Bhoruka Drum And Allied Ind. Pvt. ... vs Bank Of Maharashtra ( Asset ...
2022 Latest Caselaw 6841 Bom

          Digitally signed
          by GAURI
GAURI     AMIT
                                                      1/7                       5.WP-11537-2019.doc
AMIT      GAEKWAD
GAEKWAD   Date:
          2022.07.22
          15:16:12 +0530      IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                      CIVIL APPELLATE JURISDICTION

                                     WRIT PETITION NO.11537 OF 2019
                  Bhoruka Drum & Allied Ind. Pvt. Ltd.             )
                  Having office at 11/B, Sudhakar, Narayan         )
                  Dabholkar Road, Mumbai 400 006                   )   ....Petitioner
                                       V/s.
               Bank of Maharashtra                             )
               Having its Asset Recovery Branch office at )
               6th Flr., Janmangal, Mumbai Samachar Marg, )
               Fort, Mumbai 400 023 through its Assistant )
               General Manager Mr. Aditya Prakash              ) ....Respondent
                                                   ----
              Mr. Rajneesh Agarwal a/w. Ms. Pooja Thorat and Mr. Girish Thanvi i/b.
              Ms. Swati D. Sawant for petitioner.
              Mr. Jayesh Desai i/b. Singhi and Co. for respondent.
                                                    ----
                                                      CORAM : K.R.SHRIRAM, &
                                                              A.S. DOCTOR, JJ.

DATED : 19th JULY 2022

ORAL JUDGMENT : (PER K.R. SHRIRAM, J.)

1 Petitioner has approached this Court for a writ of certiorari or

any other appropriate writ, order or direction to respondent bank to accept

the One Time Settlement (OTS) proposal of petitioner under Mahamukti

Scheme 2017-2018 and issue no dues certificate and return all securities

and hand over possession of the mortgaged property at B-11 Wagle

Industrial Estate, Road No.15, Wagle Wadi, Thane 400 604 to petitioner

upon payment of the settlement amount.

2 Petitioner was incorporated sometime in 1964 and was in the

business of manufacturing steel drums and allied products and in another

division, assembling electronic products including TVs as OEM for Sony

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Orson.

3 Sometime in 1978, petitioner took cash credit facility including

hypothecation, bill discounting and letter of credit facility from respondent

from time to time. It is petitioner's case that they were very punctual in

making payments to respondent. Due to adverse market conditions,

sometime in 1987, petitioner suffered huge losses and had to shut its

business operations. At that time, according to petitioner, it had principal

outstanding ledger balance of approximately Rs.1.67 Crores. Respondent

filed three civil suits before Civil Judge, Senior Division, Thane for recovery

of its dues of Rs.1,84,75,354.90, Rs.43,22,147.61 and Rs.16,78,474.44 and

other reliefs. Petitioner did not contest those suits and a decree came to be

passed against petitioner.

4 The decree remained unexecuted and after the Recovery of

Debts Due to Banks and Financial Institutions Act, 1993 (RDDB Act) was

promulgated, respondent applied to DRT-III Mumbai to issue recovery

certificates. Petitioner did not contest that application as well. Recovery

certificates came to be issued and the Recovery Officer initiated execution

proceedings and proceeded to attach the factory premises of petitioner that

was mortgaged to respondent. In 2005, the Recovery Officer proceeded to

sell the factory premises. It is petitioner's case that the sale was illegal etc.

but we need not go into that aspect at this stage. Mr. Agarwal states that the

sale has been later set aside. Be that as it may, the issue in the present case

is nothing to do with the sale.

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5                   Sometime in January 2018, based on guidelines issued by RBI,

respondent came up with a Scheme for OTS called Mahamukti Scheme

2017-2018. Pursuant to the Scheme, respondent addressed communication

to all the NPAs against whom litigations were pending making an offer with

the borrowers to enter into an OTS. According to petitioner, it received an

offer dated 18th January 2018 by which it was asked to pay a sum of

R.1,27,19,000/- to be paid on or before 31 st March 2018. Petitioner was also

informed that application for OTS will be processed only on deposit of

minimum 5% of the OTS amount and the balance amount can be paid on or

before 31st March 2018 failing which the OTS sanctioned will be rendered

infructuous. Petitioner was also informed that petitioner will be eligible for

an additional incentive if paid on or before 28 th February 2018 and if the

provisional amount is paid on or before 28th February 2018, the amount will

be reduced to Rs,1,17,19,000/-, a discount of about Rs.10 lakhs. Petitioner

responded by its letter dated 12th February 2018 and after giving detailed

background, agreed to pay Rs.1,27,19,000/- in the following manner :

 5% is paid into Bank's no-lien account along with this offer (Amount : Rs.635,950/- UTR No.IBKLR9201802120 0089560) which shall be appropriated towards the settlement upon saction;

 balance 95% shall be paid before 31 st March 2018 into Bank's no-lien account; Company will make an attempt to arrange payment from investors before 28 th February 2018 to avail total settlement amount of Rs.117,19,000/-;

 against appropriation of the balance amount of 95% the Bank shall return physical possession of the Company's security, i.e., Company's mortgaged property at B-11 Wagle Industrial Estate, Thane MIDC, which is in possession of the Bank.

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Upon receipt of entire OTS amount, Bank shall issue No Dues Certificate, withdraw all proceedings against Company, its directors, guarantors, etc. and hand over all mortgaged assets.

6 Respondent replied by its letter dated 28th February 2018

informing petitioner that its offer is conditional and called upon petitioner

to make an unconditional acceptance on the following terms :

2. Further we request you to give unconditional acceptance on the following terms -

(a) On receipt of entire OTS amount charge of Bank of Maharashtra over the mortgaged asset B-11, Wagle Industrial Estate, Thane (West) would be released. It will be your responsibility to get the possession of the property from the present occupant and also to deal with NKGSB Bank, Patel Profile Pvt. Ltd., S.S. Engineering and Consultants, Sales Tax Department, Labour dues or any other dues from any authority and litigation which may arise in future. You shall also deal with present and future litigations which may arise over the property.

(b) You will pay upfront amount of Rs.5 lakhs over the compromise amount to meet the expenses which may arise in future litigation or otherwise.

(c) The borrower and guarantor will indemnify the Bank in the eventuality of any litigations, claims, damages, penalty imposed on the Bank.

We request you to immediately respond and convey acceptance on the above mentioned queries, to enable us to inform to competent authorities.

7 As petitioner, by its letter dated 9 th March 2018, did not make

an offer, which according to respondent was unconditional, respondent by

its letter dated 29th March 2018 informed petitioner that petitioner cannot

be given the benefit of Mahamukti Scheme since petitioner's OTS offer was

conditional. It is this letter that petitioner is impugning in the petition.

Subsequently, petitioner addressed another letter dated 31 st March 2018 to

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respondent once again making the same offer that it made vide its

communication dated 12th February 2018.

8 Mr. Agarwal relied upon two judgments, one of the Apex Court

in Sardar Associates and Ors. V/s. Punjab and Sind Bank and Ors. 1 and

other of the Madhya Pradesh High Court at Jabalpur in the case of Mohanlal

Patidar V/s. Bank of Maharashtra and Anr.2 to submit that this Court can

exercise its jurisdiction under Article 226 of the Constitution of India in

matters of this nature and respondent being a public sector bank is a State

and is bound by RBI guidelines and having made an offer under the

Mahamukti Scheme and petitioner having accepted the offer cannot renege

on the offer.

9 Mr. Desai appearing for respondent submitted that :

(a) this Court should not entertain this petition under Article

226 of the Constitution of India;

(b) the Mahamukti OTS Scheme was operative only for a

limited period till 31st March 2018 and all the borrowers, against whom

various litigations were pending, had to pay and settle the account under

the Scheme before the cut off date of 31 st March 2018 which petitioner

failed to pay;

(c) the offer of the OTS proposal and the correspondence from

respondent were all on without prejudice and there was not a concluded

OTS proposal and acceptance;

1. (2009) 8 SCC 257

2. Writ Petition No.22127 of 2021 dated 21.2.2022 Gauri Gaekwad 6/7 5.WP-11537-2019.doc

(d) petitioner wanted respondent to, upon payment of the

entire amount, return physical possession of company security, i.e., the

mortgaged property, which condition was not acceptable to respondent

because in the recovery proceedings against petitioner, which has been

going on from the year 2005, the property has already been sold to a third

party who had borrowed money from another bank and that bank had also

sold that property to further third party;

(e) therefore, there was no binding OTS offer or acceptance.

10 Having heard the counsel and also considering the pleadings,

we are not inclined to exercise our jurisdiction under Article 226 of the

Constitution of India. We come to this conclusion because the

communications exchanged between the parties for the OTS settlement

were all without prejudice communications. Therefore, there was no

binding concluded OTS Scheme between the parties. Moreover, respondent

had made it clear to petitioner that petitioner's requirement that upon

making the balance payment of 95% respondent shall return physical

possession of company security was not acceptable to respondent. This was

because the security was not in possession of respondent.

11 In the circumstances, in our view, respondent was justified in

taking a stand that petitioner's offer was conditional and they were not

willing to accept any conditional offer. As regards the two judgments relied

upon by Mr. Agarwal, both are not applicable to the facts and circumstances

of the case at hand. In both these judgments, it does appear that there was a Gauri Gaekwad 7/7 5.WP-11537-2019.doc

concluded OTS agreement between the parties whereas, in the case at hand

there is no OTS agreement.

12 In the circumstances, petition dismissed with costs in the sum of

Rs.50,000/-. The costs shall be paid by petitioner to respondent by way of

cheque drawn in favour of the advocate for respondent within two weeks

from today.

(A.S. DOCTOR, J.)                              (K.R. SHRIRAM, J.)




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