[Cites 12, Cited by 0]
Bombay High Court
Mr. Rajendra Rewari vs Union Of India Thr. Its Ministry Of ... on 7 April, 2026
Author: Anil L. Pansare
Bench: Anil L. Pansare
2026:BHC-NAG:5453-DB
1-WP-2874-2012.odt 1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH, NAGPUR.
WRIT PETITION NO. 2874 OF 2012
WITH CIVIL APPLICATION NOS. 782 OF 2025 AND 2413 OF
2025
IN WRIT PETITION NO. 2874 OF 2012
1] Morarjee Textiles Ltd.
through Mr. Ravi Sethia, Resolution
Having its registered office at Peninsula Spenta,
Mathuradas Mills Compound, Senapati
Bapat Marg, Lower Parel,
Mumbai - 400013.
2] Mr. Subhashchandra Kashimpuria,
adult and natural citizen of India
and Head - Finance & Accounts of
petitioner no.1, having his address at
Peninsula Spenta, Mathuradas Mills Compound,
Senapati Bapat Marg, Lower Parel,
Mumbai - 400013.
...PETITIONERS
Versus
1] Union of India,
through its Secretary, Ministry of Micro,
Small and Medium Enterprises,
Udyog Bhavan, New Delhi - 110011.
2] The Micro and Small Enterprises
Facilitation Council, Nagpur, a Council
Established under the provisions of
The Micro, Small and Medium Enterprises
Development Act, 2006, having its office
at Joint Director of Industries, Udyog
Bhavan, 2nd Floor, Civil Lines, Nagpur.
3] D.C. Weaving Mils Pvt. Ltd.
a company incorporated and registered
under the provisions of the Companies
Act, 1956 and having its registered
office at Plot No. G-16-1,
1-WP-2874-2012.odt 2
MIDC Industrial Area, Post Salaidhaba
via Hingna, Butibori, District - Nagpur
Through its Director.
...RESPONDENTS
WITH
WRIT PETITION NO. 3075 OF 2012
Mr. Harsh Piramal,
adult, natural citizen of India,
and Executive Director of Respondent No.4,
having his office at Peninsula Spenta,
Mathuradas Mills Compound,
Senapati Bapat Marg, Lower Parel,
Mumbai - 400013.
...PETITIONER
Versus
1] Union of India,
through its Secretary, Ministry of Micro,
Small and Medium Enterprises,
Udyog Bhavan, New Delhi - 110011.
2] The Micro and Small Enterprises
Facilitation Council, Nagpur, a Council
Established under the provisions of
The Micro, Small and Medium Enterprises
Development Act, 2006, having its office
at Joint Director of Industries, Udyog
Bhavan, 2nd Floor, Civil Lines, Nagpur.
3] D.C. Weaving Mils Pvt. Ltd.
a company incorporated and registered
under the provisions of the Companies
Act, 1956 and having its registered
office at Plot No. G-16-1,
MIDC Industrial Area, Post Salaidhaba
via Hingna, Butibori, District - Nagpur
Through its Director.
4] Morarjee Textiles Ltd.
a company incorporated and registered
under the Companies Act, 1956,
1-WP-2874-2012.odt 3
Having its registered office at Peninsula Spenta,
Mathuradas Mills Compound, Senapati
Bapat Marg, Lower Parel,
Mumbai - 400013.
...RESPONDENTS
WITH
WRIT PETITION NO. 3076 OF 2012
Mrs. Urvi A. Piramal,
adult, natural citizen of India,
and Chairperson of Respondent No.4,
having her office at Peninsula Spenta,
Mathuradas Mills Compound,
Senapati Bapat Marg, Lower Parel,
Mumbai - 400013.
...PETITIONER
Versus
1] Union of India,
through its Secretary, Ministry of Micro,
Small and Medium Enterprises,
Udyog Bhavan, New Delhi - 110011.
2] The Micro and Small Enterprises
Facilitation Council, Nagpur, a Council
Established under the provisions of
The Micro, Small and Medium Enterprises
Development Act, 2006, having its office
at Joint Director of Industries, Udyog
Bhavan, 2nd Floor, Civil Lines, Nagpur.
3] D.C. Weaving Mils Pvt. Ltd.
a company incorporated and registered
under the provisions of the Companies
Act, 1956 and having its registered
office at Plot No. G-16-1,
MIDC Industrial Area, Post Salaidhaba
via Hingna, Butibori, District - Nagpur
Through its Director.
4] Morarjee Textiles Ltd.
a company incorporated and registered
1-WP-2874-2012.odt 4
under the Companies Act, 1956,
Having its registered office at Peninsula Spenta,
Mathuradas Mills Compound, Senapati
Bapat Marg, Lower Parel,
Mumbai - 400013.
...RESPONDENTS
WITH
WRIT PETITION NO. 3078 OF 2012
Mr. Rajendra Rewari,
adult, natural citizen of India,
and Managing Director of Respondent No.4,
having his office at Peninsula Spenta,
Mathuradas Mills Compound,
Senapati Bapat Marg, Lower Parel,
Mumbai - 400013.
...PETITIONER
Versus
1] Union of India,
through its Secretary, Ministry of Micro,
Small and Medium Enterprises,
Udyog Bhavan, New Delhi - 110011.
2] The Micro and Small Enterprises
Facilitation Council, Nagpur, a Council
Established under the provisions of
The Micro, Small and Medium Enterprises
Development Act, 2006, having its office
at Joint Director of Industries, Udyog
Bhavan, 2nd Floor, Civil Lines, Nagpur.
3] D.C. Weaving Mils Pvt. Ltd.
a company incorporated and registered
under the provisions of the Companies
Act, 1956 and having its registered
office at Plot No. G-16-1,
MIDC Industrial Area, Post Salaidhaba
via Hingna, Butibori, District - Nagpur
Through its Director.
4] Morarjee Textiles Ltd.
1-WP-2874-2012.odt 5
a company incorporated and registered
under the Companies Act, 1956,
Having its registered office at Peninsula Spenta,
Mathuradas Mills Compound, Senapati
Bapat Marg, Lower Parel,
Mumbai - 400013.
...RESPONDENTS
Mr. Akshay Doctor, Counsel (through VC) with Mr. V.V. Sharma,
Counsel for the petitioners in Writ Petition No. 2874/2012.
Mr. Simil Purohit, Senior Counsel with Mr. Dhruv Gandhi, Ms
Khushbu Chhajed, Counsel (through VC) with Mr. A.J. Bhoot,
Counsel for respondent no.3.
None for respondent nos. 1 and 2.
.....
CORAM : ANIL L. PANSARE AND
NIVEDITA P. MEHTA, JJ.
ARGUMENTS WERE HEARD ON : 30/3/2026
JUDGMENT IS PRONOUNCED ON : 7/4/2026
JUDGMENT (PER : ANIL L. PANSARE, J.) :
WRIT PETITION NO. 2874 OF 2012
WITH CIVIL APPLICATION NOS. 782 OF 2025 AND 2413 OF
IN WRIT PETITION NO. 2874 OF 2012
Heard Mr. Akshay Doctor, learned Counsel for the
petitioners, and Mr. Simil Purohit, learned Senior Counsel for
respondent no.3. None for respondent nos.1 and 2.
2] The facts necessary to decide the petition and the
applications are as under :
3] Petitioner no.1 (formerly knows as 'Morarjee
Brembana Limited) issued a work order to respondent no.3 for
weaving clothes/fabrics in accordance with the conditions set
out therein. Petitioner no.2 is Head - Finance and Accounts of
petitioner no.1. The parties entered into an agreement. The
work commenced. Later on, there occurred dispute between
the parties. Respondent no.3 filed a claim being Reference No.
25/2010 against petitioner no.1 before respondent no.2 under
the provisions of the Micro, Small and Medium Enterprises
Development Act, 2006 (for short "MSME Act"). Petitioner no.1
filed its reply to respondent no.3's claim, and also filed counter
claim. Respondent no.2 passed the impugned award dated
20/3/2012 allowing respondent no.3's claim, and directed
petitioner no.1 to pay an amount of Rs.13,44,32,898/-.
Accordingly, the petition came to be filed.
4] On 5/7/2012, this Court, while issuing Rule,
directed the petitioners to deposit, in the Court, a sum
equivalent to 75% of Rs.13,40,00,000/- within a period of
three months as a condition for stay to the impugned award.
This interim order was challenged before the Hon'ble Supreme
Court in a Special Leave to Appeal (Civil) No. 27590/2012,
and on 28/9/2012, while issuing notice, the Supreme Court
stayed the order passed by this Court to the extent of directing
petitioners to deposit 75% of the amount in terms of the
award, subject to the condition that the petitioners shall
deposit 60% of the principal amount by way of bank draft or
furnishing bank guarantee of a nationalized bank for an
amount representing 60% of the principal amount in favour of
the Registrar, Bombay High Court, Nagpur Bench. In
compliance to the said order, the petitioners had furnished
bank guarantee. The Supreme Court, vide order dated
13/2/2025, dismissed the appeal in following terms :
"5. After having heard the learned counsel appearing
for the first appellant, we find no error in the impugned
order. The submission of the learned counsel appearing
for the first appellant is that there is an issue of
jurisdiction involved as the third respondent was not an
MSME and that is the reason why the appellant(s)
invoked the extraordinary jurisdiction under Article
226 Constitution of India. He would, therefore, submit
that without considering the existence of a prima facie
case, the High Court ought not to have imposed an
onerous condition of deposit of a sum equivalent to
75% of the awarded amount of Rs.13,40,00,000/-
(Rupees Thirteen Crore Forty Lakh).
6. The efficacious remedy of taking recourse to
Section 19 of the 2006 Act was available to the
appellant(s). Obviously to avoid the condition of pre-
deposit under Section 19 of the 2006 Act, that the
recourse was taken to the writ jurisdiction. It is
pertinent to note that the High Court has not dismissed
the writ petition on the ground of availability of the
efficacious remedy. The High Court has only put a
condition of deposit of a sum equivalent to 75% of the
amount covered by the Award as a condition for stay.
The Award is in the nature of a money decree and,
therefore, we find absolutely no error in the view taken
by the High Court.
7. We are informed that the High Court has finally
heard the pending writ petition and in November 2024,
the judgment has been reserved which is not
pronounced till date.
8. This Court vide order dated 28th September,
2012 granted stay to the appellant(s) subject to
furnishing a bank guarantee which has been
accordingly furnished by the appellant(s). The Registry
of this Court is directed to encash the said bank
guarantee furnished by the appellant(s) forthwith and
transfer the amount of proceeds to the High Court of
Judicature at Bombay, Nagpur Bench. As the judgment
has been reserved by the High Court, we direct the
Registrar (Judicial) of the High Court of Judicature at
Bombay, Nagpur Bench, to bring this order to the notice
of the concerned Bench and the fact that the amount of
bank guarantee has been transferred to the High Court.
This will enable the High Court to pass appropriate
order regarding disbursement/withdrawal of the bank
guarantee amount after hearing the parties. Till the
time the High Court deals with the issue of
disbursement/withdrawal of bank guarantee amount,
the bank guarantee amount shall be invested by the
High Court in an interest bearing fixed deposit with any
nationalised bank."
5] Thus, the Supreme Court observed that efficacious
remedy of taking recourse to Section 19 of MSME Act was
available to the petitioners, and that, recourse to writ
jurisdiction was taken to avoid the condition of predeposit
under Section 19 of MSME Act. The Supreme Court took note
of the fact that the award under question is in the nature of
money decree, and accordingly, held that there is absolutely no
error in the view taken by the High Court directing the
petitioners herein to deposit a sum equivalent to 75% of the
amount covered by the award as a condition for stay. The
parties, then, informed the Supreme Court that this Court has
finally heard the Writ Petition in November - 2024, and the
judgment has been reserved. The Supreme Court, then,
referred to its order dated 28/9/2012 granting stay to the
interim order and directed it's Registry to encash the said bank
guarantee, and to transfer the amount of proceeds to this
Court. This order was thereafter modified by the Supreme
Court in view of the fact that the bank guarantee was furnished
to this Court, and accordingly, the Registry of this Court was
directed to encash the bank guarantee.
6] In our view, the reason why the Supreme Court
directed to encash the bank guarantee is because it found no
fault in the order passed by this Court directing the petitioners
to deposit a sum equivalent to 75% of the amount covered by
the award. We may note here that while granting interim relief,
the Supreme Court had directed the petitioners to deposit 60%
of the principal amount by way of bank draft or to furnish a
bank guarantee.
7] Thus, the emphasis was on depositing the amount,
either by way of bank draft or by way of furnishing bank
guarantee. The Supreme Court having found that there was
absolutely no error in the view taken by this Court, directed
Registry of this Court to encash the bank guarantee so that the
order passed by this Court shall stand complied, to the extent
of directions issued to the petitioners to deposit the amount. Its
a different matter that the Supreme Court did not direct the
petitioners to deposit 75% of the amount covered by the award
in terms of the interim relief granted by this Court, the reason
is obvious. The parties informed that this Court has finally
heard the petition, and the judgment has been reserved. Thus,
the Supreme Court expected immediate decision.
Unfortunately, the judgment was not delivered at that time.
Accordingly, we heard the matter afresh.
8] In the meantime, the Axis Bank Limited, having
registered Office at Ahmedabad, approached the National
Company Law Tribunal, Mumbai Bench (NCLT), under Section
7 of the Insolvency and Bankruptcy Code, 2016 (for short
"IBC") for initiating Corporate Insolvency Resolution Process
(CIRP) in respect of the petitioner - Company arising out of the
term loan granted to the petitioner - Company. On 9/2/2024,
the NCLT admitted the application filed under Section 7, and
declared moratorium under Section 14 of IBC with
consequential directions, which, amongst others, prohibit
institution of suits or continuation of pending suits or
proceedings against the corporate debtor, i.e., the petitioners
herein, including execution of any judgment, decree or order in
any Court of law, Tribunal, Arbitration Panel or other
authorities. Mr. Ravi Sethia has been appointed as an Interim
Resolution Professional (IRP) of the corporate debtor.
Thereafter, a meeting of Committee of Creditors was held on
15/5/2024, and it was resolved to reappoint IRP as Resolution
Professional (RP). Consequently, the Management of Affairs of
the petitioner - Company (corporate debtor) has vested in RP,
and the powers of the Board of Directors of corporate debtor
stood suspended, and are being exercised by RP. Accordingly,
vide order dated 11/2/2026, we permitted RP to make
necessary amendment to the petition and prosecute the
petition.
9] In the meantime, both, RP and respondent no.3,
have filed applications, being CAW Nos. 2413/2025 and
782/2025 respectively. Both are seeking permission to
withdraw the amount deposited in this Court. According to RP,
the amount, so deposited, forms part of assets of corporate
debtor, and is subject to the ongoing CIRP under IBC. As
against, respondent no.3 has put forth a plea that the
provisions under Section 19 of MSME Act was made to allow
the supplier to get his blocked working capital up to the point
the litigation is put to rest.
10] Thus, the question that falls for consideration is,
whether the amount deposited in the Court in terms of the
interim order passed by this Court on 5/7/2012 read with
order dated 28/9/2012 passed by the Supreme Court, is an
asset of the Company or is an amount belonging to the bank,
being the amount generated out of the bank guarantee issued
by the bank to the petitioners towards compliance of Court's
order.
11] As noted earlier, this Court, in clear terms, directed
the petitioners to deposit a sum equivalent to 75% of the
amount covered by the award. The Supreme Court was pleased
to uphold this order, and accordingly, directed the Registry of
this Court to encash the bank guarantee. In that sense, we find
that the amount deposited in the Court is towards compliance
of order dated 5/7/2012.
12] Mr. Simil Purohit, learned Senior Counsel for
respondent no.3, submits that the bank guarantee is an
independent contract, and is not a subject matter of
moratorium provisions, and therefore, is not an asset of
corporate debtor. He vehemently argued that the decree
(award) is in favour of respondent no.3, who is waiting for
fruits of the decree for last thirteen years. He submits that
amount derived from bank guarantee is not an asset of
petitioner - Company, and therefore, the respondent no.3 will
be entitled to receive the amount.
13] In support, he placed reliance upon a judgment of
this Court in the case of Palladian Hotels Private Limited,
Mumbai Vs. Hotel Horizon Private Limited, Mumbai [AIR
Online 2020 Bombay 1256]. The learned Single Judge of this
Court held that moratorium under Section 14(1) of IBC does
not prevent encashment of bank guarantee. The Court
highlighted Section 14(3)(b) of IBC, which explicitly exempts
surety in a contract of guarantee to a corporate debtor from
moratorium provisions. The Court held that this statutory
provision underscores that the guarantor (bank) is not subject
to moratorium in the same manner as the corporate debtor.
According to the learned Single Judge, an application to encash
bank guarantee and release funds does not fall within the
ambit of moratorium restrictions.
14] These findings were rendered in an application
moved by the applicant therein requesting to encash the bank
guarantee and secure release of funds. Such request was made
despite imposition of moratorium under Section 14(1) of IBC.
The order of NCLT, however, was challenged before the Hon'ble
Supreme Court, which had stayed the order passed by NCLT.
Further, the bank guarantee was issued in accordance with a
consent order. The respondents therein, who was facing
insolvency proceedings, contested encashment ascertaining
that the moratorium would bar such action. The learned Single
Judge held that application to encash the bank guarantee and
release funds was not categorized as an application for
execution of award. The Court took note of the fact that the
earlier order passed by the Court, which permitted encashment
of bank guarantee, had achieved finality, thereby preventing
the respondents from challenge it further.
15] Thus, the facts were altogether different. The order
passed by NCLT declaring moratorium was stayed by the
Supreme Court. The bank guarantee was issued in accordance
with consent order. Further, the earlier order permitting
encashment of bank guarantee had attained finality. In that
view of the matter, the learned Single Judge was of the view
that the respondents therein cannot challenge the encashment
of bank guarantee. As against, in the instant case, this Court,
while granting interim relief, had directed petitioner no.1 (now
corporate debtor) to deposit 75% of the amount covered by the
award. Thus, the Court did not direct petitioner no.1 to furnish
bank guarantee nor was any such order passed by consent. The
order, so passed, was tested before the Supreme Court, which
was pleased to uphold the order taking note of the fact that the
petitioner approached this Court under Article 226 of the
Constitution of India, despite availability of alternate remedy
under Section 19 of MSME Act, only to avoid payment of
deposit of 75%.
16] Thus, the Supreme Court upheld the order passed
by this Court directing the petitioners to deposit 75% of the
amount, and for this reason, it directed the Registry of this
Court to encash the bank guarantee so that the order directing
the petitioners to deposit the amount would be complied.
17] Thus, encashment of bank guarantee, in the present
case, is not relatable to the situation considered by the learned
Single Judge in the above case. Here, the moratorium
proceedings have commenced, RP has been appointed, and
respondent no.3 has submitted its claim, and in that sense, has
submitted itself to the jurisdiction of moratorium proceedings.
Thus, respondent no.3's claim will be considered in terms of
the provisions of IBC.
18] Section 3(10) of IBC defines 'creditor' to mean any
person to whom a debt is owed and includes a financial
creditor, an operational creditor, a secured creditor, an
unsecured creditor and a decree holder. Respondent no.3 is
decree holder, and therefore, will be a creditor before CIRP.
That, in fact, is the reason why respondent no.3 has submitted
it's claim before RP.
19] In any case, for the reasons noted above, we are of
the considered view that the directions issued by the Supreme
Court to encash the bank guarantee is to comply order passed
by this Court directing the petitioners to deposit the amount as
a predeposit to entertain the petition. The amount so deposited
would belong to corporate debtor (petitioner - Company), and
therefore, is it's asset.
20] We may consider here the judgment relied upon by
RP in the case of Siti Networks Ltd. Vs. Rajiv Suri [2024 SC
Online Bombay 6665]. The Division Bench of this Court at
Principal Seat held that the money deposited by corporate
debtor in a Court as security pursuant to a Court order prior to
commencement of CIRP do not cease to be an asset of the
corporate debtor merely because they are in the possession of
the Court. The Court clarified that such deposit serves as
security for a potential dismissal of an appeal rather than
constituting a transfer of title to the judgment creditor.
21] Thus, the law as it stands today is clear. While it is
true that the bank guarantee per se is not the asset of the
corporate debtor, its encashment may be depending on facts of
each case. If the money deposited by corporate debtor in the
Court is in terms of order passed by the Court prior to
commencement of CIRP as a condition to consider the issue
involved in the matter, then the deposit will be an asset of the
corporate debtor. The amount so deposited will not change the
status solely because the money was deposited post
commencement of CIRP. It will remain asset of the corporate
debtor (petitioner - Company). Accordingly, RP will be entitled
to have control over this asset. The amount, so deposited, will
have to be, therefore, released in favour of RP.
22] So far as the petition is concerned, the same, as
such, is liable to be dismissed for two reasons; one is, that the
interim order directing the petitioners to deposit 75% of the
amount covered by the award has been not deposited.
However, and since the Supreme Court, while dismissing the
appeal, took note of the fact that the petition was heard by the
Division Bench of this Court and the petition was reserved for
judgment, the Supreme Court did not direct the petitioners to
deposit remaining amount, as directed by this Court, and
therefore, we do not find it appropriate to dismiss the petition
on this count. The second reason is that the petition is not
maintainable, the petitioners having statutory remedy under
Section 19 of MSME Act. The challenge to the impugned order
is on multiple grounds, one of which pertains to the
jurisdiction, which can be also raised before the appellate
forum. The impediment, however, is commencement of CIRP,
which prohibits continuation or filing any proceeding in terms
of Section 14(1) of IBC.
23] Accordingly, and taking note of the fact that CIRP
has commenced against petitioner - Company, and since RP is
appointed, and further, since respondent no.3 has lodged it's
claim as creditor before it, we dispose of the petition with a
direction to the Registry of this Court to release the amount
deposited in this Court along with interest accrued thereon in
favour of RP for payment to creditors in accordance with the
provisions of IBC. The application filed by the RP is,
accordingly, partly allowed, and the application filed by
respondent no.3 stands rejected. Civil Application No.
3462/2023 does not survive. It is disposed of accordingly.
24] The petition and the applications are disposed of in
terms of above. No order as to costs.
JUDGE JUDGE
At this stage, Mr. Simil Purohit, learned Senior
Counsel for respondent no.3, makes a request to not release
the amount for a period of four weeks from today saying that
respondent no.3 will take a chance before the Hon'ble Supreme
Court. The Counsel for RP has opposed the request. However,
considering the present status of the proceedings under IBC,
which is at the initial stage, we direct the Registry to release
the amount after four weeks, unless otherwise ordered by the
Hon'ble Supreme Court. The Registry shall take note of the
above, and act accordingly.
JUDGE JUDGE
Writ Petition Nos. 3075/2012, 3076/2012 and
3078/2012 (connected petitions) are filed by the Executive
Director, Chairperson and Managing Director of respondent
no.4 - Company respectively, who is petitioner no.1 in Writ
Petition No. 2874/2012, which is disposed of in terms of the
judgment passed above. None is appearing for the petitioners
in these three petitions may be because of subsequent
developments that occurred pending petitions.
In view thereof, and for the reasons set out in the
judgment passed in Writ Petition No. 2874/2012, and since the
petitioners have not prosecuted the petitions, the same are
dismissed.
JUDGE JUDGE
Sumit
Signed by: Mr. Sumit Agrawal
Designation: PS To Honourable Judge
Date: 07/04/2026 19:00:42
