2005 (1) TMI 419 - HC - Companies Law

Summary

Issues:
1. Settlement amount dispute between the petitioners and the respondent-Bank.
2. Challenge to the respondent-Bank's action under the Securitisation Act.
3. Request for recalling the order and restoration of the main petition.
4. Review application dismissal by the Tribunal and subsequent legal actions.
5. Interpretation of the Apex Electricals Ltd. case in relation to the present matter.

Issue 1: Settlement amount dispute
The respondent-Bank initiated a suit against the petitioners, resulting in an award against them. Subsequently, the petitioners submitted a settlement amount of Rs. 4,50,000, which the Bank accepted. However, the Bank claimed that the amount was insufficient and sought to recover additional funds. Despite efforts to settle the dispute, the matter escalated with the Bank initiating proceedings under the Securitisation Act, prompting the petitioners to challenge this action through a petition.

Issue 2: Challenge under the Securitisation Act
The petitioners filed a petition (SCA No. 2002/2004) challenging the respondent-Bank's actions under the Securitisation Act. An ad interim relief was granted, staying the proceedings under the Act. Subsequently, the petitioners sought to withdraw the petition to negotiate a settlement proposal with the Bank. The petition was allowed to be withdrawn, leading to subsequent legal actions by both parties.

Issue 3: Recalling the order and restoration of the main petition
A subsequent petition (MCA No. 1419/2004) was filed by the petitioners to recall the order of withdrawal and restore the main petition on its merits. The petitioners contended that the withdrawal was due to a mistake and sought to press the main petition. The Tribunal dismissed the respondent-Bank's review application, prompting the petitioners to file another application (CA No. 9488/2004) seeking to declare the Bank's rights unenforceable.

Issue 4: Review application dismissal and legal actions
The Tribunal's dismissal of the review application led to further legal actions, with the respondent-Bank filing a petition (SCA No. 16744/2004) before the High Court. However, the Bank later withdrew this petition, leading to the finality of the Tribunal's decision and the rejection of the review application.

Issue 5: Interpretation of the Apex Electricals Ltd. case
The Court referred to the Apex Electricals Ltd. case, emphasizing that the respondent-Bank's actions under the Securitisation Act should not nullify the Tribunal's decision and the settlement between the parties. The Court noted that both parties had acted upon the settlement, and the review application challenging it was dismissed. Consequently, the Court allowed the recalling of the order and the main petition, declaring that the Bank should not proceed under the Securitisation Act regarding the outstanding dues finalized by the Tribunal unless the Tribunal's decision is overturned by due process.

In conclusion, the Court partly allowed the petitions, emphasizing that the respondent-Bank should not resort to the Securitisation Act against the settled dues unless the Tribunal's decision is legally overturned.