KOTAK MAHINDRA FINANCE LTD Vs. MAFATLAL INDUSTRIES LTD

JUDGEMENT

(1.) BY this chamber summons, the respondents pray for declaration that the rights of the claimants are governed by the sanctioned scheme dated 30th October, 2002 read with order dated 16th January, 2003 and are not entitled to recover any further amounts from the respondents under consent terms dated 20th January, 2000 and 31st July, 2000. The respondents further pray that the Court Receiver, High Court, Bombay, appointed as Receiver in the award/arbitration proceedings and execution proceedings be discharged, with directions to hand over formal possession of the hypothecated equipments back to the respondents.

(2.) THE claimants had extended loan facility to the respondents, in respect of which loan agreement dated October 17, 1994, was executed between the parties. Besides the loan agreement, memorandum of hypothecation of equipments, belonging to the respondents, was also executed. As dispute arose between the parties, the matter was referred to sole arbitrator, who, in turn, passed Arbitral Award on 21st January, 2000 as per the consent terms signed by the parties. The claimants had filed Arbitration Petition No. 359 of 1999, in which Court Receiver was appointed as per order dated 29th October, 1999. The Court Receiver took possession of the subject property and appointed the respondents as agents of the Court receiver in December, 1999. The above factual position is not in dispute. However, after the Arbitral Award was passed by the sole arbitrator, in February 2000 Case No. 104 of 2000 came to be filed before the B. I. F. R. at the instance of the respondents under the provisions of the SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT, 1985 (hereinafter referred to as SICA for the sake of brevity ). While the said proceedings were pending, Execution Application Lodging No. 270 of 2000 came to be filed by the claimants in this Court, which, however, was disposed of, again on the basis of consent terms on 28-8-2000. Clause 8-A of the consent terms provides that the respondents do pay to the claimants amount specified therein together with further interest at the rate of 21% per annum on the reducing balance from 1st July, 2000 till the date of actual payment and/ or realisation thereof, on or before the dates and in the manner set out in the schedule appended thereto as Exhibit 2-A. Clause 8-B provides that the respondents do pay to the claimants the Indian Rupees equivalent of US Dollar 315,040. 50, together with further interest thereon at the rate of six month london Inter Bank Offer Rate (LIBOR) plus 3. 665 percentage points per annum on the reducing balance from 15th May, 2000, on or before the dates and in the manner set out in the schedule annexed as Exhibit 2-B. It further provides that the Indian Rupee equivalent shall be worked out on the basis of the prevailing exchange rate as on the relevant dates of payment and/or realisation. Clause 10 of the said consent terms provides that the respondent is ordered and directed that if a revival package for the respondent is sanctioned by B. I. F. R. , the respondent do pay to the claimants the entire balance of the decretal amount outstanding as on that date, within a period of 6 (six)months from the date of disbursement of amounts under such revival package. It is apposite to make reference to Clause 16 of the said consent terms, which reads thus :

(3.) AFTER the Execution Application was disposed of on the basis of the aforesaid consent terms on 28-8-2000, the proceedings before the B. I. F. R. continued further in which the claimants, being creditor, was given notice pursuant to which the claimants by a letter placed on record its agreement for the proposal mooted in respect of the respondent company, but expressed reservation only with regard to cut off date to be changed to March 31, 2001. This position is reflected in the minutes of the joint meeting held on September 24, 2001 at page 61. Having regard to the stand taken on behalf of the claimants and other creditors etc. , with regard to the proposal of revival of the respondent company and their respective claim qua the respondent company, the scheme came to be framed. Again second notice was issued to the claimants. However, the claimants did not participate in the joint meeting held on August 21, 2002, as is reflected from the minutes at page 72. Since the claimants did not respond to the notice given regarding the proposal of rehabilitation, it was deemed that consent has been given by the claimants. Eventually, final scheme has been sanctioned by the B. I. F. R. vide order dated october 30, 2002. Insofar as the claim of the claimants against the respondent company, the same is adverted to by the B. I. F. R. in the sanctioned scheme as can be discerned from Clause 5. 1. A, but no provision for default has been provided, as has been done in respect of another secured credit, I. L. F. S. , in terms of Clause (viii) of the said para. It is not in dispute that the respondents have paid sum of Rs. 486,96,037. 12 from time to time from 15th December, 1998 till 31st July, 2002. No payment has been made by the respondents to the claimants after the final scheme has been framed by the B. I. F. R. , as referred to above, which makes provision for total sum of Rs. 63,00,000/-only insofar as the claimants is concerned, being secured term liabilities as can be discerned from Appendix III at page 123.