Delhi High Court
Stci Finance Ltd vs Ms Aviom India Housing Finance Private ... on 12 February, 2025
Author: Subramonium Prasad
Bench: Subramonium Prasad
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 12th FEBRUARY, 2025
IN THE MATTER OF:
+ CS(COMM) 1206/2024
STCI FINANCE LTD .....Plaintiff
Through: Mr. Sandeep Sethi, Sr. Advocate &
Mr. Asim Vachhar, Sr. Advocate
with Mr. Atul Sharma Mr. Abhishek
Aggarwal, Mr.Abhinav Mukhi, Mr.
Abhishek Srivastav, Mr. Shantanu
Tomar, Advs.
versus
MS AVIOM INDIA HOUSING FINANCE PRIVATE LIMITED &
ORS ......Defendants
Through: Mr. Amarjit Singh Chandhiok, Senior
Advocate with Ms. Pooja Mahajan,
Mr. Karan Singh Chandhiok, Mr.
Rahul Narayan, Mr. Mehul Parti, Ms.
Harshita Malik, Mr. Gyanendra
Singh, Ms. Nancy Patel, Advocates
for D-1 & D-2
Mr. Chandrashekhar Chakalabbi and
Mr. Varnik Kundaliya, Advs for
Defendant No. 5/ICICI.
Ms. Neelam Rathore, Advocate for
D-7
CORAM:
HON'BLE MR. JUSTICE SUBRAMONIUM PRASAD
JUDGMENT
1. The present Application has been filed by the Defendants No.1 & 2
seeking vacation of interim relief granted to the Plaintiff by this Court vide
Order dated 24.12.2024.
2. The present Suit is one for a decree of permanent injunction in favour
of the plaintiff and against Defendants No. 1 & 2 restraining the Defendants
No.1 & 2, their respective representatives, attorneys, assignees, servants or
anybody else acting for and on their behalf from selling, transferring,
conveying, creating any third party interest of any nature or otherwise
dealing with the whole or part of receivables hypothecated/charge by the
Defendant No 1 in favour of the Plaintiff till the recovery and realization by the
Plaintiff of entire amount outstanding under the loan facility agreements. The
Plaintiff has also sought for a decree of permanent injunction in favor of the
Plaintiff and against the Defendant Nos. 3 to 12 thereby restraining the Defendants
Nos. 3 to 12 from appropriating or permitting appropriation of any amount
pertaining to or in respect of any of the receivables hypothecated I charged by the
Defendant No. l in favour of the Plaintiff and transfer all such amounts in favour
of the Plaintiff till the recovery and realization by the Plaintiff of entire amount
outstanding under the Facility Agreements.
3. Shorn of unnecessary details, the facts, in brief, leading to the present
application are that the Plaintiff, is a Non-Banking Financial Company (NBFC)
sanctioned three term loan facilities for Rs.10 crore each in favour of the
Defendant No.1 vide sanction letters dated 08.02.2022, 29.03.2023 and
25.09.2024 and three loan facility agreements dated 18.02.2022, 30.03.2023 and
26.09.2024 were executed between the Plaintiff and Defendant No.1 and
Defendant No.2. It is stated that Defendant No.1 is engaged in the business of
housing finance with a license from the National Housing Bank. It is stated that
the Term Loan Facilities were availed and utilized by Defendant No. 1 towards
funding and rendering further home loans and home improvement loans to its end
customers. It is stated that in order to secure the repayment of the loan availed
under the Term Loan Agreements, Defendant No.1 created first exclusive charge
in favour of the Plaintiff over "all monies and amounts owing to or received by the
borrower accruing to or arising out of the clients/customers of the borrowers", i.e.
receiveables. It is stated that Defendant No.2, who is the Managing Director of
Defendant No.1, stood as a personal guarantor for the said loan facilities. It is
stated that there were some defaults on the part of the Defendant No.1 in
repayment of the loan amount. It is stated that waivers were sought by the
Defendant No.1. It is further stated that on 20.09.2024 a whistleblower complaint
was received by the National Housing Bank. It is stated that on the basis of the
complaint, the NHB conducted an onsite snap inspection of the Defendant No.1
company on 30.09.2024. It is stated that after the inspection, statutory board of
Defendant No.1 company requested Board of Defendant No.1 company to initiate
investigation/audit. It is stated that on 10.10.2024, NHB appointed a third-party
independent Auditor for forensic audit. It is further stated that the Defendant No.1
company appointed Alvarez and Marsal to conduct a forensic audit. It is stated
that on 19.11.2024 Defendant No.1 filed a criminal complaint with the Economic
Offences Wing stating that there has been a falsification of its books of accounts
and the financial statements for the financial year 2023-24 through dummy entries
for fictitious collections which were covered up by fabrication of mutual fund
investment statements to cover the shortfall in the collection from borrowers. It is
stated that on 18.12.2024, on finding out the irregularities, the Plaintiff recalled all
the three loans and demanding repayment of Rs.21,82,54,243/- as on 18.12.2024
along with the interest till the date of repayment.
4. The present Suit was filed along with IA No.49852/2024, which was
an application seeking interim injunction. In IA No.49852/2024, the Plaintiff
had prayed for the following reliefs:
"A. Pass an ex - parte ad - interim order directing
Defendant No. 1 and No. 2 to (a) Not to deal with or
encumber the whole or part of receivables hypothecated by
the Defendant No 1 in favour of the Plaintiff during
pendency of the present suit; (b) to disclose the amount
repaid to Defendant no.3 to 12 since 20.09.2024; and
B) Pass an ex - parte ad - interim order directing
Defendant Nos. 3 to 12 not to appropriate or allow
appropriation of any amount pertaining to or in respect of
any of the receivables hypothecated by the Defendant No.1
in favour of the Plaintiff except for payment of dues of the
Plaintiff during pendency of the present suit, and
C) Pass an ex - parte ad - interim order directing
Defendants no. 1 to 12 not to appropriate or allow
appropriation of any balance amount pertaining to the
Defendant Nos. 1 and 2 other than amount over which
security created by the Defendant No. 1 and Defendant No.
2 in favour of the respective creditor has become
enforceable, if any and such business expenses as this Hon
'ble Court may allow during pendency of the present suit,
D) Pass an order directing the Defendant Nos 03 to 12 to
refund the receivables appropriated by them from
20.09.2024 which were not hypothecated to them pending
the hearing and final disposal of this suit; and
E) To appoint a Court Receiver to monitor all the
collection accounts maintained by defendant No.1 with
defendant no.3 to 12;
F) The Court Receiver to distribute the amount from the
collection accounts as per the charge of the respective
lenders on such amounts;"
5. The matter came up for hearing on 24.12.2024 and the co-ordinate
Bench of this Court registered the plaint as Suit and in IA No.49852/2024,
the co-ordinate Bench of this Court noted that the loan was secured by the
Defendant No.1 in the following manner:
"i. Demand Promissory Note and Continuing security
letter, thereby unconditionally and irrevocably
promising to pay the Plaintiff a sum of Rs. l0 Cr. i.e.
loan amount together with interest;
ii. Deed of Personal Guarantee executed by Defendant
No. 2;
iii. Unattested Deed of Hypothecation creating a first
and exclusive charge by way of hypothecation in
favour of the Plaintiff, over all monies and amounts
owing to or received/receivable by the Defendant No.
1, present and future with a minimum asset cover of
1.20 times of the outstanding principal amount of the
Facility and the same was duly registered with the
Registrar of Companies ('ROC');
iv. Irrevocable Power of Attorney executed in favour of
the Plaintiff in respect of the hypothecated assets in
terms of the deed of hypothecation; and
v. Undertaking inter-alia stating, agreeing, declaring,
confirming and undertaking that the promoters shall
not dispose of or create any lien/ encumbrance over
the hypothecated assets and comply with the terms and
conditions of the loan facility."
6. The co-ordinate Bench of this Court noted the argument of the learned
Counsel for the Plaintiff that receivables are exclusively hypothecated in
favor of the plaintiff but they are being received and collected by Defendant
Nos. 3 to 12 banks in accounts maintained by Defendant No. 1 with them.
The coordinate Bench further noted that the argument of the learned Counsel
for the Plaintiff that defendant nos. 3, 4, 7, 9, 10, and 12 are appropriating
these receivables, and defendant nos. 3 to 12 are permitting the
appropriation of deposits in such accounts toward payments of their own
debts and/or debts owed to creditors other than the plaintiff. The co-ordinate
Bench, after considering the fact that receivables which are hypothecated to
the Plaintiff but are being appropriated by other Defendants, passed the
following Order:
"30. On a prima facie consideration of facts and
materials placed on record, this Court is of the opinion
that the plaintiff has made out a case for interim
orders. The balance of convenience lies in favour of the
plaintiff, and there is likelihood of irreparable injury
being caused to the plaintiff.
31. In view of the above, defendant nos. 1 and 2 are
directed to not to deal with or encumber the whole or
part of receivables hypothecated by the defendant no. 1
in favour of the plaintiff and to further disclose the
amounts repaid to defendant nos. 3 to 12 since
20.09.2024 in its reply to the captioned application. In
addition, defendant nos. 3 to 12 are directed to
maintain status quo with respect to the amounts
pertaining to or in respect of any of the receivables
hypothecated by the defendant no. 1 in the favour of
the plaintiff. The said directions shall operate until the
next date of hearing."
7. It is this Order which is sought to be vacated in the present
application.
8. Learned Counsel appearing for Defendants No.1 & 2 states that
Defendant No. 1 has a loan portfolio of more than Rs. 1970 Crores and is
serving more than 90,000 women borrowers. He further states that
Defendant No.1 employs 4305 individuals and has a strong network of
vendors and collection agents across India. He states that the Order passed
by the co-ordinate Bench of this Court has been construed as an order
freezing the account of the Defendants No.1 & 2 and thereby the Defendants
No.1 & 2 are not able to operate their bank accounts. He states that the
present Suit is one for injunction and the Order dated 24.12.2024, amounts
to attachment, which could not have been passed in the present suit.
9. Per contra, learned Counsel appearing for the Plaintiff contends that
the Order dated 24.12.2024, by which the Defendant No.1 was directed to
disclose the amount repaid to Defendants No.3 to 12 has not been complied
with. It is contended that the receivables which have been specifically
hypothecated in favour of the Plaintiff are being diverted towards
satisfaction of the loan advanced by other causing irreparable loss to the
Plaintiff and, therefore, the Order dated 24.12.2024 does not require any
interference.
10. Learned Counsel for Defendants No.1 & 2 has handed-over a letter
dated 01.01.2025 which is in purported compliance of the Order dated
24.12.2024. A perusal of the same does not show that the Order dated
24.12.2024 has been complied with as the said letter does not disclose the
amount repaid by the Defendant No.1 to Defendants Nos.3 to 12. It does not
disclose the amount returned from the receivables hypothecated in favour of
the Plaintiff which have been diverted to the account of Defendant No.1
maintained by Defendant Nos.3 to 12.
11. The Order which is sought to be vacated in the present application
was passed in an application under Order XXXIX Rules 1 & 2. It is well
settled that the consideration while passing an Order under Order XXXIX
Rules 1 & 2 are that there must be prima facie case in favour of the person,
the balance of convenience must lie in favour of the person and if Order is
not passed then irreparable loss would be caused to the person seeking
Order. The object of Order XXXIX Rule 1 & 2 is to protect the interest of
the Plaintiff by ensuring that the suit property is not frittered away or that
the suit itself is not rendered infructuous.
12. The total loan amount of the Plaintiff is Rs.30 crores. The claim of the
Plaintiff is that when the letter of recall of loan was issued a sum of
Rs.21,82,54,243/- was due and payable. The interest of the Plaintiff, therefore, can
be protected if the amount, as claimed by the Plaintiff, under the loan recall notice,
is protected. It is the case of learned Counsel for Defendants No.1 & 2 that amount
more than the claimed amount is lying in the bank accounts of the Defendants.
Vide Order dated 24.12.2024, the Defendants No.3 to 12 have been directed to
maintain status quo in respect of the receivables hypothecated in favour of the
Plaintiff.
13. The Plaintiff has been able to prima facie show that all is not well in
Defendant No.1. There are major defaults in the loans granted by Defendant
No.1 and their accounts are being scrutinized and investigation is being
conducted regarding the accounts of Defendant No.1 and Defendant No.2 is
the personal guarantor. The apprehension of the Plaintiff is that the
receivables which are exclusively hypothecated in favour of the Plaintiff are
being collected by Defendants No.3 to 12 in bank accounts maintained by
Defendant No.1 with them. At the same time, there is some merit in the
arguments made by the learned Senior Counsel for Defendants No.1 and 2
that the entire bank accounts cannot be frozen and thereby jeopardizing the
business of Defendant No.1. It is therefore made clear that the Order dated
24.12.2024 the vacation of which is being sought, cannot be understood as
one of freezing the entire accounts. In order to protect the interest of the
Plaintiff, the Defendants are therefore directed to open a separate account
and maintain an amount of Rs.22,00,00,000/- as minimum balance pending
the suit which the Plaintiff claims is due and payable which would balance
the equities of the Plaintiff and the Defendants.
14. Undoubtedly, the present suit is only for injunction and order of
attachment under Order 38 Rule 5 CPC cannot be passed in a suit for
injunction. However, in a case where the allegation is that the receivables
which are specifically hypothecated in favour of the Plaintiff are being
appropriated by Defendants No.3 to 12 in accounts maintained by the
Defendant No.1 and Defendant No.1 has not complied with the Order dated
24.12.2024 passed by this Court directing Defendant No.1 to disclose the
amounts repaid to Defendants No.3 to 12 since 20.09.2024. This Court is
inclined to pass the order directing Defendant No.1 to make a separate
account and maintain Rs.22,00,00,000/- as minimum balance pending the
suit. The amounts which are to be received by the Plaintiff have to be
safeguarded, failing which irreparable loss and injury would be caused to the
Plaintiff and the Plaintiff would then forced to institute multiple proceedings
against Defendants No.3 to 12 to recover the amounts from them and
demonstrate that accounts which were specifically hypothecated in favour of
the Plaintiff have been diverted to the accounts of Defendants No.3 to 12 for
the satisfaction of their loans advanced to Defendants No.1 and 2 which will
cause prejudice to the Plaintiff.
15. The Order dated 24.12.2024 is therefore modified to this extent.
16. The application is disposed of.
SUBRAMONIUM PRASAD, J
FEBRUARY 12, 2025
Rahul
