Central Bank Of India vs Reena Gambhir And Ors

The appellant bank has filed the present appeal against the final order passed by the tribunal below(DRT) in the Original Application(O.A.) filed by the appellant bank under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993('RDDBFI Act' in short) for the recovery of over twenty crores of public money from its defaulting borrower Company, respondent no.2 herein, and guarantors/mortgagors, including the respondent no.1 herein.

The DRT has vide impugned order dated 17.12.2018 directed issuance of a recovery certificate against all the defendants in the O.A. except respondent no.1 herein who has been exonerated of the entire liability. It is the rejection of bank's case against respondent no.1 herein which has given rise to the present appeal at the instance of the lending bank. Other defendants in the O.A. have not challenged the final order passed against them.

The impugned order notices the factual background leading to the filing of the O.A. and, therefore, to avoid repetition of factual narration the relevant parts from the mpugned order are being re-produced below:-

"Central Bank of India (for short, the applicant bank) has filed the present Original Application (for brevity, the 0.A.) under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as the RDDBFI Act) with a prayer to issue Recovery Certificate for recovery of a sum of Rs.26,01,06,026/- (Rupees twenty six crores one lac six thousand twenty six only) alongwithpendente-lite and future interest at the base + @ 3.50% per annum with monthly rests from 11th March, 2015 till realization against the defendants, jointly and severally.

i. Defendant no.2, who was carrying on travelling business of operating luxury trains in India, including "Palace of Wheels", Deccan Oddssey, the Golden Chariot etc., under the name and style of M/s Luxury Holidays, had approached the applicant bank for grant of OD facility of Rs. 75 lacs vide application dated 9th January, 2012 against equitable mortgage of his residential Flat No.8410, Block C-8, VasantKunj, Delhi (for short, the flat in question) and considering the same, the applicant bank sanctioned the same vide its Sanction Letter dated 31st January, 2012............... Subsequently, at the request of defendant no.2. the applicant bank allowed enhancement of the OD limit to Rs.6 crores vide its sanction letter dated 13th September, 2012 against the primary security of the flat in question and accepting the terms and conditions of the said sanction letter by making an endorsement at the bottom, defendant no 2 executed various loaning and security documents in favour of the applicant bank on that very day and also extended the equitable mortgage already created in respect of the flat in question, which was duly entered in the Recital Registrar and also requested the applicant bank, vide his letter dated 14th September. 2012 to release the enhanced limit pending execution of the personal guarantee of his son Mr.RohenTrehan, who at that time was in Abroad and on coming back to India, Mr.RohenTrehan also executed Letter of Guarantee dated 29thSeptember, 2012 for Rs.6 crores alongwith the consent clause in favour of The applicant bank. The applicant bank further submits that defendant no.2 also submitted the report of Valuation of the Plant, Machinery and Networking equipment of Luxury Holidays given by GCA Technical Consultants dated 11thOctober, 2012 estimating the value of the same at Rs 270. 58 lacs.

ii. It is further the case of the applicant bank that on tne request of defendant no.2, who was also Managing Director of M/s Luxury Trains Pvt. Ltd./ defendant no.1, contained in his letter dated 23rd February. 2013. the applicant bank sanctioned the Working Capital Limit (ODBD) Limit of Rs.20.60 crores vide Sanction Letter dated 11thApril 2013 in favour of defendant no.1 Company..............................

....................................In order to avail the aforesaid facility of Rs.20.60 crores and to secure the interest of the applicant bank, defendant no.2, on behalf of defendant no.1 Company, had also executed various loaning and security documents in favour of the applicant bank and also re-deposited I reconfirmed the continuation of equitable mortgage already created in respect of his flat in question in favour of the applicant bank. Besides that, defendant no.5 also executed Deed of Corporate Guarantee on 31st May. 2013 in favour of the applicant bank and further that defendants no 2 to 4 and 6 to 9 had also furnished their personal guarantees on various dates in favour of the applicant bank to secure the said limit of Rs.20.60 crores. The applicant bank further submits that defendant no.1 Company wrote another letter on 11th September, 2013 informing it about the delay of CLU of Jaipur property and pending the same, defendant no.1 Company requested for release of the full limit of Rs.20.60 crores and for the interim measures, defendant no -1 Company had offered the security of the property situated at A-3. CC Colony, Opposite RanaPratapBagh, Delhi owned by defendant no 4 considering the request of defendant no.1, the applicant bank had agreed to this interim arrangement and accordingly to secure its interest. defendant no.4 created equitable mortgage of her properties viz. (i) one big shop on ground floor, measuring 41/2 x 161/2 square yards. part of building No.A-3 Block -A situated at CC Colony, Opposite Rana Pratap Bagh, Delhi in the name of Ms.KavitaGambhir, now known as Mrs.ReenaGambhir wife of Mr. Sanjay Gambhir, and (ii) Entire Mezzanine Floor between ground floor and 1st floor (without roof rights and with proportionate Freehold property bearing no.A-3. land measuring 134 square meter, situated at CC Colony, Opposite RanaPratapBagh, Delhi in the name of Ms.Reena Gambhir wife of Mr.SanjavGambhir, by depositing their original title deeds with the applicant bank and also two affidavits dated 4th October, 2013 in this regard.................

iii. It is further pleaded by the applicant bank that defendant no Company vide its letter dated 22ndNovember, 2013 requested to extend ad hoc limit of Rs.3 crores, but the applicant bank refused to accede to itsrequest and asked it to regularize its account, vide its letter dated 26thNovember, 2013. However, vide its letter dated 19th December, 2013 defendant no.1 Company intimated the applicant bank that CLU of the land at Jaipur was at its final stage and will be completed by 31' January, 2014 and further vide its letter dated 20th March, 2014 apologized for the financial indiscipline and assured to complete all formalities including the mortgage of land situated at village Kiratpur, Jaipur which belongs to defendant no 5 Company. ..........................................the applicant bank notified the account of defendant no.1 Company as NPA on June 30, 2014. However, defendant no.1 Company submitted a copyof the lease deed dated July 15, 2014 in respect of Kiratpur. Jaipur property compromising of khasra no.10 measuring 32490 sq. meters owned by defendant no.5 Company.

iv. The applicant bank further submits that all the promises and assurances made by the defendants proved to be false and, thus, leaving the applicant bank with no other option, but to proceed against the defendants under the provisions of the SARFAESI Act, 2002 ..............................................................................................

In her Written Statement, defendant no.4 Ms.Reena Gambhir has taken preliminary objections that the applicant bank does not have any claim against her because on expiry of period of 90 days from the creation of collateral securities, her personal surety and mortgages created by her, ipso -facto and ipso - jure came to be released with all contractual and legal consequences. It is further submitted that her personal surety and mortgage of the properties were strictly ad hoc in nature and constituted interim bridge securities on the basis of letter dated 11thSeptember, 2013 and acceptance of proposal contained in sanction letter dated 23rdSeptember, 2013. The officials of the applicant bank and defendant no.4 have defrauded her by including her creating her personal surety and mortgages being aware that the perfection of security qua land at Kiratpur, Jaipur would not be done within the contemplated period of 90 days The guarantee deed and collateral securities furnished by defendant no 4 were taken by the applicant bank in violation of the sanction letter dated 11thApril, 2013. Furthermore, the Agreements of guarantee and documents relating to mortgage were blank at the time of execution and further that one of the guarantee has been interpolated and manipulated as to be ante dated to 16thSeptember. 2013. Accordingly, it is submitted that the officials of the applicant bank are guilty of fraud, forgery and cheating. The answering defendant no.4 further submits that the applicant bank despite repeated requests made by her, illegally and dishonestly refused to release her personal surety and properties despite the request made by defendant no.3 about perfection of title of land at Kiratpur. Jaipur and the applicant bank proceeded to file the present O.A. against her. The applicant bank did not issue any communication or notice forewarning her about the credit facility slipping into the category of NPA and had she been timely informed, she would have taken appropriate steps to safeguards her legal and commercial interest. Since the alleged claim of the applicant bank does not constitute debt within the definition of Section 2(1)(g) of RDDBFI Act and the same emanates from fraud in which the officials of the applicant bank have actively participated, the same qua her is nullisjuris. She has further contended that the applicant bank has not complied with the ratio of the decision of Hon'ble Apex Court in the matter of Central Bank of India VsRavindra as the Statement of Accent filed by it is incomplete, vexatious and inflated. While replying on facts, it is submitted that on the request of her husband, the answering defendant no.4 had agreed to stand as personal surety and also created mortgage of her immovable properties mentioned above as an interim bridge / ad hoc security for a period of three months during which time defendant no.3 had assured that he would ensure perfection of the title of applicant bank as mortgagee in respect of the property at Jaipur. Denying all contra allegations made by the applicant bank in the present O.A., the answering defendants has totally denied the case of the applicant bank and has contended that the same is liable to be dismissed qua her with costs.

To substantiate its case, the applicant bank has filed evidence affidavitof Mr.Vijay Kumar Chawla, its Senior Manager, and has also exhibited documents as Exs.AW-1/1 to AW-1/92, AW-1/97 & AW-1/99 and has also marked documents AW-1 /16, AW-1167, AW-1/71 and AW-1/75 On the other hand, the only contesting defendant no 4 Ms.Reena Gambhir has filed her evidence affidavit and also exhibited documents as Exs.DW-4/8. DW-4/10 to DW-4/12, DW-4/15 and DW-4/16 and has also marked documents as DW-4/1 to DW-4/7, DW-4/9, DW-4112, DW-4/13 (colly), DW-4114, DW-4/17 and DW-4/18.

No the points for consideration are: (i) whether defendant no.4 entitled for exemption of her properties from interim mortgage with the applicant bank, as prayed for, and (ii) whether the applicant bank is entitled for recovery of the O.A. amount from defendants no.1 to 9, jointly and severally, as prayed for?

Point No.(i)

The contention of defendant no.4 is that she kept her properties: (i) one big shop on ground floor, measuring 4½ x 16½ square yards, part of building No.A-3. Block -A, situated at CC Colony, Opposite RanaPratapBagh. Delhi in the name of Ms.Kavita Gambhir, now known as Mrs.Reena Gambhir wife of Mr.Sanjay Gambhir, and (ii) Entire Mezzanine Floor between ground floor and 1stfloor (without roof rights and with proportionate Freehold property bearing no.A-3 land measuring 134 square meter, situated at CC Colony, Opposite Rana Pratap Bagh, Delhi - 110007 as an interim bridge /ad hoc security for a period of three months so that defendant no.3 would ensure perfection of title of the applicant bank in respect of the property at Jaipur. Basing on the aforesaid arrangement, defendant no.3 vide his letter dated 11thSeptember, 2013 informed the applicant bank that defendant no.4 had agreed for mortgaging her aforesaid properties only on ad hoc basis and as an interim bridge security and the applicant bank accepted the same vide its sanction letter dated 23rdSeptember, 2013 and on 4thOctober, 2013 she executed an Agreement of Guarantee and deposited original title deeds of her aforesaid properties. The contention of defendant no.4 is, thus, that both the arrangements are only stop-gap arrangement. It is further contended that theagreement of guarantee is interpolated by the officials of the applicant bank with antedate as 16th September, 2013 and it is inexplicable that the Agreement of Guarantee could have been executed by defendant no.4 prior to the issuance of sanction letter dated 23rd September, 2013. The interpolation and forgery would demonstrate that the officials of the applicant bank connived and colluded with defendant no.3 and perpetrated fraud upon her. It is further contended that defendant no.3 as also the officials of the applicant bank kept on assuring that defendant no.4 by the end of December, 2013 the collateral securities furnished by defendant no.4 would be discharged and released with all legal consequences, but to her utter shock defendant no.4 found that defendant no.3 did not perfect the security in respect of the property at Kiratpur, Jaipur and when despite several requests defendant no.3 and officials of the applicant bank did not release her collateral securities, she vide her letter dated 31st July, 2015 requested the applicant bank to release her properties, but the officials of the applicant bark did not accede to her request and even despite perfection of the title in respect of Kiratpur (Jaipur) property the applicant bank refused to release her properties surety as also the properties mortgaged by her She has further contended that she was utterly shocked and surprised when the applicant bank, vide its letter dated 18th September, 2014 / Or October. 2014 informed her that the credit facilities sanctioned to defendant no.1 Company had since been declared as NPA on 30th June, 2014. Thus, the main contention of defendant no.4 is that she stood as personal guarantor and created equitable mortgage only as a stopgap arrangement till the mortgage of Kiratpur. District Jaipur, property was made perfect and the applicant bank cannot make her liable for the debt and the present O.A. is liable to be dismissed against her and her personal guarantee and properties are liable to be released.

On the other hand, the contention of the applicant bank is that the borrower vide its letter dated 13thSeptember, 2013 informed it that the issuance of lease deed of their land at Kiratpur, Jaipur is likely to take some time and they offered as an interim bridging security of their close friend namely, Mr.SanjayGambhir and his wife Smt.Reena Gambhir / defendant no.4 and their son Mr.Karan Gambhir, the owners of property at A-3, Co Colony, Rana Pratap Bagh, Delhi and the applicant bank acceded to the request of the borrowers and modified the sanction letter to the extent that the properties as securities for the intervening period shall be released only after perfection of securities in respect of property situated at Kiratpur Jaipur. It is further contended that defendant no.4 accordingly provided the guarantee of her own in the account of defendant no.1 and mortgaged her properties to be released only upon perfection of the security in respect of the property situated at Kiratpur Jaipur. It is further the contention of the applicant bank that perfection of the security was only done by the defendants during the continuation of the loan and as account of defendant of defendant no.1 was classified as NPA, therefore, defendant no.4 is also liable to discharge her liability alongwith the other defendants.

From the above facts of the case, one thing is clear that the defendantno.4 executed her personal guarantee and created mortgage in respect of her abovementioned properties in favour of the applicant as stopgap arrangement for the credit facilities availed by defendant no.1 Company, till the mortgage property situated at Kiratpur, Jaipur, is made fully available.

Defendant no.4 has filed Sanction Letter dated 11thApril. 2013 as Mark DW- 4/A in respect of the loan sanctioned to M/s Luxury Trains Pvt. Ltd Letter Mark DW-4/2 filed by defendant no.4 clearly and categorically reveals that as an interim measure we are offering as "Interim Bridging Security"of a very close friend Mr. Sanjay Gambhir, his wife Smt. ReenaGambhir and his son Mr. Karan Gambhir whose property is situated at A-3, CC Colony Opp.RanaPratapBagh, New Delhi." This letter further provides that they were also wishing to reiterate that this is only an Interim Bridging Security and will have to be returned to our friends and also they all be released from their guarantees as soon as our Jaipur land is 'perfected' and you receive the lease deed from JDA for creating an equitable mortgage of the same Letter Mark DW-4/3 further provides that that "Branch Office to ensure creation of EM on the following properties after obtaining valuation report LSR before further disbursement:

• Shop in the name of Mrs.ReenaGambhir At - 3, Ground Floor Block A, situated at CC Colony, Opp. RanaPratapBagh. New Delhi, reportedly valued at about Rs.1.50 crore.

• Property at A-3. Mezzanine Floor, Block A, situated at CC Colony Opp. RanaPratapBagh, Delhi, reportedly valued at about Rs.2.50crore.

• Personal guarantee of Mrs, ReenaGambhir.

It is further stipulated in the said letter that the properties kept as securities for the intervening period shall be released only after perfection of securities in respect of property situated at Kiratpur, Rajasthan. It is further provided in this letter that the properties of defendant no.4 and her personal guarantee shall be released only after perfection of the security in respect of the property situated at Kiratpur, Jaipur, Rajasthan. Mark DW-4/4 is the guarantee agreement executed by defendant no.4, whereas Mark DW-4/6 is the sale deed for the property of defendant no.4. Ex.DW-4/8 is the letter addressed by defendant no.4 to the Assistant General Manager of the applicant bank for release of her properties, whereas Mark DW-4/9 is the copy of the letter written by M/s Luxury Trains / defendant no.1 Company addressed to the applicant bank for releasing the title deeds of the properties of defendant no 4 and personal guarantee executed by her as the patta has been finalized and defendant no.1 Company is ready to deposit the same in respect of Kiratpur (Jaipur) property. Ex.DW-4/11 is the notice dated 10th October 2014. whereas Ex.DW-4112 is the Possession Notice, Ex.DW-4/13 is the publication in the 'Statesman', Ex.DW-4/14 is the order passed by the learned Chief Metropolitan Magistrate appointing Receiver to take possession of the properties, Ex.DW-4/15 is the letter issued by the Receiver for handing over the possession, Ex.DW-4/16 is the letter issued by the applicant bank to defendant no.4 clearing mentioning therein by the applicant bank that it has received a Demand Draft of Rs.5 crores and papers of the property at Jaipur.

Defendant no.4 has also filed a document i.e. Form No CHG-1 vide Diary No.7992 dated 3rd August, 2018, from it is clear that the property relating to Jaipur i.e. Patta No.2639 issued by Jaipur Development Authority registered on 31stJuly, 2014 in favour of M/s Luxury Deluxe Hotels Pvt. Ltd. property situated at Khasra No.10, village Kiratpura. Tehsil Amer. District Jaipur, was mortgaged with the Central Bank of India and letter dated August 03, 2015 reveals that the property at Kiratpur. Jaipur was got demarcated Thus, the applicant bank has also accepted the mortgage of Kiratpur (Jaipur) property in its favour and the charge was also got registered with the Registrar of Companies. Hence, once the mortgage of Jaipur property is perfected, defendant no. 4 is entitled for release of her properties and guarantee.

Learned counsel for defendant no.4 has relied upon a judgment of the Hon'ble Apex Court in the matter of Bharati Cellular Limited Vs Union of India and others (2010) 10 Supreme Court Cases 174 wherein it has been held at Paras 8 & 9 as under:

"8. There is,inour opinion, no legal infirmity in the view taken by the Tribunal. Once the appellant-petitioner had specifically and unconditionally agreed to accept the migration package and given up all disputes relating to license agreement for the period to 31-7-1999, it was not open to it to turn around and agitate any such dispute after availing of the migration package. A party which has unconditionally accepted the package cannot after such acceptance rejects the conditions subject to which are benefits were extended to it under the package it cannot reject what is inconvenient and onerous while accepting what is beneficial to its interests. The package having been offered subject to the conditions that all disputes relating to the license agreement for the period ending 31.7.1999 shall stand abandoned by the operators, there was nop room for going back an that representation."

"9. Relying upon the decision of this Court in City MontessoriSchool Vs State of U.P., New Bihar Biri Leaves Co. Vs State of Bihar and R.N.Gosain Vs. YashpalDhir, this Court has in ShyamTelelink Ltd. Vs Union of India held that no one can approbate and reprobate and anyone who has accepted with full knowledge or notice of facts, benefits under a transaction which he might have rejected or contested, cannot question the transaction or take up an inconsistent position qua the same. We have said: (ShyamTelelink Case, SCC p.172 Para 23)

"23. The maximum qui approbat non reprobat (one who approbates cannot reprobate) is firmly embodied in English common law and often applied by courts in this Country It is akin to the doctrine of benefits and burdens which at its most basiclevel provides that a person taking advantage under an instrumentwhich both grants a benefit and imposes a burden cannot take theformer without complying with the latter. A person cannotapprobate or reprobate or accept and reject the same instrument".

Learned counsel for defendant no.4 has also relied upon a decision of the Hon'ble Apex Court in the matter of PratimaChowdhuryVsKalpana Mukherjee and another, (2014) 4 Supreme Court Cases 196 wherein it has been held as under:

"It needs to be understood that the rule of estoppel is a doctrine based on fairness. It postulates the exclusion of the truth of the matter. All for the sake of fairness. A perusal of Section 115 of the Evidence Act, 1872 reveals four salient preconditions before invoking the rule of estoppels:

I. Firstly , one party should make a factual representation to the other party;

II. Secondly, the other party should accept and rely upon the aforesaid factual representation,

III. Thirdly, having relied on the aforesaid factual representation, the second party should alter his position;

IV. Fourthly, the instant altering of position, shouldbe such, that it would be iniquitous to require him to revert back to the original position.

Therefore, the doctrine of estoppel would apply only when, based on a representation by the first party, the second party alters his position, in such manner, that it would be unfair to restore the initial position.

None of the ingredients of the principle of estoppels contained in Section 115 of the Evidence Act, can be stated to have been satisfied in the facts and circumstances of this case. Herein, the first party (appellant) has made no representation, The second party (respondent) has therefore not accepted any representation made to her. Furthermore, the second party has not acted in any manner, nor has the second party altered her position. Therefore, the question whether the restoration of the original position would be iniquitous or unfair does not arise at all. Even if consideration had passed from respondent to the appellant, on the bass of the representation made by the appellant, it could be accepted that the respondent had altered her position. However-, in the present case, no consideration had passed in lieu of the transfer of the flat in question from the respondent to the appellant. Therefore, the principle of estoppel relied upon by the Cooperative Tribunal and the High Courtcould not have been invoked to the detriment of the appellant in the facts and circumstances of the present case ".

In the instant case, the applicant bank itself has admitted the acceptance of the security of the property at Kiratpur, Jaipur, and got it registered with the Registrar of Companies, now it cannot contend that there is no and security over the property at Kiratpur, Jaipur, and. as such, defendant no.4 shall not be liable in view of the law laid down by the Hon'ble Apex Court in the above cited authoritative pronouncements.

In view of the aforesaid facts and circumstances and also the fact that there is perfection over the immovable property bearing Khasra No.10 Kiratpur (Jaipur), and the charge over it also registered with the Registrar of Companies, I am of the considered opinion that the personal guarantee and the mortgage created by her over her abovementioned properties stood discharged and no recovery can be directed to be made from her.

In view of the above discussion, point no.(i) is answering in favour of defendant no.4 and against the applicant bank.

Point no.(ii)

Since defendants no.1 to 3 & 5 to 9 have not contested the claim of the applicant bank and the cogent as well as convincing oral and documentary evidence, which consists of deposition in the form of evidence affidavit of Mr.Vijay Kumar Chawla, Senior Manager of the applicant bank and various loaning and security documents Exs.AW-1/1 to AW-1/92 AW-1197 & AW-1/99 and marked as AW-1/16, AW-1/67, AW-1/71 and AW-1/75, led by the applicant bank against them, has gone unchallenged and un-rebutted, therefore, it is held that the case of the applicant bank against them stands fully established and applicant bank is entitled to recover the 0 A. amount from them jointly and severally. Consequently, this point no.(ii) is answered in favour of the applicant bank and against the said defendants no 1 to 3 &5 to 9.

In the result

i. The O.A. is allowed with costs. The applicant bank is heldentitled to recover a sum of a sum of Rs.26,01,06,026/- (Rupees twenty six crores one lac six thousand twenty six only) alongwith future interest @ 12% per annum from the date of filing of the present O.A. till realization from defendants no.1 to 3 & 5 to 9 jointly and severally. The said defendants are directed to pay the decretal amount to the applicant bank, failing which the same shall be recovered by sale of the mortgaged properties i.e.flat in question bearing No.8410, Category No. II, Sector C, Pocket - 8, VasantKunj, New Delhi - 110070 and the property measuring 32490 square meters comprising in Khasra No.10 situated at village Kiratpur, TehsilAmer, Panchayat Kant, District Jaipur (Rajasthan). In case of any shortfall, the same shall be recovered from the personal movable and immovable assets of defendants no.1 to 3 and 5 to 9, jointly. and / or severally. The present O.A. against defendant no.4 is hereby dismissed."

The lending bank has only felt aggrieved by the said order of the learned DRT but only to the extent respondent no.1 herein has been totally exonerated of the bank's claim in its O.A. in which a joint and several recovery certificate was prayed for against all the defendants impleaded therein including the respondent no.1 herein. None of the defendants has challenged the final impugned order of the learned DRT.

I have heard the counsel for the appellant Mr. Yogesh Pachauri and Mr. Pallav Saxena, learned counsel for respondent no.1 who alone are the main parties interested in the outcome of this appeal. Written arguments have also been submitted on behalf of respondent no.1 Reena Gambhir. Relevant records which were made available to me digitally to avoid physical handling of the files in these days of Covid-19 when I am holding virtual hearings from my residential office, have also been considered.

From the aforesaid narration and the submissions advanced from both sides and the record of the case the position which emerges is that from the year 2012 the appellant bank had been showering the respondent no.2 Company 'public money' of crores of rupees and virtually without any security to ensure the same was repaid in time. Initially in the year 2012 the loan of a very small amount of Rs.75 lacs was sanctioned in favour of respondent no.2 Company under the control and management of respondent no.3 Sajivve Trehaan. However, in August, 2012 suddenly the financial facility(public money) was enhanced to six crores on the security of residential flat in Vasant Kunj, New Delhi. Showering of 'public money' upon the said borrower Company did not stop and in February, 2013 the appellant bank enhanced the limit of financial facility to whopping sum of over twenty crores of rupees(Working Capital Limit) and shockingly without ensuring the 'public interest' by taking sufficient security which in routine every bank obtains even from a poor borrower of very small amount. Though the borrower Company was supposed to offer security in the form of mortgage of a huge piece of land somewhere in Kiratpur, District Jaipur in the State of Rajasthan which respondent no.5 herein M/s Luxury Deluxe Hotels Ltd. it was trying to get on lease but that property could not be offered as security since its case of conversion of land use was pending before the Jaipur Development Authority(JDA). At that time the respondent no.1 herein stepped in to the picture and came forward to offer her two properties in Delhi, which the DRT has described in the impugned order as 'the properties in question' as security for the return of dues against the borrower Company when the loan facility was being sought to be enhanced to over twenty crores. The appellant bank quite surprisingly agreed to accept two small value properties of the respondent no.1, one of which was purchased by her in the year 2013 only for fortytfive lacs and the other one was purchased by her for Rs. 1,80,000/-, as security for return of loan of over twenty crores. There is nothing on record to justify such a step being taken by a public sector bank which has put huge amount of 'public money' in jeopardy. What was the tearing hurry in disbursing over twenty crores of 'public money' to respondent no.2 herein without waiting for the proposed mortgagor, respondent no.5, to create mortgage of its landed property in Kiratpur(Rajasthan). These kind of grant of financial held, virtually as an unsecured loan, normally would have attracted the attention of vigilance authorities but that also not to be so. Even after its dues running into crores of rupees having become almost unrecoverable the higher ups in the appellant bank do not appear to have woken up to look into the matter and find out why financial facilities were showered upon the borrower Company without securing the public interest and why a situation has arisen when the bank is struggling hard to recover its dues which by now must have shot up to over fifty crores. What steps are being taken even by the recovery officer to effect recovery of 'public money' covered under the recovery certificate issued by the DRT which seems to have remained on paper only. I now proceed further to examine the liability of the respondent no.1 herein towards the appellant bank with the hope that recovery officer at least takes the matter seriously and shows some positive results. Even the higher ups in the appellant bank will do well in holding in depth enquiry for grant of unsecured loans to persons who had no sufficient security to offer for securing the interest of the bank and return of 'public money'.

Let me now see as to what the learned Presiding Officer had seen in the records of the case while totally exonerating respondent no.1 Ms. Reena Gambhir despite the fact that she herself had categorically admitted that she did deposit with the bank title deeds in respect of her two properties in Delhi to create equitable mortgage to secure the repayment of loan money by her husband's friend's Company when the financial aid was showered upon that company to the tur of over twnty crores.

The respondent no.1 had admitted that she had mortgaged her two properties to secure the loan money which the appellant had advanced to respondent no.2. Her defence was that her liability as a guarantor/mortgagor was for a limited period of ninety days only and further that her guarantee was ad hoc and as a stop gap arrangement since the borrower company had assured the bank that within the period of ninety days it will perfect the security in the form of mortgage of landed property belonging to respondent no.5 herein. The case of respondent no.1, which has been accepted also by the learned DRT, was that her liability as a guarantor/mortgagor ceased after the expiry of ninety days period from 04.10.2013. However, the bank was not accepting that case of respondent no.1 herein and so it had initiated measures under SARFAESI Act and possession of the two mortgaged properties taken and then respondent no.1 had challenged the actions of the appellant bank before the DRT-III, Delhi by filing a petition under Section 17(1) of SARFAESI Act raising the same plea that her guarantee and mortgage of her properties was a stop gap arrangement meant to be operative for ninety days only. That plea was, however, rejected by the DRT-III vide order dated 15.05.2018 in S.A.No. 296/2015. There was thus no occasion for her to raise the same defence in the bank's O.A. and for the learned DRT to have accepted the same. In any event, even if it were to be accepted that findings of DRT in an S.A. were not binding in the O.A. proceedings, as was the submission made by Mr.Pallav Saxena, learned counsel for the respondent no.1, relying upon some orders of this very DRAT, I find no reason to accept the decision of the DRT in the bank's O.A. that respondent-defendant Reena Gambhir was not liable to pay anything to the appellant bank. The respondent no.1 had not placed on record any documentary evidence that she had herself informed the appellant bank before disbursal of enhanced loan that she was giving her guarantee and mortgaging her properties only as a stop gap arrangement for a maximum period of ninety days only. The bank had placed on record her guarantee deed which also did not have any clause that the guarantee period was only 90 days after the expiry of which period she was to stand discharged of all her liability towards the bank because of the failure of her husband's friend's company(borrower company). It was rightly contended by the learned counsel for the appellant bank that this was a cock and bull story scripted by respondent no.1 in collusion with her husband and his friend Sajjiv Trehaan to defraud the bank of crores of rupees.

It is, however, quite strange that despite the fact that appellant bank claims to have been cheated/defrauded no criminal proceedings have been initiated against any of the defendants by not lodging any FIR. There appears to have been an attempt on the part of the officials of the bank to protect the people who have allegedly defrauded the bank and is only pursing civil remedy which is always a long drawn battle. Learned counsel for the bank had no justification to offer for this lapse on the part of the bank officials. In such like cases when an FIR for cheating is lodged with the police by a bank then other investigating agencies also get activated and in that process recovery of public money also gets expedited.

Mr. Saxena had sought to strengthen his submissions from the sanction letter issued by the bank while enhancing the loan limits to Rs. 20.60 That letter shows that the borrower had offered to create mortgage of landed property in Kiratpur but since it had failed to create that mortgage the borrower had requested for release of the enhanced loan amount offering creation of mortgage of two properties of respondent no.1 as an interim bridging security and the bank had agreed to that proposal of Sajjive Trehaan and then had released the enhanced loan limit. However, this submission carries no weight since I have already observed that there is no document on record showing that before disbursement of enhanced loan money respondent no.1 had herself written to the bank that she was offering her properties as an interim and ad hoc arrangement for a period of ninety days. The letter dated 23.09.2013 relied upon by respondent and copy of which was placed on record of this appeal alongwith written submissions submitted digitally clearly showed that the properties of respondent njo.1 herein will be released only after creation of mortgage of landed property in Kiratnagar which undisputedly did not happen within the time granted to borrower Company. That showed that bank could very well effect some recovery of its dues from the properties mortgaged by respondent no.1. In fact, even in that letter of the bank it was not mentioned that her guarantee was being accepted only for ninety days. In any event, once she had created mortgages of her properties she could not later on and much after the expiry of period of ninety days turn around to say that she stood discharged as a guarantor/mortgagor without first clearing the bank's dues outstanding on the date when for the first time on 31st July,2014 she asked the bank to return her title documents. In that letter she had in fact blamed her husband's friend Sajjive Trehaan of not creating mortgage of Kiratpur property and helping her to have title deeds back. Thus, it is clear that the appellant bank was never at fault and unfair to the respondent no.1. She was in fact unfair in her dealing with the bank by not honouring her guarantee given by her to the bank subject to which enhanced loan money was released to her husband's friend and by claiming that the bank had accepted imperfect title. Much after getting crores of rupees released ito her husband's friend respondent no.1 had also started claiming that she was in fact not even full owner of the properties mortgaged by her and her title was not full as other members of her family had also shares in the mortgaged properties. That stand taken by her in fact shows that she had in fact defrauded the bank by getting loan limit enhanced for the borrower Company of her husband's friend and for that she has made herself liable to be prosecuted under criminal law but unfortunately the bank is not keen to take such a harsh step in order to expedite recovery of public money and also for the offence of perjury which she can be said to have committed in conspiracy with her husband and his friend Sajiive Trehaan by taking a stand in these proceedings that she had offered the properties in question as security to the bank even though she was not the exclusive owner thereof and some family disputes were there in respect of the shares in thiose properties. Her contention that the bank ought to have accepted security of Kiratpur land much after the period of ninety days sometime in August, 2015 cannot be a subject matter of debate in the present litigation where a secured creditor has been fighting legal battle against its defaulting borrower and guarantors since respondent no.1 is nobody to direct what bank ought to have done to secure its money. Here what is required to be seen nis whether the bank should have succeed in its battle against respondent no.1 also or not. I have no hesitation in concluding that the DRT was not justified in exonerating her completely.

I am also of the view that once the bank released the funds to the borrower Company upon creation of mortgages by respondent no.1 she could not say subsequently that even though the borrower had defaulted in repayment of loan money and its account having been declared as an NPA she was not liable to pay any money due as on the date of her writing to the bank for the first time for release of her properties from bank's charge. It was not disputed by the learned counsel for the respondent no.1 during the course of arguments that after disbursal of enhanced limit the suit amount was not outstanding in the borrower's loan account. Thus, respondent no.1 could not have avoided her liability even if the security created by her was by way of an interim arrangement.

Mr. Pallav Saxena, learned counsel for the respondent no.1 Saxena had also cited some judgments on the doctrine of estoppel and approbation and reprobation to support his submission that when finally the borrower company came forward to place at the disposal of the bank title documents in respect of landed property at Kiratpur as a security, may be it was much after the expiry of ninety days period and declaration of borrower's account as NPA, and the bank had taken on record the title deeds it could not have filed any recovery case against respondent no.1 as a guarantor because while sanctioning the enhanced limit the bank had agreed to release her of all liability and return the title documents upon perfection of the security of Kiratpur property. However, in the present case those judgments do not get attracted since the bank had not made any representation to respondent no.1 upon which she changed her position and on the contrary it was the bank which had changed its position to its disadvantage by releasing money after enhancement of loan to Rs. 20.60 crores upon the guarantee of Reena Gambhir and creation of mortgage and actually she can be said to be debarred from claiming her exoneration and discharge as a guarantor on the principle of estoppel. And even if the bank had accepted the title document in respect of Kiratpur property that would not absolve respondent no.1 of her liability which had already become due before that development and borrower's account stood declared as NPA. There is nothing on record to show that the bank had agreed to replace her security with any fresh security and had agreed to absolve her.

Alongwith written submissions counsel for respondent no.1 had filed copy of one letter written dated 10.09.2013 by respondent Sajivve Trehaan to the bank asking for an assurance that upon submission of title deed(patta) in respect of Kiratpur land the title documents in respect of the properties mortgaged by Ms. Reena Gambhir will be released and she would also be released as a guarantor and by which time the bank had already released funds after enhancement of the limit upon the guarantee of respondent no.1. That shows that even till that time when the period of ninety days for which period only she was accepting her position as a guarantor/mortgagor there was no fresh mortgage had been created and accepted by the bank in substitution of the guarantee of respondent no.1 herein which decision could be said to have absolved her. In fact respondent no.1 had herself agreed in the guarantee deed executed by her that she will not claim benefit of any provision in Contract Act which has the effect of her exoneration due to any act of the bank.

The learned DRT thus committed a grave error in dismissing the bank's O.A. against respondent no.1 herein. This appeal, therefore, deserves to be allowed and is hereby allowed. The impugned order dated 17.12.2018 passed by the DRT in O.A. No. 157/2015 completely exonerating the respondent no.1 herein Ms. Reena Gambhir of all the liability towards the appellant bank is set aside. Now, there shall be a recovery certificate against her also for the same amount as was issued against remaining respondents-defendants. There shall also be an order for the sale of the two properties in question mortgaged by her in favour of the bank, if not already sold under SARFAESI Act, in case the respondent no. 1 fails to clear the decretal amount within thirty days.

The DRT shall now draw a formal recovery certificate against respondent no.1 Ms. Reena Gambhir for a sum of Rs.26,01,06,026/- alongwith interest thereon @ 12% p.a. from the date of filing of the O.A. till realisation in full with a clause that in case the payment is not made within thirty days the same shall be recovered from the sale of her two mortgaged properties in Rana Pratap Bagh, Delhi.

A copy of this order will be collected by the bank's counsel for being placed before the Chairman of the bank to look into the afore- noted lapses and acts of commission/omission committed by bank's officials noticed by this Tribunal with grave concern because of huge amount of public money having been disbursed to respondent no.2 herein without obtaining sufficient security from the borrower. The Chairman will be at liberty to take any action in this regard albeit in accordance with law to dispel the impression that the borrowers in this case were shown special favours violating the norms fixed for sanction of loans which has put the bank as an institution in soup.

The recovery officer concerned attached to DRT-II, Delhi shall also take prompt action in executing the recovery certificates considering the fact that huge amount of public money is to be recovered which had become recoverable many years back.

A detailed report shall be submitted by the recovery officer within two weeks to his Presiding Officer, who is his supervisory authority also, as to why so far the recovery certificate could not be executed against the other certificate debtors against whom the final decision of the DRT has already attained finality and the learned Presiding Officer in turn will apprise this tribunal about the fate of the already issued recovery certificate and the present one being directed to be issued by the present order, upon receipt of the report from the recovery officer.