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2012 DIGILAW 3037 (MAD)

A. Manohar Prasad v. Kotak Mahindra Bank Ltd.

2012-07-16

V.RAMASUBRAMANIAN

body2012
Judgment :- 1. This is an Application seeking to set aside the Insolvency Notice issued in I.N. No. 11 of 2009. 2. I have heard Mr. Vineeth Subramani, learned Counsel for the Applicants and Mr. Om Prakash, learned Counsel for the Respondent. 3. The Respondent-Bank filed the Application in I.N. No.11 of 2009, seeking the issue of Insolvency Notice to the Applicants herein in terms of Section 9(2) of the Presidency Towns Insolvency Act, 1909. It is the contention of the Respondent-Bank in the said Application that two companies by name Green Gardens Pvt. Ltd. and Gemini Arts Pvt. Ltd., in which the Applicants herein are the Direction, were enjoying credit facilities with M/s. Ind Bank Housing Limited. As Directors of the borrower companies, the Applicants stood as guarantors for the facilities availed by the companies. Ind Bank Housing Limited filed Civil suits in C.S. Nos. 33 & 52 of 1999 on the file of this Court for recovery of the outstanding dues. Subsequently6, Ind Bank Housing Limited assigned the debts due from the said companies, in favour of the Respondent-Bank, in and by virtue of a Deed of Assignment dated 13.10.2006. Therefore, the Respondent-Bank got substituted as the Plaintiff in those suits and the suits ended in compromise decrees dated 23.6.2007. Ss per the compromise decrees, the borrower companies as well as the Applicants became liable to pay an amount of Rs.29,49,81,355/- & Rs.29,96,00,918/-respectively. But neither the companies nor the Applicants herein paid any amount towards satisfaction of the decree. Therefore, contending that the Applicants have no sufficient means and sources to discharge the decree debt and that therefore, they are liable to declare as insolvents, the Respondent-Bank came up with the Application I.. No.11 of 2009 under Section 9(2) of the Act, seeking the issue of an Insolvency Notice to the Applicants herein. 4. Notice was ordered on 12.3.2009 and Form 14-A was issued on 16.3.2009. It was served on the Applicants on 3.9.2009 and they were supposed to file an Application to set aside the Insolvency Notice within 35 days. 5. However, the Applicants came up with an Application in A. No.399 of 2009 for condoning the delay of 19 days in filing the set aside Petition. It was allowed by an order dated 30.11.2009. It was served on the Applicants on 3.9.2009 and they were supposed to file an Application to set aside the Insolvency Notice within 35 days. 5. However, the Applicants came up with an Application in A. No.399 of 2009 for condoning the delay of 19 days in filing the set aside Petition. It was allowed by an order dated 30.11.2009. Thereafter, the Applicants came up with the above Application, seeking to set aside the Insolvency Notice, on the following grounds: i. that the Applicants had already tendered payment to the Respondent-Bank and that therefore, they do not owe any money to the Bank; ii. that Ind Bank Housing Limited, which was the original Plaintiff in both the suits, was not a Bank at all and that in the decrees passed in both the Suits, a record of tender of full payment and receipt of the same by the Bank has been made; iii. that the Respondent-Bankhas not produced any proof to show the assignment of debt by Ind Bank Housing Limited; iv. that even the consent decrees passed in the suits record the handing over of postdated cheques for the entire decree amount and hence full satisfaction had already taken place; and v. that in any case, the decrees have become unenforceable in view of the challenge made to the validity of the same before Debts Recovery Tribunal-I, Chennai and the liberty given by the Division bench of this Court to agitate those issues before the Tribunal. 6. In view of the contentions raised by the Applicants, it is necessary to have look at the decrees passed by consent, on 28.3.2007 in C.S. Nos.33 & 52 of 1999. Since the decrees incorporate the “consent terms” entered into between the Applicants herein and the Respondent-Bank and also since the consent terms and decrees in both suits are identically worded (though the amounts differ) it is sufficient to record the decree in one Suit, since that would give a clue as to the validity of the contentions raise din this Application. Therefore, the decree passed in C.S.No.33 of 1999 is extracted as follows: “1. Therefore, the decree passed in C.S.No.33 of 1999 is extracted as follows: “1. That an amount of Rs.29,49,81,355/- (Rupees Twenty none crores forty nine lakhs eighty one thousand three hundred and fifty five only) together with further interest at the rate of 20% per annum at quarterly rates from 14th October 2006 till the date of payment is due and payable, jointly and severally, by Defendants 1 to 3 herein to the Plaintiff (hereinafter referred to as the “Amount Due”) in respect of the Financial Facility granted by M/s. Ind bank Housing Limited whose debt (Amount Due) is assigned in favour of Kotak Mahindra Bank Limited vide Assignment Deed dated 13th October 2006, along with entire right title, interest attached to the Amount Due, be and is hereby agreed, declared and confirmed. 2. That M/s. Prasad Properties and Investments Pvt. Ltd., a Company incorporated under the provisions of the Companies Act, 1956 and having its office No.3, Sarangapandi Street, T. Nagar, Chennai-600 017 (hereinafter called ‘the Mortgagor) have mortgaged one of the property (Brief Description of the Property is attached herewith and marked as Exhibit A) for securing due repayment of the Amount Due and with these present the Mortgagor hereby guarantees the due repayment of the Amount Due and shall be considered as jointly and severally liable alongwith the Defendants 1 to 3 herein for repayment of the Amount Due. 3. That the Defendants 1 to 3 herein and/or the Mortgagor by and are hereby required to pay to the Plaintiff herein, the amount due being the said sum of Rs.29,49,81,355/-(Rupees Twenty nine crores forty nine lakhs eighty one thousand three hundred and fifty five only) together with further interest thereon at the rate of 20% per annum at quarterly rests from 14th October, 2006 till the date of payment to the Plaintiff in respect of the Loan. 4. That the Amount Due are secured by a valid, enforceable and subsisting mortgage of the immovable properties as set out in ‘Exhibit-A’ annexed hereto without any further deed or writing to that effect. 5. That as agreed and admitted by the Defendants an amount due is guaranteed in favour of the Plaintiffs by Defendants 1 to 3. 6. 4. That the Amount Due are secured by a valid, enforceable and subsisting mortgage of the immovable properties as set out in ‘Exhibit-A’ annexed hereto without any further deed or writing to that effect. 5. That as agreed and admitted by the Defendants an amount due is guaranteed in favour of the Plaintiffs by Defendants 1 to 3. 6. That till the entire amount Due and paid by the Defendants and/or the Mortgagor to the Plaintiffs, the securities forming subject matter of this present consent terms and the Plaintiff stand charged in favour of the Plaintiff’ and the Defendants and/or the Mortgagor and/or their employees/agents shall not deal with the securities. 7. That the Plaintiff herein, shall not execute these decree to be issued pursuant to this consent Term in respect of Amount due shall stand marked as satisfied if the Defendants and/or the Mortgage pay to the Plaintiff a sum of Rs.11,00,00,000/-(Rupees Eleven Crores only) (hereinafter referred to as “the settlement Amount) strictly in the manner and on the dates as mentioned below: (a) Entire settlement Amount be paid on or before 90 days starting from 14th October 2006. (b) If all or any of the Defendants and/or the Mortgagor failed in providing settlement Amount within aforesaid 90 days then grace period may be provided by the Plaintiff for further period of 180 days starting from the expiry of 90 days. 8. That the Defendants herein, and/or the Mortgagor shall be considered to have committed default if the Defendants have not paid as per the Table above even after expiry of 270 days from 14th October 2006. 9. That the First Defendant herein, have handed over post dated cheques to the Plaintiff herein, in respect of the entire settlement Amount and the Plaintiff herein acknowledges receipt of the same. 10. That it is agreed and conformed the any of the following events shall constitute events of defaults: a. Defendants 1 to 3 and/or the Mortgagor fail or are otherwise unable to make payment to the Plaintiff of any of the instalments of the settlement as specified in clause 8 for any of the reasons whatsoever including force majeure; b. Defendants 1 to 3 and/or Mortgagor commit breach of or otherwise unable to comply with any of the terms, conditions, convenants, obligations undertaking herein for any reason whatsoever. c. Any proceedings, insolvency liquidation is filed by any person against any of the Defendants herein, and/or the Mortgagor. d. The Defendants herein and/or the Mortgagor while are incorporated body has pass any resolution or submit for themselves to Winding up liquidation/ Insolvency proceeding. (11) That on the occurrence of an event of default as mentioned above then in that event._ a) The decree as issued by Court pursuant to this consent term shall forthwith become executable and the Plaintiff shall be entitled to execute the same. b) The entire Amount Due together with further interest thereon at the rate of 20% per annum at quarterly rests from 14th October 2006 till the date of payment to the Plaintiff in respect of the Loan shall forthwith become due and payable by the Defendants 1 to 3, and/or the Mortgagor to the Plaintiff and the Defendants 1 to 3 herein and/or the Mortgagor do pay to the Plaintiff the entire Amount Due, less the amounts, if any, paid after the date hereof and the Plaintiff shall be entitled to recover the same from the Defendants 1 to 3 herein, and/or the Mortgagor. That the Court Receiver or any other fit and proper person on the panel of the Hon’ble Court be appointed as a Court Receiver, without any further action of this Hon’ble Court, in respect of the properties mortgaged to secure the amount due with all powers under Order XL of the Code of Civil Procedure and such Receiver shall forthwith take possession of the properties mortgaged to secure the Amount Due hereto and sell the same by public auction and/or private treaty and the net sale proceeds would be paid over to the Plaintiff herein, towards satisfaction of their dues. 13.) That the Plaintiff herein, and/or the Reserve Bank of India (RBI) shall have an unqualified right to disclose or publish the details of the default and the name of Defendants 1 to 3 and/or the Mortgagor and also the Directors of Defendants and/or the Mortgagor which are incorporate das defaulters in such manner and through such medium as the Plaintiff or RBI in their absolute discretion may think fit. 14.) That as agreed by the parties hereto, in the event of Defendants 1 to 3 and/or the Mortgagor make payment as per Clause (8) supra this decree issued issued by the Hon’ble Court pursuant to this Consent Term shall stand satisfied. 15.) That all other terms and conditions stipulated by the Plaintiff herein, for its financial assistance, not contradicting or vitiating the terms mentioned hereinabove shall continue to apply mutatis mutandis. 16.) That the existing loan documents/securities for the loan granted by the Plaintiff herein, shall continue to remain in full force until all the dues are paid in full in accordance with these consent terms. 17.) That the First Defendant herein, and/or the Mortgagor shall not declare any divided on its Share Capital, so long as there is any amount due and payable in respect of the settlement amount or the Amount Due as the case any shall be, it outstanding and payable to the Plaintiff herein, without prior written approval of the Plaintiff herein. 18.) That until all the payments due and payable by the Defendants to the Plaintiff herein are made, the Defendants shall not. (a) transfer, assign, part with possession or otherwise dispose off in any manner or purport to transfer, assign, part with possession or otherwise dispose off the properties more fully set out in the exhibit ‘A’ annexed herein or in Plaint. (b) not make any alterations, additions or improvement to the properties more fully described in exhibit ‘A’ annexed herein or in plaint or change the condition thereof without prior written consent of the Plaintiff. 19.) That there shall be no order as to costs of this Suit.” 7. A careful perusal of the decree passed on “consent terms” would show that primarily a liability to the extent of the whole amount with future interest at quarterly rests, was fixed under Clause 1 of the decrees. Howe3ver, under Clause 7 of the decree, the Bank agreed not to execute the decree, but to record full satisfaction, if the Applicants and the Company paid a particular amount, on or before 14.10.2006. Under sub-clause (b) of Clause 7 of the decree, different amounts were indicated as final settlement amounts, acceptable to the Bank, if payment was made before the dates indicated against each, in the tabular column given under Clause 7(b) of the decree. Under sub-clause (b) of Clause 7 of the decree, different amounts were indicated as final settlement amounts, acceptable to the Bank, if payment was made before the dates indicated against each, in the tabular column given under Clause 7(b) of the decree. But Clause 8 of the decree made it clear that the judgment-debtors would be deemed to have committed default, if the amounts indicated in the table under Clause 7(b). were not paid even after the expiry of 270 days from 14.10.2006. 8. It is pertinent to note that the companies, which were the borrowers, also handed over post dated cheques to the Bank and the receipt of the same was acknowledged in Clause 9 of the decree. Clause 10 of the decree listed out the events which shall constitute the events of default. Non-payment of the instalments, as indicated in Clause 7, was included as one of the events of default under Clause 10(a). Clause 13 empowered the Respondents-Bank to have an unqualified right to disclose or publish the details of the default and the names of the defaulters through any medium. 9. Two things which are of importance, require to be noted. They are (i) that the Ind Bank Housing Ltd., which was the lender and which was the Plaintiff in both Suits, assigned the debts in favour of the Respondent-Bank on 13.10.2006, and (ii) that the “consent terms” were entered into between the borrower companies and the Applicants herein on the one hand and the Respondent-Bank, on the other hand, on 23.10.2006. This is why, the date 14.10.2006 was chosen as the starting point for counting the date within which the final settlement amount indicated in Clause 7 of the decree was required to be paid. But the “consent terms” had to be filed along with necessary Applications viz., A. Nos.2453 & 2454 of 2007 by the Respondent-Bank for substituting it in the name of the original Plaintiff viz., Ind Bank Housing Limited. Those Applications for substitution were ordered on 21.3.2007, after which the Court passed judgments and decrees on “consent terms”, on 26.3.2007. 10. The above dates are important, for testing the validity of the defence now raised by the Applicants herein. Therefore, I should put the sequence of events chronologically in a tabular form, for better appreciation. It goes as follows: 11. 10. The above dates are important, for testing the validity of the defence now raised by the Applicants herein. Therefore, I should put the sequence of events chronologically in a tabular form, for better appreciation. It goes as follows: 11. It must be remembered that under Clause 8 of the decrees, the full and final settlement amount was fixed at Rs.12,04,00,197/- in C.S. No.33 of 1999 and as Rs.9,93,83,438/- in C.S. No.52 of 1999, if payment was made before the expiry of 270 days from 14.10.2006. This 270 days period expired on 11.7.2007. 12. It must also be seen that Clause 7(a) and the table under Clause 7(b) of the decrees prescribed different amounts towards full and final settlement against different dates. In have already extracted the decree in C.S.No.33 of 1999 in an earlier paragraph. But Clause 9 of the decree, in both the Suits, did not indicate the amount for which post dated cheques were issued by the borrower Company to the Respondent-Bank. There is no pleading by the Applicants in the present Application, to the effect that the post dated cheques were for the amount payable within 90 days of 14.10.2006 or within 120 days of 14.10.2006 or within 150 days of 14.10.2006 or within 180 days of 14.10.2006 or within 210 days of 14.10.2006 or within 270 days of 14.102006. It is not the case of the Applicants herein that they handed over post dated cheques to cover all the above contingencies. The fact remains that these cheques are not so far encashed. It is not the case of the Applicants that the Bank has, in fact, encashed all the cheques. The Bank could not have encashed the cheques without the knowledge of the Applicants herein. 13. In view of the fact that even within 270 days of 14.10.2006 which fell on 11.7.2007, the payments due under the decree were not made, the Bank appears to have initiated proceedings under the SARFAESI Act, 2002, by issuing a notice dated 4.1.2008. Challenging the initiation of proceedings under Section 13(4) of the SARFAESI Act, 2002, the Applicants moved the Debts Recovery Tribunal-I, Chennai. On 9.1.2008, the Debts Recovery Tribunal-I, Chennai, granted an interim stay of further proceedings subject to the condition that the Applicants deposit a sum of Rs.10 crores, within 6 weeks. It is not known whether this order was complied with or not. 14. On 9.1.2008, the Debts Recovery Tribunal-I, Chennai, granted an interim stay of further proceedings subject to the condition that the Applicants deposit a sum of Rs.10 crores, within 6 weeks. It is not known whether this order was complied with or not. 14. In the meantime, the Respondent-Bank notified the borrower companies and the Applicants as willful defaulters, in their website. Therefore, the judgment-debtor Company, Gemini Arts Pvt. Ltd. (judgment-debtor in C.S.No.52 of 1999) moved a Writ Petition in W.P. No was furnished to.24292 of 2008, seeking a direction for removing their name from the list of defaulters. Similarly, the judgment-debtor Company in the other suit also moved a Writ Petition in W.P. No.24293 of 2008. 15. Pending the Writ Petitions, the borrower companies sought interim orders of injunction restraining the Respondents from taking any coercive action. It appears that an interim order was earlier granted. Subsequently, when the Petitions for interim injunction in M.P. Nos.1 & 1 of 2008 in W.P. Nos.24292 & 24293 of 2008 came up for hearing on 23.3.2009, this Court passed the following order: “The learned Counsel appearing for the petitioners is directed to produce the copies of the post dated cheques or the numbers of the post dated cheques is directed by this Court on the earlier occasion or at least to show that when the cheques have been forwarded to the First Respondent. At the same time Mr. Vijaya Narayan, the learned Senior Counsel appearing for First Respondent is directed to show some proof that show cause notice has been issued to the petitioners before formally declaring the Petitioners as willful defaulter.” 16. In pursuance of the above said order, the First Applicant viz., Mr. A. Manohar Prasad, filed an Affidavit in common in all the Writ Petitions on 3.4.2009, indicating the cheque numbers, date, amount and the name of the drawee banks. Those details are as follows: “a. C.S. No.225 of 1999: Cheque No.638203 dated 13th July 2007 for Rs.11,04,26,042/-drawn on ABN Amro Bank, Chennai from account of Ravishankar Industries Pvt. Ltd. b. C.S. No.52 of 1999: Cheque No.052265 dated 13th July 2007 for Rs.9,99,83,438/-drawn on ICICI Bank Ltd., Chennai from account of A. Ravishankar Prasad. c. C.S. No.33 of 1999: Cheque No.140869 dated 13th July 2007 for Rs.12,04,00,197/-drawn on Andhra Bank, Chennai from account of A. Ravishankar Prasad. c. C.S. No.33 of 1999: Cheque No.140869 dated 13th July 2007 for Rs.12,04,00,197/-drawn on Andhra Bank, Chennai from account of A. Ravishankar Prasad. d. C.S. No.1023 of 1998: Cheque No.375996 dated 13th July 2007 for Rs.9,99,83,438/-drawn on ICICI Bank, Chennai from account of A. Manohar Prasad.” 17. As pointed out above, the above information relating to the post dated cheques allegedly issued by the Applicants, was furnished to this very Court through in a group of writ Petitions W.P. Nos.24292 to 24295 of 2008 by the first Applicant herein viz., Mr. A. Manohar Prasad. Therefore, I can take it that the said information cannot be disputed at least by the Applicants herein. 18. Based on the information so furnished by the First Applicant herein in an Affidavit sworn to by him before this Court, if we look at the relevant parts of the decrees in both the suits, it could be found out easily that the period of 270 days from 14.10.2006 expired on 11.7.2007. The cheques themselves, even as per the Affidavit of the First Applicant, were dated 13.7.2007, which was beyond the period of 270 days. Therefore, as per their own admission, the Applicants committed default in terms of Clause 8 of the decrees in both the Suits. 19. In the meantime, the Respondent-Bank was filed O.A. Nos.46 & 47 of 2008 on the file of the Debts Recovery Tribunal-I, Chennai, for executing the consent decrees passed in both the Suits. Pending the Original Applications, the Bank moved certain Applications for interim orders. They are (i) I.A. Nos.147, 149 & 150 of 2008 in O.A. No.46 of 2008, and (ii) i.A.Nos.145 & 146 of 2008 in O.A. No. 47 of 2008. Broadly the prayers in these Interlocutory Applications are (i) for injunction restraining the companies from transferring or alienating or dealing with the schedule mentioned properties (ii) for a direction to the judgment-debtors to disclose their assets and to file copies of annual returns (iii) for restraining the Applicants from leaving the country without obtaining prior permission, and (iv) for an order of attachment. 20. By a common o9rder dated 3.7.2009, the Tribunal allowed all the Applications. 21. Challenging the interim orders passed by the Debts Recovery Tribunal in the Applications, the borrower companies came up with a batch of Writ Petitions in W.P.Nos.13126 & 13138 of 2009 before this Court. 20. By a common o9rder dated 3.7.2009, the Tribunal allowed all the Applications. 21. Challenging the interim orders passed by the Debts Recovery Tribunal in the Applications, the borrower companies came up with a batch of Writ Petitions in W.P.Nos.13126 & 13138 of 2009 before this Court. The main contention raised in the Writ Petitions was that the Debts Recovery Tribunal had not jurisdiction even to entertain the original Applications, in view of Section 31-A of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The borrower companies contended before this Court in those Writ Petitions that when the issue of maintainability had been raised, the Debts Recovery Tribunal could not have passed any interim orders. 22. Those Writ Petitions were disposed of, by a Division Bench of this Court, by an order dated 30.7.2009. Paragraphs 6 to 8 of the said order, reads as follows: “6. Having heard Senior Counsels for both the parties, we do not think it would be appropriate for us to consider the main question raised by the present petitioner before the Debts Recovery inasmuch as the question of jurisdiction can always be raised before whom the matter is pending. Moreover, in normal circumstances, any order passed by the Debts Recovery Tribunal would be appealable and therefore, there would be scope for further hearing before the Appellate Authority. 7.) On the other hand, since, a question of jurisdiction of the Tribunal was raised, it was required to delve into that aspect. In these circumstances, we remit the matter to the Debts Recovery Tribunal for considering all the questions raised before the Debts Recovery Tribunal, afresh. The Debts Recovery Tribunal is first required to consider the question relating to the jurisdiction as a preliminary issue and thereafter other questions raised. 8.) However, in order to protect the property and to avoid any further complications, we make it clear that the directions of the Debts Recovery Tribunal contained in paragraph No.9 shall continue to remain in operation till the matter is decided one way or the other by the Debts Recovery Tribunal. It is made clear that this order should not be construed as expressing any opinion on the merits of the contentions raised by the rival parties and the matter is required to be decided by the Debts Recovery Tribunal in accordance with law. It is made clear that this order should not be construed as expressing any opinion on the merits of the contentions raised by the rival parties and the matter is required to be decided by the Debts Recovery Tribunal in accordance with law. The writ Petitions are disposed of with the above observations. No costs. Consequently, Miscellaneous Petition are closed.” 23. After the Writ Petitions were disposed of on 30.7.2009, the Applicants were served with the Insolvency Notice in I.N. NO.11 of 2009 in the first week of September 2009 and thereafter they came up with the above Application for setting aside the Insolvency Notice. Therefore, the contentions raised by the Applicants have to be tested in the backdrop of the above sequence of events. Contention Nos.1 & 4: 24. The first contention of the Applicants is that they had already tendered payment to the Respondent-Bank and that therefore, they do not owe any money. The fourth contention is that the payment made by the judgment-debtors by way of post dated cheques has already been recorded in Clause 9 of the decrees and that after the recording of the full satisfaction of the decrees, there is no question of any act of insolvency arising. 25. Thus, both the contention Nos.1 & 4 revolve around the same aspect viz., the tendering of payment and the issue of post dated cheques. Therefore, these two contentions are taken up together for convenience. 26. From the narration of facts given above and the decree extracted by me in the previous paragraph, it would be clear that the judgment-debtors would be deemed to have fully satisfied the decrees. If they had made payment of the amount indicate din column No.6 of the table under Clause 7(b) of the decree, before the expiry of 270 days from 14.10.2006. I have also indicated that the period of 270 days expired on 11.7.2007. 27. As contended by the learned Counsel for the Applicants, the fact that post dated cheques were handed over, is also recorded in Clause 9 of the decrees. But neither in the “consent terms” signed on 23.10.2006 nor in the consent decrees, there is any mention of (i) the cheque numbers (ii) the dates of issue of the cheques (iii) the amounts indicated in the cheques (iv) the banks on which the cheques were drawn, and (v) the particulars of the drawers of the cheques. But neither in the “consent terms” signed on 23.10.2006 nor in the consent decrees, there is any mention of (i) the cheque numbers (ii) the dates of issue of the cheques (iii) the amounts indicated in the cheques (iv) the banks on which the cheques were drawn, and (v) the particulars of the drawers of the cheques. Even in the present Application for setting aside the Insolvency Notice, the Applicants have not been given any particulars of the post dated cheques, covered by Clause 9 of the decrees. 28. However, the details of the cheques issued by the Applicants, find a place in an additional Affidavit filed by the First Applicant herein viz., Mr. A. Manohar Prasad in the batch of Writ Petitions W.P.Nos.24292 to 24295 of 2008, in pursuance of an interim order passed by this Court on 23.3.2009. I have already extracted the details of the cheques given by the First Applicant herein in the said Affidavit before this Court. 29. The date mentioned in those post dated cheques, even according to the First Applicant, is 13.7.2007. It was beyond the period of 270 days from 14.10.2006, which was prescribed under the decrees. Therefore, the Applicants are deemed to have committed default in terms of Clause 8 of the decrees. In such circumstances, the contention that there was full satisfaction of the decrees is completely false and frivolous. 30. As per Clause 1 of the decree, the decree amount is much more than what was agreed as final settlement under Clause 7. Once a default is committed in terms of Clause 8, the entire decree amount become payable. Therefore, the cheques which bear a date beyond the date of expiry of the period stipulate din Clause 8 of the decrees, are of no avail. 31. Interestingly, the Applicants have not even come up with a case that the cheques issued on 13.7.2007 had already been encashed. I can understand that the Applicants have something to argue at least if they take a stand that the cheques issue don 13.7.2007 had been encashed. But without even demonstrating that those cheques are already encashed, the Applicants have the audacity to contend that the decrees stand discharged. 32. I can understand that the Applicants have something to argue at least if they take a stand that the cheques issue don 13.7.2007 had been encashed. But without even demonstrating that those cheques are already encashed, the Applicants have the audacity to contend that the decrees stand discharged. 32. Even assuming for a moment that the cheques dated 13.7.2007 had been encashed, the payments realized under those cheques, after the default had occurred in terms of Clause 8 of the decrees could be construed only as part payments. Hence, I cannot accept that the decrees stand fully satisfied. 33. The first contention that the Applicants have already tendered payment and that therefore, no act of insolvency can be said to have been committed, has no legal basis. Section 9(2) of the Presidency Towns Insolvency Act, 1909, makes it clear that a debtor commits an act of insolvency, if he fails to comply with a notice served on him by the creditor who had obtained a decree for payment of money against him. Section 9(2) of the Act, reads as follows: “(2) Without prejudice to the provision of sub-section (1), a debtor commits an act of insolvency if a creditor, who has obtained a decree or order against him for payment of money (being a decree or order which has become final and the execution whereof has not been stayed), has served, on him a notice (hereafter in this section referred to as the insolvency notice) as provided in sub-section (3) and the debtor does not comply with that notice within the period specified therein. Provided that where a debtor makes an Application under sub-section (5) for setting aside an insolvency notice: a. In a case where such Application is allowed by the Court he shall not be deemed to have committed an act of insolvency under this sub-section; and b. In a case where such Application is rejected by the Court, he shall be deemed to have committed an act of insolvency under this sub-section on the date of rejection of the Application or the expiry of the period specified in the insolvency notice for its compliance, whichever is later: Provided further that no insolvency notice shall be served on a debtor reading, whether permanently or temporarily, outside India, unless the creditor obtains the leave of the Court there for.” 34. An Insolvency Notice served on a debtor in terms of Section 9(2) can be set aside only on the grounds indicated in sub-section (5) of Section 9, sub-section (5) of Section, reads as follows: “(5) Any person served with an insolvency notice may, within the period specified therein for its compliance, apply to the Court to set aside the Insolvency Notice on any of the following grounds, namely: a. that he has a Counter-claim or set off against the creditor which is equal to or is in excess of the amount due under the decree or order and which he could not, under any law for the time being in force, prefer in the Suit or proceeding in which the decree or order was passed; b. that he is entitled to have the decree or order set aside under any law providing for the relief of indebtedness and that: i. he has made an Application before he Competent Authority under such law for the setting aside of the decree or order; or ii. the time allowed for the making of such Application has not expired; c. that the decree or order is not executable under the provisions of any law referred to in Clause (b) on the date of the Application. Explanation : For the purposes of this Section, the act of an agent may be the act of the principal, even though the agent has no specific authority to commit the act.” 35. The case of the Applicants does not fall under Clause (a) of sub-section (5) of Section 9, since they do not claim that they have a Counter Claim or set off against the Respondent-Bank. The case of the Applicants would not also fall under Clause (b) of sub-section (5), since the decrees were passed on “consent terms”. The Applicants do not claim that the decrees were fraudulent. They have not filed any Suit or Application to set aside the decrees. On the contrary, the Applicants claim that payments have been tendered in accordance with the decrees. Therefore, the case will not come under Clause (b) of sub-section (5) of Section 9 of the Act. 36. The Applicants do not claim that the decrees were fraudulent. They have not filed any Suit or Application to set aside the decrees. On the contrary, the Applicants claim that payments have been tendered in accordance with the decrees. Therefore, the case will not come under Clause (b) of sub-section (5) of Section 9 of the Act. 36. The case of the Applicants would not also fall under Clause (c), since the pre-requirement to take shelter under Clause (c) of sub-section (5), is that the decree should be in executable under the provisions of any law referred to in Clause (b). At the most, the case of the Applicants is that the Debts Recovery Tribunal cannot execute the decrees in view of Section 31-A of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. This contention does not fall under any provisions of law referred to in Clause (b) of sub-section (5), so as to make the decrees in executable in terms of Clause (c). 37. Once it is found that the Applicants cannot successfully raise anyone of the 3 grounds mentioned in sub-section (5) of Section 9, it follows as a corollary that the Insolvency Notice cannot be set aside on any valid ground. Therefore, the above Application deserves to be dismissed. Contention Nos.2 & 3: 38. The second and third contentions are that Ind Bank Housing Limited was not a Bank at all and that there was no proof of assignment of debt by them in favour of the Respondent-Bank. But it is too late in the day for the Applicants to raise these contentions. As pointed out earlier, the Applicants and the borrower companies entered into “consent terms” on 23.10.2006 even when Ind Bank Housing Limited was shown as the Plaintiff in both the suits. It was only after the Applicants and the borrower companies entered into “consent terms” with the Respondent-Bank that the Respondent-Bank filed Applications in A. Nos.2453 & 2454 of 2007 for substituting them in the place of the original Plaintiff Ind Bank Housing Limited. The Applications were allowed on 21.3.2007. It was only thereafter that the Court passed decrees on 26.3.2007 in accordance with the “consent terms”. Therefore, the Applicants ought to have objected to the passing of decrees even at that time, if Ind Bank Housing was not a bank and if there was no proper assignment. The Applications were allowed on 21.3.2007. It was only thereafter that the Court passed decrees on 26.3.2007 in accordance with the “consent terms”. Therefore, the Applicants ought to have objected to the passing of decrees even at that time, if Ind Bank Housing was not a bank and if there was no proper assignment. They cannot now question the assignment or even the decrees in favour of the Respondent-Bank. Contention No.5: 39. The fifth contention is that the decrees have become unenforceable in view of the challenge made to the same before the Debts Recovery Tribunal-1, Chennai. But this is a frivolous contention. The objection that the Applicants have raised before the Debts Recovery Tribunal is to the executability of the decrees by the Recovery Tribunal in view of the Section 31-A of the Act. This is seen from paragraph-3 of the judgment of the Division Bench dated 30.7.2009 passed in W.P Nos.131126 & 13138 of 2009. 40. In other words, the Applicants do not challenge the executability of the decrees as such. They challenge only the jurisdiction of the Debts Recovery Tribunal to execute the decrees. This is why Section 31-A is sought to be invoked. Even if the Debts Recovery Tribunal holds that it cannot execute the decrees, the Respondent-Bank can always execute the decrees in the Court which passed the decrees viz., this Court. The decrees were only of the year 2007. Even the period of limitation has not expired. Therefore, the main objection to the Forum here the decrees are sought to be executed, cannot make the decree holder ineligible to come up with an Insolvency Notice. 41. As pointed out in a previous paragraph, under Section 9(5)(c) of the Presidency Towns Insolvency Act, 1909, the objection regarding inexecutability of the decree should be with reference to the provisions of law referred to in Clause (b) of sub-section (5) of Section 9. The objection raised by the Applicants to the jurisdiction of the Debts Recover5y Tribunal does not fall under this category. Therefore, the fifth contention is also bound to fail. 42. The objection raised by the Applicants to the jurisdiction of the Debts Recover5y Tribunal does not fall under this category. Therefore, the fifth contention is also bound to fail. 42. The learned Counsel for the Applicants relied upon the decision of the Supreme Court in Sarat Chandra Roy v. Harak Chand Damani, AIR 1972 SC 2127 , in support of his contention that non-payment of a decree promptly by itself, cannot be a ground to adjudicate a person insolvent and that Insolvency proceedings cannot be an alternative to Execution proceedings. The principle of law laid down in the said decision is a well settled proposition and there can be no doubt about the same. But the case of the Applicants do not fall under the category of a mere innocent failure to pay a decree debt promptly. The sequence of events narrated above would show that it is not a case of mere impromptitude in payment of a decree. But it is a case of deliberate attempt to avoid payment. A careful perusal of the Affidavit in support of the Application would show that the Applicants take all kinds of contradictory stand. On the one hand, they claim that the decree, debt stands satisfied. On the other hand, they say that payments had been tendered (not specifically pleaded as paid). In another portion, the Petitioners say that the creditor was no Bank at all and that there was no assignment at all in favour of the Respondent. In another place, they go to the extent of saying that the decrees are in executable. Therefore, the Applicants cannot take shelter under a normal principle of law that applies to innocent judgment-debtors, who are unable to pay the decree debt promptly. 43. The next decision relied upon by the learned Counsel for the Applicants is the one in T.T.V. Dhinkaran v. Dy. Director, Enforcement Directorate, AIR 2003 Mad. 59 . The said decision has no Application to the case on hand. That is a case where an Insolvency Notice was issued by the Deputy Director of Enforcement, to a person on whom a penalty was imposed under the Foreign Exchange Management Act, for certain violations of the provisions of the Act. The penalty imposed could never be construed to be a debt and that too a decree debt and hence this Court set aside the Insolvency Notice. The penalty imposed could never be construed to be a debt and that too a decree debt and hence this Court set aside the Insolvency Notice. While doing so, this Court relied upon the observations of the Supreme Court in Yenumala Malladora v. Seetharathnam, AIR 1966 SC 918 ; and Sarat Chandra v. Harak Chand, AIR 1972 SC 1217. Therefore, the said decision is of no avail to the Applicants. 44. The third decision relied upon by the Applicants is that of a Division Bench of this Court in S. Sivagamiammal v. M/s. Sagar Constructions Ltd., AIR 2009 Mad. 19 (DB). That was a case where the decree was for a declaration that a deed dated 10.7.2000 executed by the First Defendant in the Suit was null and void and inoperative and for a consequential permanent injunction. Therefore, this Court held that it was not a decree for payment of money. Similarly, the next decision in Paramjeet Sngh Patheja v. ICDS Ltd., AIR 2007 SC 168 , is also of no avail to the Applicants, since the Supreme Court was concerned in that case with an Arbitration Award. 45. Thus, I find that the Applicants have not satisfied any of the grounds available under Section 9(5) of the Act to set aside the Insolvency Notice. Consequently, their Application for setting aside the Insolvency Notice is liable to be dismissed. Accordingly, the Application is dismissed.