Birla Tyres Limited vs Reserve Bank Of India And Others
2022 Latest Caselaw 2238 Cal

                      IN THE HIGH COURT AT CALCUTTA
                        CIVIL APPELLATE JURISDICTION
                                (Appellate Side)
                                                  MAT 681 of 2021
                                                      With
                                                   CAN 1 of 2021
                                                  Reserved on: 08.03.2022
                                                  Pronounced on: 20.04.2022

Birla Tyres Limited
                                                                  ...Appellant
                                       -Vs-
Reserve Bank of India and Others
                                                                  ...Respondents

Present:-

Mr. Sabyasachi Chaudhury, Mr. Retobroto Mitra, Mr. Rajarshi Dutta, Mr. V.V.V. Sastry, Mr. Debjyoti Saha, Mr. Vishwarup Acharya, Advocates ... for the appellant Mr. Ratnanko Banerjee, Sr. Adv. Mr. Soorjya Ganguli, Ms. Pooja Chakraborti, Mr. Kanishk Kejriwal, Ms. Radhika Misra, Advocates ... for the respondent no. 2 Coram: THE HON'BLE JUSTICE PRAKASH SHRIVASTAVA, CHIEF JUSTICE THE HON'BLE JUSTICE RAJARSHI BHARADWAJ, JUDGE

Prakash Shrivastava, CJ:

1. This appeal at the instance of the writ petitioner is directed against

the order of the learned Single Judge dated 9th July, 2021 whereby WPA

10637 of 2021 has been dismissed.

2. Appellant had approached the Writ Court with the plea that

against respondent no. 3, there was a term loan of working capital

outstanding before demerger on 31st December, 2018. A part of the said

amount was transferred to the appellant's books on demerger with effect

from 1st January, 2019. The appellant had the current account and also

cash credited account with the respondent no. 2 bank and as per the

averments made in the petition, on 30th April, 2021, the appellant had

transferred Rs. 3.73 crores in the current account and had made a request 2 MAT 681 of 2021

to the respondent no. 2 to transfer a sum of USD 5, 00, 000 to a third

party to meet its business commitment but the respondent no. 2 had

debited the sum of Rs. 3.73 crores and also Rs. 17 lakhs from the current

account and had subsequently adjusted to the cash credited account. The

account of the appellant was classified as non-performing asset (NPA) with

effect from 30th September, 2020 without taking into account COVID relief

package. Hence, in the writ petition, the appellant had made a prayer to

refund Rs. 3.90 crores to the account and also to recall/rescind the

notices issued by the respondent no. 2.

3. Learned Single Judge while passing the order under appeal has

taken the view that the proceedings against the respondent no. 2 bank

under Article 226 of the Constitution is not maintainable and the petition

involves disputed questions of fact and that there is no public element

involved. Taking note of the fact that the bank had already instituted

proceedings under the Insolvency and Bankruptcy Code, 2016, the learned

Single Judge has dismissed the petition.

4. Submission of learned Counsel for the appellant is that in the IBC

proceedings, the issue of NPA cannot be decided and that in view of the

order of the Hon'ble Supreme Court and also the RBI circular, the account

could not have been declared as NPA during the COVID period and that

the respondent bank is not justified in debiting the amount from the

current account of the appellant.

5. Learned Counsel for the respondent no. 2 bank has submitted that

the recall notice cannot be challenged in writ petition and the account of

the petitioner has not been classified as NPA in violation of the order of the

Hon'ble Supreme Court or the RBI policy.

6. Learned Counsel for both the parties have relied upon several

judgments in support of their respective plea.

7. Having heard the learned Counsel for the parties and on perusal of

the record, it is noticed that undisputedly, the respondent bank has

initiated the proceedings under Section 7 of the Insolvency and 3 MAT 681 of 2021

Bankruptcy Code, 2016. Learned Single Judge has already held the writ

petition to be maintainable for the purpose of moratorium imposed by the

Hon'ble Supreme Court and thereafter has examined the issue and taken

the view that since the bank has already instituted proceedings under the

Insolvency and Bankruptcy Code, 2016 and the authorities thereunder are

better equipped to adjudicate the issue, therefore, in the light of the

judgment of the Hon'ble Supreme Court in the matter of Small Scale

Industrial Manufactures Association (Registered) vs. Union of India

and Others reported in (2021) 8 SCC 511, has refused to interfere by

observing that the authorities under the Code are competent to assess the

correctness of the decision of the bank to treat the account of the

appellant as NPA and to recall the advances. Nothing has been pointed out

to show that there is any restriction upon the power of the authorities

under the Code to go into these issues. Hence, we are of the opinion that

the learned Single Judge has committed no error in dismissing the

petition. We have refrained ourselves from going into the merits of the

issue as the parties have the opportunity to raise these issues before the

authorities under the Insolvency and Bankruptcy Code, 2016 and any

observation by this Court at this stage may prejudice their right.

8. Hence, in our opinion, no case for interference in the impugned

order of the learned Single Judge is made out. The appeal is accordingly,

dismissed.

(PRAKASH SHRIVASTAVA) CHIEF JUSTICE

(RAJARSHI BHARADWAJ) JUDGE Kolkata 20.04.2022 ________ PA(RB)

(A.F.R. / N.A.F.R.)