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Judgment
The appellant Bank has filed this appeal against the order dated 21.02.2109 passed by DRT-I, Delhi in the Original Application(O.A.) filed by respondent no.1 Punjab National Bank under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993(RDDBFI ACT,1993‟ in short) against other respondents and the appellant Bank.
The relevant parts of the impugned order which give the background facts are re-produced below:-
"1. The applicant bank has filed the OA on 15.03.2016 for recovery of Rs.82,46,65,330.53 (Rupees Eighty Two Crores Forty Six Lakhs Sixty Five Thousand Three Hundred Thirty and paise fifty three only) as on 15.03.2016 alongwith pendentelite and future interest at contractual rate currently @14.60% p.a. monthly rests in CC Account and @15.10% in the Term Loan Account with further interest @2% from the date of filing of the present OA till its realization.
It is stated that the defendant No.1 approached the applicant bank for availing the Working Capital (Cash Credit Facility) of Rs.10 crores and term loan of Rs.24 crores which was sanctioned by the applicant bank on 23.09.2010 to the defendant No.1. Defendant No.1 to 4 executed the various loaning and security documents in favour of the applicant bank.
The defendant No.5 has auctioned/sold the plot No.575-76 measuring 43241 sq.yds. under Khasra No.58, 62-66, 569, 571, 573-577 Village Bisnoli, Dujana Road, Dadri, Distt. Gautam Budh Nagar, through defendant No.6.
It is stated that the same was mortgaged with the applicant bank by defendant No.1 but the said auction was set aside by DRT and the applicant bank has right to claim the amount of refund from defendant No.5 & 6. The defendant No.7 has also extended certain facilities to defendant No.1 and as a security for the facilities extended, the defendant No.7 is having first charge on the (block assets) and applicant bank is having first charge over the (land building plant and machinery) of the property of defendant No.1 situated at Village Bishnauli, Dadri, District Gautam Budh Nagar (Uttar Pradesh) and at Khasra No.64, 575, 576, 577, 66, 569, 574, 473, 65, 58, 571, 570 & 53 at Village Bishnauli & Acheja, Dujana, Road, Near Dadri, Distt. GB Nagar, Uttar Pradesh
It is also stated that the defendant No.1 again approached the applicant bank for enhancement of WC limit of Rs.10 crores to Rs.25 crores and cancellation of NFB Limit of Rs.5 crores. The said request was considered by the applicant bank and enhanced the WC Limit to Rs.25.00 crores on 04.08.2011. Further, the defendant No.1 to 4 executed loaning documents in favour of the applicant bank.
It is also stated that the defendant No.1 again approached the applicant bank for enhancement of WC Limit of Rs.25 crores to Rs.30 crores which was enhanced by the applicant bank on 09.12.2011 and defendant No.1 to 4 again executed the loaning documents in favour of the applicant bank. Further, the defendant No.1 again approached the applicant for enhancement of WC Limit to Rs.35 crores (Rs. 33 crores CC Limit and Rs.2 crore Bank Guarantee Limit), the said request was also considered by the bank and enhanced the limits to the defendant No.1 on 04.12.2012.
Further, it is stated that the defendant No.1 again approached the applicant bank for restructuring the financial facilities
(i) renewal cum restructuring of WC Limit by carving out WCTL, (ii) review cum restructuring of existing term loan
(iii) approval of FITL of Rs.10.02 crore for funding interest on working capital limit, term loan, WCTL. The said request was also considered and the applicant bank restructured the account on 29.03.2012 and again the defendant No.1 to 4 executed the loaning and security documents in favour of the applicant bank on 31.03.2014.
It is stated that the defendant No.1 has created mortgaged of the plot No.575-76 measuring 43241 sq.yds. under Khasra No.58, 62-66, 569, 571, 573-577 which is as security in respect of the credit facilities.
The defendant No.1 also deposited with the applicant bank certificate of sales dated 04.11.2010 executed by defendant No.6 in favour of the defendant No.1.......................................................................................
.................................
However, the defendants failed to meet assurances in regards to their obligation towards the applicant bank and also failed and neglected to pay and meet their liabilities towards the applicant bank. Thus, the account was classified as NPA on 30.06.2015. Therefore, the applicant bank issued demand notice dated 15.07.2015 calling upon the defendant No.1 to 4 to pay the dues of the bank but they failed to pay the same. It is also stated that the applicant issued final legal notice to the defendant No.1 on 06.10.2015 and also invoked the guarantee executed by defendant No.2 to 4 thereby calling upon them to pay the dues however, there is no response from the defendants. Thus, the applicant bank has filed the present OA for claiming an amount of Rs.82,46,65,330.53 together with pendent lite and future interest and for issuance of Recovery Certificate for the said amount.
Notices were issued to the defendants. Defendant No.1 to 6 appeared through their counsel. Despite availing opportunities, the defendant No.1 to 4 failed to file their written statement thus, their right to file the WS was closed on 19.12.2016. The defendant No.5 has filed its reply. No reply has been filed by the defendant No.6 & 7.
In the reply filed by the defendant No.5 i.e. J & K Bank, it is stated that in the year 2007, M/s Golden Rathi Star Industries approached the defendant No.5 for availing the facility of loan cash credit limit for a sum of Rs.25 crores, adhoc limit of Rs.2 crores and a car loan of Rs.13,70,000/- and the said cash credit loan of Rs.25 crores was duly sanctioned by the answering bank on creation of security on the property bearing Plot No.575- 576 measuring 43241 sq. yards under Khasra No.58,62-66, 569-571, 573-577 Village Bisnoli, Dujana Road, Dadri, Distt. Gautam Budh Nagar of the borrower. It is stated that M/s Golden Rathi Star Industries filed a SA No.228/2009 against the answering bank before the Ld. DRT-III, Delhi and in the said SA, the defendant No.6 filed an application sought substitution as a party in place of J&K Bank i.e. answering bank which was allowed and name of J&K Bank was substituted by M/s Invent Assets Securitization & Reconstruction Pvt. Ltd. i.e. respondent No.6 herein therefore, it is stated that the Jammu and Kashmir Bank Ltd. has no relation with the present proceedings as the answering bank had assigned the debt due to respondent No.6 in present OA vide assignment agreement dated 15.12.2010.
The applicant bank has filed the rejoinder to the reply filed by the respondent No.5 and stated that the Hon‟ble DRAT, Delhi while disposing of the Appeal No.337/2014 and Appeal No.300/2013 both in SA No.228/2009 vide order dated 26.06.2016 was pleased to observe that:-
The agreement of assignment was made on 04.10.2010. Even two supplementary deeds were executed on 03.11.2010 and another on 15.12.2010. The assignee Company however sold this asset by private treaty on 19.10.2010 within 15 days of the assignment in its favour. The plea by the appellant that this sale would not be in violation of the mandatory provisions of the rules, as the assignee company had stepped into the shoes of the bank and had continued with the action in progress, cannot be accepted. The notice, if any, by the bank for sale was by way of public auction. The last notice for sale by public auction was issued by the bank on 15.03.2010 calling for tenders by 19.04.2010. This sale also failed. The bank states to have issued notice to respondent No.1 and its Directors, their legal heirs by Registered Post on 15.07.2010, informing them that since the sale process had failed, the bank had decided to assign the debt to IASR and that the borrower could redeem the property. The bank had then entered into agreement with IASR for assignment of debt for consideration of Rs.20 Crores. One correction deed was executed on 03.11.2010 and a separate assignment deed with regard to collateral securities situated at DLF, Gurgaon was signed on 15.12.2010, IASR sold this property by way of private treaty on 19.10.2010 to applicant M/s Supreme Alloys Ltd. Thus, sale has been conducted by the assignee company in this manner by way of private treaty.
It is also submitted that respondent No.5 is one of the necessary party to the present proceedings due to ongoing litigation between the defendant No.1 and defendant No.6. Therefore defendant No.5 is necessary party in the present proceeding.
It is also stated that this Tribunal vide order dated 02.12.2016 was pleased to restrain the defendant No.5 and 6 to refund the money to the auction purchaser. Relevant portion of the order dated 02.12.2016 is reproduced herein below:
"..3. Till then, the respondent No.5 and 6 are hereby restrained to refund the money to the auction purchaser."
The applicant bank has filed its evidence by way of affidavit of Sh. Rahul Gupta, Senior Manager of the applicant bank who has proved the various loaning and security documents such as Exb.AW1/1 to Exb.AW1/101.
(i) The main ground taken by the defendant No.5 is that the defendant No.6 herein entered into an assignment agreement whereby the defendant No.5 assigned its loan/debt to M/s Invent Assets Securitization & Reconstruction Pvt. Ltd. i.e. defendant No.6 therefore, no relief is maintainable against the defendant No.5 thus, it is stated that the OA qua defendant No.5 is liable to be dismissed.
(ii) On the other hand, the applicant bank stated that the auction of the mortgaged property was conducted under the SARFAESI Act, 2002 by respondent No.5 & 6 was set aside by Ld. DRT-III, Delhi in SA No.228/2009. The Hon‟ble DRAT vide order dated 26.06.2015 quashed the sale certificate issued on 19.10.2010 by defendant No.5 & 6 in favour of the defendant No.1 for an amount of Rs.21.30 crores. It is also stated that the applicant bank also wrote a letter and informed defendant No.5 & 6 that the property was mortgaged with the applicant bank and thus, it is stated that the defendant No.5 & 6 may be directed to refund the amount of Rs.21.30 crores alongwith interest @24% p.a. from 19.10.2010 till the date of payment to the applicant bank.
(iii) Admittedly, the defendant No.1 availed the loans from the applicant bank and for security of the loans, the property bearing plot No.575-76 measuring 43241 sq. yds. under Khasra No.58, 62-66, 569, 571, 573-577 Village Bisnoli, Dujana Road,Dadri, Distt. Gautam Budh Nagar, was mortgaged with the applicant bank by the defendant No.1 who purchased the same from auction conducted by defendant No.6 (assignee of defendant No.5) for a sum of Rs.20.31 crores however, the said auction was set aside by the Ld. DRT-III, Delhi vide order dated 27.06.2013 in SA No.228/2009 titled as Golden Rathi Star Industries Ltd. Vs. Jammu & Kashmir Bank.
(iv) The said order was challenged by the defendant No.1 & 6 before the Hon‟ble DRAT, Delhi by way of Appeal No.300/2013 and Appeal No.337/2014 and Hon‟ble DRAT, Delhi vide order dated 26.06.2015 dismissed both the appeals filed by the defendant No.1 & 6 and upheld the order passed by the Ld. DRT-III, Delhi dated 27.06.2013 and quashed the sale certificate issued by defendant No. 6 in favour of the defendant No.1 for an amount of Rs.20.31 crores. The said order has already attend the finality.
(v) In view of the above, the applicant bank has no right on the property in question.
(vi) So far as liability of the defendant No.5 is concerned, Hon‟ble DRAT, Delhi while passing the judgment dated 26.05.2015 has made certain remarks qua the assignments. The relevant portions are reproduced herein under:
"...... 33. The conduct of the assignee company and that of the auction purchaser contains too many uncomfortable details which cannot be ignored and which would give rise to apprehension in the mind of any fair minded person or authority to entertain doubt for the sale to be bona fide and free from collusion. The assignee company not only violated the mandate of the statute by selling this property within 15 days of the agreement/assignment but has sold the property at a far less value than it was evaluated by the bank through approved evaluators. The counsel for the borrower company has pointed out to the documents on record where the market value of the land and structure at the time of granting the facilities was assessed at Rs.35,70,68,000/-.................... At the time of auction, the bank had got the property valued at Rs.34.67 crore. The counsel would raise question in regard to the auction of the bank in getting the property evaluated reducing the same to Rs.26 crores. This drop in the value of the property by 25% within a few months is advocated as unreasonable. The drastic reduction in the value by 25% certainly is such which cannot be termed as reasonable. If this was not enough to raise doubt, then what followed would certainly lead to cement the doubts arising in the case. When the second auction failed in January 2010, the property statedly lost its value by 25% more within just one month as it was got revalued at Rs.19.50 crore within two months. Between July 2009 and March 2010, i.e. within a period of 8 months, the value of the property got reduced by 50%. A question may arise if this loss was real or was made up one to help one someone. One may expect that when an auction fails, the bank would be justified in attempting sale at some reduced value but generally such reduction cannot be to the extent of one-fourth of the value in one go. Not only that, within a gap of just two months the value of the property is reduced to one half. It is too sleep a fall to accept it to be a real and authentic tool. If this was not enough to make it look doubtful, the bank assigns the assets and loan to a reconstruction company which at super speed offers it on platter to the appellant M/s Supreme Alloys Ltd. while violating all the legal provisions held to be mandatory. Agreement of assignment is done on 04.10.2010 and property is sold by private treaty on 19.10.2010 just within 15 days when even the assignment deed of corrected on 03.11.2010. These facts and acts are too uncomfortable to leave an easy feeling for being accepted as genuine act of sale in a fair, just and reasonable manner. While drastically reducing the value of the property in this manner, the assignee company had handed over this property to the auction purchaser, that too, by violating the mandate of statue. This would appear to be suspicious to leave any feeling of comfort. The property has been sold at the half price of the value which was assessed by the valuer of bank.
The matter does not end even here. There is yet another fact which may render this sale to be indicative of intrigue. One of the directors of the purchaser company was witness to the assignment deed. The allegations of connivance are thus made by the respondent. These, in my view, fly thick and hard and cannot be taken lightly as is the plea made by the appellant. One could still have ignored all these infirmities if the sale at the reduced value would have been by way of public auction or by having tender. A serious doubt would arise regarding this sale conducted by way of private treaty would following the mandate of statute where even the terms were not settled or reduced into writing as required by law. The infirmities and telltale signs seem to be an unending process. A property which is sold at this reduced price was soon got valuated by the appellant purchaser company at Rs.55 crore for obtaining loan from Punjab National Bank against the same property. How would the bank or the assignee company or for that matter the purchaser justify the value of the property at Rs.19.50 crore and the sale thereby at Rs.20 odd crores. There are too many telltale signs which would go to raise serious doubts about the sale to be bona fide. It is too unsafe to sustain this sale done in the manner with so much of glaring and staring circumstances peeping out making this sale totally uncomfortable to sustain."
(viii) In view of the above observations made by Hon‟ble DRAT, Delhi, in case defendant No.5 also received any sum of bid amount of Rs.20.31 alongwith defendant No.6 then defendant No.5 is also liable to refund the said amount alongwith interest to the applicant bank and liability of defendant No.5 shall remain upto the said extent only.
The witness of the applicant bank has fully corroborated the averments made in the OA. Even otherwise the whole case of the applicant bank is based on documents and the witness has duly proved all these documents. In my view there is no question of disbelieving the evidence lead by the applicant bank and the applicant bank has proved its case beyond reasonable doubts. The liability of the defendant No.5 & 6 is upto the extent of Rs.20.31 crores. The liability of the defendant No.1 to 4 is joint and several being borrower and guarantor.
In the light of above discussions, the Original Application deserves to be allowed against defendant No.1 to 6. (emphasis supplied)"
From a reading of this order of the DRT and the submissions made at the Bar by counsel for all the parties and the records of the DRT the undisputed position which emerges is that sometime in the year 2007 the appellant Bank had advanced financial facilities of over twenty crores of rupees to respondent no.3 herein M/s Golden Rathi Star Industries Ltd. Repayment of the loan money was secured by way of mortgage of one factory with plant and machinery in Gautam Budh Nagar(UP) and one residential property in Gurgaon as described in the impugned order. Within a period of two years from the sanction of the loan the said borrower of the appellant Bank became defaulter and its account was declared as an NPA in 2009 followed by issuance of demand notice under Section 13(2) of SARFAESI Act and possession notice under Section 13(4) since the dues of the Bank were not cleared. Thereafter the appellant Bank had initiated steps for sale of the mortgaged factory with plant and machinery. To begin with the reserve price of the property to be auction was fixed at Rs.34.67 crores. No bidder came forward to buy the property put up for auction. Thereafter, further attempts were made to auction the same with reduced reserve price which within a short span came to be reduced to Rs.19.50 crores though according to the borrower Company, respondent no.3 herein, the value of the property was not less than crores.
When the reserve price had come down to Rs.19.50 crores respondent no.2 herein, M/s Invent Assets Securitisation & Reconstruction Pvt. Ltd. approached the appellant Bank for assignment of its debt recoverable from its abovenamed borrower Company, respondent no.3. The deal was struck and the debt with mortgaged assets was assigned by the appellant Bank to respondent no.2 for Rs. 25 crores odd on 04.10.2010(as stated in the memorandum of present appeal). Within a few days of assignment of debt the said assignee Company struck a private deal with respondent no. 4 herein and the mortgaged property in Dadri, Distt. Gautam Budh Nagar(U.P.) was sold to it for Rs.20.31 crores and possession was also handed over to it in September,2010.
Before all that took place between the appellant Bank, the assignee and the buyer Supreme Alloys Private Ltd. The appellant‟s borrower, respondent no.3, had filed a securitization application(S.A.) under Section 17(1) of SARFAESI Act challenging inter alia the first sale notice with a reserve price of Rs. 34.67. That S.A. was filed in DRT-I, Delhi and was registered as S.A.No.228/2009.
During the pendency of the S.A. of respondent no.3 the mortgaged property in Dadri, Distt. Gautam Budh Nagar was not sold even though the reserve price continued to be reduced drastically and as noticed already the appellant then assigned its debt to respondent no.2 herein. That grievance of the respondent no.3 Company has been that reserve price was being reduced to ultimately sell the property worth 100 crores to respondent no.4 herein assignment for a price of peanuts. All that was alleged to be a collusive affair and that was sought to be established from the circumstances that the assignment deed between the appellant Bank(assignor) and so called assignee, respondent n.2 herein, was witnessed by one of the directors of the respondent no.4, which Company was to be beneficiary of reduction in reserve price of the property in question worth Rs. 100 crores odd for a meager sum of Rs. 20.31 crores and the that immediately after purchasing that property for Rs. 20.31 crores the buyer Company obtained loan of over fifty crores from Punjab National Bank, respondent no.1 herein, against the security of same very property.
The learned DRT appreciated the circumstances highlighted the securitization applicant, respondent no.3 herein, to justify its grievances that everything which transpired amongst the appellant Bank, it‟s so called assignee, respondent no.2 herein and the buyer, respondent no.4 herein, which was decided beforehand to get the mortgaged property at a throwaway price and accordingly allowed the S.A No. 228/2009 of respondent no.3 herein and set aside the sale of the property in question in favour of respondent no.4 herein vide order dated 27.06.2013.
Feeling aggrieved by the setting aside of the auction sale in favour of respondent no.4 herein the appellant herein through its so called assignee as well as the buyer, respondent no.4 herein filed separate appeals before DRAT(being Appeal No. 337/2014 of Supreme Alloys and Appeal No. 300/2013 of J & k Bank(substituted by Invent Assets Securitization & Reconstruction Pvt. Ltd.). However, both the appeals were dismissed by my learned predecessor Chairperson vide common order dated 26.06.2015 and the decision and findings of the DRT were affirmed.
Thereafter neither the appellant Bank nor its so called assignee and not even the beneficiary of sale of the property of respondent no.3 herein carried the legal fight any further and consequently the findings of the DRT in S.A. No. 228/2009 regarding collusion etc. in the sale of the property of respondent no.3 in favour of respondent no.4 herein attained finality and, in fact, stood accepted by these litigants. Similarly the decision of this appellate Tribunal affirming the findings of the DRT also attained finality and accepted by the appellant Bank and its so called assignee as well as the buyer of the property in question, respondent no.4 herein.
Punjab National Bank, respondentno.1 herein, which had already given loan of over fifty crores to respondent no.4 herein on the security of the property sold to it by respondent no.2 herein for Rs. 20.31 crores realized that with the setting aside of the sale of the property in favour of its borrower, respondent no. 4 herein, which also had become defaulter, may not become unrecoverable and accordingly it also approached the DRT-I, Delhi with an Original Application(O.A.) under Section 19 of the RDDBFI Act, 1993 for recovery of over eighty crores of rupees. That O.A. (out of which the present appeal has now arisen) was registered as O.A. No. 178/2016.
In that O.A. the appellant herein as well as it‟s so called assignee, respondent no.2 herein, were also impleaded as defendants.
The DRT allowed the O.A. of Punjab National Bank vide its impugned order dated 21.02.2019 relevant parts of which order have already been re-produced in para no. 2 of this order. The claim of O.A. applicant was allowed in full as against the borrower Company, respondent no.4 herein and guarantors while the liability of the appellant and respondent no.2 herein was restricted to Rs. 20.31 crores for which amount the property in question belonging to respondent no.3 herein was sold after assignment of debt recoverable from it by the appellant J&K Bank to respondent no.2.
The appellant Bank only has felt aggrieved by the said order dated 21.02.2019 of the learned DRT and accordingly has come up in appeal Its so called assignee has, respondent no. 2 herein, has accepted the verdict rendered against it by the DRT.
Oral arguments on behalf of the appellant Bank were advanced by Mr. T.K.Ganju, learned senior counsel and its so called assignee was represented by Mr. Amit Chadha, learned senior counsel. Respondent no.1 Punjab National Bank was represented by its learned counsel Mr. Hashmat Nabi. Respondent no.3, which appeared to be the most aggrieved with all the developments, was represented by its learned counsel Mr. Ravi Data. These are the main contesting parties in this appeal though other parties were also represented by their respective advocates. Written submissions were also permitted to be filed which were filed by appellant and respondent no.1 Bank.
One of the arguments advanced by Mr. Ganju, learned senior counsel for the appellant Bank was that no direction for payment of any money by the appellant Bank to Punjab National Bank could be given in the O.A. since no such relief was even prayed for in the O.A. by Punjab National Bank. I am, however, of the view that this submission is without any substance. There is no doubt that in the prayer para of the O.A this relief was not specifically claimed but an overall reading of the O.A. and para no. 5.29 in particular clearly shows that the O.A. applicant had claimed that it was demanding money from appellant Bank also. In fact, the O.A. applicant had at one stage moved a separate application also in its O.A. for a direction to the appellant herein. Even otherwise the Courts can always grant any relief to a litigant even in the absence of a specific prayer in the plaint/petition when there is a foundation for that relief laid in the plaint/petition in the body of the plaint/petition. The respondent no.1 Bank had claimed in the prayer para of the O.A. to pass any such further orders/directions/reliefs in favour of the applicant- bank and againast the defendants, which the Hon‟ble Tribunal deems fit and proper in the circumstances of the case and in interest of justice.‟ The DRT could grant the relief to Punjab National Bank against the appellant Bank also under this prayer para. So, the argument of Mr. Ganju that no direction against the appellant Bank could be passed by DRT in the absence of a prayer in that regard is rejected.
It was then submitted by Mr. Ganju that the DRT in any case could not pass any direction against the appellant Bank in the O.A. of Punjab National Bank since there was never any privity of contract between the appellant Bank and Punjab National Bank. Elaborating further it was contended that the moment the appellant Bank assigned the debt recoverable from its defaulter-borrower, respondent no.3 herein, in favour of respondent no.2 in July-August, 2010 and full assignment consideration also stood paid by respondent no. 2 by 25.09.2010 and possession was also handed over to it of mortgaged property in Dadri the appellant Bank nowhere remained in the picture and how and in what manner the property in question was sold by the assignee on 19.10.2010 to respondent n.4 herein was not the concern of the appellant and consequently the DRT was not right in directing the appellant Bank to pay Rs. 20.31 crores to Punjab National Bank as if the appellant had taken loan from it or had got that much money from the sale of the property rights over which had already been assigned in favour of the assignee Company. However, I am not persuaded to accept this argument also of Mr. Ganju, learned senior counsel for the appellant Bank. As noticed already, the DRT as well as DRAT had in the proceedings initiated by appellant Bank‟s borrower under SARFAESI Act when appellant Bank wanted to sell its property which it was claiming to be worth more than hundred crores for the price of peanuts accepted the case of the borrower, respondent no.3 herein, that right from day one the appellant was moving towards the direction where respondent no.4 herein could be benefitted by reducing the reserve price of the mortgaged property in question from 34.67 cores to meager 19.50 crores in less than one year. Copy of the order of the DRT passed in S.A. No. 228/2009 is available on record and perused by me. The learned Presiding Officer had observed in para no 58 that:-
"58. The attention of the Tribunal is drawn by the counsel for the applicant to the assignment deed where the signature of one of the Director as witness of the auction purchaser company to the assignment Deed is there, and the same person is a director of the purchaser company is highly improper, and this Tribunal is of the view that the assignment deed is a part of deal which is entered between the bank, assignee and the purchaser company by way of private treaty which reflects doubt on the credibility of the assignment of te debt itself."
Some portions from the order of my learned predecessor Chairperson in the appeals filed against this order of the DRT may also be noticed. The same are as under:-
"23.................... So This aspect, however, may not be of much material in the present case because of the ground of challenge raised by the borrower company to this sale, alleging fraud and collusion between the bank and the purchaser. These allegations are made by pointing out various circumstances and the manner in which property was sold by way of private treaty.
The conduct of the assignee company and that of the auction purchaser contains too many uncomfortable details which cannot be ignored and which would give rise to apprehension in the mind of any fair minded person or authority to entertain doubt for the sale to be bona fide and free from collusion.....................................................
The matter does not end even here. There is yet another fact which may render this sale to be indicative of intrigue. One of the directors of the purchaser company was a witness to the assignment deed. The allegations of connivance are thus made out by the respondent. These in my view fly thick and hard and cannot be taken lightly as is the plea made by the appellant........... There are too many telltale signs which would go to raise serious doubts about the sale to be bona fide. It is too unsafe to sustain this sale done in the manner with so much of glaring and staring circumstances peeping out making this sale totally uncomfortable to sustain,"
These paras in the orders of the DRT in the S.A. and DRAT in appeals and the observations made therein which have already attained finality and observed already stood admitted also by the appellant Bank, clearly show that the very assignment of the debt for Rs. 20 cores was a collusive and sham affair. So, just because the so called assignment consideration received by the appellant Bank from respondent no.2 was prior to the so called sale private treaty of the property in question in favour of respondent no.4 will not make any difference as far as its liability to return the sale consideration of Rs. 20.31 crores as directed by DRT is concerned. Mr. Ganju had also contended that in the absence of any proof having been brought on record by Punjab National Bank that any part of sale consideration was shared/received by the appellant bank the DRT could not have passed a direction for payment of Rs. 20.31 crores to Punjab National Bank by the appellant bank also. The entire assignment of debt having been found to be an act of collusion it will not make any difference whether the appellant bank actually and directly received any full or part of the sale consideration for the sale of the mortgaged property of respondent no.3 herein. As a result of issuance of a collusive and sham sale certificate in respect of the property in question in Dadri by respondent no.2 in favour of the respondent no.4 the respondent no.4 was able to get loan from Punjab National Bank to the tune of over fifty crores of rupees and therefore with the quashing of that sale certificate by DRT Punjab National Bank became entitled to recover part of its dues recoverable from its defaulting borrower(respondent no.4 herein) from J & K Bank also and the DRT was fully justified in directing recovery of Rs. 20.31 crores with interest from J & K Bank also besides from respondent no.2 both of whom were found to be in collusion with each other in making respondent no.4 owner of the property in question belonging to respondent no.3 herein.
It was submitted in the written submissions on behalf of the appellant Bank that Punjab National Bank had sought a direction from DRT in the S.A. No. 228/2009 of respondent no. 3 for payment of Rs. 20.31 crores to it by the appellant herein but that relief was declined by the DRT and so same relief could not be granted by the DRT in the O.A. of Punjab National Bank. This argument is equally devoid of any merit like the other pleas raised by the learned senior counsel Mr. Ganju. Punjab National Bank had no doubt sought such a direction in the S.A. of respondent no.3 herein and the same was not allowed but that relief was sought at an interim stage and in any case the scope of S.A. proceedings is limited to the enquiry into the correctness of the measures taken by a secured creditor against its defaulting borrower to recover its unpaid loan money and nothing beyond that. However, in the O.A. proceedings under the RDDBFI Act, 1993 DRT conducts full-fledged enquiry into the rival claims and counterclaims of the parties in the O.A. Therefore, in the O.A. of Punjab National Bank in which the appellant herein was also a defendant the DRT could very well give a direction to the appellant herein also to pay to Punjab National Bank Rs. 20.31 crores which direction in my view could be given whether in fact appellant bank had received any money or not out of the sale proceeds of the mortgaged property of respondent no.3 herein.
No other point was urged from the side of the appellant bank.
Mr. Amit Chadha, learned senior counsel for the respondent no.2 (ARC-ASSIGNEE) had supported Mr. Ganju in his submission that since no prayer had been made in the O.A, for a direction to the appellant Bank as well as this respondent to pay money to Punjab National Bank no such direction could be given. This argument has been rejected being devoid of merit and for the reasons already given this submission raised by Mr. Chadha also stands rejected. The submission of Mr. Ravi Data, learned counsel for respondent no.3, the owner of the mortgaged property in question, was that the circumstance that respondent no.2 having not filed any appeal and then supporting the appellant Bank before his Tribunal confirms the charge of collusion‟ between the two. However, in view of my conclusions already arrived at and the fact that DRT as well as my learned predecessor Chairperson having already doubted the genuineness of the entire transactions between the appellant Bank, it‟s so called assignee and the buyer of the mortgaged property by way of a private treaty I need not go into this aspect of collusion all over again.
This appeal thus being devoid of any merit is dismissed.