2019 (12) TMI 1649 - HC - Insolvency and Bankruptcy

Entitlement for recovery of advances interest (by Bank) - classification of the loan account as Non Performing Assets - amount payable in conditional interim order - HELD THAT - This Court is of the considered view that a prima facie case has been made out for grant of interim orders for the reason that the petitioner appearsto have made substantial payments and despite that further action is contemplated against the properties of the petitioner Company, which may result in irreparable loss and grave hardship to him and balance of convenience as on today lies in favour of the petitioner. Hence there shall be an order of adinterim injunction, as prayed for till 21.01.2020. However it is made clear that till the disposal of the writ petition, the writ petitioners shall not create any third party rights in respect of the properties in question. Call on 21.01.2020.

Summary

Issues involved:
1. Interpretation of loan account classification as Non Performing Assets (NPA) and outstanding dues.
2. Discrepancies in the amount payable according to various tribunal orders.
3. Validity of the order of Debts Recovery Appellate Tribunal regarding the calculation of interest rates.
4. Granting of interim orders to prevent irreparable loss to the petitioner.

Analysis:
1. The petitioner's counsel highlighted that a substantial sum had been paid since the loan account was classified as NPA, including an amount mentioned in the interim order. The respondent Bank, however, claimed that there was still a significant outstanding amount due as per the orders of Debts Recovery Tribunal-II Chennai and a counter claim. The petitioner made a payment without prejudice to their rights, emphasizing discrepancies in the amount owed.

2. The petitioner pointed out that the respondent Bank, in a separate filing before the National Company Law Tribunal (NCLT), contended that the petitioner was liable to pay a different sum as per the order of Debts Recovery Tribunal. The Bank argued that the DRT order was erroneous and insisted on recovering the entire advances with contractual interest. This discrepancy in the amount claimed raised questions about the accuracy of the financial obligations.

3. The counsel for the petitioner drew attention to the order of the Debts Recovery Appellate Tribunal, which acknowledged the Bank's entitlement to interest but had not quantified the amount to be paid. The petitioner sought interim orders due to the pending quantification of the interest amount. The validity and calculation of interest rates as per the tribunal's order were under scrutiny, indicating a need for clarity on the financial aspects of the case.

4. Considering the circumstances, the Court found that the petitioner had made substantial payments and faced potential actions against their properties, leading to irreparable loss. To prevent such hardship, the Court granted an ad interim injunction until a specified date. The balance of convenience favored the petitioner, warranting protective measures to maintain the status quo regarding the properties in question until the writ petition's disposal. The interim orders aimed to safeguard the petitioner's interests and prevent any third-party rights on the properties during the legal proceedings.