IN THE HIGH COURT OF DELHI AT NEW DELHI ORIGINAL CIVIL JURISDICTION C.M. APP OF 2023 IN W.P. (C) 3593/2020 IN THE MATTER OF: VIKAS PROJECTS PVT LTD «+. PETITIONER VERSUS INDIAN OVERSEAS BANK «RESPONDENT/ APPLICANT BANK INDEX {.No. PARTICULARS PG. NO. ~ [URGENT APPLICATION NOTICE OF MOTION wl} nw] a (CONSOLIDATED COURT FEE ay > APPLICATION ON BEHALF OF IRESPONDENT UNDER SECTION 151 OF \CODE OF CIVIL PROCEDURE, 1908 SEEKING| |THE EARLY HEARING OF THE MATTER) [BEARING W.P. (C) 3593/2020. 418 |AFFIDAVIT IN SUPPORT 19-20 ANNEXURE-A1, [TRUE COPY OF ORDER DATED 07.08.2023) PASSED BY HON’BLE HIGH COURT OF [DELHI AT NEW DELHI 21-22 IANNEXURE-A2, 23-27TRUE COPY OF INTERIM ORDER DATED) (02.07.2020 PASSED BY HON’BLE HIGH {COURT OF DELHI AT NEW DELHI [PROOF OF SERVICE 28 RESPONDENT Through DATE: 13 fs PLACE: anene eNEBRRE =P 304, 1/52, North Avenue Road Punjabi Bagh, New Delhi ~ 110026 Email: Insolveney@arenesslaw.com M: +91 9310172723IN THE HIGH COURT OF DELHI AT NEW DELHI ORIGINAL CIVIL JURISDICTION C.M. APP OF 2023 IN W.P. (C) 3593/2020 IN THE M. ER OF: VIKAS PROJECTS PVT LTD ... PETITIONER VERSUS, INDIAN OVERSEAS BANK. ..RESPONDENT/ APPLICANT BANK URGENT APPLICATION To, The Registrar, Delhi High Court, New Delhi. Sir, The accompanying application under section 151 CPC may kindly be treated as an urgent petition. The grounds of urgency are that:- “Urgent relief has been prayed for”. Delhi Respondent/Applicant Dated: | W ps ARENESS CREED 304, 1/52, North Avenue Road Punjabi Bagh, New Delhi — 110026 Email: Insolvency@arenesslaw.com M: +91 931017272IN THE HIGH COURT OF DELHI AT NEW DELHI ORIGINAL CIVIL JURISDICTION C.M. APP OF 2023 IN W.P. (C) 3593/2020 IN THE MATTER OF: VIKAS PROJECTS PVT LTD «+» PETITIONER VERSUS INDIAN OVERSEAS BANK ««RESPONDENT/ APPLICANT BANK NOTICE OF MOTION To, Sh. Abhinav Mukhi. Counsel for the Petitioner E-Mail- abhinav@asalegal.in and asa@asalegal.in Sir, Kindly take notice that the above-captioned matter is likely to come-up for hearing on or any other successive date. This is for your kind information please. Delhi ARENESS ATTORNEY 304, 1/52, North Avenue Road Punjabi Bagh, New Delhi — 110026. Email: Insolveney@arenesslaw.com M: +91 9310172723 Dated alu BConsolideded Court b i | ‘ocIN THE HIGH COURT OF DELHI AT NEW DELHI ORIGINAL CIVIL JURISDICTION C.M. APP OF 2023 IN W.P. (C) 3593/2020 IN THE MATTER OF: VIKAS PROJECTS PVT LTD ++» PETITIONER ‘VERSUS INDIAN OVERSEAS BANK «»RESPONDENT/ APPLICANT BANK APPLICATION ON BEHALF OF RESPONDENT UNDER SECTION 151 OF CODE OF CIVIL PROCEDURE 1908 SRE LOP CODE OF CIVIL PROCEDURE, 1908 FOR EARLY HEARING OF THE MATTER BEARING EAR HEARING OF THE MATTER BEARING W.P. (C) 3593/2020 MOST RESPECTFULLY SHOWETH: I. BRIEF FACTUAL MATRIX 1. That the Respondent/ Applicant Bank has preferred the present Application for seeking early hearing in the WRIT Petition bearing no, W.P.(C) 3593/2020 (“Main Matter”), XN . That the brief facts of the present matter are such that the Petitioner filed a Writ Petition bearing No. 3593/2020 inter alia praying for quashing of the decision of the Respondent Bank of declaring the account of the Petitioner as Non- Performing Asset (“NPA”) wae.f. 31.12.2019 and accordingly, this Hon’ble Court, vide order dated 02.07.2021 directed the Respondent to maintain the status quo ofaccount of the Petitioner based on a prior commitment made by the Petitioner to regularize the account within 6 months from the date of order. Copy of the order dated 02.07.2020 passed by the Hon’ble High Court of Delhi, New Delhi, is annexed herewith as Annexure-Al. - That it is pertinent to mention that the Petitioner has miserably failed to comply with the promise/commitments made before the Hon'ble High Court even after providing several opportunities to comply with the order dated 02.07.2020 and repay the debt by way of successful settlement. The Respondent, after almost a lapse of one year, on failure of Petitioner to satisfy its statement promises, filed an OA No. 340/2021 on 04.06.2021 for the recovery of amount INR 5,46,43,429/- before DRT-1, Delhi, as a matter of right against which the Petitioner filed a Contempt Case No. 537 of 2021 on 04.08.2021 causing multiplicity in litigation, » - Itis pertinent to mention that the pleadings in the Main Matter are complete and the matter is at the stage of final arguments. However, this Hon’ble Court, vide order dated 07.08.2023, adjourned the matter for the next date of hearing on 18.03.2024 and further, directed to continue with the interim relief as granted by this Hon’ble Court. Copy of the order dated 07.08.2023 passed by the Hon’ ble High Court of Delhi, New Delhi, is annexed herewith as Annexure-A2. Il. GROUNDS A. Ludierous One Time Settlement Proposals (OTS)5. That itis pertinent to note that the Petitioner is misleading the Court by raising baseless contentions and that the Petitioner has no intention of paying the dues of the Respondent and is only delaying the process of recovery. 6. That it is apposite to mention that the Petitioner purposely submits that the said OTS proposals were presented to the Respondent just before the next hearing date scheduled in the present matter before the Hon’ble Court to represent itself as a diligent party thereby, creating a sham before the court that the Petitioner has the intent to settle the concerned matter and repay the due amount. That this callous attitude shows the malafide intention of the Petitioner to escape from the liability to repay the amount owed to the Respondent and such prejudicial actions should be ousted by allowing the Respondent to pursue with the relief prayed for. 7. That the Petitioner has very strategically planned out to buy time and escape from the liability towards the Respondent. The Petitioner has time and again warranted to amicably settle the present matter by proposing OTS proposals however, later, the Petitioner failed to respond to the request of the Respondent to discuss the said OTS proposals in the scheduled meetings. Further, the Petitioner always managed to divert the attention towards the Respondent for not reverting upon the said proposal before the hearing since the Respondent is a Bank that requires multiple approvals and discussions before accepting or rejecting any such proposal and the same shall not be possibly concluded in one (1) day. The following is the timeline of the OTS proposalspresented by the Petitioner and the corresponding meetings held: DATE PARTICULARS ACCEPT/ REASONS REJECT 1.08.20 [Petitioner submitted — [Proposal rejected incomplete 1 OTS roposal for pettlement was received [18.05.22 _JOTS proposed for Rs. [Proposal rejected [Amount quoted 22.50 Crores and later iby the Petitioner evised to 3.28 crores vas less }6.06.22 [Email sent by iA x [Respondent to revise tthe OTS proposal 18.06.22 [Meeting conducted; [NA EE NA Petitioner assured to improve OTS amount 24.06.22 JOTS proposal [Proposal rejected [Amount quoted submitted for Rs. 3.45 y the Petitioner ores Iwas less 29.06.22 Letter sent by NA INA [Petitioner to consider {he OTS proposal sent n 24.06.2022 [11.07.22 OTS proposal sent [Proposal rejected [Amount quoted by the Petitioner vas less 20.07.22 [Email by Respondent to revise the OTS. [proposal 26.07.22 [OTS proposal revised [Proposal rejected [Amount quoted fand sent to y the Petitioner [Respondent as lessp4.11.22 Meeting to discuss roposal rejected Amount quoted YTS proposals by the Petitioner as less 10.11.22 proposal [Proposal rejected [Amount quoted ejected bby the Petitioner hvas less 4.11.22 |Communication sent NA A yy Petitioner requesting bank fora meeting to know the ipprox. figure from [Respondent for OTS 15.11.22 Meeting fixed by ejected due to [Petitioner [Bank through reply to the communication lated 14.11.2022 junavailability of fequested to etitioner hreschedule the meeting due to is junavailability 28.11.22 Meeting held between |No settlement [Amount quoted the parties bby the Petitioner pvas less [30.11.22 JOTS proposal Proposal rejected [Amount quoted submitted for Rs. 3.65 |via email dated py the Petitioner rores 19.12.2022 as less 17.02.23 [Meeting to be held NA [Petitioner intimated the [Respondent that the meeting annot take place ktue to some reasons, 1.05.2023)Present OTS proposal [Proposal rejected Amount of Rs. 70| jsubmitted for Rs. 4.50 rores inclusive of Rs. ated 19.06.2023 furtherance of ide intimation lakhs deposited in|[70 lakhs already paid -ourt orders 's per the direction of should be this Court vide orders exclusive of the lated 02.07.2020, (OTS amount of 28.08.2020 and IRs. 4.50 crores, 17.12.2020 8. That the Respondent is no longer interested in these misleading settlement prospect of OTS proposals presented by the Petitioner since it is being used as a weapon by the Petitioner to escape from the said liability. Therefore, it becomes all the more necessary for the Respondent to initiate recovery proceedings which can be possible once the ongoing proceedings are adjudicated upon. 9. That it has been iterated by the Hon’ble Apex Court in catena of judgements that the OTS is not a matter of right and the applicant cannot dictate his own terms to the Bank as far as OTS is concerned. Thereby, the Petitioner by providing ludicrous OTS proposals is severely prejudicing the rights of the Bank with respect to the due amount owed by the Petitioner. B, Pending Litigation and further stay on the proceedings 10.It is pertinent to note that since the inception of the present Writ Petition, the Petitioner has, by one way or another, brought time to shy away from its liability and the same has resulted in a delay of more than three (3) years. This has caused immense hardship to the Respondent Bank due to failure to proceed against the Petitioner to recover the said. amount.11.That further, adjourning the concerned proceedings that are on the final stage on such a later date of 18.03.2024 will prejudice the interest of the Respondent Bank and further create blockages in recovering the dues owed by the Petitioner. 12.It is pertinent to note that the Hon’ble High Court, vide order dated 02.07.2020, imposed a stay on the CC Account of the Petitioner and estopped the Respondent from taking any coercive action against the said account without considering the facts of the case and the related provisions of law. 13.Pursuant to the abovementioned order, the Hon’ble High Court merely continued the interim order of maintaining status quo till the next date of hearing without giving any cogent reasons for granting such extension and without the presence of any extraordinary situation, which are the two mandatory requirements for granting an extension of stay on any proceeding. That in furtherance thereof, the said interim order continued and which now stands extended till the next date of hearing on 18.03.2024 thereby, estopping the Respondent Bank to pursue recovery of the said amount from the Petitioner and leaving the Bank hanging in the midst of huge losses. 14. That in the case of Sachin Manohar Deshmukh Vs. Central Bank of India & Anr. {Civil Appeal No. 4982 OF 2021], the Apex Court requested the NCLAT to dispose of the matter as expeditiously as possible since the stay order have been extended from time to time till the disposal of the matter. The Court further, granted the concerned bank the liberty to file / the early hearing application for the matter before theNCLAT. In another case of Shashi Bhushan Sharma Vs, Respondent: Dethi Development Authority and Ors. [LPA 127/2023], this Hon’ble Court granted the liberty to the concerned party in the matter to file an appropriate application for early hearing of the matter and further, directed the learned Single Judge to decide the matter as expeditiously as possible since the order of status quo is continuing since 23.08.2021. 15.That it is apposite to mention that the Respondent filed an Original Application bearing No. 340 of 2021 titled as “Indian Overseas Bank v. Vikas Projects Private Limited and Ors.” before the Ld. DRT-1, Delhi. However, no further action has been taken by the Respondent under Section 13(4) of the Act and merely a notice has been served under Section 13(2) thereby proving that the initiation of the said recovery proceedings was merely undertaken to safeguard themselves from the limitation norms. 16.Despite being aware of the fact, the Petitioner filed the above captioned contempt Petition against the Respondent under the garb of the stay granted by this Hon’ble Court vide order dated 02.07.2020. That in the case of Vishal Hira Merchant Pvt. Lid. and Ors. V. HDFC Bank (W.P.(C). 603/2016], this Hon’ble Court held that Section 19 of the Recovery of Debts and Bankruptcy Act, 1998 (hereinafter referred to as “RDB Act”) which enables a bank or a financial institution to recover any debt from any person by making an application under the aforesaid section before the appropriate Debt a Recovery Tribunal having jurisdiction, is in the nature of a Ms suit in respect of which the provisions of the Limitation Act,would apply. Further, the Court observed that an application under Section 19 being in the nature of a suit for recovery of debt, the limitation period prescribed in the limitation Act for filing a suit for recovery of the same debt would apply and as such there is no provision in the Limitation Act for condonation of delay in filing a suit. If a suit is time barred, it has to be dismissed. There can be no condonation of delay. C, Malafide intention of the Petitioner to stall hearing of the proceedings 17.That the Petitioner having maligning intentions to stall the Respondent from recovering the due amount, initiated multiple litigation against the Respondent. The Petitioner unlawfully and baselessly demanded quashing of the classification of the account of the Petitioner as NPA. In furtherance of this the Petitioner approached the Hon’ble High Court by filing the Writ Petition (Civil) 1789 of 2020 which was disposed of by observing that the matter does not needs to be adjudicated being devoid of issues to be decided by the Hon’ble High Court and directed the Respondent to provide a detailed reasoning for the account being classified as NPA. 18. That in order to recover the amount due to the Respondents, the Respondents immediately afterwards, as a last resort, instituted SARFAESI proceedings by issuing a demand notice dated 12.03.2020 under Section 13(2) of SARFAESI Act which was served upon the Petitioner on 17.03.2020. Immediately afterwards, the _ Petitioner approached the Hon'ble High Court with MiscellaneousApplication bearing CM No. 11939 of 2020 seeking revival of the WP. (C) No. 1789 of 2020. The Hon’ble High Court understood the maligning intentions of the Petitioner and thus dismissed the said petition on the grounds of non- maintainable as the cause of action was different, vide order dated 18.06.2020. 19.That the Petitioner, to wiggle out from the liability of repayment of dues, again approached this Hon'ble High Court vide this present Writ Petition seeking a similar remedy as already prayed in earlier writ which already stands dismissed vide order dated 08.02.2020 and 18.06.2020. 20.However, the Hon’ble High Court, without keeping into mind the conduct of the Petitioner towards repayment of the loan due amount and considering the facts of the case subsequently, vide order dated 02.07.2020, directed the Respondent to maintain status quo of the account of the Petitioner based on a prior commitment made by the Petitioner to regularize the account within 6 months from the date of order. NR -That it is pertinent to mention that the Petitioner miserably failed to comply with the promise/commitments made before the Hon’ble High Court even after providing several opportunities to comply with the order and repay the debt by way of successful settlement. The Respondent, after almost a lapse of one year, on failure of Petitioner to satisfy its statement promises, filed an OA No. 340/2021 on 04.06.2021 A for the recovery of amount INR 5,46,43,429/- before DRT=1, 4h 7 & Delhi, as a matter of right against which the Petitioner filed aContempt Case No. 537 of 2021 on 04.08.2021 causing multiplicity in litigation. That another attempt of the Petitioner to stall the already pending proceedings was to file a fresh application bearing CM. No. 40024 of 2023 to sought directions to the Respondent Bank to adjust the sum of Rs. 70 lakhs deposited pursuant to the directions of this Hon’ble Court towards settlement of the concerned NPA Account in the present OTS proposal of RS. 4.50 crores dated 31.05.2023. 23.That the said OTS Proposal of Rs. 4.50 crores presented to the Respondent on 31.05.2023 was duly rejected by the Respondent via an intimation dated 19.06.2023 on the ground that the amount was previously deposited in furtherance of the orders of the Hon’ble High Court in the said WP (C) No. 3593/2020 that was filed for the sole purpose of quashing the decision of the Respondent in declaring the Account of the Petitioner as NPA. Further, the direction of this Court vide order dated 02.07.2020 to deposit an amount of Rs. 25 lakhs was issued to restrain the Respondent Bank from undertaking any further proceedings under SARFAESI Act. Therefore, the previously deposited amount of Rs. 70 lakhs is in no way connected to the present OTS offer and should not be adjusted With the settlement amount of Rs. 4.50 crores. 24.That in view of the above, the Petitioner has misled the Hon’ble Court time and again to escape from the chains of liability owed to the Respondent and has further acted perversely by abusing the law and initiating frivolous litigations to stall the recovery of the due amount.D. Involvement of Public Money 25.That the Respondent, being an Indian Public Sector Bank, is responsible for economic process and protection of the public money and that advancing of credit facilities by the financial institutions are granted from public money generated at the tax payers expense. Such type of loan does not become the property of the person taking the loan, but retains its character of public money given in a fiduciary capacity as entrustment by the public. That timely repayment also ensures liquidity to facilitate loan to another in need, by circulation of the money and cannot be permitted to be blocked by frivolous litigation by those who can afford the luxury of the same. 26. That the concerned proceedings have been in existence since 2020 and the secured creditor is deprived of proceeding further with the action of recovering debt from the Petitioner. That the recovery of amount INR 5,46,43,429/- from the Petitioner has been blocked due to unwarranted delay created by the Petitioner in the said proceedings which in turn have serious adverse impact on the financial health of the Respondent. Thereby, involvement of such huge amount of public money ultimately proves detrimental to the economy of the nation, 27.That it is pertinent to note that the Courts have time and again allowed the early hearing application or directed to the subordinate court to admit the same solely on the ground of involvement of public money. In the case of Municipal — Corporation of Delhi vs Raj Kishore Tyagi |(CM(M) 1059/2022], this Hon’ble Court requested the Ld. ADJ to consider the application for early hearing keeping in mind thefact that public revenues are involved, Further, in another case of Santosh Kumar Singh vs The State of Bihar & Ors [Civil Writ Jurisdiction Case No. 13274 of 2015], the Patna High Court granted the liberty to the Petitioners in the said case to make a motion for early hearing before the Court, considering the fact that the matter is urgent as it relates to a contract of the year 2014 having ramification on public money. Further, in the case of Bharat Coking Coal Limited v, Supreme-Dev PL (JV), Dhanbad & Ors. [L.P.A No. 160 of 2014], the Jharkhand High Court directed to take up the concerned Writ Petition at an early date based on one of the grounds of loss of crores of public money. E. Irreparable Damage 28.That it is pertinent to mention that the Hon’ble Court vide order dated 02.11.2022 decided to finally settle the matter after giving due regards to the fact that from 2020 till 2022 the Respondent was unable to take any action under SARFAESI Act due to the stay order. However, the matter is still under proceedings causing heavy losses and damage to the Respondent with each passing day. 29.That the Bank has been restrained from seeking physical possession of the Mortgaged Property leading to delay in valuation of the said property. That owing to the current market scenarios, it is highly probable that the valuation of the mortgaged property may reduce further owing to the delay caused due to the multiplicity of litigation, In furtherance of the same, it is apposite to mention that irreparable damage has been caused to the Respondent Bank.30.In the case of Manohar and Ors. Vs. Ramesh and Ors. [Second Appeal No. 210/2013], the Bombay High Court allowed an early hearing application in furtherance of the previous order wherein the Court observed that the concemed dispute between the parties is pending since 1992 and it would be appropriate that final hearing of the Appeal is expedited and it is accordingly expedited. Based on the said order the Court in the matter allowed the early hearing application to avoid any irreparable damage to the concerned party. 31In furtherance of the same approach, it is hereby pleaded that the Respondent has been prejudiced from last 3 years and the early hearing of the said matter is immediately warranted so that the related recovery proceedings could be taken up by the Respondent. 32.That there is no prima facie case of the Petitioner and further, the Respondent shall suffer irreparable loss in case the above captioned matter is not listed before 18.03.2024 i.e. the next date of hearing of the said matter. Hence, it is expedient that the present case be listed before 18.03.2024, 33.That the present Application is bonafide and is made in the interest of justice and the Respondent will suffer irreparable loss and injury if the prayers made herein below are not allowed. PRAYER It is therefore, humbly prayed that this Hon'ble Court may be pleased to:i. Pass an order for the early hearing of the Contempt Case bearing No. 537 of 2021 in W.P(C) 3593/2020 before 18.03.2024; and/or ii, Pass any other order as this Hon’ble Court may deem fit and proper in the facts and circumstances of this instant case. Through DATE: IP)foz PLACE: New Pod hi ARENESS: 304, 1/52, North Avenue Road Punjabi Bagh, New Delhi — 110026 Email: Insolvency@arenesslaw.com M: +91 9310172723IN THE HIGH COURT OF DELHI AT NEW DELHI ORIGINAL CIVIL JURISDICTION C.M. APP OF 2023 IN W.P. (C) 3593/2020 IN THE MATTER OF: VIKAS PROJECTS PVT LTD ++» PETITIONER: VERSUS INDIAN OVERSEAS BANK »»RESPONDENT/ APPLICANT BANK AFFIDAVIT I, Shri. Devashish Mukherjee, S/o Ravindranath Mukherjee, Bad -5b-s Dreseany \erfy as Assistant General Manager at Indian Overseas Bank, having its Regional office at II Floor, Rachna Building 2, Rajendra Place, Pusa Road Patel Nagar Post, New Delhi ~ 110008, do hereby solemnly affirm and declare as under: 1. That am the Assistant General Manager of the Applicant Bank and conversant with the facts of the case and can depose this Affidavit, BTR the accompanying C.M. Application in W.P. (C) . 4593/2020 has been drafted at my instruction and contents of 1 the’ Same be read as part of this Affidavit, as the same are not ~ being repeated herein for the sake of brevity. 3. That contents of the accompanying Application are true and correct.Verification: (7 NDY 20°° Ee Verified at New Delhi, on this day of » 2023 that the contents of the above Affidavit are true and correct and no part of it ‘ities and nothing material has been concealed therefrom. os yeen read and exp! annoct ts hist 2023@ : ANNEXURE } $~8 and 9 = IN THE HIGH COURT OF DELHI AT NEW DELHI + CONT.CAS(C) 537/2021 VIKAS PROJECTS PVT LTD Petitioner Through: Ms. Ritika Jhurani, Mr. Dinesh Sharma and Mr. Aditya Lamba, Advocates, versus DAVENDER KUMAR & ORS. .... Respondents Through: — Mr. Nityash Solanki and Mr. Sanyam. Mehdiratta, Advocates. + W.P.(C) 3593/2020 and CM APPL. 12784/2020, CM APPL. 13947/202 ,39568/2022 ,40024/2023 VIKAS PROJECTS PVT. LTD, so Petitioner Through: Ms. Ritika Jhurani, Mr. Dinesh Sharma and Mr. Aditya Lamba, Advocates. Mr. Vivek Kumar Tandon and Ms. Prerna Tandon, Advocates. versus INDIAN OVERSEAS BANK we Respondent Through: Mr. Dinesh Sharma and Mr. Aditya Lamba, Advocates. Mr. Nityash Solanki and Mr. Sanyam Mehdiratta, Advocates vu OFF corm: TR! HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV ORDER % 07.08.2023 1. Learned counsel appearing on behalf of petitioner secks an adjournment. Wi a gay ned ardor The aitorety a the order abe roster Dah Hh out Or Pot by senna OR cade how above,® ee 2- 2. List these matters on 18.03.2024. 3. Interim relief to continue till then. PURUSHAINDRA KUMAR KAURAV, J AUGUST 7, 2023/p Click here to che ‘rigendum, if any _TRI COPY i cgay signs der ‘he author of teed cr be reverted ram De gh Court Ore Pat by caning the GR code sh bore% TREK COPY ANNEXURE A). ® i@ -28 IN THE HIGH COURT OF DELHI AT NEW DELHI W.P.(C) 3593/2020 and CM No, 12784/2020 (stay) VIKAS PROJECTS PVT.LTD. _..... Petitioner Through —_Mr.Tanmay Mehta, Mr.Abhishek Agarwal and Mr.Abhinav Mukhi, Advs. versus INDIAN OVERSEAS BANK sw: Respondent Through — Mr.Promod Kumar, Adv. with Mr.Devndra Kumar, AGM CORAM: HON'BLE MR. JUSTICE JAYANT NATH ORDER 02.07.2020 This hearing is conducted through Video-Conferencing, This writ petition is filed seeking the following reliefs:~ “a, Issue a writ of Certiorari or any other appropriate writ, order of directions thereby quashing the decision of the Respondent Bank of declaring the account of the Petitioner Company as Non-performing Asset (NPA) w.e.f. 31.12.2019; and b. Issue a writ of Certiorari or any other appropriate writ, order of directions thereby quashing all the replies/communications of the Respondent Bank more particularly the reply dated 09.03.2020; and c. Pass an order or directions against the Respondent thereby directing the Respondent Bank not to take any coercive steps against the Petitioner Company in view thereof;” ‘The case of the petitioner is that it has a cash-credit account with the respondent Bank for an amount of Rs. 4.25 crores. On 16.01.2020, the a ety grb ‘The utente at mb rv Da high Court OP by searing te cae hom bo.® oy respondent Bank issued a loan recall notice and apprised the petitioner Company that their loan account has been declared as NPA duc to non- service of monthly interest. 3. [have heard learned counsel for the parties. 4, Learned counsel for the petitioner has relied upon the RBI's Master Circular dated 01.07.2015 which defines the Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to advances. Reliance is placed on Clause 2.1 and Clause 2.2 which defines a non- performing asset. Clause 2.1.2 reads as follows:~ “2.1 Non Performing Assets. 2.1.1... a loan or an advance 2.1.2 A non performing asset (NPA) is where: i. interest and/or instalment of principal remain overdue for a period of more than 90 days in respect of a term loan. the account remains ‘out of order’ as indicated at paragraph 2.2 below, in respect of an Overdraft/Cash Credit (OD/CC). iii. the bill remains overdue for a period of more than 90 days in se of bills purchased and discounted. iv. the instalment of principal or interest thereon remains overdue for two crop seasons for short duration crop: COPY _ ¥ the instalment of principal or interest thereon remains overdue TRUEL for one crop season for long duration crops. vi, the amount of liquidity facility remains outstanding for more than 90 days, in respect of a securitization transaction undertaken in terms of guidelines on securitization dated ia ty rad dr ‘haute oft ater an brid om Dl high Court Order Pra by serine cosh beeant repent Tis ty soa dr ® i February 1, 2006. vii. in respect of derivative transactions, the overdue receivables representing positive mark-to-market value of a derivative contract, if these remain unpaid for a period of 90 days from the specified due date for payment “2.2 ‘Out of Order’ status An account should be treated as ‘out of order’ if the outstanding balance remains continuously in excess of the sanctioned limit/drawing for 90 days. In cases where the outstanding balance in the principal operating account is less than the sanctioned limit/drawing power, but there are no credits continuously for 90 days as on the date of Balance Sheet or credits are not enough to cover the interest debited during the same period, these accounts should be treated as ‘out of order’.” 5, Hence, as per Clause 2.2 an account is ‘out of order’ if the outstanding balance remains continuously in excess of the sanctioned limit/drawing power for 90 days. 6. Learned counsel for the petitioner has drawn my attention to the account statement of the petitioner. Reliance is placed on a credit entry of Rs.18,94,621/- which was done on 16.12.2019, Reliance is also placed on another credit entry of Rs. 5.39 crores which was done on 20.02.2020 7. Essentially, the plea of the learned counsel for the petitioner is that the account has been declared as NPA w.c.f. 31.12.2019. It is pleaded that on 16.12.2019, a credit of Rs.18,94,621/- was clearly made which reduced the debit balance to below Rs.4.25 crores which is the credit limit of the petitioner. Hence, it is pleaded that in terms of the RBI Circular, the accountTRUEFOPY ist pty nad rte ‘The authentic brid rm Ol Nigh Crt Ore Por by cannot be termed ‘Out of Order/NPA’ as outstanding balance did not remain in excess of the sanctioned limit. 8. My attention has also been drawn to a letter order dated 09.03.2020 which communication was communicated pursuant to the order of this court dated 18.02.2020 passed in W.P.(C) 1789/2020. This communication explains the credit entry of Rs. 18,94,621/- as “The other credit entry dated 16.12.2019 amounting to Rs. 18,94,621/- is the margin related to Letter of Credit which was to be paid on 16.12.2019 itself, As such, there is no credit in the accounts towards servicing of interest/sale proceeds”. 9. Learned counsel for the respondent states that the credit for a sum of Rs.18,94,621/- is margin money for an LC and hence cannot be treated as credit in the account 10. A perusal of the aforesaid explanation given for the credit entry of Rs.18,94,621/- by the respondent prima facie appears to be contrary to the RBI Circular. There is a credit entry and the outstanding balance of the account has fallen below the credit limit of Rs.4.25 crores. 11. At this stage, learned counsel for the petitioner submits that the petitioner would like to settle the matter with the respondent Bank. He submits on instructions that some payment would be made within 25 days from today and the bank account would be regularised within 6 months from today. He also points out that the respondent Bank after having declared the account as NPA, in terms of Section 13(2) and 13(4) of the SARFAEST Act has sought to commence proceedings against the petitioner and the ‘guarantor. ioner has made out a prima facie case. The 12, In my opinion, the peti respondent Bank is restrained from carrying out any further proceedings ing cade doar® a with regard to this account subject to the petitioner depositing a sum of Rs.25 lakhs within 25 days from today, A meeting will also be held between officials of the plaintiff and the respondent Bank in the office of the respondent on 01.08.2020 at 11.00 A.M. It is clarified that in case there is a default in payment of Rs, 25 lakhs by the petitioner, the respondent bank need not hold the meeting and the interim order of this court would automatically stand vacated, The parties will try and sort out their differences in the meeting and the respondent Bank will file a report in court. 13. Issue notice. 14, Learned counsel for the respondent accepts notice. 15. In ease there is no settlement, counter-affidavit be filed before the next date of hearing. 16. List this matter on 28.08.2020, JAYANT NATH, J JULY 02, 2020 rb TRUEZOPY si tty sine re These oor eb eve om Cay Nigh Car Ore Partly searing th QR ead shown seve