CANARA BANK Vs. SCANOMAX INDIA LTD

JUDGEMENT

(1.) Canara Bank (hereinafter described as 'the petitioner') has filed a civil suit against Scanomax India Limited and others for recovery of Rs. 1,32,41,767.50 besides the interest. The said civil suit is being contested and written statement has been filed.

(2.) On behalf of the respondents 2 to 4 an application has been filed seeking stay of the suit. It has been asserted that respondent Scanomax India Limited was a joint sector undertaking with the Punjab State Industrial Development Corporation and private co-promoters comprising of Dr. B.S. Grewal and other share-holders. The said project was set up for the manufacture of bulk drugs. The private share-holders comprising of B.S.G. Associates sold their shares and rights to the Raunaq Group in pursuance of the agreement dated 2.11.1994 executed by the B.S.G. Associates. The agreement was done with the approval and consent of the Financial Institutions namely, respondents 5 to 7 and also Consortium of Banks i.e. State Bank of Patiala. The petitioner-Bank was the lead Bank. In terms of the agreement dated 2.11.1994 it was stipulated that B.S.G. Associates will get the ratification of the change in the management and control to Raunaq Group from the Financial Institutions. The said approval was drafted by the Punjab State Industrial Development Corporation on 17.11.1994 and by the Industrial Finance Corporation India respondent No. 7 on 31.1.1995. Formal letter in this regard was issued by the Industrial Finance Corporation India. The Consortium of Banks with the petitioner-Bank as lead Bank granted their necessary approval and consent of transfer of the control and management of respondent No. 1 Scanomax India Limited in favour of Raunaq Group.

(3.) There were communications interaction and dealing with the Financial Institutions, the consortium of the Bank on one hand and Raunaq Group on the other. In pursuance of the interaction and deliberation between the parties, it was agreed that project for the manufacturing of Ibuprofen, Ampicillin, Trihydrate and their formulations be changed and restructured. It was to be rehashed for manufacture of the bulk drugs of Acyclovir and others. As a result of this change and restructure of initial project, the terms and conditions of the alleged guarantee deed between the petitioner-Bank and the applicant-respondents were varied. They claimed that in this process they were discharged from their liability. It was further been alleged that in pursuance of the agreement dated 2.11.1994, Raunaq Group had also agreed to indemnify respondents 2 to 4 from their liability towards their Financial Institutions and the consortium of the Banks. The relevant clause of the said agreement reads :-