Bank Cannot do Forum Shopping to Recover Its Dues [CS Shubham Budhiraja]

Trust A & Trust B & Company C took loan from the Bank wherein CD given corporate guarantee. The Bank took action under SARFESI, DRT, HC and then IBC against CD. NCLAT remand the matter to NCLT to decide afresh because Bank seems to doing forum shopping to build pressure of recovery. Recovery is not aim of IBC.

  1. The Bank is involved in forum shopping to the multiple ‘Courts/Tribunals’ just to harass the ‘Guarantor’ as it has moved the Hon’ble High Court of Calcutta at Calcutta to coerce the trust into paying of its debts and involving the Appellant in time consuming and expensive litigation at the behest of this concerned branch of the Bank.

  2. It is a settled law that the practice of Forum Shopping be condemned as it is an abuse of law. This case is beyond doubt falls under the category of Forum Shopping as it is a classic example of Forum Shopping when the Respondent Bank has approached one Court for relief but does not get the desired relief and then approached another court for the same or similar relief; (refer) Hon’ble Apex Court Judgment in Union of India & Ors. Vs. Cipla Ltd. & Anr (2017) 5 SCC 262- para 148, Vijay Kumar Ghai & Ors. Vs. The State of West Bengal & Ors. in Criminal Appeal No. 463 of 2022- para 9.

  3. The Hon’ble Supreme Court has already settled the matter that the provision of the Code is not intended to be a substitute to be a recovery forum. The Hon’ble Supreme Court in Civil Appeal No.9597 of 2018, “Transmission Corporation of Andhra Pradesh limited Vs. Equipment Conductors and Cables Company Appeal(AT)(Insolvency) No. 1138 of 2019 Page 29 of 31 Limited” vide para 15 has already held that IBC is not intended to be a substitute to a recovery forum and also laid down that whenever there is existence of real dispute, the IBC provisions cannot be invoked. The Code cannot be used whenever there is existence of real dispute and also whenever the intention is to use the Code as a means for chasing of payment or building pressure for releasing the payments.

Company Appeal (AT)(Insolvency) No. 1138 of 2019, NCLAT, New Delhi

Shubham Budhiraja , Tel: 011-45059142, M: 9654055315

Advocate, Delhi High Court [LLB,ACS,BCOM(H)]

Advertise With Us

Click here to read the disclaimer

Write a Comment