TMI Blog2015 (3) TMI 944X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner bank, which the respondent company has been unable to pay on account of its financial position. The claim of the respondent company, that it is entitled to be rehabilitated is an entirely separate controversy and is based on the substratal premise that the respondent company is unable to meet its current liabilities but has the potential to revive. It is implicit in this contention that the respondent company is unable to meet its liabilities and as such a substantial dispute with regard to the respondent company's liability towards the petitioner bank cannot be inferred. Disputes raised by the respondent company cannot be considered as a defence to proceedings under Section 433(e) of the Act. Undisputedly, the respondent company has been unable to meet its liabilities towards the petitioner bank. In this view, the petitioner bank is entitled to maintain the present petition. The reliance placed by respondents to the decision of the Supreme Court in IBA Health (India) (P.) Ltd.(2010 (9) TMI 229 - SUPREME COURT OF INDIA) is also mis-placed. In that case, the Supreme Court had explained that in a case where there is a bona fide dispute as to the liability, the credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.02.2008, it granted the same to the respondent company. Thereafter on 20.02.2008, a loan agreement was executed for the same. Loan II was secured by an exclusive charge by way of hypothecation of book debts and underlying assets. 3. The interest with respect to Loan I was due 01.04.2007 and the first installment for the same was due on 01.12.2007. The interest with respect to Loan II was due 01.03.2008 and the first installment for the same was due on 01.09.2008. 4. The petitioner bank claims that the respondent company made regular payments of interest due on both the loans up to 10.08.2009 and defaulted in payment of installments with respect to both the loans from 10.03.2009 onwards and interest with respect to both the loans from 10.09.2009 onwards. 5. The petitioner bank states that in order to enable the respondent company to repay the loans, the petitioner bank restructured the account of the respondent company by way of re-schedulement of repayment and communicated the revised payment schedule to the respondent company by letters dated 26.02.2009 and 07.12.2009, however, the respondent company did not accept the same as the pacakage was conditional on infusion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany, held on 13.05.2010, it was decided that an unconditional consent letter will be provided by the MD of the respondent company for the purpose of identifying and thereafter negotiating a sale of the respondent company's portfolio to the suitable buyer MFI. However, the petitioner bank without waiting for the consent letter issued a recall notice dated 18.05.2010. 11. The respondent company submits that, by a letter dated 23.09.2010, it proposed two compromise offers for a final settlement of its dues; One being, repayment of the amount due and payable in three installments over a period of twenty five months and the second being, full and final settlement of all dues owed to lenders/banks in four installments over a period of thirty seven months. It is stated that the petitioner bank rejected both the offers and issued another recall notice dated 19.10.2010. Thereafter, the respondent company, by its letter dated 20.10.2010, proposed yet another offer to pay total payout amount in yearly installments over a period of 10 years. This too was not acceptable to the petitioner bank. It is submitted that given the financial condition of the respondent company, the petitioner b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebt as per the provisions of Section 38 of the Small Industries Development Bank of India Act, 1989. 16. Considering the facts and the contentions urged, it is apparent that there is no dispute that the respondent company owes substantial debt to the petitioner bank and has been unable to pay the same. The respondent company has also not contested its current inability to repay the debt. Essentially, the defence raised by the respondent company is that the petitioner bank is liable to support the respondent company in its rehabilitation by providing further assistance, both in terms of providing additional funds and restructuring of the existing debt. Although, it contended on behalf of the respondent company that it is entitled to such financial assistance in terms of the RBI guidelines, the petitioner bank has disputed that it is obliged to grant any further assistance to the respondent company. 17. The only controversy that is required to be addressed is, whether the petitioner bank is precluded from recovering its debt due from the respondent company and/or maintaining the present petition on account of the dispute raised in the present petition. 18. In the present cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... singled the respondent company for not extending a rehabilitation package. 21. The reasons for the financial condition of the respondent company are not material at the present stage. Whether the financial condition of the company had deteriorated for reasons beyond the control of the respondent company is also not germane to the question whether the respondent company is unable to pay its debts. The question whether, the petitoner bank has acted arbitrarily or has adopted a policy of pick and choose is also not a controversy which can be considered in the present case. The respondent company had approached the Allahabad High Court, by way of a writ petition, and had inter alia also sought interim orders restraining the petitioner bank from initiating or continuing with any proceedings for recovery of the dues owed by the respondent company to the petitioner bank. However, the respondent company has not prevailed in securing any orders in its favour. 22. In the given circumstances, where the respondent company has neither disputed, the debt owed to the petitioner bank nor the fact that it has been unable to discharge its debt, the present petition is liable to be admitted. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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