HDFC Bank Ltd. vs Recovery Officer, DRT and Others

The HDFC Bank has come up with the above Civil Revision Petition, challenging an order passed by the Recovery Officer of the Debts

Recovery Tribunal forfeiting to the Government, an amount of Rs. 35,35,010/- deposited by a defaulted auction purchaser. Heard Mr. K.

Rajasekaran, learned Counsel for the petitioner and Mr. S. Doraisamy, learned Counsel for the sixth respondent.

The petitioner-Bank filed O.A. No. 1416 or 1998 on the file of the Debts Recovery Tribunal-I, Chennai for recovery of a sum of Rs.

46,67,289.45 together with interest against a company by name M/s. Gowri Tourist Home Private Limited and 3 others. The application was

allowed by an order dated 26.3.1999 and a Certificate of Recovery was issued in DRC No. 13 of 2000.

In pursuance of the Certificate of Recovery, the property which was offered as security for the due repayment of the loan at No. 2/1/133, Main

Road, Batlagundu, Nilakottai Taluk, Dindigul District, was brought to sale by a public auction on 11.5.2005. A company by name M/s. Santhil

Prabhu Hotels Pvt. Limited, which is the sixth respondent herein, became the highest bidder, by offering a sum of Rs. 46,50,000/-. The offer was

accepted and the highest bidder remitted 25% of the amount viz., Rs. 11,62,500/-. The balance amount was also paid by him belatedly and the

entire amount was kept by the first respondent viz., the Recovery Officer in a separate account.

However, the Recovery Officer proceeded to conduct a fresh auction and the same was questioned by the auction purchaser in an appeal M.A.

No. 1 of 2006 on the file of the Debts Recovery Tribunal. The Tribunal initially granted a stay. However, the appeal was dismissed by a

subsequent order dated 19.1.2011.

In the meantime, there was a settlement, lading to the Bank filing an application before the Tribunal seeking to withdraw the main application as

well as the Certificate of Recovery. The Tribunal passed an order dated 13.3.2012, allowing the Bank to withdraw the application and directing

the Recovery Officer to release the amount deposited by the auction purchaser. However, the Recovery Officer directed the auction purchaser to

appear before him and passed an order dated 17.5.2012 forfeiting the amount to the Government, on the ground that the withdrawal of the

application as well as the Recovery Certificate by the Bank, was fraudulent and an act of collusion. Therefore, challenging the said order, the Bank

itself has come up with the above Civil Revision Petition.

As seen from the pleadings, the parties viz., the Bank, the borrower as well as the auction purchaser appear to have entered into a settlement as

between themselves. By the said settlement, the Bank appears to have agreed to receive the amount deposited by the auction purchaser towards

the repayment of the loan. Therefore, the fist respondent-Recovery Officer had no business to order forfeiture or the amount to the government on

the ground that there was a suppression of material fact by the Bank and the other parties. The Recovery Officer is not an independent supervisory

or appellate authority over the Presiding Officer. Once the Presiding Officer had accepted the compromise, it is not open to the Recovery Officer

to go beyond the same. The role of the Recovery Officer is like that of an Executing Court. He cannot travel beyond the scope of the decree viz.,

the Certificate of Recovery. Once the parties to a litigation have no dispute among themselves, we do not know how the Recovery Officer can

create a dispute. The impugned order is thoroughly arbitrary and is liable to be set aside. In view of the above, the Civil Revision Petition is

allowed, the impugned order is set aside and the petitioner-Bank is permitted to withdraw the amount available with the Recovery Officer standing

to the credit of the recovery proceedings. There will be no order as to costs. Consequently, connected miscellaneous petition is closed.