R. D. Khare, Chairperson
1. That the present appeal has been filed under Section 20 of the Recovery of Debts and Bankruptcy Act, 1993 (hereinafter referred to as “the RDB Act”) against a part of the judgment and decree dated 08.04.2016 passed by the Tribunal below in O.A. No.16 of 2003, whereby the liability of the appellant has been fixed as 20% of the total liability of the respondent No.7 (erstwhile MPEB).
2. The brief facts of the matter are that the respondent No. 2 was granted various credit facilities by the respondent No. 1-Bank, to which the respondents No. 3 to 5 stood as guarantors. The respondent No. 2 was given the Demand Promissory Notes duly signed by the appellant towards the supply of raw materials by respondent No. 2, which were subsequently encashed/discounted by the respondent No. 2 from the respondent No. 1-Bank of Baroda. Since the respondent No. 2 did not maintain the financial discipline, therefore, the account was recalled by the respondent No. 1-Bank and filed an Original Application No. 16 of 2003 on 24. 01.2003 before the Tribunal below for the recovery of Rs. 12,28,83,171/- against the defendants.
3. It appears that in the year 2000, the Central Government had made Madhya Pradesh Reorganization Act, by which the State of Madhya Pradesh was divided in two States, as the Madhya Pradesh State and the State of Chhattisgarh. The State Government of Chhattisgarh constituted the Chhattisgarh State Electricity Board (CSEB) and the said Board started its functioning w.e.f from 15.11.2000 and the State Government of Madhya Pradesh constituted the Madhya Pradesh State Electricity Board (MPSEB) in place of Madhya Pradesh Electricity Board vide notification dated 27. 12.2000 and the MPSEB started its functioning w.e.f. 01.01.2001.
4. It further appears that the CSEB and MPSEB were impleaded as respondents no. 6 & 7 in the aforesaid O.A. pending before the Tribunal below. Consequently, the Madhya Pradesh Electricity Board was dissolved vide notification dated 02.11.2004 issued by the Government of India, Ministry of Power in view of Section 58 of the Madhya Pradesh State Reorganization Act, 2000. Prior to it, the Central Government had issued the Notification/Order dated 23.05.2003, by which the provisional liabilities of both the Boards were fixed, which is at page No. 178 to 181 of the memo of appeal. In supersession of the said notification, the Central Government had again issued notification dated 04.11.2004, by which the liability was finally worked out for a total sum of Rs. 209.57 crores, out of which Rs. 188.68 crores was allocated to MPSEB and Rs. 20.96 crores was allocated to the appellant-CSEB.
5. It transpires that the MPSEB has challenged the notifications/orders dated 02.11.2004 and 04.11.2004 before the Hon’ble Supreme Court by filing Writ Petition (Civil) No. 675 of 2004, which was dismissed vide judgment dated 13.09.2006.
6. The Tribunal below has decreed the aforesaid O.A. in toto against the borrowers including the appellant vide impugned judgment dated 08.04.2016, by which the 20% of the total liability of MPEB has been levied upon the appellant-CSEB and 80% upon the MPSEB. Being aggrieved by the said judgment and order, the present appeal has been filed by the appellant-CSEB.
7. Learned counsel for the appellant submitted that the respondent No. 2 was granted various credit facilities by the respondent No. 1, to which the respondents No. 3 to 5 stood as guarantors. The appellant and the respondent No. 7 are the State Electricity Boards, to whom the respondent No. 2 was supplying goods/raw materials and the MPEB had executed D.P. notes in favour of the respondent No. 2, which were further endorsed in favour of the respondent No.1-Bank, on the basis of which the respondent-Bank had discounted the bills and the total amount of Rs. 77,70,666/-is overdue against such bills. The learned counsel further submitted that the total liability of the erstwhile MPEB with respect to the loans under the SIDBI scheme has been worked out for a sum of Rs. 209.57 crores, out of which Rs. 188.61 crores was allocated to MPSEB and Rs. 20.96 crores was allocated to the appellant. Thus, the cumulative liability of the appellant towards the SIDBI Scheme is Rs. 20.96 crores in view of the notification dated 04.11.2004. Against the said liability, the appellant has made payment of Rs. 24.73 crores, therefore, there is no liability against the appellant and no proceeding can be drawn against it.
8. Learned counsel for the appellant has drawn attention of this Court to page No. 92 of the paper book, which is copy of the judgment and order dated 08.04.2016 passed by the Presiding Officer, DRT, Allahabad in O.A. No. 16/2003 and has referred to para 3 of the said judgment, wherein the total liability fixed against the appellant was 20:80%, whereas the deposit made by the appellant is about 10% as determined by the aforesaid notification, therefore, the contention raised by the respondent-Bank is misconceived. The learned counsel for the appellant has further drawn attention of this Court page No. 149 of the paper book, which is copy of notification dated 04.11.2004 issued by the Government of India, Ministry of Power and has stated that as per the said notification, the long term liabilities are divided in the ratio of fixed assets i.e. 90:10 (MPSEB:CSEB). It was, therefore, contended that as per the said notification, the amount more than 10% has already been deposited, therefore, the contention of the respondent-Bank that the liability of both the boards is 80:20 is not tenable. It was, therefore, prayed that the order impugned to this extent may be set aside and the appeal may be allowed.
9. The learned counsel for the respondent-Bank submitted that as per notification of Government, the appellant and respondent No. 7 are liable to pay the dues of the erstwhile Electricity Board in the proportion of the 20:80 respectively and the Tribunal below has observed that the respondent No.1-Bank is entitled to enforce its rights of recovery/pursue the recovery certificate against the appellant to recover its dues to the extent of 20% and against the respondent No. 7 to the extent of 80%. The learned counsel further submitted that in para 26 of the judgment at page 87 of the memo appeal, it is mentioned that the Bank has claimed Rs. 83,08,462/- against the appellant and respondent No. 7 and as per Government notifications regarding liabilities between them, the appellant could be liable to pay 20% of this amount from the date of O.A. till liquidation and respondent No. 7 could be liable to pay 80% of the said amount from the date of O.A. till liquidation. It was further contended that the appellant-CSEB has never pleaded before the Tribunal below that the liability of MPSEB and CSEB is not 80:20%.
10. In the last, learned counsel for the respondent No. 1-Bank submitted that as per the notification dated 04.11.2004 in sub-Clause IV, the other current assets and liabilities is mentioned that the apportionment of other current assets and liabilities shall be in the ratio of consumption of power i.e. 77.03:22.97 (MPSEB:CSEB). Thus the Tribunal below has rightly held the liability of the appellant as 20% of the liability of the erstwhile Madhya Pradesh Electricity Board. It was, therefore, prayed that the appeal filed by the appellant may be dismissed with heavy costs.
11. Heard the learned counsels for the parties and perused the record.
12. The moot question in the present case is, as to whether the appellant is liable to pay 20% of the total liability of the erstwhile Madhya Pradesh Electricity Board as held by the Tribunal below or not?
13. It is admitted that the appellant is neither borrower nor guarantor or mortgagor to the financial assistance advanced by the respondent No. 1-Bank to the respondent No. 2-company borrower. Hence, the liability of the appellant depends upon the assets and liability inherited from the erstwhile MPEB as per the notifications issued by the Central Government, Ministry of Power.
14. It is to be seen that the Government of India, Ministry of Power, New Delhi had issued an order bearing No. 42/8/2000-R&R (Vol. IV) dated 23.05.2003, wherein it is stated that “the Central Government after due consideration of the report of the Central Electricity Authority do hereby order “the provisional allocation of various liabilities of the existing Board between the two boards” namely the Madhya Pradesh State Electricity Board and Chhattisgarh State Electricity Board with immediate effect as indicated in the Schedule Attached to this order. Both these SEBs are liable to discharge the liabilities allocated to them under this order”. As per the attached schedule, the loans from SIDBI has been provisionally worked out as Rs. 209.570 crores, out of which the liability of MPSEB was fixed as Rs. 153.782 crores and Rs. 55.788 crores of CSEB, which comes around 20% of the said liability. In supersession of the said notification, the Government of India, Ministry of Power, New Delhi had issued another notification dated 04.11.2004, wherein it is mentioned in para 4 that “details of assets and liabilities (other than receivable/payable to the State Governments) apportioned in manner as stated in para 3 above is enclosed”. In para 3 of the said notification it is stipulated that “the long term liabilities are divided in the ratio of fixed assets i.e. 90:10 (MPSEB: CSEB)”. As per the attached statement of allocation of assets/liabilities of MPEB between MPSEB and CSEB, the loans from SIDBI has been finally worked out as Rs. 209.570 crores, out of which Rs. 188.613 crores was payable by the MPSEB and Rs. 20.957 crores by the CSEB which comes around 10% of the said liability.
15. It is averred that the above notifications dated 23.05.2003 and 04.11.2004 were challenged by the MPEB before the Hon’ble Supreme Court by filing Writ Petition (Civil) No. 675 of 2004 which was dismissed vide judgment dated 13.09.2006. As such the aforesaid said notification has become absolute and has attained finality, therefore, the liability of the appellant cannot be fixed over and above, the liability fixed by the Government of India vide the notification dated 04.11.2004. Thus, the appellant is liable to pay 10% of the liability of the erstwhile MPEB towards SIDBI loan/discounted bills.
16. While going through the order impugned, it is observed that the Tribunal below has not considered the aforesaid notification and has passed the order impugned holding the liability of the appellant as 20% without any basis because neither any document nor any reference in this regard has been referred to. I am of the view that the liability of the appellant cannot go beyond the liability fixed by the Central Government vide notification as mentioned above. Thus the judgment and order impugned is liable to be modified to this extent.
17. In view of the above, the order impugned with regard to the liability of the appellant is modified and the Recovery Certificate is directed to be issued accordingly. The appellant-Bank shall adjust the amount deposited by the appellant and thereafter, if any amount remains to be recovered from the appellant, then the respondent No. 1-Bank shall proceed to recover the same in accordance with law.
18. A copy of this judgment be forwarded to the parties as well as to the DRT concerned and be also uploaded on the e-DRT portal.
