Karan Kumar Kalra And Ors. vs State Bank Of Patiala And Ors.

S.N.H. Zaidi, J

The instant application has been filed by the appellants for modification/recall of the order dated 28.12.2011 whereby the appellants were directed to deposit 25% of the amount shown by the respondent Bank as outstanding in the possession notice dated 11.11.2011 for the entertainment of appeal. The facts giving rise to this application, in brief, are that the applicants have filed an appeal against the order dated 8.12.2011 of the PO of DRT-II. Chandigarh passed in S.A. No. 329/2011, whereby the interim relief sought by the applicants/appellants was declined. Along with the appeal memo, the appellants had filed an application (I.A. No. 846/2011) for wavier of pre-deposit as required under the second proviso to Section 18(1) of the SARFAESI Act for the entertainment of the appeal. The said application was disposed of by this Tribunal vide order dated 28.12.2011 and the appellant/applicants were directed to deposit 25% of Rs. 2.22,31,439.01. the amount shown as outstanding in the possession notice dated 11.11.2011.

The appellants thereafter filed an application (I.A. 36/2011) on 10.1.2012 for directing the Bank to file complete statement of accounts and also for modification/correction of the figure of Rs. 2,22,31,439.01 with Rs. 2,17,67,694.30 and also for adjustment of the payments received by the Bank The said application was later not pressed by the appellants, who filed the instant application and the said 1A was accordingly dismissed on 6.2.2012.

The respondent - Bank has opposed the instant application in its reply to which no rejoinder has been filed by the applicants

Mr. Sanjeev Bhandari, learned Counsel for the appellant/applicants and Mr. S.N. Relan, learned Counsel for the respondent - Bank, were heard on this application.

Though an amount of Rs. 4,05,08,618.93 was claimed by the respondent Bank vide demand notice dated 6.1.2011 issued under Section 13(2) of the SARFAESI Act but, in the possession notice issued on 11.11.2011, an amount of Rs. 2,22,31,439.01 was shown as outstanding. Mr. Relan has pointed out that the said amount had included the amount of interest up to 1.11.2011 and the Bank guarantee amount of Rs. 5,65,000/-. The order dated 28.12.2011. shows that since the Bank guarantees were not invoked by the beneficiaries and the Bank had exercised the lien qua the FDRs pledged with it as margin money for the Bank guarantees and appropriated its amount, therefore, the outstanding amount was reduced in the possession notice. Indisputably an amount of Rs. 1,23,05,000/- of the Bank guarantees was included in the demand notice amount.

According to Mr. Bhandari. since none of the ten Bank guarantees was invoked by any of the beneficiaries, therefore, the entire amount of Rs. 1,23,05,000/- was to be reduced from the amount claimed through the demand notice dated 6.1.2011 but the respondent - Bank did not reduce the amount of three Bank guarantees dated 20.7.2009 totalling Rs. 5,65,000/-. He also contended that since the amount of one of the four FDRs was credited on 10.1.2012. i.e. subsequent to the order dated 28.12.2011. and certain payments were also made thereafter, the appellant/applicants are entitled to the adjustment of those payments and the said order is required to be modified to that extent.

Opposing the applicants' contention, the contention of Mr. Relan is that though it is true that the Bank guarantees were not invoked, yet the Bank had incurred contingent liability on behalf of the borrower and in accordance with the RBI Circular, if any account of the borrower is classified as NPA, then all accounts/limits of the said borrower are to be classified as such and since the borrower's Cash Credit account was classified as NPA, therefore, the Bank guarantee limit account was also classified as such and even if the Bank guarantees were not invoked, the Bank was justified in claiming the amount of Bank guarantee through demand notice dated 6.1.2011.

The contention of Mr. Relan is not tenable in the absence the alleged RBI circular/guideline. Moreover, when the Bank guarantees were not invoked by the beneficiaries, the amount of the Bank guarantee limit account cannot be said to be outstanding against the borrower and that is why the Bank had itself reduced the amount of the Bank guarantees in its possession notice. The appellants are, therefore, entitled to the adjustment of the entire Bank guarantee limit amount of Rs. 1,23,05,000/-, inclusive of Rs. 5,65,000/- of three Bank guarantees dated 20.7.2009 to the demand notice amount.

It is also the case of the parties that for the issuance of the Bank guarantees, certain FDRs were pledged with the Bank. According to Mr. Relan the Bank had exercised its lien over those FDRs and appropriated its amount. As per the statement of account in question issued w.e.f. 31.12.2010 to 18.1.2012, the amounts of three FDRs were credited on 14.9.2011, i.e., prior to the issuance of possession notice dated 11.11.2011 and as such it appears that the amounts of those FDRs were adjusted and the outstanding amount was accordingly reduced in the possession notice.

Mr. Relan has admitted that after the issuance of the possession notice but prior to the order dated 28.12.2011, an amount of Rs. 6,40,815/- was deposited in the account in question and subsequent to the aforesaid order, an amount of Rs. 34,50,439/-, including Rs. 16,41,337/- of the fourth FDR, was further credited in the said account. All the deposits, whether by the appellants or by the principal borrowers, made after the possession notice dated 11.11.2011 or after the order dated 28.12.2011 and credited to the account in question are entitled to be adjusted towards the deposit required to be made by the appellants/applicants in compliance of the said order.

In view of above, it is held that since the Bank guarantees were not invoked by the beneficiary, the Bank guarantee amount of Rs. 1,23,05,000/- did not become due on the borrowers, including the appellants, and since the said amount was included in the demand notice dated 6.1.2011. it is liable to be reduced therefrom. The appellants are entitled to the adjustment of the deposits made subsequent to the issue of possession notice dated 11.11.2011 as well as of the deposits made after the order dated 28.12.2011 for the purposes of compliance of the said order, which is accordingly modified to that extent. The application is disposed of accordingly with the above observations.

Since the time given for the compliance of the order dated 28.12.2011 has expired, the appellants are allowed a further four weeks time to comply with the said order in the light of the observations made above, failing which the appeal shall not be entertained and be dismissed.

List on 16.11.2012 for further orders. Copy of this order be furnished to the parties as per law.