IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED:   05.09.2022

CORAM :

THE HON’BLE MR.MUNISHWAR NATH BHANDARI, CHIEF JUSTICE

AND

THE HON’BLE MRS.JUSTICE N.MALA

W.P.No.17720 of 2022 and W.M.P.No.17058 of 2022

V.Ravichandran       .. Petitioner

vs

1. M/s.Indian Overseas Bank

Asset Recovery Management Branch,     3rd Floor, No.763, Anna Salai,     Chennai 600 002.

2. The Liquidator for Aascar Film

Pvt. Ltd., Mr.C.Ramasubramaniam

Raji, 3B1, 3rd Floor, Gaiety Palace,     No.1, L Blackers Road, Mount Road,     Chennai 600 002.

3. The Recovery Officer,

Debt Recovery Tribunal No.II,

Chennai, 6th Floor, Shastri Bhavan,

Haddows Road, Nungambakkam,     Chennai 600 006. .. Respondents

Prayer: Petition filed under Article 226 of the Constitution of India for issuance of a Writ of Certiorarified Mandamus calling for the entire records from the 1st Respondent Bank in connection with the impugned E-Aution sale Notice dated 24.06.2022 quash the same and consequential direction  directing the 1st Respondent to grant time to pay the outstanding amount in respect of the Term Loan account No. 281200006  Term Loan Account No. TL- TCD 271100003 Cash Credit No. 1234  and receive the balance amount of Rs. 37.90 Crores as per OTS scheme within the time to be specified by this Hon’ble Court.

For the Petitioner       :    Mr.S.Hameed Ismail

For the Respondents : Mr.F.B.Benjamin George for R-1

* * * * *

ORDER

(Order of the Court was made by the Hon’ble Chief Justice)

The writ petition has been filed by the suspended Director of M/s.Aascar Film Pvt. Ltd. (hereinafter referred as ‘the borrower company’)  to question the e-auction sale notice dated 24.06.2022 with a further direction to the respondent bank to receive the balance amount of Rs.37.90 crores as per the one time settlement scheme within the time to be specified by this Court.

2. The learned counsel, at the time of hearing of the writ petition at the admission stage, submitted that the petitioner is willing to pay the aforesaid amount of Rs.37.90 crores with interest.

The learned counsel made a reference to a communication dated 09.05.2022 of the Assistant General Manager to show the one time settlement offer of the bank for a sum of Rs.37.90 crores. Accordingly, to see the readiness of the petitioner, a direction to pay a sum of Rs.5 crores was given by the order dated 13.07.2022. It was at the stage when the learned counsel appearing for the bank was to seek instructions.

3. The learned counsel appearing for the respondent bank got instructions from the bank and submitted a counter to the writ petition along with a typed set of documents to expose the conduct of the petitioner. It is not only giving reference to the several litigations by the borrower company, but also few litigations by the petitioner (suspended Director of the company). It is submitted that after the first request for OTS offer of the borrower company and its acceptance by the bank, the borrower company failed to pay the amount. The request of second OTS was also accepted and granted, but, again the borrower company failed to make the payment. Once again, a request for third OTS offer was made.
4. The learned counsel for the respondent bank has made a reference of the letter dated 15.04.2021 issued to the borrower company for sanction of Out-of-Court (OCS) settlement on a sum of Rs.46 crores on certain terms and conditions. It was submitted that even the said OCS settlement was not honoured by the borrower company and thereupon, vide letter dated 27.09.2021, the bank sent a letter to the borrower company cancelling the OCS after finding that the time sanctioned for OCS expired on 25.09.2021. In the meanwhile, vide letter dated 24.09.2021, the petitioner made a prayer for extension of time by referring to the payment already made for a total sum of Rs.53.57 crores.
5. When the matter stood thus, the petitioner again sent a letter on 17.11.2021 showing willingness to pay the OTS amount of Rs.46 crores in full and final settlement on or before 24.03.2022. The aforesaid proposal was taken into consideration by the bank, however, since the payment was not forthcoming, the bank sent a letter dated 10.03.2022 to the borrower company to make the payment as the last date for payment, i.e., 24.03.2022 was fast approaching.  On account of the failure of the borrower company to make the payment as assured, the bank cancelled the OCS sanction, vide its letter dated 07.04.2022.
6. Pursuant to the aforesaid cancellation of OCS/OTS by the bank, the petitioner again made a request vide his letter dated 13.05.2022 requesting for a fresh OCS/OTS of Rs.37.90 crore within a period of 90 days and also filed a writ petition bearing

W.P.No.13840 of 2022 which was dismissed by the order dated 02.06.2022 after recording the submission of the learned counsel for the respondent bank that the aforesaid request of the petitioner dated 13.05.2022 was considered and rejected by the bank vide its letter dated 19.05.2022 showing its inability to consider the offer in view of the failure to comply the OTS sanctions on many occasions.

7. After many rounds of litigations by the borrower company including dismissal of the writ petition and orders passed by the NCLT and DRT followed by a Special Leave to Appeal before the Apex Court where an undertaking was given by the company to settle the due amount, but failed to pay the dues, the petitioner yet filed the present writ petition and at the first instance, referred the letter dated 09.05.2022 at page No.46 to the Court to envisage that one time settlement is still in operation for the payment of a sum of Rs.37.90 crores. Accordingly, an interim order in reference to it was passed on 13.07.2022 by this Court and is quoted hereunder:-

“Learned counsel for the bank prays for and is granted seven days’ time to seek instruction on the letter of the Assistant General Manager dated 09.05.2022 showing the outstanding amount to be of Rs.37.90 crore after the receipt of Rs.3 crore remitted by the borrower, because the petitioner is ready to pay that amount along with interest.  The instruction is required, because, according to learned counsel for the bank, the due amount is greater than what has been specified in the letter dated 09.05.2022.

2. To see the bonafide of the petitioner, he is directed to deposit a sum of Rs.5.00 crore (Rupees Five Crore) with the respondent bank by 18.07.2022 and produce receipt for it on the next date of hearing.

List the matter on 20.07.2022.”

8. When the aforesaid interim order was passed, the petitioner did not submit that the OTS offer for a sum of Rs.37.90 crores has already been cancelled by the communication dated 07.04.2022, though a copy of the said letter was enclosed, but was not referred by the petitioner. The letter dated 09.05.2022 referred by the petitioner was not even a letter from the bank to the petitioner or the borrowing company rather it was a letter dated 25.02.2022 addressed to one Madhan Kumar and the said letter was forwarded to the borrower company by the said Madhan Kumar on 09.05.2022 and thereby giving the impression as if the said letter was sent by the bank, arguments were made to make out a case for acceptance of OTS for a sum of Rs.37.90 crores, though it had already been cancelled by the letter dated 07.04.2022.
9. The aforesaid conduct of the petitioner is nothing but playing fraud on the Court while making the arguments in reference to the letter dated 09.05.2022, which was not a communication between the borrower company and the bank. It was, in fact, a forward of e-mail communication by Madhan Kumar to borrower company, originally sent by the bank to Madhan Kumar on 25.02.2022. The forward of said communication is shown as if it was sent by the bank on 09.05.2022.
10. At this stage, it is pertinent to note that the request of thepetitioner vide letter dated 13.05.2022 seeking fresh OTS/OCS offer for a sum of Rs.37.90 crores was considered by the bank and they expressed their inability to consider the offer, showing the failure of the borrower company to comply with previous OTS/OCS and the offer of upfront amount was very low. In any case, the writ petition was not filed either to challenge the aforesaid letter dated

19.05.2022 or even the letter of cancellation of the OCS dated 07.04.2022, but the e-auction sale notice dated 24.06.2022, despite cancellation of OTS/OCS sanction as on the date of filing of the writ petition or even on the date of e-auction. In fact, no OTS offer was existing in favour of the borrower company, which remains in litigations from time to time.

11. If the number of litigations preferred by the borrower company is given, as stated by the learned counsel for the bank, it would be approximately ten litigations including the one before the Apex Court where despite an undertaking given to make the payment, payments were made pursuant to it. In fact, the effort of the borrower company and now through the suspended Director is somehow to drag the payment of the due amount and that too, when the learned counsel for the bank submitted that as against the loan of Rs.97 crores for making two films, the right of the films was sold to the purchaser without any information to the bank and the company secured an amount of Rs.130 crores out of it and used it for the payment of other dues instead of settling the dues to the bank.  Therefore, it is not that the petitioner could not earn out of making of the films, though the learned counsel for the petitioner submits that both the films have ended in flops and therefore, the company could not secure reasonable amount or the amount as quantified by the bank.
12. In any case, we do not find any reason to cause interference in the e-auction sale on 24.06.2022 which failed, in absence of bid, but the bank is within its rights to pursue recovery of the loan as per the provisions of law and looking to the conduct of the borrower company and now the suspended Director representing the borrower company, the prayer for acceptance of OTS for a sum of Rs.37.90 crores, which has been cancelled by the bank vide their letter dated 07.04.2022 cannot be accepted.

 

13. Taking the overall facts into consideration, we do not find any ground to accept any of the prayers made in the writ petition either for quashing of the e-auction notice for which the writ petition has become infructuous with the expiry of the date of sale on 13.07.2022 and otherwise, for acceptance of OTS for a sum of Rs.37.90 crores without even a challenge to the cancellation of OTS vide letter dated 07.04.2022 and the subsequent letter dated 19.05.2022 of the bank rejecting the request of the petitioner. The writ petition is, accordingly, dismissed.
14. Looking to the conduct of the petitioner in twisting the facts in order to mislead the Court by referring to the letter dated 09.05.2022 sent to the company by Madhan Kumar. It was forward of the letter of the AGM of the bank dated 25.02.2022 sent to Madhan Kumar with a rider to pay the amount of Rs.37.90 crores towards settling of the account of the borrower company. As it was projected to be of 09.05.2022, the conduct of the petitioner is writ large which amounts to literally playing fraud on the Court.

Therefore, a cost of Rs.1,00,000/- (Rupees one lakh only) is imposed on the petitioner for it and to be paid to the bank within a period of fifteen days from today.

Consequently, W.M.P.No.17058 of 2022 is closed.

(M.N.B., CJ.)     (N.M., J.)

05.09.2022

Index : Yes/No sra

M.N.Bhandari, CJ. and         N.Mala, J.

(sra) To:

1. M/s.Indian Overseas Bank

Asset Recovery Management Branch,     3rd Floor, No.763, Anna Salai,     Chennai 600 002.

2. The Liquidator for Aascar Film

Pvt. Ltd., 3B1, 3rd Floor, Gaiety Palace,     No.1, L Blackers Road, Mount Road,     Chennai 600 002.

3. The Recovery Officer,

Debt Recovery Tribunal No.II,

Chennai, 6th Floor, Shastri Bhavan,     Haddows Road, Nungambakkam,     Chennai 600 006.

W.P.No.17720 of 2022

 

05.09.2022