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Judgment
Ashok Menon, Chairperson
The Appellant is a company and is impugning the order dated 15.06.2012 dismissing Review Application No. 3 of 2011 seeking to review the order dated 19.07.2011 in Misc. Application (M.A.) No. 48 of 2010 in Original Application (O.A.) No. 664P of 2001 on the files of the Debts Recovery Tribunal, Pune (D.R.T.).
The Appellant claims to be a borrower of the first Respondent State Bank of India (SBI) which has allegedly repaid the entire dues under an OTS Scheme. The Respondent bank had filed the O.A. for recovery of the amount allegedly defaulted by the Appellant.
The family of the directors of the Appellant company were also doing business in the name of their Avale family and had availed several loan facilities from the SBI. The family had allegedly decided to settle all the loan accounts including the one availed by the company and had approached the bank. On 10.03.2003, a letter was addressed to the SBI by the director of the company proposing an OTS settlement of the outstanding debts for a sum of ₹40 lakhs. The bank vide reply dated 07.07.2003 agreed to the settlement for ₹42 lakhs. However, the name of the company was not mentioned in the letter dated 10.03.2003 and hence, another letter dated 29.04.2003 was sent to the bank mentioning the name of the company as well. There were six facilities availed by the family for the family business including the one availed by the company. Including the amount for which the Recovery Certificate was issued against the company in the O.A., the entire liability was offered to be settled for a total sum of ₹42 lakhs. The said amount was paid on or about 21.06.2005 resulting in the closing of all the loan accounts of the Avale family and the company. A certificate to that effect was also issued by the Chief Manager of SBI.
The Appellant filed M.A. No. 48 of 2010 before the D.R.T. for recalling/ cancelling the Recovery Certificate issued against the company and to intimate the same to the Recovery Officer and consequently stay the proceedings under the certificate, under the provisions of Sec. 26 and 27 of the Recovery of Debts Due to Banks and Financial Institution Act, 1993 (‘RDDB & FI Act’, for short).
The first Respondent appeared and submitted through its Counsel a reply stating that the certificate dated 21.06.2005 was an inadvertent mistake and the loan account of the company has not yet been satisfied. Vide order dated 18.07.2011, M.A. No. 48 of 2010 was dismissed. Aggrieved by the dismissal, the Appellant filed a review application for reviewing the order. Vide the impugned order dated 15. 06.2012, Review Application No. 3 of 2011 was dismissed. Aggrieved by that, the Appellant is in appeal.
The first Respondent bank would contend that the Appellant has filed this appeal intending to deliberately delay the execution proceedings about the Recovery Certificate issued by the D.R.T. against the Appellant company. The fact that the entire loan amount due from the Appellant company to the bank has been paid and settled is denied by the bank. The OTS Settlement was only concerning the five facilities availed by the Avale family. The said fact is clear from the OTS proposal dated 10.01.2003 which would prove that the loan of the company which is the subject matter of the present appeal was never intended to be settled. It is pointed out that the subject referred to in the aforesaid letter mentions a request for compromising the loan proposal of the following:
M/s Sunny Enterprise
M/s Sagar Enterprise
M/s Ujwala Uniform Clothing Co.
Housing loans: -
(i) Amol S Avale & Sunil S Avale
(ii) Smt. Ujwala S Avale & Smt. Latika S Avale
The body of the letter also referred to the aforesaid loans and does not mention anything regarding the loan to the company. In response to this letter, the bank sent a reply on 07.07.2004 to settle the loan for a total sum of ₹42 lakhs provided the amount is paid before 31.07.2004. The letter specifically refers to the proposal made by the Avale family vide letter dated 10.01.2003. This would indicate that the bank had only intended to settle the five accounts mentioned in the letter dated 10.01.2003. However, inadvertently ‘no dues certificate’ was issued by the Chief Manager on 21.06.2005 by adding the name of the company as well which was never proposed or intended. The D.R.T. considered this fact and dismissed M.A. No. 48 of 2010 vide order dated 18.07.2011. The bank had specifically denied the contention that all six facilities including that of the Appellant company were settled for a total sum of ₹42 lakhs. The Appellant intends to take advantage of the inadvertent error that had crept into the ‘no due certificate’ issued inadvertently by the Chief Manager. It is also pertinent that the appellant is a company and in case a settlement was arrived at in respect of its dues to the bank, a resolution must have been taken. There is no such resolution forthcoming. The D.R.T. was, therefore, justified the dismissing the M.A. No. 48 of 2010 and also Review Application No. 3 of 2011. There is no need for any interference in the appeal, submits the Ld. Counsel for the respondent.
The question that arises for consideration in this appeal is whether there was a compromise and resulted settlement of the debt due from the Appellant company named Hasmukh Fashion Point Pvt. Ltd. The document would indicate that a Recovery Certificate was issued in O.A. No. 664-P/2001which orders the certified debtors to pay the Applicant bank a sum of ₹22,86,286/- together with future interest at the rate of 18.5% per annum with quarterly rests from the date of filing of the application and costs ₹25,000/-. This would indicate that the aforesaid amount and interest were due from the Appellant company.
The only question to be decided is whether the Respondent bank had agreed to settle the debt of the Appellant company and the sister concerns of the Avale family as stated by the Appellant. To decide this, the proposal made by the members of the Avale family to the Respondent bank on 10.01.2003 is to be examined. As stated above for the Respondent, the subject of the letter indicates that it was a request for compromising the five loans of the Avale family. It does not mention the compromise of the loan of Hasmukh Fashion Point Pvt. Ltd. The fact would be further clear by reading the letter in its entirety. There is a table of the amounts due towards each of the loan facilities as thus:
Name
Amount
(in lakhs)
Compromise Offer
Sunny Enterprise
10.86
13,97,000
Sagar Enterprise
5.00
5,91,000
Ujwala Uniform Clothing Co.
7.10
7,97,000
Housing Loans:
i. Amol S Avale & Sunil S Avale
6.65
6,82,000
ii. Ujawala S Avale & Latika S Avale
5.18
5,33,000
The above table does not specify the loan of Hasmukh Fashion Point Pvt. Ltd. which is the largest with more than ₹23,00,000/- and interest thereon due. On the account of the mentioned five facilities, the amount due was ₹34.79 lakhs and interest. These five facilities were proposed to be settled for a sum of ₹40 lakhs by the members of the Avale family. Vide letter dated 07.07.2004 the Chief Manager of the bank referring to the letter dated 10.1.2003 and the subsequent discussions with the members of the Avale family agreed to consider the compromise proposal for ₹42 lakhs provided the said amount is paid before 31.07.2004. The deposit of ₹11.75 lakhs is acknowledged by the Chief Manager. In case the debt due from Hasmukh Fashion Point Pvt. Ltd. is also included the total principal amount alone due would be around ₹57.79 lakhs and interest would almost double this amount. If that be so, it would not be reasonable to believe that the Respondent bank would have agreed to settle all the six loan facilities including the facility of the company for only a sum of ₹42 lakhs. There was a mortgage created towards security for the amount due from the company. Under these circumstances, it would be fallacious to argue that the bank would have settled the loan for such a pittance. The NOC that was issued by the Chief Manager of the bank to the Avale family including the name of the Appellant company on 21.06.2005 is apparently an inadvertent error.
I, therefore, find no reason to interfere with the findings of the Ld. Presiding Officer in the impugned order. The appeal has no merits and is, therefore, dismissed.