SCIENTIFIC INSTRUMENT CO LTD Vs. BANK OF INDIA

JUDGEMENT

(1.) Heard Sri Shashi Nandan, Senior Advocate assisted by Sri Amit Negi Advocate on behalf of the petitioner, Sri P.K. Bisaria Advocate on behalf of respondent No. 1, Bank, Sri K.M. Asthana Advocate on behalf of respondents Nos. 2 and 3, Sri Ashok Bhatnagar Advocate on behalf of respondent No. 4 and Sri S.D. Singh Advocate on behalf of Hina Builders seeking impleadment/intervention.

(2.) M/S Scientific Instrument Company Limited, the petitioner, is a company duly incorporated under the Companies Act. Proceedings under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (Act No. 51 of 1993) (hereinafter referred to as the Act) were initiated by the Bank of India (respondent No. 1) against the petitioner. The aforesaid proceedings were initiated before the Debts Recovery Tribunal at Jabalpur. However, with the creation of the Debts Recovery Tribunal at Allahabad the said proceedings were transferred to Allahabad and were registered as T.A. No. 1710 of 2000. The total amount for which the application was made was to the tune of Rs. 8,65,60,554.42 paisa plus interest and cost as per the ledger outstanding for the various cash credit, term loans and other accounts of the petitioner, as on 30.03.2000. During the pendency of the aforesaid proceedings a settlement is said to have been proposed between the parties in terms whereof a sum of Rs. 5.65 crores was required to be paid by the petitioner Company after the sale of various properties which were charged with the Bank. The Bank vide letter dated 14.02.2002 communicated: its acceptance to the aforesaid proposal of settlement on the conditions that were specified in the letter itself. However there was specific stipulation that in case the petitioner commits default in payment of the complete agreed amount within the time specified the Bank's claim under Section 19 of the Act shall stand decreed or allowed without contest. On the strength of the aforesaid settlement an application was filed before the Debts Recovery Tribunal and accordingly an order dated 19.03.2002 was passed in terms of the aforesaid compromise. It was specifically specified that the said compromise would be incorporated and shall form part of the order of the Debts Recovery Tribunal dated 19.03.2002.

(3.) It is apparent from the record that the terms of the settlement could not be honoured by the petitioner for certain reasons which according to the petitioner were beyond its control. However, the Bank moved an application on 28.08.2002 before the Debts Recovery Tribunal being application No. 139 of 2003 for issue of a recovery certificate to the tune of Rs. 8.65 crores with interest and cost on the ground that the petitioner has failed to make deposit of the settled: amount within stipulated time. While the aforesaid application was still pending the Bank moved another application before the Debts Recovery Tribunal dated 11.11.2003 seeking permission to sell the charged property situate at Mumbai and further to restrain the petitioner from transferring the pledged properties during the pendency of the said proceedings. On the application for injunction filed by the Bank an order dated 20.02.2004 was passed and the petitioner was restrained from selling any charged property till the decision of the application of the Bank.