Millenium Steel); and Mr.Yashod Vardhan, learned senior counsel for Blackburn Fuels Private Limited (Blackburn Fuels).

3. Mr.E.Om Prakash, learned senior counsel, submitted that garnishee orders were passed in the four suits while the suits were at the pre-decree stage. Pursuant thereto, the garnishee, TANGEDCO, deposited amounts due and payable to Ind Barath to the credit of the respective suit. Thereafter, by order dated 29.11.2021, the amounts lying to the credit of the respective suit were directed to be paid to the decree holders in specific proportions. Learned senior counsel submitted that the applicants had a hypothecation over the receivables of Ind Barath, and, therefore, the impugned order nullifies the prior charge in favour of the consortium of banks.

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