ASSISTANT GENERAL MANAGER OVERSEAS BRANCH Vs. WATERBASE LIMITED REP BY ITS REGIONAL MANAGER AND AUTHORISED SIGNATORY R CHANDRA MOHAN

JUDGEMENT

(1.) THIS appeal arises out of the order dated 28.9.2011 in O.A.No.756 of 2011 in C.S.No.606 of 2011, whereby the learned Judge granted interim injunction that "the amount kept in No Lien Account shall not be adjusted towards the interest amount till the disposal of the suit".

(2.) DEFENDANT - Canara Bank is the appellant. The respondent/plaintiff is the public limited company incorporated under the Companies Act having its registered office at Nellore and Corporate Office at Chennai. The respondent Company manufactures prawn feed for local consumption and carries on the processing of shrimps for export business. The Company has availed banking facilities from the State Bank of India, Overseas Branch, Chennai, Union Bank of India, Chennai, State Bank of Hyderabad, Industrial Financial Branch, Chennai and Overseas Branch of Canara Bank, Chennai. State Bank of India is the lead bank of the consortium of all the four Banks. Case of respondent is that there was a slump in the export activity during the year 2005 and the industries carrying on shrimp business suffered much and therefore respondent could not settle the term loan dues. All the four Banks, which advanced finance, formed a consortium and in the meeting held on 26.03.2008, the Consortium had suggested to the respondent to sell 460 acres out of 550 acres owned by the respondent. As per the suggestion of Consortium of Banks, the respondent sold 460 acres for Rs.37 Crores. From the said amount, Rs.16 Crores was payable to the Consortium of Banks for reduction of limits at the ratio of 35% to State Bank of India, 30% to Canara Bank, 20% to Union Bank of India and 15% to State Bank of Hyderabad. State Bank of India, Union Bank of India and State Bank of Hyderabad received the amount due to them and adjusted those amounts towards the working capital limit as agreed by all the Banks in the resolution dated 4.7.2008.

(3.) CASE of plaintiff is that the sale of the lands to an extent of 460 acres was in consonance with the resolution of the Consortium of Banks and that the sale proceeds was deposited with the lead Bank promptly and the proportionate 30% of the amount payable to the appellant viz., 4.80 Crores ought to have been received by the Canara Bank for being adjusted with the working capital as agreed by them, but the appellant Bank has intended to adjust the said amount towards the accrued interest, which is contrary to the promise given by the appellant Bank with consortium of Banks through the resolution dated 26.3.2008. Therefore, the respondent had filed the suit C.S.No.606 of 2011 praying for:- (i) declaration that the proposal of the appellant Bank to declare the respondent as a willful defaulter is illegal and improper; (ii) direct the appellant Bank to pay to the respondent a sum of Rs.25,00,000/- as damages; and (iii) further necessary orders. Along with the suit, the respondent/plaintiff also filed A.No.756 of 2011 seeking interim injunction restraining the appellant Bank from in any way adjusting the said sum of Rs.4.80 Crores towards the accrued interest.