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Judgment
Shampa Sarkar, J
The revisional application has been filed by the Bank being aggrieved by the order dated February 14, 2018 passed in Appeal No. 80 of 2016 by the Learned Debts Recovery Appellate Tribunal arising out of order dated September 20, 2016 passed in Claim Petition No. OA 104 of 2016 by the learned Debts Recovery Tribunal at Kolkata DRT-III (hereinafter referred to as DRT-III).
The petitioner, filed an application under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as the said Act) before the Learned DRT-III, against the opposite parties seeking, to recover a sum of Rs.1,80,32,125.50 (Rupees One Crore Eighty Lakh Thirty Two Thousand One Hundred Twenty Five and Paisa Fifty) only along with interest @14.25% per annum on and from December 12, 2015.
The claim carried by the petitioner in the original application arose out of a loan sanctioned and disbursed by the petitioner at the request/instance of the principal borrowers, who were impleaded as defendant/opposite parties nos.1 to 4. The defendant/opposite party no.5 had stood as a guarantor guaranteeing repayment of such loan.
The loan forming the subject matter of the original application was availed by the principal borrowers in order to purchase an office space and also six car parking spaces from the defendant no.6/opposite party no.6.
In order to ensure that the relevant property was duly mortgaged to the petitioner for securing repayment of the loan, a quadripartite agreement was executed on June 29, 2011, which was consciously entered into by, inter alia, the defendant no.6.
Under the quadripartite agreement executed on June 29, 2001, the defendant/respondent no.6 was put under an obligation not to sell, transfer, convey, alienate or dispose of and not to otherwise deal with or encumber the property-in-question or any portion thereof without a prior written consent from the petitioner.
It was alleged in the application that without a prior written approval from the petitioner bank, the defendant/opposite party no.6 surreptitiously sold and transferred the property-in-question to an undisclosed third party purchaser behind the back of the petitioner. The sale was conducted by the defendant/opposite party no.6 in a clandestine manner without any information to the petitioner.
It was further alleged that the loan amount was sanctioned and disbursed by the petitioner for the specific purpose of purchase of the property-in-question from the defendant/opposite party no.6 by the principal borrowers. The loan amount made over by the petitioner to the opposite party no.6 was only on its specific undertaking not to sell the property to any other person without a prior written consent from the bank. According to the petitioner the defendant/opposite party no.6 was not at all authorized to sell the property or any portion thereof to anyone other than the principal borrowers. The petitioner also filed a complaint dated February 2, 2016 before the Indian Banks Association alleging such fraud.
The opposite party No.6 filed an application before the DRT-III for deletion of its name from the original application and alternatively for cancellation of the afore-mentioned letter upon it securing the loan.
The main grievance of the petitioner in this application is that the presiding officer of Debts Recovery Tribunal-III and the Chairman, Debts Recovery Appellate Tribunal at Kolkata, committed error of jurisdiction. It was submitted that the DRT-III erred in passing the order dated September 20, 2016 on the application of the opposite party No.6 directing the letter of complaint dated February 2, 2016 issued by the Bank to the Indian Banks Association to be withdrawn and/or treated to be withdrawn, if the opposite party no. 6 secured an amount of Rs.1.50 crores which was to be kept in a separate interest bearing account. It is the contention of the petitioner that the power of the Tribunal was confined to the provision of Section 17 of the said Act and not beyond the scope of that section.
The petitioner referred to the preamble to the said Act which was promulgated to provide for establishment of a tribunal for expeditious adjudication and recovery of debts due to banks and financial institutions. According to the petitioner the jurisdiction of the Tribunal, DRT-III was confined to exercise of powers and jurisdiction to entertain and decide the applications filed by banks and other financial institutions for recovery of dues of those the banks and financial institutions.
It is argued that when a bank or financial institution had to recover a debt from any person, it could make an application before the Tribunal. It is, further, argued that although the Tribunal had the power to make such order and give such directions as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure the ends of justice yet, the Tribunal did not have the power to direct or to pass a mandatory order treating the letter dated February 2, 2016 written by the Bank to the Indian Banks Association in terms of the guide lines of the Reserve Bank of India as withdrawn.
The learned advocate for the petitioner relies on an unreported decision of the Hon'ble Apex Court in the matter of Standard Chartered Bank - vs- Dharminder Bhohi & Ors., passed in a Civil Appeal No. 8486 of 2013. In the said decision it has been held that the power of the Tribunal was restricted to the four corners of the statute. In this case it is submitted that the Tribunal had exceeded its jurisdiction by passing an order treating the letter dated February 2, 2016 as withdrawn, inasmuch as, the said letter did not have any bearing in the proceedings before the Tribunal. It is urged that the Appellate Tribunal erred in law by upholding the said order on the ground that Rs.1.50 crores had been paid to the petitioner bank and the property was secured, being under a Receiver.
The learned advocate for the opposite party no. 6 submits that the letter dated February 2, 2016 was not issued in terms of the RBI guidelines. No opportunity of hearing was given to the said opposite party. There was no decision on the issue of fraud as alleged. Although it was alleged that the opposite party no. 6 had perpetrated the fraud in the entire transaction especially by acting in breach of the quadripartite agreement, the same was not proved and no opportunity was given to the opposite party No.6 before by the bank to rebut such allegation.
He has relied on the decision of the Hon'ble Apex Court in the matter of B.S.N. Joshi & Sons Ltd. vs. Nair Coal Services Ltd. and others, reported in (2006) 11 SCC 548. He has submitted that unless and until the opposite party no. 6 was given an opportunity of hearing and an order was passed holding the said opposite party to be guilty of fraud, the question of issuing the letter dated February 2, 2016 did not arise. He further relies on the decisions of this Court in the matter of Kingfisher Airlines Limited v. Union of India, reported in 2014 SCC Online Cal 19873, where the same principle was reiterated. He further relied on a decision of the Hon'ble Madras High Court in the matter of ICICI Bank Limited v. The Debts Recovery Appellate Tribunal, reported in 2011 (6) CTC 70, and submits that that the Debt Recovery Tribunal in order to secure the ends of justice had the power even to impound a passport and as such the order of DRT- III did not suffer from any illegality as the Tribunal has passed the order balancing the convenience of bothsides. He further submitted that the allegation of fraud was baseless as the loan was secured by his client.
Admittedly the Debt Recovery Tribunal derives its power from the statute and the powers and procedures have been prescribed under Sections 17 and 19 of the said Act. Prima facie I find that Section 19 (25) cannot be interpreted, to mean that the Tribunal had the power to decide on issues beyond what had fallen for adjudication under Section 17 of the said Act. It is also seen that the Tribunal had disposed of the application filed by the opposite party no. 6 by passing an order in the nature of a final relief thereby treating the letter dated February 2, 2016 as withdrawn.
It is also true that the application filed by the opposite party no. 6 praying for deletion of its name with a further prayer for cancellation of the letter dated February 2, 2016 upon securing the amount has been disposed of, which means that the question whether the tribunal had the authority to cancel and/or treat that letter as withdrawn was no more left for adjudication. This point was overlooked by the learned appellate tribunal.
The petitioner has made out an arguable case. The portion of the order dated September 20, 2019 by which the letter dated February 2, 2016 has been treated to be withdrawn by the DRT-III, and also upheld by the Appellate Tribunal will remain stayed for a period of three weeks from date.
Let this matter be listed in the daily supplementary list on November 29, 2019.
The learned advocate-on-record is directed to serve copies of this application by speed post with acknowledgement due on the other opposite parties during the course of this week and file affidavit-of-service on the next date.