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Judgment
P.K. Bhasin, J
This appeal is against the following miscellaneous order passed on 13th May, 2015 by the then Presiding Officer Mr. K. Asoken of Debts Recovery Tribunal-II, Delhi ('DRT' in short) in an Original Application No. 77 of 2004 filed by respondent No. 1 Bank of Baroda:
"O.A. No. 77/04
BOB versus. WHEELER LEATHER CORPORATION LTD. & ORS.
Dated: 13.5.2015
Present: Mr. Arun Aggarwal, Counsel for the applicant Bank
Mr. S.K. Tanwar, Counsel for the defendant No. 1
Mr. O.P. Mathur, Counsel for the defendant Nos. 2, 3, 4 and 5
Mr. Anand Sanjay, Counsel for defendant No. 7
Ms. Usha Singh, Counsel for defendant No. 6
Defendant No. 1 has filed IA No. 215/15.
Heard Counsel for Bank and Counsel for defendants.
The applicant has filed valuation report in respect of the mortgaged property and there are three valuations. They are Market value of the property Rs. 1.38 crores approximately, Realizable market value Rs. 1.15 crores approximately and Distress value Rs. 1.00 crores approximately. The defendant says that he wants to redeem the property for Rs. 1.38 crores approximately and he says that this amount can be deposited immediately if the Court so directs and he is even armed with a demand draft of Rs. 30 lacs to prove his bona fide. Counsel for defendant No. 5 states that the property can be sold only in public auction and that is the stand taken by defendant No. 5.
Counsel for the applicant Bank submits that the claim amount in the OA is Rs. 3,76,98,186/- and once the defendants are praying for redemption for the sum of Rs. 1.38 crores as requested by the defendants does not arise at all. The Counsel for the applicant Bank is correct but the fact remains that the Bank has assessed the market value of the property at Rs. 1.38 crores approximately. Even if a recovery certificate is obtained and the Bank proceeds against the mortgage property it has to be kept for sale fixing the reserve price ordinarily at the distress value or on the realizable market value and therefore and the Bank's condition would be little precarious. Now the Bank gets an opportunity to have liquid cash at the earliest if the property is sold at the earliest possible and if the man suggested by defendant is allowed to purchase the property the Bank gets easy recovery. Now there is consent by borrower to sell the property for Rs. 1.38 crores to the person produced by the borrower. In such circumstances the applicant Bank is directed to sell the property by private treaty as expeditiously as possible as and not later than 15 days. Bank shall be at liberty to appropriate the sale proceeds toward the loan account. After sale, sale certificate shall be issued and the title deeds shall be released to the purchaser of the property.
Applicants has exhibited the power of attorney as PW1/133 (OSR). Posted to 2.6.2015
Issue order dasti to applicant Bank as well as defendant No. 1.
K. Ashokan
Presiding Officer
DRT-II, Delhi
This order of sale of the property mortgaged with the Bank by the appellant Company, as per the appellant's case, was wrongly passed by the Presiding Officer of the DRT at the final stage of the O.A. without prior adjudication of the disputes raised in the O.A. by the contesting parties and in fact amounts to being a perverse order having been passed in undue haste by the Presiding Officer of the DRT and the applicant Bank's officials also acted post haste in rushing to sell the appellant's property even though it had opposed the application of the borrower Company inter alia on the ground that the O.A. itself was at the far end and could be finally disposed of and since there was no real opposition to the claim of the Bank even recovery certificate for the amount being claimed by the Bank could have been issued and then the mortgaged property could be ordered to be sold by open auction by the Recovery Officer in execution proceedings.
The background facts relevant for the disposal of this appeal and which led to the filing of the O.A. by the Bank and passing of the impugned order are that The Benares State Bank of India, which came to be amalgamated with Bank of Baroda, respondent No. 1 herein (reference to which Bank shall be made hereinafter as 'the applicant Bank') in June, 2002, had extended various financial facilities during 1997-98 to respondent No. 2 herein, M/s. Wheeler Leather Corporation Ltd. (hereinafter to be referred to as 'the borrower Company'). The said borrower Company had created second charge in respect of its land situated at Khewat No. 9, Khata No. 20 Min. Kila No. 56/15-2-1(5-16), 16(8-0), 25(8-0) in Village Pathreri, Near Bilaspur Chowk, District Gurgaon, Haryana to secure the re-payment of loan amounts given to it by the erstwhile The Benares State Bank of India. First Charge over this property was stated to have been created by the borrower Company in favour of respondent No. 6 herein, Industrial Development Bank of India (IDBI), from whom also it had obtained some financial facilities.
The appellant A.M. Wheeler & Co. Ltd. (hereinafter to be referred as 'the guarantor/mortgagor Company') had given Corporate Guarantee and also created equitable mortgage of its land in Khewat No. 9, Khatta No. 20 min. Kila No. 64/5/1(6-13) 5/2(1-7) 6/1(2-0) 6/2(6-0) and 63/10(1-12) admeasuring 17 Kanal 24 Marlas i.e. 2.20 acres situated at Village Pathreri, near Bilaspur Chowk, Tehsil and District Gurgaon, Haryana (hereinafter to be referred as the 'mortgaged property of the guarantor/mortgagor Company') to secure the repayment of the financial facilities extended to the borrower Company in which the appellant Company and respondent Nos. 3 to 5 together had 100% shareholding. Respondent No. 5 is dead and is being represented by his legal representatives.
The applicant Bank had filed Original Application No. 77/2004 before the DRT under Section of 19 of the Recovery of Debts from Banks and Financial Institutions Act, 1993 ('RDDBFI Act' in short) for recovery of its total outstanding dues in various accounts of the borrower Company which were to the tune of Rs. 3,76,98,186.60/- and interest thereon @ 17.50% per annum compounded monthly along with costs throughout from the date of institution of the O.A. till actual realisation. The O.A. was filed primarily against the appellant herein, which was impleaded as defendant No. 5 in the O.A. being the Corporate Guarantor and mortgagor of its land in Gurgaon, the borrower Company and respondent Nos. 3 to 5, being the Directors of the borrower Company and also its guarantors. The prayers made in the O.A. were as under:
"(1) Issue a consolidated certificate of recovery for a sum of Rs. 21,43,958.00 inclusive of accrued interest w.e.f. 24.6.2001 to 23.8.2004 in respect of Packing Credit Facility and a sum of Rs. 1,35,47,291.60 inclusive of accrued interest w.e.f. 24.6.2001 to 23.8.2004 in respect of term loans aggregating to Rs. 3,77,87,008.60 and after adjusting a credit of Rs. 2.00 lacs on 5.9.2001 and a debit of Rs. 1,11,178.00 on 24.1.2002 an aggregate amount of Rs. 3,76,98,186.60 along with pendente lite and future interest thereon @ 17.50% per annum compounded monthly along with costs throughout from the date of institution of the instant Original Application till actual realization thereof in the hands of the applicant against the defendant Nos. 1 to 5 jointly and severally:
(2) Restrain defendant Nos. 1 to 5 including their respective heirs, assigns, successors, servants, agents, representatives or any other persons deriving/claiming title under them from disposing off, transferring, creating any further charge, alienating in any matter whatsoever hypothecated stock of raw material, 'finished and semi-finished goods, goods, raw material, leather shoes, other leather products etc. and spares lying in factories, godowns and other units of defendant No. 1, movables and goods in transit, etc. till the disposal of the Original Application;
(3) Order for attachment and sale of hypothecated stock of raw material, finished and semi-finished goods, goods, raw material, leather shoes, other leather products etc. and spares lying in factories, godowns and other units of defendants No. 1 including goods in transit and permit the applicant to adjust the sale proceeds after defraying the expenses of sale towards the outstanding liabilities of the defendants;
(4) Restrain defendant No. 1 to including their respective heirs, assigns, successors, servants, agent, representatives or any other persons deriving/claiming title under them from disposing of, transferring, creating any further charge, alienating in any matter whosoever the construction on which the applicant has first charge including the debris thereof, sole marking machine and twin sole attaching machine funded by the term loan till the disposal of the Original Application;
(5) Order for attachment and sale of the construction on which the applicant has first charge or debris thereof, sole marking machine an twin sole attaching machine funded by the term loan and permit the applicant to adjust the sale proceeds after defraying the expenses of sale towards the outstanding liabilities of the defendants;
(6) Restrain the defendant No. 5 including its respective heirs, assigns, liquidator, successors, servants, agents, representatives or any other persons deriving/claiming title under them from disposing off, transferring, creating any further charge, alienating in any manner whatsoever its immovable property being Khewat No. 9, Khata No. 20 min, Kila No. 64/5/1(6-13) 5/2(1-7) 6/1(2-0) 6/2(6-0) and 63/10(1-12) admeasuring 17 Kanal, 24 Marla, i.e., 2.20 acres situated at village Pathreri, Tehsil and District Gurgaon, Haryana together with construction thereon with all fittings, fixtures, tubes and other things attached thereto or thereon the disposal of the original Application;
(7) Order for attachment and sale of mortgaged/immovable property of defendant No. 5 being Khewat No. 9, Khata No. 20 min, Kila No. 64/5/1(6-13) 5/2(1-7) 6/1(2-0) 6/2(6-0) and 63/10(1-12) admeasuring 17 Kanal, 24 Marla, i.e., 2.20 acres situated at village Pathreri, Tehsil and District Gurgaon, Haryana together with construction thereon with all fitting, fixtures, tubes and other things attached thereto or thereon and permit the applicant to adjust the sale proceeds after defraying the expenses of sale towards the outstanding liabilities of the defendants till the disposal of the Original Application;
(8) Restrain the defendant No. 1 including its respective heirs, assigns, liquidator, successors, servants, agents representatives or any other persons deriving of the claiming title under Bank from disposing of, transferring, creating any further charge, alienating in any manner whatsoever its fixed assets including land comprised in Khewat No. 9, Khata No. 20 Min, Kila No. 56/15-2-1(5-16), 16(8-0), 25(8-0) Village Pathreri, Near Bilaspur Chowk, District Gurgaon, Haryana admeasuring 21 Kanal 16 Marla together with construction thereon with all fittings, fixtures, tubes and other things attached thereto or thereon till the disposal of the Original Application;
(9) Order for attachment and sale of fixed assets of defendant No. 1 including land comprised in Khewat No. 9, Khata No. 20 Min. Kila No. 56/15-2-1 (5-16), 16(8-0), 25(8-0) Village Pathreri, Near Bilaspur Chowk, District Gurgaon, Haryana admeasuring 21 Kanals 16 Marlas together with construction thereon with all fitting, fixtures, tubes and other things attached thereto or thereon and permit the applicant to adjust the sale proceeds after defraying the expenses of sale towards the outstanding liabilities of the defendants;
(10) Direct defendants No. 1 through its Directors, employees, servants, agents, representative to handover the original Title Deeds of immovable property of defendant No. 1 viz. land comprised in Khewat No. 9, Khata No. 20 Min. Kila No. 56/15-2-1(5-16), 16(8-0), 25(8-0) Village Pathreri, Near Bilaspur Chowk, District Gurgaon, Haryana admeasuring 21 Kanal 16 Marla together with construction thereon with all fittings, fixtures, tubes other things attached thereto or thereon to the applicant forthwith;
(11) Hold and declare that defendant No. 6 is liable towards the applicant to the extent of the value of fixed assets of defendant No. 1 including land comprised in Khewat No. 9, Khata No. 20 Min, Kila No. 56/15-2-1(5-16), 16(8-0), 25(8-0) village Pathreri, Near Bilaspur Chowk, District Gurgaon, Haryana admeasuring 21 Kanals 16 Marlas together with construction thereon with all fittings, fixtures, tubes and other things attached thereto or thereon, which it illegally released in favour of defendant No. 1, and, consequently, direct defendant No. 6 to pay the aforesaid amount to the applicant alongwith pendente lite and future interest thereon at the rate of 17.50% per annum compounded monthly along with costs throughout from the date of institution of the Original Application till actual realization thereof in the hands of the applicant, which liability of defendant No. 6 may be declared as joint, several and coextensive with that of defendant Nos. 1 to 5; and
(12) Hold and declare that the purported transfer of immovable property including land comprised in Khewat No. 9, Khata No. 20 Min, Kite No. 56/15-2-1 (5-16), 16(8-0), 25(8-0) Village Pathreri, Near Bilaspur Chowk, District Gurgaon, Haryana admeasuring 21 Kanals 16 Malras together with construction thereon with all fitting, fixtures, tubes and other things attached thereto or thereon by defendant No. 1 in favour of Stumpp Schuele & Somappa Pvt. Ltd. having its Registered office at 139/2, Hosur Road, Karamangala, Bangaluru-560095 is void ab initio and otherwise subservient to the encumbrance of applicant's charge thereon as collateral security with respect to credit facilities granted to defendant No. 1."
It is case of the appellant Company that since the borrower Company was not doing well in business a deal was struck with one Nilesh Kumar & Associates (NKA) in the year 2003 where under the said NKA had agreed to buy the borrower Company and also to get the appellant Company and its Directors, absolved of all their liabilities towards the applicant Bank and then to get the mortgaged properties released. With the taking over of the management of the borrower Company new Group came to take over the management of the borrower Company and Nilesh Kumar, who is not a party in this litigation, became its Managing Director. The borrower Company under the control of Nilesh Kumar cleared its dues of the IDBI Bank only and got released the land mortgaged by it in favour of this Bank and then sold the same to M/s. Stumpp Schuele & Somappa Pvt. Ltd., impleaded in this appeal as respondent No. 7.
The O.A. was filed way back in the year 2004 and is still pending before the DRT and the present appeal has been filed by the guarantor/mortgagor Company against a miscellaneous order only passed by the learned Presiding Officer of the DRT on 13th May, 2015 whereby the mortgaged property of the guarantor/mortgagor Company had been permitted to be sold by the Bank by way of a private treaty without first adjudicating the disputes raised by the contesting parties in the Bank's O.A. and, it is the grievance of the appellant that the impugned direction for sale was give to the Bank when the borrower Company itself had not even prayed for the sale of that property by private treaty and all that it had requested the DRT was to permit the borrower Company to redeem the mortgaged property which was mortgaged by the appellant Company. As a consequence of the permission granted by the learned Presiding Officer vide impugned order dated 13th May, 2015 and the mortgaged property of the guarantor/mortgagor Company was sold in utmost haste by the applicant Bank, who had opposed passing of this kind of an order and that too at the fag end of the trial, to respondent No. 8 in this appeal, M/s. Welco Distillery Pvt. Ltd. (hereinafter to be referred as 'the buyer Company') for a sum of Rs. 1,38,00,000/- and a sale certificate also stands issued in its favour on 1st June, 2015. The applicant Bank which had opposed I.A. No. 215/2015 on the ground that such a direction could not be given in the midst of the trial chose not to challenge that order and instead gladly complied with the direction of the DRT and, as per the case of the appellant, that haste shown by the Bank's officials was a result of collusion between the Bank officials and the borrower Company under the new management headed by Nilesh Kumar. In fact, before this Tribunal the Bank has taken the stand that on 13.5.2015 the entire O.A. itself could have been allowed in its favour as evidence had already been adduced and also because the appellant Company and its three Directors had not even contested the Bank's claim in their joint written statement and the only pleas raised by them were centering around the inter se disputes between the old management and new management regarding implementation of the terms of the deal struck between them in the year 2003.
The O.A. was being contested mainly by the appellant Company and its Directors who were impleaded as defendant Nos. 5 and 2 to 4 respectively in the Bank's O.A.
When the O.A. proceedings were nearing conclusion, the borrower Company through its new Managing Director Mr. Nilesh Kumar moved a miscellaneous application, being I.A. No. 215/2015, before the DRT seeking permission to redeem the mortgaged property of the guarantor/mortgagor Company, the appellant herein, claiming itself to be the owner thereof. It is the case of the appellant urged before me on behalf of the appellant Company at the time of hearing that even though the applicant Bank had pretended to oppose this application in its reply but as per the prior understanding between Mr. Nilesh Kumar and some Bank officials no objection was raised on behalf of the applicant Bank for the acceptance of the request of the borrower Company for redemption of the mortgaged property of the guarantor/mortgagor Company when on 13th May, 2015 the said application came to be taken up by the Presiding Officer. As noticed already, and as was urged before me on behalf of the appellant Company, even though the borrower Company had simply sought to redeem the property which was mortgaged by the appellant Company but the learned Presiding Officer instead of examining the position in law regarding redemption of mortgaged properties and whether DRTs have any role in the exercise of right of redemption by any mortgagor, himself converted the application into one seeking direction to the Bank to straightaway proceed to sell the property by way of a private treaty and not only that he in fact passed that direction which had not even been sought by the applicant/defendant No. 1 in the O.A. Thereafter, the mortgaged property of the guarantor/mortgagor Company was sold by the Bank to respondent No. 8 Company and with that sale, according to the case of the appellant Company, the big mission allegedly of the borrower Company under the management of Nilesh Kumar and the applicant Bank under the umbrella of the DRT's order came to be accomplished and the liability of the borrower Company came to be reduced by Rs. 1,38,00,000/- out of the total amount of almost four crores of rupees which had been claimed in the O.A. as the principal amount and the interest was also being claimed on that amount at the contractual rate which has been noticed already. The applicant Bank's case is that it had simply complied with the directions of the DRT even though earlier it had opposed the application of the borrower Company for redemption of the mortgaged property and that it was not concerned with the inter se disputes between the old and the new management of the borrower Company and for the recovery of its balance dues it will continue to prosecute its O.A. with full seriousness and pray before the DRT for passing of recovery certificate for the entire amount claimed in the O.A. and if passed steps will be taken for recoveries against all the parties found to be liable to make the payment to the Bank including the borrower Company even under the new management headed by Nilesh Kumar.
The averments made in I.A. No. 215/2015 which was supported by the affidavit of Mr. Nilesh Kumar, the new Managing Director of the borrower Company, are re-produced below before proceeding further:
"Application Under Section 19(25) of Recovery of Debts Due to Banks and Financial Institutions Act, 1993 on behalf of the defendant No. 1 for direction to the applicant Bank to allow the defendant No. 1 to redeem the property Bearing Nokhewat No. 9, Khatta No. 20 Min Killa No. 64/5/1(6-3), 5/2(1-7), 6/1(2-0) & 63/10/2(1-12), Village Pathreri, Near Bilaspur Chowk, Tehsil Meanesar, Distt. Gurgaon (Haryana):
That the aforesaid matter is listed today for filling of evidence by the defendants. That the defendant No. 1 received copy of the valuation of the mortgaged property sent by Bank 11.3.2015 and received on my mail.
That the defendant had approached Bank for one time settlement but due to lack of funds the same could not be honored and the same was declined by the Bank.
That the case is at initial stage and under the provisions of the Section 91 of the Transfer of Property Act, defendant wants to redeem the property bearing No. Khewat No. 9, Khatta No. 20 Min Killa No. 64/5/1(6-13), 5/2(1-7), 6/1 (2-0) and 63/10/2(1-12), Village Pathreri near Bilaspur Chowk, Tehsil Manesar, Distt. Gurgaon (Haryana).
That the valuation of the aforesaid property has been mentioned as Rs. 1,00,00,000/- as distress value and realizable value as 1,15,00,000/-
That the defendant wants to redeem the mortgaged property under provisions of the Transfer of Property Act, and requests this Hon'ble Tribunal to, direct the applicant Bank to file the valuation report before this Hon'ble Tribunal and allow the defendant No. 1 to pay the distress value as mentioned in the valuation report.
That the copy of the valuation report as received by the defendant from the Bank is hereby placed on record.
That the applicant will not be prejudiced in case the defendant No. 1 is permitted to redeem the mortgaged property under the provisions of the Transfer of Property, Act, 1882 (Amended) Act, 2002 (3 of 2003).
That the defendant No. 1 will suffer irreparable loss and injury in case the applicant is allowed to proceed further to sells the mortgaged property as the next step after valuation is to sell the property.
That in the view of above mentioned facts and circumstances the defendants request to this Hon'ble Tribunal that to allow him to redeem the mortgaged qua the property in question without prejudice to the rights and contentions of the defendants No. 1.
PRAYER
It is therefore most respectfully prayed that the applicant Bank be directed to place on record the valuation report and accept the amount equivalent to the distress value and release the title deeds of the property bearing No. Khewat No. No. 9, Khatta No. 20 Min Killa No. 64/5/1(6-13), 5/2(1-7), 6/1(2-0) & 63/10/2(1-12), Village Pathreri near Bilaspur Chowk, Tehsil Manesar, Distt. Gurgaon (Haryana) and permit the defendant No. 1 to get the aforesaid property redeemed;
Any other order or direction in the facts and circumstances of the case which this Hon'ble deems fit and proper be also passed.
Defendant No. 1
S.K. Tanwar"
The reply of the applicant Bank to that application of the borrower Company is also re-produced below:
"Reply for and on Behalf of Respondent No. 1 To the Application under Sections 22 and 19(25) Read with Order 6 Rule 17 for Amendment of Appeal:
The present application is not maintainable since filed beyond period of thirty days of gaining the knowledge. In the application for dismissal of appeal the respondent No. 1 has specifically pleaded that the copy of sale certificate has already been placed after supplying advance copy on the records of the Hon'ble DRT. The advance copy has since been served on the appellant through Counsel on 27.7.2015. The fact of knowledge has already been admitted as reflected in orders dated 30.7.2015. The present application by the appellant has apparently been preferred on 31.8.2015 or thereafter since advance copy was received at 4:27 p.m. which is beyond the normal filing time at this Hon'ble DRAT. The application therefore is beyond the period of limitation.
In any case the law is clear that the amendment would be applicable to the date of preferring the appeal i.e. on 2.6.2015. Again the sale certificate had already been issued on 1.6.2015. Without prejudice it is submitted that even for sake of arguments the present application is to be considered the mortgaged property had already been sold by the applicant Bank hence there is a complete severance so far as the mortgaged property is concerned.
It is a matter of fact that the defendant No. 5 was duly represented and impugned order was very much passed and was very much within the knowledge of the defendant No. 2. In the order except the objection of applicant Bank there is no opposition. The present appeal even if for sake of argument is allowed to be amended would still remain incompetent since preferred against a consent order.
The sale has therefore been affected validly by the applicant during subsistence of its valid charge on the mortgaged property.
The records of the O.A. would otherwise reveal that with active aid, advice and connivance of the defendant No. 6 during subsistence of charge of respondent No. 1 the documents relating to secured asset as referred to in Para 7 of the O.A. At page 38 of the present paper book was released to the respondent No. 1. The respondent No. 2 i.e. Mr. Alok Banerjee being the authorized signatory in the present appeal was also director of the defendant No. 1, the mortgager.
The O.A. is otherwise at the stage of addressing of final arguments. The records are complete. The documents relating to the mortgage as of passing of impugned order favouring respondent No. 1 already being proved by way of affidavit hence the applicant in the O.A. i.e. the respondent No. 1 herein, the Bank would have been issued R.C. and the final orders on the next date of 13.5.2015 i.e. 2.6.2015. It is worthwhile to note that the written statement of the appellant copy whereof available at Page 74 of the present paper book would clearly reveal that there is no opposition to the O.A. so far as the mortgage is concerned. Furthermore the respondent No. 5 has not lead any evidence in opposition of the evidence of the Bank in respect of charge by way of mortgage in favour of the Bank. Fact may be noted that defendant No. 5 i.e. that appellant herein is a limited company hence the defendant No. 5 has already passed resolution in respect of creation of charge by way of mortgage in favour of the Bank in respect of the property under reference herein.
PRAYER
In view of above premise it is therefore prayed that this Hon'ble Appellate Tribunal may be pleased to--
(1) Reject the prayer in the application,
(2) Dismiss the application
(3) Dismiss the appeal itself; and
(4) Any other and such further order(s), as this Hon'ble Tribunal may deem fit and proper in the facts and circumstances of the case in favour of respondent No. 1 and against the appellant.
Respondent No. 1
Through
Arvind Bhatnagar
Assistant General Manager
Constituted Attorney"
The grievance of the appellant Company is that the borrower Company in collusion with the Bank officials has been successful in selling the appellant Company's land without even it getting an opportunity to oppose the said move of Nilesh Kumar with whom the deal/agreement was that before getting the mortgaged property of the guarantor/mortgagor Company in Gurgaon he was to get the appellant Company as well as its three Directors, all of whom had given guarantee for the re-payment of the dues of the applicant Bank, discharged of their liabilities for which the applicant Bank had sued them also in its O.A. which he did not do even after receiving payment of Rs. 1.25 crores from the appellant Company and its three Directors and clandestinely managed to get their property sold and that too at a low price and has left all the four guarantors of the applicant Bank high and dry and left in this battle to continue to defend the Bank's balance outstanding dues which would still run into crores of rupees considering the fact that the rate of interest being charged by the Bank is unconscionably exorbitant and amount realised from the sale of the appellant's property is too small.
This appeal is being opposed by the Bank, the borrower Company through its new Managing Director Mr. Nilesh Kumar and the buyer of the property which has come to be sold by a private treaty, respondent No. 8 in the appeal.
As far as the Bank is concerned its stand is very simple that despite the fact the borrower Company had simply asked for permission of the DRT to redeem the property in question and not for any direction to the Bank to straightaway sell it without waiting for the final verdict of the DRT and that application was opposed by the Bank but since the Presiding Officer himself gave the direction to the Bank to sell the property and that too within fifteen days the Bank had no option but to comply with direction of the DRT and its decision not to challenge that order in appeal cannot be considered to be an act of collusion between the Bank officials and Mr. Nilesh Kumar.
The borrower company and the buyer, both of whom are the beneficiaries of the impugned order have opposed this appeal primarily on the ground that the appellant Company is putting before this Tribunal a distorted version of the agreement between it and Nilesh Kumar where under the management of the borrower Company was to get transferred to the new Group under the leadership of Nilesh Kumar inasmuch under that agreement all that was agreed to between the parties to that agreement was that the shareholding of the appellant Company as well as its Directors in the borrower Company will only be transferred to Nilesh Kumar and his Group and not that Nilesh Kumar had taken over the liabilities of the appellant Company and the Directors towards O.A. applicant Bank of Baroda. It is also the case now being projected by these respondents is that the appellant Company through one of its Directors, who was duly authorised by way of a Board resolution, had appointed Mr. Nilesh Kumar to act as its attorney in respect of its assets including the one which was mortgaged with the erstwhile The Benares State Bank of India (now Bank of Baroda) and, therefore, when Mr. Nilesh Kumar had moved I.A. No. 215/2015 before the DRT he was acting as the attorney of the appellant Company/mortgagor and the appellant Company cannot now permitted to contend that application at the instance of Mr. Nilesh Kumar was not maintainable. The further stand of these respondents is that the appellant Company had intentionally not disclosed to this Tribunal that it had executed a power of attorney in favour of Mr. Nilesh Kumar and which power of attorney it would not have executed if actually all its rights and interest in the property mortgaged by it had not stood transferred in favour of the borrower Company under the new management.
The learned Counsel for the appellant did not dispute either during the course of oral arguments as or in its written arguments, the execution of a power of attorney by the appellant Company in favour of Mr. Nilesh Kumar as was being claimed on behalf of the borrower Company. Its case is that Mr. Nilesh Kumar had not moved I.A. No. 215/2015 in his capacity as the attorney of the appellant Company (defendant No. 5 before the DRT) and, therefore, that application was not an application of the guarantor/mortgagor Company, appellant herein. After having crystallised the entire factual position which was considered to be relevant for the present purpose, I have come to form a prima facie view that appellant itself can be said to have, brought itself to a situation where its property has gone out of its hands. The impugned order was passed in the presence of its Counsel and at that time no objection appears to have been raised that such a course of action as was sought to be adopted by the borrower company was permissible in law. However, the question whether the DRT in an O.A. of a Bank can at the fag end of the proceedings direct the Bank to sell the mortgaged properties just because some private parties are willing to purchase the same without proceeding to finally dispose of the O.A. and passing a recovery certificate in favour of the Bank and requiring the Recovery Office to proceed to sell the mortgaged properties will need to be examined and answered. Because of the appellants' own conduct, as noticed above, its property has come to be sold, may be by way of a private treaty, and a third party has entered the scene who has also paid a huge amount of Rs. 1.38 crores to the Bank for purchasing the property mortgaged by the appellant company. In these circumstances, I am of the view that before proceeding further to finally decide the fate of this appeal, the appellant company should be directed to deposit with this Tribunal an amount of Rs. 1.38 crores which the private buyer has paid to the Bank to purchase the mortgaged property.
Accordingly the appellant is directed to make a deposit of Rs. 1.38 crores with this Tribunal in the form of a Bank draft in the name of Registrar, DRAT, Delhi, within a period of one week and thereafter further orders will be passed in the matter.
This matter shall now be taken up again on 6.6.2017.