State Bank of India, Stressed Assets Management Branch, No.157-A, 8th Floor, Anna Salai, Chennai-600 002 v. M/s.Southern Petrochemical Industries Corporation

4. Dena Bank, No.35, Anna Salai, Chennai-600 002.5. Andhra Bank, No.48/39, Vavoo Mansion, Linghi Chetty Street, Chennai-600 108.6. State Bank of Travancore, United India Building, Esplanade, Chennai-600 108.7. State Bank of Patiala, No.30, Whites Road, Chennai-600 014.8. Bank of Rajasthan Ltd., Wavoo Complex, No.191, N.S.C.Bose Road, Chennai-600 001.9. Oriental Bank of Commerce, Spencer Plaza, No.769, Mount Road, Chennai-600 002. .. Petitioners in W.P.No.6590 of 2008 vs.1. Southern Petrochemical Industries Corporation Limited, Represented by its Asst. General Manager, Mr.R.Suresh, No.88, Mount Road, Guindy, Chennai-600 032.2. Punjay & Sind Bank, No.165, Thambu Chetty Street, Chennai-600 001.3. Bank of Baroda, No.28, Rajaji Salai, Chennai-600 001.4. Bank of India, No.826/6, Anna Salai, Chennai-600 002.5. Indian Overseas Bank, 98A, Dr.Radhakrishnan Salai, Chennai-600 004. https://hcservices.ecourts.gov.in/hcservices/

6. Allahabad Bank, No.41, Mount Road, Chennai-600 002.7. IDBI Trusteeship Services Ltd., 10th Floor, Nariman Bhavan, 227, Vinay K Shah Marg, Nariman Point, Mumbai-400 021.8. The Chairperson, Debts Recovery Appellate Tribunal, No.55, Ethiraj Salai, Chennai-600 006.9. Tamilnad Mercantile Bank, No.688, Mount Road, Chennai-600 006.10. Asset Recovery Company (India) Ltd., 17th Floor, Express Towers, Nariman Point, Mumbai-400 021.11. State Bank of India, CAG Branch, Greams Road, Chennai-600 006.12. Central Bank of India, IFB Egmore, Chennai-600 008.13. Union Bank of India, Industrial Finance Branch, No.9, K.H. Road, Chennai-600 034.14. Canara Bank, No.5, Greams Road, Chennai-600 006.15. State Bank of Bikaner & Jaipur, UTI Building, No.29, Rajaji Salai, Chennai-600 001.16. The South Indian Bank Ltd., No.64, Armenian Street, Chennai-600 001.17. The Industrial Finance Corporation of India Ltd., Continental Chambers, No.142, Mahatma Gandhi Road, Nungambakkam, Chennai-600 034. https://hcservices.ecourts.gov.in/hcservices/

18. Industrial Investment Bank of India, Spencer Plaza, 7th Floor, No.769, Anna Salai, Chennai-600 002.19. Export Import Bank of India, World Trade Centre, 21st Floor, Cuffe Parade, Mumbai-400 005. .. Respondents in W.P.No.6590 of 2008Central Bank of India,A Body Corporate established under the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970, having its Central Office, at "Chandermukhi", Nariman Point, Mumbai and having an Industrial Finance Branch at 48-49, Montieth Road, Egmore,Chennai-600 008, represented herein by its Senior Manager... Petitioner in CRP(NPD).1130 of 2008/ 6th Respondent vs.1. Southern Petrochemical Industries Corporation Ltd., rep. by its Asst. General Manager R.Suresh, No.88, Mount Road, Guindy, Chennai-600 032.2. Punjab & Sind Bank, 165, Thambu Chetty Street, Chennai-600 001.3. Indian Bank, Thousand Lights Branch, Kannammai Buildings, No.611, Anna Salai, Chennai-600 006.4. Bank of Baroda, 28, Rajaji Salai, Chennai-600 001.5. State Bank of India, CAG Branch, Greames Road, Chennai-600 006. https://hcservices.ecourts.gov.in/hcservices/

6. Syndicate Bank, 69, Armenian Street, Chennai-600 001.7. Bank of India, No.826/6, Anna Salai, Chennai-600 002.8. Punjab National Bank, 17, Rajaji Salai, Chennai-600 001.9. Dena Bank, No.35, Anna Salai, Chennai-600 002.10. Indian Overseas Bank, 98-A, Dr.Radhakrishnan Salai, Chennai-600 034.11. Union Bank of India, Industrial Finance Branch, No.9, K.H.Road, Chennai-600 034.12. Canara Bank, No.5, Greams Road, Chennai-600 006.13. Allahabad Bank, No.41, Mount Road, Chennai-600 002.14. Andhra Bank, 48/39, Vavoo Mansion, Linghi Chetty Street, Chennai-600 108.15. State Bank of Travancore, United India Buildings, Esplanade, Chennai-600 108.16. State Bank of Patiala, No.30, Whites Road, Chennai-600 014.17. State Bank of Bikaner & Jaipur, UTI Buildings, 29, Rajaji Road, Chennai-600 001. https://hcservices.ecourts.gov.in/hcservices/

18. Tamilnad Mercantile Bank Ltd., No.688, Mount Road, Chennai-600 006.19. Bank of Rajasthan Ltd., Wavoo Complex, No.191, N.S.C. Bose Road, Chennai-600 001.20. Oriental Bank of Commerce, Spencer Plaza, No.769, Mount Road, Chennai-600 002.21. The South Indian Bank Ltd., 64, Armenian Street, Chennai-600 001.22. Asset Reconstruction Company (India) Ltd., 17th Floor, Express Towers, Nariman Point, Mumbai-400 021.23. The Industrial Finance Corporation of India Ltd., Continental Chambers, 142, Mahatma Gandhi Road, Nungambakkam, Chennai-600 034.24. Industrial Investment Bank of India, Spencer Plaza, 7th Floor, 769, Anna Salai, Chennai-600 002.25. Export Import Bank of India, World Trade Centre, 21st Floor, Cuffe Parade, Mumbai-400 005.26. IDBI Trusteeship Services Ltd., 10th Floor, Narima Bhavan, 327, Vinay K.Shah Marg, Nariman Point, Mumbai-400 021. .. Respondents in CRP(NPD).1130 of 2008/ Petitioner/ Respondent 1 to 5 and 7 to 26Writ Petition No.6579 of 2008 filed under Article 226 of theConstitution of India, praying for issuance of a Writ ofCertiorari, calling for the issue pertaining to order dated5.3.2008 in I.A.No.165 of 2008 in M.A.No.35 of 2008 and quash thesame.Writ Petition No.6590 of 2008 filed under Article 226 of theConstitution of India, praying for issuance of a Writ ofCertiorarified Mandamus, calling for the records relating to the https://hcservices.ecourts.gov.in/hcservices/ order dated 5.3.2008 made in I.A.No.165 of 2008 in M.A.No.35 of2008 on the file of the 8th respondent and quash the same andconsequently permit the petitioners to appropriate the amount lyingin the Trust and Retention Account towards payment of the devolvedLCs which have not been honoured by the first respondent on the duedates.Civil Revision Petition against the order dated 5.3.2008 inI.A.No.165 of 2008 in M.A.No.35 of 2008 on the file of the DebtsRecovery Appellate Tribunal, Chennai.W.P.No.6579 of 2008:For petitioner : Mr.S.SethuramanFor respondent : Mr.AR.L.Sundaresan, Senior Counsel for M/s.AL.GandhimathiW.P.No.6590 of 2008:For petitioners : Mr.Jayesh B.Dolia for M/s.Aiyar & DoliaFor respondents : Mr.G.Masilamani, Senior Counsel for M/s.Shivakumar for R-1 Mr.R.Krishnamurthy, Senior Counsel for M/s.Surana & Surana for R-10 Mr.S.Sethuraman for RR-9 and 11C.R.P(NPD).No.1130 of 2008:For petitioner : Mr.T.M.HariharanC O M M O N O R D E RTHE HONOURABLE THE ACTING CHIEF JUSTICEThese petitions have been preferred by the State Bank of India(for short, 'the SBI'), the Indian Bank (for short, 'the IB'), theCentral Bank of India (for short, 'the Central Bank') and the otherBanks, challenging the interim order, dated 5.3.2008 passed by theDebts Recovery Appellate Tribunal (for short, 'the DRAT'), Chennaiin I.A.No.165 of 2008 in M.A.No.35 of 2008, whereby and whereunder,the DRAT directed that out of Rs.180 crores lying with the IB, asum of Rs.8 crores be disbursed to the Southern PetrochemicalIndustries Corporation Limited (for short, 'SPIC') until furtherorders, pending disposal of the appeal, to meet the urgent needsof SPIC towards electrical consumption charges, salary of the https://hcservices.ecourts.gov.in/hcservices/ employees, provident fund, payment of superannuation amount,gratuity amount, tax and duties and minimum plant maintenancecharges.2. Since the issue involved is common, these cases are beingdisposed of by this common order. 3. The main plea taken by the petitioners-Banks is that theOriginal Applications have been filed by the two Banks and otherBanks being the respondents, for recovery of its duties, at theinstance of the borrower, one of the corresponding Banks, cannot bedirected to disburse the funds for meeting the physical expenses ofthe borrower, particularly when the assets are declared as non-performing assets (for short, 'the NPA'). The SPIC cannot seek forsuch a direction in an Original Application for recovery of moneyfrom its Banker, when the assets available as on the date are notsufficient to meet the existing liability.3(a). The SPIC, which is a fertiliser and petroleum company ofSouth India, is in existence since 1969. Its production capacity isof one million tonnes of fertilisers per annum and the plant isspread over 1000 acres of lands in Tuticorin (Tamil Nadu). It isengaged in manufacture of urea, ammonia, complex fertilisers,phosphoric and sulphuric acid and aluminium fluoride. According to SPIC, as per the last audited balance sheet as on30.9.2006, the asset of SPIC stood at gross value of RS.3,329crores. SPIC has been availing of the working capital facilitiesfrom a consortium of Bank, approximately 21 in number, for whichIndian Bank is the lead Bank. There are fixed assets and currentassets, which have been charged to all the secured lenders, 36 innumber, there are 21 Banks, and 15 financial institutions, on apari-passu inter-se basis without any preference or priority of oneover the other. The Reserve Bank of India (for short, 'RBI') in 2001introduced Corporate Debt Restructuring Scheme (for short, 'theCDR') to make a timely and transparent mechanism forrestructuring of corporate debts of viable entities facingproblems. As per the CDR scheme, SPIC's financial re-constructionapplication was approved on 19.3.2003 and confirmation of pari-passu agreement was made on 29.12.2004 between participatingfinancial institutions and the Banks. In terms of the CDR package,a Trust and Retention Account (for short, 'the TRA') was openedwith the lead Bank i.e. Indian Bank, to facilitate the nodalmonitoring of the Company's business receivables. The consortium ofbanks also appointed a concurrent auditor of SPIC to report to thelead Bank by giving a monthly report. https://hcservices.ecourts.gov.in/hcservices/ As per SPIC, the cost of production per tonne of urea offertiliser is Rs.21,500/-, but in view of the Fertiliser (Control)Order, the SPIC can sell it only at the levy price of Rs.4,830/-and the balance of about RS.16,700/- is to be reimbursed by theGovernment of India, subject to the norms under the FertiliserRetention Price Scheme. This reimbursement takes about 3 to 9months. The receipt of subsidy amount takes about 75 days. In respect of phosphatics (Di-ammonium phosphaste), thepercentage of market collection is 50% and the balance 50% isreceivable by way of subsidy from the Government of India. Of this50% subsidy, 85% is received after 2 to 3 months and the remaining15% after certification from the State Government, which takesabout 9-12 months. Most of the raw materials required for themanufacture of phosphatics were to be imported with a minimum leadtime of 20 to 45 days. The other details relating to the subsidyscheme have been highlighted by the petitioners-Banks. So far as the proceedings before the DRT/DRAT are concerned,on 17.8.2006, the Punjab and Sind Bank recalled credit facilitiesextended to SPIC. According to SPIC, it is in contravention of theconsortium arrangement. In August 2006, as per SPIC, there wasproposal for 'One Time Settlement' (for short, 'the OTS') of theBank dues, which was confirmed in the minutes of the MonitoringCommittee of all Banks in their meeting held on 10.10.2006, andSPIC deposited a sum of Rs.12 crores with Punjab and Sind Bank forthe purpose of opening a letter of credit for purchase of rawmaterials. The allegation by SPIC is that the Punjab and Sind Bankunilaterally adjusted the amount for certain alleged amounts due toit by SPIC without opening the letter of credit, which is contraryto the terms of TRA. In March 2007, the Punjab and Sind Bank filed OriginalApplication No.25 of 2007 against SPIC for recovery of Rs.66.70crores along with Interlocutory Application in I.A.No.154 of 2007.Another Original Application in O.A.No.89 of 2007 was filed by theTamil Nadu Mercantile Bank for recovery of a sum of Rs.3.92 croresalong with I.A.No.216 of 2007. On 5.3.2007, DRT-II, Chennai passedan ex-parte order in I.A.No.154 of 2007 directing the Government ofIndia not to disburse a sum of Rs.66 crores as claimed by thePunjab and Sind Bank in its Original Application, from and out ofthe subsidy amount of Rs.409 crores. Subsequently, SPIC sought vacation of the said ex-parte orderdated 5.3.2007. On 27.3.2007, the DRT-II, Chennai, passed an orderin both the I.As., vacating the ex-parte order of prohibition,recording the submission of the counsel appearing on behalf of theIndian Bank that the amounts received through subsidy is in thecredit of TRA account and that the amount is disbursed only https://hcservices.ecourts.gov.in/hcservices/ according to the consortium inter-se agreement. The DRT-II alsoobserved that several members of the consortium were recovering theamounts due from SPIC without following the consortium agreementand therefore, the DRT-II was of the opinion that each disbursementof the subsidy given by the Government of India should be monitoredby the DRT. The Indian Bank as consortium leader, was directed bythe DRT to file a report regarding the fertiliser subsidy receivedfrom the Government of India in TRA account and the State Bank ofPatiala which received subsidy amount from the Government of India,was also directed to inform the DRT regarding the amount receivedby it, since 1st January 2007 towards the subsidy. The DRT alsodirected that no subsidy received from the Government of India,should be disbursed without the permission of the DRT and theIndian Bank was directed to file a monthly report of the subsidyreceived from the Department of Fertilisers through the State Bankof Patiala. Against the aforesaid order, none of the secured lendersincluding the Indian Bank, State Bank of India and the Central Bankof India, preferred any appeal before the DRAT or any Writ Petitionor Civil Revision Petition before this Court. On 20.4.2007, the DRT-II, Chennai passed an order on the basisof the reports filed by the State Bank of Patiala and the IndianBank. It recorded the submission made by the learned counsel forSPIC that the daily monitoring by the DRT would be difficult andSPIC cannot run on its day-to-day affairs and therefore, the DRTheld that the system of disbursement of the subsidy amount as perthe order of the DRT should continue and refused to modify theorder passed by the DRT. However, the leader of consortium wasgiven liberty to approach the DRT once a month for permissionregarding the disbursement of the subsidy received. The Indian Bankwas also directed to ensure that at least one meeting of members beheld per month with proper notice to all, against which, no appealwas preferred by any of the secured lenders including the IndianBank, State Bank of India and the Central Bank of India, who havemoved before this Court by filing the present Writ Petition(s)/Civil Revision Petition.On 8.5.2007, SPIC filed I.A.No.403 of 2007 in I.A.No.154 of2007, for a direction to the Indian Bank to pay a sum of Rs.20.77crores out of the subsidy amount of RS.60.80 crores to meet itsstatutory liability and critical expenses (operational expenses)and to disburse the balance available, namely Rs.40.03 crores, onlyto those members of the consortium, who are agreeable to open freshletter of credits, proportionate to the amount receivable by them.The following details of statutory and critical expenses were citedby the SPIC: https://hcservices.ecourts.gov.in/hcservices/ (Rs. in corres)a) Tamil Nadu Electricity Board/ Tamil Nadu Water Supply and Drainage Board 3.37b) Railway Freight 1.50c) Statutory dues to Port Trust, Excise Duty, PF, ESI, Gratuity etc. 2.00d) Salaries and wages to employees 3.25e) Freight, Transportation, Warehousing, Regional Office expenses 1.00f) Turnaround expenses at Petitioner Plant, Catalysts, Spares, Contract related payments, Consumables etc. 5.65g) Banking charges mainly pertaining to LC opening/discounting charges to ensure further supplies to carry on production activities 4.00 -------Total 20.77 -------On 19.6.2007, the DRT-II, Chennai, disposed of I.A.No.403 of2007, against which appeal has been preferred before the DRAT bythe Punjab and Sind Bank in M.A.No.15 of 2007 regarding its shareof Rs.2.68 crores and the Bank of Baroda (IN.500/07) and IndianBank (IN.495/07). The Punjab and Sind Bank has not preferred anyappeal against the disbursement of statutory and critical expensesand no direct appeal has been filed by the Bank of Baroda againstthe disbursement of statutory and critical expenses. The IndianBank has also not filed any appeal against the disbursement ofstatutory and critical expenses, but only against the production ofTRA account. In fact, the Indian Bank, State Bank of India andCentral Bank of India have accepted the DRT's order and opened theletters of credit for Rs.36.84 crores, Rs.16.78 crores and Rs.15.78crores respectively. No appeal has been filed by any secured lenderagainst the order regarding the disbursal of Rs.20.77 crores, i.e.Rs.16.77 crores for meeting statutory and critical expenses andRs.4 crores for Bank's charges including the charges payable to theIndian Bank, State Bank of India and Central Bank of India, whohave preferred the present Writ Petition(s)/Civil Revision Petitionbefore this Court. https://hcservices.ecourts.gov.in/hcservices/ On 3.10.2007, the DRT-II, Chennai passed orders in the I.A.filed by the Punjab and Sind Bank (I.A.No.217 of 2007) and closedthe same with the observation that the points raised in the I.A.can be taken along with the main Original Application at the timeof arguments. The other I.A.No.303 of 2007 seeking cash securityfor the claim amount of the Original Application, or otherwise, forattachment and sale of SPIC's Division's and investments, filed bythe Punjab and Sind Bank, was also disposed of, directing SPIC tofurnish security to the tune of Rs.30 crores, failing which itsassets were to be attached. SPIC has preferred an appeal before theDRAT in M.A.No.250 of 2007, wherein interim stay has been grantedin I.A.No.1550 of 2007. 4. Learned counsel appearing on behalf of the petitioner-SBI,while raising the jurisdiction of the DRAT to direct the Banks,which are formal parties in the Original Application to release thefunds to the borrower, referred to the following provisions of theRecovery of Debts Due to Banks and Financial Institutions Act,1993: "Section 17 : Jurisdiction, powers and authorityof Tribunals:--(1) A Tribunal shall exercise, onand from the appointed day, the jurisdiction,powers and authority to entertain and decideapplications from the banks and financialinstitutions for recovery of debts due to suchbanks and financial institutions. (2) An Appellate Tribunal shall exercise, onand from the appointed day, the jurisdiction,powers and authority to entertain appeals againstany order made, or deemed to have been made, by aTribunal under this Act." He also placed reliance on Section 19 (Chapter IV) of theRecovery of Debts Due to Banks and Financial Institutions Act,1993, which deals with the "Procedure of Tribunals", particularlySection 19(8), which is quoted hereunder:"Chapter IV: Procedure of Tribunals:19. Application to the Tribunal:(1)........(8) A defendant in an application may, inaddition to his right of pleading a set-offunder sub-section (6), set up, by way ofcounter-claim against the claim of theapplicant, any right or claim in respect of acause of action accruing to the defendantagainst the applicant either before or after https://hcservices.ecourts.gov.in/hcservices/ the filing of the application but before thedefendant has delivered his defence or beforethe time limited for delivering his defence hasexpired, whether such counter-claim is in thenature of a claim for damages or not...."According to the learned counsel appearing for the State Bankof India, in the light of the above provisions, the defendant canmake an application claiming set-off of the account, but noapplication can be filed for a direction to the lead Bank or anyother Bank, particularly those who are formal/proforma parties todisburse any amount in favour of the Bank. Reliance has also been placed on the decision of the SupremeCourt in the case of "Indian Bank vs. ABS Marine Products (P)Ltd.,", reported in 2006 (5) SCC 72. It was further submitted that Sections 17 and 18 of theRecovery of Debts Due to Banks and Financial Institutions Act, 1993having not been amended, the jurisdiction has not been conferred onthe DRT/DRAT to try independent suits/proceedings initiated byborrowers or others against the Bank. Reliance was also placed on the decision of the Supreme Courtin the case of "United Bank of India, Calcutta vs. Abhijit Tea Co.Pvt. Ltd.", reported in 2000 (7) SCC 357, to suggest that thesubject matter in the Bank suit/suits of the defendants against theBanks should not be inextricably connected in the sense that thedecision in the one could affect the decision in the other.It was further submitted that in the present case, there wasno inextricable connection, as the Original Application has beenfiled for recovery of money due to the Bank, as the defendant-Company (SPIC) was unable to pay the amounts borrowed. Thedefendant-Company (SPIC) on the other hand, is demanding payment onthe ground that it has to run the factory and maintain it. Therelief claimed by the Banks and the relief claimed by the borrowerare diametrically opposite.So far as the enhanced power of the DRAT is concerned, learnedcounsel appearing on behalf of the State Bank of India placedreliance on the decision of the Supreme Court in the case of"Transcore vs. Union of India", reported in 2008 (1) SCC 125,wherein the Supreme Court held that the DRT being a statutory body,does not have inherent powers as in the Civil Courts. It was also submitted that no interim order can be passedunder Section 19(20) of the Recovery of Debts Due to Banks andFinancial Institutions Act, 1993. https://hcservices.ecourts.gov.in/hcservices/ The respondent-Company (SPIC) took one of the pleas that theBank having submitted to the jurisdiction of the DRT and havingcomplied with the order passed by the DRT, cannot now plead thatthe DRT is not having jurisdiction. While placing reliance on the Supreme Court decisions in thecase of "Chief Engineer, Hydel Project and others vs. Ravinder Nathand others", reported in 2008 (2) SCC 350, "Hasham Abbas Sayyad vs.Usman Abbas Sayyad", reported in 2007 (2) SCC 355 and the otherdecisions, the learned counsel for the State Bank of Indiasubmitted that if moot question is as to whether the order passedby the person lacking inherent jurisdiction would be a nullity, itwill be so, and the principle of estoppel, waiver and acquiescenceor even res-judicata, which are procedural in nature, would have noapplication in the case where the order has been passed by theDRT/DRAT/Court, which has no authority in this behalf. Any orderpassed by the Court without jurisdiction would be "forum non-judis"being a nullity and the same ordinarily should not be given effectto.Learned counsel for the other Banks, i.e. Indian Bank, CentralBank of India., inter-alia contended that:(a) the DRAT has no jurisdiction to pass such order; (b) nodisbursal can be given to a Company classified as NPA (non-performing asset) which is a defaulter; (c) the Company did not keep up its demand to honour thedevolved letters of credit;(d) the Company has not shown progress despite receipt ofRS.389 crores;(e) existing assets are not sufficient to meet the existingliability and (f) the demand for payment of critical expenses is notmaintainable. 5. Asset Recovery Company (India) Ltd., (for short, 'theARCIL') (i.e. tenth respondent in W.P.No.6590 of 2008), which is aCompany registered under the provisions of the Securitisation andReconstruction of Financial Assets and Enforcement of SecurityInterest Act (for short, 'the SARFAESI Act'). According to thetenth respondent-ARCIL, it is the single largest lender in respectof the credit and other financial facilities obtained by SPIC,having been assigned the debts of SPIC with IDBI, ICICI, Bank ofBaroda, Allahabad Bank and Indian Overseas Bank. The SPIC hasavailed of various credit facilities and was unable to repay andthe debts due to various lending agencies were restructured underthe CDR mechanism. The guidelines of the CDR Scheme provides forrevocation of the CDR package only by 75% of the lenders. It is notin dispute that various agreements, such as inter-se creditoragreement, debtor-creditor agreement, TRA, etc., were all executed https://hcservices.ecourts.gov.in/hcservices/ so as to create a legal and binding obligation on all partiesconcerned. It is relevant to mention that the lead Bank has beengiven the power and authority to act and represent all otherconsortium Banks. The stand of the tenth respondent-ARCIL is that the TRAlays down the mechanism for control and monitor the cash flow ofthe borrower's operation with a view to maintain strict, vigil andcorrective action as and when necessary, by operating a TRAthrough which all cash flow is to be routed. Under this TRAagreement, the priority of cash flow, mode and manner of withdrawalwas laid down. The Monitoring Committee consists of representativeof Banks and tenth respondent-ARCIL is also in place. The TRA ismonitored to ensure that the cash flows follow the waterfallmechanism and no money goes out of the system. The present systemhas been put in place to ensure that all the lenders get their dueshare without any preference or priority and the borrower isallowed to function under vigil. This object sought to be achievedby strict adherence to the mechanism provided under the TRA. Clause14.4. of the TRA provides that the agreement would terminate onlyupon mutual consent and no bank can unilaterally terminate the TRAwith a view to wriggle out of their obligations.Giving reference to the orders passed by the DRT and the DRAT,learned counsel appearing for the ARCIL submitted that the Punjaband Sind Bank having approached the DRT for recovery of its dues,the first respondent-SPIC got opportunity to file an applicationfor a direction to the Indian Bank to take necessary action forutilisation of the sum of RS.186.28 crores in the TRA of thepetitioners-Banks towards settlement of Letters of Creditcommitments fallen due up to February 2008 and the DRT havingdismissed the said application on 3.1.2008, the first respondent-SPIC moved in appeal before the DRAT, wherein InterlocutoryApplication was filed for a direction on the Indian Bank (LeadBank) or any other Bank in which the subsidy amount of Rs.180crores is deposited as per the proceedings of the DRT-II, Chennai,dated 3.1.2008 to disburse a sum of Rs.8 crores per month. The DRATdirected to release a sum of Rs.5 crores immediately to restart theCompany and Rs.8 crores monthly for meeting the operationalexpenses.Giving reference to Clause 31.3 of the TRA agreement, thelearned counsel appearing for tenth respondent-ARCIL supported thestand of the first respondent-SPIC that the operational expenses ofthe SPIC should be met on top priority. In such a situation, unlessthe money is released, it is not possible for the Company (SPIC) tomeet its day-to-day expenses and therefore, in a meeting dated15.2.2008, it was resolved that the realisable value for thelenders would be more if the plant resumes operations. It was https://hcservices.ecourts.gov.in/hcservices/ submitted on behalf of the tenth respondent-ARCIL that thepetitioners-Banks cannot challenge the order of the DRAT as it wasconsidered to release the money by filing Memo before the DRAT. It was further submitted on behalf of the tenth respondent-ARCIL that the petitioners-Banks not only not objected for therelease of the money, but also prayed for permitting them to adjustthe said amount to their earlier outstanding and they being theparty to the consortium agreement, are required to act as per theterms of the consortium, the interest of every member of theconsortium being involved.6. We have heard the learned counsel appearing for therespective parties and noticed their rival contentions.7. In fact, it has not been disputed by learned counselappearing for the petitioners-Banks that both the DRT and the DRAThave the powers to pass interim orders during the pendency of theOriginal Application and the appeal, as the case may be.8. It is relevant to notice the decision of the Supreme Courtin the case of "Mardia Chemicals Ltd. vs. Union of India" reportedin 2004 (4) SCC 311, wherein, the Supreme Court held that theTribunal, in exercise of its ancillary powers, shall have thejurisdiction to pass any stay/interim order, subject to thecondition as it may deem fit and proper to impose. This decision ofthe Supreme was followed by a Division Bench of this Court in thecase of "M/s.Ramco Super Leathers Ltd. and four others vs. UCO Bankand another" reported in 2007 (5) MLJ 986, wherein, the DivisionBench observed that there is no automatic stay or prohibition onthe secured creditor to take recourse to one or more measures undersub-section (4) to Section 13 of the SARFAESI Act, to recover itssecured debts, till an interim order is passed by the Tribunal. Thesaid decision of the Supreme Court in the case of "MardiaChemicals" was also followed by a Full Bench of this Court in thecase of "M/s.Lakshmi Shankar Mills (P) Ltd. & Others vs. TheAuthorised Officer/Chief Manager, Indian Bank and others", reportedin 2008 (2) L.W. 381 (FB). 9. The only question that arises for determination is as towhether the impugned order passed by the DRAT directing the leadBank to release Rs.8 crores every month to meet the operational andcritical expenses, is justified or not?10. Section 9 of the SARFAESI Act relates to measures forassets reconstruction and under the said provision, theSecuritisation Company or Reconstruction Company, may for thepurposes of asset reconstruction, having regard to the guidelinesframed by the RBI in this behalf, provide for any one or more of https://hcservices.ecourts.gov.in/hcservices/ the measures as mentioned in Section 9, including proper managementof the business of the borrower.Under Section 10 of the SARFAESI Act, the SecuritisationCompany or Reconstruction Company, can also act as an agent for anyBank or financial institution for the purpose of recovering theirdues from the borrower.Therefore, it will be evident that the tenth respondent-ARCILhas main role to play on the question of release of funds in favourof the first respondent-SPIC, out of subsidy amount, when the otherBanks whose liabilities were only to the tune of 30% approximately,are bound by the terms of the consortium.11. In the present cases, it is informed that the tenthrespondent-ARCIL has taken over the liabilities of approximately70% of the debt amounts of the first respondent-SPIC, and thereby,the debts due to various lending agencies have been reconstructedunder the CDR mechanism. Various inter-se agreements, such ascreditor-agreement, debtor-creditor agreement, TRA agreement, etc.,all of which were executed so as to create a legal and bindingobligation on all parties concerned. The lead Bank had been giventhe power and authority to act and represent to act on behalf ofall the consortium members, i.e. Banks and Financial Institutions.The TRA agreement was entered amongst the borrower-company (SPIC)and the lender Banks, as per which the borrower established in itsown name, an account, titled "Trust and Retention Account" (i.e.TRA) bearing Account No.2244, maintained with the Thousand LightsBranch, Chennai-600 006, of the Indian Bank (under Clause 2.1). Asper Clause 2.2 of the TRA agreement, all the amounts deposited inthe TRA shall be held in the Trust and the monies received andapplied will be as provided under the said agreement. As per Clause3.13 of the agreement, the Account Bank, viz., Indian Bank issupposed to withdraw amounts from the TRA with the borrower's(SPIC) instructions for meeting the expenses, such as operationalexpenses, to pay certain amounts into the Debt Service ReserveAccount, Capital Expenditure Account, Working Capital Banks and totransfer the balance amount to the Distribution Account. 12. The further facts have been brought to the notice of theCourt that while the Original Application of the Punjab and SindBank in O.A.No.25 of 2007 was pending before the DRT, on theagreement of the Bank, it was agreed upon to disburse the Letter(s)of Credit which were actually released.13. The stand taken by the first respondent-SPIC is that theLetters of Credit were used for manufacture and sale offertilisers, but they could not get back the full amount, as theFertilisers were sold at subsidised rates and awaiting the releaseof subsidy amount from the Government of India. https://hcservices.ecourts.gov.in/hcservices/

14. Learned counsel appearing for the SBI gave much stress onthe question as to whether at the instance of the borrower (SPIC),the Bank can be directed to release the money, but that is not theissue required to be determined in the present cases, as theborrower itself had not moved initially for release of any amountin their favour. Admittedly, the Government of India released thesubsidy amount in favour of the borrower for payment to it (SPIC)from time to time, which was deposited with one of the Banks, whichis also a secured creditor.15. The Punjab and Sind Bank whose liability is much less,they moved in Original Application in O.A.No.25 of 2007 foradjusting its dues out of the subsidy amount. In the said O.A.No.25of 2007, the DRT did not choose to pass any specific order anddecided to monitor the matter. It is in this background, theborrower (SPIC) had to prefer I.A.No.791 of 2007 for a direction onthe Indian Bank to take necessary action for utilisation of a sumof Rs.186.28 crores deposited in the TRA of the borrower towardsthe settlement of Letters of Credit, which were falling due up toJanuary 2008. Therefore, it will be evident that the borrower-SPIChad not moved any application for direction on the Banks forrelease of any fund out of the funds of the Banks, but as one ofthe Banks, namely, Punjab and Sind Bank, approached the DRT forrecovery of the dues out of the subsidy amount, the borrower-SPICwanted to settle the sum towards the Letters of Credit of the Bank.It is at this stage, when finally Letters of Credit were not issuedsubsequently in favour of the borrower-SPIC by any of the Banks, itpreferred appeal before the DRAT, apart from some other appealspreferred by one or other Banks, except the tenth respondent-ARCIL. 16. When the matters were pending before the DRAT, in theabsence of any Letters of Credit or the amount with the borrower-SPIC, it stopped functioning. It was also facing difficulty tomaintain day-to-day expenditure of the Company (SPIC) for retainingits machineries, to pay its dues of the employees, etc., and toensure that there should not be any theft of its movable assets,and to pay certain dues of its employees, like salary, providentfund, gratuity, electricity charges, etc., the SPIC applied forrelease of certain amounts for month to month out of the subsidyamount, which otherwise could have been adjusted towards theearlier Letters of Credit for getting fresh Letters of Credits fromdifferent Banks. 17. Therefore, it cannot be said that the borrower-SPIC movedfor a direction on the Bank for payment of certain amounts from theBank out of their account. Further, it will be evident from theaffidavit filed by the tenth respondent-ARCIL, dated 31.3.2008 inW.P.No.6590 of 2008 that they have taken over the liabilities ofabout 60% and stated in its counter affidavit dated 27.3.2008 that https://hcservices.ecourts.gov.in/hcservices/ it has already decided in its meeting that the borrower-Company(SPIC) should remain in operation and the TRA agreement lays downthe mechanism for control and monitor the cash flow of theborrower's operation, with a view to maintain strict, vigil andcorrective action as and when necessary. 18. Taking into consideration all the relevant facts, if theDRAT, by the impugned order dated 5.3.2008, allowed the petitionfiled by the borrower-SPIC for release of Rs.8 crores per month outof the subsidy amount for day-to-day maintenance towardselectricity charges, payment of salary to its employees, etc., itcannot be held to be illegal.19. We find no merits in any of the petitions, which areaccordingly dismissed. No costs. The Miscellaneous Petitions areclosed.20. However, as the appeal seems to be pending since long, andthere are other appeals/applications appeared to have been filed bycertain Banks or other parties, and pending consideration by theDRAT, it is desirable that the DRAT decides those cases includingthe appeal in question in the present cases, at an early date. Sd/-Asst. Registrar./true copy/Sub Asst. Registrar.csTo1. The Debts Recovery Appellate Tribunal, Chennai.2. The Debts Recovery Tribunal-II, Chennai.3. The Southern Petrochemical Industries Corporation Limited, Represented by its Assistant General Manager Mr.R.Suresh,No.88, Mount Road, Guindy,Chennai-600 032. https://hcservices.ecourts.gov.in/hcservices/

4.State Bank of India,Stressed Assets Management Branch,No.157-A, 8th Floor, Anna Salai,Chennai-600 002.5. The Manager Indian Bank, Thousand Lights Branch, No.611, Anna Salai, Chennai-600 006.6.The Manager Syndicate Bank, No.69, Armenian Street, Chennai-600 001.7.The ManagerThe Punjab National Bank, No.17, Rajaji Salai, Chennai-600 001.8. The Manager Dena Bank, No.35, Anna Salai, Chennai-600 002.9. The Manager Andhra Bank, No.48/39, Vavoo Mansion, Linghi Chetty Street, Chennai-600 108.10. The Manager State Bank of Travancore, United India Building, Esplanade, Chennai-600 108.11. State Bank of Patiala, No.30, Whites Road, Chennai-600 014.12. The Manager Bank of Rajasthan Ltd., Wavoo Complex, No.191, N.S.C.Bose Road, Chennai-600 001. https://hcservices.ecourts.gov.in/hcservices/

13. The Manager Oriental Bank of Commerce, Spencer Plaza, No.769, Mount Road, Chennai-600 002.14.The Manager Punjay & Sind Bank, No.165, Thambu Chetty Street, Chennai-600 001.15. The Manager Bank of Baroda, No.28, Rajaji Salai, Chennai-600 001.16. The Manager Bank of India, No.826/6, Anna Salai, Chennai-600 002.17. The Manager Indian Overseas Bank, 98A, Dr.Radhakrishnan Salai, Chennai-600 004.18.The Manager Allahabad Bank, No.41, Mount Road, Chennai-600 002.19.IDBI Trusteeship Services Ltd., 10th Floor, Nariman Bhavan, 227, Vinay K Shah Marg, Nariman Point, Mumbai-400 021.20. The Manager Tamilnad Mercantile Bank, No.688, Mount Road, Chennai-600 006.21. Asset Recovery Company (India) Ltd., 17th Floor, Express Towers, Nariman Point, Mumbai-400 021.22. The Manager State Bank of India, CAG Branch, Chennai-600 006. https://hcservices.ecourts.gov.in/hcservices/

23.The Manager Central Bank of India, IFB Egmore, Chennai-600 008.24.The Manager Union Bank of India, Industrial Finance Branch, No.9, K.H. Road, Chennai-600 034.25.The Manager Canara Bank, No.5, Greams Road, Chennai-600 006.26. The Manager State Bank of Bikaner & Jaipur, UTI Building, No.29, Rajaji Salai, Chennai-600 001.27.The Manager The South Indian Bank Ltd., No.64, Armenian Street, Chennai-600 001.28. The Industrial Finance Corporation of India Ltd., Continental Chambers, No.142, Mahatma Gandhi Road, Nungambakkam, Chennai-600 034.29. The Industrial Investment Bank of India, Spencer Plaza, 7th Floor, No.769, Anna Salai, Chennai-600 002.30. The Export Import Bank of India, World Trade Centre, 21st Floor, Cuffe Parade, Mumbai-400 005.1 cc to Mr. aiyar and Dolia, Advocate, SR. 9351 cc to Surana and Surana, Advocate, SR. 9173 ccs to Mr.T.M. Hariharan, Advocate, SR. 5611 cc to M/s. A.L. Ganthimathi, Advocate, SR. 8313 ccs to Mr. Shivakumar, Advocate, SR. 767W.P.Nos.6579, 6590 of 2008and C.R.P.(NPD).No.1130 of 2008NSM (CO)kk 12/1