THE HON'BLE THE CHIEF JUSTICE UJJAL BHUYAN
AND
THE HON'BLE SRI JUSTICE C.V.BHASKAR REDDY
WRIT PETITION No.5099 of 2022
JUDGMENT: (Per the Hon'ble the Chief Justice Ujjal Bhuyan)
Heard Mr. M.S.Prasad, learned Senior Counsel
appearing for the petitioners. We have also heard
Mr. M.Narender Reddy, learned Senior Counsel appearing
for respondent No.1 - State Bank of India (SBI) as well as
Ms. Mayuka Parcha, learned counsel for respondent No.2.
2. The present writ petition has been filed seeking the following reliefs:
"a. Issue a writ of declaration or any other appropriate writ, order or direction in the nature of writ of mandamus declaring holding the personal guarantees dated 02.05.2006, 20.05.2006, 31.12.2013 and 14.01.2016 furnished by the petitioner No.1 and the personal guarantees dated 31.12.2013 and 18.01.2016 furnished by petitioner No.2 as null and void and unenforceable;
b. Issue a writ of declaration or any other appropriate writ, order or direction in the nature of declaration holding that no amounts are either due or payable to the respondent No.1 in the Original 2 Application bearing No.350/2019 before the DRT-II, Hyderabad.
c. Issue a writ of mandamus or any other appropriate writ, order or direction setting aside the O.A.No.350/2019 qua petitioner No.1 and 2; d. Pass such other order or orders and grant such other reliefs in favour of the petitioner No.1 and 2 as this Hon'ble Court may deem fit and proper in the interest of justice and as would be warranted in equity."
3. From the above, it is seen that petitioners seek a declaration that the six personal guarantees (four of petitioner No.1 and two of petitioner No.2) should not be invoked. Further prayer made is for a declaration that petitioners are not liable to pay any amount to respondent No.1 - SBI in O.A.No.350 of 2019 pending before the Debts Recovery Tribunal - II, Hyderabad (Tribunal). Related prayer made is for quashing of O.A.No.350 of 2019 qua the petitioners.
3.1. However, learned Senior Counsel for the petitioners submits that the third prayer is not being pressed by the petitioners.
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4. The cause for institution of the writ petition has been summed up in paragraphs 4 and 5 of the writ affidavit, which reads as under:
"4. I further state that the petitioners have filed their written statement cum counter claim in the aforesaid OA inter alia seeking declaration of the Restructuring documents as described above as null and void and unenforceable. Moreover, the petitioners have also filed an application seeking stay on the effect and operation of the personal guarantees dated 02.05.2006, 20.05.2006, 31.12.2013 and 14.01.2016 furnished by the petitioner No.1 and the personal guarantees dated 31.12.2013 and 18.01.2016 furnished by petitioner No.2 till the pendency of the OA proceedings. However, on account of the non-appointment of the Presiding Officer in DRT-II, Hyderabad, neither the said counter claims of the petitioners nor the stay application of the petitioners has been adjudicated upon thereby leaving the petitioners remediless.
5. I state that therefore the petitioners are filing the present petition inter alia seeking declaration/setting aside of the personal guarantees dated 02.05.2006, 20.05.2006, 31.12.2013 and 14.01.2016 furnished by the petitioner No.1 and the personal guarantees dated 31.12.2013 and 18.01.2016 furnished by petitioner No.2 ("subject matter PGs") as null and void and enforceable. A copy of the personal guarantees dated developments. The business model developed by respondent No.2 envisaged two majour sources of earnings namely, margins from EPC Contracts and upstream cash flow 4 from its Special Purpose Vehicles ("SPV")/Subsidiaries. Respondent No.2 successfully undertook several EPC Contracts for setting up and implementation of power projects and in the year 2013, respondent No.2 was amongst the biggest power EPC contractors in the country (with successful implementation and operational capacity of more than 4,700 MW). While foraying into new power projects, respondent No.2 factored certain timelines for completion of the projects and the eventual revenues from such SPVs."
5. Learned Senior Counsel for the petitioners submits that the guarantees were furnished by the petitioners in their personal capacity as personal guarantees for the Corporate Debt Restructuring (CDR) of respondent No.2 - M/s. Lanco Infratech Ltd. i.e., the corporate debtor. Therefore, invocation of the personal guarantees is not justified.
6. Learned Senior Counsel for respondent No.1 submits that the writ petition was filed because the Tribunal was not functional at the relevant point of time. Now the Tribunal is fully functional. Respondent No.1 has filed an application under Section 19 of the Recovery of Debts and Bankruptcy Act, 1993, before the Tribunal for recovery of 5 the debts of respondent No.2 totalling an amount Rs.1392,22,04,909.77. In this connection, respondent No.1 has also sought for invoking the personal guarantees of the petitioners. The original application has been registered as O.A.No.350 of 2019. Additionally, respondent No.1 has filed an application under Section 95 of the Insolvency and Bankruptcy Code, 2016, before the National Company Law Tribunal, Hyderabad (NCLT), against the corporate debtor. He submits that interim moratorium has been granted by the NCLT. Therefore, there is no cause for continuing with the present writ petition.
7. Learned counsel for respondent No.2 submits that in the present proceeding, respondent No.2 has no role to play and therefore, no submissions are called for.
8. Learned Senior Counsel for the petitioners submits that in O.A.No.350 of 2019 pending before the Tribunal, petitioners have filed a counter claim which is pending. 6
9. On due consideration, we are of the view that prayers
(a) and (b) can only be decided by the Tribunal on adducing of evidence. Writ proceedings are not a substitute for and cannot be used to circumvent proceedings before the statutory tribunal. Therefore, we relegate the petitioners to the forum of the Tribunal i.e., Debts Recovery Tribunal - II, Hyderabad, on the above aspects, including on the point of invocation of personal guarantees.
10. To enable the petitioners to approach the Tribunal, the interim order passed by this Court on 04.03.2022 shall continue to hold the field for a further period of forty five days whereafter it would be for the Tribunal to pass appropriate order(s) in accordance with law. However, we make it clear that we have not expressed any opinion on merit and all contentions are kept open, leaving it open to Tribunal to pass appropriate order(s). Parties would also be at liberty to seek early hearing of O.A.No.350 of 2019.
11. Writ petition is accordingly disposed of. 7
Miscellaneous applications pending, if any, shall stand closed. However, there shall be no order as to costs.
______________________________________ UJJAL BHUYAN, CJ ______________________________________ C.V.BHASKAR REDDY, J 30.08.2022 vs