HDFC Bank Ltd. vs Smt. M. K. Vishnupriya & Ors.

JUSTICE R. D. KHARE, CHAIRPERSON

The present appeal has been filed under section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as "the RDDBFI Act") against the judgment dated 16.02.2016, whereby the Original Application No. 392/2011 filed by the appellant-Bank has been dismissed as not maintainable.

Brief facts of the matter are that the appellant-Bank had taken a building situated at D-58/2, A C Market, Rath Yatra Crossing, Varanasi from defendant nos. 3 to 6 on rent vide agreement of license dated 26.12.2002 for a period of nine years w.e.f 01.01.2003 for its use and occupation/banking purposes and the said agreement was signed and executed between the respondent nos. 3 to 6 through their duly constituted power of attorney, the defendant no. 7 and the appellant-Bank. As per the agreement, the appellant-Bank had given a security deposit of Rs.18.00 lakhs to the respondents no. 3 to 6. The said premises was let out on monthly rent of Rs.1.48 lakhs with the provision for escalation in the license fee by 15% after expiry of every successive period of three years.

It appears that on 26.12.2002 itself, an agreement for service was also executed between the appellant and the respondents no. 3 to 6 through their duly constituted power of attorney-respondent no. 7 as the contractor with certain obligation for maintenance and for availing the basic amenities of cleaning of surroundings of building in question, supply of power and water to the appellant-Bank by installation of separate meter and water connection, disposal of garbage, parking of vehicles, proper gardening of the compound area, for which an amount of Rs.5,000/- per month was payable by the Bank to the said contractor every month, which was also subject to increase by 15% upon expiry of every three years.

It transpires that as per the agreement dated 26.12.2002, the security deposit of Rs. 18.00 lakhs was refundable by the landlords to the appellant-Bank upon expiry of license agreement and in case of failure of refund of the said amount by the licensors/respondents upon termination of license agreement, the licensors/respondents were liable to pay the appellant-Bank the interest @ 24% p.a. quarterly on the same from the date of termination or expiry of the said license agreement. It further transpires that the appellant-Bank had terminated the license agreement w.e.f. 30.06.2009 vide three months notice dated 29.03.2009 and asked the respondents to refund the security amount, but the respondents did not do so.

It is averred that during the existence of agreement of license dated 26.12.2002, the premises in question was sold by the respondent nos. 3 to 6 to the respondent nos. 1 & 2 vide registered sale deed dated 05.05.2003. After execution of the said deed, a tripartite agreement dated 11.08.2003 was executed between respondent nos. 3 to 6 through their power of attorney-respondent no. 7 on one part and the respondents no. 1 & 2 on second part and the appellant-Bank as third part of the said tripartite agreement with certain conditions as mentioned in the said agreement. Since the security amount as deposited by the appellant-Bank was not refunded, therefore, the appellant-Bank filed the Original Application No. 392/2011 u/s 19 of the RDB Act, 1993 before the Tribunal below with prayer to issue the recovery certificate against the respondents. The Tribunal below vide order impugned has dismissed the O.A. filed by the appellant-Bank holding that the amount claimed by Bank is a liability that has arisen from license deed and is not covered under the definition of debt. Being aggrieved by the said order, the present appeal has been filed by the appellant-Bank.

Learned counsel for the appellant-Bank submitted that 'debt' is defined u/s 2(g) of the RDB Act, 1993 and as per the said Section, any liability inclusive of interest on the amount claimed as due from any person by a bank, whether secured or unsecured or assigned, or otherwise, whether payable under a decree or order of any civil court or otherwise and subsisting on and legally recoverable on the date of the application. It was thus contended that the claim of the appellant arises directly out of contractual liability of Respondents to refund the security deposit with agreed interest.

Learned counsel further contended that as per the Tripartite Agreement dated 11.08.2003, respondent Nos. 1 and 2 having acquired ownership of the premises were bound to refund the amount of Rs. 18 lakhs because after purchasing the premises in question from the respondents no. 3 to 6, there were stepped into the shoes of the said respondents and were liable to honour the terms and conditions of the lease agreement, which was executed between the appellant and the respondents no. 3 to 7.

Learned counsel further submitted that the plea of the respondent no. 1 with regard to withholding of security deposit for alleged damages is not supported by any evidence, as there is nothing on record, which may show the damages of any part of the building or justify the withholding of the entire deposit with interest, especially when no adjudication of such claim was sought. It was, therefore, prayed that the order impugned passed by the Tribunal below may be set aside and the appeal filed by the appellant may be allowed with no order as to costs.

Learned counsel for the respondent no. 1 submitted that the present appeal is not maintainable, as the matter is related to the tenancy dispute. It was further contended that the respondent no. 1 presently is the owner of the Building No. D-582, Kuber A.C. Market, Rathyatra Crossing, Varanasi-221010. It was also submitted that the amount of Rs.18,00,000/- deposited by the Bank with the respondent for the security purpose as per terms and conditions of agreement, therefore, the said amount cannot be treated as debt.

Learned counsel further submitted that the appellant-Bank deliberately damaged the premises and violated the terms and conditions of the agreement. It was further contended that the said damages were got valued by the authorized valuer and found that said property was damaged up to the value of Rs.15.88 lakhs. In this regard, the learned counsel has referred to Annexure no. 3 of the counter affidavit, which is copy of valuation report. It was thus contended that she is entitled to withhold the security money deposited by the appellant-Bank.

Learned counsel also submitted that no notice for termination of the lease agreement was ever made by the appellant/tenant as mandatorily provided under the license agreement, whereas the appellant informed the respondents of their moving out of the leased premises in the month of September, 2009. It was further submitted that on objections made by the respondents, the appellant assured them that they would not ask for refund of security deposit and it would make good the losses suffered by them.

Learned counsel also submitted that the answering respondent is issueless and also a senior citizen and had purchased the property in hope of getting financial security for her old age, but the appellants breached the contract without any fault from her side and damaged the premises to make it unfit for further letting out without repairs and the respondents also had to pay maintenance amount for the whole duration from her own pocket. It was thus contended that the order impugned does not call for any interference by this Tribunal. It was, therefore, prayed that the appeal filed by the appellant may be dismissed with heavy costs.

Having heard the learned counsels for the parties and considering the material available on record, admittedly, the appellant-Bank was on rent of the Building No. D-582, Kuber A.C. Market, Rathyatra Crossing, Varanasi-221010 owned by Respondents No. 1 & 2, who had purchased the said property from the respondents no. 3 to 6 vide sale deed dated 05.05.2003 during the tenancy period w.e.f. 01.01.2003 to 31.12.2011. It is also not disputed that the appellant-Bank had given the security deposit of Rs.18.00 lakhs to the respondents in order to secure the rent of the building and its damages in future.

Thus the question involved in the present case is, as to whether the security deposit made by the appellant-Bank being a tenant of the landlord comes under the definition of "Debt" or not?

In this regard, Section 19 of the RDB Act, in which the claim was filed by the Bank before the Tribunal below, itself says that the Branch or any other office of the Bank or financial institution is maintaining an account, in which debt claimed is outstanding for the time being. In the present case, there was no account of the respondents with the appellant-Bank, in which the amount claimed by the appellant-Bank in its O.A. was outstanding, as the amount claimed by the Bank is purely a security money towards the security of rent and maintenance of the damages of the building taken by the appellant from the respondents in future. The deposit of security money by the Bank with the respondents cannot be treated as debt. In order to constitute a debt, there should be present two persons, the debtor, from whom the money is receivable and the creditor, to whom the money is payable. In the present case, the appellant is neither creditor nor the respondents are debtors. The relation between them is the landlord and tenant. However, the definition of debt is clearly mentioned in Section 2(g) of the RDB Act, 1993, which is as under:-

From the above, it is clear that the security deposit made by the appellant-Bank to the respondents i.e. landlord cannot be treated a debt, therefore, the Tribunal below vide order impugned has rightly dismissed the O.A. of the appellant as not maintainable holding that the amount claimed by the Bank is a liability, which has arisen from license deed, therefore, it is not covered under the term "debt".

In view of the discussions as recorded above, there is no infirmity or irregularity in the order impugned, therefore, the appeal filed by the appellant-Bank is dismissed with no order as to costs.

A copy of this judgment be forwarded to the parties as well as the DRT concerned and be also uploaded on the e-DRT portal.