Final Order 1

Order Details: Notice of Motion
Pdf Text: 1 NM No.1284/2020 in
Com St No. 4202/2020
IN THE BOMBAY CITY CIVIL COURT AT GREATER BOMBAY
NOTICE OF MOTION N0.1284 OF 2020
IN
COMMERCIAL STAMP NO. 4202 OF 2020
(CNR No.MHCC01-003766-2020 )
1. Abhay Narendra Lodha & Ors. ...Plaintiffs
Versus
1.Union Bank of India & Ors. ...Defendants.
CORAM: HIS HONOUR JUDGE SHRI R.V.KOKARE
DATE : 22/12/2020 (C.R.No.31)
Appearance:-
Ld. Adv. Dhurva Gandhi for plaintiffs.
Ld. Adv.Ms. Niyati Merchant for defendant no.1, 3 and 5 to 7.
Ld. Adv. Mr. Sunil Kadam for defendant no.2.
Ld.Adv. Ms. Fatima Lakdawala for defendant no.4.
ORDER
This is a notice of motion taken out by the plaintiffs for
temporarily restraining to the defendants from taking out any action on
the basis of Show cause notice dated 10/04/2019 issued by the
defendant no.1, Show cause notice dated 14/01/2019 issued by the
defendant no.2, Show cause notice dated 05/11/2019 issued by the
defendant no.3, Show cause notice dated 02/02/2018 issued by the
defendant no.4, Show cause notice dated 08/11/2018 issued by the
defendant no.5, Show cause notice dated 04/03/2020 issued by the
defendant no.6 and Show cause notice dated 10/04/2019 issued by the
defendant no.7.
-- 1 of 21 --
2 NM No.1284/2020 in
Com St No. 4202/2020
Brief facts of notice of motion of the plaintiffs are as under.
2. The plaintiffs are the personal Guarantors/Directors of the
Topworth Steels & Power Private Limited, a Company which has been
incorporated on May 18, 2004. The defendants are the lenders of the
Company and are banks duly constituted under the provisions of the
Banking Regulation Act, 1949.
3. The plaintiffs state that their company i.e. Topworth Steels &
Power Private Limited is into manufacturing of Structural Steel Long
Products like Beams, Channels and Angles, MS Billets and Sponge iron.
The Company within a short period has been able to achieve the
stringent quality requirement and has been awarded various
certifications. The Company has an established track record of
supplying Structural Steel and has executed direct contract from
reputed public sector undertakings. It has been an approved supplier to
large Indian & international customers (such as BHEL, TATA, Adani,
Reliance, L & T, Thermax, NHPCL, NPCIL, Essar Projects, Arcelor Mittal
Projects; Jaypee Group etc. The defendants banks are the the Bankers
of the Plaintiffs Company.
4. The plaintiffs further state that the Company had undertaken
various Credit Facilities from the Defendants bank for meeting its
business requirements. 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,
-- 2 of 21 --
3 NM No.1284/2020 in
Com St No. 4202/2020
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 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 during the period when accounts
of the Company have got irregular due to losses and reason stated
above, number of other steel industries have suffered losses and have
got irregular and have ultimately been classified as NPA.
The defendants were fully aware about the aforesaid fact and
circumstances which had led to the present financial condition of the
TSPPL. Despite being aware of the aforesaid fact, the defendants banks
have issued the impugned notices under challenge. As per the
guidelines issued by the RBI vide its Master Circular a mechanism has
been prescribed for identification of willful defaulter. As per sub clause
(b) of clause (3) of the Master Circular, if the committee concludes that
an event of willful default has occurred, then a show cause notice is
required to be issued by the committee calling for the submissions of
the borrowing company and its Promoter/Whole time Director and
-- 3 of 21 --
4 NM No.1284/2020 in
Com St No. 4202/2020
subsequently an opportunity for a personal hearing is afforded to the
Borrower/its Promoter or whole time Directors to put-forth its/their
submissions.
6. The plaintiffs state that the facts of the instant case established
that the defendants banks have violated the guidelines of RBI at every
stage as well as the principle of natural justice. The plaintiffs do not fall
in the category of the willful defaulters and there is no element of
willful default on the part of the plaintiffs to default in payment of
lenders, dues and hence the said show cause notices ought not to have
been issued to the plaintiffs. The defendants bank have provided no
documents i.e. the evidence to the plaintiffs upon which the defendants
are basing their claim for the alleged willful defaults committed by the
plaintiffs. The plaintiffs do not have the documents as has been
mentioned in the show cause notice. On these grounds, the plaintiffs
are submitted that the plaintiffs have made out prima facie case and
balance of convenience lies in favour of the plaintiffs. If this notice of
motion is not granted in favour of the plaintiffs, then plaintiffs will
suffer irreparable loss, which will not compensate in terms of money.
Hence, this notice of motion.
7. The defendant nos. 1,3 and 5 to 7 appeared through advocate
Niyati Merchant and resisted this notice of motion taken out by the
plaintiffs by filing its reply. The defendant no.2 Bank appeared through
Advocate Sunil Kadam and resisted this notice of motion by filing its
reply. The defendant no.4 Bank appeared through advocate Ms. Fatima
Lakdawala and resisted this notice of motion by filing its reply.
-- 4 of 21 --
5 NM No.1284/2020 in
Com St No. 4202/2020
8. The common objections raised by all the defendants submitting
that the plaint discloses no live cause of action, therefore, the suit is not
maintainable and be dismissed with costs. The present suit is not
maintainable as a Commercial Suit. The plaintiffs have lack locus,
power and authority to seek reliefs on behalf of the Topworth Steel and
Power Private Limited (TSPPL) Company. This Court has no jurisdiction
to try and decide this matter, but the National Company Law Tribunal
has jurisdiction and try this matter. The plaintiffs have no right to ask
reliefs mentioned in this notice of motion in view of Section 41(d) of
the Specific Relief Act. The present suit is also bad for mis-joinder and /
or non-joinder of parties. The plaintiffs have not made out prima facie
case, balance of convenience does not lies in favour of the plaintiffs. The
plaintiffs will not suffer any irreparable loss, if this notice of motion is
not granted in favour of the plaintiffs.
9. The defendant nos. 1 and 7 are submitted that the plaintiffs are
the Promoter, Director ( suspended board) and Personal Guarantor of
the said Company, who has availed and enjoyed various credit facilities
from these defendants and the other consortium banks and accounting
in tune of Rs.1,730.60 crores. It is pertinent to note that a sum of
Rs.128.56 crores with further interest from the plaintiffs to the
defendant no.1 and sum of Rs.83.05 crores is due and payable
alongwith further interest from the said Company and the plaintiffs to
the defendant no.7 only. The said Company and the Guarantors,
despite restructuring of the account by these defendants and other
consortium banks, the said Company has failed and neglected to pay
the amount dues and payable to these defendants and other consortium
banks. Inspite of the restructuring the Company failed and neglected to
-- 5 of 21 --
6 NM No.1284/2020 in
Com St No. 4202/2020
regularize the account and defaulted in making repayment of the loan,
and thus, the borrower company account was declared NPA on
07/11/2015 by the defendant no.1 and declared NPA on 31/03/2015
by defendant no.7. The defendants and other members of the
consortium banks have classified the accounts of the Borrower company
as a '' red flag '' and '' fraud'' account under the RBI Guidelines dated
01/07/2016. These defendants have declared the said Borrower
Account as fraud on 08th October, 2018 and the said declaration was
reported to the RBI on 26th October, 2018 which is well within the time
lines as mentioned in the RBI Guidelines dated 01/07/2016. These
defendants have also filed a complaint before the CBI on 26th June,
2019.
10. The defendant nos.1 and 7 have jointly filed their reply. They
have submitted that these defendants and the consortium lenders have
initiated recovery provisions before the Hon'ble DRT, Mumbai. The lead
Bank State Bank of India has also issued Demand Notice u/s.13(2) of
SARFAESI Act 2002 on 16th July, 2017. The defendant no.1 issued show
cause notice dated 10/04/2019 and defendant no. 7 issued show cause
notice dated 10/04/2019 to the plaintiffs to show as to why they should
not be declared as willful defaulters. The plaintiffs have also be given
personal hearing.
11. The defendant no.2 IDBI Bank has submitted that recently there
have multiple cases of willful defaulters and systematic fraud. In order
to prevent multiple financing and restrict further illegal borrowing, the
Reserve Bank of India has issued various Guidelines from time to time.
In view of those Guidelines, it is incumbent upon the defendant no.2
-- 6 of 21 --
7 NM No.1284/2020 in
Com St No. 4202/2020
and other creditors to report to RBI and Credit Information Companies
(''CIC'') about the act of willful defaults/frauds committed by the
borrowers. The defendants have analysed the transaction in the
borrowers account and in line with RBI Guidelines concluded and
willful default have occurred and therefore in order to restrict and
arrest further borrowings by the borrower/plaintiffs from other banks. It
is necessary to report the plaintiffs as willful defaulter to RBI and other
credit information companies.
12. The defendant no.2 has further submitted that plaintiffs are
already declared as ''willful defaulters''. The defendant no.2 issued
show cause notice dated 14th January, 2019 and also allowed personal
hearing to the plaintiffs before the Willful Defaulter Committee ( WDC )
of the Bank. The plaintiffs have played fraud upon all the defendants
and have duped public money. Total amount due to all consortium
members including the defendants is Rs.2,845.70 crores. The account
of TSPPL has been classified as NPA by all the defendants bank. The
plaintiffs have not made out prima facie case.
13. The defendant no.3 has resisted this notice of motion by common
objections raised by all the defendants and has further submitted that
the plaintiffs Company has availed and enjoyed various credit facilities
from the defendant and the other consortium banks and accounting in
tune of Rs. 2,625,71,68,500/- as on 31/03/2020. It is pertinent to note
that a sum of Rs.197,77,00,580/- is due and payable as on 31st March
2020, alongwith further interest from the said Company and the
plaintiffs to the defendant. This defendant declared account of the
Company as NPA on 31st December, 2015. The defendant has declared
-- 7 of 21 --
8 NM No.1284/2020 in
Com St No. 4202/2020
said Borrower account as ''fraud'' on 3rd October, 2019 and the said
declaration was reported to the RBI on 9th October, 2016 which is well
within the time lines as mentioned in the RBI Guidelines dated 1st July,
2016.
14. The defendant no.4 has resisted this notice of motion by common
objections raised by all the defendants and has further submitted that
M/s. Topworth Steel Power and Private Limited, the company of which
plaintiff nos. 1 to 4 were the Directors was in or about 2015, sanctioned
a funded limit of Rs.60 crores and non funded limit of Rs.40 crores.
Subsequently, the account was reviewed/restructured and sanctioned
funded limit of Rs.65.46 crores (TL) and non fund limit of Rs.60.82
crores was duly accepted by the plaintiffs. The defendant no.4 states
that the besides that LC bills worth Rs.150.21 crores were also
discounted by plaintiffs through Kalbadevi Branch. The accounts of the
plaintiffs company i.e. M/s. Topworth Steel and Power Private Limited
was classified as Non Performing Asset (NPA) on 31/03/2016, as per
RBI Guidelines. The defendant no. 4 alongwith other members bank
had filed application before Hon'ble DRT-1 Mumbai for recovery of its
dues on 30/01/2018, the said application is still pending.
The defendant no. 4 issued show cause notice to the Topworth Steel
and Power Private Limited and to the plaintiffs seeking to declare them
as willful defaulters by following principle of natural justice. The
plaintiffs have not made out prima facie case.
15. The defendant no.5 bank have resisted this notice of motion by
common objections raised by all the defendants and further submitted
that this defendant and other members of the consortium banks have
-- 8 of 21 --
9 NM No.1284/2020 in
Com St No. 4202/2020
classified the account of the borrower company as '' Red Flag '' and
''fraud'' account under RBI Guidelines dated 1st July, 2016. This
defendant bank have declared the said borrower account as '' fraud '' on
12th February, 2019 and the said declaration was reported to the RBI on
12th February, 2019 which is well within the time lines as mentioned in
the RBI Guidelines dated 1st July, 2016. This defendant bank have not
filed a complaint before the CBI. This defendant and consortium banks
have to recover a sum of Rs.2,653.92 crores as on 31st December, 2017
from the borrower company and the plaintiffs with further interest
thereon.The consortium lenders have initiated recovery actions before
the Hon'ble DRT, Mumbai. The lead bank State Bank of India has also
issued demand notice u/s.13(2) of SARFAESI Act 2002 on 16th January,
2017. The plaintiffs have not made out prima facie case.
16. The defendant no.6 bank have resisted this notice of motion by
common objections raised by all the defendants and has further
submitted that the plaintiffs and their Company availed and enjoyed
various credit facilities from this defendant and the other consortium
banks and accounting in tune of Rs.1,637.40 crores as on 31st July,
2020. It is pertinent to note that a sum of Rs.561.24 crores is due and
payable as on 31st July, 2020 alongwith 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 the other consortium banks, the said company has failed and
neglected to pay the amount dues and payable to this defendant and
other consortium banks. This defendant declared NPA on 1st
December ,2014 with account of borrower company. The borrower
company has siphoned huge amounts and therefore, other consortium
-- 9 of 21 --
10 NM No.1284/2020 in
Com St No. 4202/2020
banks had conducted forensic audit and it is clear from the said audit
report that the said borrower company has siphoned huge funds which
is public money. The members of the consortium bank have classified as
the account of the borrower company as '' Red Flag '' and '' fraud''
account under the RBI guidelines dated 1st July, 2016. This defendant
had identified the Directors/Guarantors of the said borrower company
as willful defaulters on 20th December, 2019, accordingly a show cause
notice was issued to the Directors/Guarantors of the said borrower
company on 4th March, 2020. In response to the same, the plaintiffs
have submitted their reply on 27th July, 2020 through their advocate.
The plaintiffs have not made out prima facie case.
17. All the defendants have submitted that the plaintiffs have not
made out prima facie case, balance of convenience does not lies in
favour of the plaintiffs, the plaintiffs will not suffer any irreparable loss
which will not compensate in terms of money, if this notice of motion is
not granted in favour of the plaintiffs. On these grounds, the defendants
bank have submitted that the present notice of motion taken out by the
plaintiffs may kindly be dismissed with costs.
18. 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 pleadings and written notes of arguments, the learned counsels
on behalf of the defendants have raised objections that the plaintiffs
have filed this false suit and notice of motion without any grounds. The
learned counsels have further raised objection that the defendants
Banks have already declared willful defaulters to the plaintiff company
-- 10 of 21 --
11 NM No.1284/2020 in
Com St No. 4202/2020
by following due procedure of guideline issued by RBI Bank. The
learned counsel on behalf of defendants have raised various objections
such as the suit of the plaintiffs 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.
19. During the course of arguments, the learned counsels for the
defendants banks have argued that in the present suit, the plaintiffs
have not made party to the Company of the Plaintiffs i.e '' M/s.
Topworth Steel and Power Private Limited'' which is necessary party in
the present suit and the plaintiffs have filed the present suit without
adding to the Company. Therefore, the present suit is not maintainable.
The learned counsel on behalf of the defendants 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.
20. 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) .
-- 11 of 21 --
12 NM No.1284/2020 in
Com St No. 4202/2020
21. 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.
22. 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
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 decide this suit in view of Section 9 of Civil Procedure
Code.
23. The learned counsels on behalf of the defendants have argued
that in view of provisions 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
-- 12 of 21 --
13 NM No.1284/2020 in
Com St No. 4202/2020
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 challenging show
cause notices issued by the defendants bank which are not issued by
following due 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.
24. The learned counsels on behalf of the defendants have argued
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.
25. 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.8800-8801 of 2019, the Hon' ble
Supreme Court has observed in para No. 8 of the Judgement that, ''
Section 231 of the IPC bars the jurisdiction of civil courts in respect of
any matter in which the Adjudicating Authority i.e. the NCLT or the
-- 13 of 21 --
14 NM No.1284/2020 in
Com St No. 4202/2020
NCLAT is empowered by the Code to pass any order. '' The learned
counsel on behalf of the defendants has 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
effect or consequence or bearing.''
26. 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.
-- 14 of 21 --
15 NM No.1284/2020 in
Com St No. 4202/2020
27. 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 no.3
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 and Topworth
Steel and Power Private Limited Company 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 are being suspended
directors and guarantors are challenging the show cause notices issued
by the defendants which are under challenged by which the defendants
bank issued 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.
28. The learned counsels for the defendants have 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
-- 15 of 21 --
16 NM No.1284/2020 in
Com St No. 4202/2020
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
where under the defendants have lent money in ordinary course of its
transaction. Thus, the action of the defendants bank by issuing show
cause notices under challenge are maintainable as a Commercial Suit.
29. 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 counsel in
their submissions 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
-- 16 of 21 --
17 NM No.1284/2020 in
Com St No. 4202/2020
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.
30. 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
not an ordinary Suit.
31. 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 learned counsel for
the plaintiff has submitted that the plaintiffs 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.
32. The learned counsel on behalf of the plaintiffs has argued that
the defendants have issued show cause notices to the plaintiffs and
Topworth Steel and Power Private Limited Company without following
Master Circular and therefore, the defendants have not followed the
-- 17 of 21 --
18 NM No.1284/2020 in
Com St No. 4202/2020
principles of natural justice.
33. 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
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.
34. It appears from the contention of the plaintiffs that the Topworth
Steel and Power Private Limited Company 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 ers facing restrictions in their cash flows. The plaintiffs
have filed various suit for recovery of amount against companies
debtors.
35. 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.
-- 18 of 21 --
19 NM No.1284/2020 in
Com St No. 4202/2020
36. Considering wide scope of Master Circular, the balance of
convenience lies in favour of plaintiff. 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.1284/2020 is hereby allowed.
2. The defendants bank personally or through their representatives are
restrained from taking coercive action against plaintiffs on account of
show cause notice dated 10/04/2019 issued by the defendant no.1,
show cause notice dated 14/01/2019 issued by the defendant no.2,
show cause notice dated 05/11/2019 issued by the defendant no.3,
show cause notice dated 02/02/2018 issued by the defendant no.4,
show cause notice dated 08/11/2018 issued by the defendant no.5,
show cause notice dated 04/03/2020 issued by the defendant no.6 and
show cause notice dated 10/04/2019 issued by the defendant no.7.
Defendants or their representatives are restrained from branding the
plaintiffs as willful defaulters/dissemination and publishing the name of
plaintiffs as willful defaulters 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.1284/2020 is disposed off accordingly.
Dtd:22/12/2020 Judge
City Civil & Sessions Court,
Gr.Mumbai.
-- 19 of 21 --
20 NM No.1284/2020 in
Com St No. 4202/2020
CERTIFIED TO BE TRUE AND CORRECT COPY OF THE ORIGINAL
SIGNED JUDGEMENT/ORDER”
UPLOAD DATE TIME NAME OF STENOGRAPHER
28/12/2020 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
22/12/2020
Judgement/order signed by P.O on 28/12/2020
Judgement/order uploaded on 28/12/2020
-- 20 of 21 --
21 NM No.1284/2020 in
Com St No. 4202/2020
-- 21 of 21 --