Canara Bank vs Sanjay Khanna

S.N.H. Zaidi, J

This appeal impugns the judgment and order dated 7.12.2010/13.12.2010 of the Presiding Officer of DRT-III, Delhi, whereby O.A. No. 202/2009 has been allowed only for Rs. 63,52,403/- against the claim of Rs. 1,16,77,731/-, together with pendente lite and future interest @ 10% per annum simple w.e.f. the date of filing of the O.A. till the final realisation. Briefly stated, the facts of the case are that the respondent had availed Open Cash Credit Limit of Rs. 75 lacs from the appellant-Bank after execution of loan documents and mortgage of his immovable property as collateral security in its favour. The respondent, however, could not maintain financial discipline and failed to repay the loan as a consequence thereof the loan account was declared by the Bank as Non Performing Asset (NPA) on 30.9.2006, showing an outstanding dues of Rs. 78,13,021/- as on 31.8.2006. A demand notice under Section 13(2) of the SARFAESI Act was issued to the respondent for the payment of the due amount which, however, was not complied with. The Bank, thereafter, took possession of the mortgaged property on 9.4.2007 and put it for sale through public auction and on 3.3.2009 it was sold. Since the sale consideration could not satisfy the entire outstanding dues of the Bank, therefore, O.A. No. 202/2009 was filed against the respondent before the DRT for the recovery of Rs. 1,16,77,731/- along with pendente lite and future interest. The notice of the O.A. was duly served upon the defendant/respondent, but he did not appear before the Tribunal below and, accordingly, the O.A. was heard ex parte against him. The Bank filed evidence in support of its O.A. which was partly adjudicated on 7.12.2010 when a portion of the order was dictated and thereafter on 13.12.2010 when it was finally disposed of by deciding the claim of the Bank only to the extent of Rs. 63,52,403/-, as stated above. Feeling aggrieved with that order, the Bank has assailed it in this appeal before this Tribunal.

Despite sufficient service of notice of appeal through publication in the newspaper, the respondent did not appear before this Tribunal and as such this appeal has also been heard ex parte in the absence of the respondent. I have heard Mr. J.P. Gupta, learned Counsel for the appellant and carefully gone through the record of the case.

As per the appellant's case, in the NPA amount of Rs. 78,13,021/- the interest amount calculated up to 31.8.2006 was included. Though the secured asset was sold in auction for Rs. 14.55 lacs but only an amount of Rs. 13,97,350/- was credited towards the outstanding dues, as an amount of Rs. 57,650/- was adjusted towards expenses incurred in effecting its sale and, thereafter, the O.A. was filed for the recovery of outstanding dues of Rs. 1,16,77,731/- on 14.7.2009. As per the memorandum of unrecovered interest (Annexure A-2) filed along with the O.A. (paper No. 63 of the appeal paper book), an amount of Rs. 55,89,515/-, including Rs. 5,58,940/- of penal interest, has been shown as unapplied interest w.e.f. 1.9.2006. The Hon'ble Supreme Court, in the case of Central Bank of India v. Ravindra & Ors., I (2002) BC 150 (SC) : VII (2001) SLT 400-IV (2001) CLT 127 (SC) : 2002 (1) SCC 367, has prohibited the capitalisation of the penal interest. The appellant has, however, not capitalized the penal interest and the amounts of interest and penal interest have been shown separately in the said Annexure A-2, which have, however, been claimed as recoverable from the respondent and the appellant Bank is entitled to the said amount. In Sub-para (2) of para 8 of the affidavit, filed by Mr. Ashok Kumar. Manager of the appellant-Bank, (Annexure A-5) it has been stated that the Bank was not to debit interest subsequent to the declaration of the loan account as NPA but due to change in the computer system certain debit entries of interest for Rs. 13,12,472/- were made from 31.5.2008 which require to be adjusted in the unapplied interest due on the respondent. After deducting the said amount, the total amount of interest due on the respondent, including the penal interest, comes to Rs. 42,77,043/- as on the date of filing of the O.A. A perusal of the entry dated 28.3.2009 of the statement of account (Annexure A-1) shows that the Bank had adjusted the amount of sale consideration of the mortgaged property amounting to Rs. 13,57,350/-. On adding the amount of interest of Rs. 42,77,043/- to the outstanding amount of Rs. 74,00,688/-, shown as such on 30.4.2009, the total amount due on the respondent comes to Rs. 1,16,77,731/- recovery whereof has been sought by the Bank in the O.A.

The order impugned does not show as to how the learned Tribunal below had arrived at the figure of Rs. 63,52,403/- as the amount due on the respondent which, according to the Presiding Officer, was the shortfall amount. The Tribunal below has not considered the evidence adduced before it by the appellant-Bank while determining the due amount in the order impugned and as such the amount determined by it cannot be allowed to sustain. The said figure being devoid of any support of evidence or material on record cannot be accepted. On the other hand, the figure of the outstanding amount as claimed by the appellant-Bank is supported by the evidence and the statement of account filed by it. The amount of Rs. 1,16,77,731/- is thus held to be due on the respondent at the time of filing of the O.A. and the respondent is held liable for the payment of the said amount, as claimed by the appellant.

So far as the pendente lite and future interest is concerned, the learned Tribunal below has awarded the same @ 10% per annum in exercise of its jurisdiction under Section 19(20) of the RDDBFI Act. It is the prerogative of the Tribunal below to award the interest as it thinks fit and proper. The pendente lite and future interest @ 10% per annum, as awarded by the Tribunal below, to my mind, appears to be reasonable and does not require any interference.

In view of above discussion, the appeal succeeds. The order impugned is liable to be set aside. The appeal is, accordingly, allowed and the order dated 7.12.2010/13.12.2009 is set aside and the O.A. filed by the Bank is allowed. The borrower/respondent is directed to pay Rs. 1,16,77,731/- to the appellant along with pendente lite and future interest @ 10% per annum with effect from the date of filing the O.A., i.e., 14.7.2009 till the date of payment in full. Until the realisation of the awarded amount, the immovable property of the respondent, as detailed in Schedule-B of the O.A., shall remain attached and shall be subject to the charge of the Bank for the recovery of its dues from the respondent. The Presiding Officer of the DRT concerned is directed to issue the Recovery Certificate accordingly. Copy of this order be furnished to the appellant and be sent to the DRT concerned forthwith.