Indian Delco Pvt. Ltd. vs Canara Bank

Ranjit Singh, J

Aggrieved by the order passed by DRT-I, Delhi, the appellants have filed this appeal. The O.A. filed by the respondent Canara Bank was allowed and the applicant bank was held to be entitled to recover Rs. 25,41,14,536/- with simple interest @12% per annum from 4.3.2011 onwards till payment and cost from defendants 1 to 4 jointly and/or severally. Payment received by the bank after the institution of the O.A. was to be credited from the date on which such payments were received and the bank was required to furnish details of the balance amount recoverable as on the date of the order within 30 days.

The appellants had entered into the banking business with the respondent bank in the year 1982 when a Rs. 5 lac limit was sanctioned in favour of the appellants. The said limit was enhanced from time to time looking at the credibility of the appellants. It is averred that in the year 2009-10, there was a financial dump and crises in the steel market due to which the appellants suffered a huge set back. According to the appellants, instead of helping them the respondent bank served notice under section 13(2) of the SARFAESI Act on 1.4.2011 for the recovery of Rs. 26,73,20,851.44 with interest @17.5% p.a. compounding at monthly rests. It is alleged that the rate of interest charged by the bank in the said notice was arbitrarily increased, which came to the notice of the appellants when the said notice was served. On 10.1.2011, the respondent bank served a notice under section 13(4) of the SARFAESI Act for taking physical possession of the property bearing No. 8-11/45, Mohan Cooperative Industrial Estate, Badarpur Industrial Estate, Badarpur Border, Mathura Road, New Delhi. The appellants filed Securitization Appeal (S.A.) on 18.1.2011. On 25.1.2011, the DRT passed an order granting ad interim protection to the appellants subject to deposit of Rs. 50 lacs within one week. It is stated that the appellants thereafter kept on depositing the amount with the respondent bank. On 23.3.2011, the DRT directed the appellants to deposit a further sum of Rs. 50 lacs till 31.3.2011 and another sum of Rs. 2 crores till 30.4.2011 and Rs. 2 crores till 31.5.2011.

When order was received by the appellants, they filed an application on 25.3.2011. This application was dismissed on 6.4.2011, which was impugned by the appellants by filing a Writ Petition before the Hon'ble Delhi High Court. The plea raised in the Writ Petition was that the respondent bank was not considering the proposal for one-time settlement even after the appellants had deposited a sum of Rs. 22.25 crores out of the amount of Rs. 26 crore approx demanded in the notice. The appellants submitted before the High Court that they were willing to pay the outstanding amount if time of two years was allowed. It is alleged that the High Court had directed the bank to ensure that as far as possible minimum rate of interest be charged.

Based on the observation of the High Court, the appellants approached the respondent bank on 17.9.2012, when the bank did not respond. The High Court then observed that the appellants and respondent bank shall meet and may arrive at agreed solution over the pending dispute. Finally, the Writ Petition was disposed of on 4.2.2012 on the ground that DRT was in seisin of the matter and it shall consider passing of the decree based on the offer made by the petitioners before the High Court after factoring in the interest which is ordinarily granted by the DRT for pendente lite period in such like matters.

On 26.2.2013, the appellants filed an application before the DRT based on the final order passed by the Hon'ble High Court, requesting for allowing the rate of interest at 9% p.a. and for grant of 18 months for the payment of the said amount. The appellants would allege that the DRT-II, Delhi being in charge of DRT-I, Delhi has abruptly disposed of thy O.A. pending before DRT-I, Delhi despite knowing the fact that it was beyond its jurisdiction, According to the counsel, it being a Link DRT, was not empowered to finally dispose of the matter relating DRT-I, Delhi. The appellants, accordingly, have impugned the order passed by the P.O., DRT-II, Delhi in a matter which was pending before DRT-I, Delhi while being its Link Officer.

On the basis of submissions made on the above noted line, the present appeal stands admitted and the operation of the impugned order was stayed on 30.10.2013. This appeal has accordingly come up for final disposal.

The learned counsel appearing for the appellants primarily would contend that the Presiding Officer, DRT-II, Delhi, who was having a temporary charge of DRT-I, Delhi; being Link Officer due to an administrative order passed by this Tribunal would lack any jurisdiction to finally disposed of the O.A., which was in fad pending before DRT-I, Delhi. The learned counsel has also raised some incidental issues that the appellants had already made payment of nearly Rs. 22 crores and was only wanting a period of 18 months to make the remaining payment along with simple rate of interest @9% p.a., which aspect has not been considered by the Tribunal while allowing the O.A. filed by the Bank.

The counsel for the respondent, however, would paint an entirely different picture. He would refer to the final order passed by the Hon'ble High Court where the senior counsel appearing for the appellants had made a-statement before the Court that the appellants would be willing to suffer a decree whereby the petitioners would have to pay an outstanding amount on the date when the O.A. was filed in the DRT plus simple interest @12% p.a. the Hon'ble Delhi High Court noticed this stand of the appellants and observed that the DRT which was in seisin will consider passing a decree based on the aforesaid offer of the appellant/petitioners after factoring in interest which is ordinarily awarded by the DRT in such matters. In fact, this order dated 4.2.2013 was passed by the High Court in a review application which was filed pursuant to the observation made by the Division Bench in their judgment dated 17.12.2012 passed in LPA No. 813/2012.

Different orders passed by the High Court on various dates have been annexed with this appeal. In the order dated 4.10.2012, the counsel for the appellant/petitioners had stated that the petitioners had submitted a proposal to the respondent bank and were willing to pay interest @10% p.a. He further stated that though he had asked for a period of two years over which the repayment would be made, but was willing to meet the offer by agreeing to make the payment in 1 year and 6 months. The counsel for the respondent had come up with the stand that repayment schedule be reduced from 1/2 years to one year and the interest on the balance will be charged @16% p.a. along with penalty @2%. This is recorded in the order dated 16.11.2012. The case was then adjourned requiring the bank to file some affidavit. It is thereafter, perhaps, the parties seem to have gone in appeal ultimately leading to an order dated 4.2.2013 which is finally passed on the review application filed pursuant to the observation made by the Division Bench, as already noted.

In this background, two issues would arise for consideration. Firstly, whether the disposal of the O.A. by the Presiding Officer, DRT-II, Delhi while being a Link Officer to take up the matter of DRT-I, Delhi would be without jurisdiction or not. Secondly, whether the Tribunal below could go beyond the concession made by the counsel for the appellants before the Delhi High Court or not.

To hold that the Presiding Officer, DRT-II; Delhi had no jurisdiction to decide this O.A., the counsel for the appellants has relied upon an order dated 27.9.2013 passed by this Tribunal in Appeal No. 351/2013. In this case, the Presiding Officer of DRT-II, Delhi who was looking after DRT-I, Delhi had reserved the case for judgment and posted it for pronouncement when the miscellaneous appeal was filed before this Tribunal. No doubt, this Tribunal had held that the Link/Incharge Officer of DRT-I, Delhi, i.e., the Presiding Officer of DRT-II, Delhi is not empowered and lacked jurisdiction to dispose of an O.A. related to DRT-I, Delhi unless the matter was specifically made over to him and that he could only make interim order in urgent matters, but the jurisdiction in the present case apparently had been acquiesced by the appellants. This, in my view, would be a major change in this case. No such plea was raised before the Tribunal below that it lacked in jurisdiction to decide the case. Once the Presiding Officer, DRT-II, Delhi had taken up the present. O.A. and decided the same on the basis of judgment passed by the Delhi High Court, no plea in regard to its jurisdiction to finally dispose of the O.A. may be permissible. This plea is also required to be appreciated in the background that the appellants throughout have been maintaining before the High Court that they were ready to discharge the entire liability and the dispute, if any, was only in regard to the schedule of payment and the rate of interest. In fact, the order passed by the Delhi High Court dated 4.2.2013 would leave hardly any scope for any DRT to pass a different order than what was undertaken before the said Court. In this background, the issue which arose before the Tribunal was very limited. This is what in fact is noticed. The willingness expressed by the counsel for the appellants to pay the interest @10% p.a. as noticed above is also taken note of by the Tribunal. The fact that the appellants were ready to pay the amount within two years and later modifying it to 1/2 years is also taken note of. The undertaking given by the senior counsel appearing for the appellants as recorded in order dated 4.2.2013 is reproduced in the impugned order. The Tribunal, accordingly, has noticed that the above noted direction of the High Court has narrowed down the dispute between the parties. It would be important to note that the appellants had admitted before the High Court that they were willing to suffer a decree whereby they would have to pay the outstanding amount on the date when the O.A. was filed in the DRT plus simple interest @12% p.a. Even the prayer that the appellants would pay within 1 year and 6 months is noticed which, as per the Tribunal, would be over on 4.4.2014. The Tribunal has thus allowed the O.A.

It may be worth-consideration whether the appellant would have come in to challenge before this Tribunal if the P.O., DRT- 11, Delhi while acting as Link Officer of DRT-I, Delhi, had passed an order for payment of @9% interest and given 1'8 months' time to the appellants to discharge the liability. The apparent answer would be no. In my view, the Presiding Officer, DRT-II, Delhi, or for that matter even DRT-I, Delhi, would hardly have an option to go out of the undertaking given by the appellants, whereby they had expressed their willingness to suffer a decree for paying the outstanding amount as on the date when the O.A. was filed with simple interest @12% p.a. In my view, no Tribunal would have considered passing any order contrary to what was undertaking given by the counsel for the appellants, expressing the willingness of the appellants to suffer the decree in this manner. The submission made by the counsel for the appellants about the period of 18 months is to be read into the final order in view of the earlier order passed by the Court would not impress me. All the earlier orders passed by the Tribunal would get merged into the final order passed by the Court. The Tribunal below was only to consider passing of a decree based on the aforesaid offer of the appellants after factoring in the interest which is ordinarily awarded. The plea of jurisdiction raised by the appellants appears to be aimed at buying a little more time and nothing else. Once a party waits for final order to be passed and finding it to be not to its liking challenging it on the ground of jurisdiction without raising any such plea before the Tribunal concerned, it can definitely be made explain the acquiescence and the plea of jurisdiction thus may not come to the rescue of such a litigant.

If the appellants had been sincere in its undertaking, it would have continued to make some payments after the order passed by the Delhi High Court on 4.2.2013. A period of more than one year has already expired, but not a single paisa has been deposited by the appellants to show their bona fide that they were keen to discharge their entire liability within a period of 18 months. The limited prayer in the relief was for the 'payment of the remaining amount within a period of 18 months with interest @9% p.a., which have been considered, but not agreed to by the Tribunal below for justifiable reasons. Once the appellants had undertaken before the Hon'ble Delhi High Court to suffer a decree and were willing to pay the outstanding amount of the date when the O.A. was filed, with simple interest @12% p.a., they cannot now wriggle out of the undertaking given on their behalf by their counsel. The present appeal and the subsequent application before the Tribunal below apparently were aimed at circumventing this undertaking, which cannot be permitted. Neither the Tribunal below nor this Tribunal would have any power to carry out any change in the undertaking recorded before the Hon'ble High Court and the Tribunal below was to consider passing a decree based on the aforesaid offer. Of course, it could factor the interest, which duty the Tribunal has performed.

The reference of the counsel for the appellants to Kiran Singh & Ors. vs. Chaman Paswan & Ors., AIR 1954 S.C. 340 to urge that the decree passed without jurisdiction is a nullity would not be attracted to the facts of the present case. There may not be any dispute with the proposition of law that a decree passed by a Court without jurisdiction is a nullity and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the action, strikes at the very authority of the Court to pass any decree and such a defect cannot be cured even by consent of parties. Here the Tribunal was acting on the basis of an administrative order passed by this Tribunal and had not assumed jurisdiction on its own. I fail to understand and appreciate as to how such a Tribunal when acting as a Link/Incharge Officer of the another Tribunal would be empowered to deal with the issue of grant of interim relief but would lack in jurisdiction to dispose of the O.A. when it comes up for final hearing. Suppose a case is listed for final hearing, on which date the Presiding Officer of the DRT having jurisdiction proceeds on leave of absence. The parties do not raise any objection and the Link/Incharge Presiding Officer of the said DRT passes an order disposing of the O.A. It cannot then be said that he would lack any jurisdiction, once the jurisdiction is conferred on him in view of the administrative order. The cases are in plenty where this Tribunal can competently transfer cases from one Tribunal to another because of numerous reasons and the plea of jurisdiction on this ground having regard to the facts and circumstances of this case, in my view, is raised just for the purpose of making a delay.

This appeal, as already noticed, appears to have been filed only just to buy time. Once the appellants have acquiesced the jurisdiction of the Tribunal and had submitted themselves to the jurisdiction of the Tribunal, they cannot be permitted to turn around and challenge the order on the ground that the Tribunal was lacking any jurisdiction to pass the order. I am persuaded to take this view because this case has been decided on an undertaking given before the Hon'ble High Court, which could not have been defeated in any manner by any Tribunal, be it DRT-I or the Link/Incharge Officer who was exercising the power of DRT-I. Another reason which has weighed with me is that the Tribunal below has not assumed jurisdiction on its own but was dealing with the case due to an order, may be an administrative one, passed by this Tribunal conferring jurisdiction on the Tribunal below. I am, therefore, not impressed with any of the pleas raised by the appellants and would dismiss the appeal.

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