Jammu & Kashmir High Court – Srinagar Bench
Aman Hospitality Pvt Ltd vs Jammu And Kashmir Bank Ltd on 3 April, 2026
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Serial No.
IN THE HIGH COURT OF JAMMU & KASHMIR AND LADAKH
AT SRINAGAR
CM (7602/2025) IN WP(C) 623/2023
AMAN HOSPITALITY PVT LTD ...Petitioner/Appellant(s)
THROUGH BRIJESH DARBAL
Through: Mr. Tanveer Ahmad Mir, Sr. Advocate (through virtual
mode) & Mr. Arfat Rashid Lone, Advocate
Vs.
JAMMU AND KASHMIR BANK LTD. ...Respondent(s)
Through: Mr. T.H. Khawaja, Sr. Advocate
Ms. Insha Rashid, Advocate &
Iman Abul Muizz, Advocate
CORAM:
HON’BLE MR. JUSTICE MOHD YOUSUF WANI, JUDGE
ORDE R
03.04.2026
1. The applicant/petitioner-company has approached this Court by
way of the present writ petition under Article 226 of the
Constitution of India, seeking issuance of an appropriate writs,
orders, or directions in the nature of (i) mandamus, for
commanding the respondent bank, i.e., J&K Bank Ltd., to honour
the One Time Settlement (OTS) amounting to Indian Rupees
(INR) 154.728 crores, being the proportionate share of the
respondent bank out of the total OTS proposal of INR 564 crores,
in terms of communication dated 07.12.2022, within a time-bound
manner, by permitting the petitioner-company to deposit the
aforesaid amount, or in the alternative, permit it i.e, the petitioner-
company to deposit, the principal outstanding loan amount of INR
78.72 crores along with the applicable interest component in terms
of the bank’s policy and RBI guidelines towards complete closure
of the loan account (ii) certiorari or any other appropriate writ,
order, or direction for declaring the recalling/withdrawal letters
dated 01.11.2019 and 08.03.2021, issued by the respondent bank in
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respect of the already sanctioned OTS, as illegal, and to set aside
the same.
2. The respondent-bank has already filed its reply in the matter.
3. Alongside the main petition, the petitioner-company has also filed
an application under the provisions of Section 151 of the Code of
Civil Procedure, 1908 (hereinafter referred to as the CPC for
short), seeking issuance of interim directions to the non-
applicant/respondent bank to refrain from taking any coercive
and/or adverse action against the applicant/petitioner-company and
to maintain status quo in TA No. 117 of 2022 titled J&K Bank Ltd.
vs. Aman Hospitality Pvt. Ltd., pending before the learned Debt
Recovery Tribunal (DRT-II), New Delhi, pending disposal of the
main writ petition.
4. It has been averred in the interim application that the
applicant/petitioner-company has a strong prima facie case in its
favour, as is evident from the facto-legal grounds taken in the main
petition, and thus has bright chances of success at the proceedings.
It is further averred that the balance of convenience also tilts in
favour of the applicant/petitioner-company, which is likely to
suffer more comparative hardship than the non-
applicant/respondent bank in the event of denial of interim relief. It
has also been stated that the applicant/petitioner-company shall
suffer irreparable loss and injury, which cannot be compensated in
terms of damages, if the adverse/coercive measures as
contemplated or initiated by the non-applicant/respondent bank are
allowed to proceed.
It is further averred in the interim application that the applicant has
always been ready and willing to settle the debt and/or equity
account with the respondent-bank and has submitted various OTS
proposals from time to time, but the non-applicant/respondent-
bank, on one ground or another, declined to accept the same and
instead initiated recovery proceedings before different forums.
That, among various recovery proceedings, the non-
applicant/respondent-bank has filed an OA before the DRT in the
year 2021. That, besides this, the non-applicant/respondent-bank
has also filed a petition under Section 7 of the Insolvency and
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Bankruptcy Code, 2016 before the Hon’ble NCLT, New Delhi,
bearing No. (IB)-1086(PB)/2020 titled J&K Bank Ltd. vs. Aman
Hospitality Pvt. Ltd..
That the non-applicant/respondent-Bank, vide its letter dated
07.12.2022, advised the applicant/petitioner to pay the time value
of money @ 20% over and above the already agreed OTS amount
of Rs. 470 crores (wherein the share of the respondent-bank was
Rs. 128.94 crores), i.e., an additional amount of Rs. 94 crores
(including Rs. 25.79 crores payable to the respondent-bank).
That the applicant/petitioner-company has accepted the said offer
of the non-applicant/respondent-bank and, vide its letter dated
07.12.2022, agreed to pay Rs. 154.73 crores to the non-
applicant/respondent-bank on a proportionate basis out of the total
OTS amount of Rs. 564 crores towards the settlement of both debt
and equity.
That the applicant/petitioner-company also submitted a cheque of
Rs.15.47 Crores towards 10% of the upfront money.
That thereafter, the non-applicant/respondent-bank withdrew the
proceedings before the Hon’ble NCLT, New Delhi, in view of the
OTS proposal under consideration and discussion between the
parties, as is reflected from the order dated 08.12.2022 passed by
the Hon’ble NCLT, New Delhi in the said proceedings.
That since the applicant/petitioner had agreed to pay 20% towards
the Time Value of Money as demanded by the non-
applicant/respondent-bank, the later was under an obligation to
withdraw all the recovery proceedings, including the one pending
before the Hon’ble DRT
That although, the non-applicant/respondent-bank withdrew the
same from the Hon’ble NCLT, New Delhi but continued its
proceedings before the Hon’ble DRT which has now reached to its
final stage.
That the subject matter of the writ petition pending before this
Court and the proceedings before the Hon’ble DRT arises out of
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the same loan transaction between the applicant/petitioner
company and respondent Bank.
It has been further averred in the application that in the facts and
circumstances of the case, the continuation of coercive measures
by the non-applicant/respondent-Bank including taking of adverse
action, initiation of enforcement steps and seeking issuance of
any recovery certificate would seriously prejudice the
applicant/petitioner-company and shall also render the main
petition as in fructuous.
It is submitted in the application that the main writ petition seeks
enforcement of OTS duly approved by the non-
applicant/respondent-bank when in the pending proceedings
before the Hon’ble DRT in TA No. 117/2022 titled “Jammu &
Kashmir Bank Ltd v s. Aman Hospitality Private Limited” , the
non-applicant/respondent-bank seeks inter alia a declaration of
liability against the applicant/petitioner-company and recovery of
outstanding loan amount with penal interest and other
consequential reliefs computed at inflated rates along with further
prayer for issuance of the recovery certificate U/s 19 (7) of the
Recovery of Debts and Bankruptcy Act 1997.
It is further averred in the application that since the main petition,
seeks the closure of the debt account in pursuance of the already
executed OTS for the repayment of the liability which forms the
basis of adjudication before the Hon’ble DRT, therefore, any
parallel or over lapping actions by the learned Tribunal would
undermine the issues pending consideration before this Court and
defeat the ends of justice.
It is also submitted in the application that the balance of
convenience tilts towards the applicant/petitioner-company as no
prejudice will be caused to the non-applicant/respondent bank if
the relief sought herein is granted, as all the rights shall remain
subject to the final outcome of the writ petition.
5. The case of the applicant/petitioner-company in brief is that
during 2009-2012 it availed a total Term Loan facility of Rs.810
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crore and BG facility of Rs. 60 crore from 8 different lending
banks for the construction and development of a Five Star Deluxe
Hotel at CBD Shahdara Delhi. That the credit facility availed by
the applicant/petitioner-company from the lending company
under multiple banking arrangement and later on a Joint Lenders
Forum (JLF) was formed amongst the lending banks in view of
the guidelines of RBI. That the non-applicant/respondent Bank was
elected as Lead Bank of the JLF.
That the applicant/Petitioner-company has completed the
Hotel and made it operational as per schedule in the year 2012-13
but due to market conditions, completely beyond promoter’s
control, the Hotel failed to generate projected sales revenue.
That resultantly, the lending banks including the non-
applicant/Respondent bank approved and implemented a
Restructuring Scheme in the year 2014.
That in terms of the said Restructuring, the lending banks
sanctioned fresh FITL of Rs.166 crores (including Rs.47.21 crores
by the non-applicant/Respondent Bank) besides deferring
repayment schedule of the Term Loan for 2 years i.e from
01.04.2014 to 31.03.2016.
That however, the market conditions did not improve and
therefore, in the year 2017, the lending banks including the non-
applicant/Respondent Bank approved a Strategic Debt
Restructuring (SDR) Scheme in terms of RBI Circular dated
08.06.2015 with Cut-off Date of 18.07.2017.
That in terms of the SDR scheme, it was decided that out of
total outstanding Debt of Rs.953.09 crores of all the lending banks
(including Rs.261.47 crores of the non-applicant-respondent Bank,
an amount of Rs.666.13 crores will be converted into 51% Equity
of the applicant/Petitioner, leaving the outstanding Debt to
Rs.286.96 crore (including Rs.78.72 crores of the non-
applicant/Respondent Bank).
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That the said SDR Scheme stands implemented in full on
09.01.2028 upon execution of required documents and allotment of
51% Equity Shares of the applicant/Petitioner to the lending banks
(including 13.99% to the non-applicant/Respondent Bank).
That loan accounts of all the lending banks (including the
non-applicant/Respondent Bank) were Standard as on the date of
SDR and the status of the account was to keep Standstill for a
period of 18 months in terms of the Scheme during which the
lenders were to find a new Investor. That on 12.02.2018 RBI
issued a Circular, withdrawing all restructuring schemes. That as
per the said RBI Circular dated 12.02.2018, all accounts, including
such accounts “where any of the schemes have been invoked but
not yet implemented”, shall be governed by the revised framework.
That since the SDR stood implemented in full on
09.01.2018, the said RBI notification dated 12.02.2018 was not
applicable to the applicant/Petitioner. That however, the non-
applicant/Respondent Bank still classified the loan account of the
applicant/Petitioner as NPA. That thus, the classification of loan
account as NPA by the non-applicant/Respondent Bank is
contrary to the extent of RBI guidelines and circulars.
That, although the said RBI Circular dated 12.02.2018 was
later set aside by the Hon’ble Supreme Court of India by
Judgement dated 02.04.2019 in Dharani Sugars and Chemicals v
Union of India, [2019] 6 SCR 307 but the non-applicant/
Respondent Bank did not take cognizance of the same.
That thereafter, the applicant/Petitioner-company has
offered various options to the lending banks (including the non-
applicant/ Respondent Bank) for settlement, but all the lending
banks (including the non-applicant/Respondent Bank), after
examining the pros and cons, of all options finally agreed for the
One Time Settlement (OTS) as the best option in the Joint.
Lenders Meeting (JLM) held on 23.07.2018.
That accordingly, the applicant/Petitioner company
submitted OTS of Rs 437 crores, which was later on increased to
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Rs.470 crores by it, at the insistence of the Core Committee of the
lending banks ( including the non-applicant/Respondent Bank) and
the said OTS proposal was unanimously agreed to be considered
by all the lending banks (including the non-applicant/Respondent
Bank) in JLM held 17.09.2018.
That thereafter, at the insistence of the lending banks
(including the non-applicant/ Respondent Bank), the
applicant/Petitioner, in order to prove its readiness and willingness
to settle Debt and/or Equity accounts of the lending banks,
improved the OTS proposal from time to time le. OTS of Rs.510
crores as per decision taken in JLM dated 18.06.2019, OTS of
Rs.470 crores (under Swiss Challenge) as per decision taken in
JLM dated 06.01.2021, and OTS of Rs.564 crore (including 20%
towards Time Value of Money over & above Rs.470 crores) as per
decision taken in JLMs dated 16.12.2022 and 11.08.2023.
That later on, the applicant-Petitioner was advised by all the
lending banks (including the non-applicant/Respondent Bank), to
submit OTS proposal towards settlement of Debt portion only
(excluding Equity) on the bilateral basis.
That accordingly, the applicant/Petitioner submitted OTS
proposal with all the lending banks for settlement of outstanding
Debt along-with simple interest in terms of their respective NPA
policies.
That the applicant/ Petitioner also submitted OTS proposal
of Rs.122.96 crores with the non-applicant/Respondent Bank to
pay its outstanding Debt of Rs.78.72 crores along-with simple
interest. That the applicant/ Petitioner has even submitted two
separate cheques, both dated 31.10.2023 towards 10% of the
Upfront Amount in either of the two options i.e. (A) Rs. 154.73
crores on proportionate basis out of OTS of Rs.564 crore towards
settlement of both, outstanding Debt + Equity or (B) Rs.122.96
crores towards settlement of outstanding Debt of Rs.78.72 crores
along-with simple interest.
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That although, the non-applicant/Respondent Bank has
accorded its approval to the OTS on multiple occasions i.e.
vide Sanction Letters dated 31.01.2019, 30.05.2019 and
10.02.2021 but either withdrew the sanction or did not allow
the applicant/Petitioner to make the payment.
That In the meantime, four of the lending banks, namely
Central Bank of India, Union Bank of India and Punjab
National Bank (with whom two banks, namely Oriental Bank
of Commerce & United Bank of India have been merged) have
accorded their OTS approval to settle debt and/or equity
account and the applicant/ Petitioner has since paid the entire
amount of these lenders in terms of their OTS sanction.
That thus, the applicant/Petitioner has always been ready
and willing to settle the Debt and/or Equity account of the non-
applicant/Respondent Bank and has submitted various OTS
proposals from time to time, but the non-applicant/Respondent
Bank on one ground or another, declined to accept the same and
instead, initiated recovery proceedings before different forums.
6. I have heard the learned counsel for the parties in respect of the
application.
7. The learned counsel for the applicant/petitioner while reiterating
his stand already taken in his pleadings inclusive of interim
application submitted that the subject matter of the main writ
petition and the proceedings before the Hon’ble DRT arise out of
the same loan transaction between the applicant-company and the
respondent-bank including and seeks the continuation of coercive
measures taking of adverse action, initiation of enforcement steps
or seeking issuance of the recovery certificate would seriously
prejudice the petitioner’s case and would render the pending writ
petition, before this court as infructuous.
The learned counsel further contended that the withdrawal
of the sanctioned OTS dated 10.02.2021 by the non-
applicant/respondent-bank vide letter dated 8.03.2021 is illegal on
account of the reasons, viz :
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a. “Legal principle of “Legitimate expectation”
violated.
b. Principles of natural justice violated by
unilaterally withdrawing the duly sanctioned and
binding OTS.
c. The reason for recall of sanction completely
irrelevant, illegal and marred with misplaced
influence and coercion.
d. A classic case of investigating agency
interfering with the functions of an Instrumentality of
state i.e. the Respondent Bank herein.
e. The recall is violative of fundamental rights of
the applicant/Petitioner i.e. Article 14, 19 and 21.
f. The recall is not based on cogent or relevant
reasons rather based on misplaced coercion and
duress.
g. The reason for recall is untenable as the fact
about the registration of an FIR by the ACB,
Srinagar and resultant pending investigation was
known to the non-applicant/Respondent Bank at the
time of sanction of OTS dated 10.02.2021.
h. The non-applicant/Respondent in their reply
06.04.2023 repeatedly reiterates that the decision on
the OTS is in nature of a commercial decision being
taken in the best interests of the respondent/Bank
and the same shall be independent and without
prejudice to the ongoing investigation. The said
positive averments reflect the undue influence on the
non-applicant/Respondent, who despite willing and
wanting to proceed with the OTS has been illegally
restrained from doing the same.
i. It is a matter of fact that as per the
Respondent Bank and 7 other lender Banks (part of
the Joint Lender Forum), agreed that executing a
One-Time Settlement (OTS) with the Petitioner
Company was the best possible available solution for
the resolution of the stressed loan account.
j. The reply of the non-applicant/Respondent
itself shows that sanction was accorded as per RBI
guidelines, Banks policies and keeping in mind all
relevant facts and circumstances and after exploring
all possible options available for recovering the
dues.
k. Most importantly, the fact which falls
completely in favour of the applicant/Petitioner is
the Respondent Bank’s decision to subject the
account of the applicant/Petitioner Company to a
forensic audit by an RBI empanelled Forensic
auditor not once but on two separate occasions
before according its sanction on 10.02.2021.
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l. Both the forensic reports dated 22.01.2019
and 16.03.2020 gave a clean chit to the
applicant/Petitioner company and the audit was
found satisfactory and thus was accepted by all the
lender banks. Pertinent that this court vide its order
dated 18.11.2025 held the declaring of loan account
of the applicant/Petitioner Company as fraud on the
asking of RBI as illegal and ultra-virus.
m. Four out of eight Banks have already executed
the OTS with the applicant/Petitioner company in
their respective loan account on bilateral basis.
Central Bank of India issued No dues certificate on
19.01.2024, Union Bank of India on 08.01.2024 and
Punjab National Bank (OBC and UBI merged into
PNB) on 12.06.2025.
n. Dues of the three of remaining lending banks
have been provided for by the applicant/Petitioner in
terms of order/directions of respective competent
authorities i.e. DRT and NCLT. In fact,
applicant/Petitioner has deposited the due amount of
Punjab & Sind Bank in terms of order dated
07.10.2025 passed by Debt Recovery Tribunal
(DRT). Similarly the applicant/Petitioner has
deposited the claimed amount of Indian Bank in
terms of directions of NCLT vide order dated
28.04.2025 and that of Bank of India in terms of
directions given during the course of hearing on
10.12.2025 vide application dated 24.12.2025 filed
by the applicant/Petitioner with NCLT to issue the
requisite order/written directions. Therefore, only
the dues of non-applicant/Respondent Bank
remaining to be paid which the applicant/Petitioner
assures this Court to pay in terms of sanction dated
10.02.2021 or in terms of directions of this Court
while disposing of the captioned writ petition.
o. The non-applicant/Respondent despite
wanting to execute the OTS has chosen itself it to be
bound by an overreaching and erroneous
communication of ACB, Srinagar, an agency with no
understanding of banking regulations, commercial
operations and commercial wisdom.
p. Even otherwise, the non-applicant/Respondent
by sanctioning the OTS dated 10.02.2021 entered
into a binding contract and could not have backed
out from the same. The said sanctioned OTS resulted
in a binding contract between the parties.
q. The non-applicant/Respondent recalled the
sanctioned OTS without any default on the part of
the applicant/Petitioner as the aplplicant/Petitioner
Company then as well as today is willing to abide by
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their set of obligations mentioned in the OTS
contract dated 10.02.2021.
r. The sanctioned and binding OTS dated
10.02.2021 includes application of Swiss Challenge
Rule, thereby providing additional security to the
Bank as in case a higher bid is received at the time
of auction, the non-applicant/respondent Bank will
have a right to appropriate a higher amount towards
its outstanding dues.
s. The recall of OTS vide communication dated
08.03.2021 suffers from gross illegalities and thus
begs the interference of this Court as an
instrumentality of a state is being restrained from
performing its functions as an independent entity by
an investigating agency, who is indulging in virtually
browbeating a public institution, entrusted with
public funds. If the actions of the agency are
condoned, the same would seriously jeopardize
independent decision making by a public institution
and would result in great injustice.
t. The applicant/Petitioner Company undertakes
to abide by the OTS dated 09.02.021/10.02.2021 and
by its terms and conditions and thus agrees that the
execution of OTS shall have no bearing on the
ongoing criminal prosecution, which will be
defended by the applicant/Petitioner as per law.
u. The applicant/Petitioner being a law-abiding
entity has never refused to pay the OTS amount and
most importantly has agreed to Swiss Challenge
Rule, which allows absolute fairness and
transparency in the resolution of the loan account. In
view of Swiss Challenge Rule being part of the
sanctioned OTS dated 10.02.2021, there remains no
doubt on the intention of the applicant/Petitioner
company.”
The learned counsel submitted that having regard to
the above referred facto legal issues involved in the case there
appears a prima facie case made out in favour of the
applicant/petitioner who is sure to succeed at the proceedings
of the writ petition. He further contended that OTS has been
accepted, approved and sanctioned by a competent authority of
the non-applicant/respondent-bank on so many occasions i.e
31.01.2029/30.05.2019/01.06.2019 and 10.02.2021 which has
the effect of the constitution of a concluded contract giving
rise to a legitimate expectation to the applicant-petitioner, that
non-applicant/respondent-bank being an instrumentality of the
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state would honour its obligation as per law. That the act of
the non-applicant/respondent-bank in refusing to recover
what qualifies as public money without any show cause
and/or default on the part of the applicant-petitioner is a
violation of solemn principle of audi alteram partem and
doctrine of legitimate expectation, notwithstanding the
violation of petitioner’s fundamental rights enshrined under
Articles, 14, 19(1) (g) and 21 of our Constitution. He further
contended that the non-applicant-bank has backed out from a
concluded contract twice without any default or violation of
any terms of contract on the part of the applicant-company
contrary to procedure established by law.
The learned counsel further more contended that the
balance of convenience appears to be apparently titled towards
the applicant/petitioner-company which is likely to suffer
more comparative hardship and prejudice than the other side in
case of withholding of the interim relief.
8. The learned counsels for the non-applicant/respondent-bank
however, contended that no primafacie case appears to be
made out in favour of the applicant/company which is
hellbent to delay the repayment of the huge amount of
outstanding loan towards the non-applicant/bank to the great
loss and prejudice of the public money. He submitted that
balance of convenience also does not lie in favour of the
applicant/company which instead lies in favour of the non-
applicant/respondent-bank. He further contended that
applicant-company will not suffer any irreparable loss, which
is likely to be adequately uncompensated in terms of the
damages in case of the dismissal of the interim application.
The learned counsel for the non-applicant/bank
submitted that loan account of the applicant/petitioner was
declared as NPA (Non Performance Asset) w.e.f., 20.06.2017
(as per Central Statutory Auditors). That, the total liability of
the applicant/petitioner was Rs.261.47 Crores (Rs.78.72
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Crores as fund based & Rs.182.75 Crores as Investment
Equity Share Capital of the borrower company).
That in accordance with OTS Policy, the
applicant/petitioner on 11.10.2018 approached to the non-
applicant/respondent Bank for OTS of an amount of Rs.470
Crores.
That the matter was considered at various levels. That
the Board of Directors of the non-applicant/respondent Bank
vide B.R.No.26 dated 16.10.2018 approved the OTS offered
by the writ petitioner for an amount of Rs.470.00 Crores. That
Directors of the non-applicant/respondent Bank had desired
that forensic audit of the applicant/petitioner firm be
conducted and sanction be issued only in case there are no
adverse observations.
That the applicant/petitioner was Informed of the
decision of the Board of Directors of the non-
applicant/respondent Bank on 26.10.2018. That the non-
applicant/respondent Bank engaged the services of M/s Anil
Khandelwal and Associates for the purpose of conduct of
forensic audit. That the forensic audit was conducted for the
period 01.04.2009 to 31.03.2018. That the forensic audit did
not report any fraud. That accordingly, formal sanction was
conveyed to the writ petitioner on 31.01.2019.
That on 11.02.2019, a consortium meeting was held wherein
the OTS offer of the borrower company (applicant/petitioner
herein) came up for discussion in light of forensic audit report.
That after deliberations, among the member banks (which have
advanced loan to the applicant/petitioner) and the borrower
company’s representative, following was suggested:-
a. Promoters’ offer for Rs.470.00 Crores be treated as
binding and If any higher bid is received, promoters would have
right of first refusal;
b. Fresh valuation of the property be got conducted from
Values on the panel of Lead Bank, OBC & BOI;
c. The member banks should not take action in Isolation pending
final decision on the OTS offer of the Company or other method of
recovery/resolution to be decided by consortium.
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d. Any action to be taken should be supported by proper
legal advice.
That thereafter, the applicant/petitioner moved a representation
dated 25.04.2019 requesting the non-applicant/respondent Bank to
allow Implementation of the Bank’s sanction of OTS on bilateral
basis upto 30.06.2019 to allow the applicant/petitioner to pay the
OTS amount of Rs. 128.94 Crores.
That Central Bank of India was one of the members of the
consortium which has also advanced loan to the writ petitioner.
That the said Bank had sanctioned OTS of Rs. 38.80 Crores vide
their letter dated 13.03.2019 with the rider to settle their dues upto
31.03.2019. That the said Bank had received entire settlement
amount of Rs.38.80 Crores and had accordingly issued NOC
confirming that the Central Bank of India has released all its
charges, lien, encumbrances, mortgages and claims etc., on
immovable/movable assets, receivables and Escrow Account of the
company charged to the said Bank of first pari-passu basis along
with other consortium member banks towards satisfaction of the
term Loan, FITL and Equity. It was also provided that all the
charges, lien, encumbrances, mortgages and claims etc., shall
continue in the Bank Guarantee of Rs.14.98 Crores till It is
replaced or 100% margin is provided against the same.
That having regard to the above developments, the non-
applicant/respondent Bank noticed that the applicant/ petitioner has
attained 53.21% shareholding against previous 49%. That
consequently, the remaining lenders cease to be the major
shareholders.
That having regard to the aforesaid developments, the Board
of Directors of the non-applicant/ respondent Bank vide B.R.No.58
dated 15.05.2019 modified the terms and conditions of the
previous settlement with the stipulation that the settlement terms
should have a binding clause for the borrower company (applicant
herein) that in case of a higher OTS with any creditor, the same
would be applicable to the bank. That accordingly, revised
sanction dated 30.05.2019 was conveyed to the applicant/borrower
company on terms and conditions mentioned therein.
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That in response to above, the applicant/petitioner vide his
letter dated 31.05.2019 showed its Inability to arrange funds at
short notice and requested to allow the payment of Rs.25.79 Crores
by 30.06.2019 and Rs.103.15 Crores up to 31.08.2019. That the
said request of the writ petitioner was rejected and was asked to
pay entire OTS amount by 30.06.2019.
That a meeting of all the member banks was held on
18.06.2019, wherein various decisions were taken Including the
Issue relating to OTS. That one of the Directors of the borrower
company was also Invited to the discussion and was Informed
about the consensus of the member banks to move the OTS offer at
least to Rs.510.00 Crores. That during the hearing, no settlement
could be arrived at. That the said Director of the borrower
company submitted that prior to making of any commitment, the
member banks may seek in principle the approval from the
competent authorities of the respective banks to settle the dues at
Rs.510.00 Crores.
That under the revised offer of Rs.510.00 Crores, the OTS
earlier offered to the respondent Bank was Improved by Rs.10.97
Crores (from Rs.128.94 Crores to Rs.139.91 Crores), however the
respondent Bank did not accede to the request of borrower
company, hence the offer of the writ petitioner was rejected and
other lenders too did not process their proposals. Accordingly, the
respondent Bank had decided to follow National Company Law
Tribunal (NCLT) route.
That the applicant/petitioner again represented vide its
communication dated 29.09.2020 and in view of the Covid-19,
lockdown, requested the members of the consortium for a meeting
to workout possibility to raise funds under Covld-19 relief
package. That again, a meeting was convened of the consortium
members on 21.11.2020. It was followed by another consortium
meeting on 06.01.2021. That during the course of meeting, the
member banks were informed that the borrower company had
agreed for OTS with base price of Rs.470.00 Crores under Swiss
16
Challenge Method. That the borrower company proposed that the
OTS offer of Rs.470.00 Crores or any other higher offer amount
under Swiss Challenge Method will take place in the following
manner: –
I. 10% of the share of each of the member banks in the
consortium in the OTS offer of Rs.470.00 Crores or the matching
amount of the highest bidder will take place within 30 days from
the date of sanction of all member banks.
II. As regards balance 90% of the balance offer amount of
Rs.470.00 Crores or the matching amount of the highest bidder
will take place within 06 months from the date of
approval/acceptance of the offer by all the participating lenders.
That the sanction for OTS was accorded by the non-
applicant/respondent Bank on 09.02.2021 and same was conveyed
to the borrower company on 10.02.2021 on various terms and
conditions. That so far as the non-applicant/respondent Bank is
concerned, its status would be as under:-
That Rs. 78.72 Crores to be appropriated towards full and
final settlement of all dues/claims, etc., of whatsoever nature in
loan account (NPA); That Rs. 50.22 Crores or higher amount
received towards purchase/transfer of entire equity shareholding in
the company.
That it was also decided, upon Implementation of the
package, the bank/consortium shall withdraw all litigations filed
against the borrower company and the company shall also
withdraw its litigations filed against the bank/consortium with any
court/fora. The non-applicant/ respondent Bank made its sanction
subject to concurrence of all other consortium members. That in
the event of receipt of approval from all the lenders, a consortium
meeting was required to be called to decide on engagement of
some proper process advisor to run the process of Swiss Challenge
Method and to take care of all the legal procedure and processes.
That the sanction dated 09.02.2021 for running Swiss
Challenge Method on the company’s offer of Rs. 470.00 Crores
was recalled on 08.03.2021.
That on 04.03.2021, In the context of FIR No.15 of 2019, a
copy of communication was received by the non-
17
applicant/respondent Bank from the Director of Prosecution, ACB,
which was addressed to the Commissioner/Secretary to the
Government, General Administration Department, in which it was
recommended that the respondent Bank should not go ahead with
the OTS. That further, the non-applicant/respondent Bank be
advised to proceed to invoke against the securities extended by the
Promoter Directors of the applicant/petitioner company and to take
recourse to all provisions of SARFAESI Act and other available
remedies under law to recover the entire loan amount from the
borrower to prevent loss to bank exchequer as was being done by
Bank of India and others. That the aforesaid communication was
followed by another communication dated 15.03.2021 in which the
respondent Bank was instructed by the Government to place the
‘Alert Note’ before Board of Directors for taking necessary action
as advised by ACB under intimation to the Government.
That the entire matter was considered by the Board of
Directors on 23.03.2021. That the Board taking notice of the
actions previously taken by the bank expressed its dissatisfaction
and made certain observations. That finally, the Board, subject to
observations It had made, confirmed the action of
recalling/revoking the sanction conveyed to consortium members
for running Swiss Challenge Method in NPA account of the
applicant/ petitioner.
That after the order of recalling was passed, the
applicant/petitioner again furnished the OTS offer on 07.12.2022
in terms of the OTS policy of the non-applicant/Bank offering an
amount of Rs.154.73 Crores to the respondent Bank on bilateral
basis. That the applicant/petitioner had improved his previous offer
by Rs.25.79 Crores. That the OTS proposal of the
applicant/petitioner was placed before the Board of Directors of
the respondent Bank on 26.12.2022. That the Board directed that
the proposal be resubmitted after obtaining clearance from the
ACB and after completing other due processes in the case.
18
9. I have perused the application filed in terms of Section 151
CPC for grant of interim relief as also the main petition.
10.The reply affidavit of the non-applicant/respondent-bank has
also been perused.
11.I have accorded my thoughtful consideration to the rival
arguments advanced on both the sides.
12.Although there is no golden rule or a single litmus test for the
consideration of an application for grant of temporary injunction,
yet three over-riding principles are prima-facie case, Balance of
convenience and Irreparable loss. An order for temporary
injunction can be justified only if it is based on a good prima-facie
case made out by the applicant/plaintiff, showing that in all
probability, he is entitled to obtain ultimately the relief sought in
the main matter as could appear at this stage before going into the
evidence, from pleadings and admitted documents. In
consideration of the question of Balance of convenience, the court
has to consider the comparative mischief or inconvenience of both
the parties and in determining the question of Irreparable loss, the
court has to see whether the applicant/petitioner company will
sustain such injury which cannot be possibly and adequately
remedied by way of damages and the damages would be
inadequate in case of the success of the applicant/petitioner.
The Hon’ble Apex Court in Dulpat Kumar Vs. Parshad Singh
AIR 1993 “SC” 276 while considering the principles relating to the
grant of temporary injunction observed:-
“It is settled law that grant of injunction is discretionary
relief, the exercise whereof is subject to the court satisfying
that;-
i) There is serious disputed question to be tried in suit and
on the facts before the court there is probability of his
being entitled to the relief asked for by the plaintiff.
ii) The courts interference is necessary to protect the party
from species of injury or damage would ensue before
legal right would be established at the trial.
iii) The comparative hardship or mischief or inconvenience
which is likely to occur from withholding the
injunction will be greater than would be likely to arise
19from granting it. It was further observed by their
lordships;
“Prima-facie case is not to be
confused with a prima-facie title which
is to be established with evidence at
the trial. The court however has to
satisfy that the non-interference by
the court would result in an
irreparable injury to the party seeking
relief and that there is no other
remedy available except the one to
seek injunction and he needs
protection from the consequences of
apprehended injury or dispossession”
Irreparable injury however does not
mean that there must be no physical
possibility of repairing the injury, but
means only that the injury must be
material one, namely one that cannot
be adequately compensated by way of
damages. The third consideration is
that balance of convenience must be in
favour of granting injunction. The
court while granting or refusing
injunction, should exercise sound
judicial discretion to find amount of
substantial mischief or injury which is
likely to be caused to the parties.
It was further observed by their Lordships that;-
“the phrases “prima-facie case
“Balance of convenience” and
“Irreparable loss” are not rhetoric
phrases for incantation but words of
width and elasticity to meet my-rid
situation presented by man’s
ingenuity in given facts and
circumstances but always is hedged
with sound exercise of judicial
discretion to meet the ends of justice”.
13.I am also conscious of the law laid-down by a Full Bench of this
Court in M/S Astril Traders Vs. M/S, Haji Mohd Shaban Dar &
Ors. SLJ 1982–404, to the effect, “that plaintiff or defendant
seeking temporary injunction has to establish a prima -facie case,
in his favour which merely means that he has to show that a
serious question is to be tried at the hearing and there is material
20
which probablises the success of his case. Since interim
injunction is by and large sought at the initial stage of the suit
when the main issues in it are yet to be tried on taking evidence,
the court has to be cautious in examining these issues and offering
its comments on the merits of the case. At the stage they are not
supposed to examine the merits of the case too closely or too
minutely. Such a course always infers the danger of pre-judging or
miss-judging the case and making observations that may prejudice
the parties in the long run. It is supposed to take a merely general
view of the case judging its apparent strength or weakness”.
It has also been held by this Court in Harnam
Dass Versus Krishan Lal & Anr 2017 (11) SLJ page
940 that the three important factors involved in
consideration of an application for grant of
temporary injunction in terms of Order 39, Rule 1
and 2 CPC are ‘prima facie case’, irreparable loss’
and ‘balance of convenience’. The party seeking
relief primarily has to make out the existence of a
prima facie case in his favour. To make out a
prima facie case in his favour the case projected by
such a party must raise for adjudication and
decision of the court a triable issue, that is, a
question, which to the satisfaction of the court is
substantial and bona fide. If the party seeking
relief fails to make out the existence of a prima
facie case in his favour temporary injunction
cannot be granted and other two factors need not
21
be considered. The existence of the prima facie
case in favour of the party by itself, however, is not
sufficient to grant the temporary injunction as the
court has further to be satisfied that by not
granting the temporary injunction irreparable loss
would result to that party and balance of
convenience is in favour of granting the injunction.
Every question raised by a party does not amount
to the existence of a prima facie case in his favour
for the purpose of grant of the temporary
injunction.
14.This court is also conscious of the law laid down by the Hon’ble
Orissa High Court in Shyam Kishore Bal Vs. Kishore Talkies &
Ors. 1997 (3) CCC 305 (Orissa) to the effect:-
i) ” In the facts and circumstances of each individual case there
must exist a strong probability that the petitioner has an
ultimate chance of success in the suit. This concept is what is
usually known as a prima facie case.
ii) As the injunction is granted during the pendency of the suit, the
court will interfere to protect the plaintiff from injuries which
are irreparable. The expression “irreparable injury” means that
it must be material one which cannot be adequately
compensated for in damages. The injury need not be actual, but
may be apprehended.
iii) The Court has to balance and weigh the mischief or
inconvenience to either side before issuing or withholding the
injunction. This principle is otherwise expressed by saying that
the Court has to look to the balance of convenience.
With the first condition as sine-quo-non, other two conditions
should be satisfied by the petitioner conjunctively and mere proof
22
of one of the three conditions does not entitle a person to obtain
temporary injunction.
Prima facie case means that it needs serious consideration,
Investigation or determination. It does not mean a proof at this
stage. It means bona fide dispute requiring determination without
pre-judging the case. In order to find out whether there exists any
prima facie case in favour of a party or not, it would be enough, if it
could be established that there is a seriously arguable question and
it is not necessary that the point be proved to the hilt at this stage
showing reasonable chance of success is enough. The apparent
strength of the applicant’s case is the guiding factor. Then court has
to consider the, “balance of convenience” and “irreparable loss”
aspects. When the Court is called upon to examine whether
applicant has a prima facie case for the purpose of granting
temporary injunction, the Court must perforce examine the merits
of the case. But the findings on various questions like right, title or
interest in the suit land would be merely incidental or ancillary for
the purpose of assessing the prayer for temporary injunction, and
not for anything else and the said findings shall not be of any avail
or effect for any other purpose”.
“Balance of convenience means comparative convenience,
mischief and inconvenience of the parties contesting an application
for temporary injunction and the same may be equated with what
had been left out after weighing prima facie case of the parties. The
inconvenience of the applicant if temporary injunction is refused
will be balanced and compared with that of the other party. If it is
granted, if the scales of inconveniences leans to the side of the
applicant, then only interlocutory injunction should be granted.
Irreparable injury is one which is substantial and which cannot be
remedied by damages. Balance of convenience necessarily brings
in the concept of irreparable injury. The very first principle on
which temporary injunction may be granted is that the Court will
not grant it to restrain an actionable wrong for which damages
might be proper remedy. When having regard to the facts and
circumstances of the case, the apprehended damage or injury
cannot be adequately compensated by money. Such injury which
cannot be adequately remedied by damages. The remedy by
23damages would be inadequate if the compensation ultimately
payable to the applicant in case of success in the suit would not
place him in the position in which he was before. An injury is said
to be irreparable where there exists no certain pecuniary standard of
measuring the damage. An injury is irreparable where the damages
are estimable only by conjecture, and not by any accurate standard.
An injury is regarded as irreparable if there is no certain pecuniary
standard for the measurement of the damages.
This Court is also conscious of the law laid down this Court in
“State Vs. Mohamad Hussain” 1997 SLJ 203, held that granting
interim order which practically gives the principal relief sought in
the petition for no better reason than that a prima facie case has
been made out without being concerned about balance of
convenience, the public interest and other relevant considerations
is not warranted under law.”
15.The Hon’ble Supreme Court in “Assistant Collector of Central
excise vs. Dunlop India Limited” AIR 1985 SC 330 has
authoritatively held that a tendency to grant interim orders with a
great potential for public mischief for the mere asking is
deprecated.
16.In the backdrop of the aforementioned facto-legal aspects of
the case, this court is of the opinion that it may meet the ends
of justice in case pending disposal of the main petition, the
non-applicant/respondent-bank i.e., J&K Bank Ltd is directed
to reconsider the offer of the applicant/petitioner company for
OTS of the loan account in question in continuation to the
steps reported to have been already bilaterally taken in that
behalf which shall undoubtedly in case of materialization of
the same be firstly subject to the final outcome of the main
petition and secondly without prejudice to the investigation
and further proceedings arising out of the case FIR registered
with ACB/CBI touching the matter with further request to the
Hon’ble DRT-II, New Delhi seized of TA No. 117/2022 titled
J&K Bank Ltd vs. Aman Hospitality Pvt. Ltd, that the same
with liberty to conduct the proceedings as to recording of
evidence etc will not however, take any coercive measures or
24
pass the final orders thereon pending disposal of the writ
petition WP (c) 623/2023 before this court.
17.It is accordingly ordered.
18.The interim application No. 7602/2025 stands disposed of.
19.The main petition shall come up for final consideration on
27/04/2026.
(MOHD YOUSUF WANI)
JUDGE
SRINAGAR:
03.04.2026
“Ayaz”
