Indu Narain vs State Bank Of India And Ors

The appellant had filed one Securitisation Application (S.A) under Section 17(1) of the SARFEASI Act against the respondent no. 1 bank to protect the property in question, namely, first floor of House No. C- 140, Defence Colony, New Delhi, which she claimed to be under her ownership and possession, from being taken over and auctioned by the respondent no. 1 bank in order to recover its outstanding dues in four loan accounts in the names of respondent nos. 2 to 5 herein, which were Firms of the appellant"s deceased brother Shri Jagrit Khaitan. She has been claiming to have acquired ownership right in the property in question by virtue of some family settlement/gift

Earlier to the filing of the present S.A, out of which this appeal has arisen, the appellant had filed four separate S.As in the year 2009 in respect of four separate accounts of the above named four borrower Firms of his brother in which accounts the property in question was mortgaged to secure the re-payment of the loan monies. In those S.As (being S.A Nos. 121,122,123 & 124 of 2009) the appellant had challenged the measures which had been initiated by the respondent bank under the provisions of the SARFEASI Act to recover its dues outstanding in the four accounts of her brother. Though initially DRT granted interim relief to the appellant but then the same was vacated vide order dated 15.02.2013. Thereafter the S.A. was dismissed in default and restored also on 29.05.2013. Thereafter, it appears that the appellant did not press for any adjudication of her challenge to the measures which were being taken by the respondent bank in respect of the property in question. Instead, she made the prayer before the learned DRT for bringing a better buyer of her property. The DRT allowed that request and also granted her three months" time to bring a buyer otherwise the Bank was permitted to proceed with the auction of the property in question and the appellant herein was also given the right to redeem her property upon payment of bank"s dues. She had also prayed for reduction in rate of interest and that prayer was also allowed and rate of interest was reduced vide order dated 29.05.2013. By a subsequent order dated 03.07.2015 the appellant was shown further indulgence by DRT in disposed of SAs four miscellaneous applications were entertained and she was granted one year"s time to clear the entire dues with interest @ 13% p.a. in ten equal instalments.

According to the case of the respondent bank the appellant did not clear the entire dues of the bank even within given time vide order dated 03.07.2015 and, therefore, steps were initiated again under SARFEASI Act to take over physical possession of the property in question through the intervention of CMM under section 14 of SARFAESI Act and to auction the same in order to recover the bank dues which, I was told during the course of hearing of the present appeal, were to the tune of Rs. five crores odd.

At that stage, the appellant filed a fresh consolidated S.A. in respect of all the four loan accounts of the Firms of her deceased brother the same was registered as S.A No. 65/2019 in DRT-II, Delhi. The appellant appears to have taken a plea before the learned DRT in this fresh S.A after disposal of earlier S.As that there was a settlement between her and the bank and as per that settlement/OTS the appellant had cleared the entire outstanding dues of the bank. The appellant based this claim of hers on two letters dated 11.09.2015 and 23.03.2016. Those letters were addressed to her by the State Bank of Mysore, which subsequently stood merged with State Bank of India, informing her of the recoverable amounts in four accounts. In the letter dated 11.09.2015 the bank had informed the appellant that a sum of Rs.58,23,092.63 was recoverable and in the second letter dated 23.03.2016 the bank had informed her that a sum of Rs.8,23,092.63 was recoverable as on 11.09.2015. The appellant claims to have cleared the entire dues as mentioned in the said two letters of the bank. Those letters according to the appellant brought about a settlement and the Bank was thus estopped from claiming any more money from the appellant on the principle of promissory estoppel.

The bank however, claims that amounts mentioned in the above referred two letters were only NPA amounts and were not inclusive of interest. It also claims that there was no settlement of any kind agreed to by the bank and the appellant was wrongly claiming that there was OTS/Settlement under which only the above mentioned amounts were agreed to be payable by the appellant.

In the fresh S.A. the appellant had claimed an interim relief also when the bank was threatening to dispossess her from the property in question. The learned DRT passed the order on 02.04.2019 relevant parts therefrom are as re-produced below:-

"Security Applicant, namely, Mrs. Indu Narain has filed the present Securitization Application (for brevity, the S.A.) under Section 17 of the Securitization and Reconstruction of financial Assets and Enforcement of Security Interest Act, 2002 (for short, the Securitization Act, 2002), with a prayer to quash/set aside the Possession Notice dated 16th February, 2019 issued by the Court Receiver for taking possession of the property situated at C-140, 1t Floor, Defence Colony, New Delhi- 110024 9for short, the property in question) and to quash the recovery proceedings in view of the deposit of adjudicated/agreed outstanding dues by the security applicant and has also prayed for passing an interim order restraining the Receiver to take any further step in respect of the property in question till the disposal of the present S.A.

Briefly, the case of the security applicant, as is revealed from the contents of the present S.A., is that earlier she had filed four SAs bearing Nos 121 to 124 of 2009 before Debts Recovery Tribunal-III at Delhi challenging the action of the respondent no.1 bank to take possession of the property in question and had questioned the equitable mortgage of the property in question as she has made payment of Rs.1,64,23,092.63 between 21st June 2013 to 4th March 2016 to the respondent no.1 bank and is owner in possession of the property in question since 22nd February, 2000 as she had agreed to deposit money against the liability of Shri Jagrit Khaitan payable to respondent no.1 bank. Vide its letter dated 11th September, 2015 addressed to the security applicant for arranging the funds, State Bank of Mysore had confirmed the outstanding balance of Rs.58,23,092.63. It is further submitted that only 21st March, 2016 the security applicant wrote a letter to the respondent bank requesting to disclose the balance in the said accounts and the respondent bank vide its reply dated 23rd march, 2016 informed the outstanding balance as Rs.8,23,092.63 and thereafter she cleared the entire outstanding dues through four cheques, but the respondent bank did not issue any letter demanding any further amount. She had requested respondent no.1 bank to return the papers of the property in question and was assured that the needful would be done on receipt of permission of their Circle Office. It is further submitted by the security applicant that unfortunately her husband was diagnosed with Prostate Cancer and was operated upon in December 2016 and thereafter radiation therapy continued as a part of treatment till July 2017 and due to that reason she could not visit the respondent bank and even there was no cause of anxiety as the liability stood discharged. It is further submitted that the only child of the security applicant expired in August 2017 which shattered her life and that of her husband and both of them secluded themselves in shells in isolation and could not think of anything what to talk of collecting papers from the respondent bank. She was stunned to receive the impugned noticed dated 16th February, 2019 from the Receiver for taking possession of the property in question. The respondent bank has no cause of action for approaching the learned Chief Metropolitan Magistrate for appointment of a Receiver as the demanded liability already stood paid as on 23rd March, 2016 and in any case the respondent bank is not entitled to initiate SARFAESI actions as not only 80% of the debt, but the entire outstanding demanded amount stood already paid. On having received a call from the respondent bank that it has obtained Recovery Certificate in three accounts, she was perplexed and on enquiry in November, 2018 it was revealed that the respondent bank had not withdrawn the OAs despite adjudication of its claim in the SAs as per order dated 3rd July, 2015. It is further submitted that the security applicant is neither a borrower no guarantor/mortgagor and has a valuable right in the property in question and has already deposited the entire dues of the respondent bank out of her family funds. Accordingly, it is submitted that she shall suffer irreparable loss if the respondent bank is allowed to take possession of the property in question. Hence, a prayer has been made to restrain the respondent bank from taking possession of the property in question, as an interim relief, till the decision of the present S.A.

In its reply, the respondent bank has contended that late Mr.Jagrit Khaitan being a proprietor of his four firms have availed certain credit facilities / loan in the year 2004 against hypothecation of stock, etc. and equitable mortgage of the property in question as well as his personal guarantee and that of his wife Smt.Mukta Khaitan and after availing the said loan facilities, he failed to maintain the financial discipline and consequently, all the four loan accounts were rendered NPA on 31st March, 2015 and on failure to liquidate the entire dues of the respondent bank as per demand notices issued under Section 13(2) of the SARFAESI Act, the respondent bank issued four separate Possession Notices dated 3rdApril, 2013 under Section 13(4) of the SARFAESI Act but the security applicant, who is the sister of late Shri Jagrit Khaitan, had filed four separate SAs which were finally disposed of on 15th February, 2013, 29th May, 2013 and 3rd July 2015. In terms of the said final order dated 3rd July, 2015 in the aforesaid S.As., the security applicant and other persons were directed to repay the entire dues of the answering respondent bank within one year through ten equal monthly instalments commencing from expiry of sixty days from the date of order i.e. 3rd July, 2015 and admittedly the security applicant failed to comply with the said order as the entire dues of the respondent bank were not paid and consequently, the respondent bank initiated recovery proceedings against said Khaitans and other personal guarantor by filing four OAs which were allowed on 23rd June 2018 and after appropriation of the part payments in the pending RCs, the respondent bank moved an application under Section 14 of the SARFAESI Act before the learned Chief Metropolitan Magistrate. It is further submitted that the present S.A. cannot be maintained against foru different loan accounts with independent demand and possession notices and further that the present S.A. is bad for mis-joinder of necessary parties inasmuch as late Shri Jagrit Khaitan and Smt. Mukta Khaitan and legal heirs of late Shri Jagrit Khaitan are necessary parties. It is further submitted that the security applicant has not come with clean hands. While replying on merits, it is contended that no offer of any kind even of alleged settlement was ever given by the respondent bank and further that the respondent bank never requested and advised the security applicant to clear the NPA balance before 31st March, 2016 and she deposited the same of her own and pursuant to the order dated July 03, 2015. It is further submitted that the entire liability was not paid. The security applicant never visited the applicant bank to claim the title deeds or release of the mortgage or to issue No Dues Certificate as she fully knew that she had failed to comply with the said order dated 3rd July, 2015. She intentionally remained silent as she did not want to remind the bank about the passing of the said order and its due execution. Otherwise also, there was no occasion to return the title deeds of the property in question and to issue No Dues Certificate. It is denied the entire liability has been discharged. Ultimately, it is submitted that since there is breach of order dated 3rd July, 2015, therefore, the security applicant is not entitled to any relief and the present S.A. is liable to be dismissed with costs.

I have heard the learned counsel for the parties on the point of interim relief and have gone through the entire record carefully.

Now the point of consideration is whether the security applicants are entitled to any interim relief under Section 17(7) of the SARFAESI Act, 2002, as prayed for?

Now the point for consideration is whether the security applicant is entitled for interim relief of restraining the Court Receiver from taking physical possession of the property in question i.e. the property situated at C-140, 1st Floor, Defence Colony, New Delhi- 110 024, under Section 17(7) of the SARFAESI Act, as prayed for?

The contention of the security applicant is that as per orders passed by the Hon"ble High Court of Delhi in Civil Suit (OS) No.580 of 2009 tilted Smt. Indu Narain Vs. Smt. Mukta Khaitan and others, a Memorandum of Understanding (for short, MoU) was executed in between her and Smt. Mukta Khaitan and others. While so, the then secured creditor i.e. State Bank of Mysore initiated SARFAESI Action which resulted into filing of SAs No.121 to 124 of 2009 titled as Indu Narain Vs State Bank of Mysore and in between 21st June, 2013 to 4th March, 2016 the entire NPA amount was paid and vide letter dated 11th September, 2015 State Bank of Mysore confirmed the outstanding balance of Rs.58,23,092.63 and after making payments, the said Bank vide its letter dated 23rd March,, 2016 informed the outstanding balance of Rs.8,23,092.63 and the security applicant cleared the entire liability and thereafter there is no correspondence till 18th February, 2009 when 1stcommunication was received from the Court Receiver. It is thus contended that as the security applicant has paid the entire amount as per demand of the then State Bank of Mysore, there are no dues to the first respondent bank, which is illegally claiming an amount of Rs.5 crores approximately in all the four accounts. Since the security applicant has paid the entire amount due as per demand of the said Bank is stopped as per the letters dated 11th September, 2015 and 23rd March, 2016 whereby it confirmed the balance.

On the other hand, the contention of the respondent bank is that on failure to liquidate the entire dues, the erstwhile State Bank of Mysore issued notice under Section 13(2) of the SARFAESI Act and then notice under Section 13(4) and the security applicant, who is the sister of Mr. Jagrit Khaitan filed four S.As NO.121 to 124 of 2009 which were finally disposed of by Debts Recovery Tribunal-III, Delhi vide order dated 3rd July,, 2015 passed in IAs Nos.1575 to 1578 of 2013, which reads as under:

"Heard the ld counsels for both the parties, perused the records and in the interest of justice one year time is hereby granted to the applicant to deposit the entire dues through ten equal monthly installments out of which the first installment shall be deposited within 60 days; failing which the respondent bank is at liberty to proceed further in respect of the property in question in accordance with law."

Further, at Para 11 of the order dated 29th May, 2013 passed in I.A. No.733 of 2013 (S.A. No.121 of 2009) titled Smt. Indu Narain Vs. SBM, Debts Recovery Tribunal-III at Delhi has also observed that "... Taking stock of all the circumstances and keeping in view that there is a drastic fall in rates of interest globally and domestically, I am of the opinion that interest of justice will be served if the interest at the rate of 13% simple is awarded from the date of NPA till the date of full realization."

It seems that the said orders passed by the learned Debts Recovery Tribunal-III, at Delhi have become final as both the parties did not challenge the same in any Appellate Forum. Hence, the above quoted orders are binding on both the parties to the lis. As per above orders, the letters dated 11th September, 2015 and 23rd March, 2016 were issued by the said bank.

Learned counsel for the security applicant has vehemently contended that as per the said letters, the entire dues mentioned therein have already been paid and now 1st respondent bank is stopped from contending that more than Rs.5 crores is due.

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Learned counsel for the security applicant has finally contended that having asked the security applicant to pay the NPA amount under OTS, now the respondent bank cannot go back and demand the amount now claimed and, as such, the SARFAESI proceedings are liable to be quashed.

On the other hand, learned counsel for the first respondent bank contends that there is no OTS as alleged and the security applicant has not filed any document in this regard. Even in the letters dated 11th September 2015 and 23rd March, 2016 there is no mention about the OTS and only the orders of Debts Recovery Tribunal-III at Delhi have been referred. As per letters dated 11th September, 2015 and 23rd march, 2016 and the subsequent cheque payments filed by the security applicant reveals that the NPA amount has been cleared. Admittedly, the Debts Recovery Tribunal-III at Delhi had directed to pay the NPA amount alongwith interest @13% per annum till realization, but the interest part has not been served by the security applicant. As the NPA amount has been paid by the security applicant as per the documents filed by her, I am of the considered opinion that it is a fit case to direct the respondent bank to file Statement of Account to show as to what amount is now payable as per directions of the Hon'ble DRT-III, Delhi contained in orders dated 3rd July, 2015 and 29th May, 2013 after deducting the NPA amount within 13% interest simple on reducing balance within fifteen days from today. The security applicant is directed to file objection, if any, to the Statement of Account to be filed by the respondent bank, as directed above, within one week from the date of filing of the Statement of Account. It is further directed that the amount arrived at after considering the objections, if any, to be filed by the security applicant, shall be payable in three equal monthly instalments by the security applicant and further proceedings under the SARFAESI Act are stayed for a total period of four months. The interim relief is disposed of accordingly."

The appellant has felt aggrieved by the direction given by the learned DRT to the bank to come out with the figure of amount to which according to it is still recoverable from the appellant and giving the liberty to appellant to file objections to that statement of account.

The appellant"s learned counsel Mr. N.P Gaur had submitted orally as well as in the written submissions which were permitted to be filed, that there was no occasion for the learned DRT to have directed the bank to come out with a fresh statement of account when the appellant"s case was that there was a settlements /OTS between the parties and she had cleared the entire dues, as were communicated to her by the bank by way of above referred two letters dated 11.09.2015 and 23.03.2016. Mr. N.P Gaur, submitted that by writing those two letter intimating the appellant that she had to pay the amounts mentioned in those letters, the bank had made its stand clear that only that much amount was due from her to the bank under the OTS/settlement and thereafter, the bank cannot resile from the OTS/settlement and start claiming that still Rs. five crores odd were recoverable from the appellant. It was also submitted that though the Bank had also filed O.As but after the settlement and receipt of settled amount those O.As should have been withdrawn but the Bank played fraud upon DRT and has obtained Recovery Certificates without disclosing about OTS/settlement and recovery of entire dues under the OTS.

On the other hand, Mr. Jai Mohan, learned counsel for the respondent 1 bank had contended orally as well as in his written submissions that there was no settlement of any kind as was being claimed by the appellant nor has she produced any proof which could even prima facie suggest that there was an settlement to the effect that appellant will have to pay only the amounts as communicated to her by the bank in its above referred two letters dated 11.09.2015 and 23.03.2016 which were written in response to the appellant"s own letter dated 21.03.2016 asking the bank to give her the outstanding amounts in the four „NPA" accounts. It was submitted that in those two letters, only the NPA amount were mentioned and interest on that amount was also recoverable as per the order dated 03.07.2015 of the learned DRT passed in the earlier round of litigation when four SAs were filed by the appellant and got disposed of from DRT permitting the appellant herein to clear the entire dues in ten instalments in a year"s time. It was also contented that since the mortgaged property in question was having a market value of more than the dues recoverable from the appellant there was, in any case, no occasion for the bank to enter into any kind of settlement with the appellant. Counsel submitted that the fact is that appellant having first got a relief from the learned DRT of deferred payment of the bank"s dues is now simply trying to confuse the issue in order to delay the recovery of public dues from her by coming out with frivolous story that bank had entered into OTS/settlement with her where under it had agreed to accept the payment of only of NPA amount in full and final settlement as against the amount of Rs. five crores odd still recoverable from her and for which amount the Bank has got recovery certificates also issued now from DRT after the appellant failed to comply with the orders of DRT passed in her earlier filed four SAs.

After giving my due consideration to the rival submissions and the material available on record, I am of the view that the appellant has no good reason to get any kind of interim relief against her dispossession from the property in question and its being auctioned publically. Prima facie, she has only cooked up a story of OTS/settlement. Prima facie, it also appears to be correct that the amounts conveyed to her by the bank in the above referred two letters were only NPA amounts which did not include the interest component which after declaration of some defaulter"s account as an NPA is not added to the principal NPA amount and it continues to be shown in a separate account.

I am in full agreement with the submissions of the learned counsel for the bank that the appellant has cleverly sought to project that the bank had entered into OTS/settlement with her. It is definitely an attempt on her part to avoid recovery of crores of public money. This appeal appears to this Tribunal to be a frivolous one. The appellant has all along been since 2009 playing game of hide and seek with the Tribunal below and has been misusing the indulgences shown to her by the DRT even in her disposed of SAs. It has now become the order of the day that first the defaulters of public monies tell the DRTs that they want to clear their liabilities and then get undue indulgence from the DRTs who give time for clearance of banks" dues and in the meanwhile SARFAESI measures are stalled and then those very defaulters come forward with pleas of fraud etc. and also their inability to pay back loans and still expect further indulgences from DRTs. These attempts of dishonest borrowers must view seriously and stopped. That exercise begins with the present frivolous appeal which deserves to be rejected with exemplary costs.

This appeal is accordingly dismissed with costs of Rs. 50,000/-, which the respondent bank will be at liberty to debit in the loan accounts in question. It is, however, clarified that since S.A. of the appellant is still pending DRT shall decide the same finally as per law since this appeal has been disposed of only on a prima facie view of the matter.