AI Drafter 
TaxTMI 
TaxTMI 
2019 (2) TMI 1763
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....4 and 5th May, 2017, vis-à-vis the Joint Lenders Restructuring Agreement (JLRA) dated 27th June, 2015. FACTS 3. The facts as averred in the appeal are that the appellant Lakshmi Energy, a Company incorporated under Companies Act, 1956 is involved in the business of processing paddy and exporting rice. In the year 2010, it had availed of certain financial assistance from a Consortium of Banks comprising of respondent nos. 2 to 5 herein with respondent no.2 (Punjab National Bank, hereinafter referred to as PNB) being the lead banker. Sometime in 2014 on account of non-conducive market conditions in the paddy / rice industry which adversely affected the appellant's business, the drawing power of the appellant suffered heavily and the appellant company informed the consortium of banks accordingly. However, the account was not an NPA at that point of time. 4. Meanwhile, the Reserve Bank of India in exercise of its powers under the Banking Regulations Act, 1949 ("Act of 1949' in short) issued Guidelines on 30th January, 2014 by way of which it introduced the framework of identifying stressed assets and prescribed detailed steps that had to be taken by banks in order to re....
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....ein it not only recommended "restructuring" as the CAP but also laid out a detailed blueprint for the next 10 financial years, wherein the lenders work to infuse working capital in terms of the TEV report into the appellant's business on a proportionate basis and the same had to be repaid by the appellant company over a period of 10 years following a moratorium of two years. In terms of the said report and proposal contained therein the cut-off date was fixed as 1st October, 2014 on which date the term loan outstanding was Rs. 32 Crores and cash credit outstanding was Rs. 860.88 Crores. The restructuring plan involved converting the drawing power shortfall of Rs. 436 Crores into a working capital term loan bearing an interest @ 10.75% per annum. Interest on the said loan was to be converted into a term loan (Funded Interest Term Loan-FITL), the repayment of which would start after the aforementioned moratorium (a period of 24 months from the cut-off date). The proposal also included another Working Capital Term Loan (WICTL-II). The interest on cash credit facility was also proposed to be converted into a term loan. 7. Since the total exposure of the appellant company was more th....
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....hich was already suffering on account of recessionary market conditions and the stressed financial condition. Consequently, the appellant company's efforts and ability to meet the projected cash flow as envisaged in the approved JLF package was severely impeded and jeopardised. 12. It was the case of the appellant that on 1st December, 2015, following several representations and requests made by the appellant company for the release of the remainder of the working capital in terms of the approved JLF package, Punjab National Bank, (PNB) formally sanctioned the release of ad-hoc facilities of Rs. 59.68 Crores against furnishing of further additional third-party ad-hoc securities commensurate with the said amount. However, only Rs. 30 Crores were released out of the said sanctioned amount. It was the appellant's case that since the adhoc limit was merged with the approved JLF package, it was entitled to release of remainder of total sum envisaged for the fiscal year 2015-16 by the other banks according to their pro-rata share. Despite several letters sent to respondent banks repeatedly requesting release of additional working capital no further limits / funds were released. 13.....
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....IBC) having completely abandoned the restructuring process. 19. It was in this context that the appellant company filed the subject writ petition being W.P(C) 5555/2018 inter alia seeking implementation / compliance of RBI circulars dated 30th October, 2014, 26th February, 2014 and 5th May, 2017, vis-a-vis JLRA dated 27th June, 2015. The Learned single judge has dismissed the writ petition. APPEAL 20. Challenging the impugned order, it is the appellant company's case that the learned Single Judge has erred in concluding that the Projected Cash Flow Statements and Working Capital Assessment as contained in the D&B TEV report was not a part of the "Approved JLF package" and therefore it was not entitled to any additional working capital over and above Rs. 75 Crores. It is further stated that Clause 2.6.1 of the JLRA has been completely misconstrued inasmuch as the respondent banks' stand that the Approved JLF Package is limited to Schedule - X of the JLRA and therefore did not envisage provision of fund based working capital beyond Rs. 75 Crores, being a complete afterthought was raised for the first time only before the learned Single Judge. It is stated that the respondent....
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.... request of the Borrower and in consideration of the Borrower's commitment to improve its operations, the request of the Borrower was referred to the Joint Lenders' Forum (hereinafter referred to as the "JLF"), a non-statutory voluntary mechanism for the efficient restructuring of corporate debt. Pursuant thereto, the Lenders at their meeting held on March 19, 2015 agreed for restructuring of Existing Loans as corrective action plan. Pursuant thereto Dun and Bradstreet (D&B) was requested to draw a Techno Economic Viability Report (the "TEV Report") on the restructuring of Existing Loans and it submitted its TEV Report on March 27, 2015 along with the final restructuring package and after perusal of the said report, the Lender / Lead Bank have agreed to restructure the Existing Loan subject to the terms and conditions as decided by the JLF, in its meeting dated March 27, 2015 and finally approved in JLF dated June 23, 2015 (hereinafter referred to as the "Approved JLF Package") 23. It is the appellant's case that upon a conjoint reading of the aforesaid clauses it becomes clear that the restructuring package (proposal) as contained in the D&B TEV report is an integral part of th....
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....in favour of the appellant company towards the remaining sum of Rs. 29.68 Crores which had been withheld unlawfully. It is therefore their case that once working capital had been approved and sanctioned by the Banks in their favour a right had crystallized in favour of the appellant. Therefore, if even after sanction the banks failed to disburse the said funds the said right accrued in favour of the appellant ought to have been enforced by the learned Single Judge. 26. It is further stated that the stand adopted by PNB and ICICI Bank that the said sanction of additional working capital limits was a separate transaction altogether is factually incorrect inasmuch as the said stand was taken only during the course of oral arguments and not in any of the pleadings filed by them. Moreover, treating the said transactions as a separate one would in fact be a violation of extent RBI Circulars which stipulated that the decisions of the JLF were binding on all constituent members. It is stated that a perusal of the minutes of the JLF meeting dated 22nd December, 2016 would show that a decision to enhance working capital limits for FY 2015-16 was taken by the JLF in October, 2015 itself an....
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....t the Approved JLF Package was limited to provision of Rs. 75 Crores only. In fact, the appellant company had on 22nd September, 2015 along with supporting "Credit Monitoring Assessment" CMA data requested that enhanced working capital be released for FY 2015-16 thereby demonstrating the understanding that the Approved JLF Package included enhancement of working capital limits in the subsequent years. It is their case that the aforesaid letter has been read completely out of context inasmuch as several other letters written by the appellant company requesting sanction and release of enhanced working capital have not been considered by the learned Single Judge. 30. It is stated that a TEV Study plays an important role in the framework established to deal with stressed assets by the RBI vide Circulars dated 30th January, 2014 and 26th February, 2014. Reliance is placed on the following Clauses from the Circular dated 26th February, 2014: "4.3 Restructuring by JLF 4.3.1 If the JLF decides to restructure an account independent of CDR mechanism, the JLF should carry out the detailed Techno-Economic Viability (TEV) study, and if found viable, finalise the....
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.... accounts in their respective books of accounts before 30th March, 2015 and 31st March, 2015 on the basis of the restructuring package envisaged in the D&B TEV Report. Attention is drawn to the following sequence of events: DATE EVENT 19.03.2015 JLF in its meeting appointed D&B as the TEV Consultant. 27.03.2015 D&B TEV Report is finalized and submitted to JLF wherein a "restructuring scheme" was proposed. 27.03.2015 On the same day, the JLF approved the aforesaid D&B TEV Report in its entirety which included the Annexure-2 (Balance Sheet) and Annexure - 3 (Projected Cash Flow Statement) and (Assessment of Working Capital Limits) showing enhancement of fund based working capital which later on became the basis of the consequent JLRA executed between the parties. 30.03.2015 PNB and Syndicate Banks issued Sanction Letters in terms of the restructuring package as proposed in the D&B TEV Report. 30.03.2015 On the same day, PNB and Syndicate Bank, restructured the Appellant Company's loan account as WCTL, TL, FITL etc., as proposed in the D&B TEV Report. 10.04.2015 ICICI Bank also issued a Sanction Letter as per the restructuring ....
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....e that the learned Single Judge has completely overlooked the fact that the appellant company had failed to adhere with the repayment schedule only on account of the respondent Banks' default in sanctioning necessary working capital which hindered the appellant company's ability to meet cash flow statements as envisaged in the D&B TEV Report. 36. It is also stated that in light of the fact that the contents of the PNBISL TEV Report had specifically been admitted by PNB and ICICI Bank in their respective counter affidavits before the learned Single Judge, there was no occasion to discredit and refuse to rely on the said Report on the ground that the findings / observations contained therein were not informed or backed by specific analysis. Relevant extract of the said Report is as follows: "The Company complied with all the conditions of restructuring scheme including payment of interest till 3009-2016. But WC limits were not released by Banks as per TEV report / approved restructuring scheme. Consequently, the restructuring scheme could not be taken forward after 01.10.2016 and the Company could not achieve its projections as per TEV report. Amounts payable to Ban....
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....overy mode was eventually approved, it could not be concluded that the JLF had changed the CAP accordingly. It is stated that on 24th April, 2017 the JLF had ratified the minutes of its last meeting held on 22nd December, 2016 thereby implying that there was no meeting convened by the JLF between 22nd December, 2016 and 24th April, 2017. Moreover, the meeting held on 8th February, 2017 was attended by low ranking officers and as such they were not competent to take any decision with regard to changing the CAP. 40. Attention is drawn to the fact that in the meeting held on 21st June, 2017 the JLF had formally invoked S4A Scheme thereby waiving and abandoning its right to initiate recovery proceedings following the purported decision taken in the meeting held on 8th February, 2017. The appellant therefore states that the learned Single Judge's decision to uphold the action of the respondent banks in initiating recovery proceedings is completely unjustified and misconceived. 41. The appellant has sought to distinguish the Judgment of the Supreme Court Innoventive Industries Ltd. v. ICICI Bank and Anr. 2018 1 SCC 407 by contending that Section 238 of IBC cannot override Section 3....
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....es and obligations of the respondent banks under the restructuring package / JLRA dated 27th June, 2015 are not merely contractual in nature but are instead statutory in character. The JLRA, having been executed under the aegis of the extant RBI Circulars, raised certain legitimate expectations on part of the appellant company that the respondent banks would comply with the same. It is stated that implementation / compliance of the aforesaid Circulars is not only important vis-à-vis the stressed assets in particular, but is also critical in view of larger public policy involved and affects the fiscal health of the nation at large. 44. The appellant states that the learned Single Judge has erred in arriving at the finding that the appellant company could have obtained credit facilities from outside the JLF. It is stated that in terms of various clauses of the JLRA the appellant company was precluded from obtaining multi-banking credit facilities from outside the JLF. In fact, faced with delays / failure on part of the respondent banks in disbursing necessary amounts, the appellant had made a specific request to the JLF to permit multi-banking facilities, the same was howev....
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....ondent Bank. 3. Letter dated 2nd December, 2015 of the appellant Company addressed to the answering respondent Bank. 4. Undertaking dated 2nd December, 2015 given by appellant company to the answering respondent Bank. 5. Deed of Hypothecation of goods and Book debts to secure cash credit facility dated 2nd December, 2015 executed and given by the appellant company to the answering respondent Bank. 6. Agreement of Hypothecation of current assets dated 2nd December, 2015 executed and given by appellant Company to the answering respondent Bank. 7. Agreement of Guarantee dated 2nd December, 2015 executed and given by appellant Company to the answering respondent Bank. 8. Agreement of 2nd Charge of Hypothecation of moveable assets forming part of fixed / blocked assets dated 2nd December, 2015 executed and given by appellant Company to the answering respondent Bank. SUBMISSIONS:- 48. Mr. Kapil Sibal, learned Sr. Counsel appearing on behalf of the appellant submitted that the main issue arising out of the present appeal is that respondent Banks failed to release Fund Based Working Capital (FBWC) to the appellant Company as envis....
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....working capital limits as per the "Approved JLF Package" in terms of the projections contained in D&B TEV Report. Mr. Sibal would submit that the said Clause uses the phrase "Approved JLF Package" instead of "this agreement" and therefore the respondent banks' contention that they were not obligated to provide working capital in excess of Rs. 75 Crores is contrary to the language of Clause 2.6.1 itself. He would refer to the several letters written by the appellant to the respondent Banks seeking release of additional working capital limits which had never been denied / disputed by the Banks to submit that their present contention is merely an afterthought. 53. Mr. Sibal would submit that the sanction of Rs. 59.68 Crores by PNB is not a separate transaction but is in fact its pro-rata share of the enhanced working capital limits envisaged in the D&B TEV Report. He would submit that the said stance adopted by the respondent Banks, which had never been taken before the learned Single Judge, is false and misconceived inasmuch as after the issuance of the said sanction letter dated 5th December, 2015, PNB, vide letter dated 7th December, 2015, informed the other Banks that it had sa....
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....Mr. Sibal's submission that in terms of the scheme of IBC, specifically Section 7 thereof, in the proceedings emanating therefrom, the appellant company would not in fact have an opportunity to agitate its grievances before the NCLT. The appellant company's accounts, having been restructured under the JLRA governed by RBI Circular dated 5th May, 2017, issued under Section 35AB of the Act of 1949, must be tested for "default" in terms of the procedure laid down in the JLRA (Clauses 7.3.1 and 7.3.2) unlike a situation which is governed by Section 35AA of the said Act which specifically incorporates the definition of "default" from IBC. The respondent Banks' reliance on the definition of "default" as given in Section 3(12) of IBC 2016 would therefore be completely misconceived. According to him, resorting to IBC proceedings would be in grave violation of the procedure given in the JLRA. 58. He would further submit that Section 238 of IBC cannot override Section 35AB of the Act of 1949 and the Circulars issued thereunder inasmuch as Section 238 seeks to override such laws that stood in force as on date of enactment of IBC, whereas Section 35AB had been introduced in the year 2017, i....
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....capital beyond Rs. 75 Crores. Such sanction beyond the said limit was at the sole discretion of the Banks. 61. It was Mr. Gautam's submission that the appellant had vide letter dated 22nd September, 2015 submitted its audited balance sheets as on 31st March, 2015 along with fresh CMA data to PNB, seeking sanction of working capital in terms thereof. The appellant company passed a Board Resolution on 6th November, 2015 "to avail credit facility from PNB" to obtain cash credit hypothecation for execution of fresh document of agreement and furnishing of securities by way of hypothecation, mortgage and charge on fixed assets. Consequently, the appellant executed separate documents such as Deed of Hypothecation of Goods and Book Debts, Current Assets, Guarantee, Second Charge of Hypothecation of Movable Assets etc. on 2nd December, 2015. He would submit that the managing Committee of PNB in the meeting held on 1^st December, 2015 had sanctioned cash credit limit of Rs. 270.45 Cr. (i.e. enhancement of Rs. 59.68 Cr. from existing Rs. 210.77 Cr.). According to him, it is therefore clear that the said sanction of Rs. 59.68 Cr. was a separate transaction on a separate request made on 22nd....
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.... from their own sources. • The process shall be subject to the approval of Overseeing Committees set up by the IBA. • Forensic Audit as per Scheme • Any other conditions as per the guidelines. Meanwhile the Company was also advised to cooperative with the Stock Auditor appointed by the Lead Bank and get the Stock Audit / other audits completed within any further delay. The Company was also advised to submit all the necessary information viz., financial, stock statements etc. immediately so that a resolution strategy is put in place in good time. Meanwhile the bankers shall also take up internally regarding the S4A option which shall be again discussed in the meeting proposed to be held in the first week of June, 2017, after the Company submits a formal proposal accompanied by the requisite documents. It was also decided to for a core committee of Bankers with a representative from the Company to coordinate the matter. The Company was advised to ensure that all the sale proceeds are routed through the designated TRA account." 64. It is further submitted that the S4A Scheme could not be implemented on account of the appellan....
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....y in its rejoinder merely adopted the stand that the same was irrelevant. He would also submit that without prejudice to his case even if there was an actual violation of the terms of the JLRA the appellant company could not invoke the writ jurisdiction of this Court for the enforcement of the said terms. Reliance is placed on State of U.P. and Others v. Bridge and Roof & Company Ltd. 1996 (6) SCC 22; Kerala State Electricity Board and Anr. V. KUrien E. Kalathil & Ors. 2000 (6) SCC 293; Binny Ltd and Anr. v. V. Sadasivam and Ors. reported in 2005 (6) SCC 657 and State of Kerala and Ors. vs. M.K. Jose reported in 2015 (9) SCC 433. 67. Finally, he would submit that in terms of the law laid down by the Supreme Court, a corporate debtor cannot seek stay of proceedings initiated under IBC 2016 and remedy against proceedings initiated under SARFAESI Act would lie with the borrower only in terms of the Section 17 of the Act. 68. Mr. Ramji Srinivasan, learned Senior Counsel appearing for the respondent No.3 would, in addition to supporting the stance adopted by Respondent No. 2, submit that the appellant company was in continuous default on almost all its payment / repayment obligati....
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....ICI Bank would not undertake any additional exposure with respect to the appellant company. 72. Vide letter dated 2nd February, 2017, the appellant company was informed that its account maintained with ICICI Bank was declared as an NPA as on 31st December, 2016 and related information with regard to outstanding dues was also conveyed. In the JLF meeting held on 8th February, 2017, the CAP was changed from "Restructuring" to "Recovery" following which respondent nos. 2, 4 and 5 issued notices under Section 13 (2) of SARFAESI Act to the appellant company. However, only as a matter of goodwill gesture, in the meeting held on 24th April, 2017, the lenders agreed to implement any viable proposal for resolution of the appellant's debt in terms of S4A Scheme of the RBI subject to satisfactory Forensic Audit Report. The proposal of S4A Scheme was considered in light of the appellant's financial indiscipline which had resulted into a substantial portion of the debt becoming unsustainable. It was only on account of non-closure of the Forensic Audit Report within 180 days that ICICI Bank withdrew its consent for the S4A Scheme on 23rd January, 2018. Subsequently, the appellant was also iss....
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....the scheme of restructuring is for the "Existing Facilities" and would mean to be the package as was finally approved in the JLF meeting held on 23rd June, 2015. Mr. Srinivasan would refer to the appellant's letter dated 7th June, 2015 to support the view that agreed restructuring did not include provision of any additional working capital beyond Rs. 75 Crores. None of the documents executed by the respondent Banks record any commitment to provide additional funding and clause 2.6.1of the JLRA expressly provides that the same would be at the Bank's sole discretion. 76. Mr. Srinivasan would point out that the appellant has also defaulted with respect to several other stipulations contained in the JLRA namely, (i) upfront promoter's contribution of Rs. 18.44 Crores; (ii) requirement to route all trading transactions through TRA; and (iii) regular payment of monthly interests as per respective due dates mentioned in the payment schedule in the JLRA. Even though the respondent Banks had given liberal extensions to the appellant to regularize its accounts, it continued to default and, in such circumstances, it cannot demand additional funding as a matter of right. 77. According to....
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....to be subject to the exception that a general provision cannot derogate a special one. Reliance is laid on Yakub Abdul Razak Memon v. State of Maharashtra, 2013, 13 SCC 1. 80. It is Mr. Srinivasan's submission that a TEV Study Report can never be a conclusive or legally binding document for the purposes of restructuring. In this regard, he would refer to Clause 3.3.3 of the RBI Circular dated 30th January, 2014, which reads as follows: "For accounts with AE above Rs. 5000 million, the abovementioned TEV Study and restructuring package will have to be subjected to an evaluation by an Independent Evaluation Committee (IEC) of experts fulfilling certain eligibility conditions. The IEC will look into the viability aspects after ensuring that the terms of restructuring are fair to the lenders." 81. As regards the appellant's contention that sanction of additional package by PNB vide letter dated 5th December, 2015 formed a part of the JLRA, Mr. Srinivasan would submit that had the same additional facility formed the part of the package, there would not have been requirement of any further "sanction" and "creation of separate additional securities" and the said facility would....
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....rores. 86. The submissions of Mr. Sibal as noted above can be summed up as below: - (i) That the Banks have failed to comply with mandatory directions of RBI, issued vide circulars dated January 30, 2014, February 26, 2014 and May 05, 2017, which casts a statutory duty on the Banks to implement the Restructuring Package in a time bound manner; (ii) That, the stand of the Banks that the JLRA did not envisage provision of capital beyond Rs. 75 Crores and that Annexures 2 and 3 of the D&BTEV Report were not part of the "Approved JLF Package" is completely misconceived inasmuch as the JLF itself in its meeting held on 19th March, 2015 had commissioned D&B to carry out the TEV Study, having adopted "Restructuring" as the CAP. The TEV recommended the enhancement of working capital which was adopted in its entirety in the meeting held on 26th March, 2015; sanction letter issued by the PNB to the appellant on 30th March, 2015; IEC comprising of Senior RBI officials had approved the TEV report in its entirety without expressing any reservation with regard to the subject Annexures. (iii) The restructuring envisaged comprised of "Restructuring" contained in the J....
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....ks to issue notice in the case of default. No such notice was issued to the Appellant. (x) The appellant would not have an opportunity to agitate its grievances before the NCLT. The company accounts having been restructured under the JLRA in terms of Circular dated 5th May, 2017, issued under Section 35AB, must be tested for "default" in terms of procedure laid down in the JLRA, unlike a situation governed by Section 35AA of the Act. So, resorting to the IBC proceedings would be in grave violation of the procedure given in the JLRA. (xi) Section 238 of the IBC cannot override Section 35AB of the Act of 1949 and the Circulars issued thereunder inasmuch as Section 238 seeks to override such laws that stood in force on the date of enactment of IBC, whereas Section 35AB was introduced in the year 2017. (xii) Reliance placed by the ld. Single Judge on the Judgement of the Supreme Court on Innoventive (Supra) is misconceived, inasmuch as the Supreme Court had only declared supremacy of the IBC over Maharashtra Relief Undertaking Act, 1958 which is admittedly hit by Section 238 unlike Section 35AB in the present case. (xiii) He refers to the Judgment of....
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.... (INR Millions) Particulars Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24 Mar-25 Opening Balance 320.00 320.00 320.00 312.00 296.00 272.00 240.00 208.00 160.00 96.00 32.00 Addition / Disbursement Repayment 0.00 8.00 16.00 24.00 32.00 32.00 48.00 64.00 64.00 32.00 Closing Balance 320.00 320.00 312.00 296.00 272.00 240.00 208.00 160.00 96.00 32.00 - Interest Charged to P&L 0.00 34.49 34.12 24.62 31.07 27.95 24.57 20.84 14.60 7.71 1.29 Interest Converted to FITL - III 34.49 17.25 iii. Working Capital Term Loam (WTCL)-I Irregularity of INR 4,360 million cons....
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.... from quarter ended December 2016. The detailed repayment is as exhibited under - (INR Millions) Particulars Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24 Mar-25 Opening Balance 245.00 245.00 238.88 226.63 208.25 183.75 159.25 122.50 73.50 24.50 Addition / Disbursement Repayment 0.00 0.00 6.13 12.25 18.38 24.50 24.50 36.75 49.00 49.00 24.50 Closing Balance - 245.00 238.88 226.63 208.25 183.75 159.25 122.50 73.50 24.50 - Interest Charged to P&L 0.00 24.50 26.09 24.86 23.29 20.79 18.11 14.98 9.88 4.63 0.33 Interest Converted to FITL - IV 24.50 13.20 iv. Fund Based Working Capital (CC) The total outstanding working capital as on the cut-off date is INR 8,636 million and drawing power is ar....
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....nbsp;93.30 95.92 89.90 80.28 69.92 57.86 38.20 17.92 1.29 The detailed repayment schedule of FITL - II (on Working Capital) is as under - (INR Million) Particulars Mar15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar21 Mar-22 Mar-23 Mar-24 Mar-25 Opening Balance 213.28 213.28 629.22 816.26 774.41 711.62 627.90 544.19 418.61 251.18 83.75 Addition / Disbursement 415.94 207.97 Repayment 0.00 20.93 41.86 62.79 83.72 83.72 125.57 167.43 167.43 83.72 Closing Balance 213.28 629.22 816.26 774.41 711.62 627.90 544.19 418.61 251.18 83.75 0.03 Interest Charged to P&L 0.00 43.54 82.61 84.95 79.60 71.07 61.88 51.21 33.77 15.79 1.12 The detailed repayment schedule of FITL - III (on Term Loan) is as under - (INR Million) Particulars Mar15 Mar-16 Mar-17 Mar18 Mar-19 Mar-20 Mar21 Mar-22 Mar-23 Mar-24 Mar-25 ....
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....EBITDA Margin -26.83% 11.16% 12.20% 15.45% 13.94% 14.28% 14.41% 14.31% 14.15% 13.92% 13.68% Net Profit (3,390.52) (352.00) (228.15) 295.26 389.62 759.50 1,266.48 1,442.54 1,626.37 1,708.96 1,767.27 Net Profit Margin -47.36% -3.29% -1.91% 2.20% 2.45% 4.16% 6.32% 6.85% 7.35% 7.71% 7.96% Break-Even Sales -1,739.91 16,512.72 15,549.41 11,003.71 12,138.67 10,978.15 7,277.59 6,413.62 5,510.33 4,436.25 3,546.94 Break-Even Capacity -7% 89% 83% 57% 64% 58% 38% 34% 29% 23% 19% Share Capital (Incl. Promoters' Contribution) 132.98 132.98 132.98 132.98 132.98 132.98 132.98 132.98 132.98 132.98 132.98 Reserves and Surplus 3,743.56 3,391.57 3,163.42 3,458.68 3,848.30 4,607.80 5,874.28 7,316.82 8,943.19 10,652.15 12,419.42 Total Net Worth (TNW) 3,876.54 3,524.55 3,296.40 3,591.66 3,981.28 4,740.78 6,007.26 7,449.80 9,076.17 10,785.13 ....
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....-statutory voluntary mechanism for the efficient restructuring of corporate debt. Pursuant thereto, the Lenders at their meeting held on March 19, 2015 agreed for restructuring of Existing Loans as corrective action plain. Pursuant thereto Dun & Bradstreet (D&B) was requested to draw a Techno Economic Viability Report (the "TEV Report") on the restructuring of Existing Loans and it submitted its TEV Report on March 27, 2015 along with the final restructuring package and after perusal of the said report, the Lenders /Lead Bank have agreed to restructure the Existing Loan subject to the terms and conditions as decided by the JLF, in its meeting dated March 27, 2015 and finally approved in JLF dated June 23, 2015 (hereinafter referred to as the "Approved JLF Package")." 63. Paragraph 2.5 of Article II of the JLRA provides for restructuring and reads as under:- "2.5 RESTRUCTURING Each of the Lenders and the Borrower hereby agree that the Existing Loans shall hereby stand reconstituted and or restructured as mentioned herein below On and from the Effective Date the provisions of the Existing Financing Documents and Existing Security Documents relating....
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....pital dues (Rs in Crore) Lenders Sanctioned Limits FB NFB Total Punjab National Bank 360.00 25.00 385.00 Syndicate Bank 240.00 - 240.00 ICICI Bank 125.00 - 125.00 Axis Bank 64.00 5.00 within FB 64.00 Total 789.00 25.00 814.00 "SCHEDULE III PART A Details of Facilities Particulars of facility A - Term Loans Bank TL PNB 32.00 ICICI Bank - Syndicate Bank - Total 32.00 Particulars of facility B - Working Capital Term Loan - I (WCTL - I) (Rs in Crore) Bank WCTL-I PNB 228.11 ICICI Bank 64.97 Syndicate Bank 117.09 Axis Bank 29.79 Total 439.96 Particulars of facility C - Working Capital Term Loan - II (WCTL - II) Bank FITL - I PNB 24.50 ICICI Bank - Syndicate Bank - Axis Bank - Total 24.50 Particulars of facility D - Funded Interest Term Loan - I (FITL - I) Bank FITL - I PNB 49.40 ICICI Bank 12.47 Syndicate Bank 25.38 Axis Bank 6.46 Total 9....
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....However interest on existing working capital facitielies for a period of two years from cut of date will be funded as FITL-2, (b) The repayment of the same shall be on demand. The Facility H shall be utilised for funding the working capital requirements of the Borrower without reference/restriction to any particular division of the Borrower. (c) Drawing power shall be calculated based on the stock statement received from the Borrower (d) Cover period for book debt is 90 days with margin of 25% and uniform margin of 25% against all components of inventory. (e) All other conditions as mentioned in Article XII All other terms and conditions (which are not enumerated/specifically mentioned in the JLRA) will be applicable as per sanction letter issued by respective lenders." 68. As is apparent from the relevant extracts of the Schedules to the JLRA, as set out above, there is no reference to provision of additional working capital limits in the subsequent years. 69. As noticed above, the expression "approved JLF Package" has been explained in recital "F' of the JLRA. A plain reading of the recital "F' of the JLRA indicates t....
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.... expressly clear that additional funding would be at their discretion. 74. It also evident from the Minutes of the Meeting of the JLF held on 22.12.2016 that the decision to process the petitioner's request for additional funding was delayed on account of ICICI bank red flagging the account. Concededly, this was not justified because the reasons for the same were already factored in at the time of approving the restructuring package. Thus, the contention that the respondent banks had unduly delayed the process is perhaps justified. But the same does not lead to the conclusion that the respondent banks were obliged to provide additional funding. As noticed above, the JLRA made it expressly clear that any additional funding would be at the discretion of the respondent banks. 75. In view of the above, this Court is unable to accept that any directions are required to be issued to the RBI for implementing the Circulars to enforce the JLRA. As noticed above, the additional funding was always to be at the discretion of the respondent banks. It is also relevant to note that Article 4 of the JLRA also provides for prepayment of the facilities. The petitioner was expressly....
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....rrower's commitment to improve its operations, the request of the Borrower was referred to the joint lenders forum (hereinafter referred to as the "JLF"), a non-statutory voluntary mechanism for the efficient restructuring of corporate debt. Pursuant thereto, the Lenders at their meeting held on March 19, 2015 agreed for restructuring of Existing Loans as corrective action plain. Pursuant thereto Dun & Bradstreet (D&B) was requested to draw a Techno Economic Viability Report (the "TEV Report") on the restructuring of Existing Loans and it submitted its TEV Report on March 27, 2015 along with the final restructuring package and after perusal of the said report, the Lenders /Lead Bank have agreed to restructure the Existing Loan subject to the terms and conditions as decided by the JLF, in its meeting dated March 27, 2015 and finally approved in JLF dated June 23, 2015 (hereinafter referred to as the "Approved JLF Package"). (iii) The last sentence of Paragraph 2.5 of the JLRA makes it amply clear that the JLRA and other financing documents constituted the entire agreement between the parties on the terms and conditions as mentioned in Schedule III to Schedule XI. Schedule I....
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....ioning a sum of Rs. 59.68 Crores (out of which it had also disbursed Rs. 30 Crores), that there was an obligation on the Banks to release capital beyond Rs. 75 Crores. It was the stand of the PNB that the sanction of Rs. 59.68 Crores was part of a different transaction. Mr. Sibal had relied upon a communication dated December 07, 2015 said to have been sent by the PNB to the other Banks calling upon other Banks to sanction their share of the amount. 90. It is a conceded case that other Banks had neither sanctioned, nor released any money in favour of the appellant herein. So, PNB is right in contending that the sanction of sum of Rs. 59.68 Crores was part of a separate transaction as, new agreements like Deed of Hypothecation of Goods and Book Debts etc. were signed and new securities were furnished. In any case, only an amount of Rs. 30 Crores was disbursed out of the said amount and it is PNB's stand, that the rest could not be released as, the appellant itself had failed to provide additional security for the enhanced limit. That even otherwise, the fact that it was at the asking of the appellant, that the process of implementation of S4A Scheme in its favour was initiated, t....
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....that the consensus amongst the respondent banks is to proceed with recovery. This is also reflected in their stand in these proceedings. 80. Clearly, a specific performance of the JLRA cannot be granted. The events that have unfolded subsequent to the parties entering into the JLRA indicate that the fundamental assumptions on which the approved JLF package was founded, no longer holds good. In the JLF meeting held on 22.12.2016, the respondent banks have noticed that the revenue being generated by the petitioner was insufficient to support the existing level of debt. The respondent banks were thus of the view that the petitioner's case could be considered under the S4A Scheme subject to the viability being established. At the said meeting, the Managing Director of the petitioner company also agreed that there was no perceptible improvement in the earnings from the milling/trading operations due to the shortage of the working capital. He conceded that the petitioner company's finances were not strong enough to sustain the existing level of debt and agreed that a S4A scheme may be considered. At the meeting of the JLF held subsequently, on 24.04.2017, the petitioner company ....