Disposed

Usv Limited v. Axiz Bank Limited and Anr.

Bombay HC14 Aug 2014NMS/864/2013

Case brief

AI extract

What is this about?

The High Court recorded the parties' consent agreement wherein the petitioner deposits amounts with the respondent bank. The bank agrees not to declare accounts as NPAs, remove liens, and treat expired bank guarantees as closed, subject to the petitioner depositing funds for current guarantees.

What did the court decide?

Recorded agreement: Plaintiff deposits Rs. 1.15 crores and further sums for BGs; Bank agrees not to declare account as NPA, remove liens, and treat expired BGs as closed.

Mr. Karl Shroff, with Mr. Shiraj Dhru & Mr. Pritesh Naik, i/b M/s. Dhru & Co., for the Plaintiff. Mr. Chirag Bulsara, i/b M/s. K. Ashar & Co., for Defendant No. 1. Mr. Rahul Bothra, i/b M/s. D.H. Law Asso., for Defendant No. 2.

a)Without prejudice to the rights and contentions of both parties, the Plaintiff shall, on or before 19th August 2014 deposit a sum of Rs. 1.15 crores with the 1st Defendant–bank. The amount as directed above, shall be kept in a fixed deposit with the 1st Defendant-

Bank in the name of the Prothonotary & Senior Master, High Court, Bombay, initially for a period of one year and thereafter for a period of three months with automatic renewal till the fixed deposit is closed along with accrued interest as indicated below. The amount shall be invested at a rate of return not less than 9%.

b)On such deposit being made, the 1st Defendant–bank shall not declare Cash Credit Account No. 911030046353328 standing in the name of the Plaintiff as a Non-Performing Asset and shall not charge any interest thereon. The 1st Defendant–bank shall remove the lien marked on this cash credit account as also on the Plaintiff’s current accounts. The cash credit account shall stand frozen as on the date of this deposit of Rs. 1.15 crores.

c)In the event that the Plaintiff succeeds in the present suit, the fixed deposit referred to in paragraph (a) above is to be paid over to the Plaintiff with accrued interest from the date of deposit till payment.

d)Should the Plaintiff fail in the present suit, or the Defendant succeed in the Original Application (L) No. 1100 of 2014, it has filed before the Debt Recovery Tribunal, the fixed deposit agreed to be made above along with accrued interest shall be appropriated by

e)The Plaintiff agrees and undertakes to this Court that by 19th August 2014, it will also deposit a further sum of Rs. 10,59,535/- with the 1st Defendant–bank in three separate fixed deposits towards the following bank guarantees:

`Sr.` `No.`	`BG` `Amount in` `INR`	`Issue` `Date`	`Effe-` `ctive`	`BG-` `Expiry`	`Claim` `Expiry`	`Beneficiary` `Name`
`1`	`31,610.00`	`3.6.12`	`3.6.12`	`31.3.2015`	`31.3.2015`	`The Armed` `Forces` `Medical Stores` `Depot.`
`2`	`5,00,000.00`	`6.1.12`	`6.1.12`	`30.6.2015`	`30.6.2015`	`The Ministry of` `Defense,`
`3`	`5,27,925.00`	`14.6.12`	`14.6.12`	`31.5.2016`	`31.5.2016`	`The Raksha` `Mantralaya` `Karyalaya` `Mahanikdesha` `Sashastra` `Sena Chikitsa` `Sewa,`

Sr.
No.

BG
Amount in
INR

Issue
Date

Effe-
ctive

BG-
Expiry

Claim
Expiry

Beneficiary
Name

1

31,610.00

3.6.12

31.3.2015

The Armed
Forces
Medical Stores
Depot.

2

5,00,000.00

6.1.12

30.6.2015

The Ministry of
Defense,

3

5,27,925.00

14.6.12

31.5.2016

The Raksha
Mantralaya
Karyalaya
Mahanikdesha
Sashastra
Sena Chikitsa
Sewa,

f)On the expiry of these bank guarantees (all issued by the 1st Defendant), the Plaintiff shall encash the corresponding amount along with accrued interest covered under such bank guarantee. In the event any of these three bank guarantees is invoked and the 1st Defendant bank is made to pay the amount of such bank guarantee, the 1st Defendant–bank is at liberty to withdraw the principal amount towards such invoked bank guarantee from the amount deposited by the Plaintiff, and to the Plaintiff to claim fixed deposit

interest accrued thereon. Upon expiry of each such bank guarantee on its due date, the Plaintiff shall ensure that each such bank guarantee is returned to the 1st Defendant–bank for due cancellation in order to enable the Plaintiff to claim the corresponding fixed deposit amount with interest.

g)It is also agreed between the parties that within a period of seven working days from the date of deposit by the Plaintiff of the amounts mentioned in paragraph 1(a) and (d) above, the 1st Defendant–bank shall release the securities created / provided by the Plaintiff to recover the Working Capital Facilities (the first charge under Charge ID No. 10301593 and second charge under Charge ID No. 10302134) to enable the Plaintiff to complete the entire process of satisfaction of the said charges with the concerned authorities.

2.In addition, there are certain bank guarantees that, it is agreed, have expired but the originals of which have not been returned by the beneficiaries to the 1st Defendant–bank for cancellation. The 1st Defendant–bank is directed to treat these bank guarantees, listed below, as closed in its books of account. If any of these bank guarantees are attempted to be invoked by their respective beneficiaries, the 1st Defendant–bank shall not be liable to pay the amounts under those guarantees upon any such invocation. The beneficiaries shall be required to approach this Court for reliefs in that respect. On such invocation being made, the 1st Defendant bank shall be at liberty to bring this order to the

notice of the beneficiaries seeking such an invocation. This order is necessitated because although the bank guarantees have expired, and the permissible time for invocation has passed, the instruments have not been returned to the 1st Defendant–Bank for cancellation. This is required for the protection of both the Plaintiff as well as the 1st Defendant–bank. These bank guarantees are listed below.

`Sr` `No.`	`Amount`	`Issue` `Date`	`Expiry` `Date/Claim` `Expiry Date`	`Name of` `Beneficiary`
`1`	`1,15,500`	`1.12.2012`	`3.1.2013`	`Managing director,` `Rajasthan Medical` `Services Corporation`
`2`	`10,000`	`25.6.2012`	`31.7.2013`	`The Dy Director` `Accounts`
`3`	`12,14,680`	`30.7.2012`	`31.3.2013`	`Through Additional` `Director, Central` `Government Health` `Scheme`
`4`	`1445687`	`18.1.2012`	`31.12.2013`	`The Joint` `Commissioner` `(Corporate)`

Sr
No.

Amount

Issue
Date

Expiry
Date/Claim
Expiry Date

Name of
Beneficiary

1

1,15,500

1.12.2012

3.1.2013

Managing director,
Rajasthan Medical
Services Corporation

2

10,000

25.6.2012

31.7.2013

The Dy Director
Accounts

3

12,14,680

30.7.2012

31.3.2013

Through Additional
Director, Central
Government Health
Scheme

4

1445687

18.1.2012

31.12.2013

The Joint
Commissioner
(Corporate)

3.This order is entirely without prejudice to the rights and contentions of the parties in this suit, as also in the original application filed by the 1st Defendant–bank before the Debt Recovery Tribunal.

Usv Limited v. Axiz Bank Limited and Anr.

Case brief

What is this about?

What did the court decide?

Usv Limited v. Axiz Bank Limited and Anr.

Case brief

What is this about?

What did the court decide?

What the court decided

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