M.S.PRABHAKAR Vs. INDIAN BANK

JUDGEMENT

(1.) Heard Sri A. Venkatesh, learned Senior Counsel representing Sri D. Narendar Naik, learned counsel for the petitioners and Sri Raja Shekar Rao Salvaji, learned Standing Counsel for the respondents. Perused the entire record.

(2.) The writ petition is filed seeking the following relief:

(3.) The brief facts of the case are that the writ petitioners are erstwhile Managing Director and guarantor of M/s. Kadevi Industries Limited, a public limited company. The said company availed credit facilities under consortium lending in the year 2008. Further, in the year 2008, respondents sanctioned a separate midterm loan of Rs.20.00 Crores to the corporate debtor for capital expenditure on plant and machinery outside the consortium arrangement. For said midterm loan, the petitioners have given the land and building as security in Kushaiguda unit of Kadevi Industries Limited, apart from machinery in Kushaiaguda unit of said Kadevi Industries Limited. Respondents-bank declared the Kadevi's account as Non-Performing Asset ('NPA') in the year 2015 in violation of guidelines of the Reserve Bank of India ('RBI'). There were no outstanding interest dues towards mid-term loans or CC limits. However, there is unjust classification of Kadevi Industries Limited as NPA. Due to said classification as NPA, Kadevi Industries Limited could not access financial assistance from other banking and financial institutions. Consequently, there were cash flow issues to Kadevi Industries Limited, finally culminating into respondents-Bank initiating proceeding under Corporate Insolvency Resolution Process (CIRP), by the application bearing No.CP.(IB) No.10/7/HDB/2017 under Sec. 7 of Insolvency and Bankruptcy Code, 2016 ('IBC') before the National Company Law Tribunal ('NCLT'). The petitioners challenged the action of respondents vide W.P.No.28827 of 2021 before this Court and this Court passed interim orders dtd. 13/12/2021 and 2/4/2024 restraining coercive actions against personal guarantees pending adjudication. The NCLT vide order dtd. 15/3/2017, admitted said CIRP, and initiated CIRP process against Kadevi Industries Limited as per the procedure under IBC. Then, an order was passed on 23/2/2018, ordering liquidation of Kadevi Industries Limited. Respondents relinquished security interest over certain current assets, but retained rights in fixed assets, which includes the land and buildings in Sy.Nos.321, 325/5, 321/6, 321/1/A admeasuring 4600 Sq.Yds. at Kushaiguda, Hyderabad ('schedule property').