TMI Blog2019 (2) TMI 1763X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant s own action in abandoning its efforts under the JLRA, and moving on to the S4A Scheme, and thereby turning the clock back on a process, which, under the current legal and economic scenario in the country, is mandated to be extremely time bound and forward moving. Further, the writ petition was filed by the appellant on 21st May, 2018 much after the ICICI Bank approached the NCLT, Chandigarh on 9th March, 2018. So, it is clear that the writ petition was filed as an afterthought, only with a view to possibly interdict the proceedings already initiated by ICICI. Also, it cannot be overlooked that the account maintained with the ICICI Bank was declared as NPA on 31st December, 2016. The respondents 2, 4 and 5 issued notices under Section 13(2) of the SARFAESI Act to the appellant Company. A recall notice was sent to the appellant to pay a sum of ₹ 1,77,77,60,053.15/- which the appellant had failed to pay. Merely because the amendments incorporated in the Banking Regulations Act, 1949 empower the Central Government and the RBI to issue directions for resolution of stressed assets, the same does not create any entitlement or right in the hands of the borrower, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30th January, 2014 by way of which it introduced the framework of identifying stressed assets and prescribed detailed steps that had to be taken by banks in order to re-vitalize such stressed assets. These Guidelines were further supplemented by another set of Guidelines issued on 26th February, 2014. The rationale behind the said Guidelines was to arrive at an early and feasible solution in order to preserve the economic value of the underlying assets as well as the lenders loans . According to the appellant on a conjoint reading of the said circulars, the following salient features are noted:- 1. Banks are to mandatorily constitute a Joint Lender s Forum, i.e., JLF as soon as a loan account of any borrower is classified as SMA-2 or on the request of a borrower to that effect. 2. As soon as the aforesaid is done, JLF is to arrive at a suitable Corrective Action Plan, i.e., CAP in a time bound manner, which as per the said Guidelines can be either rectification , restructuring or recovery . 3. If the JLF chooses to opt for restructuring then a detailed Techno-Economic Viability (TEV) study has to be carried out in a time bound manner and if res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... another Working Capital Term Loan (WICTL-II). The interest on cash credit facility was also proposed to be converted into a term loan. 7. Since the total exposure of the appellant company was more than ₹ 500 Crores in terms of the RBI Guidelines the TEV study had to be subjected to an independent evaluation by an Independent Evaluation Committee (IEC) constituted by the Reserve Bank of India / Indian Bank s Association. The minutes of the meeting of the IEC, held on 11th May, 2015 record that after detailed deliberations and justification given by the Company restructuring with additional working capital limit of ₹ 75 Crores as proposed in the package was approved . 8. On 23rd June, 2015, the JLF in its meeting approved the restructuring proposal and consequently on 27th June, 2015 A Joint Lenders Restructuring Agreement (JLRA) was executed between the appellant company and respondent Banks. On the same date the Consortium of respondent Banks also entered into an Inter-Credit Agreement. Prior to that each of the members of the Consortium issued sanction letters for sanctioning the restructuring package in terms of the CAP. It is stated that ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed JLF package, Punjab National Bank, (PNB) formally sanctioned the release of ad-hoc facilities of ₹ 59.68 Crores against furnishing of further additional third-party ad-hoc securities commensurate with the said amount. However, only ₹ 30 Crores were released out of the said sanctioned amount. It was the appellant s case that since the adhoc limit was merged with the approved JLF package, it was entitled to release of remainder of total sum envisaged for the fiscal year 2015-16 by the other banks according to their pro-rata share. Despite several letters sent to respondent banks repeatedly requesting release of additional working capital no further limits / funds were released. 13. The moratorium period envisaged in the restructuring package was to get over by December, 2016, however, on account of non-release of funds / limits by respondent banks, the appellant company could not operate its business efficiently and therefore, the projected cash flows were not met. The appellant Company therefore requested for convening an urgent JLF meeting to resolve the issue. 14. On June 13, 2016, RBI issued a circular whereby it introduced a scheme for Sustaina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned order, it is the appellant company s case that the learned Single Judge has erred in concluding that the Projected Cash Flow Statements and Working Capital Assessment as contained in the D B TEV report was not a part of the Approved JLF package and therefore it was not entitled to any additional working capital over and above ₹ 75 Crores. It is further stated that Clause 2.6.1 of the JLRA has been completely misconstrued inasmuch as the respondent banks stand that the Approved JLF Package is limited to Schedule X of the JLRA and therefore did not envisage provision of fund based working capital beyond ₹ 75 Crores, being a complete afterthought was raised for the first time only before the learned Single Judge. It is stated that the respondent banks had never disputed or objected to the appellant company s request for enhancement of fund based working capital and on the contrary PNB had sanctioned its pro-rata share of ₹ 59.68 Crores in accordance with the figures envisaged in D B TEV report (out of which ₹ 30 Crores had already been disbursed). It is stated that the appellant company had also written several letters to PNB, the lead Bank seeki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Loans as corrective action plan. Pursuant thereto Dun and Bradstreet (D B) was requested to draw a Techno Economic Viability Report (the TEV Report ) on the restructuring of Existing Loans and it submitted its TEV Report on March 27, 2015 along with the final restructuring package and after perusal of the said report, the Lender / Lead Bank have agreed to restructure the Existing Loan subject to the terms and conditions as decided by the JLF, in its meeting dated March 27, 2015 and finally approved in JLF dated June 23, 2015 (hereinafter referred to as the Approved JLF Package ) 23. It is the appellant s case that upon a conjoint reading of the aforesaid clauses it becomes clear that the restructuring package (proposal) as contained in the D B TEV report is an integral part of the restructuring under the JLRA. It is stated that the learned Single Judge s conclusion that the proposed enhancement of working capital limits as contained in the D B TEV report could not be read to mean that the respondent banks had committed to provide additional funding is contrary to the terms and conditions of the JLRA itself as also the finding that the appellant company was in fact in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the enhanced limits to the extent of ₹ 240.77 Cr. 25. It is stated that the learned Single Judge has further failed to appreciate that PNB / Lead Bank, having sanctioned an amount of ₹ 59.68 Crores as its pro-rata share of enhanced working capital requirements for FY 2015-16, and having released ₹ 30 Crores therefrom, a right had crystallized in favour of the appellant company towards the remaining sum of ₹ 29.68 Crores which had been withheld unlawfully. It is therefore their case that once working capital had been approved and sanctioned by the Banks in their favour a right had crystallized in favour of the appellant. Therefore, if even after sanction the banks failed to disburse the said funds the said right accrued in favour of the appellant ought to have been enforced by the learned Single Judge. 26. It is further stated that the stand adopted by PNB and ICICI Bank that the said sanction of additional working capital limits was a separate transaction altogether is factually incorrect inasmuch as the said stand was taken only during the course of oral arguments and not in any of the pleadings filed by them. Moreover, treating the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Crores. It is stated that the said amount was only required to be released in order to meet the appellant company s immediate requirements to meet demands of the pressing creditors. It was on account of non-disbursal of the said amount despite approval of IEC that the appellant company had written the said letter requesting that the said amount be released immediately. It was nowhere stated in the said letter that the Approved JLF Package was limited to provision of ₹ 75 Crores only. In fact, the appellant company had on 22nd September, 2015 along with supporting Credit Monitoring Assessment CMA data requested that enhanced working capital be released for FY 2015-16 thereby demonstrating the understanding that the Approved JLF Package included enhancement of working capital limits in the subsequent years. It is their case that the aforesaid letter has been read completely out of context inasmuch as several other letters written by the appellant company requesting sanction and release of enhanced working capital have not been considered by the learned Single Judge. 30. It is stated that a TEV Study plays an important role in the framework established to deal with s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... especially Annexures 2 and 3 of the Report and therefore, the Banks cannot now be permitted to resile from the same especially since the appellant company has now acted to its own detriment pursuant to the promises made by the Banks. It is their case that after the finalization of the D B TEV Report but prior to approval of the same by the IEC and execution of the JLRA the respondent Banks had restructured the appellant company s loan accounts in their respective books of accounts before 30th March, 2015 and 31st March, 2015 on the basis of the restructuring package envisaged in the D B TEV Report. Attention is drawn to the following sequence of events: DATE EVENT 19.03.2015 JLF in its meeting appointed D B as the TEV Consultant. 27.03.2015 D B TEV Report is finalized and submitted to JLF wherein a restructuring scheme was proposed. 27.03.2015 On the same day, the JLF approved the aforesaid D B TEV Report in its entirety which included the Annexure-2 (Balance Sheet) and Annexur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sardar Associates and Others vs. Punjab Sind Bank (2009) 8 SCC 257 and Gujarat State Financial Corporation vs. M/s. Lotus Hotels Pvt. Ltd. (1983) 3 SCC 379. It is their case that specific performance of JLRA is distinct from specific performance of any other agreement since a JLRA is executed under the aegis of RBI s Circular issued under Sections 21, 35A and 35AB of the Banking Regulation Act, 1949. Therefore, in the facts of the present case specific performance of the subject JLRA would effectively mean directing the respondent Banks to comply with Circulars issued by the RBI in exercise of its regulatory power under the Act of 1949. 35. It is stated that negation of the aforesaid plea by the learned Single Judge on the ground that there had been a fundamental change in finances of the appellant company severely and adversely affecting its ability to service its debts is totally misconceived. It is their case that the learned Single Judge has completely overlooked the fact that the appellant company had failed to adhere with the repayment schedule only on account of the respondent Banks default in sanctioning necessary working capital which hindered the appellant co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. Further, admittedly the said minutes were only draft minutes and the respondent Banks have failed to produce any material / documents to show that the same were eventually finalized thereby giving them a basis to initiate recovery proceedings. In fact, from a perusal of the said draft minutes it is seen that no formal decision to change CAP was taken and the same was merely discussed. The relevant portion reads as under: Under these circumstances JLF resolved that, in the absence of any proposal for resolution, the CAP may be changed to recovery mode and the necessary notices under SARFAESI may be issued. ICICI Bank informed that they are exploring the possibility of restructuring under S4A and mandate for change of CAP shall be subject to approval by their higher authority. 39. It is the appellant s case that in the absence of specific documents / material showing that the aforesaid proposal to change CAP to recovery mode was eventually approved, it could not be concluded that the JLF had changed the CAP accordingly. It is stated that on 24th April, 2017 the JLF had ratified the minutes of its last meeting held on 22nd December, 2016 thereby implying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the basis for deciding the CAP, and will be binding on all lenders, subject to the exit (by substitution) option available in the Framework. Lenders shall ensure that their representatives in the JLF are equipped with appropriate mandates, and that decisions taken at the JLF are implemented by the lenders within the timelines. .. 5. It shall be noted that (i) . (ii) any bank which does not support the majority decision on the CAP may exit subject to substitution within the stipulated time line, failing which it shall abide by the decision of the JLF. (iii) the bank shall implement the JLF decision without any additional conditionalities; 6. Any non-adherence to these instructions and timelines specified under the Framework shall attract monetary penalties on the concerned banks under the provisions of the Banking Regulation Act 1949. 43. It is therefore the appellant s case that the duties and obligations of the respondent banks under the restructuring package / JLRA dated 27th June, 2015 are not merely contractual in nature but are instead statutory in character. The JLRA, having been executed under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the ground that even though it has been held that Circulars issued by the RBI are binding on banking companies, implementations / compliance of the same has not been directed especially in light of the finding that respondent banks had delayed the release of working capital which had admittedly been sanctioned by the JLF, thereby also clearly violating the statutory duty cast on members of the JLF under the subject RBI Circulars. 47. PNB / Lead Bank (PNB) in its counter-affidavit has only stated that the learned Single Judge has rightly arrived at a conclusion that the sanction of a sum of ₹ 59.68 Crores was a separate transaction and not a part of the Approved JLF Package. Additionally, the following documents with regard to the said transaction have been placed on record: 1. Extract of the meeting of Board of Directors of appellant held on 6th November, 2015. 2. Letter dated 2nd December, 2015 of the appellant Company addressed to the answering respondent Bank. 3. Letter dated 2nd December, 2015 of the appellant Company addressed to the answering respondent Bank. 4. Undertaking dated 2nd December, 2015 given by appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant on 30th March, 2015 was categorically subject to the aforesaid TEV Report as were the sanction letters issued by the other Banks, later on. He points out that the said sanction letters were issued prior to the execution of the JLRA. Even the IEC, comprising of senior RBI officials, had approved the said TEV Report in its entirety without expressing any reservations with regard to the subject Annexures. 51. Drawing attention to the definition of Restructuring Documents he would submit that restructuring envisaged in the present case, comprised of restructuring contained in the JLRA as well as the one envisaged under the Approved JLF Package. It is therefore submitted that the usage of the term Approved JLF Package (which has been defined in Recital F to the JLRA to mean D B TEV Report) is distinct from the phrase this agreement which two phrases have in fact been used separately in the JLRA itself. 52. Attention is further drawn to clause 2.6.1 of JLRA wherein the respondent Banks have undertaken to extend working capital limits as per the Approved JLF Package in terms of the projections contained in D B TEV Report. Mr. Sibal would submit that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cturing Scheme. Consequently, the restructuring scheme could not be taken forward after 01-10-2016 and the company could not achieve its projections as per TEV Report. Amounts payable to banks became overdue and loan accounts of Company have been classified as Non-Performing Assets by the lending Banks. The said PNBISL TEV Report was never denied / disputed by the banks. 56. Controverting the respondent Banks argument that the appellant had committed several defaults in its obligations under the JLRA, he would submit that PNBISL TEV Report categorically concludes that the appellant company had complied with all conditions of restructuring scheme. Moreover, in terms of Clauses 7.3.1 and 7.3.2 of the JLRA, the respondent Banks were obligated to issue a prior notice in case of an event of default. No such notice having been issued, the said argument of the respondents is clearly untenable. He would submit that in any case the said issue involves highly disputed questions of facts and the same would be beyond the scope of Article 226 of the Constitution of India. 57. It is Mr. Sibal s submission that in terms of the scheme of IBC, specifically Section 7 thereof, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conclusion Mr. Sibal would submit that since the appellant has raised issues of default on the part of the Banks which has led to a concomitant violation of a statutory duty, the jurisdiction of this court under Article 226 cannot be ousted to render the appellant remediless. Reliance is placed on Gujarat State Financial Corporation (supra), Sardar Associates (supra) and Mardia Chemicals v. Union of India 2004 (4) SCC 311. 60. Mr. Rajesh Kr. Gautam, learned counsel appearing for the PNB submits that there is no clause or provision in the JLRA in terms of which the respondent Banks are mandated to sanction working capital limits beyond ₹ 75 Crores to the appellant without taking into consideration its actual performance. Similarly, there is also no provision which mandates such sanctions in terms of estimated or projected figures in terms of D B TEV Report. He would further submit that provisions of the JLRA read with minutes of the meeting of the JLF dated 26th March, 2015 and the minutes of the IEC meeting dated 11th May, 2015 clearly indicate that there was no obligation to sanction working capital beyond ₹ 75 Crores. Such sanction beyond the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g level of debts and so S4A may be considered. The Company also agreed that for this he shall have to keep the account in standard category for which purpose he shall hold discussion with the individual lenders .. In the Meeting held on 24.04.2017 in Para 4 it has been recorded:- 4. Way forward - Various options were discussed at length at the end of which the Company requested to consider the option of S4A as a resolution strategy. Company also circulated a note for reference of the JLF. After discussion it was explained to the Company that it should establish the eligibility criteria for S4A as per guidelines and should come back with a detailed working / request. Some of these guidelines are explained to the Company are as follows:- Eligibility criteria as per scheme Technical Validity to be established Sacrifice of the Company shall not be less than that of the Banks Immediate transfer of equity The Company was informed that the Banks shall not be taking any additional fresh exposure and the funds if any shall have to be brought in by the promoters from their own sources. The process shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d ICICI Bank, having already conveyed their respective mandate for withdrawal from the S4A Scheme (meeting held on 9th February, 2018), and on account of limitation for the said scheme nearing expiry coupled with the appellant company s non-cooperation, jointly decided to file joint suit against the company and guarantors before the DRT. 65. Mr. Gautam would submit that the appellant company s argument that the respondent Banks were bound to sanction working capital beyond ₹ 75 Crores in terms of the JLRA, was raised only after the Forensic Audit Report highlighted certain High Risk and Medium Risk Points; ICICI Bank filed a case before NCLT and the consortium decided to file a joint suit before the DRT. Moreover, the said argument was also never raised in any of the meetings of the JLF. 66. In conclusion Mr. Gautam submits that the appellant company has not approached this Court with clean hands inasmuch as even though it was aware about the Forensic Audit Report being against it the same has not been mentioned anywhere in the writ petition. Following the production of the said audit report by PNB, the appellant company in its rejoinder merely adopted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore the question of entertaining the present appeal to disturb any finding arrived at therein does not arise. Since it is not the appellant s case that the findings of the learned Single Judge are perverse or patently illegal, the present appeal would be beyond the scope of interference and thus deserves to be dismissed at the threshold. It is his submission that the subject writ petition had been filed by the Appellant with the sole aim of derailing the proceedings initiated against it under IBC, 2016, despite the law laid down by the Supreme Court in Chitra Sharma and Ors. vs Union of India, W.P. (C) 744/2017, and Arcelor Mittal (supra). 71. He would submit that following the acceptance of the appellant company s request to adopt Restructuring as the CAP by the JLF and execution of JLRA in pursuance thereof, the appellant, instead of complying with the obligations arising thereunder, began to default in repayment of principal amount and interest dues. The appellant s account was reported as a Red Flag Account by ICICI Bank and in the meeting of the JLF held on 22nd December, 2016 wherein issue of financial indiscipline was also raised. It was therefore decide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the finding that enhancement of working capital limits in every subsequent year as shown in the D B TEV Report does not figure in the JLRA, Mr. Srinivasan would submit that the only additional working capital agreed to and recorded in the JLRA was a sum of ₹ 75 Crores and the same was also accepted by the IEC. According to him, there has been a deliberate misreading of the Approved JLF Package by the appellant whereby it is claiming additional capital of over ₹ 529 Crores over 10 years including immediate release of ₹ 136 Crores. While referring to Para 2.5 of Article II of the JLRA Mr. Srinivasan would submit that that it is only the JLRA and other Financing Documents that constitute the entire agreement between the parties, subject to terms and conditions mentioned in Schedule III and Schedule XI of the JLRA. Further, details of Facilities as agreed to be provided by the respondent Banks is defined to mean Facility A to I in Schedule III. The working capital limit agreed to be provided by the Banks is defined at Facility H which in turn referred to Schedule X in JLRA. 75. It is submitted that the expression Approved JLF Package as defined in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent Banks were under no obligation to provide any additional working capital to the appellant. It would be incorrect to state that the learned Single Judge has substituted his view for that of a technical consultant and in fact he has merely observed that the aforesaid conclusion was not backed by any substantive material or discussion contained in the said TEV Report. In any case, the Forensic Audit Report has made several adverse comments against the appellant with respect to sustainability of its debts. 79. Mr. Srinivasan submits that the case of Innoventive Industries (Supra) is squarely applicable to the facts of the present case inasmuch as the Clause 5.1 (t) of the JLRA is identically worded as a subject clause that was considered in the said case. Merely because the appellant herein had raised the issue of non-provision of additional funds right at the threshold, it would not mean that its unconditional obligation to pay dues had been rendered ineffective. Further the appellant s argument that Section 238 of IBC would not override Sections 35AA and 35AB of the Act of 1949 simply because the same were enacted after enactment of IBC, is based on a princi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s debts, it should not adopt malafide ways of evading from the rigours of IBC and the time bound resolution process prescribed therein. 83. In conclusion, Mr. Srinivasan would submit that the impugned judgment wherein the learned Single Judge has in fact considered all contentions of the appellant herein and adjudicated all the issues raised is neither perverse nor patently illegal. 84. In rejoinder Mr. Sibal would reiterate that the PNB sanction dated 5th December, 2015 is in fact not a separate transaction and that the projections contained in the D B TEV Report formed an integral part of the Approved JLF Package . He would also submit that in Section 7 proceedings, the appellant would have no scope to raise the existence of any dispute unlike the case of an operation creditor . The appellant has therefore approached this Court under Article 226 seeking relief against violation of statutory circulars issued by the RBI. The said circulars having statutory force and are fully binding in nature. 85. Having heard the learned counsel for the parties, the issue which arises for consideration is whether the learned Single Judge was justified in dismissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing capital limits of ₹ 592.7 Crores had been sanctioned as already accepted in the TEV study submitted at the time of restructuring . (vii) The failure on the part of the Banks to release working capital limits was discussed in the JLF meeting, wherein none of the Banks disputed the request on the ground JLRA did not envisage provision of working capital beyond ₹ 75 Crores. Reference is made to the counteraffidavit of the PNB, wherein it is admitted that the sanction letter dated 5th December, 2015 was part of the Approved JLF Package . (viii) That the stand adopted by the Banks was to overcome PNBISL TEV Report of December, 2017, wherein it is stated that the Company has cleared all the conditions of restructuring including payment of interest till 30th September, 2016. But working capital limits were not released by the Banks as per D B TEV report / Approved Restructuring Scheme. Consequently, the restructuring scheme could not be taken forward after 1st October, 2016 and the company could not achieve the projections as per the D B TEV Report. Amounts payable to banks became overdue and loan accounts of company had been classified as NPA s by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormance of their obligations under the JLRA. According to the petitioner, the CAP (the approved JLF Package) as agreed to between the petitioner and the respondent banks entail an obligation for the respondent banks to provide additional working capital of ₹ 75 crores in the initial year and further working capital (as projected under the D B TEV Report) for the subsequent periods. XXXXX XXXXX XXXXX 51. The restructuring proposal as set out in the D B TEV Report is reproduced below: Restructring proposal A. Cut-off Date - October 1st . 2014 Term Loan outstanding as on cut-off date is INR 320 million and CC outstanding as on cut- off date is INR 8,638.80 million. i. Term Loan The Term Loan outstanding of INR 320 millon shall be restructured as follows: The Company proposes 24 months moratorium from the cut-off date for repayment of term loan and repayment to be made in 32 quarterly instalments from the quarter ended December 2016. The Interest moratorium on term loan is proposed for first 24 months from cut-off date and the same be funded (to be converted into FITL). The repayment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii. Working Capital Term Loam (WTCL)-I Irregularity of INR 4,360 million considering all fund based limits is proposed to be converted into WCTL-I. To assess the irregularity, the Drawing Power is considered at INR 3,869.20 million as on Cut-off date 1st October, 2014. Indicative breakup of WCTL- I shall be as detailed under (INR Millions) Particulars Value CC Outstanding 8,636.80 Less: Interest debited after cut-off date 407.60 Less: MPBF/Available DP 3,869.20 DP Shortfall (WCTL I) 4,360.00 Total WCTL I 4,360.00 Interest Rate on WCTL -I is proposed at 10.75% through the restructuring tenure. Moratorium on Principal repayment is proposed to be 24 months (upto 30th September, 2016) from Cut-off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iv. Working Capital Term Loan (WCTL) II o Moratorium on Principal repayment is proposed to be 24 months (upto 30th September, 2016) from Cut-off Date. Interest Rate on WCTL - II is proposed at 10.75% through the restructuring tenure. The interest moratorium is proposed to be 24 months from cut-off date and is proposed to be funded and converted into FITL. Repayment of WCTL II is proposed to be made in 32 quarterly instalments commencing from quarter ended December 2016. The detailed repayment is as exhibited under - (INR Millions) Particulars Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24 Mar-25 Opening Balance 245.00 245.00 238.88 226.63 208.25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,869.2 0 3,869.20 3,869.20 3,869.20 3,869.20 3,869.20 3,869.20 3,869.20 3,869.20 Addition / Disbursement Repayment Interest Rate 10.75% 10.75% 10.75% 10.75% 10.75% 10.75% 10.75% 10.75% 10.75% 10.75% 10.75% Interest Charged to P L 415.94 415.94 415.94 415.94 415.94 415.94 415.94 415.94 415.94 415.94 Interest Converted to FITL - II 415.94 207.97 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 284.30 95.43 -0.00 Interest Charged to P L 0.00 49.12 93.30 95.92 89.90 80.28 69.92 57.86 38.20 17.92 1.29 The detailed repayment schedule of FITL II (on Working Capital) is as under (INR Million) Particulars Mar15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar21 Mar-22 Mar-23 Mar-24 Mar-25 Opening Balance 213.28 213.28 629.22 816.26 774.41 711.62 627.90 544.19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Repayment 0.00 1.92 3.84 5.76 7.67 7.67 11.51 15.35 15.35 7.67 Closing Balance 25.00 59.49 74.82 70.98 65.23 57.56 49.88 38.37 23.02 7.67 0.00 Interest Charged to P L 3.88 7.47 5.91 7.45 6.70 5.89 5.00 3.51 1.85 0.31 The detailed repayment schedule of FITL IV ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elow:- The below table depicts the projected financial highlight of the LEFL. Particulars Projected 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E Net Sales 7,158.96 10,703.08 11,952.14 13,427.87 15,876.83 18,253.04 20,047.94 21,070.31 22,142.14 22,169.94 22,199.21 % Growth -55.89% 49.51% 11.67% 12.35% 18.24% 14.97% 9.83% 5.10% 5.09% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 132.98 132.98 132.98 132.98 132.98 132.98 132.98 132.98 Reserves and Surplus 3,743.56 3,391.57 3,163.42 3,458.68 3,848.30 4,607.80 5,874.28 7,316.82 8,943.19 10,652.15 12,419.42 Total Net Worth (TNW) 3,876.54 3,524.55 3,296.40 3,591.66 3,981.28 4,740.78 6,007.26 7,449.80 9,076.17 10,785.13 12,552.40 Secured Loan 9,777.92 12,195.78 13,238.72 13,093.7 9 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter on 25.06.2015. The sanction letter issued by PNB also indicated a reference to ₹ 75 crores as additional working capital limit. The same was in reference to the condition requiring the petitioner to secure a working capital limit of ₹ 461.93 crores the breakup of which was indicated as Current DP of ₹ 386.93 C + ₹ 75.00 Cr as additional proposed . None of the sanction letters had any reference of any further funding in addition to ₹ 75 crores. XXXXX XXXXX XXXXX 61. In any view of the matter, the parties had reduced their agreement in writing by entering into the JLRA. Thus, the question whether the respondent banks had any commitment to provide additional funding must be examined on the basis of the express terms of the JLRA. 62. The term approved JLF Package is defined under Article 1 of the JLRA to have the same meaning as given to the said term in recital F of the JLRA. Recital F of the JLRA reads as under:- F. At the request of the Borrower and in consideration of the Borrower s commitment to improve its operations, the request of the Borrower was referred to the joint lenders forum (hereinafter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity D, Facility E, Facility F, Facility G, Facility H and Facility I. Schedule II sets out the particulars of existing loans and Part A of Schedule III sets out details of all Facilities. Schedule IV to Schedule XI includes details of separate facilities. The working capital limit agreed to be provided by the respondent banks was referred to as Facility H in the JLRA. Facility H is defined in the JLRA as under:- Facility H means the revised Fund based working capital limits including Cash Credit/LOCSTL/EPC/PCFC/PSCFC Facility (FBWC) to be extended to the Borrower by continuation of regular portion of existing fund based working capital limits, more specifically defined in Schedule X. 66. The particulars of working capital facility were set out in Schedule X. Part B of the said Schedule included the terms and conditions of such facility. 67. Part A of the Schedules II and III and Schedule X to the JLRA are relevant and are set out below: SCHEDULE II Particulars of Existing Lenders and Existing Loan A. Existing Loans Secured term loans (Rs in Crore) Lender ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Axis Bank - Total 24.50 Particulars of facility D Funded Interest Term Loan I (FITL I) Bank FITL I PNB 49.40 ICICI Bank 12.47 Syndicate Bank 25.38 Axis Bank 6.46 Total 93.71 Particulars of Facility E Funded Interest Term Loan II (FITL II) Bank FITL II PNB 38.20 ICICI Bank (sanctioned only one (FITL) 14.09 Syndicate Bank 25.48 Axis Bank 6.79 Total 84.56 Particulars of Facili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NFB PNB - ICICI Bank* 9.70 Syndicate Bank - Axis bank 5 Total 14.70 (*Derivate) PARTICULARS OF FACILITY J (FCNR B LOAN) (Rupees in crores) Bank NFB PNB - ICICI Bank 64.96 Syndicate Bank - Axis bank - Total 64.96 Total Particulars of all the facilities (Rupees in crores) SCHEDULE X PART A Particulars of facility H-Fund Based Working Capital Facilities (Rupees in crores) Bank FBWC-1 FBWC-2 TOTAL FBWC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... JLF on 23.06.2015. A perusal of the Minutes of the said Meeting do not refer to any additional capital other than ₹ 75 crores which was expressly approved by the IEC. 70. In view of the above, this Court finds it difficult to accept that the Approved JLF Package included a commitment to provide additional working capital other than ₹ 75 crores as expressly mentioned. The sanction letters issued by the respondent banks (three of which were issued prior to entering into the JLRA) are in terms of the agreed restructuring package and none of the said letters referred to providing any additional funding other than ₹ 75 crores. 71. The petitioner relies on Paragraph 2.6.1 of the JLRA in support of its claims that the respondent banks were obliged to provide additional working capital. Paragraph 2.6.1 of the JLRA reads as under:- 2.6.1 Additional Working Capital Limits To meet the working capital requirements of the Borrower, the Lenders agree that the working capital limits shall be extended as per the Approved JLF Package and the same shall be re assessed depending on the need of the Borrower. The Lenders may at their sole disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prepaid. The petitioner could also seek funding from other sources. 76. The petitioner has relied heavily on the PNBISL TEV Report wherein it was observed that the petitioner had complied with all the conditions but the working capital limits were not released by the respondent banks as per the approved restructuring scheme and consequently, the restructuring scheme could not be taken forward after 01.10.2016 and the petitioner could not achieve its projection as per the D B TEV Report. It was contended that the said report established that the respondent banks had in fact failed to comply with the obligations under the JLRA. In addition, the petitioner also relied upon the communications with PNB wherein PNB, had, in fact, sanctioned additional working capital pro rata to their share. However, this Court is unable to accept that the aforesaid documents establish that the respondent banks were obliged to issue additional working capital in terms of the JLRA. This is so because the provisions of the JLRA do not support this view. It also appears that the statement that the projections could not be achieved due to non provision of working capital is a mere observation and n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the relevant extracts of the Schedules to the JLRA, as set out above, there is no reference to provision of additional working capital limits in the subsequent years. (v) The expression approved JLF Package has been explained in recital F of the JLRA. A plain reading of the recital F of the JLRA indicates that the approved JLF Package is the scheme of restructuring of existing loans, as decided by the JLF in its meeting dated 27.03.2015 and as approved by the JLF on 23.06.2015. A perusal of the Minutes of the said Meeting do not refer to any additional capital other than ₹ 75 crores, which was also expressly approved by the IEC. (vi) The sanction letters issued by the respondent banks (three of which were issued prior to entering into the JLRA) are in terms of the agreed restructuring package and none of the said letters referred to providing any additional funding other than ₹ 75 crores. (vii) Paragraph 2.6.1 of the JLRA must be read in its context. It is apparent that the respondent banks had agreed to provide working capital limits as per the approved JLF package and the details of such facilities were expressly mentioned in Sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 75 Crores had seemingly been given up by the appellant or in other words had not been insisted upon. 91. Had the appellant really wanted implementation and enforcement of obligations arising out of the JLRA, it should have taken appropriate steps at the relevant time, before having requested for implementation of the S4A Scheme, or even consenting to the same. Present action, in our opinion, is highly belated, at least as regards seeking specific performance of the JLRA. Moreover, the CAP having been changed from restructuring , to recovery , granting the appellant s prayers would necessarily mean overlooking the appellant s own action in abandoning its efforts under the JLRA, and moving on to the S4A Scheme, and thereby turning the clock back on a process, which, under the current legal and economic scenario in the country, is mandated to be extremely time bound and forward moving. We therefore agree with the conclusion as drawn by the learned Single Judge in paras 78 to 81 of the impugned order which read as under: 78. Even if it is accepted (which this Court does not) that the respondent banks were obliged to provide additional working capital as cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ider the option of S4A as a resolution strategy. The petitioner company also circulated a note for the reference of the JLF. At the said meeting, the whether a S4A scheme could be sanctioned was discussed and the petitioner company was called upon to establish its eligibility for such a scheme. Thereafter, at the meeting held on 21.06.2017, the JLF agreed to implement the S4A Scheme and adopted 21.06.2017 as a reference date. PNBISL was also directed to conduct a TEV Study for the said purposes. However, there was a delay in completion of the TEV Study and the S4A Scheme could not be implemented within the period of 180 days as required. 81. There is much controversy with regard to the proceedings for a S4A Scheme. The petitioner claims that the respondent banks had no intention to adopt any S4A scheme and had intentionally delayed the implementation of the same. It was finally abandoned by them on grounds, which the petitioner claims are untrue. The respondent banks, on the other hand claim that the S4A scheme was subject to a forensic audit and the draft Forensic Audit Report contained adverse observations against the petitioner and, thus, the petitioner was disentit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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