Research › Search › Judgment

Gujarat High Court · body

2025 DIGILAW 93 (GUJ)

Prime Cottex Pvt. Ltd. v. Bank of Baroda

2025-02-10

PRANAV TRIVEDI, SUNITA AGARWAL

body2025
ORDER : SUNITA AGARWAL, C.J. 1. Heard learned counsel for the appellant and perused the record. 2. The present appeal filed under Section 13 of the Commercial Courts Act, 2015 is directed against the judgment and order dated 10.05.2024 passed in Commercial Civil Suit No. 10 of 2018, rejecting the application under Order XXXIX Rules 1 and 2 CPC seeking for injunction restraining the defendants, its servants, its workers, representatives, etc. from enforcing the corporate guarantee on the premise that the same has already been discharged against the plaintiff. 3. The explanation of the delay of 199 days in filing the instant appeal is to the effect that pursuant to the judgment and order dated 10.05.2024, the authorised representative of the appellant in suit, namely the ex-director of the appellant was contacted by the advocate appearing for the appellant on or around 15.05.2024. The Ex-Director who was pursuing the matter between 30.09.2015 to 01.05.2017 had informed the advocate that he was a share holder and was not involved in the day to day affairs of the company and further that he had sold his shareholding about a year back though in effect, his name was appearing in the official record. He also conveyed that he would inform the concerned person to get in touch with the learned advocate regarding the said development and hence, no further steps could be taken for challenging the judgment and order dated 10.05.2024. 4. In a cursory manner, it is stated in the application seeking for condonation of delay that Mr. Hitesh Selani, Ex-Director of the company inadvertently forgot to inform the Directors of the company and on 22.12.2024, one of the Directors of the company who was present at the property of the appellant in Jalna, Maharashtra, received a notice from the recovery officer that a proceeding to undertake the valuation of the property of the appellant would be undertaken and that police protection was required to be given for carrying out valuation peacefully. It was, thus, transpired that the order dated 10.05.2024 passed by the Commercial Court has not been challenged. The Director then requested the learned advocate to take immediate steps to challenge the order before the appropriate forum and advocate informed that he was travelling from 21.12.2024 to 01.01.2025, which has further delayed the preparation of the matter. It was, thus, transpired that the order dated 10.05.2024 passed by the Commercial Court has not been challenged. The Director then requested the learned advocate to take immediate steps to challenge the order before the appropriate forum and advocate informed that he was travelling from 21.12.2024 to 01.01.2025, which has further delayed the preparation of the matter. The certified copy was applied by the learned advocate on 07.01.2025, which was delivered on 10.01.2025 and thereafter, the matter was prepared and presented on 24.01.2025. 5. Taking note of the averments made in the application seeking condonation of delay accompanied with the affidavit of the authorised representative of the applicant, suffice it to record that there is complete silence in the application about the fact as to who was pursuing the matter after 01.05.2017, inasmuch as, as per own case of the applicant, the Ex-Director Mr. Hitesh Selani was authorised representative in the suit between 30.09.2015 to 01.05.2017. The explanation that the Ex-Director did not inform and the current Director did not have knowledge is vague explanation, which cannot be said to be sufficient to explain the day to day delay of 199 days in presentation of the present appeal. 6. Moreover, coming on the merits of the appeal, pertinent is to note that the application under Order XXXIX Rules 1 and 2 CPC was filed in the suit seeking for relief of specific performance of agreement dated 13.03.2015. It is the case of the appellant-original plaintiff who is the corporate guarantor that a corporate guarantee dated 16.08.2013 worth Rs.75 crores was executed by the plaintiff in favour of the defendant bank in order to guarantee the loan amount sanctioned to M/s. ABC Cotspin. Since the aggregate credit facilities were amounting to Rs.137 crores, a corporate guarantee dated 07.11.2013 was executed by the plaintiff in favour of the defendant bank. Subsequently, the credit facilities of 137 crores were reviewed and increased to aggregate credit of Rs. 487 crores vide sanction letter dated 25.02.2014. It is submitted that in order to secure the aforesaid facilities, corporate guarantee dated 28.02.2014 of Rs. 350 crores was executed in favour of the defendant bank by the plaintiff. It is the case of the plaintiff that it wanted to get discharged from the aforesaid liability and hence, approached the defendant bank to release it from its liability in respect of the account of M/s. ABC Cotspin. 7. 350 crores was executed in favour of the defendant bank by the plaintiff. It is the case of the plaintiff that it wanted to get discharged from the aforesaid liability and hence, approached the defendant bank to release it from its liability in respect of the account of M/s. ABC Cotspin. 7. The whole case of the plaintiff is dependent upon a sanction letter dated 13.03.2015, which allegedly recorded the terms agreed between the parties wherein it was stated that on mortgage of two fresh properties and release of two mortgaged properties described therein, the corporate guarantee of the plaintiff will be released. It is the case of the plaintiff that the mortgage of two new collateral properties as described in the plaint was executed and completed in favour of the defendant on 05/06.05.2015. The basis of such execution is the sanction letter dated 13.03.2015. It is further the case of the plaintiff that on 07.05.2015 and 08.05.2015, the mortgages of the two properties including the property of the plaintiff was released and all title documents in respect thereof were returned to the plaintiff. Based on these submissions, the relief sought by the plaintiff is that the plaintiff once discharged in terms of the sanction letter dated 13.03.2015, the defendant bank has in malafide manner, proceeded against the plaintiff in the case filed against M/s. ABC Cotspin. 8. Taking note of these facts brought before the Civil court in the suit seeking for specific performance of agreement executed between the plaintiff and the defendant bank in terms of the sanction letter dated 13.03.2015, the civil court records that it was the case of the defendant bank that it had never issued any No-Due Certificate in favour of the plaintiff and the plaintiff was never discharged from any liability as guarantor of M/s. ABC Cotspin. There is an order passed by the Debt Recovery Tribunal issuing recovery against the plaintiff in the proceedings under the Recovery Of Debts And Bankruptcy Act, 1993 . The Writ petition, viz. Special Civil Application No. 15490 of 2018 challenging the order dated 21.06.2018 passed by the Debt Recovery Tribunal has been dismissed by this Court vide judgment and order dated 19.10.2022. The Writ petition, viz. Special Civil Application No. 15490 of 2018 challenging the order dated 21.06.2018 passed by the Debt Recovery Tribunal has been dismissed by this Court vide judgment and order dated 19.10.2022. It is, thus, recorded by the trial court that in view of the recovery order passed by the DRT in the proceedings wherein the plaintiff was a party, no prima facie case can be said to be in favour of the plaintiff, inasmuch as, at the interim stage it is not permissible for the civil court to conduct a mini trial so as to find out the correctness of the assertions made by the plaintiff about its discharge from the liability in terms of the sanction letter dated 13.03.2015. 9. It is categorically recorded by the trial court that the plaintiff has failed to prove a prima facie case in its favour and if the balance of convenience is considered, at the interim stage, the civil court cannot assume that the defendant bank had totally discharged the plaintiff as corporate guarantor of M/s. ABC Cotspin, which would be a question to be adjudicated after evidence are led by the parties. It is also recorded by the trial court that mere issuance of the sanction letter by the defendant in absence of any discharge from the liability to pay the loan account would not be a reason to grant any interim injunction, which in turn would result in irreparable loss being suffered by the defendant bank, which cannot be compensated in terms of money. 10. Taking note of the facts brought before us, we are of the considered opinion that the trial court while rejecting the interim injunction application has considered three ingredients of grant of interim injunction, i.e. prima facie case, balance of convenience and irreparable loss to the respective parties. As regards the plaintiff, the whole case of the plaintiff depends upon the sanction letter dated 13.03.2015 and the assertion is that in terms of the said sanction letter, the defendant bank had completely discharged the plaintiff from its liability as a corporate guarantor of M/s. ABC Cotspin. There is a decree passed by the competent tribunal, viz. Debt Recovery Tribunal dated 21.06.2018, which has attained finality. 11. There is a decree passed by the competent tribunal, viz. Debt Recovery Tribunal dated 21.06.2018, which has attained finality. 11. The question as to whether the sanction letter dated 13.03.2015 would amount to complete discharge of the plaintiff from its liability as a guarantor of M/s. ABC Cotspin, as rightly has been held by the trial court, is subject matter of evidence to be led by the parties. As no mini trial can be conducted at the stage of consideration of the interim injunction application, we do not find any error in the opinion drawn by the trial court that the plaintiff has failed to establish a prima facie case in its favour. As regards the balance of convenience and irreparable loss, the same lean in favour of the defendant, inasmuch as, the defendant possess a decree of recovery against the plaintiff and in case of any interference at this stage by granting an interim injunction as sought for, it would amount to stay the execution of the decree passed by a competent tribunal, which has attained finality. 12. In the totality of the facts and circumstances of the present case, the submissions made by the learned counsel for the appellant based on the observations made by this Court in the judgment and order dated 18.12.2019 in First Appeal No. 5349 of 2019 are misconceived, inasmuch as, the question before the first appellate court therein was whether the plaintiff can be be non-suited at the thresold by rejection the plaint under Order VII Rule 11 when the bar under Sections 17 and 18 of the Recovery Of Debts And Bankruptcy Act, 1993 would not be attracted in view of the nature of the relief sought before the civil court. The principles of dealing with an application under Order VII Rule 11 CPC as discussed by the first appellate court in the judgment and order dated 18.12.2019, cannot be taken aid to decide the question of grant of interim injunction herein when the facts of the case are speaking otherwise. 13. In the view of the above, we do not find it a fit case to interfere. The application for condonation of delay as well as the appeal stand dismissed both on the ground of unexplained inordinate delay as well as on merits. Connected Civil Application would not survive and shall stand disposed of accordingly.