Anindita Jena and Another vs General Manager and Another

C.R. Dash, J.—Subject matter of both the Writ Petitions being same, they are taken up together for disposal by this common order.

Flat No. 229, Block-C, Type-F, Second Floor, Rajendra Vihar, Forest Park, Bhubaneswar is the subject matter of both the Writ Petitions. Anindita Jena, Petitioner in W.P. (C) No. 3056 of 2008 (hereinafter referred to as "Petitioner in the first Writ Petition") is the auction purchaser of the aforesaid property. She having failed to comply with the conditions of sale, the bid amount deposited by her was forfeited. Captain Aditya Prasad Jagaty, Petitioner No. 1 in W.P. (C) No. 9186 of 2010 (hereinafter referred to as "Petitioner in the second Writ Petition") is the owner of the aforesaid property & Petitioner No. 2 is his wife & guarantor for the loan availed by said Captain Aditya Prasad Jagaty for purchase of the aforesaid property.

Petitioner in the second Writ Petition was working as Security Officer in Punjab & Sind Bank (hereinafter referred to as "Opp. Party Bank"). During such incumbency, he, on 23.06.1998 availed a housing loan from the Opp. Party Bank. Originally, loan of Rs. 5,00,000 (five lakhs) was disbursed in three phases. Two additional loans of Rs. 1,00,000 (one lakh) & Rs. 1,31,885 (one lakh thirty-one thousand eight hundred & eighty-five) were disbursed subsequently on 16.12.1999 & 05.02.2003 respectively. During his incumbency as Security Officer in the Opp. Party Bank, he repaid certain amount. Subsequently he resigned from service to pursue lucrative business avenues. He stopped repaying the loan, resulting in huge outstanding dues & classification of the debt as N.P.A.

The Opp. Party Bank initiated action u/s 13 of the Securitization & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (''SARFAESI Act'' for short). Necessary notice to that effect was published in the daily ''The Samaj'' dated 14.03.2007 inviting offers in sealed covers from intending buyers/bidders for purchasing the aforesaid property. In response to the aforesaid advertisement, the Petitioner in the first Writ Petition submitted her offer for the bid on 19.06.2007 enclosing Demand Draft amounting to Rs. 1,15,000 (one lakh fifteen thousand). Her offer for Rs. 13,00,000 (thirteen lakhs) for the aforesaid property being the highest, was accepted by the Opp. Party Bank & she was advised to deposit 25% of the bid amount less the Earnest Money already deposited within 48 hours with the Opp. Party Bank. On 06.07.2007 she deposited Rs. 2,10,000 (two lakhs ten thousand) with the Opp. Party Bank.

While matter stood thus, Petitioner in the first Writ Petition came to know that some tenants are still in possession of the suit property & the Petitioner in the second Writ Petition has preferred an appeal in the Debt Recovery Tribunal (''D.R.T.'' for short), Cuttack u/s 17 (1) of the SARFAESI Act, on being aggrieved by the action of the Opp. Party Bank u/s 13(2)(4) of the said Act. She (Petitioner in the first Writ Petition) became skeptical about the duration the actual delivery of possession may take & sought for certain clarifications from the Opp. Party Bank. She failed to deposit the remaining 75% of the bid amount in spite of the Opp. Party Bank''s communication & demand. Without clarifying the queries of the Petitioner in the first Writ Petition & without clarifying the nature of possession of the property in their hands, the Opp. Party Bank vide letter dated 17.09.2007 (Annexure-9) forfeited 25% of the bid amount already deposited by her (Petitioner in the first Writ Petition).

Petitioner in the first Writ Petition impugned the aforesaid Annexure-9 in W.P. (C) No. 12316 of 2007. The said Writ Petition was dismissed as withdrawn with the following observation :

Heard.

Since the Petitioner is withdrawing the Writ Petition, there is no need to issue notice to the Opp. Parties.

The Petitioner''s grievance is that he has deposited 25% of the bid amount towards the EMD in respect of item No. 1 of the sale notice dated 13.5.2007 vide Annexure-1. As the Petitioner has failed to deposit the balance amount within the stipulated period, the Bank has issued the letter dated 17.9.2007 forfeiting the EMD as per the conditions of sale.

In that view of the matter, we cannot & do not interfere with the said order passed by the Bank. The Petitioner is also willing to approach the Bank by filing a representation. As such, the Writ Petition is disposed of as withdrawn. Misc. Case No. 11466 of 2007 is also disposed of.

It is made clear that we do not express our opinion on the merits of this case.

Sd/-A.K. Ganguly (C.J.) Mahanty (J)

Pursuant to withdrawal of the aforesaid Writ Petition, the Petitioner in the first Writ Petition canvassed her grievance before the Opp. Party Bank vide her representations dated 26.10.2007, 23.11.2007 & 01.12.2007 & pleaded with the Opp. Party Bank to accept the remaining 75% of the bid amount, which she is agreeable to deposit. There was however no response from the Opp. Party Bank.

When the action under the SARFAESI Act failed, on failure by the Petitioner in the first Writ Petition, to deposit the bid amount, the Opp. Party Bank approached the D.R.T., Cuttack in O.A. No. 104 of 2008 for recovery of outstanding loan dues amounting to Rs. 11,48,686 (eleven lakhs forty-eight thousand six hundred & eighty-six) as on 31.03.2008 along with P.I. & F.I., cost, expenses, etc. till realization of the loan dues. The aforesaid O.A. was allowed on contest for a sum of Rs. 11,48,686 with S.I. '' 11 % per annum from 01.04.2008 till the date of realization, with cost, making both the Petitioners in the second Writ Petition jointly & severally liable to pay the said amount to the Opp. Party Bank. Subsequently, Recovery Certificate was prepared & Demand Notice was issued against the Petitioners in the second Writ Petition after hearing both the parties. The Petitioners in the second Writ Petition impugned the order passed by the D.R.T., Cuttack in O.A. No. 104 of 2008 before the Debt Recovery Appellate Tribunal, Calcutta (''D.R.A.T.'' for short) by preferring Application No. 72 of 2008, which is still pending.

In course of the proceedings under the provisions of The Recovery of Debts Due to Bank & Other Financial Institutions Act 1993 (''D.R.T. Act'' for short), the Opp. Party Bank had adjusted the P.F. & Gratuity amount payable to the Petitioner (in the second Writ Petition) towards the Over Draft facility the Petitioner had availed. In the petition filed by the Petitioners (in the second Writ Petition) before the D.R.A.T u/s 21 of the D.R.T. Act, the D.R.A.T. passed order directing the Petitioners to deposit Rs. 6,00,000 (six lakhs) by 30.11.2009. As the Petitioners in the second Writ Petition were short of resources then, they filed a Misc. Application before the D.R.A.T. for issuance of appropriate direction to the Opp. Party Bank to release the P.F amount in favour of the said Petitioners to enable them to make the deposit in compliance of the order passed u/s 21 of the D.R.T. Act. In the aforesaid Misc. Application, Petitioners have pointed out that though the Opp. Party Bank had taken an undertaking from the Petitioners to appropriate the P.F. & Gratuity amount due to Petitioner No. 1 to liquidate the outstanding dues on the housing loan account, the Opp. Party Bank however adjusted a major portion of the same towards the over-draft amount on 29.03.2007. In the aforesaid Misc. Application the Petitioners had further prayed for release of the entire P.F. amount of Rs. 5,58,180 (five lakhs fifty-eight thousand one hundred & eighty) in favour of the Petitioners so that the Petitioners can comply with the order passed by D.R.A.T. u/s 21 of the D.R.T. Act. The Petitioner however in partial compliance of the order passed u/s 21 of the D.R.T. Act, by the D.R.A.T. is stated to have already deposited Rs. 2,00,000 (two lakhs) in the meantime.

As the Misc. Application filed by the Petitioners before the D.R.A.T., Calcutta in Application No. 72 of 2008 was not taken up for irregular functioning of the D.R.A.T., the Petitioners in the second Writ Petition have moved this Court for appropriate direction/ directions to the Opp. Party Bank to return the P.F. & Gratuity amount to the Petitioners.

The grievance of the Petitioner in the first Writ Petition is forfeiture of 25% of the bid amount under Annexure-9. In the alternative, she has prayed for issuance of a direction to the Opp. Party Bank to accept the rest amount of the sale price & deliver vacant possession of the property in question.

Mr. Bijoy Mohanty, Learned Senior Counsel appearing for the Petitioner in the first Writ Petition, submits that the provisions of SARFAESI Act do not speak of taking of symbolic possession of the disputed property by the Bank & the Petitioner being not sure about the time frame by which delivery of possession could have been handed over to her & she having come to know about pendency of Appeal by the Petitioners in the second Writ Petition before the D.R.T. u/s 17(1) of the SARFAESI Act & she having not received the clarifications she had sought for from the Opp. Party Bank, she chose not to deposit the balance bid amount &, by doing so, she having acted bona fide, it was not proper, legal, authorized or justified on the part of the Opp. Party Bank to forfeit the 25% of the bid amount the Petitioner had deposited. He relies on the case of Transcore Vs. Union of India (UOI) and Another, to substantiate his contention.

Mr. G.K. Mohanty, Learned Counsel appearing for the Opp. Party Bank on the other hand submits that the Petitioner having failed to deposit the balance bid amount within the stipulated period, the Opp. Party Bank was constrained to issue the letter, vide Annexure-9, forfeiting the E.M.D. as per the conditions of sale. The Petitioner having dwelt under assumptive apprehension, has acted to her peril & the Opp. Party Bank being a public institution had no other option than to forfeit the deposited amount in accordance with the conditions of sale, when the Petitioner failed to deposit the balance bid amount. He also relies on the same decision of the Hon''ble Supreme Court, on which Learned senior Counsel appearing for the Petitioner relies.

The Petitioner in the second Writ Petition has mainly stressed on return of the P.F. & Gratuity amount, which the Opp. Party Bank has appropriated towards over-draft facility the Petitioner had availed. Mr. Amarjit Keshari Das, Learned Counsel appearing for the Opp. Party Bank, taking us through the counter affidavit filed, submits that the Petitioner is having three outstanding loans in the account of the Bank & all such loans having been declared as N.P. As., the Opp. Party Bank has the authority to attach & appropriate the P.F. & Gratuity amount payable to the Petitioner towards loan accounts of the Petitioner. In reply, Learned Counsel for the Petitioners submits that the Petitioners in the second Writ Petition are also agreeable to liquidate the entire loan amount if proper opportunity & time are granted to them.

Coming to the grievance of the Petitioner in the first Writ Petition, her grievance is based solely on taking over symbolic possession of the property in question by the Opp. Party Bank, which gave rise to apprehension in the mind of the Petitioner regarding the period that may take for actual delivery of possession & execution of sale letter, etc. To steer clear of her apprehension, she sought for clarification from the Bank officials, but in vain, & dwelling under such apprehension she chose not to deposit the balance amount. For violation of the conditions of sale, the Opp. Party Bank forfeited the amount already deposited. The Petitioner preferred W.P. (C) No. 12316 of 2007 but chose to withdraw the same with liberty to canvass her grievance before the Bank authorities. Subsequent to withdrawal of the Writ Petition, the Petitioner approached the Bank Authorities for acceptance of the balance bid amount, but in vain. In the Writ Petition the Petitioner has assailed forfeiture of the deposited bid amount & in the alternative she has sought for a direction to the Opp. Party Bank to accept the balance bid amount & deliver possession of the property in her favour.

Hon''ble Supreme Court in the case of Transcore (supra) dealt with the nature of possession of immovable property, as provided in Section 13(4) of the SARFAESI Act. It was contended before the Hon''ble Supreme Court that if physical possession of the properties is taken on expiry of 60 (sixty) days, as provided u/s 13(4) of the Act, the remedy of application u/s 17 of the SARFAESI Act by the borrower would become illusory & meaningless, as the borrower or the person in possession would be dispossessed even before adjudication of the Objections by the Tribunal. It was further contended that u/s 13 (8) of the Act, the Bank/Financial Institution is prevented from selling the secured assets, if the dues of the secured creditor with all costs, charges & expenses are tendered to the secured creditor at any time before the date fixed for sale. Hon''ble Supreme Court, took into consideration the relevant provisions of the SARFAESI Act & relevant Rules of the Security Interest (Enforcement) Rules, 2002 (''2002 Rules'' for short) & proceeded with the following conceptual aspect in mind :

The word possession is a relative concept. It is not an absolute concept. The dichotomy between symbolic & physical possession does not find place in the Act. As stated above, there is a conceptual distinction between securities by which the creditor obtains ownership of or interest in the property concerned (mortgages) & securities where the creditor obtains neither an interest in nor possession of the property but the property is appropriated to the satisfaction of the debt (charges). Basically, the N.P.A. Act deals with the former type of securities under which the secured creditor, namely, the Bank/FI obtains interest in the property concerned. It is for this reason that the N.P.A. Act ousts the intervention of the Courts /Tribunals. Discussing all the relevant provisions of the SARFAESI Act & the 2002 Rules, including position of a Receiver under Order 41, Rule 1, C.P.C. in relation to the property of which he is the receiver & that of the nature of possession of the property taken over by a Bank / FI u/s 13 of the Act, Hon''ble Supreme Court held thus :

In the circumstances, the drawing of dichotomy between symbolic & actual possession does not find place in the scheme of the N.P.A. Act read with the 2002 Rules.

If the word ''dichotomy'' as used by Hon''ble the Supreme Court is understood literally, it is to be understood that if there is dichotomy between the two things, there is a very great difference or opposition between them. The afore-quoted observation of Hon''ble Supreme Court is therefore clear to the effect that there is no very great difference or opposition between the symbolic & actual possession in the scheme of the SARFAESI Act.

Hon''ble Supreme Court, by discussing the relevant provisions of the SARFAESI Act & 2002 Rules & proceeding on the conceptual aspects quoted supra, held that there is no dichotomy or very great difference between symbolic & physical possession in the scheme of SARFAESI Act & 2002 Rules. The aforesaid decision cannot be read & stretched further in the line of argument advanced by Mr. Bijaya Mohanty, Learned Senior Counsel to mean that the Opp. Party Bank having taken symbolic possession in the present case, has committed an illegality & such an act is a nullity in the eyes of law justifying grant of relief, as claimed by the Petitioner. Admittedly, the Petitioner in the first Writ Petition, having failed to deposit the balance bid amount within the stipulated period, the Bank has issued the letter vide Annexure-9 forfeiting the amount deposited by the Petitioner as per the conditions of sale. We, therefore, find no justification to interfere with the matter.

Coming to the grievance of the Petitioners in the second Writ Petition, admittedly the matter is now subjudice before the D.R.A.T., Calcutta. This Court, vide interim Order Dated 20.05.2010 passed in Misc. Case No. 8917 of 2010, has issued direction to transfer the P.F. dues as well as Gratuity dues of the Petitioner, which has been adjusted against the Over-Draft Account to the Savings Bank Account of Petitioner No. 1 with a rider for both the parties not to draw/attach any amount from that account without leave of this Court.

The Opp. Party Bank has initiated action under the D.R.T. Act in respect of the housing loan availed by the Petitioners. O.A. No. 104 of 2008 which now is pending in appeal is in respect of the housing loan alone. Admittedly, both the Petitioners, vide letter dated 23.06.2008, had authorized the concerned Branch Manager of the Opp. Party Bank to appropriate the proceeds of P.F. /Gratuity amount of Petitioner No. 1 towards adjustment of the housing loan, if the same remains outstanding at the time of Petitioner No. 1''s retirement or resignation from service. Said letter was filed as Annexure-8 to the Original Application No. 104 of 2008 before the D.R.T., Cuttack, & the same has been filed as Annexure-3 to the present Writ Petition. The Petitioner vide Annexure-A to the counter affidavit, vide document executed on 02.12.2002, has authorized the Opp. Party Bank to appropriate the terminal benefits including the P.F., Pension, Gratuity, etc. towards the liability under the over-draft facility.

The grievance of the Petitioners being non-payment of P.F. & Gratuity dues, it is to be seen whether the Opp. Party Bank has the authority to attach the same for liquidation of the loan availed by the Petitioner. Hon''ble Supreme Court in the case of Delhi Cloth and General Mills Co., Ltd. Vs. Workmen and Others etc., , has defined Gratuity by holding that etymological meaning of the word ''Gratuity'' is a gift especially for services rendered or return for favour received but under Industrial Law it is now recognized as a legitimate claim, which the workers may make & which may give rise to an industrial dispute. The object of providing a Gratuity Scheme is to provide a retiring benefit to workmen, who have rendered long & unblemished service to the employer & thereby contributed to the prosperity of the employer. Further, in Balbir Kaur and Another Vs. Steel Authority of India Ltd. and Others, , Hon''ble Supreme Court held that the provident fund & gratuity etc. are rights of an employee under the provisions of Social Security Legislations & a person or his dependants cannot be deprived thereof. Section 10 of the Employees Provident Fund & Miscellaneous Provision Act, 1952 envisages protection against attachment of an employee''s provident fund & an employee would be entitled to payment of the same irrespective of any dues which might be recovered from him & due to the employer. The law on the point is so well settled that the amount admissible on account of provident fund dues is not a part of remuneration or wages arising out of a contract of employment but is a liability on the employer by virtue of the beneficial provisions of the Act & the Schemes envisaged thereunder. In view of the provisions of Section 10 of the aforesaid act, the amount standing in to the credit of any member of the fund cannot in any way be capable of being assigned or charged even by the employee himself. Almost same is the provisions of Section 13 of the Payment of Gratuity Act, 1972 which provides for exemption of gratuity amount payable to an employee from attachment in execution of any decree or order of any civil, criminal or revenue Court.

Learned Counsel for the Opp. Party Bank, in the counter affidavit filed & in course of his argument, has strenuously harped at assignment of the amount due to the Petitioners towards P.F. & Gratuity for appropriation towards liability under the over-draft facility as per Annexure-A to the counter affidavit. He has however not drawn out attention to any statutory authority with the Bank contrary to the law discussed supra, which would have invested the Opp. Party Bank to attach the P.F. & Gratuity amount due to the Petitioner No.1 for appropriation towards the over-draft facility he had availed.

Another peculiarity in the facts of the case & in the context of the discussion is that the Opp. Party Bank is the employer & Petitioner No.1 in the second Writ Petition is the employee. The gratuity & P.F. amount payable to the Petitioner No.1 is the entitlement of the said Petitioner, which the Opp. Party Bank is liable to pay being the employer. So far as the loan accounts outstanding against the Petitioner are concerned, the Opp. Party Bank is the creditor & the Petitioner is the debtor. The P.F. & gratuity amount payable to Petitioner No.1 has its bearing on the relationship between the Petitioner No.1 & the Opp. Party Bank as the employee & employer. The liability of Petitioner No.1, on the other hand, as the debtor arises out of relationship between the two as the debtor & creditor. The Opp. Party Bank being the creditor would have no authority to appropriate the gratuity & P.F. amount of Petitioner No.1 towards any outstanding loan even on the basis of assignment or charge created by him (Petitioner No.1), for that purpose had the employer of Petitioner No.1 been one other than the Opp. Party Bank because of the statutory bar under different social security legislations as discussed supra. On the same analogy, the Opp. Party Bank being the employer & the creditor in the present case could not have paid the P.F. & gratuity amount as the employer in its right hand to lay its left hand over the same being the creditor, leaving the hands of Petitioner No.1 blank in between. The Opp. Party Bank being the employer could not have adjusted its liability with the, liability of the Petitioner No.1 as a debtor of the Bank. Such adjustment of liabilities, if approved, shall strike at the very objectives of different social security legislations.

In view of the above & in view of the fact that in spite of the petition filed by the Petitioners before the D.R.A.T. for the aforesaid purpose, the same is still pending for irregular functioning of D.R.A.T. We feel persuaded to dispose of the Writ Petition by making the interim Order Dated 20.05.2010 passed in Misc. Case No. 8917 of 2010 absolute, giving further right to the Petitioner to withdraw the amount deposited in the S.B. Account of Petitioner No.1 towards his due for Gratuity & Provident Fund. The second Writ Petition, i.e., W.P.(C) No. 9186 of 2010 is accordingly disposed of.

So far as the first Writ Petition, i.e., W.P.(C) No. 3056 of 2008 is concerned, in view of our discussion supra & in view of our findings in papagraph-17 supra, we do not find any merit in the claim of the Petitioner, but the Petitioner having deposited 25% of the bid amount which has been forfeited by the Bank for her own laches, she shall be given opportunity to participate in the auction of the property if such auction takes placed, pursuant to the order of the D.R.T., Cuttack &, if she becomes successful in the bid, the Opp. Party Bank may, in its discretion, adjust the amount, already forfeited, towards the sale price of the property fixed in such auction. The Writ Petition, i.e., W.P. (C) No. 3056 of 2008 is disposed of with the aforesaid observation.

Both the Writ Petitions are accordingly disposed of.

L. MOHAPATRA, J.

I agree.