Goldspin Industries Ltd. vs Canara Bank And Ors.

Ranjit Singh, J

The appellant is seeking to protect its rights on the basis of a tripartite agreement which it entered with M/s. Hudson Hoses Pvt. Ltd. and the Bank on 3.1.2003. As per this agreement, the property in question was to be sold and transferred in favour of the appellant on payment of Rs. 90 lac along with interest PLR from 17.3.2001. It was also agreed that Rs. 30 lac which stood paid would be adjusted in the amount Rs. 90 lac along with interest and the balance amount be paid on or before 30.1.2002. The appellant states that it had all bona fide intention to purchase the property, but learnt to its surprise that this property had been acquired by the Haryana Government and that this property was given to one M/s. Dunroll Industries Ltd. on long lease. There is one CBI case also in progress. When the Bank failed to clarify the queries raised in this behalf, the appellant did not deposit the remaining amount. In the meantime, on 20.10.2006, the Official Liquidator attached to the High Court of Delhi took over the total machinery belonging to M/s. Dunroll Industries Ltd. The property was also put to auction, being mortgaged property, when the appellant approached the R.O. with the objection on the basis of agreement among the appellant, the borrower and the Bank.

The appellant would also state that on the one hand the Bank was opposing the appellant before the Tribunal below, but, at the same time, was approaching it by giving a fresh proposal reducing the balance amount to Rs. 45 lac. The appellant though was ready with this amount, but the Bank failed to honour the commitment and ultimately took possession of the Property on 30.1.2009 under Section 13(4) of the SARFAESI Act. Aggrieved against this action, the appellant filed S.A. before the DRT-I. Chandigarh, praying for restoration of its possession. This application has been dismissed, which order is now impugned in the present appeal.

During the course of hearing, it was revealed that subsequently another OTS came to be sanctioned on 5.7.2014 for a sum of Rs. 250 lac and accordingly the prayer by the appellant to restore the possession on the basis of an OTS which was based on agreement entered into in the year 2003 was opposed. It is also on record that this OTS too lapsed as the parties did not comply with its terms.

The Counsel for the appellant would submit that the Bank had entered into this subsequent settlement to frustrate the right of the appellant when it was given time to have instructions if the appellant was ready to pay a sum of Rs. 250 lac. Indeed, while hearing the appeal an option was given to the appellant to seek instruction if it was ready to match the settlement amount reached between the Bank and the borrower which was for a sum of Rs. 250 lac. Once there was settlement for Rs. 250 lac, the prayer by the appellant requiring the Bank to adhere to the terms of the settlement which the appellant could not comply was a plea which was unacceptable being highly unreasonable and unjust. The option was given to the appellant to match the amount of Rs. 250 lac to see its bona fides. The appellant had expressed its willingness to pay an amount of Rs. 250 lac on the conditions that the sum of Rs. 30 lac earlier deposited by it be also accounted for towards the discharge of the liability of the settlement amount.

The Counsel for the Bank had rightly and justifiably pointed out that the OTS proposal which the appellant has agreed to match stood cancelled and in case the appellant is now interested in getting the property, it may have to discharge the liability by paying the full decretal amount. Appreciating this counter submission made in this case, this Tribunal considered it appropriate to permit the Bank to proceed ahead to realize the amount in accordance with law. The Bank was even permitted to sell the property in public auction and intimate the result thereof to the Tribunal to see if the appellant was prepared to match the same or to offer more amount than what was offered by the higher bidder in the said auction. The rights of the borrower was also protected and it was also given opportunity to bring a better buyer if it had one who would be ready to offer more amount than what the property would fetch in the public auction. Confirmation of sale was made subject to the further order to be passed by this Tribunal.

The borrower (respondent No. 3) even had filed an application for review of this order passed by this Tribunal. This application has been rejected by passing a detailed order. The applicant had also sought permission to approach the Bank for one-time settlement, which prayer was disposed of by observing that the applicant or appellant may take any action considered appropriate in this regard.

The Counsel for the Bank submits that so far the Bank has not been able to put the property to auction and has accordingly prayed for some more time to proceed in accordance with law to effect recovery in this case by putting the property to auction.

The situation as on this date would show that the property is being put to auction. The auction can fetch proper and real value of the property only if there is no restraint on the right of the Bank to auction the property. The order requiring confirmation of sale being subject to further order of this Tribunal may act as deterrent or inhibition for any bidder who may come forward to make a bid. If the present appeal is kept pending, it may definitely have a dampening effect on the auction on the ground that the offer made by the bidder would be subject to the right of the appellant to make a further offer.

The appellant, in my view, does not seem to be having any legal right to agitate or to prosecute the present appeal. It has approached this Tribunal against an order whereby its prayer for handing over the possession of the property has been declined. Its plea that it could not make further payment on account of some clout on the property would not give him right to make its claim survive on the basis of tripartite agreement for perpetuity.

Appellant is basing its claim on an agreement which is of 2003 vintage. Such a state agreement would loose its significance and meaning when the appellant failed to stand by its commitments. We are now in the year 2015. If there is some clout in the property, then the appellant could not have been still keen to bid for or to retain the property. It is for the appellant to consider if it is still interested in having the property. Once it has shown its keenness by filing the present appeal, it would obviously indicate that its plea that it could not comply with the terms of the tripartite agreement due to some clout on the property is certainly unacceptable. Subsequently, the Bank had entered into an OTS with the borrower for Rs. 250 lac and in this background it would be highly unfair to consider the plea of the appellant who was to get this property only on payment of Rs. 60 lac. If the right of the appellant is made to survive, the sufferer would be the borrower. The Tribunal is otherwise also required to ensure that the property fetches maximum price in order to maximize the recovery, which would be in the interest of the borrower. If the appellant is still interested in purchasing the property, then the appellant is expected to and is required to participate in the open auction. The appellant cannot be given advantage of first having look at the maximum bid and then make its offer which may lead to unfair advantage to the appellant. Accordingly, no case is made out for granting relief to the appellant as claimed in the present appeal. The Counsel for the appellant at this stage seeks refund of the amount of Rs. 30 lac deposited by the appellant. The appellant would be at liberty to make any application in this regard before an appropriate forum to seek refund of the amount in accordance with law, if it is able to show that this amount belongs to the appellant.

The appeal is accordingly dismissed.