RELIGARE FINVEST LTD. Vs. LAKSHMI VILAS BANK

JUDGEMENT

(1.) The present application under Order I Rule 10 read with Sec. 151 of the Code of Civil Procedure, 1908 (hereafter CPC") has been filed on behalf of the applicant/ State Bank of India, seeking impleadment as proposed defendant in the present suit being CS (COMM) 940/2018.

(2.) Briefly stated, the facts of the present case are that the Plaintiff had filed the present suit against the Defendant's action of liquidating Fixed Deposits (FDs) amounting to Rs.791,44,77,051.00 along with interest, which were maintained by the Plaintiff with the Defendant, i.e. Lakshmi Vilas Bank Limited. The Applicants, comprising various banks and financial institutions, had sanctioned and disbursed multiple credit facilities, including term loans, working capital demand facilities, cash credit, and overdraft arrangements, under a Multiple Banking Arrangement to support the Plaintiff's lending activities. The instant application for impleadment has been filed by the authorized representative of the State Bank of India, who is fully competent and authorized by a letter dtd. 29/8/2019. Additionally, the State Bank of India had been authorized by 19 other lenders to sign, verify, and file the application for impleadment. The Applicants had sanctioned credit facilities totaling Rs.11,020.00 crores as of 31/3/2019 to meet the Plaintiff's funding requirements. The terms and conditions set out in the sanction letters had been accepted by the Plaintiff, following which various loan and security documents had been executed in favor of the Applicants. To secure these facilities, the Plaintiff had created a floating first charge on a pari passu basis over its business receivables, book debts, and current assets, including cash and cash equivalents. For effective monitoring and security consolidation, a Security Trustee Agreement had been executed on 23/8/2013, appointing IL and FS Trust Company Limited (later Vistra ITCL) as the Security Trustee for the lenders. In furtherance of the agreement, a Deed of Hypothecation had been executed on 23/8/2013, creating a charge over the Plaintiff's hypothecated assets. Over time, the Plaintiff had availed credit facilities that had been renewed and enhanced, leading to the execution of additional transaction documents, including a Supplemental Deed of Hypothecation dtd. 20/3/2019, securing enhanced facilities up to Rs.15,000.00 crores. The FDs held by the Defendant had also formed part of the hypothecated assets, which had been secured in favor of the Applicants under the Deed of Hypothecation and Supplemental Deed of Hypothecation. However, in April 2018, the Applicants had been informed that the Defendant had liquidated the hypothecated FDs without authorization and adjusted the amounts towards loans availed by the Plaintiff's group companies. As per the applicant, this action was prejudicial to the interests of the Applicants, and in violation of the terms of the hypothecation agreement. Thus, applicant State Bank of India has preferred the present application seeking its impleadment as a defendant in the present petition.

(3.) The learned counsel appearing for the applicant submits that the applicant herein is a proper and necessary party. It is submitted that the real controversy/ dispute or the subject matter of the instant suit is the Fixed Deposits. Hence, it is stated that for the proper disposal of the instant suit in an effective manner, the applicant be added in the suit and be granted an opportunity to be heard as necessary and proper party. The learned counsel appearing for the applicant further submits that the applicant is the necessary party to the present proceedings since any adjudication, and any decision thereafter, in the present matter shall have a direct bearing on the rights and obligations of the applicant. Therefore, it is prayed that the applicant be impleaded as defendant in the instant matter, for proper adjudication of the matter.