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Judgment
The appellant bank is aggrieved by the order dated 26.09.2014 passed by the Tribunal below(DRT) dismissing its Original Application(O.A.) filed under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act,1993 for recovery of its loan dues of Rs.54,56,596/- which had not been paid back by its borrowers, the two respondents herein. The appellant bank had given loan of Rs. 60 lacsto the respondents in September, 2010 for buying a BMW car.
Loan was repayable in 59 equated monthly instalments of Rs.1,28,415/-. Interest was payable @ 9.75% p.a. The BMW car having registration no. CH-01AH-8282 purchased by the respondents with the loan moneywas hypothecated with the appellant bank. Besides deed of hypothecation other usual loan documents were also executed by the respondents-borrowers in favour of the appellant bank. The respondents defaulted in repayment of loan instalments after paying some instalments as per the terms of loan. Several instalment cheques were dishonoured and consequently the entire loan, which was payable in instalments, was recalled by the appellant bank. When despite receipt of demand notice the respondents did not clear the outstanding dues of the bank an O.A. was filed in November, 2012 by the appellant bank before the DRT for issuance of a recovery certificate against the respondents.
The respondents appeared before the DRT upon receipt of summons from DRT and filed a common written statement. They admitted the case of the O.A. applicant bank as far as the disbursement ofloan to them for purchase of BMW car is concerned. They also accepted that after payment of some instalments they had defaulted in repayment of balance instalments. Regarding the claim of the appellant made in the O.A. for issuance of a recovery certificate against them is concerned their main defence was that on account of a road accident on 4th August, 2011 the financed BMW car was totally damaged resulting in 'total loss' to the respondents. That car was insured by ICICI Lombard Ltd..which according to the case of the respondents was an associate Company of the appellant. A claim was lodged with the Insurance Company and then a complaint against the Insurance Company was filed before the Delhi State Consumer Forum and therefore, the respondents pleaded the Bank could nor demand any money from them till the matter before the Consumer Forum wasdecided and so the O.A. was prematurely filed. It was also pleaded by the respondents that they had written many letters to the bank to remove the damaged car but that was not done.
Both parties had led evidence before the DRT by way of affidavits.
The learned DRT vide its final order dated 26.09.2014, which is under challenge in the present appeal filed by the bank, totally rejected the claim of the bank and O.A. was dismissed. Feeling aggrieved, the present came to be filed by the bank.
The impugned order of the DRT is re-produced below:-
"This is an application under section 19 of The Recovery of Debts Due to Banks and Financial Institutions Act for recovery of the sum of Rs. 54,56,596/-
D1 is a Private Limited Company, D2 is the Director of the D1 Company, D1 is the borrower and D2 is the co-borrower. The applicant granted loan for purchase of vehicle "BMW/ Gran Turismo" to the defendants. The defendants executed credit facility application, deed of hypothecation and irrevocable power of attorney on 21.09.2010 and availed the loan of Rs. 60 lacs. The loan was to be repaid in 59 EMIs @ Rs. 1,28,415/-. The agreed rate of interest was 9.75% p.a. the vehicle bearing regd. No. CH-01AH-8282 was hypothecated with the applicant bank. The defendant failed to adhere to financial discipline. The loan was recalled by notice dated 10.08.2012. The applicant claims the sum of Rs. 54,56,569/- with interest @9.75% p.a. and cost.
The defendants filed written stated contending as follows:
The applicant has concealed material facts. The vehicle was insured with the ancillary group company of the applicant bank i.e. ICICI Lombard Insurance Company Limited and the applicant is the agent of the insurance company. The vehicle suffered serious damage in road traffic accident resulting in total loss of the vehicle. The accident took place on 04.08.2011. The insurance claim was lodged. The cover policy was also endorsed in favour of the applicant bank to receive the amount of claim from the insurance company. These facts are intentionally concealed by the applicant. On account of unfair trade practices adopted by applicant bank organization, defendant had filed complaint no. 93/2012 before the State Consumer Forum. The Consumer Forum by its order dated 21.01.2013 restrained the applicant bank from the recovery of any amount of instalment against the car loan till final disposal of the consumer complaint. The defendants had repeatedly called upon the applicant bank to take custody of the vehicle which is lying in total loss condition. The vehicle is kept at the workshop of the manufacturer and it is incurring demurrage charges. Defendants hadissued registered letter dated 12.02.2013. The applicant failed to act on the letter.
The points of determination are:
(i) Whether the applicant is entitled to recover the amount as claimed?
(ii) Relief.
The applicant granted loan of Rs. 60 lacs to D1 and D2 and the defendants had executed AW-1/B credit facility application, AW-1/C Deed of Hypothecation and AW-1/D, Power of Attorney. The fact that the loan was availed is not disputed. Defendant had agreed to repay the loan with interest @9.75% p.a. in 59 in 59 EMIs @Rs. 1,28,415/-. The vehicle BMW car bearing registration no. CH-01 AH- 8282 was hypothecated with the applicant bank, this is also not a fact in dispute.
The defendant in his evidence has stated that the vehicle met with a road traffic accident on 04.08.2012 and there was complete loss to the vehicle. The defendant would further say that the vehicle was insured with M/s ICICI Lombard Insurance Company. The documents show that ICICI Bank is an agent of M/s ICICI Lombard Insurance Company. RW-1/A is the true copy of the insurance policy dated 26.09.2010. The insurance policy reveals that the bank is an agent of the State Insurance Company. Defendant says that he has repeatedly requested the applicant bank to lift the vehicle kept in the workshop of the company of the car and he has produced RW-1/B dated 12.02.2013. This letter says that, "as already intimated to you the above vehicle met with an accident on 04.08.2011 while the subject policy was covered for the insurance." It is also stated that the vehicle was immediately shifted to authorized workshop of M/s BMW. The defendants also say that the survey of the vehicle was conducted with respect of the loss on the vehicle at the site workshop where the total loss condition of the vehicle was seen and confirmed by the surveyor deputed. The defendant also intimated that the condition of the vehicle may further worsen by the time lapse and the cost of parking the vehicle may arise which shall be solely and additional claim liability under the insurance policy and therefore once again by this letter called upon applicant to take appropriate steps to take care of the vehicle/salvage so that in case of delayed decision and occasion to pay the claim, the liability against the above kept vehicle at the workshop may be contained. It was reminded to the applicant to note that the further loss on the above count shall be applicant's sole liability. The applicant has not furnished any reply to this letter.
The defendant has pleaded in his written statement that the accident took place on 04.08.2011 where after the insurance claim has been lodged. The defendant will not get the claim amount because the vehicle has been hypothecated and as per the terms the claim from insurance company would be directly received by the applicant. The applicant has kept a complete silence on the position of the vehicle. The defendant has stated that he instituted consumer complaint no. 93/2012 before the State Consumer Forum, New Delhi and the commission has passed order dated 21.01.2013 restraining the bank from recovery of the further instalments. The fact that the consumer complaint is filed is known to the bank. This OA is instituted on 23.11.2012. The accident had taken place on 04.08.2011. So as on the date of filing the OA applicant was aware that the vehicle had met with an accident and it was deposited in the authorized workshop of the car company. Even in such circumstances, the applicant has made an averment in IA No. 881 of 2012 that the defendants are trying to part with the possession of the said vehicle and the said act of the defendants would cause irreparable loss and injury to the applicant bank and would also deprive of its legal and contractual rights which has been acquired by the documentation entered between the parties. The applicant further submitted in paragraph-11 of the IA that "if the defendants succeeded in disposing of the vehicle or remove it from the legal limits of the jurisdiction of this Tribunal", the applicant bank shall suffer irreparable loss and injury. It is inthe above circumstances the applicant requested for appointing a receiver to take over possession and custody of the vehicle. This Tribunal granted expert order in favour of the applicant bank whereby receiver was appointed to take possession of the vehicle. Now, it is clear that the bank was aware that the vehicle had met with an accident and the insurer was duly informed. But even when the applicant was aware of this fact a false affidavit was filed before this Tribunal to secure ex-parte order. Even, after securing the ex-parte order what did the applicant do? The receiver has not filed any report. The receiver did not take possession of the vehicle. The receiver did not take any steps to sell the salvage and recover whatever could be recovered from the primary security. No explanation is offered from the side of the applicant.
AW-1/H is the statement of account. The statement of account shows that the foreclosure was made on 11.10.2012 after the vehicle was met with an accident. The defendant has stated that once the accident took place he did not repay the instalments since he had asked the bank to recover the dues from the sale of vehicle. The insurance company in which the vehicle was insured is an associate company of the applicant bank. The copy of the policy produced will go to show that the applicant is an agent of the insurance company. Thus things were easier for the applicants to settle the claim with the insurance company and recovery whatever amount could be recovered by disposal of the salvage and claim balance amount. The defendant had given consent for sale. It was for the applicant to recover the dues but the applicant did not take any steps. Not only that the applicant is completely silent on this issue even though the defendant had specifically pleaded negligence on the side of the bank in recovering the dues by proceeding against the primary security has been eroded. If, the salvage was disposed immediately the parking charges and demurrages could have been saved. There is no explanation from the applicant why the primary security was not disposed. By the negligent conduct of the applicant bank primary security has been lost or its value has been eroded. The defendant could not have sold the salvage because of the agreement with the applicant thereby the applicant is personally liable for the same. Not only that, suppressing these facts and swearing on false affidavit the applicant requested for appointment of receiver. Even though that application was allowed the receiver did not take possession of the salvage and did not take steps for sale of the same. The applicant is grossly negligent and guilty in primary security being lost/ eroded. The applicant cannot say that primary security was not in their possession. After the accident that took place on 04.08.2011 and when the vehicle was deposited with the authorized workshop and when the fact was intimated to the insurer of the applicant, there was no difficulty for the applicant for recovering the dues to the extent available by disposing the salvage. The applicant is guilty of gross negligence, suppression of material facts and filing false affidavit before this tribunal. In such circumstances the applicant is not entitled to recover the dues.
The applicant has claimed pre-payment charges in AW-1/H foreclosure statement amounting to Rs. 2,64,661/- when the applicant has recalled the loan how applicant can claim pre-payment charges? This is also a claim which the bank is not entitled to. Thus, even the claim is an exaggerated amount. AW-1/E is the notice dated 10.08.2012. The applicant has stated in the notice that the amount due as on date is the sum of Rs. 8,98,905/- is due as on August 6, 2012. The sum of Rs. 50,76,415/- as on 06.08.2012 has been increased to Rs. 54,56,596/- as on the date of filing of the OA. It is not understandable how this much increase could be there on the amount. Thus the entire claim is exaggerated.
On considering the materials placed before me I find that for reason recorded above the applicant is not entitled to recover the amount as claimed. The OA is dismissed and I direct the parties to suffer their respective costs."
The appeal was earlier disposed of by my learned predecessor Chairperson vide order dated28.07.2015 but that order was set aside by the Hon'ble Delhi High Court vide its order dated 19.04.2016 when the same was challenged by the appellant Bank by way of a writ petition(CWP No. 11595/2015). There both sides had agreed for setting aside of the order of this Tribunal and for remand of the matter for a fresh decision of this appeal.
Though counsel for the respondents had appeared in the matter on some dates after remand by the High Court and for some dates hearing of the appeal was got adjourned by him but then he did not appear at all before this Tribunal on the dates of hearing. On 22.0.2019 counsel for the bank was heard but in order to give an opportunity to counsel for the respondents to argue appeal was adjourned 13.03.2019 but on that date also counsel for the respondents did not appear. Hearing was again adjourned to 01.04.2019 and on that date also counsel for the respondents did not turn up to argue and on that date hearing was closed.
After hearing the learned counsel for the appellant bank, Mr.PuneetBhalla and going through the record of the Tribunal below I have unhesitatingly come to the conclusion that the learned DRT was not at justified in dismissing the claim of the appellant Bank. It was rightly argued by Mr.Bhalla that this was a simple case of recovery by a lender against its borrower who had taken loan for purchase of a BMW car and if after taking the loan and buying the car it met with an accident resulting into total loss the borrowers could not withhold the loan money for that reason. Even if the claim lodged with the insurance company, which is claimed by the borrowers to be a part of ICICI Group the appellant's entitlement to get back the loan money from the borrowers does not get curtailed or affected in any manner. The insurance contract between the respondents-borrowers and the Insurance Company was an independent transaction between the two and the appellant bank had nothing to do with the same and its right to get back its loan money was not dependent upon whether the respondents get the insurance claim from the insurance company or not. There was also justification for the DRT to have held that there was negligence in the part of the Bank in not selling the damaged vehicle and due to which negligence primary security was lost and its vale eroded. When the financed vehicle had become total loss there was no occasion for the bank to have made efforts to sell the same. Mr.Bhalla had rightly argued that this was not a case claim being made by the bank for damages/compensation for breach of contract where as a claimant the bank was expected to ensure mitigation of loss. The respondents having not disputed the amount claimed by the bank and its defence being that bank should firs have taken steps to have settled/recovered its dues from insurance company having been found to be without any legal backing the O.A. is liable to be allowed in toto. The relationship, if any, between the appellant bank and the insurance company has nothing to do with the with the claim of the bank from its defaulting borrowers even if the insurance policy in respect of the BMW car in question stands assigned in favour of the appellant Bank. Mr.Bhalla was further right in his contention that as and when insurance claim of the respondents is settled at any stage then only the respondents can claim that the amount of insurance claim which bank might receive should be reduced from the claim amount and in if in the meantime O.A. amount gets recovered by the bank it will release that money to the respondents since the bank cannot get doubly enriched.
In the result, this appeal succeeds. The impugned order dated 26.09.2014 of the DRT is set aside. Consequently, now a recovery certificate shall be issued against the respondents for a sum of Rs.54,56,596/- with interest thereon @ 9.75 % p.a. from the date of filing of the O.A. till realisation of the said decreed amount in full from the respondents, both of whom shall be liable jointly and severally. The DRT shall daw the recovery certificate accordingly and forward the same to the Recovery Officer for execution.
Record of DRT be sent back with a copy of this order.