INDUSTRIAL DEVELOPMENT BANK OF INDIA Vs. RAMBAL LTD.

JUDGEMENT

(1.) ORIGINAL Application Nos. 549 and 550 of 2002 are filed by the applicant/ plaintiff to pass an order granting interim injunction restraining the respondents/defendants 1 to 5 from transferring, alienating, disposing or registering the shares in the name of the 5th defendant or any other person dealing with the shares of respondents 1 to 3 and also restrain defendants 1 to 5 and their men from claiming through them from alienating, encumbering, transferring, assigning or delivering title or possession in respect of the securities detailed in schedules A and B to anybody pending disposal of the suit.

(2.) THE case in brief for disposal of all the applications is as follows : - The 1st respondent formerly known as M/s. Shriram Auto Components (Madras) Limited, a company registered under the Companies Act, 1956 with effect from 29 -2 -1996 and in the new name registered with effect from 14 -4 -2000, engaged in the manufacture of precision turned components for automobile industry and having registered office at Old Mahabalipuram Road, Perungudi, Chennai. Defendants 2 to 4 are the guarantors guaranteeing due repayment of the dues by the 1st defendant. The 5th defendant is a US based company having entered into partnership with the 1st defendant to take over the stake in the 1st defendant company. Defendants 6 and 7 have also given financial assistance to the 1st defendant having joint equitable mortgage along with the petitioner of the landed properties mentioned in the A schedule. The 1st defendant availed a Rupee Term Loan of Rs. 100 lakhs and a Foreign Currency Term Loan of US dollars 1.8 Million (equivalent to Rs. 640 lakhs) sanctioned by the petitioner under Project Finance Scheme for setting up a project at an estimated cost of Rs. 2100 lakhs at Edaiyankuppam Village, Thandalam Panchayat, Tiruporur Taluk for manufacturing precision turned auto components. They also executed a loan document on 1 -8 -1997 as loan agreement, deed of hypothecation. The 1st defendant created equitable mortgage in favour of the plaintiff on 12 -1 -1998 by depositing title deeds relating to the immovable properties. Memorandum of Entry with regard to the equitable mortgage was made on 13 -1 -1998. During 1997, defendants 6 and 7 had granted financial facility to the 1st defendant on the collateral security of the very immovable properly. By virtue of the hypothecation, the 1st defendant shall keep all the hypothecated goods and all the sale realisations and insurance proceeds thereof and hold them as the exclusive property of the lender viz., the petitioner. The 1st defendant shall not create any charge, mortgage, lien or other encumbrance or any attachment or distress to affect the same or any part. The charges under hypothecation and equitable mortgage have been duly registered with the Registrar of Companies, Chennai.

(3.) THE 1st respondent filed a counter and denied various averments. He admitted the lending of money by the plaintiff as well as by defendants 6 and 7. The plaintiff issued a notice on 28 -5 -2002 against defendants 2 to 4, who are guarantors demanding the amount due under various loan agreements and also threatened to invoke the proceedings under Companies Act for winding up of the company. Notice was suitably replied. The present suit is one of the modes of recovery of the debt by proceedings against the securities offered. The 1st defendant is having its registered office outside the City of Madras and leave to sue ought to have been obtained. There is no violation or breach of terms of any agreement creating securities for the loan of the plaintiff. The arrangement with the 5th defendant who is a regular customer of the 1st defendant had come forward to fund the 1st respondent company as a part of the business proposal. The 1st respondent company has set up a project to manufacture and supply precision turned components predominantly for automobile industry. Owing to the globalisation of industries the domestic market had to compete with multinational majors and therefore there is ever increasing competition and the automobile sector is vitally affected. The 1st respondent has no other option except to expand its overseas market. The 5th respondent had agreed for a strategic alliance which would assist development of customer base. The proposal was only to disinvest the public issue portion of Rs. 330 lakhs and this will not fall within the hypothecation clause in the loan agreements dated 1 -8 -1997. Clause (f) deals with the undertaking of the promoters not to dispose of their shareholding without the specific approval of the lender. The shareholding pattern also did not in any way affect the percentage of the promoters holding as on the date of the loan agreements as it held only 65.4 per cent and the balance is more than 26 per cent and there cannot be any objection on the part of the plaintiff in the disinvestment of any portion of shares over and above the value of Rs. 630 lakhs. There is no sinister design in the investment as the 1st defendant has informed the plaintiff by its letter dated 17 -7 -2002 and also explained. When the securities are intact and not alienated and the guarantees are intact, there is no reason for any apprehen3ion. The process of disinvestment had gone through various public authorities and Government of India including the Foreign Investment Promotion Board. The securities already offered to the plaintiff and its associates will remain quite intact and there is no question of pledging of securities to the 5th defendant or any other party. The 1st defendant or the guarantors never intended to encumber, alienate or deal with the securities already offered to the plaintiff. The application for interim injunction is not sustainable. There is no relief asked for appointment of Commissioner in the main suit and, as such, the present relief is not available to the applicant. The suit prayer also does not refer to the shares. What is not asked for in the plaint cannot be enforced by means of an interlocutory application.