Deepak Mitra vs United Bank of India & Ors

R. D. Khare, Chairperson

Both the cases were reserved vide order dated 06.01.2023 on conclusion of the arguments by the counsel for the appellant.

The abovementioned appeals are being decided by this common order because the issues involved in both the cases are the same.

Both the appeals have been filed by the appellants under section 20 of the RDB Act, 1093 against the orders dated 10.05.2019 passed by the Presiding Officer DRT, Allahabad, by which the applications filed by the Respondent-Bank for withdrawal of the DRC No. 158/2013 and DRC No. 50/2013 against the defendants no. 2 to 5 were partly allowed by the Tribunal below.

The relevant facts of both the cases are that two original suits bearing No. 109/2002 and 116/2001 were filed by the respondent-Bank before the Tribunal below against the defendants including the appellants for recovery of its dues, which were allowed in toto along with future and pendentelite interest. Accordingly, the recovery certificates were issued separately and the same were registered as DRC No. 158/2013 and DRC No. 50/2009 before the Recovery Officer for execution.

It appears that the appellants approached the respondent-Bank and submitted One Time Settlement proposal for a consolidated sum of Rs. 5.00 crores against the aforesaid both the DRCs, which was approved/sanctioned by the Bank vide letter dated 28.12.2015 with certain conditions and pursuant to that, the entire amount has been deposited by the appellants.

It transpires that after receipt of OTS amount, the respondent-Bank filed two Misc. Applications bearing No. 342/2018 and No. 343/2018 on 27.03.2018 with prayer to withdraw the DRC proceedings only against the CDs No. 2 to 5 and continuing the DRC proceedings against the other CDs/JDs for recovery of the amount of Rs. 2,91,50,871/-and Rs. 8,70,15,914.10 plus further interest as mentioned in the abovementioned applications. The Tribunal below vide order impugned has allowed both the applications holding that the personal liability of only two directors/CDs namely Shri Ashok Mitra and Shri Deepak Mitra have been absolved. Being aggrieved by the said order impugned, the present appeals have been filed by the appellants with the prayer that the orders impugned may be set-aside and withdrawal applications filed by the respondent-Bank be allowed in toto.

Despite service of notice upon the respondent, no one has appeared on behalf of the respondent, therefore, the Bank was directed to be proceeded ex-parte vide order dated 16.08.2021.

Learned counsel for the appellant contends that the Bank had filed withdrawal application for withdrawing the proceedings before the Tribunal below against the CD No. 2 to 5, but the Tribunal below only allowed to withdrawal application pertaining to two CDs namely Shri Ashok Mitra and Shri Deepak mitra and disallowed the withdrawal application with regard to other three persons, for whom the withdrawal was also prayed for. Learned counsel for the appellant further contends that either the withdrawal application may be allowed in toto or dismissed in toto, but it cannot be allowed in part. In support of his contention, the learned counsel has relied upon a judgment passed by the Hon’ble Karnataka High Court in W.P, No. 116523 of 2019-Smt. Sonubai Vs. State Bank of Karnataka and Ors., decided on 14.09.2021.

Having heard the learned counsel for the appellant and considering the material available on record, there is no dispute that the Ex-directors of the company Shri Deepak Mitra and Shri Ashok Mitra had submitted one time settlement proposal dated 24.10.2013 for a consolidated sum of Rs. 5.00 crores against the dues of Maya Agro Product Ltd. and Mitra Prakashan Pvt. Ltd. which was approved and sanctioned by the respondent-Bank vide its letter dated 28.12.2015 with certain conditions as mentioned in annexure A to the said letter and the entire amount was paid by the appellants to the Bank.

The moot question in both the appeals is, as to whether the applications filed by the respondent-Bank for withdrawal of the recovery certificates against the CDs No. 2 to 5 were to be allowed in toto or in part? In this regard, the relevant document is Annexure ‘A’ to the OTS sanction letter dated 28.12.2015 issued by the Bank, which has been appended at page No. 32 and 33 of the memo of appeal. The important portion of the terms and conditions of the last para of Annexure ‘A’ of the said sanction letter is “since both the companies are under liquidation and have no legal status to enter into any OTS; the present proposal is entertained by the Bank with the aforesaid ex-directors of the company in their individual capacity with a condition that apart from the settled dues, if anything is received from the official liquidator, the same would be retained by the Bank”.

It is, thus, clear that after deposit of the settled amount of Rs. 5.00 crores by the defendants no. 3 & 4, there remains nothing to be recovered from the defendants No. 2 and 5 also except the amount to be recovered by the Official Liquidator from both the companies under liquidation. As such the respondent-Bank had rightly filed the applications before the Tribunal below for withdrawal of the DRC No. 158/2013 and DRC No. 50/13 against the defendants no. 2 to 5, but the Tribunal below has partly allowed the said applications, which is contrary to the terms and conditions of the compromise sanction letter dated 28.12.2015, as the terms and conditions settled between the appellant and the Bank is that “apart from the settled dues, if anything is received from the official liquidator, the same would be retained by the Bank”, meaning thereby, the respondent-bank is entitled to receive the amount only from the official liquidator and not from the directors/guarantors i.e. defendants No. 2 to 5.

In view of the above, the order impugned is set-aside to the extent of disallowing the application for withdrawal of DRCs against the defendants no. 2 & 5. Accordingly both the appeals filed by the appellants are allowed. Consequently, the misc. applications filed by the respondent-Bank for withdrawal of the DRC No. 158/2013 and DRC No. 50/2013 are allowed in toto and the defendants no. 2 and 5 have also been absolved from their personal guarantee and liability against the said DRCs.