M/S Griesheim Gmbh vs Goyal Mg Gases Pvt Ltd
2009 Latest Caselaw 4437 Del

37
*      IN THE HIGH COURT OF DELHI AT NEW DELHI

                                                                    Pronounced on : 03.11.2009
+      EX.P. 70/2006

       M/S GRIESHEIM GMBH                                 ..... Decree Holder
                       Through : Mr. Jayant Bhushan, Sr. Advocate with Ms. Mohna. M.
                       Lal, Advocate.

                       versus

       GOYAL MG GASES PVT LTD        CA+             ..... Judgement Debtor
                      Through : Mr. Maninder Singh, Sr. Advocate with Mr. Pawan
                      Bindra, Advocate.

       CORAM:
       HON'BLE MR. JUSTICE S. RAVINDRA BHAT

1.     Whether the Reporters of local papers
       may be allowed to see the judgment?

2.     To be referred to Reporter or not?

3.     Whether the judgment should be
       reported in the Digest?


HON'BLE MR. JUSTICE S.RAVINDRA BHAT (OPEN COURT)


E.A. Nos. 224/2006 [Under Section 51(e), 225/2006 (Under Order 21 Rule 41) and 506/2009

1.     The Judgment Debtor/respondent claims variation of the order dated 27.04.2006,

whereby the statement was recorded that its two properties located at Sahibabad and Ghaziabad

(hereafter referred to as "the subject-properties") could be subjected to attachment; that order

reads as follows:

"Notice, returnable on 11.7.2006. Learned counsel for the judgement debtor accepts notice. Reply be filed within four weeks. Rejoinder within two weeks thereafter.

Learned counsel for the judgement debtor, on instructions from Mr. P.K.

Gupta, Vice President of the judgement debtor states that till the next date of

E.A. Nos. 224/2006, 225/2006 and 506/2009 in Ex.Pet. 70/2006 Page 1 hearing property bearing No.A-4/2, South Side of GT Road, UPSIDC, New Area Ghaziabad and Plot No. 8/7, Industrial Area, Site IV, Sahibabad, near Maharajpur, District Ghaziabad will not be alienated or transferred or encumbered any further (as at present certain loan facilities are being enjoyed against mortgage of these properties) without leave and liberty of this Court and the said statement is being made without prejudice to the rights and contentions of the judgement debtor in the replies proposed to be filed."

2. The applicant contends that when the order was made, the two properties were subject to

encumbrances; a first charge had been created in favor of the State Bank of India, Corporate

Accounts Branch, for a corporate loan of Rs.36 crores and the second pari passu charge in favor

of PICUP, Lucknow, for Rs.4.25 crores; another second pari passu charge in favor of the Jammu

and Kashmir Bank, of its assets (except Ghaziabad property) had been created. It is contended

that the applicant is a solvent company with a net worth of Rs.441 crores, which is alleged to be

ten times the amount of the alleged decree, that is sought to be executed.

3. During the course of submissions, learned counsel had relied upon a sanction letter issued

by the State Bank of India on 09.05.2009 as well as previous letter dated 15.09.2004 by the same

bank as also letters dated 01.10.2004 and 11.08.2009 issued by the PICUP, and submitted that

the statement recorded earlier would operate to its disadvantage now that substantial repayments

had been made to the financial institutions. Reliance was also placed upon the sanction letter

dated 09.05.2009 to submit that the total value of the property was Rs.101.50 crores, which is in

excess of the decreetal amount with interest (which works-out to Rs.36.22 crores, as on date).

4. After some hearing, learned counsel for the applicant placed on record what was termed

as a proposal, on 13.10.2009; a copy of the said document containing six-annexures was supplied

to the counsel for the decree holder. It was contended on the basis of these documents that the

term limits (i.e. cash credit, bank guarantee and letter of credit facilities), originally sanctioned

by the State Bank of India to the judgment debtor, were to the tune of about Rs.30 crores (in the

E.A. Nos. 224/2006, 225/2006 and 506/2009 in Ex.Pet. 70/2006 Page 2 year 2004); and that they were enhanced to Rs.55 crores. The applicant points out that the term

limits were secured by hypothecation of entire current assets of the company, excluding any

collateral security as well as personal guarantee of one of its Directors.

5. After some hearing, the applicant filed a further affidavit on 31.10.2009, enclosing the

Annual Report for the year ending 2008; it was submitted that this also establishes that the

valuation of the immovable property was, as mentioned by the State Bank of India in its letter

dated 09.05.2009, Rs.101 crores.

6. Learned counsel for the applicant submitted that the Court should pass an appropriate

equitable order relieving the alleged Judgment Debtor of its statement made on 27.04.2006 so as

to enable it to avail the benefit of the loan sanctioned by the State Bank of India - an offer which

is to expire on 09.11.2009. It is contended that the only outstanding amount payable to the

Jammu and Kashmir Bank is to the tune of Rs.60 lakhs. It was submitted that of the two

properties that have been subjected to attachment, the Judgment Debtor would be agreeable if the

attachment is continued in respect of the Sahibabad property, which is valued in excess of Rs.52

crores - as reflected in the Sanction Letter of the State Bank of India.

7. The Decree Holder had contended that the documents placed on record did not show the

necessity of varying the previous orders of the Court. It was pointed out that the balance-sheet

and other materials disclose that the Judgment Debtor has generated surplus of more than Rs.14

crores for the previous year. It was also submitted that despite the letter issued by the Judgment

Debtor on 08.07.2009, to the State Bank of India, latter has not clarified that the two properties

have been released from encumbrances.

8. The Decree Holder had, during the course of hearing today, relied upon a compilation of

documents; these included a copy of the Form-8 submitted by the judgment debtor to the

E.A. Nos. 224/2006, 225/2006 and 506/2009 in Ex.Pet. 70/2006 Page 3 Registrar of Companies, enclosing an agreement dated 24.11.2008 (entered into by the Judgment

Debtor), with the State Bank of India. It was pointed-out that Clause-7 of the said agreement

clearly created interest in respect of a limit of Rs.91 crores, in favor of the bank. It was also

pointed-out that the Annual Report containing the Judgment Debtor's balance-sheet discloses

that it continues to lend amounts to companies, which is reflected in the appropriate Schedule

(Schedule-9). The Decree Holder's senior counsel pointed that the loan advanced and

recoverable from companies under the same management had increased from Rs.85.56 crores for

the year ending 31.12.2007 to Rs.94.66 crores for the year ending 31.12.2008 and that similar

loans receivable from other companies had increased from Rs.52.81 crores to 57.75 crores over

the corresponding period. It was emphasized that the Judgment Debtor had declined to bear the

expenses of arbitration, in an e-mail communication dated 30.10.2009, in respect of a small

amount of US$ 52,500/-, by claiming paucity of funds due to ongoing litigation between the

parties.

9. The present application arises out of execution proceedings initiated by the Decree

Holder; a foreign Court had granted summary judgment in favor of the Decree Holder to the

extent of US$ 5,824,564.47/- and Euro 31,364.74/-. The decree holder applied for execution of

the said foreign judgment claiming that the aggregate equivalent of principal and interest was

Rs.27,68,17,466/-, as on 24.04.2006. The Court had, while issuing notice on 27.04.2006, made

an order on the basis of the statement recorded on behalf of the Judgment Debtor, reproduced

above.

10. The Judgment Debtor's claim for relieving it of the statement is premised primarily upon

the facts that the valuation of the entire property, which is the subject-matter of attachment is in

excess of Rs.101 crores. It states that the State Bank of India's sanction, or offer of 09.05.2009

E.A. Nos. 224/2006, 225/2006 and 506/2009 in Ex.Pet. 70/2006 Page 4 would enable it to go in for business expansion. In support, the Judgment Debtor sought to

satisfy the Court by producing copies of the Sanction Letter as well as the Annual Report for the

year 2008, reflecting the said valuation. The documents on record do suggest that the Judgment

Debtor has availed of other credit facilities to the extent of Rs.55 crores. The Judgment Debtor

had relied upon letter dated 03.10.2008 by the State Bank of India, which had enhanced the

previously existing credit facilities; the said letter, while outlining the terms for enhancement

(from the previously existing Rs.30 crores to Rs.55 crores) mentioned that the security was

hypothecation of entire current assets. The same documents mention, in the very next column, as

against the heading "Collateral" that there was no collateral and that the amount or enhancement

was secured by personal guarantee of one of the Judgment Debtor's Directors. The Judgment

Debtor has also relied upon the letter of State Bank of India dated 07.09.2009, stating that its

previously sanctioned corporate loan had been closed on 03.09.2009. The Judgment Debtor has

also produced on record, PICUP's letter dated 26.08.2009, stating that there was no dues payable

to it, by the Judgment Debtor.

11. The Decree Holder's reliance on the hypothecation agreement dated 24.11.2008 - which

was placed on the record of the ROC is, no doubt, facially relevant; however, a reading of that

concerned term would indicate that security for payment and discharge by the Judgment Debtor

(borrower) to the bank was of the total amount of Rs.91 crores could be "as may be required",

the subject matter of a future mortgage. There is nothing on record to suggest that credit facilities

to the extent of Rs.55 crores are the subject matter of mortgage, currently.

12. On an overall consideration of the materials on record, the Court is satisfied that when the

statement was made by the Judgment Debtor on 27.04.2006 - which has been continued till date,

this Court had not been made aware of the valuation of the properties. The materials placed on

E.A. Nos. 224/2006, 225/2006 and 506/2009 in Ex.Pet. 70/2006 Page 5 the record now suggest that the value of the said two properties put together are in excess of

Rs.101 crores. The said materials also suggest that the evaluation of the Sahibabad is in excess of

Rs.52 crores and that of Ghaziabad property, in excess of Rs.48 crores.

13. This Court is primarily concerned that in the ultimate event of the decree being upheld,

and the Court concluding it to be executable, the decree holder should not be left with a paper-

remedy and that if the judgment debtor is shown to possess means or assets that can satisfy the

decree, it should be appropriately secured. At the same time, that would not imply that the

Decree Holder should be dictating the Judgment Debtor's options in carrying-on its business.

14. Having regard to all the circumstances, the Court is of the opinion that the Judgment

Debtor should be relieved of the statement dated 27.04.2006, to the extent of the Ghaziabad

property. Accordingly, the restraint order shall operate in respect of the property, being 8/7,

Industrial Area, Site-IV, Sahibabad, Near Maharajpur, District Ghaziabad; the order dated

27.04.2006 is modified to the above extent.

15. E.A. Nos. 224/2006, 225/2006 and 506/2009 are disposed of in the above terms.

EX.P. 70/2006

List on 03.12.2009.

S. RAVINDRA BHAT (JUDGE) NOVEMBER 03, 2009 'ajk'

E.A. Nos. 224/2006, 225/2006 and 506/2009 in Ex.Pet. 70/2006 Page 6