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Judgment
The appellants are fortunate as well as shrewd litigants. Fortunate because even though the respondent Bank had filed an Original Application No. 97/2011 against them under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act,1993 for recovery of Rs. 10,55,27,853/- because of their having defaulted in re-payment of huge amount of loan which was disbursed to them by the respondent Bank but because the appellants had offered to pay the amount which the Bank had claimed in its demand notice under Section 13(2) of SARFAESI Act the learned Presiding Officer of DRT-I had accepted that request of the appellants-defendants and had issued a recovery certificate for a sum of Rs.9,78,41,463/- with interest @ 11% p.a. against the contractual rate of 15.48% p.a. claimed in the O.A., which principal amount was almost a crore of rupees less than what the Bank had claimed in its O.A. The appellants were also fortunate that the Bank which had lent them crores of rupees had felt satisfied with the issuance of recovery certificate for an amount which was much less than the amount which it had claimed in the O.A.
The appellants are shrewd because after getting a favourable order from the DRT they started making attempts to see that they do not pay even the amount for which recovery certificate was issued by the DRT which, as noticed above, was for an amount which was less a crore of rupees less than the amount claimed by the O.A. applicant Bank. The appellants sought to give a ridiculous interpretation to the final order dated 12.05.2015 passed by the DRT in the Bank's O.A. in order to show that even though they had defaulted in making payments to the Bank in terms of the final order dated 12.05.2015 of the DRT they were still entitled to make the payment of the amount of Rs. 9,78,41,463/- and that too with the reduced rate of interest of 11% p.a. and not @ 15.48% p.a. which was to be payable only in case of default in payment of any one of the four instalments permitted by the DRT to liquidate the decretal amount. On this aspect fortunately neither the Recovery Officer nor the learned Presiding Officer could be persuaded by the appellants to accept their interpretation of the final order dated 12.05.2015 according to which interpretation recovery proceedings were started prematurely and till date the same are incompetent because of non compliance of an important direction of the DRT in its order dated 12.05.2015 by the CH Bank and disobedience of that direction even by the Recovery Officer. Now, they have filed this second appeal to try their luck.
The operative portion of the final order dated 12.05.2015 passed by the DRT in the O.A. of respondent Bank reads as under:-
"(i) The applicants/defendants herein are directed to pay a sum of Rs.9,78,41,463.00 alongwith pendentelite and future interest @11% p.a. w.e.f 01.05.2011 till its entire realization to the respondent FI in four equal quarterly instalments. The first instalment shall be paid within one month from the date of this order and remaining three instalments shall be paid quarterly
(ii) The amount of Rs.5.00 crores deposited by the applicants during the pendency of present proceedings be given due adjustment on the date of their deposit. The cost of litigation be also borne by the applicants/defendants. The applicant/respondent FI is also directed to provide a copy of revised statement of account to the applicants/defendants within 10 days from the date of this order.
(iii) It is made clear that time is the essence of granting relief of interest in the present matter. In case the applicants/ defendants herein failed to pay any single instalment within time, the applicant/respondent FI is held entitled to receive the entire amount as clamed by it in OA No.97/2011 i.e. Rs.10,55,27,853/- alongwith pendentelite and future interest at the rate of 15.48% p.a. from the date of filing of this O.A. till its realization.
(iv) In that eventuality, a Recovery Certificate be issued in favour of the applicant FI and the applicant FI is also held entitled to recover the entire dereetal amount from the sale of mortgaged/ hypothecated/ pledged assets and other personal movable and immovable assets of the defendants as mentioned in the present OA.
(v) A recovery certificate be issued forthwith for Rs.10,55,27,853/-alongwith pendentelite and future interest at the rate of 15.48% p.a. from the date of filing of this OA till its realization and be sent to the Recovery Officer, DRT-I, Delhi. However, the said Recovery Certificate be kept in abeyance in case the applicants/defendants herein deposits the amount within time as directed above.
(vi) Parties are directed to appear before the Recovery Officer, DRT-I, Delhi on 08.07.2015 to apprise the status of payment.
(vii) Copies of final order as well as Recovery Certificate be sent to all concerned free of cost. A copy of this order be also kept in both the files. Files be consigned to records."
A bare reading of this final paragraph of the final order of the DRT shows that it was a simple conclusion of the DRT that the defendants in the O.A. were required to pay to the applicant Bank a sum of Rs.9,78,41,463/- with interest thereon @ 11% p.a. in four quarterly instalments and the defendants were also held entitled to the adjustment of Rs. 5 crores which had been paid to the Bank during the pendency of the O.A. The recovery officer was directed not to proceed with recovery in case the defendants pay the decretal amount. Recovery proceedings were to proceed for recovery of the originally claimed amount with contractual rate of interest of 15.48% p.a. in case of default in payment of any one instalment. The defendants/ appellants undisputedly did not pay even the first instalment despite service of statutory demand notice dated 14.07.2015 under Rule 2 of the Rules framed under Second Schedule to the Income Tax Act. Consequently the recovery officer had moved ahead with recovery proceedings by putting the mortgaged assets to Bank after initiation of the recovery proceedings by the Recovery Officer. Not only that the appellants also submitted an OTS proposal to the Bank and the same was accepted also by the Bank but admittedly the appellants did not make payments as per the accepted OTS and that resulted in revocation of the acceptance of the OTS. Again the appellants submitted another OTS proposal dated 06.11.2017 and again the Bank accepted that proposal also vide its letter dated 09.11.2017 but the appellants did not adhere to the terms of that OTS also.
The appellants after having failed to abide the terms and conditions of the OTS submitted by them and accepted by the CH Bank during the pendency of the recovery proceedings then thought of approaching the learned Presiding Officer of the DRT with the hope of getting the entire recovery proceedings dropped and approached the Presiding Officer with one misconceived Miscellaneous Application No. 70/2018 for recall of the recovery certificate, direction to the Bank to comply with the final order dated 12.05.2015 by furnishing a correct statement of account which as per the order dated 12.05.2015 was to be furnished by the Bank within ten days of the passing of that order and also sought stay of further recovery proceedings. That application was, however, rejected by the DRT vide its order dated 12.06.2018 with the observation that the applicants/CDs were a 'hurdle' in the recovery of dues of the CH Bank. The appellants were still left with lightly with a simple order of dismissal of their application. The appellants/CDs did not stop at that and then the present appeal, which is equally misconceived and frivolous, came to be filed against that order of DRT and sought same reliefs from this appellate Tribunal.
Before proceeding further the order dated 12.06.2018 passed by the learned Presiding Officer is re-produced below:-
"Today the case is listed for orders on MA No. 70/2018.
By way of present MA, the applicant prayed to direct the applicant in OA to furnish the revised statement of account and also to compute the amount due and payable by the defendants in term of para 21-(ii) of the Final Order dated 12.05.2015 and Withdraw and recall forthwith the Recovery Certificate from which Recovery Case No. 91/2015 pending before the Learned Recovery Officer, DRT-1, Delhi.
Ld. Counsel for the applicant contends that this Tribunal vide final o1rder dated 12.05.2015 has allowed an opportunity to the applicant to deposit Rs. 9,78,41,463/- alongwith pendentelite and future interest @ 11% per annum however, the applicant of OA i.e. HUDCO did not provide the revised statement of account in terms of final order dated 12.05.2015 thus, the liability of applicants in MA/defendants to pay the amount ordained by final order dated 12. 05.2015 did not commence therefore, he submits that the applicant of OA directed to furnished revised statement of account in terms of para 21 (ii) of the final order dated 12.05.2015.
Record reveals that this Tribunal vide order dated 12.05.2015 passed final order and allowed applicants of MA/defendants tom deposit Rs, 9.78,41,463/- with @ 11% interest per annum. The rate of interest @ 11% p.a. pendent elite and future was allowed to the applicants subject to deposit the amount in equal quarterly instalments however, admittedly applicant of MA/defendant did not deposited the same within the time and now in 2018 the applicants has filed the present MA and stated that as the revised statement of account was not provided by the applicant of OA therefore, the liability of the applicant of MA/defendants would not commence.
It is important to note here that during the proceeding of RC No. 91/2015 Ld. Recovery Officer vide order dated 21.01.2016 directed to CHFI to file revised statement of account and the same was filed the CHFI on 15.02.2016. The CDs therein (applicant of MA is the CDs No.1 in the concern RC) filed objection dated 09.05.2016 on statement of account, thereafter, CHFI filed reply dated 21.07.2016 to the said objections and on 21.09.2016 CDs sought time for filing rejoinder to the reply of CHFI.
Thus, from the record of RC it is proved that the revised statement of account was already been provided to the CDs therefore, prayer of the applicant of MA for providing revised statement of account in terms of order dated 12.05.2015 of this Tribunal is not sustainable and the conduct of the applicant of MA is writ at large. The revised statement of account was already been provided to them and still he is pressing the prayer for providing revised statement of account. The applicant of MA by way of this application trying to hurdle the recovery proceeding.
For the forgoing reasons, the present MA is hereby dismissed as not maintainable.
Files be closed and consigned to record room."
The main submission of Mr. Pallav Saxena, learned counsel for the appellants, was that in the final order dated 12.05.2015 the learned DRT had directed the CH Bank to provide the statement of account to the defendants within 10 days but that direction was not complied with by the Bank and further that though a perfunctory statement of account was submitted before the Recovery Officer highly belatedly but that stamen was also not in accord with the command of the DRT in the order dated 12.05.2015, final para of which order has already been extracted by me. When it was put to Mr. Saxena as to what prejudice had been caused to the appellants due to non-furnishing of statement of account to the appellants within ten days from the order dated 12. 05.2015 of DRT and due to late filing of the same even before the Recovery Officer the answer of Mr. Saxena was that it is the non compliance of direction of the DT which is a serious matter and could not have been brushed aside lightly by the learned Presiding Officer and disobedience of the direction of the DRT ought to have been punished appropriately. In support of this submission Mr. Saxena relied upon one judgment of the Hon'ble Supreme Court in the case of "Prestige Lights Ltd. Vs. State Bank of India",(2007) 8 Supreme Court Cases 449, and one order dated 08.09.2017 of this very Tribunal in Appeal No.192/2015 "A.H. Wheeler & Co. Ltd. Vs. Bank of Baroda & Ors.". In the judgment of the Hon'ble Supreme Court it was held that in case of non compliance of any direction of the Court the disobedient litigant has no right to be heard. In the order passed by this Tribunal in A.H.Wheeler's case it had been held that directions of Tribunal are meant to be complied and in that case due to non compliance of some direction given by this Tribunal the disobedient litigants were ordered to be sent to prison. Mr.Saxena submitted that the Bank officials in the present case should also be treated same way and punished appropriately and the appellants be absolved of the payment of the amount which had been claimed by the Bank in the OA. alongwith interest @ 15.48 % p.a. and the recovery proceedings being continued by the Recovery Officer should be closed and satisfaction of the final order dated 12.05.2015 should be recorded and recovery certificate should be revoked treating the same to have been fully satisfied because of the appellants having made the entire payments as per the final order dated 12.05.2015. It was also contended that even though the appellants had made the payments without getting statement of account from the CH Bank as directed by DRT but, in fact, the time for making the payments in four quarterly instalments had not even commenced since statement of account was not supplied to them by the Bank within ten days from 12.05.2015 and so there was no default on the part of the appellants-CDs justifying initiation of recovery steps by the Recovery Officer for recovery of Rs. 10,56,77,853/- with interest of 15.48 % p.a. which was to happen in case of default on the part of the appellants to comply with the first direction in order dated 12.05.2015. It was thus also submitted that even the Recovery Officer must be dealt with sternly since he had extended the time for compliance of the direction given by his Presiding Officer to the Bank for furnishing of latest statement of account to the appellants herein and that decision of his amounted to overreaching the DRT's direction.
In my view none of the aforesaid submissions advanced by Mr.Pallav Saxena help the appellants-CDs and instead lead to the conclusion that such a stand has been taken out of frustration because of their having failed to evade the payment of the decretal amount. The appellants-CDs owe crores of public money and they want not to leave any stone unturned to see that they get away with their shrewd intentions of not clearing the dues of the Bank as per the order dated 12. 05.2015 of DRT. Non supply of statement of account by the Bank to them is only a lame excuse for not making the full payment of public money. Supply of statement of account to the appellants by the Bank was not a condition precedent for the appellants for starting to make the payments of the instalments fixed in the order dated 12.05.2015. The principal amount of Rs.9,78,41,463/- stood fixed. That amount was bound to be paid in any case by the appellants and non supply of statement of account had nothing to do with that payment and it could not be said that period of payments was not to commence till supply of statement of account by the Bank. Such kind of directions are usually given by DRTs only for facilitation purpose since Banks are experts in arriving at correct figures. In fact, even big business people like the appellants herein are also well equipped to calculate the amounts due from them to the lending banks. They cannot say that in the absence of supply of statement of account to them by the Bank they are in any way handicapped in calculating their liability. That certainly cannot be made an excuse for deferring payments as was being attempted to be done all along by the appellants-CDs.
Here I would like to notice what Hon'ble Karnataka High Court had to say when the borrowers of that case had sought to raise same point of their not being informed of their dues by the lending Financial Corporation. In "K.R. Krishnan Nair vs Karnataka State Financial Corporation", reported as ILR 1996 KAR 2094, the following view was taken by the High Court:-
"5. In these petitions, Petitioners have contended that the actual amount of liability was not made known by KSFC to the borrowers and the borrowers were not given an opportunity to check the correctness of the amounts claimed and therefore the assets could not be taken over under. Section 29 of the SFC Act. There is no merit in this contention. The amounts are due in respect of the financial transactions between the KSFC as lender and the two Hotels as borrowers, covered by the loan documents containing the terms of the Contract between the parties. The borrowers are aware of the terms of contract, amounts borrowed, the particulars of instalments in which the amounts will have to be repaid, the rate of interest applicable and the repayments, if any, made by them. Whenever there is variation in the rates of interest, KSFC notifies the borrowers about such change and KSFC also issues notices showing the overdue instalments. In these circumstances, the borrowers can always calculate the amounts due by them or verify the correctness of the amount claimed by KSFC. Hence a contention by a borrower that he does not know what is due by him is, to say the least, either a lame excuse for non-payment or proof of carelessness. Even if a borrower does not have the particulars, he can always apply to KSFC seeking an account extract or copies of the loan documents, if he has any doubt and KSFC will furnish them on payment of the required fee.
The fact that the petitioners have committed defaults and that amounts are due to KSFC is not disputed. The Borrowers merely contend in a vague manner, that the amounts claimed are not correct, without stating how the amount demanded is incorrect or what is the actual amount due, according to them. Once the borrowing is admitted, repayment is a matter to be proved by the borrower. The borrowers cannot avoid payment or delay payments on a vague plea that they are not aware of the amounts due or the terms of repayment. When there is default, KSFC is entitled to recover the amounts due to it in accordance with the terms of the loan documents by having recourse to its rights under the SFC Act or Public Moneys Act."(emphasis supplied)
In the present case the appellants very well knew as to what money was due from them when the DRT accepted their prayer for issuance of a recovery certificate for a sum of Rs. 9,78,41,463/- and also they knew as to how the amount of Rs. 10,56,77,853/- was shown by the Bank in its books of account to be due and that amount also they had not claimed to be incorrect for any reason. Thus, for this reason also the appellants cannot say that they are not liable to pay Rs. 10,56,77,853/- with interest @ 15.48% p.a. even though they admitted that they had not paid even the first of the four instalments permitted by the DRT for the liquidation of the decretal amount. In case this shrewd argument raised by the appellants-CDs is accepted they will get unduly enriched and huge amount of 'public money' will be lost. Quite strangely the appellants after the issuance of recovery certificate themselves had volunteered to pay over twelve crores of the CH Bank to settle with the bank which they would have never offered to pay if they did not know as to how much they had to pay because of non supply of the statement of account to them by the Bank as mentioned in the order dated 12.05.2015 Non supply of statement of account is simply being used as a 'bogey' to avoid payment of decretal amount.
This appeal thus is totally devoid of any merit. There is no reason whatsoever to penalise either the bank officials or the recovery officer and, in fact, the appeal being frivolous one is liable to be dismissed with exemplary costs. It is accordingly dismissed with cost of two lacs of rupees.
Now, that the decks have been cleared for the Recovery Officer to proceed further to recover the yet-to-be recovered decretal amount, he would do well to complete the recovery proceedings within a month from the date of receipt of this order and will submit a report of compliance to this Tribunal. This direction is being given since perusal of his files showed that the appellant/CD's have been persuading the Recovery Officer to grant them time on one ground or the other for making payment of the unpaid decretal amount and the Recovery Officer has been showing indulgence to them by deferring his proceedings from time to time.
The CH bank has also not been serious in persuading the Recovery Officer to expedite the recovery process with the speed with which such like recovery proceeding should proceed as crores of rupees are to be recovered. In fact, in one of the proceedings of 2012/2017 of the Recovery Officer it had been noticed by him that assets of the CDs are of a value more than the recoverable dues from them. Therefore, it should not have been difficult for the Recovery Officer to execute the Recovery Certificate in full by now. It is hoped that result is achieved now within a month.