Kerala Gramin Bank vs Mercy Thankachan And Ors

This is an application filed on 20.08.2018 under sub-section (1) of S.31A of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - hereinafter referred to as 'the Act'- by the applicant/decree holder bank in O.S. No.134/2007 of the Hon'ble Sub Judge Court, Sulthan Bathery, Wayanad District for issuing recovery certificate in terms of the decree dated 16.12.2009 for recovery of the amount due thereunder.

The applicant bank filed O.S. No.134/2007 against the defendant before the Subordinate Judge's Court, Sulthan Bathery, for recovery of debt due and obtained decree dated 16.12.2009 directing the defendants 1 to 7 (as per decree 1,2 and 4 to 8)to pay to the applicant bank the sum of 5,08,826/- with interest @ 16% per annum from the date of suit i.e., 06.10.2007 till realisation and also its costs amounting to 8,766/- on or before 16.04.2010, failing which, by sale of decree 'A' schedule mortgaged property.

According to the applicant bank, the defendants 1 and 2 along with Karimbakudyil Mathai did not pay the debts together with interest and other charges. While the suit was pending one of the defendants Karimbakudyil Mathai expired and defendants 3 to 7 herein are the legal heirs of Karimbakudyil Mathai was impleaded as additional defendants 4 to 8 in the said suit.

The defendants 1 to 7 (Defendants 1 and 2 along with additioanal defendants 4 to 8 as per the decree) filed written statement admitting the suit claim and the suit was decreed in favour of the applicant. The defendants 1 to 7 herein (as per the decree 1, 2 and 4 to 8) is directed to pay sum of 5,08,826/- as the total principal sum adjudged as due as on 06.10.2007, the date of the suit and 8,85,051/- as the interest on the principal sum @16% per annum from 06.10.2007 to 20.08.2018, the date of the OA and 8,766/- as the costs awarded, totalling to 14,02,643/- . They have remitted a sum of Rs.60,000/- on 16.08.2016, Rs.20,000/- on 22.09.2016 and Rs.20,000 on 14.02.2017. After adjusting the said amount, the total amount due is 13,02,643/-under the decree as on 20.08.2015, the date of the OA. The prayer is to issue recovery certificate for recovery of the said amount of 13,02,643/- in terms of the decree.

The defendants were duly served with summons by registered post. But the defendants never appeared nor were they represented and thus they were declared exparte on 05.12.2018.

The decision of the Hon'ble Supreme Court in Punjab National Bank, Dasuya v. Chajju Ram and others [reported in (2000) 6 SCC 655] and the subsequent amendment made to the definition of 'debt' under S.2(g) of the Act would show that the principal and the amount payable as interest and costs under a decree have to be taken into account for determining whether the debt exceeded the minimum postulated in S.1(4) of the Act. The defendants remained exparte and I do not find any mistake in the calculation shown in the OA of the amount claimed as due under the decree.

Amount due under a decree comes within the meaning of 'debt' defined under S.2(g) of the Act. The amount due under the decree on hand as on 20.08.2018, the date of the OA exceeded 10 lakhs.

Though S.31A incorporated by the amendment made to the Act as per Act 1 of 2000, which came into force on 17.01.2000, deals with issuance of recovery certificate in respect of decrees for recovery of debt passed by any court prior to and which remained unexecuted on the date of commencement of Act 1 of 2000, I am of the view that S.31A r/w Ss.1(4), 17(1) and 18 of the Act bars jurisdiction of civil court to recover amount of and above 10 lakhs due to a bank or a financial institution or a consortium of banks or financial institutions under a decree passed by any court subsequent to the commencement of Act 1 of 2000, and by necessary implication empowers the Tribunal to issue recovery certificate for recovery of amount due under such a decree. Any other interpretation will make S.31A redundant and a decree holder bank, which obtained a decree subsequent to the commencement of Act 1 of 2000 for recovery of amount in excess of 10 lakhs, would be unable to approach for recovery of such amount either before this Tribunal or a civil court in view of the bar under Ss.17(1) and 18 r/w S.1(4) of the Act.

Therefore, in view of S.31A r/w Ss.1(4), 17(1) and 18 of the Act the applicant bank is entitled to get recovery certificate issued to recover under the decree on hand the sum of 13,02,643/- with interest on the sum of 5,08,826/- @16% per annum from 20.08.2018 till realisation from the defendants 1 to 7 herein and by sale of the decree schedule mortgaged property. The liability of defendants 3 to 7 is limited to the extent of the properties inherited by them being the legal representatives of late Karimbakudiyil Mathai.

The decision of the Hon'ble High Court of Kerala in Glenny v. The Catholic Syrian Bank Ltd. [reported in 2003 (2) KLT 973 (F.B.)] would show that once the amount of debt due under a decree passed by a court exceeds 10 lakhs, such a decree has to be treated as a deemed decree passed by the Tribunal. Therefore, in view of Ss.19(22) and 31A(2) r/w Ss.1(4), 17(1) and 18 of the Act jurisdiction of civil court to execute the decree is barred and it is this Tribunal which alone has jurisdiction to recover the amount due thereunder and, the Tribunal, therefore, has to issue recovery certificate for recovery of the amount due under the decree on hand in terms of what has been stated above.

The Hon'ble High Court of Kerala in Mathew v. State Bank of Travancore [reported in 2008 (3) KLT 30] has held that S.31A does not and is not intended to exclude decrees passed or obtained after 17.01.2000 from being decrees within the meaning of S.2(g), and it reads thus:-

"S.2(g) was substituted by Act 1 of 2000 with effect from 17.1.2000 to provide the definition of debt to mean, among other things, 'liability payable under a decree or order of any civil court. But such amendment decree debts could also form the foundation of applications under S.19 of the RDB Act. By virtue of S.31A, even decree debts on the basis of decrees, which have become final before the date of the said amendment would also fall within the net of the proceedings under the RDB Act. That is essentially an enabling provision, which is intended to exclude any contention that the Tribunal did not have the authority to treat debts on the basis of decrees issued before coming into force of Act 1 of 2000 as also debts for the purpose of S.2(g) of the Act. It does not in any manner, and is not intended to, exclude decrees passed or obtained after 17.1.2000 from being decrees within the meaning of S.2(g) of the RDB Act. To hold otherwise would be to classify debts falling under S.2(g) into two groups depending upon the date of the Act viz., 17.1.2000, which would be wholly irrational and with no legitimate foundation. At any rate, the decree against the petitioner was passed only after the coming into force of Act 1 of 2000. It was passed only on 10.12.2004. The question would be whether that decree could be the foundation of proceedings under S.19 of the RDB Act. Firstly, that decree has become final. Secondly, that decree is not challenged as one issued without jurisdiction, on the ground that the decree had exceeded the limit of Rupees Ten Lakhs which would have disabled the civil court to pass a decree. If that be so, after the decree was passed, the debt under it remains a decree debt and when the outstandings under that decree grew to be beyond Rupees Ten Lakhs, it was amenable to the jurisdiction of the Tribunal, as a cause of action, against the debtor."

Thus, viewed in any angle, I find that the applicant bank is entitled to get a final order directing to issue recovery certificate on the following lines:-

(a) In the result, it is ordered to issue recovery certificate in terms of the decree dated 16.12.2009 in O.S. No. 134/2007 of the Hon'ble Sub Court, Sulthan Bathery for recovery of the sum of 13,02,643/-(Rupees Thirteen lakhs two thousand six hundred and forty three only) with future interest on the sum of 5,08,826/-(Rupees Five lakhs eight thousand eight hundred twenty six only) @16% per annum from 20.08.2018 till realisation and also the costs of the applicant bank in this proceedings from the defendants 1 and 2 and by sale of the decree 'A' schedule mortgaged property.

(b) In case of non-realization of claim amount despite the sale of 'A' schedule mortgaged property, the applicant is at liberty to recover from D1 & D2 personally.

(c) The liability of defendants 3 to 7 is limited to the extent of the properties inherited by them being the legal representatives of Late. Karimbakudyil Mathai.

(d) The 'A' schedule to the decree dated 16.12.2009 in O.S No.174/2007 of the Hon'ble Sub Court, Sulthan Bathery shall be appended to this final order.

(e) A certificate of recovery shall be drawn up on the basis of this final order and be issued along with a copy of this final order to the Recovery Officer for recovery of the amount of debt specified under paragraph 12(a) above and for distribution of the proceeds from the sale of the decree schedule immovable property in the order of priority as provided under sub-section (20AB) of S.19 of the Act.

Communicate a copy each of this final order and the recovery certificate to be issued as specified under paragraph 12(e) above to both parties as provided under sub-section (21)(i) of S.19 of the Act r/w R.16 of the Debts Recovery Tribunal (Procedure) Rules, 1993 as amended from time to time.