Bombay High Court
Manisha Nimesh Mehta, Director Of ... vs The Board Of Directors Of Technology ... on 1 April, 2025
Author: Bharati Dangre
Bench: Bharati Dangre
2025:BHC-OS:5745-DB
COMAP(L)15792025.doc
Andreza
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMMERCIAL APPEAL (L) NO. 1579 OF 2025
IN
INTERIM APPLICATION (L) NO. 25072 OF 2024
WITH
INTERIM APPLICATION (L) NO. 3331 OF 2025
Manisha Nimesh Mehta, Promoter & ... Appellant
Guarantor of Perfect Infra-engineers Ltd.
Versus
The Board of Director of Technology
Development Board & Others. ... Respondents
***
Mr. Mathews Nedumpara a/w Hemali Marve & Satsang Tailor i/by
Nedumpara & Nedumpara for the Appellant.
Mr. Viraj Shelatkar a/w Sumedh Ruikar i/by Pradip Yadav for
Respondent Nos. 1, 2, 4, 5 and 6.
Mr. Anshul Anjarlekar a/w Sanika Athalye a/w Manshi Thakkar i/by
Ravat Shah & Co. for Respondent No. 8.
---------------------------
CORAM: ALOK ARADHE, CJ. &
BHARATI DANGRE, J.
RESERVED ON: 28th MARCH 2025
PRONOUNCED ON: 1st APRIL 2025
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JUDGMENT (Per Bharati Dangre, J.)
1. The present Commercial Appeal is filed by the Appellant raising
challenge to the Order dated 19.11.2024 passed by the Single Judge,
rejecting the interim reliefs sought by her through IA(L) 25072 of 2024
and IA(L) No. 25073 of 2024. The Commercial suit is instituted by the
Appellant seeking damages and compensation of Rs.8.73 crores.
alleging gross breach of contract and trust, culpable negligence, and
malicious and tortious action at the hands of the The Technology
Development Board (herein after referred to as 'TDB') and its Officer,
along with further interest from the date of decree till its final payment.
A claim is also staked against ICICI Bank and its Officers, as the
Plaintiff alleged that she had suffered harassment, on account of the ill
treatment meted out by the Bank, which has been instrumental in
causing deficit in the accounts of the Plaintiff by charging exorbitant
interest and initiating proceedings under the Securitization and
Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 (SARFAESI Act) without examining the stress in the
account through a Committee, as contemplated under the MSMED
Notification dated 29.05.2015.
2. The Appellant before us is Manisha Nimesh Mehta, the promoter
of Perfect Infra Engineers Limited and it is her claim that she along
with her husband commenced the unit of manufacturing of solar panels
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in the year 1994 and the Company did well for some length of time and
its shares were listed on stock exchange. Since the Company needed
technology upgradation, she entered into partnership with an
American Company and also approached the Technology Development
Board of India (TDB), an entity under the Ministry of Science and
Technology, which sanctioned a loan of 7.5 crores, which came into
two tranches and which was invested by the Appellant in import of
Modern Technology including purchase of machines.
The Appellant was also banking with ICICI Bank and it is her
allegation against the Bank that it was charging interest incorrectly and
in excess of the agreed rate of interest, which constrained her to
approach the Banking Ombudsman who directed the excess interest
charged to be reversed. However, by way of vengeance, the loan of the
Appellant-company was classified as NPA with retrospective effect
from 29.02.2020, so as to deny the benefit of COVID-19 moratorium
and various other benefits extended by Government of India/RBI
which inter alia directed Banks/NBFC not to classify Micro, Small and
Medium Enterprise (MSME) Loan Accounts as NPA. However, it is the
pleaded case of the Appellant that after classifying the loan account as
NPA, ICICI Bank under Section 13(2) of SARFAESI Act took symbolic
possession of her property which included the guest house of the
Company at Lavasa, Pune, and a residential flat at Ghatkopar (East), by
invoking proceedings under Section 13(4) of the Act. According to the
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Appellant, she attempted to salvage her business by selling her factory
premises and companies office premises by way of distress sale and
paid the entire proceeds i.e. an amount of 5.50 cross against the total
claim of ICICI Bank of 9.50 crores and sought regularization of the
loans but the Bank did not oblige her.
Instead, ICICI Bank approached the TDB to credit the money of
third tranche of its loan to the Appellants-Companies' banking account
with ICICI Bank instead of Bank of India, as was done while releasing
the earlier two instalments. According to the Appellant, this was a
malafide act on the part of the bank but ultimately TDB refused to
release the third and fourth tranche of the loan, which brought the
project of the company to a grinding halt.
3. According to the Appellant, it is this malafide act of the ICICI
Bank as well as TDB which did not allow her to meet her contractual
obligations with her foreign partners, resulting into financial stress
which caused her to approach DRT, City Civil Court as well as Supreme
Court, on more than one occasion.
4. According to Mr. Nedumpara, the learned Counsel appearing for
the Appellant, that the unit of the Appellant is an Micro, Small and
Medium Enterprises (MSME) and therefore it is entitled for protection
of the Notification issued by the MSME dated 29.05.2015 and the ICICI
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bank was under an obligation to identify incipient stress which it did
not and according to him, the bank was under an absolute duty to
create a special account, constitute a Committee and make an
application to the Committee under Notification dated 29.05.2015 and
no recovery could have been made against it except in manner
permitted by the Committee. Apart from this, it is urged by Mr.
Nedumpara that not a single bank or financial institutions in the
Country had given effect to the Notification and even the RBI failed in
its duty to enforce it.
5. In the sequence of events, we have noted that TDB instituted
proceedings under the IBC and this action was challenged by the
Appellant in a Writ Petition which came to be admitted by the Court on
12.06.2023. By subsequent common Judgment dated 11.01.2024, the
plea of the Appellant along with other MSMEs alleging the recovery
proceedings initiated to be in violation of Notification was rejected.
This Judgment was taken in an appeal before the Apex Court and on
29.01.2024, their Lordships of the Apex Court declined to interfere.
A Review Petition was filed by the Petitioner being Review
Petition (L) No. 4048 of 2024 but on 19.04.2024, the Review Petition
was dismissed by this Court by recording that Order of the Apex Court
amounted to merger.
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6. Once again, the Appellant approached the Apex Court against the
Order passed in Review Petition by invoking Article 136 but before the
proceedings could be heard, by Order dated 18.03.2024, the NCLT
Mumbai Bench had already adjourned the Company Petition filed by
TDB under Section 7 of IBC for pronouncement of Orders. This
constrained the Appellant to file an application for recall of the Order of
the NCLT dated 18.03.2024 and Writ Petition was also filed in Delhi
seeking declaration that IBC 2016 is one sided legislation and therefore
unconstitutional and the Delhi High Court ultimately reserved the
same for Orders. When once again the Supreme Court was
approached, but the proceedings were disposed off by relegating the
Appellant to Delhi High Court.
7. However, the Appellant again approached this Court and on
01.04.2024 the NCLT Mumbai Bench was restrained from passing
Order under Section 7 on the petition, however, on 01.07.2024, this
Order was vacated. In the meantime, the SLP filed by the Appellant
challenging the dismissal of the Review Petition was heard by the Apex
Court when it set aside the Judgment passed by the Division bench of
this Court in Review Petition, holding review is not barred by the
doctrine of merger.
8. With this backdrop, the Appellant once again approached the
NCLT alleging that the recovery proceedings by the ICICI Bank and
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TDB under SARFAESI Act and TDB respectively are illegal as the
Appellant is entitled to protection of the Notification dated 29.05.2015
but the NCLT declined adjournment and placed the matter for
pronouncement of Orders. In the meantime, since the Order of the
Supreme Court allowing the Appellants' SLP was delivered, Appellant
approached NCLT and requested it to refrain from passing any Order
as the High Court was directed to hear the Appellants' Review Petition.
However, the NCLT did not deem it appropriate to indulge the
Appellant and on 15.07.2024 passed the Order admitting the
proceedings under IBC.
9. We have perused the Order of the NCLT dated 15.07.2024 on
initiation of the proceedings filed by the financial creditor The
Technology Development Board as against the corporate debtors i.e.
the Appellant.
Recording that there is no dispute at the end of the corporate
debtor in respect of the loan agreement which granted loan facility of
7.50 lakh, it is noted by the NCLT that out of the sanction letter amount
of Rs.450 Lakhs was disbursed by way of two instalments and after
realization of second instalment, it was noted that the debtor could not
fulfill the conditions of collateral mentioned in the loan agreement but
the debtor chose to adopt a plea that the financial creditor failed to
disburse the entire loan amount within a reasonable time and therefore
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she was unable to meet the obligations of the financial creditors. In
addition plea of recusal was also raised by the Appellant. However, the
contentions raised were specifically negated by the Tribunal by
recording as below :
"16. Second ground we are clear in our mind
that if the judges decide to recuse themselves on
the basis of frivolous and baseless allegations it
will be a convenient ploy to litigant to choose
their own Benches by stage managing such king
of litigations. Recusal is not to be forced by any
litigant to choose a Bench. It is for the judge to
decide to recuse. The picture emerging from
the conspectus of the detailed facts summarized
hereinabove amounts to choosing Bench of
one's liking. If allowed to happen, this would
open the flood gates of forum shopping.
Quintessentially the plea tantamounts to Bench
hunting.
17. It would be quite apposite and appropriate
to note that in the matter of Company Appeal
(AT) (Insolvency) No. 420 of 2023 & IA
No. 1388 of 2023 at National Company Law
Appellate Tribunal Principal Bench, New Delhi
held as under -
5. Rule 62 of NCLT Rules, 2016 which
deals with the-recusal provides as follows:
62. Recusal-
(1) For the purpose of maintaining
the high standards and integrity of the
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Tribunal, the President or a Member of
the Tribunal shall recuse himself:
a) In any cases involving
persons with whom the
President or the Member has or
had a personal, familial or
professional relationship;
b) In any cases concerning
which the President or the
Member has previously been
called upon in another capacity,
including as advisor,
representative, expert or
witness: or
c) If there exists other
circumstances such as to make
the President or the Member's
participation seem
inappropriate.
(2) The President or any Member
recusing himself may record reasons
from recusal:
18. We are fortified in our view in the light of
observation of Hon'ble NCLAT, that no person
can maintain application for recusal of the
Member."
10. The NCLT in its Order also make a reference to the MSME
Notification dated 29.05.2015, as it was urged by the Debtor that her
account could not have been declared as NPA without having recourse
to the revival mechanism however the Tribunal record that the issue
before it was whether the corporate debtor ought to have been declared
as NPA or not and this was purely between the corporate debtor and its
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banker, namely, the ICICI bank and the argument that MSMED Act,
2006 is special law which will prevail over SARFAESI Act and IBC was
a completely misplaced argument. Recording that the application by
the financial creditor is complete in all aspects as required in law and
since it is established that corporate debtor is in default of debt due
and payable and the default is in excess of minimum amount stipulated
under Section 4(1) of IBC, the Petition came to be allowed resulting into
imposition of moratorium with consequential directions.
Pertinent to note that the Appellant also filed Writ Petition (L)
No.20943 of 2024 raising a challenge to the Notification dated
29.05.2015 and other consequential reliefs against respondent no. 1 as
well as the ICICI Bank i.e. Respondent no. 4. After the Orders being
passed by NCLT on 15.07.2024 she filed interim application in the
aforesaid Writ Petition seeking stay of the Order dated 15.07.2024
passed in the three IAs.
On 18.7.2024, the Division Bench of the Court expressing that
the statutory remedy is available to the Appellant to approach NCLT
under Section 21, dismissed the application. The Appellant also
challenged the said Order in three distinct Petitions. In the wake of the
Order dated 18.07.2024, the same were directed not to be listed before
the same Bench.
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11. In the meantime, the appellant instituted Commercial Suit No.
70/2024 in which Interim Application(L) Nos. 2507/24 and 2503/24
were filed, seeking the stay of the order dated 15.07.2024 passed in the
Company Petition, for recalling of the order dated 18.02.2024 which
has dismissed the IA No. 3290 of 2024 filed by the Appellant. A
direction was also sought against the respondent-TDB to disburse the
balance remaining in tranche, of Rs. 3 crores in the account of the
Plaintiff in Bank of India. By way of another interim application, it was
prayed that the Order dated 15.07.2024, be revived/recalled.
12. When the applications came before the learned Single Judge,
this Court ( Justice Pooniwalla, J) in the background of the arguments
advanced by Mr Nedumpara that such relief can be granted by the Civil
Court and reliance was placed on the notification dated 29.05.2015 in
respect of "The Framework For Revival and Rehabilitation for Micro,
Small and Medium Enterprises", as according to him, the notification
conferred right on MSME and cast burden, obligation, and
responsibility on the financial institution but there is no judicial forum
created under the Micro, Small and Medium Enterprise Development
Act, 2006, to enforce this obligation. It was also canvassed by Mr
Nedumpara that ICICI bank had not constituted any committee under
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the Notification and the Parliament has not created any judicial forum
in substitution of civil Court where MSME can raise any grievance.
13. The counsel for the defendant, however, invited the attention of
the Court to Section 63 of the IBC, 2016, which barred the jurisdiction
of the Civil Court in entertaining any suit or proceedings in respect of
any matter on which National Company Law Tribunal or National
Company Law Appellate Tribunal has jurisdiction under the Code. In
addition, attention of the Court was also invited to Section 61 of 2016
Code, which provides an appeal before the National Company Law
Appellate Tribunal.
14. Taking into consideration the aforesaid rival contentions, the
learned Single Judge refused to entertain the Appellant and rejected
the interim applications seeking ad-interim relief in the wake of Section
63 of the IBC, which prevented in a suit or proceedings being
entertained, in respect of any matter on which the National Company
Law Tribunal or National Company Law Appellate Tribunal had
jurisdiction. As a result, since the challenge was raised to the order
passed by the National Company Law Tribunal in proceedings under
IBC in a Company Petition, the request for grant of interim relief or
maintaining the status quo was rejected on the ground that Court
lacked jurisdiction to entertain the request.
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15. Mr Nedumpara, learned counsel for the appellant, is extremely
critical in his attempt to establish a case as according to him there is no
clarity on the forum available to a person like the Appellant and he
would rely upon the principles "Ubi jus, ibi remedium" i.e. for every
wrong there must be a remedy. He posed a question which according to
him, was of million dollar as to what is the forum available to the
Appellant like the MSME, as if there is no remedy of suit, what is the
remedy available when the Appellant is in dire straits only because of
breach of contract and malicious action at the hands of the ICICI bank
and its officials and also TDB. According to him, the action under the
SARFAESI Act is liable to be set aside as the bank is duty-bound to
constitute a committee, which was under the obligation to make a
meaningful attempt towards the dissolution of stress and in absentia,
the appellant cannot be made to suffer the proceedings.
Mr Nedumpara has attempted to canvas before us that the
Parliament, while enacting the special statute like IBC, SARFAESI,
RDB Act, has lost sight of fundamental principle of law as embodied in
Section 10 and 11 as well as Order I Rule 1, Rule 2, Rule 8 and Order 23
Rule 3 of CPC, and Section 39 and 41 of the Specific Relief Act. He has
therefore earnestly requested before us that there should be one
remedy which should be available to the appellant and all her grievance
should be entertained in the said proceedings.
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16. Apart from this, Mr Nedumpara has also attempted to canvass
before us that certain malafides against the member of the NCLT which
we refuse to entertain since they are not established by any cogent
evidence and we find it to be in form of a balt statement.
17. We are not at all impressed by the submission advanced before
us as it is duty of the Court to implement the Legislation as it stands
and if the IBC 2016 bar the jurisdiction of the Civil suit, in that case we
are not in the position to pronounce upon the same and as far as the
proceedings before National Company Law Tribunal are concerned,
they are instituted by the corporate creditors against the corporate
debtor and necessarily follow the process of law. It is too late in the
day for Mr Nedumpara to allege that SARFAESI Act proceedings by the
ICIC Bank are non-sustainable.
Since the position of law under the IBC clearly prevents the
institution of a suit but definitely remedies are available to the
appellant and this includes the remedy to be availed in terms of the
order of the Apex Court, when it set aside the order dated 19.03.2024
passed by the Division Bench, seeking review of the order passed on
11.01.2024, in any case, it is not a case of no remedy, the Appellant shall
act in accordance with law.
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The Apex Court, while setting aside this order, recalling the
judgment dated 11.01.2024, where the Division Bench has dismissed
the bunch of writ petitions alleging that the statutory
notification/guidelines issued by the RBI were not followed while
classifying the loan account of NPA, they being entitled to the benefit of
MSME, the Apex Court took note of the order passed on 29.01.2024
upholding the dismissal of the petitions when the SLP was dismissed.
By referring to the decision in the case Kunhayammed and
others Vs State of Kerala and another, 2000 (6) SCC 359 and
further decision in the case of Government of NCT of Delhi and
another Vs BSK Realtors LLP and another, 2024 (6) SCALE
764, Their Lordships of the Apex Court clarified that the applicability of
doctrine of merger is contingent upon the leave being granted by the
Court in special leave petition and by specifically recording that it is
within the high Court's purview to make a final determination on the
merits of the petition, the matter was remitted to the High Court with a
request to the Division Bench to decide the review petition on merits.
18. As far as the present commercial appeal is concerned, the
challenge is raised to the Order passed by the Single Judge on
19.11.2024 in the Commercial Suit and hence we are of the view that we
may not be required to decide the issue raised by Mr Nedumpara as
regards the applicability of Circular issued by RBI dated 15.09.2024 to
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the MSME and in turn to the appellant. As in the suit filed before the
learned Single Judge has adopted a view in the wake of Section 63 of
the IBC, the suit may not be entertained against the order passed by the
Company Law Tribunal and therefore, ad-interim relief was refused.
19. We do not find any reason to interfere in the impugned order
which has refused ad-interim relief in favour of the Appellant. As a
result, the Commercial Appeal is dismissed.
BHARATI DANGRE, J. CHIEF JUSTICE
1st April 2025
