ICICI BANK LIMITED vs Temba Shipyards Limited on 28 March 2024

FINAL ORDER

1. This application is filed by the applicant bank under Section 19(1) of Recovery of Debts and Bankruptcy Act, 1993 against the defendants’ seeking issuance of a Recovery Certificate for recovery of an aggregate sum of Rs.38,03,57,750.81p comprising a sum of Rs.15,16,16,063.62p together with further interest at the rate of 12% per annum with monthly rests being the amount due under Term Loan Account and a sum of Rs.23,12,56,769.08p together with interest at the rate of 16.5% per annum with monthly rests being the amount due under Overdraft facility from the date of filing of this application till the date of realisation along with costs of the application and for sale of schedule properties.

2. The subject matter of the case is the credit facilities availed by the defendants 1 to 4 from the Applicant Bank.

3. The brief facts of the case may be stated as follows: - (a) The 1st defendant engaged in the business of ship building manufacture of dredgers and tugs has been enjoying various credit facilities from the applicant since 2006. The applicant had sanctioned Fund Based Limit of Rs..5 crores and Non Fund Based Assistance of Rs.30 crores vide Credit Arrangement Letter datetd 31.01.2006. The Non Fund Based Limit was Rs.10 crores towards Letter of Credit and Rs.20 crores towards Bank Guarantee Limit. The said limits were secured by pari passu charge on borrower’s fixed and entire current assets and the tenure was for a period of one year. The 1st defendant executed Master Facility Agreement on 16.02.2006, deed of hypothecation dated 16.2.2006 thereby hypothecating the assets more fully described in Schedule ‘A’ to the TA.

(b) Subsequently additional facilities were granted vide Credit Arrangement Letter dated 1.8.2006 for a sum of Rs.45 crores. The 1st defendant executed necessary security documents including guarantee agreements dated 3.8.2006 by Mr. P.K. Balan and Cdr S. Subramaniam for aggregate limit of Rs.45 crores.

(c) At the request of the 1st defendant, the facilities were renewed and extended to the tune of Rs.210 crores, subject to terms and conditions in the credit arrangement letter dated 11.6.2007. The facilities were secured by way of first paripassu charge of defendants entire schedule ‘A’ property and also paripassu mortgage of its immovable properties at Chengalpet.

(d) The LC Limit mentioned in Credit Arrangement Letter dated 17.8.2007 was modified vide applicant’s letter dated 17.8.2007 and the 1st defendant executed Master Facility Agreement on 10.11.2007. The Director of 1st defendant Mr. P.K. Balan executed guarantee agreement and deed of hypothecation on 10.11.2007.

(e) Subsequently, the facility was enhanced to Rs.220 lakhs vide Credit Arrangement Letter dated 16.5.2008, further to Rs.56.78 crores vide Letter dated 19.01.2010 and to Rs.62.78 crores on 4.3.2010 and the 1st defendant executed various security documents and Mr. P.K. Balan executed guarantee agreements.

(f) The defendants 5 to 9 also extended facilities to the 1st defendant. In order to improve the business the 1st defendant approached the lenders to restructure the existing facilities under Corporate Debt Restructuring Forum, which was approved by the Corporate Restructuring Debt Cell and the applicant vide letter dated 28.1.2011 extended credit limit of Rs.62.78 crores and restructured the existing Term Laon.

(g) Further, all the lenders including the applicant entered into a Master Restructuring Arrangement dated 18.3.2011 and revised the payment schedule. For the purpose of restructuring the lenders had appointed the 5th defendant a lead banker and a Trust and Retention Agreement dated 18.3.2011 was entered into among the applicant , the 1st defendant and defendants 5 to 9. In terms of the restructuring package on 31.10.2011 the 1st defendant mortgaged immovable property more fully described in Item Nos. 1 and 2 of the Schedule ‘B’ property.

(h) The appliciant renewed the Working Capital Credit Limits on 19.06.2012 to a limit of Rs.33.92 crores and on 7.2.2012 the 4th defendant executed corporate guarantee.

(i) The applicant vide Credit Arrangement Letter dated 25.03.2013 agreed to provide Working Capital Assistance not exceeding Rs.53.24 crores to the 1st defendant subject to terms and conditions. On 23.5.2013, the 1st defendant entered into Working Capital Consortium Agreement with applicant and other lenders in order to have proper agreement amongst lenders, on which day an Amended & First Supplementary Trust and Retention Account Agreement was entered upon. The 4th defendant executed a Supplementary Agreement for pledge of shares on 22.7.2013.

(j) Certain terms of Credit Arrangement Letter dated 25.3.2013 were amended and the Working Capital Limit was revised to Rs.42.76 crores as per Arrangement Letter dated 7.8.2013 and 20.9.2013. By Memorandum of Deposit of Title deeds dated 21.8.2013 the 1st defendant confirmed the creation of equitable mortgage over Item No.1 of Schedule ‘B’ property in favour of 5th defendant on behalf of all the lenders to secure the overall limit of Rs.825.52 crores, which was registered as Doc. No.9418 of 2013, SRO Chengalpet. Further, by MODT dated 26.12.2013, the 1st defendant mortgaged its immovable property viz., Item 2 of Schedule ‘B’ in favour of State Bank of India to secure the overall limit.

(k) The facilities were renewed vide Credit Arrangement Letter dated 12.12.2014, 29.04.2016 respectively. The terms of sanction were duly accepted by Defendants 1 to 4. Finally on 1.12.2016 vide Renewal Credit Arrangement Letter the applicant renewed the overall limit of Rs.21.31 crores with a validy of one year. The defendant executed Memorandum of Deposit of Title deeds on 16.3.2018 and re- deposited the original title deeds of all ‘B’ schedule properties.

(l) In view of the default committed by the 1st defendant the facilities were recalled vide letter dated 23.01.2018 and invoked the personal guarantee of defendants 2 and 3 on 6.2.2018 and the Corporate Guarante of 4th defendant on 12.02.2018. The consortium lenders who have pari passu charge as detailed above have also been impleaded as proforma defendants in the application. Thus according to the applicant, the defendants 1 to 4 are jointly liable to pay the outstanding dues with further interest and costs.

4. The defendants 1 to 4 remained absent. The 5th defendant filed its reply statement. It is stated that the 1st defendant has been enjoying various credit facilities for building various types of vessels from the 5th defendant bank since 2003, which were periodically enhanced. The 1st defendant, the defendants 5 to 9 banks formed a Working Capital Consortium with 8 other banks, which sanctioned Rs.1885.27 crores and entered into consortium arrangement and advanced various credit facilities. The 1st defendant through its Chief Financial Officer executed various documents in favour of SBI Consortium on 20.07.2009. The other banks entered into inter-se agreement dated 20.7.2009 recognizing the 5th defendant as Lead Bank. The 1st defendant executed deed of hypothecation dated 23.5.2013 in favouor of defendant banks hypothecating the movables described in Schedule ‘A’ and ‘B’ in favouor of the consortium. At the request of the 1st defendant the defendant banks formed a Working Capital Consortium with 9 banks, which sanctioned Working Capital Loan of Rs.540.43 crores and tem loan outstanding as on 30.11.2014 was of Rs.179.83 crores aggregating to Rs.710.26 crores. The 1st defendant company executed Supplementary Working Capital Consortium Agreement dated 6.1.2015. As per the agreement executed by the borrower the properties contained in Schedule ‘A’ and ‘B’ are hypothecated in favour of defendant banks including current assets of the borrower. On 6.6.2017 the 1st defendant requested the 5th defendant to release an amount of Rs.5.3 lakhs for replacement of mooring rope of the ship and on 17.5.2018 the 1st defendant requested the 5th defendant to give consent for selling the tug. The 1st defendant created mortgaged and extended the mortgages in respect of B Schedule properties on various dates and executed Registered Memorandum of Deposit of Title deeds on 21.8.2013, 26.12.2013, 21.03.2018 and 16.03.2018 and defendants 5 to 9 along with applicant bank have paripassu charge in respect of the said properties. The 1st defendant company was sufficiently funded by defendant banks 5 to 9, yet it failed to perform the projected results. The defendants 1 to 4 acknowledged the debts by executing revival letters on 24.11.2017. Since the 1st defendant defaulted in repayments the accounts were classified as NPA by defendants 5 to 9 on 28.10.2017, 30.6.2017, 30.9.2016, 29.9.2017 and 30.8.2017 respectively. The SBI Consortium sent a legal notie on 24.7.2018 to the 1st defendant, its Directors and its guarantors but of no avail. Thus the 1st defendant is liable to pay a sum of Rs.558,56,47,594.56 crores. Hence the defendants 5 to 9 were constrained to file OA No.634 of 2018 before this tribunal. The 1st defendant company is due to defendants to amounting to Rs.337,81,86,223.28p, 106,83,30,891.91p, 48,45,39,746/-, 26,81,78,685.98p and Rs.38,64,12,047.29p respectively and the 1st charge over the properties vests with SBI Consortium. This defendant is having paripassu charge in respect of the properties mentioned in the schedule to the application.

5. The applicant bank filed proof affidavit along with 56 documents and got them marked in evidence as Exhibits A-1 to A-56.

6. The defendants 1 to 4 remained absent and did not choose to file any reply statement. The 5th defendant filed its reply statement but did not choose to file its Counter Proof Affidavit. Even otherwise the 5th defendant is not disputing the averments as made by the Applicant in the TA.

7. During the pendency of the TA, the applicant bank filed a memo stating therin that the a petition was filed before NCLT, Chennai by an Operational Creditor, CIRP proceedings was commenced against the 1st defendant company on 25.9.2018 and the Hon’ble NCLT had also appointed Interim Resolution Professional and public announcement was made for submission of claims and the applicant is one of the financial creditors of the 1st defendant and its share is 6.47%. It is stated that pursuant to the expression of interest issued by the Resolution Profesional, one M/s Cochin Shipyard Limited submitted its Resolution Plan and in the 12th Committee of Creditors Meeting held on 26.10.2019, the samd was approved. The NCLT vide its order dated 4.3.2020 ha approved the Resolution Plan submitted by M/s Cochin Shipyard Limited, according to which the applicant was entitled to get a sum of Rs.3,80,00,000/- being 9.74% of the admitted debt and the same was received by the applicant bank on 16.9.2020. Further, the 4th defendant’s company was struck off the records of Registrar of Companies owing to non filing of income tax returns. The applicant is entitled to proceed against the defendants 2 to 4 being personal guarantors and corporate guarantor for the loan availed by the 1st defendant company.

8. The applicant filed an IA No.1510 of 2023 seeking to delete the defendants 6 to 9 from the array of parties as there is no necessity to continue against them in this TA. The said application was allowed by this Tribunal by order dated 26.9.2013 and the applicant filed amended TA on 20.10.2013.

9. Heard, the following issues arise for consideration: -

(i) Whether the Applicant had proved the TA claim?

(ii) What orders are to be passed? Both these issues are decided together.

10. The Applicant evidence remain un-rebutted as the defendants 1 to 4 remained absent and hence proved. The documents produced by the Applicant are found to be admissible and are sufficient to produce TA claim. The 5th defendant filed a reply statement narrating the action of the consortium as a Lead Bank and was with the only prayer that this Tribunal would declare that the 1st defendant along with the 5th defendant as a Lead Bank of the consortium will have pari passu charges over the schedule mentioned properties. Hence the Applicant is to be found entitled for the TA claim. The TA claim is made within limitation and there is no capitalization of penal interest. Since the TA claim is arrived at by calculating interest at agreed rate, which this Tribunal considers as on the higher side, pedente ilite and future interest at 12% simple.

11. In view of the above, the following order is passed: - (a) TA No.620 of 2023 stands allowed.

(b) Applicant is permitted to recover an amount of Rs.38,03,57,750.81p with future and pendente lite interest @ 12% simple per annum from the date of filing of the OA/TA till realization, after giving credit to all the amount recovered and received during the pendency of the TA/TA, from the defendants 2 to 4 jointly, severally and personally against defendants 2 to 4 and also by proceedings against their assets and schedule mentioned properties. It is made clear that the liability of the 1st defendant would be subject to the IBC proceedings before the NCLT, Chennai in CP/738/IB/2018. Further, the 5th will be holding pari-passu charges over the schedule mentioned properties with the applicant.

(c) A Recovery Certificate is to be drawn and issued to the recovery Officer to enable recovery of the as per the above terms.

(d) Applicant is allowed to realize cost of the proceeding for which cost memo is to be filed in 7 days’ time from the date of receipt of the copy of the order.

10. Communicate a copy of the order to the parties concerned in terms of section 19(21)(i) of the RDB Act, read with Rule 6 of DRT (Procedure) Rules, 1993. (Dictated to PS, transcribed by him, corrected, signed and pronounced by me in the Open court, this the 28th day of March, 2024)

Sd/- (T.RAJESH)

PRESIDING OFFICER

DRT-II, CHENNAI