The petitioner had earlier filed an application before the Mumbai Debt Recovery Tribunal (DRT) claiming the outstanding dues. The DRT passed an ex-parte order on December 17 last year restraining the company from transferring or disposing of its assets.

The tribunal also directed the company to pay or deposit an amount of Rs 93.95 lakh with ING Bank within a month from the date of the order. The company was also restrained from operating any of its accounts with any other banks except the petitioner. Welspun appealed against the DRT's decision before the Debt Recovery Appellate Tribunal, Mumbai. The appellate tribunal modified the DRT's order. The original application and appeal are pending.

The bank argues that it had granted Welspun facilities like pre and post shipment export finance and foreign letter of guarantee facilities upto a limit of two million dollars each, spot foreign exchange facility up to $6,00,000 or forward foreign exchange facility upto two million dollars.

Welspun executed a memorandum of loan and facility agreement, general counter-guarantee, letter of continuity, demand promissory note and also passed on a certified copy of the resolution passed by its board of directors at a meeting held on December 27, 1997 relating to availing of the credit facilities.

ING Bank says Welspun managing director B K Goenka executed a contiuing letter of guarantee dated February 1, 1997 in favour of the bank "undertaking and assuming personal obligations and liabilities towards the petitioner to pay off the dues of the company under the various facilities".The bank, on April 15, 1998 cancelled the letter of guarantee facility, reduced the pre-shipment export finance facility to two million dollars. To secure repayment of the said facility, the company executed eight export orders in favour of the bank. ING Bank, in turn, advanced Rs 7.93 crore against the export orders for purchase of goods received by the company from its foreign buyers.

The petition says the amount financed was agreed to be liquidated by the company from the negotiation of export documents and through the inward remittances and sales proceeds received from foreign buyers.

ING Bank, in its petition alleges the company has `failed' to pay the outstanding dues despite demands though it availed the credit facility from the petitioner fully.