9911796707
TMI Blog2024 (11) TMI 998X X X X Extracts X X X X X X X X Extracts X X X X ..... - there are no meaningful and detailed discussion on this issue in the Adjudicating Authority decision in the Impugned Order, especially on issue of default which is against the spirit of the Code. In view of these discussions, the debt and default is established in favour of the Appellant. Whether, ratio of Vidarbha Industries [ 2022 (7) TMI 581 - SUPREME COURT] was applicable in the present case based on which the Adjudicating Authority rejected the application of the Appellant filed under Section 7 of the Code? - Whether, there was judicious application of mind by the Adjudicating Authority as evident in the Impugned Order while rejecting the application of the Appellant under Section 7 of the Code? - HELD THAT:- In the present case, the total outstanding of all lenders was thousands of crores and debt claims of Appellant was itself Rs. 646.38 Crores, whereas the Respondent is now hopeful of Rs. 1271 Crores to be recovered from other telecom companies based on Arbitration etc., which are at present at different stages of being finalised, thus, perception of the Respondent looks far from finality. It is anybody s guess as to when this money, if at all, will come to the Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es is not a new plea set out by the Appellant. It has its basis in the pleadings of the Respondent as well as the Appellant before the Adjudicating Authority - it is already noted the relevant para of Vidarbha Industries [ 2022 (7) TMI 581 - SUPREME COURT] , Innoventive Industries Ltd. [ 2017 (9) TMI 58 - SUPREME COURT] , Vidarbha Review Order and it is already noted the various financial facts and figures regarding viability of the Corporate Debtor, as such the contentions raised by the Respondent does not hold good. Even without considering the Rejoinder filed by the Appellant, the ratio and applicably of Vidarbha Industries is in the present appeal is required to be taken into consideration along with various financial facts which are found in the pleadings made as well as written submissions and which are based on the financial statements of the Corporate Debtor which are in public domain. Whether, the Appellant was duty bound to agree with majority of the lenders to assign its debts to EARC? - HELD THAT:- The Appellant is not duty bound to agree with majority of the lenders to assign its debts to EARC - It is clear that it is the commercial wisdom of the lenders is paramount i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xecuted several finance and security documents ( Phase-I financing documents). The Appellant stated that for expansion of business by the Respondent in Phase-II, the Respondent approached the group of 16 other lenders (in short GTL Consortium Lenders ) and the consortium sanctioned Rupee Term Loan ( RTL ) of Rs. 2,829 Crores in addition to foreign currency loan. 5. The Appellant submitted that he also sanctioned RTL of Rs. 200/- Crores to the Respondent and for this purpose; the Respondent, consortium to lenders, lenders agent and security trustee, entered into a common loan agreement dated 12.07.2008 and certain other agreement (Phase II Financing Agreement). 6. One entity named Chennai Network Infrastructure Limited ( CNIL ) also approached the Appellant and 10 other consortium lenders ( CNIL Consortium Lenders/JLF ) for RTL of Rs. 5,000 Crores for acquisition of 17,500 passive telecom towers. The Appellant sanctioned of RTL of Rs. 650 Crores and entered into a Facility Agreement dated 23.03.2010 along with various connected agreements ( CNIL Financing Documents ). 7. The Appellant further elaborated that during March, 2010, the Respondent approached five other lenders for additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent and the Respondent became liable for the payments of the loans and financing facilities in terms of both the Respondent and CNIL, which were earlier availed by the Appellant from the Consortium Lenders under the GIL Finance Documents/GIL Restructuring Documents. 12. The Appellant stated that the Respondent could not meet requirements of the SDR restructuring package and the Corporate Debtor was classified as NPA with retrospective effect from 01.07.2011 based on advise of statutory auditor i.e., from the CDR Reference Date, since the CDR had failed consequent to which, the terms and conditions w.r.t. pricing and repayment schedule as per the pre-CDR Period had been restored. 13. The Appellant submitted that in 2018, some of the Consortium Lenders assigned their rights, title and interest w.r.t. the Corporate Debtor in favour of Edelweiss Asset Reconstruction Company Limited ( EARC ) and therefore, EARC acquired 79.34% (by value) of the debt of the Respondent. 14. The Appellant submitted that vide notice dated 27.06.2018, the Appellant called upon the Respondent to pay the overdues amount of Rs. 264.46 Crores along with the interest due from 01.06.2018, which was followed by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cide whether to accept or reject the offer. 20. The Appellant submitted that his Section 7 application was finally rejected by the Adjudicating Authority on 18.11.2022 and aggrieved by the same the present appeal has been filed. 21. The Appellant brought out that during meeting held on 20.09.2016 between the Appellant and Consortium Lenders, the Respondent informed that they are agreeable to SDR and following is the relevant portion :- 'The JLF lenders reviewed the performance of the companies and they were of the opinion that they have not been able to achieve the projections envisaged at the time of CDR on all viability parameters (or reasons mentioned above. The companies have also voiced its inability to service the principal repayments o(the lenders. In view of the failure to achieve viability milestones and since the account is in SMA 2 category, the company has requested the Lenders to find a solution through Corrective Action Plan. The company has also informed that they are agreeable for Strategic Debt Restructuring Scheme as per RBI Guidelines ( SDR')'. (Emphasis Supplied) 22. The Appellant reiterated that the Respondent miserably failed to meet its obligation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been rejected earlier and by doctrine of res-judicata the same could not have been filed. The Appellant reiterated that his earlier section 7 application was dismissed in view of decision on RBI Circular dated 12.02.2018 titled as 'Resolution of Stressed Assets- Revised Framework' which was held as ultra vires under Section 35 AA of Banking Regulations Act, 1949 and this had nothing to do with the Appellant s right to file Section 7 application. The Appellant filed Section 7 application under the Code for outstanding amount of Rs. 6,46,38,06,271/- as on 30.11.2019 before the Adjudicating Authority which was dismissed vide Impugned Order dated 18.11.2022. 28. The Appellant pleaded that the Adjudicating Authority has erred in following the ratio of Vidarbha Industries Power Ltd. vs. Axis Bank Ltd. [(2022) 8 SCC 841] in rejecting his application under his Section 7. The Appellant gave details of the facts based on Vidarbha Industries (Supra) vis- - vis present case and stated that Vidarbha Industries (Supra) could not have been applicable here on viability and feasibility of the Corporate Debtor, which is entirely different. The Appellant further stated that Vidarbha Indus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en defaulting its payment since 2011 despite of the best possible assistance provided by the lenders including the Appellant through various mechanism including the CDR and SDR. 34. The Appellant submitted that the Corporate Debtor is loss making entity and can be seen from its Financial Statement for the year 2017-18 and is having negative networth and not in a position at all is making the payments. The Appellant emphasized that there is no chance of revival of the Respondent and under these circumstances only option left is seeking resolution of the Corporate Debtor where new management can infuse funds and bring desired changes which ultimately would be beneficial to all stakeholder including the Corporate Debtor itself, the lenders including the Appellant and other stakeholders. 35. The Appellant castigated Impugned Order which despite noting few facts of the Appellant under submissions, has relied solely on the judgment of Vidarbha Industries (Supra) and gave the ruling in one single para 11 of the Impugned Order dated 18.11.2022 which show clearly non application of mind by the Adjudicating Authority. The Appellant stated that the Adjudicating Authority has not give any rati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facing financial distress and there has been occasion of not paying to the lenders, however, the Respondent has been making all the endeavors in meeting its obligations and fulfilling its commitments towards lenders. The Respondent assailed the conduct of the Appellant who is bent upon to send the Respondent on the path of insolvency and later liquidation. 42. The Respondent submitted that the Corporate Debtor is capable of survival and its genuine intentions regarding meeting its obligations can be gauged by the fact that the Corporate Debtor has paid Rs. 17,394 Crores during the period 2011 to 24.09.2024 (updated figures based on Written Submission) to lenders which clearly demonstrate that the intention of the Respondent has always good and fair. 43. The Respondent brought out that the ratio given by the Hon ble Supreme Court of India in the case of Vidarbha Industries (Supra) is clearly applicable in the present case and the Adjudicating Authority rightly followed the same in rejecting the application filed by the Appellant under Section 7 of the Code. To buttress his point, the Respondent stated that the Adjudicating Authority itself directed Aircel (debtors of the Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndustries (Supra), is squarely applicable to the instant case. The ratio in the aforesaid judgment clearly provides the Adjudicating Authority discretion to admit Section 7 application, despite the existence of a financial debt and default. The Respondent stated that the Hon'ble Supreme Court has clearly held that the Adjudicating Authority has discretion under Section 7 of the Code and it ought to exercise this discretion in situations where an entity is not really in the red especially where there is concrete evidence of monies being due to it as a result of decrees, awards and pending arbitrations along with other relevant factors, such as steady revenue stream need to be considered. The Respondent emphasized that the judgment in the case of Vidarbha Industries (Supra) has stated that the examples are only illustrative and the real intent of the judgment is that if the company is a going concern with regular revenues and has potential to revive, it is not advisable to send such company CIRP. 49. The Respondent submitted that there are several other financial parameters which cannot be over looked in deciding the fate of the Corporate Debtor and submitted that as part of SDR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fessional which has been directed by the Adjudicating Authority vide Order dated 06.12.2019 in M.A. No. 1450 of 2019 in CP(IB) 298(MB)/2018 and same has been challenged by the Resolution Professional before this Appellate Tribunal in Company Appeal (AT) No. 1410 of 2019 and 1503 of 2020. 54. The Respondent stated that he has filed arbitration proceedings to recover Rs. 351 Crores against BSNL. This arbitration is at the stage of filing of evidence before the cross-examination of witnesses and the Respondent is hopeful of being able to recover the dues against BSNL. 55. The Respondent emphasized that the Respondent is engaged in the business of building, maintaining and providing/leasing passive infrastructure to telecommunication service providers like Airtel, Reliance Jio, BSNL etc., and such services are categorized as essential services and are being used by the public at large. Any disruption of these services due to a protracted insolvency process could cause set back for millions of customers across the country. 56. The Respondent mentioned that in the recent past, telecom companies like Reliance Communications / Aircel which went into CIRP/liquidation could not be revived an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or the Revised Framework which permits the Applicant Bank to declare the SDR Scheme or CDR Scheme as having failed and disregard the specific portion of the debt converted into equity even if the shares have not been sold prior to the end of the stand-still period under the SDR Scheme on 19.03.2018. 61. The Respondent submitted that the Appellant has not appreciated that in the event that the debts of all the lenders are not assigned to the EARC, the EARC would not be in a position to restructure the entire debts owed by the Respondent, which would defeat the very purpose of the entire process of sale of the debt of the Respondent to the EARC due to adamant approach by the Appellant. 62. The Respondent stated that he is not a willful defaulter and has extended utmost co-operation and support to the lenders and made every attempt to achieve resolution of the debts of the Lenders. The Respondent stated that the appellant was only interested in pursuing its own mala fide objecting of using IBC as recovery mechanism and not for resolution of the Corporate Debtor and for sending the Corporate Debtor into CIRP without considering any alternative remedies available. 63. The Respondent r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts, the Appeal devoid of any merit should be dismissed with exemplary cost. The Respondent submitted that alternatively, this Appellate Tribunal may consider to remand the matter to Adjudicating Authority for fresh consideration after hearing both the sides. The Respondent stated that he would like to bring out to the notice of the Adjudicating Authority the financial statements, facts like various arbitrations award in his favour which the Respondent has claimed w.r.t. to its viability and sustainability as well as its ability to settle outstanding debts of the Lenders. Findings 66. Since, we have already noted the facts of the case, during pleadings of the Appellant and the Respondent, we will not reiterate the same once again. 67. Following issues emerges in the present appeal :- (i) Whether there was a debt and default which could trigger Section 7 application filed by the Appellant. (ii) (a) Whether, ratio of Vidarbha Industries (Supra) was applicable in the present case based on which the Adjudicating Authority rejected the application of the Appellant filed under Section 7 of the Code. (b) Whether, there was judicious application of mind by the Adjudicating Authority as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of CDR invocation year i.e., from 2011. We also note that the suitable correspondence was made by the lenders including the Appellant to the Respondent for serving its financial liability and finally the loan recall notice was also issued by the Appellant. The various financial statements were brought to our notice which clearly demonstrate the acknowledgments of default by the Respondent in its financial statement including the annual statements for the Financial Year 2017-2018. We note that the Impugned Order consist of 11 Paras and the contentions/ pleadings of the Appellant herein were discussed in paras No. 2 and 9 and the contentions of the pleadings of the Respondent were discussed in Para 3 to 8. In Para 10 of the Impugned Order, ratio of Vidarbha Industries (Supra) has been elucidate and finally in solitary Para 11, the financial facts as submitted by the Corporate Debtor have been mentioned and the Section 7 application has been rejected in view of the Vidarbha Industries (Supra). Thus, we do not find any explicit discussions regarding debt and default and any detailed analysis regarding acknowledgments of defaults by the Respondent in the Impugned Order. From the va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te pleadings , substantial parts of the Appellant's Rejoinder dated 11.04.2023 are liable to be struck off as set out in IA No. 2601 of 2023? F. Whether, in the event, the Rejoinder dated 11.04.2023 is either taken on record and parts thereof not struck off, is the Respondent not entitled to file a reply to the said Rejoinder on grounds contained therein which are beyond the ones raised in the memo of appeal? G. Whether in the alternative, the matter be remanded to the Adjudicating Authority to re-examine the case on merits? H. Whether in the facts and circumstances of the case, where more than INR 17,394 crores has been recovered by the financial creditors against the principal debt of INR 12,539 crores from 2011 to 24.09.2024, and with cash flow of more than INR 130.48 Crores (inclusive of GST) and INR 110.57 Crores (net of GST) per month credited in the TRA each month out of which disbursements are also made to the Appellant, and other factors including claims/amounts in excess of INR 1271 crores to be recovered from other Telecom Companies, the appeal is liable to be dismissed? (Emphasis Supplied) From above issues and the details given by the Respondent, we do not find any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal debt owed by the appellant to the consortium of lenders of which the respondent financial creditor is the lead bank was approximately Rs 2727 crores. 59. There can be no doubt that a corporate debtor who is in the red should be resolved expeditiously, following the timelines in the IBC. No extraneous matter should come in the way. However, the viability and overall financial health of the corporate debtor are not extraneous matters. 60. The adjudicating authority (NCLT) found the dispute of the corporate debtor with the electricity regulator or the recipient of electricity would be extraneous to the matters involved in the petition. Disputes with the electricity regulator or the recipient of electricity may not be of much relevance. The question is whether an award of APTEL in favour of the corporate debtor, can completely be disregarded by the adjudicating authority (NCLT), when it is claimed that, in terms of the award, a sum of Rs 1730 crores, that is, an amount far exceeding the claim of the financial creditor, is realisable by the corporate debtor. The answer, in our view, is necessarily in the negative. 75. Significantly, the legislature has in its wisdom used the word ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng any award or decree, if the award/decretal amount is incapable of realisation. The example is only illustrative. (Emphasis Supplied) From above, it is seen that there was a clear award approved by APTEL in favour of the Vidarbha Industries (Supra) of Rs. 1730 Crores pending before the Hon ble Supreme Court of India which was much more than the amount claimed by the Financial Creditor i.e., Axis Bank of Rs. 553.28 Crores. In view of this scenario, the Hon ble Supreme Court of India held that it was discretion of the Adjudicating Authority, since the word may has been used in Section 7 and thus the Adjudicating Authority should have given a chance to the Corporate Debtor to continue rather than admitting Section 7 application. In the present case, the total outstanding of all lenders was thousands of crores and debt claims of Appellant was itself Rs. 646.38 Crores, whereas the Respondent is now hopeful of Rs. 1271 Crores to be recovered from other telecom companies based on Arbitration etc., which are at present at different stages of being finalised, thus, perception of the Respondent looks far from finality. It is anybody s guess as to when this money, if at all, will come to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27. The scheme of the Code is to ensure that when a default takes place, in the sense that a debt becomes due and is not paid, the insolvency resolution process begins. 30. On the other hand, as we have seen, in the case of a corporate debtor who commits a default of a financial debt, the adjudicating authority has merely to see the records of the information utility or other evidence produced by the financial creditor to satisfy itself that a default has occurred. It is of no matter that the debt is disputed so long as the debt is due i.e. payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date. It is only when this is proved to the satisfaction of the adjudicating authority that the adjudicating authority may reject an application and not otherwise. (Emphasis Supplied) We note that Innoventive Industries Ltd. (Supra) clearly stipulated that once debt and default is established, the logical decision of the Adjudicating Authority ought to admit Section 7 application. The Respondent also pointed out that the Corporate Debtor has claimed aggregating Rs. 13,393.83 Crores against Aircel entities and the same has been noted b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent as CIRP cost. Thus, there is no clear basis of Rs. 900 Crores claimed by the Respondent. Incidentally, this Appellate Tribunal vide its Order dated 09.12.2019 in Company Appeal (AT) (Ins.) No. 1410 of 2019 has stayed the said order of the NCLT. We would also like to record other facts of the present case to examine whether the ratio of Vidarbha Industries (Supra) is applicable in the facts of the present case or otherwise. We note that as per Annual Report of the Respondent for the year 2017-18, the Respondent had incurred losses of Rs. 1892 Crores, negative networth and total liabilities of Rs. 7188 Crores. This does not infuse rosy picture regarding viability of the Respondent. We note that the Respondent has been emphasizing regarding its viability and capacity to meet the financial obligations towards lenders. The latest figures submitted by the Respondent about gross monthly revenue of Rs. 130.48 Crores (inclusive of GST) and Rs. 110.57 Crores (net of GST). The bank balance of the Respondent as on 30.06.2024 was Rs. 497.77 Crores and EBITDA of the Respondent during Financial year 2023-24 of Rs. 198.3 Crores. However, the Respondent has not brought out the context of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s post CDR/SDR and what was the total payment made thereon. This would have given a clear picture in terms of total payment made by the Respondent on account of principals, interest and other ancillary charges like penal interest, if any, happened due to non payment on part of the Respondent to the Lenders. The Adjudicating Authority has not gone into any of these details, as such we are not in position to support the Impugned Order rejecting Section 7 application of the Appellant only on the ground of Vidarbha Industries (Supra). Thus, in view of all above detailed analysis herein above, we are of the view that the Adjudicating Authority has not applied the ratio of Vidarbha Industries (Supra) correctly in the present case while rejecting the application of the Appellant, filed under Section 7 of the Code. 70. Issue No. (iii) Whether the Adjudicating Authority ignored the acknowledgements of debt and default by the Respondent in its various statements, books of accounts, affidavit in reply and Written Submissions filed before the Adjudicating Authority . The following have been brought out during pleadings to our notice regarding acknowledgements of debts and defaults by the Respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gements of debt and default on the part of the Corporate Debtor. In view of above, we hold that there is a clear debt and default backed several acknowledgements by the Respondent which entitled the Appellant to file application under Section 7 of the Code before the Adjudicating Authority. 71. Issue No. (iv) Whether the Appellant is permitted to raise any disputed issues of facts before this Appellate Tribunal through Rejoinder dated 11.04.2023 to the Affidavit in Reply and Additional Affidavit in reply and whether it is an impediment in the present appeal. We have already noted the submissions of the Respondent that the Appellant cannot be allowed to raise new issues in form of rejoinder. It is the case of the Appellant that the grounds taken by the present appeal is restricted to challenge the issues that law laid down by Vidarbha Industries (Supra) based on which the Adjudicating Authority rejected his application is per-incuriam and therefore ought to not have been applied. It is the case of the Respondent that the Appellant has not challenged any other finding of the Adjudicating Authority. We note from the submissions of the Appellant that the Adjudicating Authority vide its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d vide order dated 03.02.2020. At this stage, we would like to take into consideration the relevant portion of relevant paras of the Judgment of the Hon'ble Bombay High Court which reads as under:- 2. These two petitions were heard together and as they involve similar questions and issues, they are disposed of by this common judgment. 4. The relief claimed in the writ petition is that this Court should issue a writ of mandamus or any other appropriate writ, order or direction, directing respondent Nos.1 to 6 to forthwith comply with paragraph 6.4 of the Master Circular dated 1st July, 2015 issued by the Reserve Bank of India (RBI). 38. The petitioner further submits that pertinently, despite agreeing to a sale to an ARC, in the aforementioned meetings of the lenders of the petitioner, on 3rd August, 2018 i.e. almost 6 months after agreeing to the sale, respondent No. 1 addressed a letter to the Union Bank of India, opposing the proposed sale to respondent No. 7 and raised totally irrelevant, extraneous and misconceived objections. By the said letter, respondent No. 1 also expressed its intention to initiate proceedings under the IBC against the petitioner . 45. On the above all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articularly, grounds (D) to (Q) of the petition, it is submitted that respondent Nos.1 to 6 be directed by a writ of mandamus or a direction in the nature of mandamus to assign their respective debt owed by the petitioner in favour of respondent No.7 in terms of the IRAC guidelines. 50. We heard both sides extensively on that date. 62. On these pleadings, the petition has been instituted and there is one more petition filed, namely, Writ Petition (L) No.223 of 2020. In that petition, the petitioner is stated to be GTL Limited and it invokes the jurisdiction of this Court under Article 226 of the Constitution of India for claiming the relief/direction against respondent No.7 to that petition (Canara Bank) to forthwith withdraw and cancel the Recall Notice dated 10th July, 2018, copy of which is at Exhibit 'R' to the petition, letter dated 4th June, 2019, copy of which is at Exhibit 'BB', letter dated 27th June, 2019, copy of which is at Exhibit-II and the letter dated 12nd December, 2019, copy of which is at Exhibit 'VV' to the petition. 67. It is on the above materials that we have heard Mr.Kamdar, learned senior counsel appearing on behalf of the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the credit risk associated with the financial assets being transferred to the creditors. This is subject to unrealised part of the asset reverting to the seller bank/financial institution. The banks are directed to ensure that the effect of the sale of the financial assets should be such that the asset is taken off the books of the bank/financial institution and after the sale, there should not be any known liability devolving on the bank/financial institution. Thereafter, how the sale is to be conducted in a prudent manner, in accordance with the policy approved by the Board and what policy and guidelines the Board should lay down is set out in clause (b) of para 6.4. 76. The entire set of guidelines denote that this is an advise, caution and guidance provided on sale of financial assets to Securitisation Company (SC) and Reconstruction Company (RC). a procedure has to be followed and in the case of consortium/multiple banking arrangements, if 75% (by value) of the banks/financial institutions decide to accept the offer, the remaining banks/financial institutions will be obligated to accept the offer. However, this is preceded by an assessment of each bank/ financial institution o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks/financial institutions cannot be taken away by issuing a command or writ contrary to the expressed terms and conditions of the policy. The policy document must be read as a whole and nothing should be read, as is attempted, in isolation or out of context. In these circumstances, we do not think that the petitioner can claim the writ. In fact, in the grounds of this petition, respondent No.1 is targeted and it is stated that its actions are mala fide and arbitrary. It is seeking to recover monies from the petitioner under the original financial documents after a part of the respondent No.1's debt has been converted into equity under the SDR Scheme. Now, we cannot attribute mala fides and arbitrariness so easily and casually in financial matters to a public sector bank. That bank is the custodian of public funds. It holds them in trust for the public. It is not expected to surrender and sacrifice its interests, particularly legal rights merely because the petitioner desires that it should join in total restructuring of the debt of the petitioner or total waiver. We must bear in mind that before us is a debtor who owes thousands of crores to these financial institutions and ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bank was seeking to recover a sum of Rs. 540.35 Crores under the Rupees Facility as on 23rd August, 2018. 84. As a result of the above discussion, Writ Petition No. 1893 of 2019 fails. Rule is discharged. There would be no order as to costs. 89. We cannot, by a unilateral version of the petitioner, issue the writ. Ultimately nobody and much less a public sector financial institution/bank can be compelled to accept a settlement or resolution plan of the debtor. The bank has its own limitations, restrictions and desires to abide by the norms which it terms as more prudent. In the circumstances, we do not think that the petitioner's version can be accepted as sacrosanct. The petitioner here also relies upon the minutes of the joint lenders' meeting. If only the Canara Bank is not joining the resolution plan, then, it cannot be compelled to join it by entering into the intercreditor agreement, all the more when it has approached the NCLT. The allegations made against the Canara Bank by the petitioner can be substantiated in the appropriate proceedings or while defending the proceedings before the NCLT or other Forums. In the circumstances, we think that it would be highly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring debt of the Corporate Debtor. Incidentally, the Hon ble Bombay High Court noted carefully that before them is a debtor (Respondent herein) who owes thousands of crores to these financial institutions and banks and is dictating to them to accept the prosed settlement or restructuring of debt. In this connection, the Hon ble Bombay High Court held that if such directions is given to the banks (Appellant herein) it would mean calling upon the banks not to act for public good and in public interest. Thus, the reasoning and the ratio given by the Hon ble Bombay High Court is absolutely explicit and does not leave any ground for any doubt regarding non mandatory nature of the RBI Guidelines as well as absolute right of the Appellant to pursue its legal remedies including initiation of Section 7 application before the Adjudicating Authority. We note that this was challenged by the Respondent before the Hon ble Supreme Court of India in the matter of GTL Infrastructure Limited vs. Canara Bank and Ors. [(2021) SCC OnLine SC 3366] and the following are the relevant paragraphs of the judgment of the Hon ble Supreme Court of India which reads as under :- 2. This appeal arises out of Spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order as to costs. 16. For the same reasons, in our considered view, the writ petition also calls for no interference and is therefore, dismissed. (Emphasis Supplied) From above judgment of Hon ble Supreme Court of India, we note that the Hon ble Supreme Court of India has upheld the judgment of the Hon'ble Bombay High Court that there would be no obligation upon the bank/ financial institutions to accept settlement and each bank must make its own assessment of to accept or reject. The Hon ble Supreme Court of India clearly held that Para 6.4 of RBI Master Circular is not mandatory and it gives discretion to every bank to decide in overall scenario. This is quite contrary to position taken by the Respondent before the Adjudicating Authority as well as in the present appeal before us while arguing that clause 6.4 is mandatory and once 75% of Lenders (by value) agrees, the other minorities (by value) debts holders/ banks cannot remain outside. The judgments, as discussed above, also negates the connotation of the Respondent that the Appellant could not have initiated on his own Section 7 application before the Adjudicating Authority. In view of this settled position by the Hon&# ..... X X X X Extracts X X X X X X X X Extracts X X X X
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