KRIMPEX SYNTHETICS LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) The present petition, is filed to impugn the order dated April 16, 1996 passed by the Appellate Authority for Industrial and Financial Reconstruction, New Delhi. The Appellate Authority gave, consent for continuation of the proceedings in Suit No. 1595/89 against the petitioner company and the insolvency petitions 8 to 13 of 1994 against the guarantors. However, it was made clear that in case any decree was obtained by respondent No. 3 against any of the properties of the petitioner company it shall not be executed without the prior consent of the Appellate Authority. The petitioners have omitted to give the relevant facts which culminated in the passing of the impugned order in the petition and these facts are brought on record in the counter affidavit filed on behalf of respondent No. 3. There is practically no denial in respect of the same. These in brief may be reproduced as follows: (i) In October, 1986 the petitioner company had approached the third respondent, IFCI Ltd. and Bank of Baroda for financial assistance for setting up a draw texturising and twisting unit at Silvassa, in Dadra and Nagar Haveli, Union Territory of India. The project cost was estimated at a sum of Rs. 440 lacs which the petitioner company proposed to finance in the following manner: a) Project cost : Rs. 440 lacs b) Means of Finance Equity share capital (Promoters contribution Rs. 90 lacs & Public Rs. 100 lacs) : Rs. 190 lacs Rupee Term Loan Rs. 250 lacs ICICI Rs. 100 lacs IFCI Rs. 65 lacs BOB Rs. 20 lacs BOM Rs. 20 lacs Dena Bank Rs. 20 lacs Central Subsidy Rs. 25 lacs Rs. 440 lacs (ii) The respondent in or around November, 1986 acting on the request of the petitioner company sanctioned a term loan of Rs. 165 lacs jointly with IFCI Ltd., in furtherance of which on 18th March, 1997 a Loan Agreement was executed by and between the petitioner company and the respondent company. (iii) Out of the sanctioned loan of Rs. 165 lacs by the third respondent and IFCI Ltd. a sum of Rs. 145 lacs was disbursed in favour of the petitioner company. The said respondent contributed a sum of Rs. 87 lacs while IFCI contributed the balance sum of Rs. 58 lacs. (iv) The petitioner company defaulted in payment of instalments towards principal and interest as early as in July, 1987. There was consistently breaches of essential conditions under the Loan Agreement. These breaches are specifically cited in the counter affidavit and it will not be necessary to reproduce them herein.

(2.) In view of the breaches and continued failure of the petitioner company in paying its instalments forced the respondent in issuing a Recall Notice on January 12, 1989. By the said notice the petitioner company was called upon to repay the following sums outstanding on 31st December, 1989: Third respondent ICICI Rs. 1,05,06,289.00 IFCI Rs. 69,94,795.00 Rs. 1,75,01,084.00

(3.) The failure on the part of the petitioner company to respond to the Recall Notices compelled the third respondent company along with IFCI Ltd. to jointly institute two suits in the Bombay High Court, one against the petitioner company and the other against petitioners 2 and 3 and one Ramanlal Khanna. The facts are incorporated in paras (iv) to (x) of the counter affidavit which are reproduced herein below :