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industrial Development Bank of Vs. Empee Sugars and Chemicals Ltd. - Court Judgment

LegalCrystal Citation
CourtDRAT Madras
Decided On
Judge
Reported inI(2004)BC99
Appellantindustrial Development Bank of
RespondentEmpee Sugars and Chemicals Ltd.
Excerpt:
.....is the guarantor for the borrower m/s. empee sugar and chemicals ltd. for the outstanding due, the idbi filed this ia for garnishee order exparte order was originally passed by the drt, chennai, directing the garnishee tasmac not to pay the amount to empee distilleries. the defendant empee distilleries filed ia-1229/2000 to vacate the garnishee order. the po, drt passed a modified order on 30.5.2000 directing the empee distilleries to pay rs. 10 lakhs every month to the bank. appeal was preferred by the idbi as against that order, in ma-54/2000 and this appellate tribunal disposed of that appeal on 6.10.2000 directing to po, drt, to pass a well considered order. then, ias 1 and 2/2000 in ma-54/ 2000 were filed by the empee distilleries to modify drat's order dated 6.10.2000. in.....
Judgment:
1. The Industrial Development Bank of India (IDBI) filed IA-1129/2000 before DRT, Chennai, to pass garnishee Order directing the garnishee TASMAC not to pay the amount to Empee Distilleries Ltd. Empee Distilleries is the guarantor for the borrower M/s. Empee Sugar and Chemicals Ltd. For the outstanding due, the IDBI filed this IA for garnishee Order Exparte Order was originally passed by the DRT, Chennai, directing the garnishee TASMAC not to pay the amount to Empee Distilleries. The defendant Empee Distilleries filed IA-1229/2000 to vacate the garnishee Order. The PO, DRT passed a modified Order on 30.5.2000 directing the Empee Distilleries to pay Rs. 10 lakhs every month to the Bank. Appeal was preferred by the IDBI as against that Order, in MA-54/2000 and this Appellate Tribunal disposed of that appeal on 6.10.2000 directing to PO, DRT, to pass a well considered Order. Then, IAs 1 and 2/2000 in MA-54/ 2000 were filed by the Empee Distilleries to modify DRAT's Order dated 6.10.2000. In MA-54/2000 the matter was compromised before the DRAT and a Joint Consent Memo was filed. As per this Joint Consent Memo, the Empee Distilleries will have to pay Rs. 40 lakhs every month to the IDBI and in case of default the Order passed by the PO, ,DRT, dated 31.3.2000 will revive. Admittedly, the Empee Distilleries did not pay that amount as per the joint Consent Memo and defaulted.

2. Then, Contempt Application was filed by IDBI before this Appellate Tribunal and this Appellate Tribunal passed Order holding that no contempt has been committed but the applicant Bank can always invoke the default clause in case of default. Then, the Empee Distilleries filed IA-33/2002 before DRT-1, Chennai, for directing the IDBI to withdraw letter dated 2.1.2002 and to direct the garnishee not to garnish any amount till IA-1229/2000 is finally disposed of. That IA-33/2002 was disposed of and the PO, DRT-I, dismissed that petition.

While disposing of IA-33/2002, IA-1129/2000 on which Joint Consent Memo Order was passed by this Appellate Tribunal, was also taken by the PO, DRT-I, and he has modified that Order. The PO, DRT-I, also passed some interim Orders on 9.1.2002 and 27.6.2002.

3. Counsel for the IDBI submitted that since Empee Distilleries did not act as per the Order passed by the Appellate Tribunal on the Consent Memo filed, there is default on the part of Empee Distilleries and as per the Orders passed by the DRAT, the Order passed by the PO, DRT, dated 31.3.2000 was revived and the garnishee must be directed not to pay the amount to the Empee Distilleries. Counsel for the Empee Distilleries pointed out that even though money is lying with the garnishee, the Empee Distilleries will have to meet the expenditure of wages to workers and the Sales Tax and other revenue dues and thus the amount lying with the garnishee cannot be directed to be given to the Bank in entirety and the Empee Distilleries will have to discharge the statutory obligations. He further pointed out that there is arrears of Sales Tax for a sum of Rs. 3 crores which being a statutory liability, the entire amount lying with the garnishee cannot be deposited with the IDBI and only if the wages are paid and sales tax is paid, the Empee Distilleries can further run the Company and so the entire amount lying with the garnishee cannot be deposited with the Bank.

4. In MA-54/2000, this Appellate Forum has passed Order on the Consent Memo. After an Order has been passed by the Appellate Forum, it is no longer open for the PO, DRT-I, to pass any modified Order in respect of the same petition. It is significant to note that the parties agreed for the compromise and Empee Distilleries on the Consent Memo agreed to pay Rs. 40 lakhs to the IDBI every month with effect from 1.11.2000 till a settlement is arrived at between the principal debtor the Empee Sugars and Chemicals and the IDBI or until the disposal of the OA whichever is earlier. Having agreed for such Consent Memo, the Empee Distilleries must pay that amount to the Bank and in case of default, the default clause has to be invoked i.e. the Order passed by the PO, DRT, dated 31.3.2000 will revive and be in full force.

5. Counsel for the Empee Distilleries submitted that the Order passed by the PO, DRT, dated 31.3.2000 is only an ex parte Order and so the PO, DRT, can pass modified Order since that ex parte Order alone can be revived and so the subsequent Orders passed by the PO, DRT, modifying the Order cannot be stated to be improper. When the Appellate Forum has passed Order, any modification can be sought for only before the Appellate Forum and modified Order cannot be passed by the lower Court.

In the Order passed on the Joint Consent Memo, no direction has been given by the Appellate Tribunal to the PO, DRT, to pass any modified Order. Final Order has been passed by the Appellate Tribunal in MA-54/ 2000 on the Joint. Consent Memo. The default clause provided in the Joint Consent Memo is that in case of default of payment of any two monthly instalments, the garnishee Order passed in IA-1129/2000 will get revived and be in full force. The terms used in the Consent Memo "will get revived and be in full force" stipulates that the Order passed by the PO, DRT, dated 31.3.2000 will get revived and it will be in full force. When the Joi t Consent Memo is filed by both parties before the Appellate Forum, it cannot be stated that only an ex parte Order was passed by the PO, DRT, and the Order can be modified by the PO, DRT. The PO, DRT, has passed Order on 31.3.2000 directing the garnishee not to pay any money to R2 Empee Distilleries payable to R2 until further orders with notice by 17.6.2000. Even though it was an ex parte Order passed on 31.3.2000, since Order was passed on the Joint Consent Memo filed by the parties, that Joint Consent Memo holds good and it is no longer open to the Empee Distilleries to contend that the PO, DRT, has to pass a revised order after service of notice.

6. When an order has been passed by the Appellate Tribunal, finality has been reached and it is no longer open to the PO, DRT, to pass any modified Order. So, the Order passed by the PO, DRT, dated 31.3.2000 is revived directing the garnishee not to pay any money to Empee Distilleries payable to Empee Distilleries.

7. Counsel for the Empee Distilleries further submitted that the Empee Distilleries will have to pay Sales Tax and wages to workers and those amounts have to be paid from out of this amount and so the entire amount lying with the garnishee cannot be paid to Empee Distilleries and the Order passed by the PO, DRT, requires some modification. He further submitted that a sum of more than Rs. 3 crores is due to the Sales Tax Department and that has to be considered. Counsel for the IDBI submitted that only the Empee Distilleries had agreed to pay Rs. 40 lakhs every month with effect from 1.11.2000 till a settlement is arrived at or the O.A. is disposed of and even at that rate if the amount is calculated from November, 2000, the amount lying with the garnishee cannot meet that amount and there are other amounts available with Empee Distilleries to meet those expenses and for the amount due by the borrower to the IDBI, this amount lying with the garnishee is only a meagre amount and the argument advanced by the Counsel for the Empee Distilleries does not deserve any consideration. It is submitted by the Counsel for the IDBI that more than Rs. 70 crores is due by the defendants to the IDBI. Empee Distilleries is the guarantor for the borrower Empee Sugars.

8. Counsel for the IDBI further submits that only a meagre amount is lying with the garnishee and that cannot satisfy the amount due to the Bank and that amount lying with the garnishee should be paid to the Bank in entirety and the amount lying with the garnishee will less than Rs. 4 crores. When parties have consented to pay certain amount on the basis of the Compromise Memo, the parties are bound by the Compromise Memo and they cannot go back especially when Order has been passed on the Compromise Memo.Salkia Businessmen's Association and Ors. v. Howrah Municipal Corporation and Ors., "If Courts are not to honour and implement their own orders, and encourage party litigants--be they public authorities, to invent methods of their own to short circuit and give a go-bye to the obligations and liabilities incurred by them under orders of the Court--the rule of law will certainly become a casualty in the process--a costly consequence to be jealously averted by all and at any rate by the highest Courts in States in the country. It does not, in our view, require any extraordinary exercise to hold that the memorandum and terms of the compromise in this case became part of the orders of the High Court itself when the earlier writ petition was finally disposed of on 13.2.1991 in the terms noticed supra notwithstanding that there was no verbatim reproduction of the same in the order. The orders passed in this regard admits of no doubt or give any scope for controversy. While so, it is beyond ones comprehension as to how it could have been viewed as a matter of mere contract between parties and under that pretext absolve itself of the responsibility to enforce it, except by doing violence to the terms thereof in letter and spirit. As long as the earlier order dated 13.2.91 stood, it was not permissible to go behind the same to ascertain the substance of it or nature of compliance when the manner, mode and place of compliance had already been stipulated with meticulous care and detail in the order itself. The said decision was also not made to depend upon any contingencies beyond the control of parties in the earlier proceedings. The Division Bench of the High Court equally fell into the same error and went, in our view, aside and beside the real issue and point before them.

The orders of the High Court under challenge are set aside. The respondents are obliged and as public-authorities are bound to comply with the orders dated 13.2.91, particularly clause/paragraph (viii) of it, relating to the place or site of allotment of alternative sites and other stipulations, in letter and spirit giving the said order full effect." 10. Counsel for the Empee Distilleries submitted that the ex parte Order cannot be allowed to continue indefinitely. The Apex Court in V (1999) SLT 310=11 (1999) BC 57 (SC), The ICICI Ltd. v. GRAPCO Industries and Ors. has held that-- "An ex parte Order is only of short duration and it is granted to safeguard the interest of the applicant, but at the same time, such an order cannot be granted as a matter of course. A Court or Tribunal has also to consider the consequences of such an order if ultimately the order is to be revoked after hearing the defendant.

In such circumstances, the Tribunal must put the applicant on terms while granting an ex parte order and compensate the defendant in case the ex parte order was obtained without any justification and harm has been caused to the defendant. It must be remembered that an ex parte order can also affect the reputation of the person against whom it is issued and sometimes it may be difficult to undo the damage caused by an interim order. A Tribunal while granting ex parte order of stay or injunction must record reasons, may be brief one, and cannot pass a stereo-typed order in terms of the prayer made. Then an ex parte order cannot be allowed to continue indefinitely and the continuance of interim order has to be decided without undue delay when the defendant puts in his appearance. It is not necessary to hear long drawn arguments. Principles on which an interim order can be granted are well-settled. Sub-section (8) of Section 19 requires that application for recovery of debt itself is to be disposed of finally within a period of six months from the date of receipt of the application. That also shows the urgency to decide is an interim order of injunction or stay granted ex parte is to be continued or not. In our view, the High Court was not correct in holding that a Tribunal under the Act has no power to grant an ex parte order of injunction or stay." 11. In the case on hand, even though the ex parte order was passed it was taken on appeal before the DRAT and Order was passed by the Appellate Tribunal in MA-54/2000 on 6.10.2000 directing the PO, DRT, to pass a considered meaningful Order on the two IAs in question setting aside the impugned order. It was also observed in the Order dated 6.10.2000 passed by this Appellate Tribunal that till then ex parte Order of injunction against the garnishee shall continue. Then the petition was filed by Empec Distilleries to modify the Order passed by the Appellate Tribunal dated 6,10.2000, Only in the petition seeking for modification of the order dated 6.10.2000 in MA-54/2000. Joint Consent Memo was filed by the IDBI and the Empee Distilleries and the Empee Distilleries agreed to pay Rs. 40 lakhs every month and in case of default, the Order passed by the PO, DRT, dated 31.3.2000 will get revived and be" in full force.

12. After both the parties agreed to pay certain amount and filed joint Consent Memo before the Appellate Tribunal in the petition seeking to modify its earlier Order, it is no longer open to the Empee Distilleries to contend that only an ex parte Order was passed and a further detailed Order will have to be passed. In the Joint Consent Memo, the Empee Distilleries agreed to pay Rs. 40 lakhs every month and they also agreed that in case of default the Order passed by the PO, DRT, dated 31.3.2000 will get revived and be in full force. The Order passed by the PO, DRT, dated 31.3.2000 is to the effect that garnishee is directed not to pay any amount to the Empee Distilleries payable to Empee Distilleries. Only that will remain in force and since the Joint Consent Memo is filed before the Appellate Forum, parties have agreed to pay the amount. As per the Joint Consent Memo, in case of default the Order passed by the PO, DRT, directing the garnishee not to pay any amount to the Empee Distilleries will get revived and that will be in force. PO, DRT, is not expected to pass any further Order modifying the Order dated 31.3.2000. No such direction was also given in the Order passed on the Consent Memo. So, the Order passed on the Consent Memo is to the effect that in case of default the Order passed by the PO, DRT dated 31.3.2000 directing the garnishee not to pay any amount to the Empee Distilleries the amount payable to Empee Distilleries, will get revived and that will be in force.

13. In the case on hand, there is default of the Order dated 31.3.2000 passed by the PO, DRT, directing the garnishee not to pay any amount to the Empee Distilleries which amount will become payable to the Empee Distilleries gets revived and the garnishee is directed not to pay any amount to the Empee Distilleries. Now, it is no longer open to the Empee Distilleries to contend that they will have to pay tax dues and other dues and that has to be made out from the amount lying with the garnishee and the amount lying with the garnishee should not be paid to the applicant Bank.

14. As against the Order passed on the Consent Memo by the DRAT in IAs 1 and 2 in MA-54/2000, Writ Petition No. 31765/20002 was filed by the Empee Distilleries before the High Court of Madras and Order was passed in the Writ Petition holding that "After having filed a joint memo and consented for the order, curiously the writ petitioner filed an application for direction before the Debts Recovery Tribunal to the first respondent to withdraw its letter and to direct the garnishee not to garnish any amount till the Interlocutory Application No. 1229 of 2000 is finally disposed of. No writ is maintainable just for getting interim orders when substantial proceedings are pending before the Debts Recovery Tribunal, which is a statutory Tribunal and that too after having consented for an order" and dismissed the writ petition.

15. Then, that was taken in Writ Appeal before the High Court of Madras in W.A. 2750/ 2002 and in the W.A.M.P. Nos. 4656, 4657, 5258 and 5259 of 2002, Order was passed by the High Court directing the appellant therein M/s. Empee Distilleries Ltd., and also the 3rd respondent M/s.

Empee Sugars and Chemicals Ltd., either jointly or severally to deposit Rs. 13 crores to the IDBI, if the amount is tendered by way of Banker's cheque, the same shall be received by the IDBI and if the above amount is paid, then there shall not be any garnishee proceedings against either the appellant or the 3rd respondent and the above referred amount can be appropriated by the IDBI. It has been made clear in the Order passed in the writ appeal that only if the amount of Rs. 13 Crores is paid, there shall not be any garnishee proceedings against either the appellant or the 3rd respondent. Admittedly, the amount of Rs. 13 Crores as directed by the High Court in the writ appeal was not paid. Only if that amount is paid, there shall not be any garnishee proceedings. Since the amount directed by the High Court in the writ appeal was not paid, garnishee proceedings also get revived. So, there is clear default on the part of the Empee Distilleries in payment of the amount to the IDBI in pursuance of the Order passed by the Appellate Tribunal as well as by the High Court in the writ appeal. So, the Order passed by the PO, DRT, dated 31.3.2000 directing the garnishee not to pay any amount to the Empee Distilleries payable to Empee Distilleries, gets revived.

16. For the foregoing reasons, I hold that the arguments advanced by the Counsel for the Empee Distilleries does not hold good and the IDBI is entitled to succeed in the appeals filed by them.

17. MA-62/2003 is filed by the IDBI against the interim Order dated 9.1.2002 passed by the DRT-I, Chennai, directing the guarantor Empee Distilleries to keep reserve 40% of the amount received from and payable by TASMAC to the guarantors, out of which the said amount of Rs. 10 lakhs shall be paid by the guarantor M/s. Empee Distilleries to the applicant Bank within a week from the day they receive from TASMAC.18. MA-182/2002 is filed by the IDBI challenging the interim Order dated 27.6.2002 of the DRT-I, Chennai, holding that the guarantors have belatedly paid Rs. 10 lakhs and after that there is no order for payment and directing the guarantor Empee Distilleries to furnish statement as to how much amount is available with them, kept as 40% reserved.

19. MA-262/2002 is filed by the IDBI to set aside the Order dated 20.11.2002 passed by the Tribunal in IA-1129/2000, in so far as it relates to modifying the garnishee Order dated 31.3.2000 passed in IA-1129/2000.

20. IA-5 is filed by the IDBI in MA-54/2000 praying to direct the garnishee (TASMAC) to pay to the applicant IDBI the monies garnished by them in the account of the 1st respondent to the extent of Rs. 892 lakhs being the amount due to the applicant till February, 2003.

21. The IDBI has filed the petition IA-5 in MA-54/2000 before this Appellate Tribunal directing the garnishee TASMAC to pay all monies and charges payable by them to Empee Distilleries directly to the applicant Bank to the credit of the 1 st respondent Empee Sugars' loan account.

Since, there is default in carrying out the orders passed by the Appellate Tribunal and the High Court in the writ appeal, the garnishee Order passed by the PO, DRT, gets revived and the applicant Bank is entitled for this amount lying with the jarnishee. So, the petition filed by IDBI for directing the garnishee to pay the amount payable by them to the Empee Distilleries directly to the applicant Bank to the credit of the 1st respondent's loan account is allowed and the garnishee TASMAC is directed to pay the amount payable to Empee Distilleries, to the applicant Bank to the credit of the loan account of the 1st respondent Empee Sugars and Chemicals.

22. Empee Distilleries Ltd., filed 1A-33/2002 before the PO, DRT; for directing the IDBI to withdraw the impugned letter dated 2.1.2002 addressed to the garnishee TASMAC advising the garnishee to desist from releasing any money payable to the Empee Distilleries and for directing the garnishee not to garnish any amount till IA 1229/2000 is finally disposed of and to pass any order or orders as deemed fit in the circumstances of the case. The Division Bench of the Madras High Court directed the PO, DRT-I, Chennai, to dispose of this IA-33/2002 on the materials available before it and the PO, DRT-I, dismissed that petition. As against that Order, Appeal Nos. MA-34 and 35/2003 have been preferred. While disposing of IA-33/2002, the PO, DRT-'1, has found that IA-1229/2000 already stand finally disposed of by the Consent Order dated 13.10.2000 passed by the DRAT and so the prayer sought for cannot be allowed and it has become infructuous by virtue of the Consent Memo dated 13.10.2000. But he has passed a further Order in IA-1129/2000 modifying the Order dated 13.10.2000. IA-1129/2000 is the garnishee application in which the Order has been passed directing the garnishee not to pay any money to R2 payable to R2. IA-1229/ 2000 was filed by the Empee Distilleries to vacate the ex parte Order passed in IA-1129/ 2000. The PO, DRT-I, has found that IA-1229/2000 was finally disposed of by consent Order dated 13.10.2000 by DRAT but he has taken I A-1129/2000 and has passed modified Order. There was no direction by the High Court also to take up IA-1129/2000. Order was passed on the consent Memo by the DRAT.23. The PO, DRT-I, in para-24 of his Order in IA-33/2002 has stated that Court should pass an appropriate further Order by interpreting the contents of the Consent Memo filed by the parties in order to secure the ends of justice. Accordingly, he has passed a modified Order in IA-1129/2000 modifying the Order already passed by him. It is something strange to note that how a lower Forum can interpret the contents of the Consent Memo filed by the parties before the Appellate Forum. The PO, DRT-I, is not at all empowered to interpret or discuss with regard to the Consent Memo filed before the Appellate Forum on which Consent Memo the Appellate forum has passed Order. If at all the parties are aggrieved, they should approach only the Appellate Forum which passed that Order for seeking any modification or any clarification. It is not for the lower Court to interpret and pass Order when an Appellate Forum has passed Order. The Order passed by the PO, DRT-I, in IA-1129/2000 in IA33/2002 is quite unwarranted and the PO, DRT-I, has exceeded his jurisdiction and has passed Order and the Order passed by the PO, DRT-I, in IA-1129/2000 dated 20.11.2002 is liable to be dismissed in limine and it is dismissed.

24. With regard to IA-33/2002, the PO, DRT-I, has found that as Order was passed by the DRAT on the Consent Memo dated 13.10.2000 and which has been finally disposed of, the prayer sought for in that application cannot be allowed and accordingly dismissed that petition. So, nothing warrants to interfere in the Order passed by the PO, DRT-I, in IA-33/ 2002.

25. Counsel for the Empee Distilleries Ltd., further submitted that sufficient security has been furnished to the Bank and so there is no justification at all for passing any garnishee Order. He relies upon the decision of the Madras High Court 1996-1-L.W. Page-455 wherein it has been held that there is no justification for granting attachment of other properties when there are immovable properties furnished as security for the mortgage amount, in the absence of any amount regarding value. It has further been held that garnishee is a person who is bound to pay certain amount to defendant or one who is in possession of monies belonging to the defendant and liable to pay the debt due to the defendant is necessary.

26. It may be that the defendant would have offered sufficient security for the mortgage amount but that is not a ground to allege that the amount lying with the garnishee cannot be sought for. The defendants are defaulters and they have not paid any amount on the loan transaction to the Bank and the loan amount has swelled to the extent of more than Rs. 70 crores. When such is the position, it is no longer open to the defendants borrowers to contend that there are sufficient securities given and the garnishee Order cannot be passed. The amount due to the Bank has to be secured. There is huge stake involved in this case. The defendants are not at all interested in repaying the loan amount to the Bank. Even the orders passed by the High Court are not complied with. The defendants are committing default without paying any amount to the Bank. The amount due to the Bank has to be secured. Even though the Empee Distilleries agreed to pay Rs. 40 lakhs every month in the Consent Memo, it did not pay that amount. It was fully confident that it was in a position to pay Rs. 40 lakhs every month and that is why a Joint Consent Memo was given and Order was passed on that. Even as per the Consent Memo, the Empire Distilleries did not act and has committed default. So the Order passed by the PO, DRT, directing the garnishee not to pay any amount to Empee Distilleries has to be invoked and the garnishee Order passed by the PO, DRT, directing the garnishee not to pay the amount to Empee Distilleries has to be upheld and it is confirmed. M.A. 34/2003 and M.A. 35/2003 filed by the Empee Distilleries are dismissed.

27. The garnishee is directed to pay the amount lying with them and payable to R2, to the IDBI within a period of two weeks from today.

28. All the appeals are disposed of with the above said direction. No costs.

29. As the matter is pending before the DRT since 1999, the PO, DRT-I, Chennai, is directed to dispose of the O.A. within a period of two months.


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