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Judgment
E. Padmanabhan, J.—The writ petitioner, M/s. Empee Distilleries Ltd., has prayed for the issue of a writ of mandamus or any other
appropriate writ or order or direction forbearing the first respondent from invoking its rights under the joint consent memo dated 13.10.2000 in
I.A. No.s 1 and 2 in M.A. No.54 of 2000 and restrain the 2nd respondent from withholding payment to the petitioner till the disposal of I.A.
No.33 of 2002 in O.A. No.1211 of 1999 pending on the file of the Debts Recovery Tribunal, Chennai.
On 1.8.2002 notice regarding admission was ordered returnable by 22.8.2002 by V. Kanagaraj, J. The learned Judge also granted ad interim
injunction till 22.8.2002. There has been further extension/modification of the interim order and continuance of the order. The first respondent
moved the Court for vacating the interim orders. When the interim applications came up for enquiry, counsel on either side represented that the
arguments in the interim application as well as in the main writ petition are one and the same and at their joint request the writ petition itself is taken
up for final disposal.
Heard Mr. A.L. Somayaji, learned senior counsel for M/s. Aiyar & Dolia, appearing for the petitioner, Mr. P.L. Narayanan, learned counsel
appearing for the first respondent, Mr. N.R. Chandran, learned Advocate General appearing for the third respondent and none appearing for the
other respondents.
According to the petitioner, it is a manufacturer of Indian made Foreign Liquor and supplies the entire produce manufactured by it to the 2nd
respondent, State Marketing Corporation. Admittedly, the petitioner-company is one of the guarantors of M/s. Empee Sugars and Chemicals, who
had borrowed substantial sum from the first respondent to set up a sugar mill in Nellore District. The loan was availed under the Project Finance
Participation Scheme. There was delay in commissioning the sugar plant and there was less recovery of sugar from the sugarcane supplied by the
cane growers and that the 3rd respondent sugar mills sustained loss. Due to the financial support extended by the petitioner company, the 3rd
respondent, who is the principal borrower could run its business. The 3rd respondent negotiated for a settlement with the first respondent also,
which agreed to receive Rs.19.96 Crores as one time settlement in full and final payment in the year 1996. The principal borrower remitted
Rs.6.86 Crores and it could not discharge the remaining obligations as a result of which the one time settlement arrived at was withdrawn by the
first respondent.
The first respondent instituted original application for recovery of the amount due to it before the Debts Recovery Tribunal, Chennai in O.A.
No.1211/99 seeking for recovery of Rs.53.91 Crores, which includes interest, penal interest and liquidated damages, as against Rs.14.96 Crores
borrowed by the 3rd respondent during the year 1992.
The first respondent moved I.A. No.1129/00 for an exparte order of garnishee restraining the petitioner from receiving the amounts from the
2nd respondent. The exparte order was granted on 31.3.2000. The petitioner moved an application to vacate the order and the said order was
kept in abeyance on condition that a sum of Rs.10 lakhs has to be paid every month to the first respondent towards the discharge of the dues.
Such an order was passed on 30.5.2000. As against the said order dated 30.5.2000 passed in I.A. No.1129/00, the respondent filed M.A.
No.54/00 before the Debts Recovery Appellate Tribunal. The Appellate Tribunal in M.A. No.54/00 set aside the order dated 30.5.2000 and
remanded the matter back to the Debts Recovery Tribunal, but directed that order passed against the garnishee shall continue. The writ petitioner
moved I.A. Nos. 1 and 2 of 2000 to modify the order dated 6.10.2000. During the pendency of the interim application, a joint memo was filed in
which the petitioner agreed to pay Rs.40 lakhs per month with effect from 1.11.2000 till a settlement is arrived at between the principal debtor,
namely, the 3rd respondent and IDBI or until disposal of O.A. No.1211/99. In case of default of two monthly instalments, the garnishee order
dated 31.3.2000 will get revived and will be in force. The said memorandum of compromise, it is claimed, was availed as an interim measure
pending the original application.
While so, the first respondent through its counsel by letter dated 2.1.2002 informed the 2nd respondent that default has been committed and
demanded the 2nd respondent not to release any money payable to the petitioner. The petitioner has to pay substantial sum towards sales tax and
excise duty and, therefore, the petitioner could not keep up the schedule. The petitioner moved I.A. No.33 of 2002 in I.A. No.1229/00 in O.A.
No.1211/99 and an order was passed on 9.1.02 while reserving orders in the pending interlocutory application. The Debts Recovery Tribunal
taking into account the financial hardship of the petitioner in paying the statutory liabilities and the necessary expenses required for running the unit,
permitted the 2nd respondent to make payment to the petitioner on condition that Rs.20 lakhs should be paid by the 3rd respondent within a week
and the 2nd respondent shell keep in reserve 40% of the amount to be paid to the petitioner out of which a sum of Rs.10 lakhs has to be paid. It is
claimed that such an order was passed as one time measure pending further orders in I.A. No.33/02. It is admitted that the said interim application
is still pending.
The first respondent moved Contempt Application No.1 of 2002 in M.A. No.54 of 2000 seeking for a direction to punish the petitioner herein
for alleged wilful disobedience of the order dated 13.10.2000 by way of contempt, but the same was dismissed. The petitioner filed R.A. No.1 of
2002 in C.A. No.1 of 2002 in M.A. No.54 of 2000 seeking for modification of the order dated 7.7.2002 by deleting para-4 of the order. The
said review application was dismissed by the Debts Recovery Appellate Tribunal and it declined to review its order dated 7.7.2002. The counsel
for the first respondent sent a letter to the 2nd respondent intimating that it has to exercise the right of garnishee and called upon the 2nd
respondent to restrain itself from making any payment to the petitioner. The said action on the first respondent is mala fide. It is further stated that
the principal borrower met the Directors of the first respondent bank at Mumbai and offered to settle while offering certain terms. It is claimed that
the petitioner has paid Rs.3.83 Crores after filing of O.A. No.1211/99 and a sum of Rs.2.43 Crores after the joint memo of compromise dated
13.10.2000. It is contended that the first respondent has to await the final outcome of I.A. No.33 of 2002 as the earlier orders has been kept in
suspended animation. The demand made by the first respondent on the 2nd respondent is uncalled for, illegal and if the garnishee order is to be
given effect to, the petitioner will suffer irreparable loss and it has to close down its brewery.
The entire dues could be wiped out if required time is granted and there is no justification at all to throttle the petitioner, who has guaranteed the
amounts repayable by the 3rd respondent sugar mills. Hence, the present writ petition. Pending the writ petition, the petitioner also prayed for
interim injunction in W.P.M.P. No.46298 of 2002. To vacate the interim orders, the first respondent in the writ petition moved W.V.M.P. No.975
of 2002. The first respondent also filed W.P.M.P. No.47199 of 2002 to suspend the order of interim injunction passed in W.P.M.P. No.46298 of
2002.
According to the first respondent, the writ petition is not maintainable and it is liable to be dismissed. The relief sought for in the writ petition
amounts to interference with the due process of law and, hence, they are not maintainable. Admittedly the petitioner is a guarantor of the 3rd
respondent''s borrowings from the first respondent. The advancement of monies by the first respondent to the third respondent was an independent
decision. The one time settlement offer made by the writ petitioner was accepted on certain terms and conditions and time was essence of the said
one time settlement. However, the 3rd respondent did not comply with the terms and conditions of the said one time settlement and, consequently,
got lost. As on 30.6.02, the total outstanding due from the 3rd respondent is to the tune of Rs.90.44 Crores and the petitioner''s liability as
guarantor is co-extensive with that of the principal borrower. The present offer made by the petitioner for one time settlement is no where near it.
The first respondent advanced Rs.870 lakhs in 1991, Rs.500 lakhs in 1992 and another sum of Rs.120 lakhs during 1992. The payments alleged
by the petitioner would not even serve the interest part of the huge loan.
After filing of I.A. No.1229 of 2000 on 30.5.2000, the 4th respondent, Debts Recovery Tribunal, passed further order directing the petitioner
herein to pay Rs.10 lakhs and the injunction granted in I.A. No.1229 of 2000 was suspended. As against the said order, the first respondent
preferred M.A. No.54 of 2000 and the Appellate Tribunal by order dated 6.10.00 allowed the appeal and remanded the matter to the 4th
respondent while reviving the garnishee order. The attempt on the part of the petitioner to modify the remand order is opposed. At that stage the
petitioner volunteered and undertook to pay Rs.40 lakhs per month and requested the first respondent to consent for the passing of a consent
order.
Thereafter a consent order came to be passed on 13.10.2000 by the Debts Recovery Appellate Tribunal, which order is the final order in
M.A. No.54 of 2000 and by that the earlier order dated 6.10.2000 stands modified. It is incorrect to contend that the earlier order dated
6.10.2000 still survives. No appeal is maintainable against the consent order. The petitioner is estopped from going back and challenging the
consent order.
The first respondent addressed a letter on 2.1.2002 to the 2nd respondent through its counsel stating that the petitioner had committed several
defaults. This respondent has taken a categorical stand in I.A. No.33 of 2002 that the 4th respondent cannot sit in appeal over the order passed
by the Appellate Tribunal. However, the 4th respondent proceeded to pass the order dated 9.1.02. The 4th respondent posted the matter to
28.1.2002 and, thereafter, this respondent waited for further orders for further course of legal action. However, no orders were passed for a long
time till the first respondent reopened the matter following the sale of the petitioner''s group company viz., Empee Breweries Ltd., to Mcdowell
Alcobev Ltd. Sale of the shares in the said group company was effected by the guarantor when there is an order of injunction restraining such
transfer of licence. Once again an interim order was passed on 27.6.2002 in the pending I.A.s, granting time to the petitioner. This respondent
preferred an appeal against the order dated 27.6.2002.
Even in respect of the order dated 9.1.2002 passed by the 4th respondent, the petitioner tried to take advantage, but has not complied with
the same by keeping 40% reserve ordered to be kept aside. The 40% reserve from 9.1.02 to 5.7.02 should be atleast Rs.50 Crores. The attempt
to supersede the order passed by the Appellate Tribunal is a nullity.
The petitioner has committed default in payment of the monthly instalments and, consequently, the garnishee order gets automatically revived.
The first respondent, financial institution, is entitled to enforce the garnishee order, which is in force. The plea of contempt sought to be raised is a
misconception. The garnishee order gets revived and the first respondent is entitled to enforce the garnishee order. The garnishee order directs not
to pay any money to the 2nd respondent until further orders. By virtue of the joint memo, the garnishee order passed gets revived and it is in force.
There is no error apparent on the face of the record for being corrected. After the passing of the order, the 2nd respondent sought for details and,
hence, the first respondent has addressed a letter dated 2.1.2002. Thereafter, the details of the order passed by the Debts Recovery Tribunal was
furnished.
The Appellate Tribunal''s order stands and it cannot be modified by the 4th respondent as an inferior tribunal cannot sit on appeal against the
orders of the appellate tribunal. The one time settlement offered are not genuine and they lack bona fides. The 3rd respondent has all along
adopted the practice of making unacceptable revised offers and there is no genuineness in the offer. The offer so far made by the 3rd respondent
has no relevance to the substantial sum of Rs.90.44 Crores due as on 30.6.2002. The alleged payment will not even be sufficient to cover the
interest accrued due on the principal outstanding.
When an order of injunction is pending, the petitioner and the 3rd respondent have chosen to sell the brewery unit with a view to defeat the
first respondent''s claim and to make illegal gain without clearing the huge dues of public funds. The brewery unit of the petitioner Empee Breweries
has been transferred by way of transfer of shares to Mcdowell Alcobev Ltd., knowing fully well that they are not entitled to utilise the monies
received from the sale of their share holding in the brewery unit as it is hit by the doctrine of lis pendence. The transfer of licence by the petitioner is
with ulterior motive to abdicate the responsibility of Empee Distilleries Ltd., as guarantor.
It is fallacious on the part of the petitioner to contend that the order passed by the Appellate Tribunal in M.A. No.54 of 2000 has to be kept in
animated suspension. Even when the order of garnishee was in force for a month, the petitioner was still able to run its brewery unit, which would
show its financial power. By continuance of the garnishee order only the amounts due and payable to the first respondent is collected, no harm or
prejudice will be caused to the petitioner group. The writ petitioner and the 3rd respondent always attempt to avoid the liability to pay the principal
and interest. The contempt application filed by the petitioner has also been dismissed on 5.7.2000 holding that garnishee order gets automatically
revived consequent to the default and that the first respondent is entitled to enforce the garnishee order.
The petitioner having failed to challenge the consent order passed in M.A. No.54/00, cannot seek to forbear the first respondent from
exercising its rights and enforcing the said order. The consent order passed in M.A. No.54/00 is in force until disposal of the original application or
until a settlement is reached between the petitioner and the first respondent as well as the principal borrower. It is well open to the petitioner to go
before the Debts Recovery Tribunal and participate in the O.A. proceedings and get the O.A. disposed of on merits.
The petitioner is not entitled to the relief prayed for. The petitioner cannot claim plurality of release, which is per se not maintainable. As
regards the relief of mandamus prayed for, this Court would decline the grant as there is no obligation on the part of the first respondent. Further
this Court would decline to issue injunction against due process of law and action taken pursuant to orders passed by competent Tribunal. The
consent order has reached finality and, therefore, the petitioner is not entitled to the relief. The first respondent has prayed for dismissal of the writ
petition.
Though Mr. A.L. Somayaji, learned senior counsel vociferously contended that this Court should go to the rescue of the petitioner as well as
the 3rd respondent and the learned Advocate General appearing for the 3rd respondent sought to support the writ petitioner, this Court is of the
considered view that the petitioner is not entitled to maintain the writ petition nor it is entitled to seek for the relief sought for in this writ petition.
When the proceedings are pending before the competent Tribunal, and when the orders passed by those Tribunals not having been challenged and
no case has been made out, if at all to interfere with those orders, the petitioner has to move the said Debts Recovery Tribunal or the Appellate
Tribunal as the case may be for appropriate orders and not by way of a writ petition. Writ petition is not meant for scuttling the judicial process of
the competent Tribunal. The Debts Recovery Tribunal as well as the Appellate Tribunal have already passed orders and those orders are binding
on the petitioner. That apart, the petitioner and the 3rd respondent were consenting parties to the directions issued by the said Tribunal and,
therefore, they cannot wriggle out of the situation in which the petitioner has placed itself.
The remedy of writ of mandamus is maintainable only when there is a failure of justice and that it should be granted in all cases where law has
established no specific remedy and where injustice has been rendered. Mandamus is issued only where there is a clear and specific legal rights to
be enforced or an obligation or duty which ought to be and could be performed. The object of mandamus is not to supersede the legal remedies,
but are to supply one of them. The petitioner has no legal right to the performance of a particular act of deed at the hands of the first respondent
and it is not as if the petitioner has no other adequate or specific remedy to secure the enforcement of its right, if any, and the performance of the
deed and all the rights, if any. Mandamus will not lie to all acts of deeds calling for the exercise of judgment and discretion.
The petitioner having failed to stand by the consent order cannot seek for a mandamus against the first respondent to defeat the rights of the
first respondent or in its attempt to enforce the consent order. The relationship between the 3rd respondent and the first respondent is that of the
borrower and lender and the writ petitioner is only a guarantor and, therefore, no mandamus could be issued forbearing the first respondent from
enforcing the consent order and in its attempt to recover the amount due either from the principal borrower or from the guarantor. Mandamus
being a public law remedy, will not be issued in respect of test of private right or contractual right or obligation to avoid the contract entered into
between the parties.
In the present case, though the first respondent may be amenable to writ jurisdiction, what is sought for by the petitioner is to forbear the first
respondent from enforcing the contractual obligations of the lender and the borrower as well as the guarantor and the garnishee order by the
competent Tribunal. The contract entered into between the first respondent and the 3rd respondent, the borrower and the petitioner the guarantor
is purely contractual, the terms of which determines the rights and obligations of the parties interse.
That apart, when substantial matters are pending before the Tribunal, namely, the Debts Recovery Tribunal, it is too farfetched on the part of
the petitioner to come before this Court and seek for certain interim orders to defeat the rights of the first respondent. No writ is maintainable just
for interim orders or interim directions alone when proceedings are pending before the Tribunal, namely, the Debts Recovery Tribunal.
It is rightly contended by Mr. Narayanan, learned counsel for the first respondent that neither the writ petitioner nor the 3rd respondent could
invoke the writ jurisdiction of this Court under Article 226 of The Constitution for the avoidance of their obligations voluntarily incurred as has been
held by the Apex Court in Har Shankar and Others Vs. The Dy. Excise and Taxation Commr. and Others, .
It is further contended by Mr. Narayanan, learned counsel for the first respondent that no indulgence should be shown to a recalcitran defaulter
in repayment of the loan as the Court would protect only honest and sincere litigants and the learned counsel rightly relied upon the pronouncement
of the Apex Court in ORISSA STATE FINANCIAL CORPORATION & ANOTHER VS. M/S. HOTEL JOGENDRA reported in .
It is further and rightly contended by Mr. Narayanan that there is no equity in favour of the petitioner and the 3rd respondent, who are
defaulting parties to justify interference by this Court in exercise of its equitable extra-ordinary jurisdiction under Article 226 to assist them in not
repaying its debts. It has been held so by the Apex Court in Andhra Pradesh State Financial Corporation Vs. M/s. GAR Re-Rolling Mills and
another, . The Apex Court held in the said case that aim of equity is to promote interest and not to frustrate legitimate rights of the financial
corporations, which after advancing the loan takes steps to recover its dues from the defaulting parties.
Concedingly proceedings are pending before the Debts Recovery Tribunal and the petitioner had not chosen to abide by the orders much less
consent orders passed by the said Tribunal. The one time settlement offer made to the first respondent by the petitioner and the 3rd respondent are
not genuine nor it is bona fide and the attempt on the part of the writ petitioner as well as the 3rd respondent is to defeat the claims of the first
respondent and also screen its valuable assets from being proceeded. The first respondent is well founded in pointing out that the petitioner has
chosen to transfer its licence and other assets, despite the interim orders and such activities on the part of the petitioner has to be deprecated.
As seen from the order of the Debts Recovery Tribunal dated 31.3.2000, the garnishee was directed not to pay any money to the guarantor
until further orders. Thereafter, on 30.5.2000 after considering the application made by the guarantor/writ petitioner, the Debts Recovery Tribunal
directed the guarantor to file a statement and affidavit and ultimately considering the income and expenditure statement, the claim of the first
respondent, directed the writ petitioner and the 3rd respondent to pay Rs.10 lakhs every month without prejudice to the contention of both parties
towards the dues due to the first respondent bank from 1.6.2000 as an interim arrangement till the disposal of the interlocutory application or till
the disposal of the application. In that view, the earlier order granted in I.A. No.1129 of 2000 was suspended.
The first respondent bank preferred an appeal M.A. No.54 of 2000 before the Debts Recovery Appellate Tribunal at Chennai. The said
Appellate Tribunal after detailed consideration, while pointing out that the petitioner and the third respondent were due to the first respondent bank
in a sum of Rs.54 Crores on the date of filing of the original application, and Rs.56 Crores on the date of the order, and by pointing out the
illegality committed by the Debts Recovery Tribunal and the suspension of its order, allowed the appeal by order dated 6.10.2000. The first
respondent succeeded before the Appellate Tribunal. Thereafter on 13.10.2000 both the parties filed joint consent memo before the Appellate
Tribunal and, consequently, the Appellate Tribunal modified its order in accordance with the joint consent memo. The consent memo reads thus :-
JOINT CONSENT MEMO FILED BY THE APPELLANT AND RESPONDENT
The above named appellant and respondent respectfully state as follows :-
i) The applicant/respondent undertakes that the monthly payment to the respondent/appellant (IDBI) will be enhanced to Rs.40 lakhs (Rupees
Forty Lakhs only) with effect from 1st November, 2000 till a settlement is received at between the Principal Debtor, Empee Sugars and Chemicals
Ltd., the respondent/appellant, IDBI, or until disposal of the above O.A., whichever is earlier.
ii) The monthly instalment for October will be restricted to Rs.25 lakhs and will be paid on or before the 30th October, 2000 to IDBI.
iii) In case of default of payment of any said monthly instalments, the garnishee passed in I.A. No.1129/00 in O.A. No.1211 of 1999 dated
31.03.2000 will get revived and be in full force.
iv) This joint consent memo is filed in the interlocutory garnishee proceedings and not in O.A. No.1211 of 1999.
Dated at Chennai, this the 13th day of October, 2001.
The joint consent memo to which the writ petitioner was a party cannot be avoided. As the petitioner has committed default, there is no other
alternative for the first respondent except to address the garnishee and there is no illegality in the said action taken by the first respondent.
After having filed a joint memo and consented for the order, curiously the writ petitioner filed an application for direction before the Debts
Recovery Tribunal to the first respondent to withdraw its letter and to direct the garnishee not to garnish any amount till the interlocutory application
No.1229 of 2000 is finally disposed of. It is rather extra-ordinary and this would show the attitude of the petitioner, who is the guarantor. The
Debts Recovery Tribunal passed another order on 9.1.2002 directing the guarantor to keep reserve of 40% of the amount reserved from and
payable by TASMAC to the guarantor out of which the amount of Rs.10 lakhs shall be paid by the guarantor to the first respondent bank herein
within a week from the date they receive from TASMAC and such order, it has been made clear shall be in force until further orders.
These above orders would show that there is a clear attempt on the part of the petitioner to set at naught the effect of the consent memo and
avoid the obligations and such attempt is neither bona fide nor could be appreciated. This Court has to deprecate the conduct on the part of the
writ petitioner in coming before this Court when the proceedings are pending before the Debts Recovery Tribunal.
No writ is maintainable just for getting interim orders when substantial proceedings are pending before the Debts Recovery Tribunal, which is a
statutory Tribunal and that too after having consented for an order. Writ is not meant to defeat the wilful defaults or consent orders, which have
reached finality and at any rate this Court holds that the writ petition filed by the petitioner herein is an abuse of process of Court and the same has
been resorted with a view to avoid the contractual obligations, which the writ petitioner as a guarantor has undertaken.
In the foregoing circumstances, this writ petition is dismissed with cost of Rs.3,000/= (Rupees Three Thousand only) one set against the writ
petitioner. Consequently, connected miscellaneous petitions are also dismissed.