Mrs. Asha Kalra vs Punjab National Bank

Brijesh Sethi, Chairperson

Vide this order, I shall dispose of an appeal filed by the appellant under Section 20 of the RDB Act against the order dated 03.09.2022 passed by the learned DRT in I.A. No.1550/2022 in an appeal filed by the appellant against order dated 21.07.2022 of the Recovery Officer in R.C. 36/2019.

The present appeal has arisen out of the impugned order dated 3. 09.2022 passed by the learned Presiding Officer of DRT-III, Delhi asking the appellant to comply with Section 30-A of the RDB Act. Learned counsel for the appellant has contended that there is no determination of ‘debt’ in relation to the claim filed by Karnataka Bank Ltd. in O.A. No.1486/2018, which is pending before another DRT (DRT-I, Delhi) for adjudication and, therefore, Section 30-A of the RDB Act does not get attracted in the appeal which has been filed by the appellant against the order dated 21.07.2022 of the Recovery Officer in a proceedings initiated pursuant to a separate O.A. filed by another bank.

The learned counsel for the appellant further submitted that the proceedings which are going on before the learned Recovery Officer is with  respect  of Recovery  Certificate  No.36/2019  issued  in  O.A. No.779/2016 filed by respondent no.1, i.e. Punjab National Bank for the recovery of alleged dues against the appellant in which Karnataka Bank was also impleaded as a party. He submits that vide order dated 02.01.2019, the learned DRT has passed the final order in the said O.A. and the relevant portion of which runs as under:-

“The applicant bank shall be entitled to recover its dues by selling the hypothecated goods/assets at the first stage, thereafter the mortgaged property bearing No.A-2/26, Second floor (with roof rights/terrace rights), Rajouri Garden, New Delhi-110027, area measuring 283.5 sq.yds., which shall be sold jointly by Punjab National Bank and Karnataka Bank Ltd. in accordance with law and out of the sale proceeds thereof, the dues of Karnataka Bank shall be cleared at the first instance and if any residual amount is left there, the same shall be adjusted towards the loan account of the applicant bank and further if any dues of the applicant bank is left, the same shall be recovered from the sale of immoveable and moveable assets of the Defendant Nos. 1 to 4.”

Learned counsel for the appellant next submitted that Karnataka Bank had filed an application before the Recovery Officer on 14.10.2019 with a prayer to appoint a Receiver to take physical possession of the property in question but no copy of the said application was furnished to the appellant. Learned counsel for the appellant has contended that thereafter the proceedings were held before the learned Recovery Officer on various dates and finally vide order dated 21.07.2022 the learned Recovery Officer passed an order appointing a Receiver without considering the facts that no copy of the application was served by Karnataka Bank upon the appellant and without granting any opportunity of being heard or even to file reply to the same. Learned counsel has further contended that the order passed by the learned Recovery Officer was without considering the fact that the objections filed by the appellant were already pending before him for decision. The learned counsel has, therefore, contended that the order passed by the learned Recovery Officer is erroneous and against the provisions of the statute by virtue of Section 29 of the RDB Act. It is, therefore, prayed by the learned counsel for the appellant that the order of the learned Recovery Officer be set aside in the interest of justice.

Learned counsel for respondent no.3, i.e. Karnataka Bank has submitted that the appellant has no right to be heard before the learned Presiding Officer, DRT-III, Delhi without depositing the mandatory 50% of the amount of debt as determined and reflected in the recovery certificate, as per the mandate of Section 30-A of the RDB Act. It is further submitted that Section 30-A of the RDB Act uses the word ‘shall’, which shows the intent of the Legislature that making compliance of the said section is mandatory and without complying with the same, the appeal cannot be entertained by the learned Presiding Officer of DRT. According to learned counsel for respondent no.3, the use of the words ‘by any person from whom the amount of debt is due to a Bank or Financial Institution or Consortium of Bank or Financial Institutions’ in Section 30-A of the RDB Act reflects that the debt could be with respect of any or all the banks and not necessarily of a particular bank. It is also contended that the recovery certificate was issued in favour of both respondent no.1 and 3, i.e. Punjab National Bank and Karnataka Bank Ltd. respectively, wherein it has been observed that the respondent no.3 bank is having first charge and thus the same is to be satisfied by auction of the mortgaged property. It is submitted that respondent no.3 bank has been directed by the learned Recovery Officer to take over the physical possession of the mortgaged property in order to satisfy the recovery certificate to the tune of more than Rs.4 crores. The respondent no.3 has, therefore, submitted that no interference is required in the impugned order and has, therefore, prayed for dismissal of the appeal.

I have carefully considered the rival submissions. The final order dated 02.01.2019, which was passed by the learned Presiding Officer of DRT-III, Delhi in O.A. No.779/2016 filed by Punjab National Bank and in which Karnataka Bank Ltd. was also a party (as Defendant No.5), reveals that the learned Presiding Officer has referred to the evidence filed by respondent no.5 (Karnataka Bank Ltd.) and the same is clear from paras 12 and 13 of the said order, which run as under:

“12. The defendant no.5 has also filed its evidence by way of affidavit of Shri Prafulla Chandra B. – Chief Manager, who has also exhibited certain documents such as copy of the details of the security interest with CERSAI as Exh. DW-5/1 and copy of agreement executed between defendant no.5 bank and M/s Shree Durga Packaging as Exh.DW-5/2.

So far as the evidence of the defendants no.1 to 4 is concerned, the right to exhibit the documents by these defendants has already been closed on 14.03.2018, even otherwise, they were also proceeded exparte vide order dated 27. 07.2018.”

The learned Presiding Officer, after perusing the record, has passed the following order/directions on 02.01.2019.

(i) I allow this OA and direct the defendants no.1 to 4 to pay to the applicant bank jointly or severally, within a period of 30 days, a sum of Rs.4,01,37,143.57 (Rupees Four Crores One Lakh Thirty Seven Thousand One Hundred Forty Three and Paisa Fifty Seven Only) together with costs and future interest @12% simple p.a. from the date of filing of this O.A. till the date of realization; failing which the aforesaid amount shall be recovered from the sale of hypothecated stocks/goods, book debt, plant and machineries etc. and in case of shortfall the same shall be recovered from the sale of movable and immovable properties of the defendants no.1 to 4.

(ii) The applicant bank shall be entitled to recover its dues by selling the hypothecated goods/assets at the first instance, thereafter the mortgage property bearing no.A-2/26, second floor (with roof rights/terrace rights), Rajouri Garden, New Delhi-110 027, area measuring 283.5 sq. yds which shall be sold jointly by Punjab National Bank and Karnataka Bank Ltd. in accordance with law and out of sale proceeds thereof the dues of the Karnataka Bank shall be cleared at the first instance and if any residual amount is left there, the same shall be adjusted towards the loan account of the applicant bank and further if any dues of the applicant bank is left, the same shall be recovered from the sale of immovable and movable properties of the defendants no.1 to 4.

(iii) The recovery certificate be issued forthwith and be sent to the Recovery Officer, Debts Recovery Tribunal-III, Delhi.

(iv) Parties Are directed to appear before the Recovery Officer, DRT-III, Delhi on 07.02.2019.

(v) Copies of final order be sent to all concerned free of cost.”

A perusal of the above order reveals that the learned Presiding Officer has allowed the O.A. and ordered the defendants no.1 to 4 to pay to the applicant bank jointly and severally Rs.4,01,37,143.57 together with cost and future interest within a period of 30 days. The Presiding Officer has also ordered that the applicant bank shall be entitled to recover its dues by selling the hypothecated goods/assets at the first instance and thereafter by selling the mortgaged assets jointly by Punjab National Bank and Karnataka Bank in accordance with law. None of the parties have averred that the above order dated 02.01.2019 of the learned Presiding Officer in O.A No.779/2016 has been challenged before this Tribunal (Appellate Tribunal). Therefore, the above order, whether it is right or wrong, has attained finality. Since it is clear from the order that Punjab National Bank and Karnataka Bank can jointly sell the property in accordance with law for recovery of Rs.4,01,37,143.57, the contention of the learned counsel for the appellant that recovery certificate could not have been issued in favour of Karnataka Bank and the learned Recovery Officer could not have initiated proceedings against the appellant cannot be accepted.

Perusal of record further reveals that after passing of the order dated 02.01.2019, the learned Presiding Officer has issued the Recovery Certificate and thereafter the learned Recovery Officer has initiated recovery proceedings against the appellant. The order dated 21.07.2022 passed by the learned Recovery Officer runs as under:-

“The Matter has been taking through Video Conferencing (VC) because of suspension of physical hearing of cases in this Forum due to spread of COVID-19 virus in the city.

Counsel for CD#5 Performa Party (Karnataka Bank Ltd.) submitted that he has first charge on the mortgaged property and so he has filed two applications (i) Change of AR vide dy no.4552 dated 20.07.2022 and (ii) appointment of Court Receiver for taking possession of the mortgaged property vie dy. No.4553 dated 20.07.2022.

Counsel for CH Bank submitted that inspite of orders directions of the Forum dated 13.01.2020 & 04.01.2022 the CDs still not provided copy of affidavit of assets and rejoinder filed by the CDs

Counsel for CD#1 to 4 submitted that he has not received the application field by CD#5 (Karnataka Bank Ltd.) and it should be provided to him before appointment of the Court Receiver.

It is observed by the Forum that the appointment of Court Receiver in this matter for taking possession of mortgaged property has been advertently delayed by the CDs on the pretext or the other, so this Forum is of the view that to proceed in Recovery procession of the property is necessary

DIRECTION

Karnataka Bank Ltd. is directed to provide copy of both the applications filed by them to CD#1 to 4

This Forum is of the view that the physical possession of the mortgaged property be taken under Section 25(AA) of RDB Act, 1993 before putting the same on public auction hence, I hereby appoint Shri Krishan Dutt Thapilyal, Advocate Mob. NO.9711678169 & 9821290062 as a Court Receiver to take the physical possession of the property bearing No.A-2/26, Second Floor (with Roof Rights/terrace rights), Rajouri Garden, New Delhi-110027 (area measuring 283.5 Sq. yards.)

Court Receiver is directed to take over the physical possession by removing any impediments coming over in the way of taking over the physical possessions including break open the pad locks/doors. Court Receiver is directed to deposit the keys of the property in the Registry of this Tribunal. Court Receiver is also directed to serve advance notice as per law and follow all guidelines before taking the physical possession.

The Fees of the Court Receiver is fixed at Rs.35,000/- along with misc. expenses (50% fee in advance and 50% shall be paid after completion of task), which shall be borne by the Karnataka Bank Ltd.

Karnataka Bank Ltd. and CH Bank are directed to depute one officer each to coordinate with Court Receiver for taking physical possession of the mortgaged property. Court Receiver is directed to file the report on or before the next date of hearing.

SHO of the concerned area is directed to provide adequate police force including lady constables to Court Receiver for taking over the peaceful physical possession of the property.

ORDER DASTI

List the case on 09.09.2022.

(SUDHIR KR. TRIVEDI)

RECOVERY OFFICER-II,

DRT-III, DELHI”

The appellant had, thereafter, filed an appeal against the above order dated 21.07.2022 passed by the Recovery Officer before the DRT and also an application for holding that the provisions of Section 30-A of the RDB Act is not applicable to the facts of the case. The learned Presiding Officer of DRT vide its order dated 03.09.2022 has, however, held that Section 30-A of the RDB Act is applicable in the case and the appeal cannot be entertained. The said order of the learned Presiding Officer is re-produced and it runs as under:-

“1. This matter is taken up by this Tribunal through Video Conferencing.

Heard Ld. counsels for the parties on IA No.1550/2022.

Heard Ld. counsels for the parties on the point of compliance of Section 30A of RDB Act as well as on the stay order passed by this Tribunal on previous date i.e. 18.08.2022.

It appears that the contentions of Ld. counsel for the party aggrieved form the order of Ld. Recovery Officer is based on merit of the order, which shall be considered after admission of the appeal. So far as, question of court fees is concerned, the provision of Section 30A of RDB Act incorporates the law which runs interalia:-

“30A. Deposit of amount of debt due for filing appeal against orders of the Recovery Officer.- Where an appeal is preferred against any order of the Recovery Officer, under section 30, by any person from whom the amount of debt is due to a bank or financial institution or consortium of banks or financial institutions, such appeal shall not be entertained by the Tribunal unless such person has deposited with the Tribunal fifty per cent. Of the amount of debt due as determined by the Tribunal.”

In the light of the aforesaid mandatory provision, the interim stay order dated 18.08.2022 is hereby recalled. With the above said directions, IA No.1550/2022 stands dismissed accordingly.

Since, appellant herein has not deposited the requisite court fees as per Section 30A of RDB Act, therefore, this Tribunal is not inclined to entertain this appeal for want of court fees. However, it is made clear that in case appellant herein deposits the requisite court fees, this appeal shall be listed before this Tribunal for admission of same.

Let the matter be placed before Ld. Registrar on 15. 09.2022 for removal of objection with regard to deposit of requisite court fees.

A copy of this order be sent to Ld. Recovery Officer for information and necessary compliance.

(Deepak Nath Tiwari)

Presiding Officer,

DRT-III, Delhi”

Perusal of the above order reveals that the learned Presiding Officer has observed that contentions of learned counsel for the party aggrieved by the order of learned Recovery Officer, dated 21.07.2022, is based on the merit of the order, which can only be considered after the appellant deposits 50% of the amount of debt due as determined by the Tribunal as envisaged by Section 30-A of the RDB Act. Since the appellant has not made the requisite deposit as per Section 30-A of the Act, the learned Presiding Officer has not entertained the appeal.

This Tribunal has given its thoughts to the above matter and is of the opinion that there is no infirmity in the above order. The learned Presiding Officer, vide its order dated 02.01.2019, has clearly directed for recovery of dues by selling of the mortgaged property jointly by Punjab National Bank and Karnataka Bank for recovery of debt due, i.e. Rs.4,01,37,143.57. Thereafter, the learned Recovery Officer has initiated proceedings pursuant to the recovery certificate issued by the learned Presiding Officer. In case the appellant finds that there is an infirmity in the order passed by the learned Recovery Officer, he can challenge the same under Section 30 of the RDB Act and for the said purpose, 50% of the debt due as determined by the Tribunal has to be deposited with the learned Presiding Officer, DRT under Section 30-A of the Act, which has not been done by the appellant in the present case.

In view of the above discussion, this Tribunal is of the opinion that there is no irregularity or illegality in the order passed by the learned Presiding Officer. The appeal is, therefore, dismissed.

Before parting with this appeal it is also observed that in the present appeal also, the appellant had to cross the hurdle of complying with the condition of pre-deposit as envisaged under Section 21 of the RDB Act, which runs as under:-

“21. Deposit of amount of debt due on filing appeal.– Where an appeal is preferred by any person from whom the amount of debt is due to a bank or a financial institution or a consortium of banks or financial institutions, such appeal shall not be entertained by the Appellate Tribunal unless such person has deposited with the Appellate Tribunal fifty per cent. of the amount of debt so due from him as determined by the Tribunal under section 19:

Provided that the Appellate Tribunal may, for reasons to be recorded in writing, reduce the amount to be deposited by such amount which shall not be less than twenty-five per cent. of the amount of such debt so due to be deposited under this section.”

The appellant has not made the pre-deposit of 50% of the debt due. On that account also the appeal is liable to be dismissed as not entertainable.

File be consigned to record room.