LCL JEWELLERY LIMITED Vs. BANK OF BARODA

JUDGEMENT

(1.) Through the instant writ petition under Article 226 of the Constitution of the India the petitioners have assailed the order dated 31-3-2003 and 30-9-2003 passed by opposite party No. 4 as contained in Annexure No. 13 and 15 of the petition. A further relief for issuance of a writ in the nature of prohibition has also been prayed for prohibiting the opposite party No. 4 not to enforce the decision (Annexure No. 13 and

(2.) The factual scenario under which the instant writ petition arises is as follows The petitioner No. 1 which is said to be a company duly incorporated under the Companies Act, 1956 and petitioners No. 2 and 3 being its Directors/with a view to promote a project to manufacture Gold, Jewellery for domestic as well as for International Market in collaboration with M/s. Sisma SPA, Italy, approached the Bank of Baroda Narhi Branch Lucknow for financial assistance in the nature of Foreign Currency Term Loan for import of plant and machinery and for allied purposes. To secure the said facilities the petitioners executed several documents with opposite party No. 1. Property belonging to the petitioners situate at Lucknow was also hypothecated to secure the said loan. Facility agreement between the petitioners company and the Bank was also executed on 3-11-1997 after completion of all the formalities required to be undergone a Foreign Currency Term Loan (FCTL) to the tune of Rs. 6.50 crores was sanctioned in the year 1997 by the opposite party No. 1. Since the amount was to be paid in foreign currency, therefore, the Branch of Bank of Baroda at 31/32, King Street, London was to make available the FCTL. The entire loan amount was to be repaid in five years with moratorium period of 18 months, in seven equal half yearly instalments commencing on completion of moratorium of 18 months from the date of first draw down. Interest was to be paid six monthly, though the FCTL was to be disbursed in foreign currency by the London Branch, the Bank was entitled to recover the equivalent amount of the same in Indian Rupees to be remitted to the Narhi Branch.

(3.) As the petitioners did not make payment of any of the instalments of the loan even after the completion of moratorium period the opposite party No. 1 made an application to the Debts Recovery Tribunal under Section 19 of Recovery Debts due to Banks and Financial Institutions Act, 1993 (hereinafter to be referred as an Act) for recovery of the debt from the petitioners.