Bombay High Court
Perfect Infraengineers Ltd. By ... vs Board Of Directors Of Icici Bank By ... on 1 July, 2024
Author: A.S. Chandurkar
Bench: A.S. Chandurkar
2024:BHC-OS:9486-DB
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (LODGING) NO.4667 OF 2024
1. Perfect Infraengineers Ltd., Navi Mumbai ]
Represented by Promoter & Guarantor ]
Mrs. Manisha Nimesh Mehta, ]
2. Manisha Nimesh Mehta ]
Promoter & Guarantor of ]
Perfect Infraengineers Ltd., Navi Mumbai ] .. Petitioners
Versus
1. Board of Directors of ICICI Bank ]
Represented by Chairman & Managing Director ]
of ICICI Bank, Bandra-Kurla Complex, Mumbai-51 ]
2. Shri Benoy Idiculla ]
Head of the ICICI Branch, ]
ICICI Bank Head Office, ]
Bandra-Kurla Complex, Mumbai-51 ]
3. Ms. Ritu Maheshwari ]
Relationship Manager, ]
ICICI Bank Head Office, ]
Bandra-Kurla Complex, Mumbai-51 ]
4. Shri Jignesh Shelani ]
Authorized Officer, ICICI Bank Ltd., ]
Vadodara - 390 001. ]
5. Technology Development Board ]
Represented by its Chairperson, ]
Vishwa Karma Bhavan, New Delhi. ]
6. Board of Directors of the Reserve Bank of India, ]
Represented by its Governor, Fort, Mumbai. ]
7. Ministry of Micro, Small and Medium Enterprises, ]
Represented by its Secretary, ]
Udyog Bhawan, New Delhi. ]
8. National Company Law Tribunal No.1, ]
Cuffe Parade, Mumbai - 400 005. ] .. Respondents
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Mr. M.J. Nedumpara with Ms. Hemali Kurne, Ms. Maria Nedumpara and
Mr. Akhilesh Nair, Advocates, i/by Nedumpara and Nedumpara, for the
Petitioners.
Mr. Harjot Singh Alang, Advocate, i/by Raval Shah & Co., for Respondent
Nos.1 to 4.
Mr. Sumedh Ruikar with Mr. Viraj Shelatkar, i/by Mr. Pradip Yadav,
Advocates, for Respondent No.5.
CORAM : A.S. CHANDURKAR &
RAJESH S. PATIL, JJ
DATE : 1ST JULY, 2024.
ORDER :
{ Per A.S. Chandurkar, J. }
1. The 1st petitioner - a Company registered under Micro, Small and
Medium Enterprises Development Act, 2006, (for short, "Act of 2006"),
through the 2nd petitioner, its Promoter and Guarantor, has filed this Writ
Petition under Article 226 of the Constitution of India praying that the
communications issued by the 1st respondent - ICICI Bank rejecting the
application made on behalf of the petitioners for constitution of a
Committee for the revival and rehabilitation of an Enterprise under the
Act of 2006 be quashed with a further prayer to restrain the ICICI Bank
from initiating or continuing any action under the Insolvency and
Bankruptcy Code, 2016, (for short, "the Code"), as well as under the
provisions of the Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (for short, "Act of 2002"). The
petitioners also seek a declaration that they are covered by the provisions
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of the Act of 2006 and hence the recovery proceedings initiated by the
ICICI Bank classifying the petitioners' account as Non Performing Asset -
NPA without extending benefits under Notification dated 29 th May 2015
issued under Section 9 of the Act of 2006 are illegal. Relief of similar
nature is also sought against the 5th respondent - Technology Development
Board, New Delhi (for short, "TDB").
2. The facts on record indicate that the petitioner no.1-Company
availed credit facility from ICICI Bank. On failure to make the repayment
as agreed, the account of the Company was declared as Non Performing
Asset (NPA) on 29th February 2020. The Loan Recall Letter along with
Guarantee Invocation Notice was issued to the petitioners after which
notice under Section 13(2) of the Act of 2002 was issued on 14 th October
2020. On 13th July 2021, the Bank issued a notice for taking possession of
the secured assets. In proceedings initiated by the Company before the
Debts Recovery Tribunal, order dated 23rd March 2022 was passed
granting stay to the taking over of possession of the mortgaged property
subject to conditions imposed in the said order. It was further directed that
on failure to deposit the amount as directed, the stay as granted would
stand vacated. Since the petitioners were aggrieved by the condition of
deposit imposed by the Debts Recovery Tribunal ("DRT"), they approached
the Debts Recovery Appellate Tribunal ("DRAT"). The DRAT by its order
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dated 31st October 2022 decided the application filed under Section 18(1)
of the Act of 2002 with regard to mandatory pre-deposit. Subject to
complying with the order of deposit, further proceedings initiated by the
Bank were directed to be stayed.
3. On 28th September 2022, the Bank issued another notice for sale of
secured assets being a plot located at Taluka Mulshi, Lavasa. In the
aforesaid backdrop, the petitioners approached this Court by filing Writ
Petition (Lodging) No.35792 of 2022 against the ICICI Bank as well as the
Technology Development Board. By the judgment dated 11 th January
2024, the said Writ Petition along with a batch of Writ Petitions came to be
decided by a common judgment since challenge in all the Writ Petitions
was based on the Notification dated 29 th May 2015. Turning down the said
challenge, it was held that Banks as well as Non-Banking Financial
Companies were not obliged to adopt the re-structuring process under the
Notification on their own without there being any application by the
petitioners / MSME. The challenge as raised was therefore turned down.
The Court however granted leave to all the petitioners to agitate other
issues in their Writ Petitions by adopting alternate remedies as available in
law. It was clarified that the Court had not opined on the merits of such
other issues.
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4. Insofar as the 5th respondent - Technology Development Board
("TDB") is concerned, it is seen that it had granted a loan assistance of
Rs.750 lakhs to the Company. On 31 st May 2021, a communication with
regard to non-continuation of the Loan Agreement was issued by TDB.
Hence, notice dated 26th April 2022 came to be issued to the petitioners
seeking re-payment of the outstanding dues being Rs.5,76,25,606/-. It
appears that the petitioners challenged the aforesaid action before the City
Civil Court. In the meanwhile, TDB initiated proceedings under Section
138 of the Negotiable Instruments Act, 1881 against the petitioners. TDB
has thereafter initiated proceedings under Section 7 of the Code against
the Company. The said proceedings are stated to be pending, awaiting
pronouncement of final orders.
5. It is in this backdrop that the present Writ Petition has been filed
seeking the reliefs referred to hereinabove. The learned counsel for the
petitioners submitted that notwithstanding the rejection of the challenge
raised by the petitioners to the applicability of the Notification dated 29 th
May 2015, followed by rejection of the Review Petition and thereafter the
Special Leave Petition bearing No.(C) 2112 of 2024 on 29 th January 2024,
it was permissible for the petitioners to seek the reliefs as prayed for in the
present Writ Petition. Since the Special Leave Petition came to be
dismissed without granting leave, the doctrine of merger was not attracted
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insofar as the order passed by the Supreme Court on 29 th January 2024
was concerned. In that regard, reliance was placed on the decisions in
Supreme Court Employees Welfare Association Vs. Union of India and
Anr., (1989) 4 SCC 187, Kunhayammed and Ors. Vs. State of Kerala and
Anr., (2000) 6 SCC 359, the judgment in Civil Appeal No.2432 of 2019
(Khoday Distilleries Ltd., now known as Khoday India Ltd. and Ors. Vs. Sri
Mahadeshwara Sahakara Sakkare Karkhane Ltd., Kollegal (Under
Liquidation), represented by the Liquidator), along with connected matter ,
dated 1st March 2019 and Experion Developers Pvt. Ltd. Vs. Himanshu
Dewan and Ors., 2023 SCC OnLine SC 1029 . To substantiate the
contention that the earlier adjudication would not operate as res judicata,
the learned counsel referred the judgments of the Full Bench of this Court
in The Province of Bombay Vs. The Municipal Corporation of Ahmedabad,
AIR 1954 Bom 1, and Mathura Prasad Bajoo Jaiswal and Ors. Vs. Dossibai
N.B. Jeejeebhoy, 1970 (1) SCC 613. It was thus submitted that the present
Writ Petition could be entertained on merits. Similarly, it was urged that
no estoppel against law would operate against the petitioners especially in
the light of the fact that all challenges raised by the petitioners on facts
had been kept open despite rejection of the earlier Writ Petition. Reference
in that regard was made to the decision of the Court of Appeal in Thoday
Vs. Thoday, (1964) 1 All ER 341, as well as extracts from Everest on
Estoppel.
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. Coming to the Notification dated 29th May 2015, it was submitted
that ICICI Bank as well as TDB did not offer any explanation for not
referring the case of the Company to the Committee constituted under the
Notification for identifying incipient stress. Since the said respondents had
failed to comply with their mandatory obligations under the Notification,
it was not permissible for them to oppose the prayers made by the
petitioners. It was further submitted that since the judgment dated 11 th
January 2024 deciding the earlier Writ Petition filed by the petitioners did
not interpret the Notification dated 29th May 2015 in its proper perspective
and ignored its mandatory nature, that decision was rendered per
incurium. The same was also a nullity in the eye of law. Thus,
notwithstanding the rejection of the Special Leave Petition without grant
of any leave, it was open for this Court to examine the challenge afresh.
The Court was not bound by the earlier adjudication and could correct
itself in larger interests of justice. In that regard, learned counsel referred
to the judgment of the Constitution Bench in A.R. Antulay Vs. R.S. Nayak
and Anr., (1988) 2 SCC 602. On the aforesaid basis, it was submitted that
the petitioners were entitled for the reliefs claimed in the Writ Petition.
6. The aforesaid contentions were opposed by the learned counsel
appearing for the 5th respondent - TDB. According to him, the TDB had
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been constituted under the Technology Development Board Act, 1995 and
was thus a Statutory Board, distinct from a Bank. Referring to the
Circulars issued by the Reserve Bank of India on 1 st August 2012 and 21st
July 2016, it was submitted that these Circulars were applicable to
Scheduled Commercial Banks, which did not include the TDB. It was then
submitted that TDB had initiated proceedings under Section 7 of the Code,
wherein the arguments of the parties had been concluded and the
judgment therein was awaited. In view of the interim order dated 1 st April
2024 passed in the Writ Petition, the judgment could not be pronounced.
The learned counsel sought to distinguish the action taken under the Act
of 2002 by Commercial Banks and the action initiated by TDB under the
Code. He also referred to the judgment of the Constitution Bench in
Daryao and Ors. Vs. State of U.P. and Ors., along with connected matters,
AIR 1961 SC 1457, to contend that with the dismissal of the earlier Writ
Petition, the petitioners could not be permitted to re-open the issues that
had attained finality. It was thus submitted that the Writ Petition be
dismissed.
7. We have heard the learned counsel for the parties at considerable
length and with their assistance, we have also perused the documents on
record. Having given due consideration to the rival submissions, in our
view, we find that the petitioners on facts are not entitled for the reliefs
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sought by them in the Writ Petition. It is to be noted that the petitioners'
account insofar as ICICI Bank is concerned was declared as NPA on 29 th
May 2020. Under the Notification dated 29 th May 2015, it is necessary for
Banks or creditors to identify incipient stress before a loan account of a
MSME turns into NPA. On such identification, the account has to be
categorized under the special mention account, after which further steps
are required to be taken for resolution of the stress. As noted above, after
the petitioners' account was declared as NPA, proceedings under the Act of
2002 came to be initiated by ICICI Bank that have thereafter culminated
into notice of sale / auction in view of various subsequent events taking
place. ICICI Bank after declaring the account as NPA on 29 th May 2020 has
taken various further steps to recover its dues under the Act of 2002. The
petitioners approached the DRT and thereafter the DRAT challenging the
action taken by the Bank. We find in the facts of the present case that with
passage of time, the steps taken by ICICI Bank have crystallized into a
right in its favour, which at this point of time have become irreversible and
do not deserve to be set aside in equity jurisdiction. The challenge as
regards non-initiation of any action by the ICICI Bank in accordance with
the Notification dated 29th May 2015 ought to have been taken
immediately on the petitioners' account being declared as NPA on 29 th May
2020 or shortly thereafter. Any rights claimed under the Notification ought
to have been pursued within reasonable time of the petitioners' account
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being declared as NPA. The same not having been done in the present case
coupled with the resultant initiation of action by the Bank under the Act of
2002 dis-entitles consideration of the petitioners' prayers based on the
Notification dated 29th May 2015 on the ground of unreasonable delay in
seeking such relief.
8. It is true that in the earlier round of litigation, the petitioners had
sought relief based on the said Notification. By the judgment dated 11 th
January 2024 delivered in the petitioners' earlier Writ Petition, it was held
that in absence of any steps being taken by the petitioners to seek benefit
under the Notification, it was not obligatory for the Bank to have
categorized the account of the petitioners for benefit under the said
Notification. The liberty granted in the aforesaid judgment was with
regard to raising other issues than the one decided. In the earlier Writ
Petition, the issue with regard to action of the ICICI Bank not acting as per
the Notification dated 29th May 2015 was under consideration. This issue
cannot be re-agitated in this Writ Petition afresh.
. It is true that the doctrine of merger would not apply when a
Special Leave Petition is dismissed by the Supreme Court without grant of
leave, as held in the decision in Kunhayammed and Ors. (supra). Despite
this position, in our view the principle of issue estoppel would arise in the
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light of the fact that the petitioners had sought similar reliefs in the earlier
Writ Petition based on the Notification dated 29 th May 2015 and were
unsuccessful. Since we find that the petitioners' earlier Writ Petition came
to be decided on 11 th January 2024, followed by dismissal of the Review
Application, the ratio of the decision in Nivrutti G. Ahire Vs. State of
Maharashtra and Ors., (2007) 5 MhLJ 284 would be attracted precluding
the Court from having a re-look at the matter. We therefore find that on
the principle of issue estoppel coupled with the challenge being raised by
the petitioners beyond reasonable period of time as a result of which
rights have crystallized in favour of the Bank, the petitioners are not
entitled for the reliefs sought against ICICI Bank. In these facts therefore
the ratio of the decisions relied upon by the learned counsel for the
petitioners cannot be applied to present case.
9. Insofar as TDB is concerned, we find that it is a Statutory Board
constituted under the Act of 1995. It's learned counsel is justified in
referring to the Circulars issued by the Reserve Bank of India which have
been addressed to Commercial Banks alone and hence the same are not
applicable to TDB. In any event, we find that the aspect of approaching
the Court after considerable period of time also precludes grant of any
relief to the petitioners. The TDB has also initiated proceedings under
Section 7 of the Code, which are stated to have now been concluded with
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the judgment therein being awaited. The TDB took steps to recall the
amounts advanced to the petitioners on 26 th April 2022, after which it had
approached the National Company Law Tribunal by filing proceedings
under the Code. Hence, on this count, we do not find that this is a fit case
to exercise discretion under Article 226 of the Constitution of India as
regards the prayers made against the TDB.
10. For aforesaid reasons, we do not find any case made out to grant
any relief to the petitioners in the Writ Petition. It is accordingly dismissed
with no order as to costs.
[ RAJESH S. PATIL, J. ] [ A.S. CHANDURKAR, J. ]
12/12 Digitally
signed by
10-WP(L)-4667-2024.doc SNEHA SNEHA
ABHAY DIXIT
Dixit ABHAY Date:
DIXIT 2024.07.01
17:42:26
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