Anant Raj Industries Limited vs The Industrial Finance Corpn. Of ...
1999 Latest Caselaw 320 Del

JUDGMENT

Dr. M.K. Sharma, J.

1. The present suit was instituted by the plaintiff against the defendants seeking for a decree for declaration in favour of the plaintiff and against the defendants declaring that the plaintiffs have paid the entire dues of the defendant in terms of one time settlement dated 31.3.1995 and also for a permanent injunction restraining the defendants, their agents, employees, officers from in any manner revoking the one time settlement made between the parties vide defendant No. 1's letter dated 31.3.1995.

2. Pursuant to a request for loan made by the plaintiff the defendants approved the grant of the aforesaid loan by a letter dated 1.1.1987. Pursuant thereto the plaintiff company was granted a Rupee Term Loan and Foreign currency loan. The plaintiff duly availed of the said loan disbursed by the defendants No. 1,2 & 3 and various charges on the assets of the defendant company were given in favour of the defendants No. 1,2 & 3. The plaintiff became irregular in repayment of the said loan and gave a proposal for one time settlement to defendants 1,2 & 3. Pursuant thereto a one time settlement was agreed to between the plaintiff and the defendants under letter dated 31.3.1995. According to the plaintiff the plaintiff has been making entire payment in terms of the one time settlement and in fact completed the entire payment which was to be made by the plaintiff company. According to the defendant however, the plaintiff could not adhere to the payment schedule, as mentioned in the one time settlement letter and became irregular in repayment of the amount even in terms of the one lime settlement. Accordingly, the plaintiff filed the present suit in this court for the aforesaid relief.

3. Summons and notices were issued to the defendant and on 1.10.1996 an interim order was passed that till the next date the defendants would not revoke the one time settlement dated 31.3.1995. As against the aforesaid interim order passed by this court an application has been filed by the defendants under Order 39 Rule 4 CPC seeking for vacation of the aforesaid order. Accordingly, by this order I propose to dispose of the interim application filed by the plaintiff (registered as I.A.No. 4610/1996) as also the application filed by the defendants under Order 39 Rule 4 CPC (registered as I.A. 2216/1997).

4. It is stated on behalf of the defendant that the present suit filed by the plaintiff is not maintainable in law in view of the bar contained in Section 18 of 'The Recovery of Debts due to Banks and Financial Institutions Act, 1993. It is further stated that the plaintiff has not repaid the loan in full and as such there exist liabilities which are yet to be discharged by the plaintiff under the one time settlement as well as under the Foreign currency loan and therefore, the interim injunction granted by this court is required to be vacated.

5. According to the plaintiff the terms and conditions of the one time settlement stand satisfied since the plaintiffs have been adhering to the payment schedule as mentioned therein although in payment of one or the other instalment there was some delay. The aforesaid statement of the plaintiff is refuted by the defendants contending inter alia that the plaintiff has failed to discharge its liability even under the One Time Settlement as. well as the debt relating to foreign currency loan. In this connection reference may be made to the various communications issued by the parties and relied upon at the time of arguments by the counsel for the parties. Letter dated 30.4.1994 is a proposal from the plaintiff seeking for one time settlement by making payment of principal and over-dues of interest. On 31.3.1995 IFCI wrote a letter to the plaintiff intimating the decision of IFCI agreeing in principal to accept the proposal for payment of the entire principal in respect of Rupee Term Loan, Re-tied loan of ICICI, Crystallized portion of Foreign Currency Loan and simple jnterest as on 31.3.1995. It is stated that the acceptance of the aforesaid proposal as full and final settlement of the dues of IFCI except the uncrystalized portion of FCL would be payable as and when due. In paragraph 3 it is stated that the settlement of dues would be subject to the following terms and conditions:-

(a) The total settled amount as per the said proposal shall be payable by you in 4 equal quarterly instalments commencing from the 30th June, 1995 with an interim payment of Rs. 100 lakhs (Rupees one hundred lakhs) immediately on acceptance of this letter which would be adjusted towards payment of first instalment falling due on the 30th June, 1995.

(b) The institutions would charge interest @ 15% p.a. (in case of default @ 18.5% p.a.) on instalments payable under OTS after six months i.e. from 01/10/1995.

(c) In the event of the company/promoters failing to amortize the dues in full in accordance with the proposed arrangement within the envisaged period, the institutions shall have the absolute right to revoke the arrangement.

6. According to the defendants the plaintiff failed to clear the dues in full in accordance with the proposed arrangement within the stipulated period and therefore, the defendants proposed to proceed against the plaintiff in accordance with law and institute judicial proceedings against the plaintiff for recovery of the amount due. It is stated that in view of the aforesaid interim injunction passed by this court the defendants have been unable to resort to the legal proceedings as sought to be done.

7. I have heard the learned counsel appearing for the plaintiff as also for the defendants. The question that arises for my consideration is whether such an injunction could be granted in favour of the plaintiff. There is a dispute between the parties as regards the dues and also relating to faithful compliance of the one time settlement between the parties. Under the said settlement the defendants have been empowered to revoke the arrangement once according to them the borrower has failed to liquidate the dues in full in accordance with the proposed arrangement. According to the terms and conditions of the arrangement the amounts by way of instalments were required to be paid within stipulated period of time. It is an admitted position that some of the instalments were not paid within the stipulated period of time although subsequently the same came to be paid. Even in respect of the same, according to the defendants, that as on date their exist substantial liabilities yet to be discharged by the plaintiff even under the One Time Settlement and in respect of the other Crystallized portion of the Foreign Currency Loan. The issue is whether an injunction could be granted in favour of the plaintiff and against the defendant preventing an action which is sought to be taken by the defendants for alleged breach of the contract.

8. The defendants have been given a power under the aforesaid settlement to revoke the agreement once it is found that there is a breach in payment of the stipulated instalment within the stipulated period fixed under it. In my considered opinion no injunction could be granted in favour of the plaintiff and against the defendants preventing the defendants from taking resort to aforesaid clause of the agreement when the defendants are of the opinion that there is such a breach. Grant of such an injunction would amount to restraining the defendants from determining the actual dues payable by the plaintiff to the defendants and also from prosecuting any proceeding in an appropriate court for realisation of the dues after its determination which is prohibited under the provisions of Section 41(b) of the Specific Relief Act. In this connection reference may be made to the decision of the Supreme Court in Cotton Corporation of India Limited v. United Industrial Bank and Ors.; , wherein it was held by the Supreme Court that ordinarily a preventive relief by way of prohibitory injunction cannot be granted by a court with a view to restraining any person from instituting or prosecuting any proceeding and this is subject to one exception enacted in larger public interest. It was further held that the court is precluded by a statutory provision i.e. Section 41(b) from granting an injunction restraining a person from instituting or prosecuting a proceeding in a court of co-ordinate jurisdiction or superior jurisdiction.

9. In view of grant of the aforesaid ad interim injunction in favour of the plaintiff the defendant has been prevented by a prohibitory injunction even from determining the actual dues payable by the plaintiff and realisation of the said dues in the appropriate forum accordance with law. The case of the plaintiff is that nothing is due and payable by the plaintiff to the defendant under the one time settlement. Even assuming the aforesaid stand to be correct, in my considered opinion the plaintiff shall not be prevented from taking up such a plea before the appropriate forum if and when such a proceeding is instituted by the defendants against the plaintiff. In Cofex Exports Ltd. v. Canara Bank; reported in 1997(2) Delhi Lawyer page 559 the Division Bench of this Court has held that taking of accounts and finding out what is due and payable by the defendants to the plaintiff bank would be an exercise necessarily to be performed even by the Tribunal to satisfy the demand of the principles of natural justice before finding out the amount of debt for which the Tribunal may issue a certificate under Section 19(7) of the Act.

In case the aforesaid order of injunction granted in favour of the plaintiff and against the defendant is made absolute the same would prevent the defendants from instituting any suit claiming the dues, which according to the defendants are due and payable to the defendants. That would thus prevent the defendants from instituting a legal proceeding against the plaintiff which could not be done, there being a specific bar for issuing such an injunction under Section 41(b) of the Specific Relief Act.

10. In that view of the matter the order of injunction issued on 1.10.1996 stands vacated. The application filed by the plaintiff under Order Order 39 Rules 1..& 2 (registered as I.A.4610/1996) stands dismissed and the application filed by the defendants under Order 39 Rule 4 CPC (registered as 1.A.2216/1997) stands allowed.