A.RAMALINGESWARA RAO J. - (1.) This writ petition is filed challenging the communication dated 20.07.2017 issued by the 1st respondent, Power Finance Corporation to the 2nd respondent, IDBI Bank Limited.
(2.) The 1st petitioner is a Company incorporated under the provisions of the Companies Act, 1956 and is engaged in the business of infrastructure and construction. The 2nd petitioner is a subsidiary of the first petitioner Company and it was incorporated as a Special Purpose Vehicle for setting up of a Thermal Power Project comprising four units namely Unit-I (300 MW), Unit-II (300 MW), Unit-III (660 MW) and Unit-IV (660 MW) in the State of Chhattisgarh. The 1st respondent is a financial institution, a Central Government Public Sector undertaking and is engaged in the business of financing power projects. It makes available loan facilities to the entities setting up independent power projects. According to the petitioners, it is a State under Article 12 of the Constitution of India. The 2nd respondent is a Public Sector Bank and is a State within the meaning of Article 12 of the Constitution of India. The 2nd respondent issued a bank guarantee in favour of the 1st respondent on behalf of the 2nd Petitioner, which is the subject matter of the present Writ Petition.
(3.) The 2nd petitioner availed loan facilities from a Consortium of banks and financial institutions with the 1st respondent as a lead member of the Consortium for setting up its 300 MW Thermal Power Station (Unit-I). The 2nd petitioner executed financing documents with the 1st respondent and other members of Consortium for availing such loan facility. The 2nd petitioner availed a loan of Rs. 904.34 crores by signing the Common Senior Debt Agreement (Facility Agreement) dated 04.08.2005 for Rupee Term Loan with the 1st respondent and other members of the Consortium. The said amount is required to be repaid by the 2nd petitioner in 48 quarterly instalments which was subsequently revised to 55 quarterly instalments commencing from a date indicated in the facility agreement after commencement of commercial operation of the unit. The date fixed was 15.07.2010. The commercial operation was achieved on 09.04.2010. The second petitioner also executed another agreement on 04.08.2005 called as "Trust and Retention Account Agreement" (TRAA). Under the said agreement, certain accounts were opened and operated by the Account Bank mentioned therein for the purpose of making available the requisite funds under the Facility Agreement to the 2nd petitioner and for repayment of instalments of the loan to the 1st respondent and other Consortium members. The TRAA provides for maintenance of Debt Service Reserve Account (DSRA) to secure the above payments. The account is required to be maintained with an amount stipulated under TRAA which is called as "Debt Service Reserve Amount". In order to provide and maintain the DSRA under the Facility Agreement and TRAA, a bank guarantee for an amount of Rs. 88,56,00,000/- was furnished by the 2nd respondent on 18.11.2011. The said bank guarantee is valid and subsisting till 16.11.2017. The bank guarantees to an extent of 193.51 crores for the purpose of covering the DSRA towards debt servicing for the entire debt of Units I and II by Lenders Consortium were furnished by the 1st petitioner, on behalf of the 2nd petitioner, by earmarking its non fund based limits maintained and made available by the 2nd respondent to the 1st petitioner. The 1st respondent also provided finance to the 2nd petitioner for its Unit-II for which a separate agreement was executed. The total bank guarantees to an extent of 193.51 Crores includes the guarantee for Unit-II also. Unit-II also became operational with effect from 07.05.2011, but it was shut down from March 2013 to December 2015 due to reasons beyond the control of the 2nd petitioner because of non-availability of linkage coal and unviable tariff being paid by the consumer Discoms resulting in financial stress to the 2nd petitioner. However, the 2nd petitioner continued to service the dues of all the lenders in Units I and II out of the available cash flows of Unit I. There were certain delays in paying the instalments by the 2nd petitioner to the 1st respondent and other Consortium lenders for Unit-II loan. Wherever there was delay, the 2nd petitioner was paying the loan amounts and interest along with the applicable liquidated damages and the account never become a Non-performing Asset (NPA). 3A. While so, the 1st respondent under an apprehension that the account would become Non-performing Asset (NPA) addressed a letter to the 2nd respondent on 18.05.2017 indicating the outstanding amount with respect to Units I and II stating that an amount of Rs. 88.02 Crores was outstanding and shall be cleared within three months from the due date indicated therein in order to avoid classifying it as NPA. The 2nd petitioner paid an amount of Rs. 3.5 Crores to the 1st respondent on 30.06.2017. In spite of the same, when a communication was issued by the 1st respondent on 20.07.2017 addressed to the 2nd respondent, the present Writ Petition is filed.;