Mr. L. Madhusudhan Rao And Another vs State Bank Of India And Another
2022 Latest Caselaw 4360 Tel

       THE HON'BLE THE CHIEF JUSTICE UJJAL BHUYAN
                                           AND
       THE HON'BLE SRI JUSTICE C.V.BHASKAR REDDY


              WRIT PETITION No.5099 of 2022

JUDGMENT:       (Per the Hon'ble the Chief Justice Ujjal Bhuyan)



      Heard      Mr.        M.S.Prasad,           learned             Senior     Counsel

appearing for the petitioners.                           We have also heard

Mr. M.Narender Reddy, learned Senior Counsel appearing

for respondent No.1 - State Bank of India (SBI) as well as

Ms. Mayuka Parcha, learned counsel for respondent No.2.

2. The present writ petition has been filed seeking the

following reliefs:

"a. Issue a writ of declaration or any other appropriate writ, order or direction in the nature of writ of mandamus declaring holding the personal guarantees dated 02.05.2006, 20.05.2006, 31.12.2013 and 14.01.2016 furnished by the petitioner No.1 and the personal guarantees dated 31.12.2013 and 18.01.2016 furnished by petitioner No.2 as null and void and unenforceable;

b. Issue a writ of declaration or any other appropriate writ, order or direction in the nature of declaration holding that no amounts are either due or payable to the respondent No.1 in the Original

Application bearing No.350/2019 before the DRT-II, Hyderabad.

c. Issue a writ of mandamus or any other appropriate writ, order or direction setting aside the O.A.No.350/2019 qua petitioner No.1 and 2; d. Pass such other order or orders and grant such other reliefs in favour of the petitioner No.1 and 2 as this Hon'ble Court may deem fit and proper in the interest of justice and as would be warranted in equity."

3. From the above, it is seen that petitioners seek a

declaration that the six personal guarantees (four of

petitioner No.1 and two of petitioner No.2) should not be

invoked. Further prayer made is for a declaration that

petitioners are not liable to pay any amount to respondent

No.1 - SBI in O.A.No.350 of 2019 pending before the Debts

Recovery Tribunal - II, Hyderabad (Tribunal). Related

prayer made is for quashing of O.A.No.350 of 2019 qua the

petitioners.

3.1. However, learned Senior Counsel for the petitioners

submits that the third prayer is not being pressed by the

petitioners.

4. The cause for institution of the writ petition has been

summed up in paragraphs 4 and 5 of the writ affidavit,

which reads as under:

"4. I further state that the petitioners have filed their written statement cum counter claim in the aforesaid OA inter alia seeking declaration of the Restructuring documents as described above as null and void and unenforceable. Moreover, the petitioners have also filed an application seeking stay on the effect and operation of the personal guarantees dated 02.05.2006, 20.05.2006, 31.12.2013 and 14.01.2016 furnished by the petitioner No.1 and the personal guarantees dated 31.12.2013 and 18.01.2016 furnished by petitioner No.2 till the pendency of the OA proceedings. However, on account of the non-appointment of the Presiding Officer in DRT-II, Hyderabad, neither the said counter claims of the petitioners nor the stay application of the petitioners has been adjudicated upon thereby leaving the petitioners remediless.

5. I state that therefore the petitioners are filing the present petition inter alia seeking declaration/setting aside of the personal guarantees dated 02.05.2006, 20.05.2006, 31.12.2013 and 14.01.2016 furnished by the petitioner No.1 and the personal guarantees dated 31.12.2013 and 18.01.2016 furnished by petitioner No.2 ("subject matter PGs") as null and void and enforceable. A copy of the personal guarantees dated developments. The business model developed by respondent No.2 envisaged two majour sources of earnings namely, margins from EPC Contracts and upstream cash flow

from its Special Purpose Vehicles ("SPV")/Subsidiaries. Respondent No.2 successfully undertook several EPC Contracts for setting up and implementation of power projects and in the year 2013, respondent No.2 was amongst the biggest power EPC contractors in the country (with successful implementation and operational capacity of more than 4,700 MW). While foraying into new power projects, respondent No.2 factored certain timelines for completion of the projects and the eventual revenues from such SPVs."

5. Learned Senior Counsel for the petitioners submits

that the guarantees were furnished by the petitioners in

their personal capacity as personal guarantees for the

Corporate Debt Restructuring (CDR) of respondent No.2 -

M/s. Lanco Infratech Ltd. i.e., the corporate debtor.

Therefore, invocation of the personal guarantees is not

justified.

6. Learned Senior Counsel for respondent No.1 submits

that the writ petition was filed because the Tribunal was

not functional at the relevant point of time. Now the

Tribunal is fully functional. Respondent No.1 has filed an

application under Section 19 of the Recovery of Debts and

Bankruptcy Act, 1993, before the Tribunal for recovery of

the debts of respondent No.2 totalling an amount

Rs.1392,22,04,909.77. In this connection, respondent

No.1 has also sought for invoking the personal guarantees

of the petitioners. The original application has been

registered as O.A.No.350 of 2019. Additionally, respondent

No.1 has filed an application under Section 95 of the

Insolvency and Bankruptcy Code, 2016, before the

National Company Law Tribunal, Hyderabad (NCLT),

against the corporate debtor. He submits that interim

moratorium has been granted by the NCLT. Therefore,

there is no cause for continuing with the present writ

petition.

7. Learned counsel for respondent No.2 submits that in

the present proceeding, respondent No.2 has no role to

play and therefore, no submissions are called for.

8. Learned Senior Counsel for the petitioners submits

that in O.A.No.350 of 2019 pending before the Tribunal,

petitioners have filed a counter claim which is pending.

9. On due consideration, we are of the view that prayers

(a) and (b) can only be decided by the Tribunal on adducing

of evidence. Writ proceedings are not a substitute for and

cannot be used to circumvent proceedings before the

statutory tribunal. Therefore, we relegate the petitioners to

the forum of the Tribunal i.e., Debts Recovery Tribunal - II,

Hyderabad, on the above aspects, including on the point of

invocation of personal guarantees.

10. To enable the petitioners to approach the Tribunal,

the interim order passed by this Court on 04.03.2022 shall

continue to hold the field for a further period of forty five

days whereafter it would be for the Tribunal to pass

appropriate order(s) in accordance with law. However, we

make it clear that we have not expressed any opinion on

merit and all contentions are kept open, leaving it open to

Tribunal to pass appropriate order(s). Parties would also

be at liberty to seek early hearing of O.A.No.350 of 2019.

11. Writ petition is accordingly disposed of.

Miscellaneous applications pending, if any, shall

stand closed. However, there shall be no order as to costs.

______________________________________ UJJAL BHUYAN, CJ

______________________________________ C.V.BHASKAR REDDY, J

30.08.2022 vs