JM FINANCE ASSET RECONSTRUCTION COMPANY PVT LTD vs MS NITCO LTD on 3 November 2023

J U D G M E N T

1. By way of the present MA the Applicant is praying issuance of Recovery Certificate for Rs. 73,54,43,907/- (Rupees Seventy- Three Crores Fifty-Four Lakhs Forty-Three Thousand Nine Hundred and Seven only) due as on 29/06/2015 along with the interest of @14.45% p.a. compounded with monthly rests against the Defendant / Respondent Nos. 1 to 8.

2. Ld. Counsel for the Applicant contends that the consent term was arrived at between the parties on 19/07/2019 in the OA No. 106/2015. He also submits that the said consent terms was taken on record by this tribunal and appropriate order was passed on 19/07/2019.

3. However, the Defendants committed default, therefore, in terms of Clause 12 of the Consent Terms, Recovery Certificate for an amount of Rs. 73,54,43,907/- (Rupees Seventy-Three Crores Fifty-Four Lakhs Forty-Three Thousand Nine Hundred and Seven only) may be issued.

4. He also informed that the Defendants/Respondents after the consent terms, has deposited amount of Rs. 2,15,61,950/- (Rupees Two Crores Fifteen Lakhs Sixty-one Thousand Nine Hundred and Fifty only) which was duly being appropriated in all 15 different account of the Defendants / Respondents thus, he submits after reducing the said amount of Rs.2,15,61,950/- (Rupees Two Crores Fifteen Lakhs Sixty- one Thousand Nine Hundred and Fifty only) which was adjusted in different account a Recovery Certificate may be issued as claim in the O.A.

5. In support of his contention, Ld. Counsel for the Applicant referred the Judgement of Hon'ble supreme court in Kamini Jaiswal Vs Union Bank of India.

6. Pre Contra, Ld. Counsel for the Defendants/Respondent objected to the present MA and contended that the Applicant has no right to file the present MA as a restructuring agreement had already taken place between the parties on 27/03/2018. He further contended that the said restructuring agreement has not been duly stamped, therefore, the consent term which is based on the said restructuring agreement, will also not survive.

7. In support of his contention Ld. Counsel for the Defendants/Respondents relied upon judgement of Hon'ble Supreme Court in N. N. Global Vs. Indo Unique Flame Limited, 2023 SSC Online, 495.

8. He further contended that the Applicant herein has already filed an application before NCLT Mumbai Bench, however, now instead of filing appropriate application before NCLT, the applicant has filed the present application for issuance of Recovery Certificate before this tribunal therefore, the action of the Applicant is not proper and thus, the present MA may be decline.

9. The Defendants have also raised the objection that the consent terms superseded to the restructuring agreement and therefore, no claim may be allowed on the basis of said consent terms. Further it is stated the Applicant did not annex the material document regarding the breach of consent terms, therefore, also the present application is not maintainable.

10. Lastly, it is stated by Ld. Counsel for the Defendants that they have already made the payment of 66,15,60,204/- to the Applicant and also post the consent terms sum of Rs. 44,11,72,106/- has been deposited however, the Applicant after the receiving the huge sum still praying for the recovery certificate and therefore, the present MA is a arm twisting tactics of the Applicant to harres the Defendants/Respondents, thus, the Present MA may be dismissed.

11. Considered the rival submission made by the parties and gone through the record.

12. Record reveals that after recording the submissions of both parties, since the consent term dated 19.07.2019 arrived between them therefore this Tribunal disposed off the OA No. 106/2015 vide order dt.19.07.2019. There was default clause in the consent terms dated 19.07.2019, which is extracted herein below: “12. In case of default in payment as stated therein, the Applicant will have right under O.A. No. 106 of 2015 for a Recovery Certificate in terms for a sum of Rs.73,54,43,907/- (Rupees Seventy Three Crores Fifty Four Lakhs Forty Three Thousand Nine Hundred and Seven only) due as on 29.06.2015 in the accounts of Defendant No.1 together with further interest thereon at the rate of 14.75% compounded with monthly rests, till repayment/realization of the entire debt, deducting the amount, received by the Applicant and also the charges created by Defendants on the assets both movable and immovable properties will be continued till the full and final payment and/or realisation of the Applicant’s claim.”

(emphasis provided)

13. Thus, on a plain pleading of the clause 12 of the Consent term, it is establish that the Defendants/Respondents herein agreed that in case of default the Applicant would be entitled for the RC for the entire sum of Rs. 73,54,43,907/- (Rupees Seventy-Three Crores Fifty-Four Lakhs Forty-Three Thousand Nine Hundred and Seven only).

14. According to the Applicant there is a default by the Defendants/Respondents and therefore, seeking Recovery Certificate.

15. According to the Defendants/Respondents they have already paid sufficient amount with the Applicant herein, however, despite depositing the due sum the Applicant still praying for the Recovery Certificate thus, the same cannot be permitted.

16. The Applicant herein provides the detail of the amount received and its adjustment in para F of the written argument which is also reproduced herein under: “Payment made under the Restructuring Agreement: The present M.A. has been filed by JM Financial Asset Reconstruction Company Limited, acting in its capacity as trustee of JMFARC - Corp Bank Ceramics September 2015- Trust i.e. the Applicant and as per Clause 7 of Consent Terms entered into between the Applicant and Defendant Nos. 1 to 8, an amount of Rs. 34.44 crores was due and payable to the Applicant by the Defendants. In that regard,

I further say that only an amount of Rs. 2,15,61,949.82/- (~ Rs. 2,15,61,950/-), i.e., from a period of August 02, 2019 to February 25, 2022 has been received in JMFARC- Corp Bank Ceramics September 2015- Trust as against the corresponding restructured dues of Rs. 34.44 crores mentioned in Clause 7 of the Consent Terms. In view thereof, I say that the amounts claimed to have been paid by Defendant No.1 post the execution of the Restructuring Agreement and the Consent Terms have been paid to JM Financial Asset Reconstruction Company Limited, acting in its capacity as trustee of various trusts (as mentioned in the table herein below). Hence, the aforesaid amounts claimed to have been paid by Defendant No. 1 as mentioned in para 13 of the said reply have been paid for all trusts and not for only single trust, i.e., JMFARC- Corp Bank Ceramics September 2015- Trust as claimed for in the said reply. Therefore, I deny that the amounts claimed to have been paid by the Defendant No. 1 exceed the maximum amount of Rs. 34.44 crores due under the Consent Terms since the Defendant No. 1 has only paid a meagre sum of Rs. 2,15,61,949.82/- (~ Rs. 2,15,61,950/-), i.e., from a period of August 02, 2019 to February 25, 2022 as against the amount of Rs. 34.44 crores due under the Consent Terms.

17. Details of Trusts

S. No. Trusts Sharing Ratio (%)

1. JMFARC-SBI Ceramics June 2014-Trust 19.28%

2. JMFARC-CSB Ceramics September 2014- Trust 3.37%

3. JMFARC-LVB Ceramics September 2014- Trust 2.45%

4. JMFARC-SBH Ceramics December 2014- Trust 5.94%

5. JMFARC-SBOP Ceramics December 2014- Trust 1.23%

6. JMFARC-SBT Ceramics December 2014- Trust 2.33%

7. JMFARC-SBM Ceramics March 2015- Trust 1.30%

8. JMFARC-VB Ceramics March 2015- Trust 2.52%

9. JMFARC-PNB Ceramics November 2015- Trust 34.74%

10. JMFARC-Corp Bank Ceramics September 2015- Trust 4.92%

11. JMFARC-Dena Ceramics January 2016- Trust 1.59%

S. No. Trusts Sharing Ratio (%)

12. JMFARC-Exim Ceramics March 2016- Trust 1.82%

13. JMFARC-IDBI Ceramics March 2016- Trust 5.59%

14. JMFARC-IOB Ceramics March 2017- Trust 2.83%

15. JMFARC-Syndicate Ceramics September 2017- Trust 10.09%

Total 100.00% “

(emphasis provided)

18. Thus, after going to the detail provided by the Ld. Counsel for the Applicant I do not find merit in the objection taken by the Defendants/Respondents.

19. In sofar as other objections of the defendants / respondents are concerned, those objections are not maintainable at this stage, as parties with their free will entered into the consent term dt.19/07/2019 and the said consent terms is between all the parties therefore, issue raised by the Respondent herein is only an afterthought story.

20. In view of the above the present MA is hereby allowed and the Recovery Certificate for an amount Rs. 73,54,43,907/- (Rupees Seventy-Three Crores Fifty-Four Lakhs Forty-Three Thousand Nine Hundred and Seven only) is hereby issued.

The amount which is deposited by the Defendants/Respondents i.e. Rs. 2,15,61,950/- (Rupees Two Crores Fifteen Lakhs Sixty-one Thousand Nine Hundred and Fifty only) shall be reduced from the said amount.

File be closed and consigned to record.

Place: Mumbai.

(Dr. Rekha G. Dhakar) Date : 03.11.2023

Presiding Officer, DRT-1, Mumbai.

SP/-36