Final Order 1

Order Details: Notice of Motion
Pdf Text: 1 NM No.1283/2020 in
Com St.No.4201/2020
IN THE BOMBAY CITY CIVIL COURT AT GREATER BOMBAY
NOTICE OF MOTION N0.1283 OF 2020
IN
COMMERCIAL STAMP NO. 4201 OF 2020
(CNR NO.MHCC010037622020)
1. Abhay Lodha )
Aged 48 years, Occu:Business )
Director of Suspended Board and )
Guarantor of Topworth Pipes and Tubes )
Pvt. Ltd., an Adult, Indian Inhabitant, )
Having address at 308, 3rd Floor, )
Ceejay Towers, Dr.Annie Besant Road, )
Worli Sea Face, Mumbai: 400 021. )
2. Ashwin Lodha )
Aged 44 years, Occu:Business )
Guarantor of Topworth Pipes and Tubes )
Pvt. Ltd., an Adult, Indian Inhabitant, )
Having address at 308, 3rd Floor, )
Ceejay Towers, Dr.Annie Besant Road, )
Worli Sea Face, Mumbai: 400 021. )
3. Vaibhav Lodha )
Aged 33 years, Occu:Business )
Guarantor of Topworth Pipes and Tubes )
Pvt. Ltd., an adult, Indian Inhabitant, )
Having address at 805808, )
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Ashok Towers, Dr.B.A.Road, )
Opposite ITC Hotel, Parel, )
Mumbai: 400 012. )
4. M/s. Akshata Realtors Private Limited, )
a company incorporated and registered )
under the provisions of the Companies )
Act, 1956 having its registered office at )
308, 3rd Floor Cee Jay House, )
Dr.Annie Besant Road, Worli, )
Mumbai 400 018. )...Plaintiffs
Versus
1. State Bank of India )
A Bank constituted under the provisions )
of the provisions of the Banking )
Regulation Act, 1949, having its head )
Stressed Assets Management Branch1, )
Mumbai, The Arcade Mumbai, 2nd Floor, )
World Trade Centre, Cuffe Parade, Colaba, )
Mumbai400 005. )
2. Syndicate Bank ( Now merged with )
Canara Bank) )
A Bank constituted under the provisions )
of the provisions of the Banking )
Regulation Act, 1949, )
Having address at SAM Branch )
Maker Tower, EWing, 2 nd Floor )
Cuffe Parade, Mumbai 400005. )...Defendants.
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CORAM: HIS HONOUR JUDGE SHRI R.V.KOKARE
DATE : 08/12/2020 (C.R.No.31)
Appearance:
Ld. Adv. Mr. Bobade for plaintiffs.
Ld. Adv. Ms.Niyati Merchant for defendant no.1.
Ld. Adv.Ms. Sandhya Nanaware for defendant no.2.
ORDER
This is notice of motion taken out by the plaintiffs for
temporarily restraining to the defendants from taking out any action
upon show cause notice issued by the defendant nos.1 and 2 dated
24/09/2019 and 16/05/2018 respectively.
Brief facts of the notice of motion of the plaintiffs are as under
2. The plaintiff no. 1 is the Director and plaintiff nos. 2,3 and 4 are
the Guarantors of “ Topworth Pipes And Tubes Private Limited ”, a
Company which has been incorporated and registered under the
provisions of the Companies Act, 1956. The defendants are two of the
Lenders/Bankers of the TPTPL .
3. The plaintiffs state that the Company is into manufacturing of
Helical Submerged Arc Welding (HSAW) and Electric Resistance
Welded (ERW) steel pipes. The Company within a short period had
been able to achieve the stringent quality requirement and was
awarded various certifications. The Company's products were
certificated with prestigious American Petroleum Institute(API), which
is renowned International Institution, certifying the international
standard for products used in the Oil and Gas Industry. Mr.Abhay
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N.Lodha is the Director of TPTPL and Chairman of Topworth Group. He
possesses more than two decades of experience in the iron and steel
industry. Topworth Group has its genesis in trading steel, aluminium
and related products. Under his supervision, the Group has grown
rapidly in the manufacturing of iron and steel, aluminium and has also
made forays in power generation and coal mining. The defendants and
the other banks namely Bank of Baroda, Oriental Bank of Commerce,
Allahabad Bank , Union Bank of India and Canara Bank are the the
Bankers of the Plaintiffs Company.
4. The plaintiffs further state that the term loans of lenders were
restructured in March 2015 with cutoff date 1/12/2014. The working
capital limits of the Company have not been restructured even though
the company has time and again requested for the same and has given
legible reasons too. The defendants outstanding amount against the
plaintiffs Company as on 31/03/2018 is Rs.440.68 crores. The
plaintiffs deposited primary and the collateral security against the loan
amount infavour of the defendants bank. The plaintiffs further state that
the delay in sanctioning of working capital funds adversely affected the
ability of the Company to procure raw material at favorable prices.
Pending orders from reputed clients forced the Company to procure the
raw material at a higher cost, further affecting margins. The global steel
industry witnessed one of its toughest times during FY2010 till FY2017
with demand not moving in tandem with the capacity additions. China,
which was the largest steel producer in the world was witnessing a
slowdown in its economy resulting in excess steel capacity, which was
more than the total steel production capacity of India. The excess steel
produced was diverted into the international markets resulting in excess
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supply and thereby suppressing the steel product prices. The
devaluation of Yuan aggravated the situation making it more lucrative
for the steel exports from China. The plaintiffs company was finding it
difficult to realize the debtors in timely manner. This had adversely
impacted the cash flow of the Company which resulted in frequent LC
development and delaying servicing and the debt.
5. The plaintiffs further state that to cope with this problem the
Company immediately approached the lead bank for term loan debt
restructuring in 2015. Consortium of lenders took up the issue in the
meeting and deliberated upon the same and found the request of the
Company genuine and sanctioned the restructuring of the company
after obtaining the TEV from empaneled agency. Since problems faced
by the company were so serious and since working capital financial
assistance was not restructured, the Company did not come out of red
and kept bleeding in terms of reporting losses.
6. The plaintiffs further states that to their utter shock and surprise,
the defendant no. 1 vide its letter dated 24/09/2019 issued the Show
Cause Notice to the plaintiffs calling upon them to show cause and
make submissions in writing as to why their names should not be
included in the list of “ Willful Defaulter” as per the RBI Guidelines. The
plaintiffs replied the notice issued by the defendant no.1 through their
advocate’s letter dated 18/10/2019. The defendant no.2 had issued a
Show Cause Notice dated 16/05/2018. The plaintiffs replied through
their advocate’s letter dated 28/05/2018. The plaintiffs were not given
the proper opportunity to represent their case during the personal
hearing with the willful defaulter Committee. The defendants issued
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these Show Cause Notices to the plaintiffs without following due
procedure and violated the Guidelines of RBI. The plaintiffs did not fall
in the category of the wilful defaulters and there is no element of wilful
default on the part of the plaintiffs to default in payment of lenders'
dues and hence the said Show Cause Notice issued by the defendants
are illegal one to the plaintiffs. The defendants have provided no
documents i.e. the evidence to the plaintiffs upon which the defendants
are basing their claim for the alleged wilful defaults committed by the
Company.
7. The plaintiffs further states that there is apprehension on the part
of the defendants that on the basis of impugned notice will declare the
plaintiffs as willful defaulters without following due procedure of law.
Any action by the defendants at this stage to declare the plaintiffs as
willful defaulter will be against the basic principles of natural justice,
fair play and equity.
8. There is Master Circular issued by R.B.I. for declaring any
account as willful defaulter by following certain procedure. Here,
defendants have not followed due procedure given in Master Circular
and also the defendants have not followed the rule of natural justice
by not giving opportunity of hearing to plaintiffs. There are serious
consequences of any account as willful defaulter. Considering said
serious nature consequences, it was mandatory for defendants to follow
the procedure as well as time line given in Master Circular. On these
grounds, the plaintiffs are submitted that the plaintiffs have made out
prima facie case, Balance of convenience are lies in favour of the
plaintiffs. If this notice of motion is not granted in favour of the
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plaintiffs, then plaintiffs will suffer irreparable loss, which will not
compensate in terms of money. Hence, this notice of motion.
9. The defendant no. 1 resisted this notice of motion taken out by
the plaintiffs by filing its reply.
Brief facts of the reply of the defendant no.1 are as under
10. The defendant no. 1 has resisted this notice of motion on many
grounds. The defendant no.1 has submitted that the plaintiffs have
prematurely filed the present suit on the basis of an imaginary cause of
action. The suit/plaint is filed without disclosing any present live cause
of action and is therefore not maintainable and deserves to be dismissed
with costs. The present suit is not maintainable as the plaintiffs lack
locus, power and authority to seek relief on behalf of the said Topworth
Pipes & Tubes Private Limited i.e. plaintiffs company.
11. The defendant no.1 has further submitted that the present suit is
also bad for misjoinder and/or nonjoinder of necessary parties. The
present suit is not maintainable as a commercial suit and the plaint
ought to be rejected on this ground alone. The relief of Injunction
sought are barred under Section 41 of the Specific Relief Act.
12. The defendant no.1 has further submitted that the plaintiffs are
the Promoter/Directors (Suspended Board) and Personal Guarantor of
the said Company, who has availed and enjoyed various credit facilities
from this defendant and the other consortium banks and accounting in
tune of Rs.1804.66 crores. It is pertinent to note that a sum of
Rs.407.78 crores is due and payable as on 31st July, 2020 along with
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further interest from the said Company and the plaintiffs to this
defendant. The said Company and the Guarantors, despite restructuring
of the account by this defendant and other consortium banks, the said
Company has failed and neglected to pay the amounts due and payable
to this defendant and other consortium banks. Inspite of the
restructuring, the Company failed and neglected to regularize the
account and defaulter in making repayment of the loan, and thus the
Borrower Company Account was declared NPA on 1st December, 2014.
The defendant no. 1 has further submitted that it has come to the notice
of this defendant and other consortium banks that the said Borrower
Company has siphoned huge amounts and therefore, other consortium
banks had conducted forensic audit and it is clear from the said report
that the said Borrower Company has siphoned huge funds which is
public money. The other members of the consortium banks have
classified the account of the Borrower Company as “ Red Flag” and
“ Fraud ” account under the RBI Guideline dated 01st July 2016. This
defendant has declared the account of the said Borrower Company as
Fraud on 4th January, 2018.
13. This defendant and consortium banks have to recover a sum of
Rs.1804.66 crores from the Borrower Company and the plaintiffs with
further interest thereon and a sum of Rs. 407.78 crores as on 31st July,
2020. The consortium lenders have initiated recovery proceedings
before the Hon'ble DRT, Mumbai. The lead bank State Bank of India has
also issued Demand Notices under section 13(2) of the SARFAESI Act,
2002 on 21st November, 2016.
14. The defendant no.1 has further submitted that vide order dated
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31st August, 2017, the Hon'ble High Court has admitted the Company
Petition No.174 of 2016 filed by M/s. MSTC Limited against the
Borrower Company and the Provisional Liquidator was appointed. This
defendant has identified the Directors/Guarantors of the said Borrower
Company as Willful Defaulter on 28th February, 2019. Accordingly a
Show Cause Notice was issued to the Directors/Guarantors of the said
Borrower Company on 24th September, 2019. In response to the same,
the plaintiffs have submitted their reply on 18th October, 2019 through
their Advocate.
15. The defendant no. 1 has further submitted that there is no breach
or violation of any RBI Guidelines as alleged by the plaintiffs, on the
contrary, the plaintiffs have approached this Hon'ble Court with unclean
hands suppressing the true and correct material facts to this Hon'ble
Court. The Show Cause Notice issued to the plaintiffs and subsequent
personal hearing afforded to plaintiffs in pursuance of willful default
proceedings has always been strictly in compliance with the extant RBI
Guidelines on the willful default as well the principles of natural justice.
No harm, loss or prejudice will be caused to the plaintiffs if the reliefs as
prayed for are not granted. However, grave harm, loss or prejudice will
be caused to this defendant if the reliefs as prayed for are granted to the
plaintiffs. On these grounds, the defendant no.1 has requested that the
present notice of motion taken out by the plaintiffs may kindly be
dismissed with costs.
16. The defendant no.2 resisted this notice of motion taken out by
the plaintiffs by filing its reply.
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Brief facts of the reply of the defendant no. 2 are as follows
17. The plaintiffs are through the present notice of motion at the
interim stage itself praying for prayers which are finally prayed in the
suit. The plaintiffs are challenging the Show Cause Notice dated 16th
May, 2018, however the copy of the same is not annexed to the present
suit. The plaintiffs have filed the present suit is based on incomplete set
of the documents. The plaintiff no.1 is the Director of M/s. Topworth
Pipes and Tubes Pvt. Ltd. and the plaintiff nos. 2 to 4 are the
Guarantors of M/s. Topworth Pipes and Tubes Pvt. Ltd. By virtue of the
order dtd 12th June, 2020 passed by the Hon'ble NCLT M/s. Topworth
Pipes and Tubes Pvt. Ltd. is wound up.
18. The present suit is also barred by the Non Joinder of necessary
party. The plaintiffs deliberately did not add the Liquidator as well as
RBI as the party to the suit. The plaintiffs Company have been
sanctioned Term Loan of Rs. 292.36 crore from following banks for set
up of Pipe manufacturing facility at Khopoli in year 2009. On inspection
of the record, the Auditor observed that the Term Loan Fund has been
used for the specific purpose mentioned in the sanction letters of
consortium lenders. However, the term loan facility of the Company has
been restructured under JLF mechanism in March, 2015 with cut off
date of Decembers, 2014. During the course of audit, it appears that
the plaintiffs not used the amount sanctioned by the defendants bank
for the purpose as per the defendants bank sanctioned the loan amount
to the plaintiffs. It is trace out that the plaintiffs Company diverted of
funds disbursed by the lenders.
19. The plaintiffs further submitted that the forensic audit dated
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20/09/2016, conducted by M/s. J. Singh and Associates has detected
fraudulent transactions of different nature, in the accounts of the
Company. The plaintiffs failed to pay regular loan amount to the
defendants bank. Therefore, the account of the plaintiffs Company is
classified as NPA on 01/12/2014. Presently it is classified as DA2 and
the branch has made provision of Rs. 69.12 crores as on 30/09/2018.
The plaintiffs have not produced a copy of Show Cause Notice issued
by the defendant no.2 to the plaintiff and also not annexed to the plaint
in the present suit. The plaintiffs have suppressed material facts and
the plaintiffs have not made necessary party to the Liquidator as well as
RBI. Therefore, the plaintiffs have not made out prima facie case,
balance of convenience does not lies infavour of the plaintiffs, the
plaintiffs will not suffer any irreparable loss if this notice of motion is
not granted infavour of the plaintiffs. On these grounds, the defendant
no. 2 has submitted that the present notice of motion taken out by the
plaintiffs may kindly dismissed with costs.
20. Upon hearing arguments of the learned counsels of both the
parties, on perusal of notes of arguments and documents produced on
record on behalf of both the sides, during the course of arguments and
in the written notes of arguments, the learned counsels on behalf of the
defendants have been raised various objections such as the suit of the
plaintiff is premature, the plaintiffs have no locus standi, the plaint does
not disclose cause of action, the suit is barred, this court has no
jurisdiction to try and decide this matter and etc.
21. During the course of arguments, the learned counsels for the
defendants bank have argued that the plaintiffs have filed the present
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suit on presumption that the respective defendants have already
declared the account of “Topworth pipes and tubes Pvt. Ltd “ (TPTPL)
as fraud. It is not the fact that the defendants have declared fraud to
“Topworth Pipes and tubes Pvt. Ltd” (TPTPL) or to the plaintiffs. As a
matter of fact, the defendant no. 1 has only classified the account as
Red Flagged (RAF) Account. Therefore, the present suit and notice of
motion are not maintainable.
22. On perusal of the pleadings of the plaintiffs, it appears to me that
in the present suit and notice of motion have challenged show caused
notice issued by the defendants no. 1 and 2 dated 24/09/2019 and
16/05/2018 respectively . It is the allegation of the plaintiffs that the
defendants have been taken steps for declaring fraud and classified to
the “Topworth pipes and Tubes Pvt. Ltd “ (TPTPL) account as Red
Flagged without giving opportunity for hearing to the plaintiffs.
Therefore, the plaintiffs have apprehension that in hurriedly the
defendants bank will initiate criminal action against the plaintiffs.
Under such circumstances, I am of the opinion that the plaintiffs have
right to challenge any action taken by the defendants. Therefore, the
present suit and notice of motion are not premature and the cause of
action arose for filing the present suit.
23. The learned counsels on behalf of the defendants have argued
that in the present suit, the plaintiffs have not made party to the
Company of the Plaintiff i.e “Topworth pipes and tubes Pvt.Ltd.”
which is necessary party in the present suit and they have filed the
present suit without adding the Company. Therefore, the present suit is
not maintainable. The learned counsels on behalf of the defendants
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have relied on the Judgement of the Supreme Court of India in
Innoventive Industries Ltd. V/s. ICICI Bank and Ors., reported in
MANU/SC/1063/2017, the Hon'ble Supreme Court has observed in
para no 11 of the Judgement that once an insolvency professional is
appointed to manage the company, the erstwhile directors who are no
longer in management, obviously, cannot maintain an appeal on behalf
of the company.
24. A perusal of the observations held in the above citations, it
appears to me that with due respect the ratio held in above citations is
not applicable to the present case in my hand due to differ of facts and
circumstances. In the present case in my hand, the plaintiffs are the
Directors as well as Guarantors of the loan amount granted by the
defendants bank to the plaintiffs company i.e “Topworth Pipes and
Tubes Pvt Ltd.” (TPTPL) .
25. The learned counsels on behalf of the defendants have argued
that the present suit is not tenable in view of provisions of Section 9 of
the Civil Procedure Code. It is argued by the learned counsel on behalf
of the plaintiffs that this is a suit for declaration against the action
initiated by the defendants. The plaintiffs are challenging the virus of
action taken by defendants and therefore, suit will lie as per Section 9
of Civil Procedure Code.
26. Section 9 of C.P.C. deals with jurisdiction of the Civil Courts and
bar thereon. It says that Court is empowered to try all Civil suits unless
barred by law. It is settled legal position is that Civil Court has every
jurisdiction to try the suit. No doubt, Civil Court cannot try and
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entertain the suit which are expressly or implied barred. Here, plaintiffs
are seeking declaration against the action of defendants. The action
levelled by defendants is based on Master Circular issued under R.B.I.
Guidelines. Therefore, in my opinion, nothing will bar from presenting
such grievance before Civil Court. As such, I am of the opinion that Civil
Court has every jurisdiction to try and entertain such nature of suit.
Therefore, there is no any force for argument of the learned counsels on
behalf of the defendants for saying that this Court has no jurisdiction to
entertain and decided this suit in view of Section 9 of Civil Procedure
Code.
27. The learned counsels on behalf of the defendants have argued
that in view of provision of Section 41(d) of the Specific Relief Act,
injunction cannot be granted. I have gone through Section 41 of
Specific Relief Act. It is regarding “ injunction when refused ”. As per
Sub Section (d) injunction cannot be granted to restrain any person
from instituting or prosecuting any proceeding or any criminal matter.
No doubt, in such case injunction cannot be granted. However, here the
circumstances are some what different. Plaintiffs are challenged show
caused notice issued by the defendants dated 24/09/2019 and
16/05/2018 respectively. Which are not as per procedure laid down in
Master Circular. Plaintiffs are challenging the virus of the action taken
by the defendants. In such circumstances, if said decision is not taken in
accordance with the procedure laid down, then the aggrieved party has
every right to ask for injunction. So, the bar as mentioned in Section
41(d) of Specific Relief Act is not applicable here.
28. The learned counsels on behalf of the defendants have argued
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that the National Company Law Tribunal (NCLT) has jurisdiction to
entertain or dispose of any application or proceeding or any claim made
by or against the Corporate Debtor. Section 63 r/w. Section 231 of the
Insolvency Code, no Civil Court or authority has jurisdiction to entertain
any Civil Suit or proceedings in respect of any matter with respect to
which the NCLT as jurisdiction. As against this, the learned counsel for
the plaintiffs has argued that the Civil Court has jurisdiction to entertain
and decide the present suit filed on behalf of the plaintiffs.
29. The learned counsels on behalf of the defendants have relied on
the judgement of the Hon'ble Supreme Court of India in the case of Mr.
Anand Rao Korada Resolution Professional V/s. M/s. Varsha Fabrics
(P) Ltd. & Ors. In Civil Appeal Nos.88008801 of 2019, the Hon' ble
Supreme Court has observed in para No. 8 of the Judgement that, ''
Section 231 of the I.B.Code bars the jurisdiction of civil courts in respect
of any matter in which the Adjudicating Authority i.e. the NCLT or the
NCLAT is empowered by the Code to pass any order.'' The learned
counsels on behalf of the defendants have relied on the another
judgement of Hon'ble High Court at Calcutta in the case of Vikram
Jairath And Ors. Vs. Middleton Hotels Private Limited, decided on
27th September, 2019. The Hon'ble High Court has observed in last
para of the judgement that, ''in the light of such fraud, from having the
company proceedings or the suit proceedings being rendered
infructuous. In view of my prima facie finding that this court does not
have the jurisdiction to grant any of the reliefs prayed for in the plaint
and having regard to the fact that all the reliefs claimed in the plaint
could be claimed before the NCLT in the pending proceeding and in fact
if the prayer made before the NCLT is allowed it could have the same
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effect or consequence or bearing.''
30. I have gone through Section 17 of the I.B.Code 2016. Said
chapter is regarding Corporate Insolvency Resolution Process (CIRP). As
per said section, after appointment of Interim Resolution Professional
(IRP) the management of affairs of corporate debtor vest in (IRP). So
also the power of directors, partners and guarantors stand suspended.
So also as per section 231 of said Code no Civil Court have jurisdiction
in respect of any matter in which the adjudicating authority is
empowered by or under, this court to pass any order and no injunction
shall be granted by court in respect of any action taken in pursuance of
order passed by adjudicating authority. So on going through above
sections and more particularly section 231 of I.B.Code there is a bar in
respect of matter within the jurisdiction of adjudicating authority i.e.
NCLT. So also there is bar to pass injunction order in respect of any
action taken by said authority.
31. I have gone through the observations held in above citations. It
appears to me with due respect the above observations are not
applicable to the present case in my hand due to defers facts and
circumstances. It is an admitted position on record that defendant has
approached before NCLT, DRT and also started recovery proceeding
under the SARFAESI and other available Acts. Since beginning it is
made clear by Ld. Counsel for plaintiffs that plaintiffs are not against
the recovery proceedings nor by way of this suit plaintiffs are
challenging or restraining the recovery proceeding. No doubt, plaintiffs
are not challenging the recovery proceedings nor challenging the
proceedings which is pending before NCLT. Here, plaintiffs being
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suspended directors and guarantors are challenging the show cause
notices issued dated 24/09/2019 and 16/05/2018 by the defendants
without following the procedure given in Master Circular. Therefore, in
my opinion the bar as contemplated under section 231 of I.B Code will
not apply here and so the present suit and notice of motion filed on
behalf of the plaintiffs are maintainable.
32. The learned counsels for the defendants argued that the
plaintiffs have filed the present suit as a commercial suit which is not
maintainable and cause of action shows in the plaint does not fit within
the ambit of commercial dispute which is defined under Section 2(c) of
the Commercial Court Act 2015. Thus, the suit is not maintainable as
Commercial Suit. As against this, the learned counsel on behalf of the
plaintiffs has argued that the present suit is maintainable in view of
Section 2(c) of the Commercial Court Act 2015. I have reproduced the
definition 2(c) of the Commercial Court Act 2015 “ the Commercial
dispute means a dispute arising out of (i) ordinary transaction of
merchants, bankers, financiers and traders such as those relating to
mercantile documents, including enforcement and interpretation of
such documents. From the definition contained in 2(c) (i), it is clear
that ordinary transactions of bankers and financier are covered in the
definitions. The definition is all inclusive which is reflected from use of
words “ such as those relating to mercantile documents including
enforcement and interpretation of such documents ”. The definition
makes it clear that the documents which are connected with the
transaction of bankers and financiers are covered. In the present case,
the action of defendants by issuing show cause notice under challenge
are based on Master Circular which is applicable to all the accounts
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where under the defendants have lent money in ordinary course of its
transaction. Thus, the action of the defendants bank by issuing show
cause notice under challenge are maintainable as a Commercial Suit.
33. The learned counsels for the defendants have argued that the
present suit is not maintainable as a commercial suit and therefore, the
plaint ought to be rejected on this ground alone. The learned counsels
in their submissions have relied on the following Judgements.
(i) Bank of India V/s. Gupta Coal India Pvt. Limited & Anr. In the
High Court of Judicature at Bombay, Nagpur Bench, in Civil
Revision Application No. 97/2017. In this Judgement, the objection
raised before the Hon'ble High Court was that the suit should be treated
as Commercial Suit and not an ordinary suit, but the Hon'ble High
Court held that the suit of the present nature cannot be a Commercial
Suit.
(ii) In the Judgement of Supreme Court of India in Civil Appeal No
75/1962 in MANU/SC/0227/1963 in Raizada Topandas and Ors.
V/s Gorakhram Gokalchand. The Hon'ble Supreme Court has held that
the plaint can be returned for presentation before appropriate court
when a court lacks territorial or pecuniary jurisdiction but not when it
lacks inherent jurisdiction. Thus, this Hon'ble Court lacks inherent
jurisdiction and cannot and ought not to grant any relief. The Court
ought to reject the plaint entirely forthwith.
34. I have gone through the above citations with due respect the ratio
held in above citations are not applicable to the present case in my
hand. In the present case the nature of the suit is a Commercial Suit and
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not an ordinary Suit.
35. The learned counsels on behalf of defendants have argued that
the plaintiffs have not paid sufficient court fees. It regard to this
objection of the defendants regarding court fees, the plaintiffs have
submitted that they have paid court fees accordingly. However, the
plaintiffs are ready to pay the deficient court fees, if any, as adjudicated
by the court. Therefore, I am of the opinion that at this stage for
deciding this notice of motion does not require to give findings about
the court fees while the plaintiffs have submitted that the plaintiffs shall
pay the deficient court fees, if any, as adjudicated by the court.
36. The learned counsel on behalf of the plaintiffs has argued that the
defendants have issued show cause notices to the plaintiffs company i.e
“Topworth Pipes and Tubes Pvt Ltd” (TPTPL) without following Master
Circular and therefore, the defendants have not followed the principles
of natural justice.
37. The learned counsel on behalf of the plaintiffs has relied on
Judgement reported in MANU/PH/1231/2017, in the case of Oswal
Apparels Private Limited and Ors. Vs. State Bank of India, Ludhiana
and Ors., the Hon'ble Punjab and Haryana High Court has held that “ It
is also settled principle of law that the documents that are relied upon
by any authority in arriving at a conclusion must be made available to
the affected party to conform to the principles of natural justice. That
apart, the petitioners ought to have been afforded adequate opportunity
to present their case in its correct perspective.” In this judgement the
Hon'ble Court clearly states that not just an opportunity of being heard
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is mandated under principles of natural justice but also, documents
which are relied upon by the authority should be made available to the
affected party.
38. It appears from the contention of the plaintiffs that the
“Topworth Pipes and Tubes pvt ltd” i.e (TPTPL) started facing financial
problems. The realization from debtors of the company has been
sluggish resulting in tightness in liquidity and led to a major impact on
the bottom line as well cash flows. The plaintiffs have filed various suit
for recovery of amount against companies debtors.
39. It is contended by the learned counsels for the defendants that
the plaintiffs may repay the loan, thereafter no action will be initiated
against the plaintiffs. It appears that the defendants bank had initiated
the action for recovery of the loan under the grab of Master Circular.
40. Considering wide scope of Master Circular, the balance of
convenience lies in favour of plaintiffs. Obviously, irreparable loss will
be caused to the plaintiffs, if the court refuse to grant injunction as
prayed. Hence, the order.
ORDER
1. The Notice of Motion No.1283/2020 is hereby allowed.
2. The defendants bank personally or through its representatives are
restrained from taking coercive action against plaintiffs on account of
notices issued by the defendant no.1 Bank dtd. 24/09/2019 and notice
issued by defendant no.2 dated 16/05/2018. Defendants or their
representatives are restrained from branding the plaintiffs as willful
defaulter/dissemination and publishing the name of plaintiffs as willful
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defaulter till final disposal of the suit.
3. It is needless to say that defendants are at liberty to proceed against
the plaintiffs regarding recovery proceedings, attachment, sale of
attachment property to recover the defaulted loan.
4. Cost in cause.
5. Notice of Motion No.1283/2020 is disposed off accordingly.
Dtd:08/12/2020. Judge
City Civil & Sessions Court,
Gr.Mumbai.
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22 NM No.1283/2020 in
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CERTIFIED TO BE TRUE AND CORRECT COPY OF THE ORIGINAL
SIGNED JUDGEMENT/ORDER”
UPLOAD DATE TIME NAME OF STENOGRAPHER
11/12/2020 2.00p.m. Mrs. V.V.Malgaonkar
Name of the Judge H.H.J.Shri R.V.KOKARE (C.R.31)
Date of Pronouncement of
Judgement/Order
08/12/2020
Judgement/order signed by P.O on 11/12/2020
Judgement/order uploaded on 11/12/2020
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