ICICI Bank Ltd. vs Trimurti Construction Developer And Builders

S.N.H. Zaidi, J

This appeal has been directed against the order dated 9.7.2012 of DPT-II, Delhi whereby MA No. 77/2012 filed qua OA No. 102/2008 has been disposed of with the direction to the R.O. to adjust the amounts of two FDRs with accrued interest towards the R.C. issued in the said O.A. only after the disposal of the appeal. Relevant facts giving rise to this appeal, in brief, are that the appellant Bank had advanced loans to respondent No. 1 firm for the purchase of nine vehicles/equipment which were hypothecated with it, but when the borrower firm defaulted in repayment of the loan amount, it filed O.A. No. 102/2008 before the DRT and repossessed the hypothecated Vehicles/equipment and sold them through the auction sale. The sale proceeds were kept in the form of three FDRs of Rs. 12,10,000/-, Rs. 22,80,078/- and Rs. 59,67,641/-. The O.A. was later allowed by the DRT by order dated 30.3.2012 for the recovery of Rs. 94,71.730/- along with pendente lite and future interest @13.01% p.a. against the defendant/respondent Nos. 1 to 4 jointly and severally. It was also directed that the sale proceeds of Rs. 55.74 lacs, which was kept in the form of FDR would alongwith its accrued interest be adjusted towards the debt, but the order remained silent qua the amounts of the other FDRs. The DRT also held that defendant No. 5 did not have any valid charge on those nine vehicles/equipments on which the Bank had advanced loan to respondent Nos. 1 to 4. A recovery certificate (RC) was accordingly issued in terms of the said order. Defendant No. 5 has challenged the order dated 30.3.2012 by filing an appeal before this Tribunal which is pending. The CH Bank filed application (M.A. No. 77/2012) before the DRT seeking modification of the order dated 30.3.2012 and a direction for the adjustment of the amounts of aforesaid two FDRs against the RC. Notice qua that application was issued to the defendant/respondent No. 5, who had filed its reply and had contested the same. The learned DRT has disposed of that application by the order impugned with the direction to the R.O. to adjust the amounts of the two FDRs alongwith accrued interest towards the R.C., only after the disposal of the said appeal. Feeling aggrieved with the later portion of the said order, the CH Bank has filed the instant appeal.

As the guarantor/borrowers, respondent Nos. 1 to 4 herein, were not heard by the DRT qua the aforesaid application, notices of this appeal to them were dispensed with.

I have heard Mr. Punit Bhalla, the learned Counsel appearing for the appellant Bank and Mr. Shailendra Ojha, the learned Counsel for the respondent No. 5, who has opposed the appeal by filing the reply.

A perusal of the order impugned would show that the learned DRT, by directing the R.O. to adjust the amounts of the two FDRs with accrued interest towards the R.C., has in fact allowed the application (M.A. No. 77/2012) but the directed adjustment was kept in abeyance until the disposal of the appeal filed by defendant No. 5. The DRT, while allowing O.A. No. 107/2008 for the recovery of Rs. 94,71,730/- alongwith pendente lite and future interest @ 13.01%, had only ordered for the adjustment of Rs. 55.74 lacs, which was not the full amount of any FDR. It had given no reason in its order dated 30.3.2012 as to why the entire amount of Rs. 59,67,641/- of one FDR or the amounts of the other two FDRs were not allowed to be adjusted towards the debt amount of Rs. 94,71,730/- as was determined by it, when the aggregate amount of all the three FDRs, being Rs. 94,57,719/-, was less than the debt amount.

Mr. Bhalla has contended that since no interim indulgence has been granted in favour of the appellant by this Tribunal in the appeal filed by the defendant/respondent No. 5 against the order dated 30.3.2012, the R.O. is free to proceed with the recovery of the R.C. amount and he can adjust the amount of the FDRs towards the R.C. amount. It has further been contended by him that the learned DRT has rightly ordered the R.O. to adjust the amount of the two FDRs along with its accrued interest towards the R.C. but has erred in concurring with the view of the R.O. that it would not be prudent to appropriate the amount of the FDRs till the disposal of the appeal and has accordingly directed the R.O. to adjust the amount of FDRs only after the disposal of the said appeal, which has given a cause of grievance to the appellant to file this appeal.

Mr. Ojha has, on the other hand, submitted that the State of Haryana had sanctioned the loan for the purchase of those vehicles/equipment to the borrowers who had failed to repay the same, therefore, the respondent No. 5, being a State instrumentality, has precedence of charge on the sale proceeds thereof against the appellant Bank. He has further submitted that pursuant to the order dated 30.3.2012 of the DRT, the Bank had already appropriated Rs. 55.74 lacs out of the amount of one FDR but the amount of two FDRs totaling Rs. 34,90,078/- is still available and if the said amount is also allowed to be adjusted towards the R.C. amount then the appeal filed against the order dated 30.3.2012 before this Tribunal would become infructuous and its nature would be changed.

Considering the submissions of the parties Counsel and looking to the facts and circumstances of the matter, I am of the view that since the DRT had allowed the O.A. for the recovery of Rs. 94,71.730/- in favour of the appellant Bank with the finding that defendant/respondent No. 5 did not have any valid charge on those vehicles/equipment, it should have ordered for the adjustment of amounts of all the three FDRs, which were made out of the sale proceeds of those vehicles/equipment, instead of directing for the adjustment of certain amount of only one FDR. The learned Tribunal below has, therefore, rightly directed the R.O. to adjust the amount of the remaining two FDRs along with accrued interest towards the R.C. amount. The R.O., under Section 25 of the RDDBFI Act, is under a legal duty to recover the amount of debt specified in the R.C. as per the direction given therein. The R.O. should have proceeded to recover the R.C. amount as he was not restrained by any Forum in respect thereof. In my opinion, the R.O., had acted against the mandate of law in waiting to see the outcome of the appeal for appropriating the amount of FDRs. The view of the Tribunal below that since the finding of this Tribunal in appeal would have a direct bearing on the issue of adjustment, therefore, R.O. should adjust the amount of FDRs only after the disposal of appeal does not appear to be based on proper appreciation of the circumstances of the case, as the recovery of R.C. amount cannot be put on hold for an indefinite period.

The circumstances show that as per the R.C. issued in the O.A., the CH Bank was to recover Rs. 94,71,730/- along with cost and interest @ 13.01% p.a. from 22.8.2008 until realization. An amount of Rs. 94,57,719/-, which was almost equal to the determined amount of debt, was available in the form of three FDRs with the Tribunal below. As already observed, the Tribunal below should have directed for the adjustment of the amount of all those FDRs towards the R.C. amount, instead of only Rs. 55.74 lacs. Once the Tribunal below was of the view that the R.O. should take steps to adjust the amount of the remaining two FDRs towards the recovery of the R.C. amount, it was not proper for the Tribunal below to direct the R.O. to wait until the disposal of the appeal for the appropriation of the amounts of the two FDRs, as it was not certain as to when the said appeal would be disposed or it would be allowed in favour of defendant/respondent No. 5. In my opinion, since the amount of the FDRs is lying idle and cannot be utilized by the Bank, it may be allowed to be adjusted/appropriated by the CH Bank towards the R.C. amount with the condition that if the appeal is allowed and respondent No. 5 is found to have any claim or charge over the sale proceeds of the vehicles/equipment, the Bank would deposit the amount as may be directed by this Tribunal. In view of above discussion, the appeal is allowed and the direction of the Tribunal below given in the order impugned that the amount of the two FDRs would be adjusted after the disposal of the appeal is set aside. The R.O. is directed to adjust the amount of the FDRs available with the Tribunal below towards the R.C. amount, provided the CH Bank files an undertaking on affidavit that if the appeal is allowed and the claim or preferential charge of the appellant over the sale proceeds of the vehicles/equipment is upheld, the Bank would deposit such amount with the R.O. as may be directed by this Tribunal.

Copy of this order be furnished to the parties as per law.