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2022 (6) TMI 544 - AT - Insolvency and BankruptcyRecovery of outstanding amounts - NPA - Forum Shopping - Section 13(2) of the SARFAESI Act 2002 - HELD THAT - It is undisputed fact that the impugned order of Adjudicating Authority dated 04.10.2019 was passed ex parte - This Tribunal has observed that loan facility has been granted to the Trust which is engaged in Educational Services @25% p.a by the R1/Bank which itself seems to be very high. It is difficult to predict about the bargaining power of the Trust/CD with the banks to borrow at such a high rate of interest. Although not much details are provided but as it looks that sanctioned amount is Rs. 3 Crore to M/s. Camellia Educare Services Ltd. and Rs. 8.5 Crore each to M/s. Multiple Educational and Manpower Development Trust and Camellia Educare Trust sanctioned in the year 2012 for the furtherance of the objective of the trust for Development of Education Services and the Corporate Guarantee Agreement was executed apart from offering its properties in mortgage for Rs. 20.80 Crore - It is also evident from the pleadings that the Corporate Debtor/Guarantor has executed a Corporate Guarantee Agreement in lieu of the said loans apart from offering its property in mortgage. It is also observed that the R1/Bank also issued demand notice on 29.12.2016 under the provisions of SARFAESI Act 2002 to the Appellant demanding further Rs. 14 Crore from the Appellant being the Corporate Guarantor. It is also observed from the pleadings that the Appellant has given reply of the said demand notice as per provisions laid in SARFAESI Act 2002 vide their letter dated 13.02.2017 denying and disputing the said demand notice and the quantum. It has also been mentioned in the pleadings that the borrower was continuously making payment inspite of receiving demand notice under the relevant provisions of SARFAESI Act 2002. As per the pleadings it is also mentioned that the original borrower has paid an amount of Rs. 92 lakhs during the time of pendency of the said application. It is a settled law that the practice of Forum Shopping be condemned as it is an abuse of law. This case is beyond doubt falls under the category of Forum Shopping as it is a classic example of Forum Shopping when the Respondent Bank has approached one Court for relief but does not get the desired relief and then approached another court for the same or similar relief. It is deemed fit and proper to remand back the matter to the Adjudicating Authority to give a patience hearing also to the Appellant and the Respondents including the RP and then to decide the matter considering the fact of the case as well as the provisions of applicable laws on the issue and then to finally pass appropriate order in accordance with law - appeal allowed by way of remand.
Issues Involved:
1. Ex parte order by the Adjudicating Authority. 2. High-interest rate on loan facilities. 3. Payment history and suppression of facts by the Respondent. 4. Multiplicity of proceedings initiated by the Respondent. 5. Forum shopping by the Respondent. 6. Application of principles of natural justice. Detailed Analysis: 1. Ex Parte Order by the Adjudicating Authority: The Tribunal observed that the impugned order dated 04.10.2019 was passed ex parte. The Appellant argued that the Adjudicating Authority failed to appreciate the objections raised and the facts of the case, leading to an ex parte decision without considering the Appellant's submissions. The Tribunal acknowledged this procedural lapse and decided to remand the matter back to the Adjudicating Authority for a fair hearing. 2. High-Interest Rate on Loan Facilities: The Tribunal noted that the loan facility granted to the Trust at an interest rate of 25% per annum seemed very high. It was difficult to predict the bargaining power of the Trust/CD with the banks to borrow at such a high rate. This issue was highlighted to understand the financial strain on the borrowers and the subsequent defaults. 3. Payment History and Suppression of Facts by the Respondent: The Appellant claimed that the Respondent suppressed the amount received till December 2018, which was approximately Rs. 28 Crores. The Respondent failed to provide a statement of accounts and started disputing the order of satisfaction of the equated monthly installments. The Tribunal noted that the Corporate Debtor had paid Rs. 28 Crores from 2013 to December 2018, and this fact was not considered by the Adjudicating Authority. The Tribunal emphasized the need to look into these details despite them not being in the domain of the Code. 4. Multiplicity of Proceedings Initiated by the Respondent: The Appellant argued that the Respondent initiated multiple proceedings in different legal avenues to harass the Appellant and the borrowers. The Tribunal found that the Respondent had indeed approached various forums, including the DRT, Kolkata, and the Hon'ble High Court of Calcutta, for relief. This multiplicity of proceedings suggested a strategy to coerce the borrowers and guarantors into paying the debts. 5. Forum Shopping by the Respondent: The Tribunal condemned the practice of forum shopping, where the Respondent approached different courts for similar reliefs when the desired outcome was not achieved in one forum. The Tribunal referred to the Hon'ble Apex Court judgments in Union of India & Ors. Vs. Cipla Ltd. & Anr (2017) and Vijay Kumar Ghai & Ors. Vs. The State of West Bengal & Ors., emphasizing that such practices are an abuse of law. 6. Application of Principles of Natural Justice: The Tribunal highlighted the importance of natural justice, emphasizing that the person affected must have a reasonable opportunity of being heard. The Tribunal referred to the Hon'ble Supreme Court's ruling in Meneka Gandhi Vs. Union of India, which stressed the need for a genuine hearing. The Tribunal found that the principles of natural justice were not complied with in this case, leading to the decision to remand the matter back to the Adjudicating Authority for a fair hearing. Conclusion: The Tribunal set aside the ex parte order of the Adjudicating Authority dated 04.10.2019 and remanded the matter back for a fresh hearing. The Adjudicating Authority was directed to consider the objections and facts presented by the Appellant and the Respondents, including the Resolution Professional (RP), and pass an appropriate order in accordance with the law. The appeal was allowed, and any interim orders passed by the Tribunal were vacated. No order as to costs was made.
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