Gtl Infrastructure Limited vs Canara Bank And 6 Ors

GTL Infrastructure Limited } A company incorporated under the } Companies Act, 1956 and having its } registered office at 3rd Floor, "Global } Vision", Electronic Sadan No.II MIDC, } TTC Industrial Area, Mahape Navi } Mumbai - 400710 through its authorised } representative Pratibha Mule } Petitioner

versus 1.CANARA BANK } A body corporate/banking company } constituted under the Banking } Companies (Acquisition & Transfer of } Undertakings Act, 1970 having its head } office at 112, J.C.Road, Bangalore- } 560 002, Karnataka and having a } Branch at G Block, Near Indian Oil, } Opposite Godrej, Bandra Kurla } Complex, Bandra East, Mumbai, } Maharashtra 400051 and also at The } Prime Corporate Branch of Canara } Bank is at 20th floor, Maker Tower 'E' } 1st Floor, Maker Arcade, Cuffe Parade, } Mumbai, Maharashtra 400005 } } 2. CORPORATION BANK } A body corporate/banking company } registered under the Banking } Companies (Acquisition & Transfer of } Undertakings) Act, 1970 having its } head office at P.B.No.88, Mangladevi } Temple Road, Mangalore-575 001, } Karnataka and its Industrial Finance } Branch at Bharat House, Bombay } Samachar Marg, Fort, Mumbai - 400 } 001, Maharashtra, through its } Manager. } }

M.M.Salgaonkar

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3. INDIAN BANK } A banking company within the meaning } of the Banking Regulation Act, 1949 } and having its registered office at New } No.66, Rajaji Salai, Chennai-1 and } having its branch office at 210, Mittal } Tower, B-Wing, GF, Nariman Point } Branch, Mumbai - 400 021, } Maharashtra through its Manager. } } 4. VIJAYA BANK } A body corporate constituted under the } Banking Companies (Acquisition & } Transfer of Undertakings) Act, 1980 } and having its Head Office at 41/2 M.G. } Road, Bangalore-560001, Karnataka } and having a branch office at 81, Hill } Road, Bandra (West), Mumbai, through } its Manager. } } 5. IDBI BANK } Formerly known as "Industrial } Development Bank of India Limited", a } company incorporated under the } Companies Act, 1956 and a banking } company within the meaning of the } Banking Regulation Act, 1949 having } its registered office and Large } Corporate Branch at IDBI Tower, WTC } Complex, Cuffe Parade, Mumbai - 400 } 005. } } 6. LIFE INSURANCE CORPORATION } OF INDIA LIMITED } A Corporation established under the } Life Insurance Corporation Act, 1956 } having its corporate office at 6th } floor, Yogakshema Building, Jeevan } Bima Marg, Nariman Point, Mumbai } 400 021 } } 7. EDELWEISS ASSET } RECONSTRUCTION COMPANY } LIMITED } A company registered under the }

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provisions of Companies Act, 1956 } having its registered address at } Edelweiss House, Off. C.S.T. Road, } Kalina, Mumbai - 400 098 } Respondents AND WRIT PETITION (L) No. 223 OF 2020

GTL Limited, a company registered under } the Companies Act, 1956, having its } Registered office at Global Vision, } 3rd Floor, Electronic Sadan-II, TTC } Industrial Area, MIDC, Mahape, } Navi Mumbai 400710. Through its } Authorized representative } Mr. Arun Sinha } Petitioner

Versus

1 Union of India, through Secretary, } Ministry of Finance, North Block, } New Delhi. } } 2 Reserve Bank of India, Department of } Banking Regulations, Central Office } Building, 12th floor, Shahid Bhagat Singh } Road, Mumbai - 400 001. } } 3 IDBI Bank formerly known as } "Industrial Development Bank of India } Limited". In its capacity as the } 'Monitoring Institution', a company } incorporated under the Companies Act, } 1956 and a Banking Companies within } the meaning of the Banking Regulation } Act, 1949, having its registered office } and Large Corporate Branch at IDBI } Tower, WTC Complex, Cuffe Parade, } Mumbai 400 005. Maharashtra. } } 4 Dena Bank, a body corporate } constituted under the Banking } Companies (Acquisition & Transfer of } Undertaking) Act, 1970 and having its } branch office at Corporate Business } Complex, Bandra (e), Mumbai 400 051 } M.M.Salgaonkar

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5 Bank of Baroda, a body corporate } constituted under the Banking } Companies (Acquisition & Transfer of } Undertaking) Act, 1970 and having its } branch office at Corporate Financial } Services Branch, 3rd Floor, Baroda } House, Horniman Circle, Fort, Mumbai- } 400 001 } } 6 Bank of India, a body corporate } constituted under the Banking } Companies (Acquisition & Transfer of } Undertaking) Act, 1970 and having its } branch office at Large Corporate Branch } BOI Building, 4th Floor, M.G. Road, } Fort, Mumbai - 400 001. } } 7 Canara Bank, a body corporate } constituted under the Banking } Companies (Acquisition & Transfer of } Undertaking) Act, 1970 and having its } branch office at Prime Corporate Branch } - BKC, Canara Bank Bldg., "A" Wing, } 1st Floor, C-14, G Block, Bandra Kurla } Complex, Bandra (East), Mumbai } 400051 } } 8 Standard Chartered Bank, a body } corporate, constituted under the } Banking Companies (Acquisition & } Transfer of Undertaking) Act, 1970 } and having its registered office at } Crescenzo, 7th Floor, C-38/39, G Block } Bandra Kurla Complex, Bandra (East) } Mumbai 40-0 051 } } 9 Indian Overseas Bank, a body corporate } constituted under the Banking } Companies (Acquisition & Transfer of } Undertaking) Act, 1970 and having its } branch office at Fort Branch, Tamarind } House, 30-32, Tamarind Lane, Fort, } Mumbai - 400023. } }

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10 Andhra Bank, a body corporate } constituted under the Banking } Companies (Acquisition & Transfer of } Undertaking) Act, 1970 and having its } branch office at Specialised Corporate } Finance Branch 82, 8th floor, "F" Wing } Maker Towers, Cuffe Parade, Mumbai - } 400 005 } } 11 Union Bank of India, a body corporate } constituted under the Banking } Companies (Acquisition & Transfer of } Undertaking) Act, 1970, having its } branch office at Industrial Finance } Branch, 1st Floor, Union Bank Bhavan, } 239, Vidhan Bhavan Marg, Nariman } Point, Mumbai - 400 021 } } 12 UCO Bank, a body corporate } constituted under the Banking } Companies (Acquisition & Transfer of } Undertaking) Act, 1970, having its } branch office at Flagship Corporate } Branch, Mafatlal Centre, 1st Floor, } Nariman Point, Mumbai - 400021 } } 13 Small Industries Development Bank of } India, a body corporate constituted } under the Banking Companies } (Acquisition & Transfer of Undertaking) } Act, 1970, having its registered office } at Samrudhi Venture Park, MIDC } Industrial Area, Marol, Andheri (E), } Mumbai - 400093. } } 14 Punjab National Bank a body corporate } constituted under the Banking } Companies (Acquisition & Transfer of } Undertaking) Act, 1970, having its } branch office at Large Corporate Branch } Maker Tower "E", Ground Floor, Cuffe } Parade, Mumbai - 400005 }

15 Indian Bank, a body corporate } constituted under the Banking }

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Companies (Acquisition & Transfer of } Undertaking) Act, 1970, having its } branch office at Nariman Point Branch } 210, B-Wing, Mittal Tower, Nariman } Point, Mumbai - 400 021 } } 16 Vijaya Bank, a body corporate } constituted under the Banking } Companies (Acquisition & Transfer of } Undertaking) Act, 1970, having its } branch office at ARM Branch, Vijaya } Bank Regional Office premises, Vikas } Centre, 1st Floor, S.V. Road, Santacruz } (West), Mumbai - 400054 } } 17 United Bank of India, a body corporate } constituted under the Banking } Companies (Acquisition & Transfer of } Undertaking) Act, 1970, having its } branch office at Corporate Finance } Branch UBI Bldg. Ground Floor, 25, Sir } P M Road, Fort, Mumbai - 400001 } } 18 JM Financial ARC Limited, A Company } incorporated under the Companies Act } 1958, and having its registered office } at 3rd Floor, B Wing, Suashish IT Park, } Plot No.68 E, Off. Dattapada Road, } Opp. Tata Steel, Borivali (East), } Mumbai - 400066 } } 19 Amilife Insurance PCC Limited, } a company incorporated under the Laws } of Seychelles and having its registered } office at Commercial House, 1, Eden } Garden Eden Island, Mahe, Seychelles } } 20 Bank of Baroda, a body corporate } constituted under the Banking } Companies (Acquisition & Transfer of } Undertaking) Act, 1970, having its } branch office at Global Syndication } Center, 32, City Road, } London, EC1Y2BD UK } }

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21 Bank of India, a body corporate } constituted under the Banking } Companies (Acquisition & Transfer of } Undertaking) Act, 1970, having its } branch office at London Branch, 4th } Floor, 63 Queen Victoria Street, London } EC4N 4UA } } 22 Indian Bank, a body corporate } constituted under the Banking } Companies (Acquisition & Transfer of } Undertaking) Act, 1970, having its } branch office at No.57, Sir Baron } Jayatilleke Mawatha, Fort, Colombo - } -1, Sri Lanka } } 23 Indian Bank, a body corporate } constituted under the Banking } Companies (Acquisition & Transfer of } Undertaking) Act, 1970, having its } branch office at 3, Raffels Place, Bharat } Building, Singapore 048617 } } 24 Indian Overseas Bank,a body corporate } constituted under the Banking } Companies (Acquisition & Transfer of } Undertaking) Act, 1970, having its } branch office at 3rd Floor, Ruttonjee } House, 11, Duddell Street, Hong Kong } } 25 Pegasus CP One Limited - Class E, a } Company incorporated under the laws } of British Virgin Islands and having its } registered office at Romasco Place, } Wickhams Cay 1, P.O. Box 3140 Road } Town, Tortola } British Virgin Islands VG 1110 } } 26 Punjab National Bank, a body } corporate constituted under Banking } Companies (Acquisition & Transfer of } Undertaking) Act, 1970, having its } brand in United Kingdom at 1, } Moorgate, London, EC2R 6JH, } United Kingdom }

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27 Syndicate Bank, a body corporate } constituted under the Banking } Companies (Acquisition & Transfer of } Undertaking) Act, 1970, having its } Branch in the State of United Kingdom } at London Branch, 2A, Eastcheap, } EC3M 1LH } } 28 Al Salam Bank, Bahrain B.S.C. a body } corporate incorporated in the Kingdom } of Bahrain under the Bahrain } Commercial Companies Law and having } its registered office at P.O. Box 18282, } Manama, Kingdom of Bahrain } } 29 Standard Chartered Bank (Mauritius) } Limited, a company incorporated under } the laws of Mauritius having its } registered office at Units 6A and 6B } 6th Floor, Raffles Tower, Lot 19, } Cybercity, Ebene, Mauritius } Respondents

Mr.S.U.Kamdar-Senior Advocate with Mr.Nikhil Sakhardande, Mr.Rohan Rajadhyaksha, Mr.Charles DeSouza, Mr.Prasad Lotlikar, Mr.Manaswi Agrawal and Ms.Sakshi Bhalla i/b. Mahima Sinha for the petitioner in WP/1893/2019.

Mr.Navroz Seervai-Senior Advocate with Mr.Rohan Rajadhyaksha, Mr.Suyash Gadre, Mr.Prasad Lotlikar and Ms.Vandana Chamle i/b. M/s.Alathea Law LLP for the petitioner in WPL/223/2020.

Dr.Birendra Saraf with Ms.Apurva Gupte, Mr.Ishtiaq Ali, Mr.Zaman Ali, Ms.Vinita Hombalkar and Mr.Umar F. Azam i/b. M/s.Orbit Law Services for respondent Nos.1 and 2 in WP/1893/2019 and for respondent No.7 in WPL/223/2020.

Ms.Priyanka Shetty with Mr.Prabhav Shroff, Mr.Ayush Chaddha i/b. M/s.AZB and Partners for respondent No.7 in WP/1893/2019.

Mr.Y.R.Mishra with Mr.A.S.Singh for respondent No.1 (UOI) in WPL/223/2020.

M.M.Salgaonkar

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CORAM :- S. C. DHARMADHIKARI & R. I. CHAGLA, JJ.

DATED :- FEBRUARY 3, 2020

JUDGMENT (Per S.C.Dharmadhikari, J.) :

-

1. Rule. Respondents waive service. By consent of both

sides, Rule is made returnable forthwith.

2. These two petitions were heard together and as they

involve similar questions and issues, they are disposed of by this

common judgment.

3. Writ Petition No.1893 of 2019 has been filed by GTL

Infrastructure Limited, a company incorporated under the

Companies Act, 1956 having its registered office at the address

mentioned in the cause title. It has been filed against five Banks

and Life Insurance Corporation of India Limited by impleading

them as respondent Nos.1 to 6. The seventh respondent is a

company registered under the provisions of the Companies Act,

1956 having its office at the address mentioned in the cause title.

It has been impleaded because it is an Asset Reconstruction

Company

4. The relief claimed in the writ petition is that this Court

should issue a writ of mandamus or any other appropriate writ,

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order or direction, directing respondent Nos.1 to 6 to forthwith

comply with paragraph 6.4 of the Master Circular dated 1st July,

2015 issued by the Reserve Bank of India (RBI).

5. The petitioner claims that in and around 2007-2008, it

availed financial facilities from various banks and financial

institutions in India, including respondent Nos.1 to 6 with a view

to expand its business. Thereafter, it says that, owing to certain

unforeseen circumstances, increased competition etc., the telecom

industry suffered extensively and the petitioner was unable to

comply with its obligations under the documents relating to the

sanction of financial facilities. The petitioner's debt was referred

to the Corporate Debt Restructuring Cell (CDR Cell). Pursuant

thereto, the CDR Cell issued a Letter of Approval dated 23 rd

December, 2011 and restructured the petitioner's debt on the

terms and conditions more particularly set out therein. Pursuant

to the issuance of the Letter of Approval by the CDR Cell, the

petitioner's lenders and the petitioner executed a Master

Restructuring Agreement, copy of which is at Exhibit 'A' to the

petition. It is dated 31st December, 2011.

6. The Reserve Bank of India issued a notification dated

8th June, 2015 bearing No.DBR.BP.BC.No.101/21.04.132/2014-15 in

respect of Strategic Debt Restructuring (SDR Notification). At a

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Joint Lenders Forum (JLF) meeting held on September 20, 2016

(Review and Reference Date), the lenders of the Petitioner,

including respondent Nos.1 to 6, invoked the SDR Notification in

respect of the petitioner and M/S Chennai Network Infrastructure

Limited (for short, "CNIL"). A copy of the minutes of the JLF

meeting dated 20th September, 2016 is annexed as Exhibit 'B' to

the petition. Pursuant thereto, the JLF through the Union Bank of

India, which is a monitoring institution, executed a term sheet

containing detailed terms and conditions of the scheme to be

implemented in respect of the petitioner under the SDR

Notification. The said term sheet was forwarded by the Union of

Bank of India to the petitioner under a cover letter dated 14th June,

2017 alongwith the term sheet for the SDR scheme, copy of which,

alongwith the terms sheet for the SDR scheme, is annexed as

Exhibit 'C' to the petition. Similarly, the JLF, through the Union

Bank of India, executed a term sheet containing detailed terms

and conditions of the scheme to be implemented in respect of CNIL

under the SDR Notification. The said term sheet was forwarded by

the Union Bank of India to CNIL under a cover letter dated 14 th

June, 2017, copy of which alongwith the term sheet for the SDR

scheme is annexed as Exhibit 'D' to the petition.

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7. The petitioner submits that the total outstanding dues

of the petitioner to its lenders as on the Review and Reference date

was Rs.3357,13,19,841 (Rupees Three Thousand Three Hundred

and Fifty Seven Crores Thirteen Lakhs Nineteen Thousand Eight

Hundred and Forty One Only). A table detailing the dues owed by

the petitioner to each of its lenders as on the Review and

Reference Date is annexed as Exhibit 'E' to the petition. Similarly,

the total outstanding dues of CNIL to its lenders, as on the Review

and Reference date, were Rs.5158,10,36,665 (Rupees Five

Thousand One Hundred and Fifty Eight Crores Ten Lakhs Thirty

Six Thousand Six Hundred and Sixty Five Only). A table detailing

the dues owed by CNIL to each of its lenders as on the Review and

Reference Date is annexed as Exhibit 'F' to the petition.

8. The petitioner further states that the scheme under

the SDR Notification (SDR scheme) envisages participation by all

the lenders of the petitioner and CNIL, including respondent Nos.1

to 6, to convert the whole or part of their respective debts into

equity share capital of the petitioner or CNIL, as the case may be.

Once the conversion was completed, then, the lenders would sell

the equity shares held by the lenders in the petitioner or CNIL to a

new promoter and upon completion of conversion of debt to equity,

the existing asset classifaciton of the petitioner and CNIL, as on

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the Review and Reference Date, would continue for a period of

eighteen months from the Review and Reference Date.

9. It is further submitted that pursuant to execution of

the SDR term sheets, the debt of the lenders, including respondent

Nos.1 to 6, to the extent of Rs.1692,21,58,070 (Rupees One

Thousand Six Hundred and Ninety Two Crores Twenty One Lakhs

Fifty Eight Thousand and Seventy only), was converted into fully

paid up equity shares of the petitioner on and around 13 th April,

2017 and only an amount of Rs.1758,41,96,635 (Rupees One

Thousand Seven Hundred and Fifty Eight Crores Forty One Lakhs

Ninety Six Thousand Six Hundred and Thirty Five only) remained

outstanding from the petitioner.

10. It is further submitted that similarly, as regards CNIL,

the debt of the lenders, including respondent Nos.1 to 6, to the

extent of Rs.2808,95,53,920 (Rupees Two Thousand Eight

Hundred and Eight Crores Ninety Five Lakhs Fifty Three

Thousand Nine Hundred and Twenty only) was converted into full

paid up equity shares of CNIL on and around 13 th April, 2017 and

only an amount of Rs.2385,08,72,011 (Rupees Two Thousand

Three Hundred and Eighty Five Crores Eight Lakhs Seventy Two

Thousand and Eleven only) remained outstanding. The details of

the outstanding debt of the lenders, including respondent Nos.1 to

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6, pursuant to the aforesaid conversion of debt into equity shares

and the details of the shares of the petitioner and CNIL held by the

lenders, including respondent Nos.1 to 6, are annexed as Exhibit

'G' collectively. The petitioner submits that it would not be out of

place to mention that pursuant to the implementation of the SDR

Scheme and merger of CNIL and the petitioner, the lenders,

including respondent Nos.1 to 6 together held 63.16% of

shareholding in the petitioner.

11. The petitioner submits that thereafter, during the

implementation of the SDR scheme, the petitioner paid an amount

of Rs.1069,00,00,000 (Rupees One Thousand and Sixty Nine

Crores only) towards interest to the lenders, including respondent

Nos.1 to 6 and Rs.75,00,00,000 (Rupees Seventy Five Crores only)

on 22nd June, 2018 and 27th June, 2018 towards the first principal

repayment tranche. Upon conversion of debt into equity shares of

the petitioner, all amounts, overdue prior to the date of conversion,

were converted into equity shares. Therefore, post conversion,

there were no outstanding payments overdue to be paid by the

petitioner in any manner.

12. It is submitted by the petitioner that meanwhile, the

lenders of the petitioner, including respondent Nos.1 to 6,

attempted to find an investor to sell their stake in the petitioner.

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However, despite extensive assistance from the petitioner, the

lenders, including respondent Nos.1 to 6, failed to find an investor

and thereby defaulted in their obligation under the SDR Scheme.

The petitioner states that it did not default on any of its

obligations, including repayment of the debt, under the SDR

scheme and co-operated to the maximum extent possible with the

lenders to find a new investor. The obligation to find the new

investor and transfer their respective shareholding in the

petitioner to a new investor was that of the lenders alone under

the SDR Scheme and the lenders of the petitioner failed to do the

same. The petitioner further states that respondent Nos.1 to 6,

alongwith other lenders of the petitioner commenced a 'new

investor induction' process which was supported and facilitated by

the petitioner and experienced advisors of like Ernst and Young

and TAP Advisors were appointed. The petitioner initially

received interest from over 20 investors, including the likes of

Brookfield Asset Management and American Tower Company.

Potential bidders were given access to the data room as part of a

diligence process, followed by management discussions. Some of

the key investors, including Brookfield Asset Management and

American Tower Company withdrew from the process due to

extraneous reasons like the entry of new aggressive participant in

the market, uncertainty regarding the future of Aircel, and

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shutting down of telecom operators like Rcom, Tata Tele, SSTL and

Telenor. Post completion of the due-diligence process, the

petitioner received non-bonding term sheets from 3 investors i.e.

AION Capital, Beam Group LLC and a consortium of Piramal

Enterprises and Bain Capital Credit. However, owing to the

aforementioned adverse circumstances, the consortium of Piramal

Enterprises and Bain Capital Credit withdrew from the process

and AION Capital and Beam Group LLC also did not pursue their

respective offers.

13. The petitioner further submits that since the lenders,

including respondent Nos. 1 to 6 were uncertain of the induction of

a new investor into the petitioner and the consequent completion

of the SDR Scheme, the lenders considered selling their respective

debts to an Asset Reconstruction Company (ARC). Accordingly, on

23rd January, 2018, in the meeting of the Core Committee of the

lenders of the petitioner, it was deliberated by the lenders to

consider a sale of their respective debts to an ARC. In the meeting

dated 23rd January, 2018, the Core Committee of the lenders was

also informed that respondent No.7 had evinced an interest in

buying the debt of the lenders of the petitioner. It is pertinent to

note that the decision to sell the petitioner's debt to an ARC was

the sole decision of the lenders of the petitioner and their

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consultants and neither the promoter of the promoter nor the

petitioner itself were involved in the said decision making process

at any time. Copy of the minutes of the meeting of the Core

Committee of the lenders held on 23rd January, 2018 is annexed to

the petition as Exhibit 'H'. Notably, the meeting dated 23 rd

January, 2018 was, inter alia, attended by the representatives of

respondent Nos. 1, 5 and 6.

14. Thereafter, at the joint lenders' meeting dated 30 th

January, 2018, the lenders of the petitioner deliberated the

proposal to sell the entire debt of the petitioner to an ARC. Copy of

the minutes of the joint lenders' meeting held on 30 th January,

2018 is annexed as Exhibit 'I' to the petition.

15. It is further submitted that the proposition to sell the

debts of the lenders to an ARC was further discussed at the

meeting of the Core Committee of the lenders of the petitioner on

2nd February, 2018. Pertinently, the proposed sale of assets to an

ARC was on 50:50 basis i.e. 50% consideration for sale of asset

would be cash and 50% consideration for sale of asset would be

security receipts to be issued by the proposed ARC. However, at

the meeting held on 2nd February, 2018, respondent No.1 inquired

as to whether the cash consideration for sale of assets to an ARC

could be increased to more than 50% in order to comply with

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certain guidelines issued by the RBI. Accordingly, it was agreed to

increase the cash consideration of the sale of asset to an ARC to

51%. Further, modifications to the term sheet for the transaction

with an ARC were discussed and agreed and it was decided that

the term sheets for the transaction with an ARC would be finalised

in the next meeting of the lenders. A copy of the minutes of the

meeting of the Core Committee of the lenders dated 2 nd February,

2018 is annexed to the petition as Exhibit 'J'. The meeting of the

Core Committee of the lenders dated 2nd February, 2018 was

attended by respondent Nos.1, 5 and 6.

16. Thereafter, the lenders of the petitioner further

negotiated the terms of the sale of the debt of the petitioner to an

ARC at a Joint Lenders Meeting held on 12 th February, 2018. At

the meeting dated 12th February, 2018, the representative of the

CDR Empowered Group stated that if the lenders were to sell their

debt to an ARC, the monitoring institution (Union Bank of India)

ought to circulate a review note on exit of the petitioner from CDR.

A copy of the minutes of the Joint Lenders Meeting dated 12 th

February, 2018 is annexed as Exhibit 'K' to the petition. The said

meeting was attended by the representative of respondent Nos. 1,

2, 3 and 5.

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17. It is further submitted that pursuant to the discussions

and consensus arrived at between the lenders of the petitioner, a

process for sale of the petitioner's debt to an ARC was initiated and

the bids were invited from the ARCs by giving a public notice

published in two newspapers on 28th February, 2018. Exhibit 'L'

collectively is the copy of the said publication in the newspapers.

At the end of the bidding process, only one binding bid was

received, which was made by respondent No.7 jointly with Bank of

America Merill Lynch (BAML). The bid of respondent No.7 BAML

was discussed by the lenders at the meeting of the consortium of

lenders of the petitioner on 23rd March, 2018. As per the joint bid

of respondent No.7 and BAML, respondent No.7 and BAML were

ready and willing to buy the complete debt of Rs.4143,00,00,000/-

(Rupees Four Thousand One Hundred and Forty Three Crores

only) owned by the petitioner to its lenders, in consideration of

Rs.2000,00,00,000/- (Rupees Two Thousand Crores only) along

with transfer of underlying security interest. During the said

meeting of the consortium of lenders, ICICI Bank queried whether

respondent No.7 would consummate the transaction if only some

of the lenders are willing to assign the debt. Respondent No.7

clarified that the offer then extended by respondent No.7 was

contingent on 100% of the lenders assigning their debt and

piecemeal purchase of the debt from each lender would entail

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substantial reduction in the consideration being offered by

respondent No.7. Respondent No.7 further stated that in such a

situation, respondent No.7 would be able to offer only around

Rs.1500,00,00,000/- (Rupees one Thousand and Five Hundred

Crores only) to Rs.1800,00,00,000/- (Rupees One Thousand and

Eight Hundred Crores only). Thus, to facilitate aggregation of

debts as envisaged by the relevant RBI circular and mandated by

the IRAC guidelines, it was always understood between the lenders

including respondent Nos. 1 to 6, consultants and respondent No.7

that a 100% assignment of the debt of the petitioner would help to

realise the best value for all the lenders of the petitioner. Further,

during the meeting, Ernst and Young emphasised that the process

of evaluating the sale of the petitioner's debt to an ARC was

commenced pursuant to the instructions of the lenders of the

petitioner in view of the fact that the SDR Scheme had to be

abandoned due to extraneous circumstances. A copy of the

minutes of the meeting of the consortium of lenders of the

petitioner dated 23rd March, 2018 is annexed as Exhibit 'M' to the

petition. The petitioner submits that for the sake of completeness,

it must be noted that though respondent No.7 could not acquire

100% of the debt of the petitioner, respondent No.7 acquired the

debt on a cluster basis rather than piecemeal basis to enable the

lenders of the petiitoner to realise the best value of their

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respective debts on one hand, commercial considerations on the

other hand and keeping in view the intention of the RBI circulars.

18. The petitioner further submits that in the meeting of

the consortium of the petitioner's lenders dated 3 rd April, 2018, it

was noted that majority of the lenders were agreeable to sale off

their respective debts to respondent No.7 and the lenders decided

to obtain their respective internal approvals for the proposed

transaction with respondent No.7 and BAML. The said meeting

was inter alia attended by respondent Nos.1 to 6. Copy of the

minutes of the meeting dated 3rd April, 2018 is annexed as Exhibit

'N' to the petition.

19. Even while the process for sale to an ARC was under

consideration, the petitioner proactively submitted a resolution

plan vide letter dated 27th April, 2018 (Exhibit 'O'). However, in

view of the ARC sale process, the resolution plan submitted by the

petitioner was not considered by the lenders.

20. By letter dated 8th May, 2018 (Exhibit 'P'), the

promoter of the petitioner expressed its support for the sale of the

debt of the petitioner to an ARC chosen by the lenders of the

petitioner.

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21. Thereafter, in a meeting of all the lenders, including

respondent Nos. 1 to 6, held on 24th May, 2018, the lenders,

including respondent Nos. 1 to 6 decided to carry out a so-called

"Swiss-auction" process for concluding the debt sale transaction

with a reserve price of INR 2,400 Crores.

22. Thereafter, the Union Bank of India (the monitoring

institution) issued an advertisement inviting an expression of

interest from potential investors (ARCs, Banks and Non Banking

Financial Companies), in two newspapers on 28 th June, 2018.

Exhibit 'Q' is the copy of the newspaper advertisement issued on

27th June, 2018 by the Union of India.

23. However, no further bids were received by the lenders

and meanwhile, during the negotiations with the lenders of the

petitioner, respondent No.7 had raised its offer to purchase the

entire debt of the petitioner of Rs.2400,00,00,000/- (Rupees Two

Thousand and Four Hundred Crores only). Therefore, by a letter

dated 11th July, 2018, the Union Bank of India declared the bid of

respondent No.7 and BAML as H1 or "highest Bidder" so as to

enable all the lenders to seek the consent of their respective

competent authorities in this regard.

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24. On 13th July, 2018, at a meeting of the lenders of the

petitioner, including respondent Nos. 1 to 6, it was expressly

recorded in the minutes of the meeting that since no counter bid

was received from the above investors within the stipulated time

lines, by virtue of the ROFR, the offer of Rs.2400.00 crores by the

BoAML-EARC has been accepted for the proposed sale.

25. Pursuant thereto, a note was prepared by Union Bank

of India and circulated to all the lenders of the petitioner vide an

email dated 17th July, 2018. The petitioner submits that a bare

reading of this note speaks volumes of the extremely cogent and

valid reasons that formed the basis of the unanimous decision of

the lenders of the petitioner, including respondent Nos. 1 to 6 to

sell their debts in favour of respondent No.7. Exhibit 'R' to the

petition is a copy of the note prepared and circulated by the Union

Bank of India to all the lenders of the petitioner, including

respondent Nos.1 to 6.

26. The petitioner further submits that in view of the

aforementioned discussions and the decision of the lenders of the

petitioner to assign their debt to respondent No.7 (acting in its

capacity as the trustee of EARC Trust - SC 338), by an assignment

agreement dated 27th August, 2018, Union Bank of India, Andhra

Bank, Punjab National Bank, Bank of India, Dena bank, State bank

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of India, Bank of Baroda, Axis Bank Ltd., Indian Overseas Bank

and ICICI Bank Ltd. assigned all their rights, title and interest in

the financial assistance granted by them to the petitioner in favour

of respondent No.7.

27. The fact that the debt of the Union Bank of India,

Andhra Bank, Punjab National Bank, Bank of India, Dena Bank,

State Bank of India, Bank of Baroda, Axis Bank Ltd., Indian

Overseas bank and ICICI Bank Ltd. was assigned to respondent

No.7 was communicated by respondent No.7 to the petitioner vide

letter dated 29th August, 2018, copy of which is annexed as Exhibit

'S' to the petition.

28. Similarly, Oriental Bank of Commerce and Central

Bank of India also assigned all their rights, title and interest in the

financial assistance granted by them to the petitioner in favour of

respondent No.7 in its capacity as trustee of EARC Trust - SC 343

by executing an assignment agreement dated 7th September, 2018.

29. The fact that the debt of the Oriental Bank of

Commerce and Central bank of India was assigned to respondent

No.7 was communicated by respondent No.7 to the petitioner vide

letter dated 10th September, 2018 (Exhibit 'T').

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30. In view of the above assignments, respondent No.7

acquired 77.07% (by value) of the debt of the petitioner.

Accordingly, whilst relying on the IRAC Guidelines, by a letter

dated 12th September, 2018, respondent No.7 called upon

respondent Nos. 1 to 6 and United Bank of India to assign their

respective debts owed by the petitioner in favour of respondent

No.7. Exhibit 'U' is a copy of the letter dated 12th September, 2018

addressed by respondent No.7 to respondent Nos. 1 to 6 and

United Bank of India.

31. In compliance with the request of respondent No.7,

United Bank of India assigned its rights, title and interest in the

financial assistance granted by it to the petitioner in favour of

respondent No.7 acting in its capacity as trustee of EARC Trust- SC

366 vide an assignment agreement dated 29th March, 2019.

32. The said fact was communicated by respondent No.7 to

the petitioner vide letter dated 1st April, 2019. Exhibit 'V' to the

petition is a copy of the letter dated 1st April, 2019 addressed by

respondent No.7 to the petitioner.

33. The details of the debts assigned to respondent No.7

are as follows:-

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Sr. Name of Bank Total outstanding as % No. on September 1, 2018

(INR Crores)

1. Union Bank of India 488.5 12.01% 2. Central Bank of India 468.6 11.52% 3. Indian Overseas Bank 410.2 10.09% 4. Bank of Baroda 343.2 8.44% 5. ICICI Bank 306.1 7.53% 6. Punjab National Bank 235.9 5.80% 7. Oriental Bank of Commerce 207 5.09% 8. Andhra Bank 206.3 5.07% 9. Bank of India 188.8 4.64% 10. State Bank of India 144.2 3.55% 11. Axis Bank 104.9 2.58% 12. Dena Bank 30.7 0.75% 13. United Bank of India 75 1.86% 34. The petitioner further states that in the meanwhile, by a letter dated 27th June, 2018, addressed by respondent No.1 to the petition, respondent No. 1 contended that the SDR Scheme had failed; the account of the petitioner has been classified as an NPA retrospectively with effect form 1st July, 2011 (the CDR reference date) and therefore, sought repayment of the entire pre-CDR debt owed by the petitioner to respondent No.1. A copy of the letter dated 27th June, 2018 addressed by respondent No.1 to the petitioner is annexed as Exhibit 'W' to the petition.

35. The petitioner replied to respondent No.1's letter dated 27th June, 2018 by a letter dated 10 th July, 2018 (Exhibit 'X') and M.M.Salgaonkar ::: Uploaded on - 11/02/2020 ::: Downloaded on - 22/03/2020 04:41:59 :::

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highlighted that no financial default had been committed by the petitioner under the SDR Scheme and therefore, the contentions of respondent No.1 were misplaced.

36. Respondent No.1 reiterated its demand for repayment of the entire pre-CDR debt owed by the petitioner to respondent No.1 by letters dated 13th July, 2018 and 4th August, 2018 (Exhibits 'Y' and 'Z'). The petitioner responded to the letter dated 13 th July, 2018 by a letter dated 23rd July, 2018 (Exhibit 'AA').

37. Despite the petitioner addressing the aforementioned letters dated 10th July, 2018, 23rd July, 2018 and elucidating why no default had taken place, by a letter dated 23 rd August, 2018, respondent No.1 recalled the financial facilities granted by it to the petitioner and called upon the petitioner to pay a sum of Rs.540, 35,00,000/- (Rupees Five Hundred and Forty Crores and Thirty Five Lakhs only). Copy of the letter dated 23 rd August, 2018 of respondent No.1 is annexed as Exhibit 'BB' to the petition.

38. The petitioner further submits that pertinently, despite agreeing to a sale to an ARC, in the aforementioned meetings of the lenders of the petitioner, on 3rd August, 2018 i.e. almost 6 months after agreeing to the sale, respondent No.1 addressed a letter to the Union Bank of India, opposing the proposed sale to respondent M.M.Salgaonkar ::: Uploaded on - 11/02/2020 ::: Downloaded on - 22/03/2020 04:41:59 :::

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No.7 and raised totally irrelevant, extraneous and misconceived objections. By the said letter, respondent No.1 also expressed its intention to initiate proceedings under the IBC against the petitioner. Copy of the letter dated 3rd August, 2018 is annexed to the petition as Exhibit 'CC'.

39. The petitioner challenged the retrospective declaration of the petitioner to be in default and an NPA with effect from 1 st July, 2011 as being ex-facie unjustified, illegal and arbitrary, before the Madras High Court in Writ Petition No.22687 of 2018. The petitioner had also filed Writ Petition No.22688 of 2018 before the Madras High Court seeking a declaration that the threshold for deciding sale of the debt of the petitioner to an Asset Reconstruction Company/ Securitisation Company is (i) 66% (sixty per cent) in value of the lenders in accordance with the provisions of the revised framework circular issued by the Reserve Bank of India; or (ii) in the alternative, 75% (seventy five per cent) in value of the lenders in accordance with the IRAC guidelines.

40. On 14th September, 2018, the petitioner filed a memo before the Hon'ble Madras High Court seeking to withdraw Writ Petition No.22688 of 2018 on account of lack of jurisdiction of the Madras High Court to entertain the said writ petition. The Madras M.M.Salgaonkar ::: Uploaded on - 11/02/2020 ::: Downloaded on - 22/03/2020 04:41:59 :::

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High Court allowed the petitioner to withdraw Writ Petition No.22688 of 2018 with liberty to file appropriate proceedings in accordance with law.

41. The petitioner further submits that in the meanwhile, on 12th February, 2018, the RBI issued an illegal, arbitrary and unconstitutional guidelines titled as "Resolution of Stressed Assets - Revised Framework" (Revised Framework Circular) for the resolution of stressed assets.

42. On 14th September, 2018, relying upon the Revised Framework Circular, respondent No.1, purportedly, in its capacity as a Financial Creditor of the petitioner, filed Company Petition (IB)-3604(MB)/2018) before the National Company Law Tribunal (NCLT), Mumbai under section 7 of the IBC, which is presently pending final disposal.

43. The petitioner further submits that on 19 th September, 2018, the petitioner filed Writ Petition (Civil) No.1156 of 2018 before the Hon'ble Supreme Court of India, inter alia, seeking to quash the Revised Framework Circular. Respondent No.1 contested the said writ petition by filing an affidavit in reply dated 24th November, 2018. Pertinently, respondent No.1 annexed a typed copy of the minutes of a meeting of the consortium of the M.M.Salgaonkar ::: Uploaded on - 11/02/2020 ::: Downloaded on - 22/03/2020 04:41:59 :::

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lenders of the petitioner dated 13th July, 2018, wherein, it was expressly recorded that since no counter bid was received from the above investors within the stipulated timeline, by virtue of the ROFR, the offer of Rs.2400.00 crores by the BoAML-EARC has been accepted for the proposed sale. A copy of the typed minutes of the meeting of the consortium dated 13 th July, 2018 is annexed as Exhibit 'DD' to the petition. Further, the RBI also filed written submissions in Writ Petition (Civil) No.1156 of 2018, copy of which is annexed as Exhibit 'EE' to the petition.

44. By a judgment dated 2 nd April, 2019, the Hon'ble Supreme Court was pleased to declare that the Revised Framework Circular was ultra vires and consequently, all actions taken under the Revised Framework Circular, including actions by which proceedings were filed under the IBC, were non-est.

45. On the above allegations and in the light of the judgment of the Hon'ble Supreme Court delivered in Writ Petition (Civil) No.1156 of 2018 dated 2nd April, 2019, it is urged that the proceedings under the Insolvency and Bankruptcy Code, 2016 (For short, "the IBC") are liable to be dismissed. The further averment in the petition is that respondent Nos.1 to 6 are required to comply with the extant guidelines of the Reserve Bank of India, including the Income Recognition and Asset Classification (IRAC) guidelines.

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Since 78.93% lenders of the petitioner have assigned their respective debts to respondent No.7, as per the IRAC guidelines, respondent Nos.1 to 6 are bound to assign their respective debts to respondent No.7 as well. The petitioner is impugning the actions/omissions of respondent Nos.1 to 6 on the grounds set out in the petition. In ground B, reliance is placed upon para 6.4 of the IRAC guidelines, which reads as under :-

"6.4 Procedure for sale of Bank's/ FI's financial assets to

ARC including valuation and pricing aspects.....

(d) (i) .....

(ii) In the case of consortium/ multiple banking

arrangements, if 75% (by value) of the banks/ FIs decide

to accept the offer, the remaining banks/ FIs will be

obligated to accept the offer" (Emphasis supplied).

46. The averment in the petition is that respondent Nos.1 to 6 are bound by the said guidelines issued by Reserve Bank of India. In the present case, since more than 75%(by value) of the lenders of the petitioner have assigned all their rights, title and interest in the financial facilities granted by them to the petitioner, in favour of respondent No.7, by executing Assignment Agreements, all other lenders of the petitioner are also obliged to accept the offer of respondent No.7 for assignment of their respective rights, title and interest in the financial facilities granted to the petitioner. In view of the IRAC guidelines, respondent Nos.1 to 6 are not entitled to treat themselves as M.M.Salgaonkar ::: Uploaded on - 11/02/2020 ::: Downloaded on - 22/03/2020 04:41:59 :::

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creditors of the petitioner and must mandatorily assign their debts to respondent No.7. Since they have failed to assign their respective debts to respondent No.7, respondent Nos.1 to 6 are in blatant violation of IRAC guidelines. The IRAC guidelines constitute a law. The actions of respondent Nos.1 to 6 are not only illegal, but also arbitrary and violative of Article 14 of the Constitution of India. Thereafter in other grounds, particularly, grounds (D) to (Q) of the petition, it is submitted that respondent Nos.1 to 6 be directed by a writ of mandamus or a direction in the nature of mandamus to assign their respective debt owed by the petitioner in favour of respondent No.7 in terms of the IRAC guidelines.

47. In para 7 of the petition it is said that since the proceedings filed by respondent No.1 under the IBC seeking initiation of the corporate insolvency resolution process in respect of the petitioner is pending, the petitioner apprehends that respondent Nos.1 to 6 may also continue to assert their purported rights as financial creditors of the petitioner and file similar proceedings against the petitioner under the IBC. If the corporate insolvency resolution process is initiated against the petitioner, the same will cause irreparable injury not only to the petitioner, but also to all stakeholders of the petitioner, including the lenders.

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Further, the initiation of the corporate insolvency resolution process will also render the present petition infructuous. The breach of clause 6.4.d (ii) of the IRAC guidelines is alleged. For all these reasons, the present petition seeks the above referred relief.

48. This petition is filed on 26 th April, 2019 and it was listed before a Division Bench of this Court on 30 th April, 2019. No orders were passed and liberty was granted to the petitioner to move the Vacation Court. The petitioner appeared before us on 3 rd December, 2019, but it could not be taken up. It was, therefore, adjourned to 18th February, 2020. However, the advocates for the petitioner moved a praecipe on 20th January, 2020 in view of the following terms :-

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

WRIT PETITION No.1893 OF 2019

GTL INFRASTRUCTURE LIMITED ..PETITIONER

VERSUS

CANARA BANK & ORS. ..RESPONDENTS

______________________________________

To,

The Prothonotary and Senior Master,

Bombay High Court,

Original Side

Sir,

BE PLEASED TO list the above Writ Petition before the

Division Bench of Hon'ble Mr.Justice S.C.Dharmadhikari

and Hon'ble Mr.Justice R.I.Chagla in the Bombay High

Court on ________ when the Advocates for the Petitioner

will seek urgent ad-interim reliefs in the following facts

and circumstances.

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1. The Petitioner filed the above Writ Petition seeking a

writ of mandamus against the Respondent Nos.1 to 6 to

assign the debts owed by the Petitioner to the

Respondent Nos.1 to 6 in favour of the Respondent

No.7 as mandated by the Reserve Bank of India (RBI)

under Prudential Norms on Income Recognition,

Assets Classification and Provisioning Pertaining to

Advances dated July 1, 2015 (IRAC Guidelines) and

pending such assignment to refrain from taking any

recovery/coercive measures against the Petitioner.

2. The Petitioner submits that since more than 75% of

the lenders of the Petitioner have assigned their

respective rights to Respondent No.7 i.e. an Asset

Reconstruction Company, as per the IRAC Guidelines,

Respondent Nos.1 to Respondent No.6 are also

obligated to assign their respective debts to

Respondent No.7.

3. However, Respondent No.1 has filed an Application

under Section 7 of the Insolvency and Bankruptcy

Code, 2016 against the Petitioner before the NCLT,

Mumbai claiming to be a financial creditor while acting

in breach of the IRAC Guidelines. The said Application

filed by Respondent No.1 to initiate the corporate

insolvency resolution process against the Respondent

is next scheduled to be listed before the NCLT, Mumbai

on January 30, 2020.

4. In the above circumstances, the Petitioner submits

that if the above Writ Petition is not heard urgently for

ad interim and interim reliefs sought therein and

Respondent No.1's Application under Section 7 of the

IBC is admitted by the NCLT, Mumbai, the above Writ

Petition would be rendered infructuous.

In the above facts and circumstances, BE PLEASED TO

list the above Writ Petition before the Division Bench of

Hon'ble Mr.Justice S.C.Dharmadhikari and Hon'ble

Mr.Justice R.I.Chagla in the Bombay High Court on April

30, 2019 when the Advocates for the Petitioner will seek

urgent ad-interim reliefs.

Dated this 20th day of January, 2020

Sd/-

Meraki Chambers

Advocates for the Petitioner"

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49. In view of the same, this matter was listed on 29 th January, 2020 and on that date, we took on record the rejoinder affidavit dated 22nd January, 2020 tendered by the advocate for the petitioner.

50. We heard both sides extensively on that date.

51. An affidavit-in-reply has been filed on behalf of respondent No.1 to this petition.

52. A preliminary objection is raised to the maintainability of the present petition. Firstly, it is argued that the present petition contains a similar prayer and seeks an identical relief that has been sought in the proceedings before the Hon'ble Supreme Court, namely, Writ Petition (Civil) 1156 of 2018. Prayer clause (e) of that petition and prayer clause (a) of the present petition are identical. The Hon'ble Supreme Court has disposed of that petition vide judgment dated 2nd April, 2019, without granting any relief of the aforesaid nature. Now, once that relief has not been granted and is deemed to have been refused, the present petition is not maintainable.

53. The second objection and raised as a preliminary one is that the petitioner is a borrower company. It has no locus in the matter of sale and purchase of the respondents' assets/loans in M.M.Salgaonkar ::: Uploaded on - 11/02/2020 ::: Downloaded on - 22/03/2020 04:41:59 :::

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favour of a third party, including respondent No.7. It cannot, as a borrower, seek a direction to respondent No.1 to assign its debt in favour of respondent No.7 at a throw away price.

54. Thereafter, it is stated that the first respondent had sanctioned a Rupee Term Loan of Rs.200.00 Crores to the petitioner out of the total Debt requirement of Rs.3529.00 Crores by the lenders' consortium, including respondent No.1. This is to part finance the Capex plan of installing telecom towers (Phase II) over three years from 2008-2009 till financial year 2010-2011.

Due to excess tie up, respondent No.l was allotted a share of 166.50 Crores as against the sanctioned limit of Rs.200 Crores.

However, the petitioner has availed only Rs.94.97 Crores. The said Term loan facility was payable in 28 quarterly installments commencing from 30th September, 2011 till 30th June, 2018.

Subsequently, the petitioner has also acquired tower portfolio comprising of 17,500 towers of Aircel Group through its fully owned subsidiary-M/S Chennai Network Infrastructure Limited (CNIL), which subsequently got merged into the petitioner. The combined tower portfolio of the merged entities was around 28000 towers. The first respondent had sanctioned a Term loan of Rs.750.00 Crores to part finance CNIL for the merger of CNIL. Due to excess tie up, respondent No.1 was allotted a share of Rs.650.00 M.M.Salgaonkar ::: Uploaded on - 11/02/2020 ::: Downloaded on - 22/03/2020 04:41:59 :::

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Crores as against the sanctioned limit of Rs.750 Crores and the unallocated portion Rs.100 Crores was cancelled. Aircel's tower portfolio was acquired at a value of Indian Rupees 8.026.00 Crores. The petitioner's group funded the deal in a mix of debt of Indian Rupees 5,000 Crore and the balance of Rs.3,026 Crore by way of equity. The deal was completed on 19 th July, 2010 and the Term loan was repayable in 34 quarterly installments.

55. It is then said that the petitioner and CNIL faced problems in servicing the debt as per the terms of the respective financing documents and requested the Consortium Lenders for CDR. At the request of both and in consideration of their commitment to improve its operations, the respective accounts were referred to the CDR Cell, a non-statutory voluntary mechanism set up under the aegis of the Reserve Bank of India.

This is for the efficient restructuring of corporate debt. Pursuant thereto, a restructuring package was agreed to as set out in the letter dated 23rd December, 2011. The reliefs, concessions and waivers granted as per this package did not improve the conduct and operations in the account of the petitioner and CNIL. That is why, there was a correspondence with the parties requesting them to regularise the account. Owing to default in payment of interest and principal amount, the account of the petitioner became Non M.M.Salgaonkar ::: Uploaded on - 11/02/2020 ::: Downloaded on - 22/03/2020 04:41:59 :::

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Performing Asset (NPA) with effect from 31st March, 2016 as per the IRAC norms of the Reserve Bank of India. The account was also upgraded. However, the petitioner failed to comply with the conditions and other milestones set out in the CDR package. At the request of the petitioner, subject to assurance provided by the petitioner that surplus amount received out of valuation of the assets shall be utilised for repayment of the lenders of the GTL Limited-Parent Company of the petitioner, the Consortium Lenders in the Joint Lenders Forum meeting, held on 20 th September, 2016, reviewed the account and after deliberations, invoked SDR scheme as per the Reserve Bank of India guidelines considering 20 th September, 2016 as the review and reference date. Thus, Rs.13000 Crores were to be brought in by the petitioner so as to comply with their obligations and, therefore, there was an agreement for conversion of part of the outstanding debt into equity. It was proposed that CNIL be merged with the petitioner and induction of new investor post-merger. In tune with the JLF decision, respondent No.1 permitted conversion of part debt of Rs.35.60 Crores out of the total outstanding debt of Rs.71.79 Crores as on reference date into equity shares of the petitioner apart from permitting part debt conversion of Rs.271.11 Crores out of the total outstanding debt of Rs.498.30 Crores in CNIL.

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and SDR, the balance total debt of the lenders was Rs.4143.51 Crores and the total equity shares was around 63.16% held by the lenders in the share capital of the petitioner. In terms of the SDR Scheme, the Rupee Lenders were expected to divest their shareholding in the petitioner company in favour of new promoter for effecting change of Management, as soon as possible, but in any event, not later than 18 months from the review and reference date i.e. upto 19th March, 2018 in line with applicable RBI guidelines.

56. It is alleged that the SDR documents were not complete and the change of Management could not take place within the cut- off date of 19th March, 2018, which resulted in failure of implementation of the SDR scheme and the account of the petitioner is classified as Non-Performing Asset with effect from 1 st July, 2011 as per the guidelines of the Reserve Bank of India.

57. After setting out the facts relating to sale of financial assets to respondent No.7 and bank of America Merrill Lynch, it is stated that respondent No.1 had not agreed for the sale of financial assets to respondent No.7 and expressed its dissent vide letter dated 3rd August, 2018. Respondent No.1 expressed its dissent in view of the following facts :-

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(i) During the change in management process, as

discussed in the JLF meeting dated 16th November, 2017,

three bids from investors ranging from Rs.5500 crores to

Rs.12780 crores were received, which were subsequently

withdrawn for the reason best known to transaction advisor

and the petitioner.

(ii) As per the valuation report of M/s.DH Consultant dated 20th June, 2015, enterprise value of CNIL was Rs.7497.15

crores and GIL was Rs.5618.16 crores. Hence, combined

value of the petitioner entity was Rs.13115.21 crores during

2015.

(iii) As per valuation report of Baker Tilly dated 25th

October, 2017, enterprise value of CNIL was Rs.5095 crores

and the petitioner was Rs.4609 crores. Hence, combined

value of the present entity was Rs.9704 crores during the

year 2017.

(iv) Further, the enterprise value of the petitioner was

drastically reduced to as low as Rs.1861 crores as per

valuation report of ITCOT dated 20 th March, 2018 and

Rs.2410 crores as per valuation report of TRC Corporate

consulting dated 28th March, 2018 which was only 1/5th

and 1/4th of the last valuation held five months ago. Hence, such sharp reduction in the valuation within such a short

span of five months was beyond understanding and

therefore, was not accepted.

(v) The valuation was objected by some of the lenders

including respondent No.1 on methodology and approach

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method on projected cash flow for a period of five years by one valuer and nine years by another valuer. This projected cash flow for 5/9 years was based on certain assumptions of

the market perception which is highly subjective.

(vi) The useful life of towers is 35 years and it is being depreciated on straight line method at the rate of 2.72% per

annum in terms of specific approval received from the

Ministry of Corporate Affairs, Government of India vide

Order No.45/2/2010-CL-III dated 26th May, 2010 issued

under section 205(2) (d) of the Companies Act,1956.

However, in the above said latest valuation, economic

values of the towers were not considered as per the

Government norms.

(vii) As per the petitioner's annual balance-sheet-2018, total depreciated value of property and plant and

equipment of the company was Rs.7944.57 crores, out of

which, value of plant and machinery was Rs.7715.24

crores.

(viii) In the recent sale transaction of telecom towers as reported by live mint dated 31st May, 2018, American Tower Company had completed the acquisition of 9900-stand alone

towers from Idea Cellular for around Rs.4000 crores.

(ix) Similar transaction was completed by ATC by way of

the acquisition of Vodafone India Ltd.'s 1,200 stand-alone

towers for around Rs.3,850 crores.

(x) Thus, the sale of the Financial Assets of the petitioner

with underlying towers of 28000 in number should fetch

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somewhere in the range of Rs.10000 crores to Rs.13000

crores as per actual market deal happened recently.

Further, the petitioner, vide letter dated 19 th December,

2017 addressed to the lead bank (Union Bank of India)

indicated the valuation in the range of Rs.13,750 to

Rs.15,990 crores. Annexure 'R-4 to the petition is a true

copy of the letter dated 19th December, 2017 of the

petitioner company.

(xi) The ERAC-BoAML's offer for purchase of Financial

Asset with underlying assets of around 28000 telecom

towers was certainly an undervalued transaction. Some of

the lenders, including respondent No. 1 had raised

objections on the ongoing transaction based on the current

deals happening in the same telecom sector.

(xii) Accordingly, respondent No.1 had expressed its dissent over the sale transaction to Asset Reconstruction vide its letter dated 3rd August, 2018. Annexure '5' is the true copy of the letter dated 3rd August, 2018 addressed to

the Union Bank of India.

(xiii) The Union Bank of India (lead bank), being well

versed with the terms and conditions of the ERAC-BoML,

wherein, it was a conditional bid for purchase of 100% of Financial Asset, neglected the other dissenting lenders' views and without calling for any consortium/ lenders meet after 13th July, 2018 and without taking into account the serious and vital objections raised by respondent No.1 vide its letter dated 3rd August, 2018 addressed to Union Bank of India (lead bank) and marked copy to all the lenders went M.M.Salgaonkar ::: Uploaded on - 11/02/2020 ::: Downloaded on - 22/03/2020 04:41:59 :::

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ahead with the sale transaction. Respondent No.7 violated

its own contract terms, wherein, respondent No.7 went

ahead to purchase the assets from the lenders bi-laterally

without the consent of the 100% lenders.

(xiv) The validity of the bid for ARC sale was being extended from time to time since March, 2018 (22 nd March, 2018 being the last bid date) till 17th August, 2018 (last known extended period) to accommodate and facilitate the

undervalued ARC deal and the transaction was done with

some of the lenders on 27th August, 2018, which was

subsequent to the validity date for sale of asset to EARC-

BoAML.

(xv) As per the petitioner, interest had been served and the principal installments on the residual portion of the debt upon converting the part debt into equity, the BoAML EARC were to receive the interest on the entire amount of the assigned debt i.e. Rs.4143 crores by investing only Rs.2400 crores, fetching an effective return of around 19% on the assigned debt. Therefore, the proposed transaction confers an undue advantage to the Asset Reconstruction Companies at the sacrifice of the lenders and majority of the lenders being public sector banks, causing grave and serious loss to

the exchequer.

(xvi) During the JLF meetings held on 30th January, 2018, 2nd February, 2018 and 12th February, 2018, sale to ARC was initially proposed in the ratio of 50:50 structure (i.e. 50%

cash and 50% security receipt) with no sacrifice to the

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debt will be either refinanced or sold to ARC.

(xvii) However, the proposed offer was initially made for

Rs.2000 crores, which constituted at 48.27% of the

outstanding debt (Rs.4143 crores) and the final offer was

for Rs.2400 crores, which constituted at 57.92% of the

outstanding debt.

(xviii) last consortium meeting was held on 13th July, 2018, wherein, it was decided that the lenders will take up the

proposal for sale of debt to ARC with their respective

competent authorities and give their final approval by 31 st July, 2018. It was also decided that thereafter, a consortium meeting would be convened for closing the deal.

Further, Union Bank of India, vide their e-mail dated 1 st

August, 2018 had requested the lenders to give their

approvals at the earliest. However, subsequent to above no

lenders meet was held and the transaction was concluded

by 10 lenders on bilateral basis with a value of around

Rs.1424 crores i.e. approximately 60% of the outstanding amount on 27th August, 2018, which is a clear violation of consortium spirit and violation of term sheet floated by

M/s.Edelweiss ARC and Bank of America Merrill Lynch.

That there is no document which can be put on record by

way of consortium meeting minutes that the consortium of lenders have explicitly, by way of majority (75% by value),

accepted the offer of EARC-BoAML as required under the

RBI guidelines on Income Recognition and Asset Classification norms dated 1st July, 2015. Annexure '6' is a copy of the minutes of the meeting dated 13th July, 2018 of

the consortium bank.

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(xix) After conversion of debt of Rs.4500 Crores under

SDR into equity, the remaining debt of the company as on 30th June, 2018 is Rs.4063.31 Crores. Considering this, the offer of Rs.2353.83 Crores made by ARC was only 57.92% of the outstanding liability as on 31st December, 2017. Hence,

huge hair cut in terms of outstanding principal and

unapplied interest was observed. Haircut was more after

restoring the debt from the reference date of CDR after

cancelling all the relaxation under event of default by the

company.

(xx) Forensic audit was initiated at the instance of

Department of Financial Services, Government of India

(DFS) guidelines to ascertain the elements of fraud etc. The final audit report is yet to be submitted by M/s.Chokshi &

Chokshi LLP.

(xxi) Vide their letter dated 27th June, 2018, respondent No.1 requested the petitioner to regularise the account but the petitioner failed and neglected to do so. Thereafter,

respondent No.1 had recalled the advance and invoked

personal guarantee/ sponsor support agreement vide

notices dated 23rd August, 2018 and 24th August, 2018.

(xxii) The petitioner is continuously in default with

respondent No.1 and has not remitted any amount towards

its dues since August, 2018 with respondent No.1 despite having regular cash flows from the operations.

Consequently, respondent No.1 has filed recovery suit

against the petitioner, guarantors at DRT, Chennai on 23 rd

April, 2019.

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58. A reference is made then to the two circulars of the Reserve Bank of India. One circular is dated 12 th February, 2018, which has been struck down by the Hon'ble Supreme Court and the subsequent one is dated 7th June, 2019. It is contended that if a Resolution of such larger essence is not implemented as per the timeline specified in these guidelines, then, lenders can file insolvency application, singly or jointly, under the IBC.

59. The reference to these directives, according to respondent No.1, enables them to file the application under the IBC. Therefore, filing of that application is justified. It is contended that the Reserve Bank of India, after the Supreme Court judgment dated 12th February, 2018, issued a new circular dated 7 th June, 2019 on Prudential Framework for Resolution of Stressed Assets.

Pursuant to the new circular, the lenders, including respondent No.1, are free to choose to initiate legal proceeding for insolvency or recovery in accordance with the provisions of new circular. It is stated that all the contentions of the petitioner in this writ petition are obsolete and the petitioner has no grounds to seek any relief under the circular of the Reserve Bank of India. Under the circulars of the Reserve Bank of India, including IRAC guidelines, the Reserve Bank of India issued directions to the banks and financials for the purpose of managing their stressed assets and M.M.Salgaonkar ::: Uploaded on - 11/02/2020 ::: Downloaded on - 22/03/2020 04:41:59 :::

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the borrowers of such banks and financial institutions have no say in such matters.

60. It is, therefore, submitted that respondent No.1 is a financial creditor and the proceedings initiated by respondent before the National Company Law Tribunal (for short, "NCLT") be continued in the interest of justice and that of all stakeholders, including the petitioner. Further, the proceedings under the IBC are not recovery action, but to prepare the resolution plan in the best financial interest of all stakeholders under the supervision of the NCLT. In these circumstances, the prayer is to reject the petition.

61. In the affidavit-in-rejoinder, the petitioner has submitted that the earlier proceedings instituted by respondent No.1 under Section 7 of the IBC, namely, Company Petition No.3604 of 2018 were dismissed on 26th November, 2019 by the NCLT. However, respondent No.1 has again invoked Section 7 of the IBC against the petitioner by filing Company Petition No.4541 of 2019. That is pending. In the circumstances, the conduct of respondent No.1 smacks of mala fide and personal vendetta.

62. On these pleadings, the petition has been instituted and there is one more petition filed, namely, Writ Petition (L) No.223 of M.M.Salgaonkar ::: Uploaded on - 11/02/2020 ::: Downloaded on - 22/03/2020 04:41:59 :::

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2020. In that petition, the petitioner is stated to be GTL Limited and it invokes the jurisdiction of this Court under Article 226 of the Constitution of India for claiming the relief/direction against respondent No.7 to that petition (Canara Bank) to forthwith withdraw and cancel the Recall Notice dated 10th July, 2018, copy of which is at Exhibit 'R' to the petition, letter dated 4th June, 2019, copy of which is at Exhibit 'BB', letter dated 27th June, 2019, copy of which is at Exhibit-II and the letter dated 12nd December, 2019, copy of which is at Exhibit 'VV' to the petition.

63. In this petition, the contention is that the petitioner before this Court is a public limited company incorporated under the provisions of the Companies Act, 1956 and engaged in the business of independent telecom network services provider with a range of offerings primarily network operations and maintenance, besides network planning, design and deployment. The petitioner promoted GTL Infrastructure Limited as a "Category 1"

Infrastructure Provider and registered with the Department of Telecommunications, Government of India to provide passive telecom infrastructure services to various Telecom Operators. GIL owns telecom towers and offers these towers to its customers on a shared and chargeable basis. The petitioner maintains these towers and provide energy management services to GIL and other M.M.Salgaonkar ::: Uploaded on - 11/02/2020 ::: Downloaded on - 22/03/2020 04:41:59 :::

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telecom operators. The parties to this petition other than the Canara Bank are, Union of India, Reserve Bank of India and other banking companies. The allegations in that petition are more or less identical, but the difference is that the Canara Bank opted to issue the notices in question and under challenge. This is notwithstanding with an explanation submitted by the petitioner to the Canara Bank (respondent No.7) regarding the third proposal dated 2nd June, 2018. It is alleged that respondent No.7 wrote to IDBI Bank (respondent No.3) and all lenders of the petitioner and stated that this third proposal was allegedly not attractive and requested for a meeting of the lenders to discuss this proposal. The response was given to this letter on 13 th June, 2018.

64. There were meetings held where this proposal was discussed, but it was not acceptable to the CDR lenders. It is specifically alleged in para 27 of the petition as under :-

"27. In the meetings of the JLF held on June 27, 2018 and

September 6, 2018, the Petitioner once again submitted

revised settlement proposals to the CDR Lenders. However, the Third Settlement Proposal was not acceptable to the CDR Lenders. The Petitioner states that due to the paucity of time, the resolution attempts could not fructify as there was no time to materially better or improve the plan in the manner sought by the CDR Lenders and the Petitioner believes that the CDR Lenders were unable to allow more time due to the 180 period

imposed by the Revised Framework issued by Respondent

No.2. Copies of the minutes of the JLF dated June 27, 2018 and September 6, 2018 are annexed herewith as Exhibits [P]

and [Q]".

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65. However, it is alleged that on 10th July, 2018, a Recall Notice was addressed, copy of the same is at Exhibit 'R', but the petitioner continued to pursue its proposal. There was a reply given to the notice, copy of which is at Exhibit 'T'. Though the correspondence continued, ultimately, the same allegations are made and then it is stated that efforts were made to hold discussion on the proposal of the petitioner. It is then alleged that the lenders' meetings were held to discuss the proposals, but respondent No.7 informed that it has already approached the NCLT. Since there was no agreement to settle the dues, eventually, the seventh respondent has decided to pursue the Recall Notice. It is in these circumstances that the Recall Notice is challenged on various grounds. Here as well, the allegations are same, but there is no affidavit-in-reply.

66. The response of the Canara Bank has been that it is not agreeable to the proposal.

67. It is on the above materials that we have heard Mr.Kamdar, learned senior counsel appearing on behalf of the petitioner in Writ Petition No.1893 of 2019 and Mr.Navroz Seervai, learned senior counsel appearing on behalf of the petitioner in other petition.

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68. Mr.Kamdar invited our attention to the petition and its annexures and submitted that the case of the petitioner is that it is the Canara Bank alone, which is objecting to the agreement and assignment of the debt. The circulars of the Reserve Bank of India have been referred to by Mr.Kamdar and he would argue that these circulars are binding on Canara Bank. It cannot opt out of restructuring of debt and settlement proposal. It is alone resisting this and though it has not succeeded in its attempt to seek winding/dissolution of the petitioner, if the Canara Bank alone is allowed to frustrate and defeat the proposal, then, it is clear that the nationalised banks have, contrary to the mandate of Article 14 of the Constitution of India, conducted themselves unfairly, arbitrarily, unjustly so also unreasonably. This should not be permitted and we must interfere in our writ jurisdiction and issue the writ as prayed for.

69. These arguments are adopted by Mr.Seervai and he has also emphasised that the Canara Bank is bent upon on liquidating or winding up the petitioner. It should not be allowed to do so. Our attention has been invited by Mr.Seervai to the communication of 4th June, 2019 by the Canara Bank to M/s.Global Holding Corporation Private Limited on the subject of negotiated settlement with lenders. The bank says that the consortium M.M.Salgaonkar ::: Uploaded on - 11/02/2020 ::: Downloaded on - 22/03/2020 04:41:59 :::

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meeting rejected the negotiated settlement proposed by the petitioner. The Canara Bank firstly alleges that the negotiated settlement proposed by the petitioner was one sided and not taking care of the interest of all stakeholders. The bank is pressing onerous conditions and contrary to the Reserve Bank of India's circulars. It is not assigning any reasons for rejection of the proposal for settlement. Our attention has been invited to the latest circular of the Reserve Bank of India dated 7 th June, 2019 and, particularly, on the guidelines on implementation of Resolution plan. It is, therefore, contended by Mr.Seervai that the bank must be directed to execute an inter-creditor agreement and that is mandatory. If the Resolution of Stressed Assets has to be done, then, the signing of the agreement by all the creditors is necessary. For these reasons, he would submit that the writ petition be allowed.

70. Our attention has also been invited by Mr.Seervai to the minutes of the consortium meeting held on 19 th June, 2019 and the stand of the Canara Bank noted therein. Thus, the Canara Bank decides to opt out of the plan thereby jeopardising the interest of the other stakeholders. The refusal of the Canara Bank to sign inter-creditor agreement is unjust, unreasonable, unfair and defeats the mandate of Article 14 of the Constitution of India.

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71. To appreciate the arguments of Mr.Kamdar and Mr.Seervai, we must first refer to the settled principles, which enable us to issue a writ of mandamus. In both matters, a writ of mandamus is claimed. That writ cannot be issued as a matter of course. It cannot be issued on the mere asking of it. It cannot be issued merely because the petitioners feel that it should be issued.

The petitioner will have to prove that there is a pre-existing and pre-established legal right and a corresponding duty, which alone would enable us to issue this writ.

72. In the case of State of Kerala and Ors. Vs. Kandath Distilleries1, the Hon'ble Supreme Court observed thus :-

"27. Legislature when confers a discretionary power on

an authority, it has to be exercised by it in its discretion, the decision ought to be that of the authority concerned and not that of the Court. Court would not interfere with

or probe into the merits of the decision made by an

authority in exercise of its discretion. Court cannot

impede the exercise of discretion of an authority acting

under the Statute by issuance of a Writ of Mandamus. A

Writ of Mandamus can be issued in favour of an applicant

who establishes a legal right in himself and is issued

against an authority which has a legal duty to perform,

but has failed and/or neglected to do so, but such a legal

duty should emanate either in discharge of the public

duty or operation of law."

73. In the first petition, the prayer is to issue such a writ directing respondent Nos.1 to 6 to forthwith comply with

1 AIR 2013 SC 1812

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paragraph 6.4 of the Master Circular dated 1 st July, 2015 issued by the Reserve Bank of India.

74. Copy of this Circular has Parts A, B, C, C-1 to C-3. Now, the petitioner's prayer is that this Circular should be complied with insofar as it lays down the Prudential Norms on Income Recognition Assets Classification and Provisioning pertaining to advances. Now, this part of the Circular would require a closer look. The said aspect is found in Part A, 3, 4 and 5. That says, an asset can be termed as Non Performing Asset, if it satisfies the criteria laid down in the definition of this expression. Firstly, this part says that in line with the international practices and as per the recommendations made by the Committee on the Financial System, the Reserve Bank of India has introduced, in a phased manner, the norms styled as prudential norms for income recognition, asset classification and provisioning for the advances portfolio of the banks. Pertinently, Mr.Kamdar does not point out that it is to move towards greater consistency and transparency in the published accounts that the policy has been brought into effect.

It is clarified that this policy should be objective and based on record of recovery rather than on any subjective considerations.

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consistent application of the norms. Importantly, the provisioning should be made on the basis of the classification of assets based on the period for which the asset has remained non-performing and the availability of security and the realisable value thereof. The banks are urged to ensure that while granting loans and advances, the repayment schedules fixed should be realistic. It should promote prompt repayment by the borrowers and thus improve the recovery of advances. Mr.Kamdar does not say that the policy of income recognition is any way faulty or defective. He relies upon this policy, but ultimately, there is a discretion vesting in the financial institutions. The asset classification has to be based by determining the assets as Substandard Assets, Doubtful Assets and Loss Assets. What could be termed as Substandard Assets, Doubtful Assets and Loss Assets is set out in Part 4.1. The guidelines for classification of assets are laid down in Part 4.2 onwards. The further paras of this part are with regard to provisioning norms and they are set out in Part 5 onwards. The provisioning norms are aimed at fixing primary responsibility.

The primary responsibility for making adequate provisions for any diminution in the value of loan assets, investment or other assets is that of the bank managements and its statutory auditors. There has to be a inspecting officer of the Reserve Bank of India whose assessment furnished to the bank will assist it and statutory M.M.Salgaonkar ::: Uploaded on - 11/02/2020 ::: Downloaded on - 22/03/2020 04:41:59 :::

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auditors in taking a decision with regard to making adequate and necessary provisions in terms of prudential guidelines. The prudential norms, the classification of assets would then enable the provisioning. Now, the argument of the learned senior counsel is based on para 6.4 of this circular. This para sets out the procedure for sale of banks/financial institutions' financial assets to Securitisation Company and Reconstruction Company, including valuation and pricing aspects. This paragraph reads as under :-

"6.4 Procedure for sale of banks'/FIs' financial assets to

SC/RC, including valuation and pricing aspects

(a) The Securitisation and Reconstruction of Financial

Assets and Enforcement of Security Interest Act, 2002

(SARFAESI Act) allows acquisition of financial assets by

SC/RC from any bank/FI on such terms and conditions as

may be agreed upon between them. This provides for sale

of the financial assets on 'without recourse' basis, i.e., with the entire credit risk associated with the financial

assets being transferred to SC/RC, as well as on 'with

recourse' basis, i.e., subject to unrealized part of the asset reverting to the seller bank/FI. Banks/FIs are, however,

directed to ensure that the effect of the sale of the

financial assets should be such that the asset is taken off the books of the bank/FI and after the sale there should

not be any known liability devolving on the banks/FIs.

(b) Banks/FIs, which propose to sell to SC/RC their

financial assets should ensure that the sale is conducted

in a prudent manner in accordance with a policy

approved by the Board. The Board shall lay down policies

and guidelines covering, inter alia,

i. Financial assets to be sold;

ii. Norms and procedure for sale of such financial

assets;

iii. Valuation procedure to be followed to ensure that

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the realisable value of financial assets is reasonably

estimated;

iv. Delegation of powers of various functionaries for

taking decision on the sale of the financial assets; etc.

(c) Banks/FIs should ensure that subsequent to sale of

the financial assets to SC/RC, they do not assume any

operational, legal or any other type of risks relating to

the financial assets sold.

(d) (i) Each bank/FI will make its own assessment of the

value offered by the SC/RC for the financial asset and

decide whether to accept or reject the offer.

(ii) In the case of consortium/multiple banking

arrangements, if 75% (by value) of the banks/FIs decide

to accept the offer, the remaining banks/FIs will be

obligated to accept the offer.

(iii) Under no circumstances can a transfer to the SC/RC

be made at a contingent price whereby in the event of

shortfall in the realization by the SC/RC, the banks/FIs

would have to bear apart of the shortfall.

(iv) Banks using auction process for sale of NPAs to SCs/

RCs should be more transparent, including disclosure of

the Reserve Price, specifying clauses for non-acceptance of bids, etc. If a bid received is above the Reserve Price and a minimum of 50 per cent of sale proceeds is in cash, and also fulfills the other conditions specified in the Offer

Document, acceptance of that bid would be mandatory.

(e) Banks/FIs may receive cash or bonds or debentures

as sale consideration for the financial assets sold to

SC/RC.

(f) Bonds/debentures received by banks/FIs as sale

consideration towards sale of financial assets to SC/RC

will be classified as investments in the books of

banks/FIs.

(g) Banks may also invest in security receipts, Pass-

through certificates (PTC), or other bonds/debentures

issued by SC/RC. These securities will also be classified

as investments in the books of banks/FIs.

(h) In cases of specific financial assets, where it is

considered necessary, banks/FIs may enter into

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agreement with SC/RC to share, in an agreed proportion,

any surplus realised by SC/RC on the eventual realisation

of the concerned asset. In such cases the terms of sale

should provide for a report from the SC/RC to the bank/FI

on the value realised from the asset. No credit for the

expected profit will be taken by banks/FIs until the profit

materializes on actual sale."

75. Mr.Kamdar would submit by relying upon clause (d)(ii) of this paragraph that the writ be issued. However, he omits from his arguments other clauses of para 6.4. The clauses would reveal that the financial institutions and banks can acquire financial assets. This can be done by taking recourse to the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, "the SARFAESI Act"). This provides for sale of financial assets on 'without recourse' basis.

This means the credit risk associated with the financial assets being transferred to the creditors. This is subject to unrealised part of the asset reverting to the seller bank/financial institution.

The banks are directed to ensure that the effect of the sale of the financial assets should be such that the asset is taken off the books of the bank/financial institution and after the sale, there should not be any known liability devolving on the bank/financial institution. Thereafter, how the sale is to be conducted in a prudent manner, in accordance with the policy approved by the Board and what policy and guidelines the Board should lay down is set out in clause (b) of para 6.4. Further, clause (c) says that the M.M.Salgaonkar ::: Uploaded on - 11/02/2020 ::: Downloaded on - 22/03/2020 04:41:59 :::

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banks and financial institutions should ensure that subsequent to sale of the financial assets to Securitisation Company and Reconstruction Company, they do not assume any operational, legal or any other type of risks relating to the financial assets, which are sold.

76. The entire set of guidelines denote that this is an advise, caution and guidance provided on sale of financial assets to Securitisation Company (SC) and Reconstruction Company (RC).

As provided in para 6.3, the financial assets which can be sold to the Securitisation Company and Reconstruction Company by any bank or financial institution are non-performing assets, including a non-performing bond/debenture, a Standard Asset where the asset is under consortium/multiple banking arrangements and atleast 75% by value of the asset is classified as non-performing asset in the books of other banks/financial institutions and atleast 75% by value of the banks/financial institutions who are under the consortium/multiple banking arrangements agree to the sale of the asset. Secondly, a procedure has to be followed and in the case of consortium/multiple banking arrangements, if 75% (by value) of the banks/financial institutions decide to accept the offer, the remaining banks/financial institutions will be obligated to accept the offer. However, this is preceded by an assessment of each bank/ M.M.Salgaonkar ::: Uploaded on - 11/02/2020 ::: Downloaded on - 22/03/2020 04:41:59 :::

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financial institution of the value offered by the Securitisation Company/Reconstruction Company for the financial asset and decide whether to accept or reject the offer. Further, there cannot be a transfer to this Securitisation Company/ Reconstruction Company at a contingent price, whereby, in the event of shortfall in the realization by the Securitisation Company/Reconstruction Company, the banks/financial institutions would have to bear a part of the shortfall. Finally, if the auction process is used for sale of non-performing assets to Securitisation Companies/ Reconstruction Companies, that should be more transparent and complying with what is laid down in para 6.4 clause (d)(iv).

77. Mr.Kamdar, therefore, is not correct in arguing that this circular ought to be followed and must be directed to be followed by respondent Nos.1 to 6, even if that is containing a caution, advise and guidance. It is common ground that the petitioner says that these guidelines/norms should be applied and there is no choice not to abide by it. The argument is that since more than 75% (by value) of the lenders of the petitioner have assigned all their rights, title and interest in the financial facilities granted by them to the petitioner in favour of respondent No.7 by executing assignment agreements, by virtue of the IRAC guidelines, all other lenders of the petitioner are obligated to M.M.Salgaonkar ::: Uploaded on - 11/02/2020 ::: Downloaded on - 22/03/2020 04:41:59 :::

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accept the offer of respondent No.7 for assignment of their respective rights, title and interest in the financial facilities granted to the petitioner. To our mind, this understanding of the senior counsel is flawed and erroneous simply because there is an obligation only when the guidance is adhered to and all precautions are taken before the assignment arrangement for sale.

Once these are guidelines and they cannot be elevated or placed at the level of a binding rule, regulation and statute, then, we cannot accept the arguments of Mr. Kamdar. Assuming that these are fulfilled, as projected by the petitioner, still the decision to be taken requires balancing and weighing of several factors. There is a risk which has to be taken and ultimately the policy must be applied on case-to-case basis. We cannot direct respondent Nos.1 to 6, who are financial institutions/banks, to agree to the demand of the petitioner. If these are policy matters and dealing with fiscal and financial issues, then, the discretion of the banks/financial institutions cannot be taken away by issuing a command or writ contrary to the expressed terms and conditions of the policy. The policy document must be read as a whole and nothing should be read, as is attempted, in isolation or out of context. In these circumstances, we do not think that the petitioner can claim the writ. In fact, in the grounds of this petition, respondent No.1 is targeted and it is stated that its actions are mala fide and M.M.Salgaonkar ::: Uploaded on - 11/02/2020 ::: Downloaded on - 22/03/2020 04:41:59 :::

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arbitrary. It is seeking to recover monies from the petitioner under the original financial documents after a part of the respondent No.1's debt has been converted into equity under the SDR Scheme. Now, we cannot attribute mala fides and arbitrariness so easily and casually in financial matters to a public sector bank. That bank is the custodian of public funds. It holds them in trust for the public. It is not expected to surrender and sacrifice its interests, particularly legal rights merely because the petitioner desires that it should join in total restructuring of the debt of the petitioner or total waiver. We must bear in mind that before us is a debtor who owes thousands of crores to these financial institutions and banks and it is dictating to them to accept the proposal of settlement or restructuring of its debt. The proposal has to be evaluated and considered in the backdrop of its long term implications and consequences. If the bank adopts such a course, then, we cannot direct the bank to act contrary to the same. That would mean calling upon the bank not to act for public good and in public interest.

78. Respondent No.1, on the own showing of the petitioner, contends that the SDR scheme failed because no change in management could be effected and thus, an event of default has M.M.Salgaonkar ::: Uploaded on - 11/02/2020 ::: Downloaded on - 22/03/2020 04:41:59 :::

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occurred under the CDR scheme. Now, the petitioner says that the obligation to induct new investor and cause a change in the management was that of the lenders. In raising such a ground, the petitioner is attributing to the bank (respondent No.l) arbitrariness. Now, such an accusation or allegation is easy to level, but when the nationalised bank has to also consider all pros and cons and its decision should be rational, reasonable, fair, just and in public interest, then, merely because its interpretation of the clauses of a scheme is allegedly erroneous, the writ cannot be issued as claimed. In fact, in grounds (E), (F) and (G), precise allegations made by respondent No.1 are summarised. The petitioner seeks to challenge these allegations. However, all the matters pertaining to these allegations are factual issues. The remarks of the first respondent are termed as allegations by the petitioner,but what we find is that it is an evaluation by the first respondent. Its evaluation and financial commitments may not be acceptable to the petitioner, but surely, on the version of the petitioner, we cannot issue the writ as prayed. These are seriously disputed factual issues. Therefore based on all these grounds, the petitioner cannot insist on respondent Nos.1 to 6 to agree with it.

It is apparent from a reading of ground (K) that respondent Nos.1 to 6 are public sector undertakings and custodian of public funds.

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arbitrarily, the petitioner knows that the guidelines of the Reserve Bank of India on all and every possible aspects of financial management, grant of loans and advances, do not have a binding character. Ultimately, the banks have been given a free play in the joint. The decisions are discretionary in nature. The discretion cannot be directed to be exercised in a particular manner when several options and courses are open to the decision making body.

It is not obliged to take only one particular decision, much less in favour of the petitioner. It is in these circumstances that we do not agree with Mr.Kamdar that everything that is placed before us is mandatory in character. In fact, we have reproduced the paragraphs of the petition which are based on the IRAC guidelines contained in circular dated July 1, 2015. There is no case outside this circular, which is pressed before us. Merely because several meetings were held and some tentative decisions were taken does not mean that there is a mandate flowing from the same. The decisions are termed as unanimous by the petitioner, but it is conceded before us that 13 lenders have assigned their respective debts to respondent No.7. However, respondent Nos.1 to 6 are not agreeable to the decisions taken at the consortium meeting by the other lenders of the petitioner. There is no question of backing out, but if the petitioner says that there is a commercial merit in assigning the debt of the petitioner in favour of respondent No.7, M.M.Salgaonkar ::: Uploaded on - 11/02/2020 ::: Downloaded on - 22/03/2020 04:41:59 :::

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then, that commercial wisdom is not collective, but of the majority of the creditors. Particularly even after scaling down and granting a concession, the debt of the petitioner is enormous and computed to the extent of Rs.1758,41,96,635/-. There is another debt of the associated company and that is also enormous. When such is the magnitude of the debt, then, a cautious approach by respondent Nos.1 to 6 cannot be ipso facto termed as arbitrary, unfair and unreasonable. The petitioner will have to establish and prove that the IRAC guidelines styled as such contain a mandate. That mandate has not been adhered to by respondent Nos.1 to 6 though all conditions in relation thereto are fulfilled by the petitioner is another facet, which will have to be established and proved by the petitioner. That the decisions are taken unanimously by all lenders and, therefore, respondent Nos.1 to 6 cannot back out of the same must be proved by leading evidence. That legally admissible evidence ought to take care of all the alternate versions and placed by the petitioner itself before us. Firstly, it is said that these decisions are unanimous and thereafter it is said that the decisions are the product of collective commercial wisdom of the superior majority of the creditors of the petitioner and they have to be implemented.

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79. We do not think that the grounds raised in this petition, consistent with which Mr.Kamdar raised the arguments, enable us to issue the writ as prayed for.

80. The grounds in the writ petition project a version of the petitioner based on which a relief in the nature of specific performance of contractual obligations is sought in this writ petition. If we make a reference to grounds (N), (O) and (P), then, it is evident that the petitioner say that it has fulfilled its part of promise or obligation and respondent Nos.1 to 6 have refused to comply with the guidelines despite the same. Now, what the reciprocal or corresponding obligations qua the dues of the lenders are and whether they are contractual or statutory in character would have to be established and proved. If these are contractual obligations, then, whether there is absolute refusal to perform the obligations or discharge the duties or that the duties and obligations allegedly attributed to the lenders have been performed only in part and not in full are matters, which would have to be established and proved by the petitioner either in substantive legal proceedings or in defence to the proceedings instituted against it by respondent No.7. To our mind, it would be highly risky and unsafe to rely on the version of the petitioner and issue the writ of mandamus as prayed.

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81. All the more, when the seventh respondent has, in a communication addressed to the petitioner, copy of which is at Exhibit 'BB' to the petition, clarified its position. It has referred to all the facts in details and then said in the recall notice that pursuant to the terms of the SDR package, the debt amounting to Rs. 35.60 Crores and Rs.271.11 Crores were converted into equity in the share capital of the petitioner and Chennai Network Infrastructure Limited (CNIL). The consortium lenders, alongwith Canara Bank, post conversion of debt into equity, are presently holding 51% shareholding. They were required to be transferred to new investor within a period of 18 months from the date of reference to the change of present management. This is an essential condition of the SDR package. That has not been fulfilled.

The standstill clause available under the SDR expired on 19 th March, 2018. Therefore, by the Reserve Bank of India guidelines, the petitioner's accounts were classified as non-performing assets by the statutory auditors with retrospective effect from 1st July, 2011. This is on account of failure or non-compliance with the CDR and SDR packages. The company has failed to meet its repayment obligations towards the Canara Bank and committed breaches and defaults under financial documents. That is why the Canara Bank called upon the petitioner to pay the dues by its reminder dated 27th June, 2018. There is no response to the same. That is how the M.M.Salgaonkar ::: Uploaded on - 11/02/2020 ::: Downloaded on - 22/03/2020 04:41:59 :::

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bank was seeking to recover a sum of Rs.540.35 Crores under the Rupees Facility as on 23rd August, 2018.

82. We are clear in our mind after we have perused this letter that it is the first respondent, which is accusing the petitioner of breach and violation of the packages and the conditions thereof. The bank accuses the petitioner of not fulfilling its commitment or the essential conditions under the packages. This may be or may not be correct, but it is definitely a version contrary to that of the petitioner. In such circumstances, how arbitrariness, much less, mala fides, can be attributed to a public financial institution without resolution of the factual disputes, is unclear to us. In other words, this is not an undisputed factual position, but a highly disputed one. It is in these circumstances that we are disinclined to grant any relief.

83. It may be that the seventh respondent has addressed a letter to the petitioner, copy of which is at page 322 of the paper- book, and it claims that it is entitled to recover from the borrowers or guarantors the total dues of the banks alongwith the interest at contractual rate. It makes reference to certain banks mentioned in Schedule-1. This may not be inclusive of all the debts and dues to even Canara Bank. Therefore, this communication may say that the assignment agreements are with Union Bank of India, Andhra M.M.Salgaonkar ::: Uploaded on - 11/02/2020 ::: Downloaded on - 22/03/2020 04:41:59 :::

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Bank, ICICI Bank Limited, Axis Bank, Bank of Baroda, Bank of India, Dena Bank, Indian Overseas Bank, Punjab National Bank, State Bank of India, Oriental Bank of Commerce and Central Bank of India, still, the petitioner has impleaded Canara Bank, Corporation Bank, Indian Bank, Vijaya Bank, IDBI Bank and Life Insurance Corporation of India Limited, all of which are not a party to this agreement. In these circumstances, marking of the documents in favour of these entities would not suffice. All the more when we have made detailed reference to the affidavit-in- reply of respondent No.1 as well.

84. As a result of the above discussion, Writ Petition No.1893 of 2019 fails. Rule is discharged. There would be no order as to costs.

85. We do not think that the judgments relied upon by Mr.Kamdar have any bearing on the issue. In the case of Central Bank of India Vs. Ravindra and Others2, the reliance was placed upon a circular of the bank dealing with interest. There, the Hon'ble Supreme Court observed that on the subject of interest, the Circular of the Reserve Bank of India cannot be ignored by the bank. It is evident from the judgment that the issue there was whether it is possible to construe the words "the principal sum

2 (2002) 1 SCC 367

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adjudged" to include the principal amount plus outstanding interest as on the date of the suit or the interest component should be kept aside or that is inclusive. The Hon'ble Supreme Court laid down certain principles and then concluded that the Reserve Bank of India circulars in relation to rate of interest and periods of rest have statutory force. The context in which these observations have been made should not be lost sight of by us.

86. In Dharani Sugars and Chemicals Limited Vs.Union of India and Ors.3, the issue was different. There, the Banking Regulation Act and Sections referred to in Ravindra's case (supra) have been referred to and thereafter, the argument that these circulars of the Reserve Bank of India are not traceable to any statutory provisions was dealt with. In these circumstances, the arguments on constitutional validity of Section 35-AA and 35-AB have been rejected. Once again these are in the context of the challenge to these provisions after the Insolvency and Bankruptcy Code, 2016 was enacted. The Hon'ble Supreme Court concluded its judgment on the issues by holding the circulars ultra vires.

Now, these circulars, in the backdrop of which the challenge was raised, were not identical nor was the factual issue. Therefore, this judgment has no bearing on the issue before us.

3 (2019) 5 SCC 480

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87. Similarly, the judgment delivered in the case of Innoventive Industries Limited Vs. ICICI Bank and Anr. 4 would also have no application as a distinct controversy was dealt with by the same.

88. As far as the writ petition argued by Mr.Seervai is concerned, there, we find that the prayer is to direct respondent No.7 to enter into a inter-creditor agreement. That is already entered into between the petitioner and remaining domestic lenders (respondent Nos.3 to 6 and 8 to 18).

89. Now, the mandamus that is claimed is once again on the basis of the petitioner's version. The petitioner says, in the grounds of challenge itself, that the prudential framework issued by the second respondent (Reserve Bank of India) provides lenders with a wide array of options to implement a resolution plan for the resolution of the debts owed by the borrowers. Ultimately, it is a resolution plan. Now, whether the word "shall" appearing therein would denote that it is mandatory to enter into the inter- creditor agreement or otherwise or that is not decisive would depend upon this framework and reading of the same in its entirety. Similarly, the disputes and which are purely factual in nature, founded on contractual obligations necessitates

4 (2018) 1 SCC 407

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consideration of a contra version. That is how ground (A) of the petition is drafted. The intent of the framework is to facilitate decision on the basis of prescribed thresholds. Whether this prudential framework is better in comparison to given one and contains an absolute mandate as directed, will have to be considered in the backdrop of the case of the Canara Bank. We have referred to that case and the debt of Canara Bank owed by the petitioner. The Canara Bank may have allegedly, contrary to this framework and the alleged mandate therein, approached the NCLT, but the proceedings before the said Tribunal are pending.

Now, whether that proceeding is maintainable or not and must be disposed of in the light of the petitioner's assertions, is a matter entirely left for decision by the NCLT. If the NCLT has to determine and decide the matter within the time framework, then, it is not as if the NCLT's decision, if adverse to the petitioner, is unassailable. It can be assailed and challenged in the scheme of the IBC itself by filing appeals. Now, the petitioner says very clearly in ground (B) that respondent No.7 has not per se refused to implement a resolution plan, but its stand is that the petitioner has not submitted a resolution plan that is acceptable to respondent No.7. Respondent No.7 is not averse to considering the so called better plan. Now, which plan completely and totally resolves the disputes and fulfills the obligations of parties and M.M.Salgaonkar ::: Uploaded on - 11/02/2020 ::: Downloaded on - 22/03/2020 04:41:59 :::

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settles the dues of respondent No.7, is not a matter which can be decided in writ jurisdiction. We cannot, by a unilateral version of the petitioner, issue the writ. Ultimately nobody and much less a public sector financial institution/bank can be compelled to accept a settlement or resolution plan of the debtor. The bank has its own limitations, restrictions and desires to abide by the norms which it terms as more prudent. In the circumstances, we do not think that the petitioner's version can be accepted as sacrosanct. The petitioner here also relies upon the minutes of the joint lenders' meeting. If only the Canara Bank is not joining the resolution plan, then, it cannot be compelled to join it by entering into the inter- creditor agreement, all the more when it has approached the NCLT. The allegations made against the Canara Bank by the petitioner can be substantiated in the appropriate proceedings or while defending the proceedings before the NCLT or other Forums.

In the circumstances, we think that it would be highly unsafe to issue the writ as prayed in this petition. The petitioner can pursue its objections before the NCLT so also institute substantive proceedings and seek appropriate declaration and relief to compel the seventh respondent to execute the agreement. We do not think that judgments in fiscal and financial matters involving huge debts can be so easily made in our limited powers. For the same reasons as are assigned while dismissing Writ Petition No.1893 of 2019, M.M.Salgaonkar ::: Uploaded on - 11/02/2020 ::: Downloaded on - 22/03/2020 04:41:59 :::

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even this writ petition fails. It is dismissed. Rule is discharged.

There will be no order as to costs.

(R.I.CHAGLA, J.) (S.C.DHARMADHIKARI, J.)

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