2019 (1) TMI 332 - HC - Insolvency and Bankruptcy

Court dismisses mandamus petition on bank debt resolution plan, cites bank autonomy and ongoing recovery proceedings.

The Court dismissed the petition seeking mandamus to direct respondent banks to consider the resolution plan for debt repayment. The Court held that ... Consideration of resolution plan and options put forth by the Petitioner Company for repayment of the total debt owned by the Petitioner Company - Held that:- A plain reading of the Minutes of the JLF Meeting held on 16.01.2018 and 15.05.2018 clearly indicate that the bankers had held discussions with regard to the proposals submitted by the petitioner. However, the respondents were not agreeable to the same - the contention that the respondent banks have not explored the possibility of a restructuring plan, is unmerited. The relief as sought by the petitioner, to direct the respondent banks to consider and accept the resolution plan and the options put by the petitioner – is plainly not maintainable. This Court cannot issue a mandamus directing the respondent banks to restructure the financial assistance granted by them to the petitioner. Direction to the respondent banks to provide necessary guidelines and/or resolution plans for continuing of daily business of the petitioner - Held that:- The same is also unmerited - This is so as the respondent banks have already examined the petitioner’s case within the framework of the circulars issued by the Reserve Bank of India. It is also relevant to note that the CAP, as envisaged in the RBI’s circular dated 26.02.2014, also includes the option for recovery of dues. The decision as to whether the respondent banks require to support a resolution plan proposed by the petitioner is a matter of their commercial wisdom and warrants no interference from this Court. Petition dismissed. Issues:Petition seeking mandamus to direct respondent banks to consider resolution plan and provide guidelines for business continuation.Analysis:1. The petitioner sought a writ of Mandamus directing the respondent banks to consider and accept its resolution plan for debt repayment. The petitioner claimed its inability to repay debts due to uncontrollable factors and false statements by competitors.2. The respondent banks, forming a Joint Lenders Forum (JLF), were led by Canara Bank due to the petitioner's debt exceeding Rs. 100 crores. The petitioner alleged that despite submitting viable rehabilitation packages, the banks failed to consider them.3. The petitioner's counsel argued that the banks' failure to consider the proposal was arbitrary, citing a circular by the RBI mandating JLF formation for corrective action plans in such cases.4. Respondent Canara Bank contended that the JLF rejected the proposals due to lack of confidence in the petitioner's management and unsubstantiated claims of asset valuation.5. Another respondent, ICICI Bank, presented JLF meeting minutes showing discussions on restructuring plans and the petitioner's failure to provide concrete action plans, leading to rejection of proposals.6. The Court noted the JLF minutes indicating lack of confidence in the petitioner's submissions and decision to initiate recovery steps, dismissing the petitioner's claim of restructuring necessity.7. The Court held that directing banks to accept the petitioner's resolution plan via mandamus was not maintainable, citing precedents where courts did not interfere in commercial decisions of banks.8. The second prayer for guidelines on business continuation was deemed unnecessary as the banks had already assessed the case within RBI circulars, including recovery options.9. The Court highlighted that some banks had initiated recovery proceedings, with ICICI Bank filing under the Insolvency and Bankruptcy Code, leading to the dismissal of the petition as unmerited.This detailed analysis of the judgment showcases the legal arguments, submissions, and court's reasoning regarding the petition seeking mandamus for debt resolution and business continuation guidelines.