TMI Blog2018 (5) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... ffectively adjudicated by the learned Appellate Tribunal. Assuming that there is some merit in the petitioners’ contention that all these issues were raised before the Adjudicating Authority and the same have not been decided on merits, yet it would not be a sufficient ground to entertain the writ petition. There is a sea difference between ‘erroneous exercise of jurisdiction’ or ‘lack of jurisdiction’ in a Tribunal. The erroneous or failure to exercise jurisdiction by a Tribunal is a ground which can be effectively taken before the Appellate Authority. It appears to us that the petitioners cannot be heard to say that notwithstanding the powers expressly conferred under Section 60(5) of the Code, the NCLT lacks jurisdiction to entertain or dispose of the issues raised by them. Undisputedly, equally efficacious and effective remedy of appeal is available under Section 61 of the Code to the petitioners. More-so, the petitioner-Company had submitted to the jurisdiction of Adjudicating Authority and in that process, continued to appear and associate before the Adjudicating Authority during 15 effective hearings in a long span of 6 months. Unfortunately, instead of approaching the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directed to grant the subsidy amount to first petitioner; ( vi) the Insolvency Petition filed by respondent No.4 (SBI) before the National Company Law Tribunal, Chandigarh be declared to be frivolous, misconceived, vexatious and violative of guidelines dated 28.08.2017 issued by Reserve Bank of India; ( vii) SBI and other lender-Banks be restrained from pursuing the Insolvency Petition pending before NCLT; ( viii) the order dated 11.04.2018 (P24) passed by NCLT be set aside. (2) According to the petitioners, petitioner No.1-company is one of the biggest textile companies in India and is one of the largest textile exporter with 60000 share holders and is providing direct/ indirect employment to more than 50000 persons. However, because of the actions/ inactions on the part of respondents No.4 to 20, who are Consortium of the Banks have turned into a Non Performing Asset. The petitioner-company had set up a spinning manufacturing unit at village Mehatwara, District Sehera, Madhya Pradesh with an investment of approximately ₹ 2500 Crores and it is entitled to textile subsidy from both Central Government and the State Government of Madhya Pradesh. The pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny. On the basis of forensic report, the bankers mandated for techno-economic viability study which was carried out by M/s Wazir Advisers, Gurgaon. In the meeting held on 27.03.2017, Wazir Advisers had confirmed that the petitioner-company is fully viable. The State Bank of India obtained the account through merger of State Bank of Patiala, State of Bank of Travancore, State Bank of Hyderabad, State Bank of Mysore and State Bank of Bikaner and Jaipur and, as such, the State Bank of India, not only inherited the rights of the predecessor Banks, but also their obligations and that being so, the State Bank of India is not entitled to maintain any Insolvency Petition against the petitioner-company. Though the petitioner-company had a loan exposure of ₹ 4000 Crores, yet respondent No.4, instead of giving an opportunity of debt restructuring to the petitioner-company without seeking approval of CDR-EG without compensating the petitioners for subsidy loss, filed insolvency petition under Section 7 of the Code before the Tribunal at Chandigarh in which the Tribunal has passed the impugned order dated 11.04.2018 (Annexure-P24), which is arbitrary and discriminatory as the Tribunal Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Loan. This fact was also reflected in various meetings of Joint Lenders Forum (JLF) as per terms of MRA. The petitioner was required to close all accounts being maintained outside the Banks who form a part of the JLF and route all the money through the trust and retention account maintained but again in utter disregard to the same, the petitioner continued to maintain accounts with various banks outside the JLF including ICICI Bank and thereby diverted the funds from lenders which was duly objected and recorded in various JLF meetings. The lenders supported the petitioner at each stage for the release of subsidies from the Government but the petitioner at one of the meeting specifically asked the lenders not to write to the TUFS Cell as the petitioner itself was following up the same. All the material facts have been suppressed by the petitioners thereby dis-entitling them to seek relief by way of present writ petition. Respondent No. 4 has further averred that even after restructuring of the account of the first petitioner and execution of MRA in June, 2014, its accounts were categorized as 'Non-Performing Asset' in 2016 as the petitioners had been utilising every possible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly after fulfillment of all the conditions prescribed thereunder. Respondent No.2 too has prayed that the present writ petition deserves dismissal on this account. (7) Before adverting to the rival contentions, we deem it appropriate to very briefly refer to the statutory scheme of the Code of 2016. The Statute has been enacted for reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of value of assets of such persons_ and also to balance the interest of all the stake-holders including alteration in the order of priority of Government dues I . Section 3(12) of the Code defines default to mean non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not repaid by the debtor or the corporate debtor, as the case may be. Section 7 of the Code enables a financial creditor either by itself or jointly with other financial creditors to file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority i.e. National Company Law Tribunal (NCLT). The Explanation given below Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese pleas. Learned senior counsel further contended that in the present case, the State Bank of India, respondent No.4, violated the RBI instructions. As per the provisions of Section 35AA of the Banking Regulation Act, the RBI can issue statutory instructions which are binding upon all the banks, including respondent No.4. During the restructuring proposal, initially a period of six months was given. However, the same did not work out during the period from June, 2017 to December, 2017. The spirit of restructuring Code is that viable attempts are to be made to restructure a running industry. The petitioner-Company is one of the largest textile industries in India and is providing directly and indirectly employment to about 50000 people and are dealing in export of garments, thereby earning huge foreign exchange for the country. There was not even a single default towards payment of income tax or any other statutory liability or payment of wages and other benefits to its employees. So, it cannot be said to be a sick industry which cannot be restructured, rather, the problems being faced by the petitioner-company are because of action/non-actions on the part of lending banks and Min ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court in Popcorn Entertainment and Another v. City Industrial Development Corpn. And Another, (2007) 9 Supreme Court Cases 593 and Verigamto Naveen v. Govt. of A.P. And Others, (2001) 8 Supreme Court Cases 344. (17) Learned senior counsel for the petitioners also urged that in identical matters, i.e. Jayaswal Neco Industries Limited and another Vs. Reserve Bank of India and others, SLP No. 9286-9287/2018 and Jayaswal Neco Industries Limited and another Vs. Reserve Bank of India and others, SLP No. 9286-9287/2018. Hon ble Apex Court has passed interim orders dated 16.04.2018 and 05.03.2018 to maintain status quo by the parties as existed on that date. (18) Responding to these contentions, Ms. Manisha Gandhi, learned senior counsel representing respondent No.4/Bank maintained that undisputedly, the petition under Section 7 of the Act has been admitted by the Adjudicating Authority on 11.4.2018 vide impugned order, Annexure P/24. The petitioners herein had been participating in those proceedings throughout which continued for a span of six months and there were fifteen effective hearings in the matter. All these points, now raised in this writ petition, were also r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manner in which the said rights could be successfully asserted and vindicated in courts of law. (21) On the same point, reliance was also placed on the judgment of this Court in Hope Plantations Ltd v. Taluk Land Board, Peermade and Anr., (1999) 5 SCC 590. (22) Learned senior counsel for respondent-Bank then urged that the petitioner-Company was itself in gross violation of terms of MRA and had been maintaining accounts with various banks other than JLF, including ICICI and thus prayed that the writ petition may be dismissed. (23) Learned counsel appearing for respondent Nos. 1 and 2 argued that the petitioner-Company had never approached them for release of any subsidy. More so, the grant of subsidy is not a fundamental right. The petitioner-Company had not given the details of the Term Loan and the details given are between the petitioner and the lending agencies. As such, there was inaction on the part of petitioner-Company itself, but at any rate, the petitioners cannot seek a writ of mandamus without first approaching the authority against whom such direction is sought. In the case in hand, the petitioners never before approached the Ministry of Textiles. (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record to suggest that the petitioners have ever approached the State of Madhya Pradesh for the release of the due amount of alleged subsidy hence they cannot spring surprise on the Ministry of Textiles or State of Madhya Pradesh by seeking a writ of mandamus without even once agitating the matter before those agencies. Similarly, the question whether RBI guidelines have been followed or consciously violated by the SBI, is also essentially a question of fact which can be effectively adjudicated by the learned Appellate Tribunal. (26) Assuming that there is some merit in the petitioners contention that all these issues were raised before the Adjudicating Authority and the same have not been decided on merits, yet it would not be a sufficient ground to entertain the writ petition. There is a sea difference between erroneous exercise of jurisdiction or lack of jurisdiction in a Tribunal. The erroneous or failure to exercise jurisdiction by a Tribunal is a ground which can be effectively taken before the Appellate Authority. It appears to us that the petitioners cannot be heard to say that notwithstanding the powers expressly conferred under Section 60(5) of the Code, the N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arties are said to have been considered, though the petitioner-Company is not satisfied with the said findings on the ground that the same have not been effectively redressed. On this account alone, the writ petition is surely not maintainable in the light of the view taken in Hope Plantations Ltd.'s case (supra). (30) So far as the issue regarding release of subsidy by the Ministry of Textiles is concerned, respondent No.2 in the short reply has denied its liability and taken plea that the same was never raised as per the requirement of law and even complete information was not supplied to it and on that count, the petitioner was not entitled to get release of subsidy amount. Again this question can be looked into by the Appellate Authority under the Statue or it can be independently raised before an appropriate forum. In any case, the release of subsidy amount as claimed in the instant writ petition may also not be sufficient to bail out the petitioner No.1 from insolvency proceedings in the light of the undisputed fact that its loan liability taken from the Bank Consortium is over ₹ 4000 Crore. (31) We are conscious of the fact that regardless of availability ..... X X X X Extracts X X X X X X X X Extracts X X X X
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