w w w . L a w y e r S e r v i c e s . i n

Kotak Mahindra Bank Limited v/s Capricorn Food Products India Ltd.,

    OA. No. 328 of 2020

    Decided On, 06 October 2020

    At, Debts Recovery Tribunal Chennai


    For the Appearing Parties: ---------

Judgment Text

1. This is a petition filed by the applicant bank for appointment of Advocate Commissioners for the purpose of taking inventory of the hypothecated stocks available at the plants of the 1st respondent situated at (1). Palagunta, Satyavedu Mandal, Chittoor District, Andhra Pradesh, PIN - 517588 (2) Kalguddapatti, Palakodu Road, Banni Halli Post, Kaveripatnam, Krishnagiri District, Tamilnadu -635106 and (3).Gonglu Agro Pvt Ltd, Gut No. 207,211,213, Village Jaitpur, Taluk Chandwad, District Nashik- 423101, to seize and to sell the same .

2. This Tribunal vide its order dated 07.09.2020 appointed, ex-parte, three Advocate Commissioners for the purpose of taking inventory of the hypotheca and to deliver the stock to the petitioner for proper custody and maintenance. Subsequently, the Respondents 1 to 3 entered appearance, filed their counter and also a separate IA viz., 472/2020 to recall the above order dated 7.9.2020. The respondent bank filed its counter in IA 472/2020.

3. In the above backdrop on 28.09.2020 when IA 403/2020 was taken up for enquiry this Tribunal after having heard the Ld. Counsels for both sides in part besides considering the undeniable fact that the subject hypotheca which is a fruit pulp is a highly perishable item, wanted to know from both the parties whether there can be any consensus between the parties for immediate disposal of the hypotheca by way of sale, as the sale of the Hypotheca through the Advocate Commissioners has faced some resistance and is time consuming. Pursuant thereto, Ld. Counsels for both sides agreed to work out and subsequently, on 6.10.2020 filed Joint Memorandum of Terms, inter alia, agreeing for sale of the hypotheca valued tentatively at Rs.156.04 crores (as per stock statement dated 31.8.2020),with full transparency and also for routing the current as well as all the future sale proceeds into the Kotak Mahindra Bank account (Applicant),which account shall be construed as designed by the consortium, however by stating that the Joint Memorandum has been entered without prejudice to the contentions of the applicant as well as the defendants 1to3.Having thus filed a Joint Terms of Memorandum, Ld. Counsel for both parties prayed the Tribunal to record the same and pass orders as expeditiously as possible.

4. At this juncture, Mr. Seshadri, Ld. Advocate, submitted that he has been instructed by the 6th defendant (RBL Bank) to appear in this matter and therefore he may be heard in this petition, the applicant be directed to serve the copies of the Joint Memorandum and pending service and hearing the 6th respondent on the joint memorandum the Tribunal may defer recording the terms of Joint Memorandum..

5. Ld. Counsel for the applicant bank Mrs. Ananda Gomathi, while strongly opposing the said plea, at the outset submitted that the applicant bank has not sought any relief in this petition against the 6th respondent which is a member of the consortium and that the Joint Memorandum is entered only to ensure that the hypothecated stock which is a highly perishable item is disposed of immediately thereby avert its quality deterioration. Ld. Counsel further submitted that the Joint Memorandum provides for keeping the said sale proceeds in deposit in an account with the applicant bank, which account shall be construed as designed by the consortium. It is the firm contention of the Ld. Counsel that forthwith disposal of the hypotheca will protect the interest of not only the applicant bank but also of the rest of the members of consortium including the 6th defendant, therefore, it is not necessary to adjourn the matter for the purpose of hearing the 6th respondent.

6. Mr. Srinath Sridevan, Ld. Counsel for Respondents 1 to 3 submitted that the hypothecated stock is highly perishable as such it is imperative to dispose of the stocks as expeditiously as possible hence to facilitate immediate sale of the stock the Joint Memorandum is entered. Ld. Counsel also submitted that immediate sale of the hypotheca will protect the interest of all the members of the consortium therefore, hence it is not at all necessary to hear the 6th respondents at this stage.

7. Having heard the Ld. Counsels for both sides, and also Mr. Sheshadri, Ld. Advocate, at the threshold, it is to be stated that the submissions of the Ld. Counsel Mr. Seshadri that the 6th Respondent be heard before recording the terms of the above joint memorandum and pending hearing the 6th respondent no order be passed, is unacceptable and unnecessary for the following reasons.

(i) Firstly, the 6th Respondent has not challenged the order appointing Advocate Commissioners for seizure and also for the sale of the hypothecated stock passed on 7.9.2020 by this Tribunal.

(ii) Nextly, the Joint Memorandum now filed is to enable quick disposal of the hypothecated stock which indisputably is highly perishable and thus avoid/prevent delay, quality deterioration and ultimately its value.

(iii) The terms of the Memorandum specifically state that the sale proceeds will be deposited in an account of Kotak Mahindra Bank, which shall be construed as an account designed by the consortium, thus, the interest of all the members including the 6th respondent of the consortium is well protected.

(iv). It is always open to the 6th respondent to raise objection if any, regarding the appropriation of the sale proceeds if the same is found to be contrary to the terms of the consortium agreement or the Paripassu charge, at the time of appropriation of sale proceeds.

(v) The 6th defendant had not even filed vakalat or even a memo of undertaking to file vakalat in due course.

8. Therefore, the Tribunal, is of the view that no prejudice will be caused to the 6th respondent if the 6th defendant is not heard on the Joint Terms of Memorandum at this stage of the proceedings.

9. Therefore, having heard the Ld. Counsels, supra, and on careful perusal of the Joint Memorandum dated 6.10 2020, the Tribunal is satisfied that the terms of the same are not detrimental to the interests of any of the stake holders, and would in fact protect their interest, hence the following order is passed:

I. The order appointing the Advocate Commissioners dated 07.09.2020 shall continue to remain in force until further orders, however with the following modifications: (a). The Advocate Commissioners shall visit each of the factories of the 1st defendant mentioned in the commission warrant and inspect the stocks of the 1st defendant therein and submit biannual (twice a year) reports to this Tribunal. (b) The 1st defendant shall fully cooperate with the learned Advocate Commissioners who shall be accompanied by one representative of the consortium and one representative of 1st defendant, for the above purpose. (c) The 1stdefendant is hereby allowed to work out the ways and means to take forward the existing orders as follows;

(i) Order of M/s Capricorn Food Products India Ltd (CFPIL)from Hindustan Coco-Cola Beverages Pvt Ltd for purchase of 4,408 Mt of Mango Pulp for a sum of Rs.23,03,18,000/- (Twenty three crores three lakhs and eighteen thousand only).

(ii) Pending supply of 2334 MT must be affected by 30.11.2020, and payment will be made by the respondents on receipt of supply.

(iii) The 1st defendant will dispatch 2324 MT of stocks to M/s Hindustan Coco Cola Beverages P Ltd., from 1.10.2020 onwards and submit the Lorry Receipts to Kotak. CFPIL will also raise invoice on M/s Hindustan Coco Cola Beverages P Ltd. for Rs.13.6 Cr inclusive of GST, with a request to wire the same to the Applicant Banks A/c. The Applicant Bank shall ensure that the GST amount of this sale is paid to the department.

(iv) The Applicant Bank shall distribute all moneys as per Consortium Agreement according to the Paripassu charge of the member banks. IB. Future Orders (a) The 1st defendant will be entitled to aggressively market the remaining stocks with various buyers. If buyers are related parties (namely, Shuchi Beverages Limited, Gonglu Agro Pvt. Ltd), then, no order shall be serviced until full details are given to the Consortium lenders and approval is obtained. (b) That whenever any order for fruit pulp is received, the following process shall be followed: -

(i) If the order is from a related party, then, the approval as per clause above shall be obtained before servicing the order.

(ii) If the order is from a third party, 1st defendant can proceed to service the order immediately in the following manner. (a). 1st defendant shall submit the Purchase Order / Confirmation email to the Consortium. Unless Consortium objects to the Purchaser Order / confirmation email with copy to the advocate commissioner within 7 business days, the 1st defendant shall proceed to fulfill the order. (b) 1st defendant shall move the stock to the purchaser, and submit the lorry receipts / BL to Kotak Mahindra Bank Ltd and the advocate commissioner. Advocate Commissioner shall ensure that the goods dispatched as per lorry receipt matches the quantity as per Purchaser Order. (c) 1st defendant shall raise the invoice, ensuring that the invoice proceeds are payable only into the account maintained by 1st defendant with applicant bank.

II. As and when the proceeds are received, Applicant Bank shall duly account for the same, and Applicant Bank shall file a Memo recording the receipt of funds received to its credit after distribution between consortium members thereby reducing the OA claim (which includes the interest serviceable) to that extent.

III. No hypothecated stocks shall be sold except by following the above procedure.

IV. Both parties shall cooperate at the time of biannual visits by the Commissioner for verification of the stocks and also at the time of sale of hypotheca by the Advocate Commissioner. V Expenses of CFPIL (a) The applicant in consultation with consortium should consider reasonably the release of funds to the 1st defendant for critical operations such as salaries, wages of labourers, EB, Logistics, Transport

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, raw material, packaging material and GST etc. VI. The first defendant shall store the hypothecated stocks in optimum storage conditions to maximize the shelf life of the hypothecated stocks. VII. The Advocate Commissioner shall be entitled to inspect the hypothecated stock at Satyavedu, Krishnagiri, and other places wherever they are stored on biannual basis and submit report to this Tribunal. VIII. The Advocate Commissioner shall give reasonable notice to 1st defendant for execution of the warrant, and the respondents 1 to 3 shall cooperate with the advocate Commissioner. IX. It is hereby recorded that the Joint Memorandum is entered by the parties without prejudice to their respective contentions. X. The warrant issued to the Advocate Commissioners is hereby recalled and the Registry is hereby directed to forthwith issue a fresh warrant incorporating the condition Nos. I(a)(b), IV, VII &VIII above and also the conditions nos.(f) (g) (h)(i) (j) (k) (l) of the order dated 07.09.2020. For compliance and for report of the Advocate Commissioners. Call on 9.11.2020.