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Judgment
Respondent no.2 M/s AEC Ssangyong Ltd. had taken loan from respondent no.1 IFCI Ltd. To secure the re-payment of the loan mortgage of land admeasuring 30.5 acres in survey Nos. 210,241,241/1 to 3, 242/2 and 243 situated at Dhodipada-Morkhal Road, village-Morkhal, Silvassa(Dadra & Nagar Haveli) was created. Respondent no. 2 had taken loan from respondent no.2 Bank of India also and it also had a pari passu charge over the said land. The said borrower Company defaulted in repayment of the loans taken from both the banks. IFCI Ltd. initiated proceedings under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act,1993 ('RDDBFI Act') for the recovery of its dues before the Tribunal below (DRT). IFCI Ltd. obtained a recovery certificate from the DRT and the recovery certificate was forwarded by DRT to the Recovery Officer attached to it for the execution and recovery of the decretal amount which was allowed to be recovered by way of sale of the mortgaged land also. The proceedings before the Recovery Officer were registered as RC.No. 241/2002.
The Recovery Officer had put the mortgaged land to auction with a reserve price of Rs. 307 lacs but before the same could be sold, it appears that there was some kind of partial settlement(OTS) between the borrower Company (CD) and IFCI (CH.) However, before the mortgaged land could be actually sold the CH IFCI informed the recovery officer that respondent no.3 herein M/s had agreed to purchase for Rs. 380 lacs the mortgaged property by private treaty and since despite attempts having been made by the recovery officer to sell the same it did not attract any buyer the same could be sold to the said intending buyer. The recovery officer also showed his inclination to sell the mortgaged property to respondent no.3 herein for Rs. 380 lacs. However, since the said interested buyer failed to make the agreed payment within the agreed time the IFCI requested the recovery officer on 16.03.2009 that since the CD had failed to honour its commitment the amount paid by the CD had been forfeited and so the mortgaged property could be put to auction again. Accordingly, the recovery officer once again resumed auction process and fixed the auction for 18. 12.2009.
The appellant herein entered the scene at that stage with a different story. It filed 'application/objection' before the Recovery Officer on 24.11.2009 claiming that it was approached by respondent no.3 herein, which held majority of shareholding in appellant Company, in the year 2008 to join it in the purchase of the mortgaged land in question and that the property will be purchased in the name of appellant herein from IFCI Ltd. Then there was an agreement with IFCI Ltd. and the borrower Company(as a confirming party) to have the mortgaged land sold to the appellant after getting necessary permission from the DRT for a sale consideration of Rs. 380 lacs and as per the agreement IFCI Ltd. had received a total sum of Rs. 170 lacs from the appellant as part payment. The sale agreement, however, did not fructify since the appellant could not pay the full sale consideration to IFCI Ltd. within the agreed period due to global economic slowdown. Accordingly IFCI Ltd. was asked by the appellant to refund Rs. 170 lacs which it had received from the appellant. That money was not returned and on the contrary IFCI Ltd. forfeited and appropriated the same in the loan account of the borrower Company, respondent no.2 herein, claiming that there was no independent agreement between IFICI and the appellant herein which was acting as the agent of the borrower Company. It was further alleged that on the one hand IFCI had accepted Rs. 170 lacs from the appellant-objector and which amount ad been kept in 'No Lien Account' and on the other hand it was seeking auction of the mortgaged land which was to be sold in the name of the objector which the IFCI could not lawfully do. It was also claimed in the objection petition that IFCI was wrongly claiming that the appellant was doing everything on behalf of the borrower Company. It was claimed by the appellant that the mortgaged property could not be sold till the money paid by the objector to IFCI was returned to the objector.
The prayers were accordingly made by the appellant-objector in its objection petition filed on 24.11.2009 before the Recovery Officer for its impleadment in the ongoing recovery proceedings and for staying the sale of the mortgaged land in question till the return by IFCI Ltd. Rs. 170 lacs to the objector.
The learned Recovery Officer rejected the objections of the appellant herein vide order dated 16.12.2009. The appellant-objector then challenged that order before the learned Presiding Officer of DRT who decided the appeal under Section 30 of RDDBFI Act,1993 vide his order dated 20.05.2015, which is now being challenged by the appellant-objector, and directed the borrower Company, respondent no.1 herein to refund Rs. 170 lacs with interest to the appellant herein.
The impugned order of the learned Presiding Officer narrates the entire background facts giving rise to the filing of objections before the Recovery Officer by the present appellant and, therefore, in order to avoid repetition relevant parts of that narration the impugned order are being re-produced below:-
"1. This appeal has been filed by the appellant under Section 30 of the Recovery of Debts Due to Banks and Financial Act, 1993 challenging the order dated 16.12.2009 passed by the Recovery Officer, DRT-I Delhi in RC No. 241/2002 titled IFCI Vs AEC Ssangyong Limited and Others. By way of order dated 16.12.2009, the Ld. Recovery Officer has dismissed the objections filed by the appellant herein regarding sale of land situated at Dhodipada-Morkhal Road, Village Mokhal, Silvassa (Dadra & Nagar Haveli).
Brief facts as culled out from the present appeal are that the respondent No. 1 herein has filed an Original Application before the Tribunal against respondent No. 2 and Others for recovery of certain amounts. The said OA was allowed by my Ld. Predecessor and recovery certificate being RC No. 241/2002 was issued. During the pendency of recovery proceedings, the Ld. Recovery Officer put the impugned property to public auction. The appellant herein filed its objections before him.
......................................................................"
In these circumstances, the appellant has filed the present appeal challenging the order dated 16.12.2009 and prayed to set aside the said order and also to directed the respondent No.1/ICI and respondent No. 4/Bank of India to return to the appellant the amount of Rs. 1.70 crores deposited by the appellant for purchase of the land together with interest @18% p.a. from the date of receipt of individual amounts till the date of payment.
As per the case of the appellant, the respondent No. 3 approached the appellant for jointly purchasing the property in question for a total sale consideration of Rs. 380.00 lacs. The land was scheduled to be auctioned by the Recovery Officer on 18. 12.2009. Bank of India/respondent No. 4 is the Co-lender alongwith IFCI. As per the agreement between the parties, the appellant through respondent No. 3 deposited an initial amount of Rs. 25.00 lacs with the respondent No. 4 and Rs. 15.00 lacs with respondent No. 1, totalling a sum of Rs. 40.00 lacs with the arrangement that the said amount be kept in "No Lien Account".
IFCI has accepted the said arrangement and the amount was kept in a No lien Account. As per the arrangement between the appellant and respondent No. 3, the sale of the land is required to be confirmed through this Tribunal and subsequently the Sale Certificate shall be issued by this Tribunal in favour of appellant on payment of agreed consideration amount. The said arrangement was in the knowledge of IFCI and it had accepted the same without any objection, whatsoever.
Subsequent thereto, the respondent NO. 2 wrote a letter to IFCI on 08.07.2008 (Annexure-A-2) for their approval and confirmation of the arrangement. The appellant also wrote a letter to respondent No. 1 on 08.07.2008 (Annexure-3) for their approval and confirmation of arranging sale certificate from DRT on payment of consideration amount of Rs. 380.00 lacs. He also deposited an amount of Rs. 20.00 lacs in a No. Lien Account. In response thereto, the respondent No. 1 vide letter dated 08.07.2008 (Annexure A-4), issued their confirmation for the sale of the said land in favour of the appellant on receipt of the sale proceeds. In the said letter, the respondent No. 1/IFCI also assured the appellant that the said amount will be kept in a No Lien Account till the sale Certificate is issued. Thereafter, the appellant further made a payment of Rs. 75.00 lacs (Rs. 60 lacs to IFCI and Rs. 15.00 lacs to BOI) towards the total consideration of Rs. 380.00 lacs vide letter dated 01.09.2008 (Annexure A-5).
It has been further contended that after receiving the said payment, the respondent no. 1/IFCI wrote a letter dated 08.09.2008 (Annexure A-6) to respondent No. 2 putting a condition before them that if the appellant fails to pay the entire sale consideration on or before 20.12.2008, the amount of Rs. 80.00 lacs deposited by the appellant in a No Lien Account shall be forfeited. The appellant wrote a letter dated 23.10.2008 to IFCI and conveyed its non-acceptance of the condition of forfeiture of the said amount. The appellant intimated the IFCI that the question of forfeiture of amount deposited in a No Lien Account is totally against the interest of a genuine investor and due to liquidity crunch in the financial markets, the appellant is unable to meet the time frame put by IFCI. Further, to show their bonafides, the appellant proposed an amicable resolution to the issue and agreed to release an additional amount of Rs. 100 lacs within 3 working days in the "No Lien Account" subject to IFCI agreeing to its following conditions (Annexure A-7):-
(i) Condition of forfeiture of advance paid by the appellant will not be applicable since the money is paid in "No Lien Account".
(ii) Time for payment of balance amount be extended till 12.03.2009.
(iii) Interest payment shall be waived on the balance payment after making the payment of Rs. 100.00 lacs.
It has also been alleged that the IFCI/respondent No. 1 replied to this letter vide letter dated 29.10.2008 (Annexure A-8) and conveyed their consent to the aforesaid request and asked the appellant to deposit further amount of Rs. 100.00 lacs on or before 31.10.2008 and the remaining Rs. 150.00 lacs on or before 12.03.2009 in the "No Lien Account". In furtherance to the same, the appellant herein deposited Rs. 50.00 lacs with the respondent No.1/IFCI on 31.10.2008 in a "No Lien Account". However, as per the appellant, in view of the vulnerable financial situation, the appellant could not pay the total amount of Rs. 100.00 lacs as proposed in its letter dated 23.10.2008. Hence, by deposit of this Rs. 50.00 lacs, the appellant herein deposited a total amount of Rs. 170.00 lacs (Rs. 130.00 lacs with the IFCI and Rs. 40.00 with the BOI) towards the land consideration in a "No Lien Account".
It has further been alleged that subsequent to this, the appellant received a letter from the IFCI dated 16.12.2008 (Annexure A-10) through respondent No.2 regarding revocation of OTS and forfeiture of the amount deposited by the appellant in the "No Lien Account". The appellant immediately wrote a letter dated 26.12.2008 (Annexure A-11) to IFCI explaining the current market conditions and further submitted that the money cannot be forfeited by IFCI without complying with the conditions of their approval letter dated 08.07.2008, wherein IFCI has clearly stated that till the confirmation of the sale by the DRT Delhi, the amount shall be kept in the "No Lien Account". In response to that IFCI vide letter dated 09.01.2009 (Annexure A-12) intimated the appellant about appropriation of the amount of Rs. 170.00 lacs deposited by the appellant in the "No Lien Account".
It has further been alleged that thereafter appellant came to know that the Recovery Officer, DRT-I Delhi has issued a sale proclamation for auction of the subject land on 18.12.2009 (Annexure A-14) without disclosing the ongoing transaction under which the appellant was to purchase the subject land for consideration of Rs. 380.00 lacs and out of which Rs. 170 lacs was already deposited. The appellant filed his objections (Annexure A-15) before the Recovery Officer. However, the Recovery Officer failed to decide the said objections till 16. 11.2009 and the auction was scheduled for 18.12.2009, the appellant herein filed the aforestated writ petition before the Hon'ble High Court. During the pendency of such writ petition, the Recovery officer has dismissed the objections of appellant herein vide impugned order dated 16.12.2009. The Hon'ble High Court vide order dated 17.07.2014 disposed off the above-mentioned writ petition with the directions as mentioned above, hence the present appeal.
The IFCI/respondent No. 1 has filed its reply submitting that appellant is a sister concern of respondent No. 2/ASL and is privy to the settlement/OTS referred by IFCI. It has further been submitted that the appellant became a party to the transaction in question through ASL/respondent No. 2 which is clear from the letter of ASL/respondent No.2 dated 08.07.2008 in which it has been clearly stated that respondent No. will buy the mortgaged land in question towards the discharge of respondent No. 2's liability of repayment of loan of IFCI for a total sum of Rs. 380.00 lacs in the name of appellant which according to respondent No. 2 is the sister concern of respondent No. 3 and in which respondent No. 3 has majority stake. It was in these circumstances that the IFCI consented for the sale in question. Thus, the appellant cannot claim that it is not privy to the transaction in question.
It has further been submitted that in spite of acceding to the request of appellant as contained in his letter dated 23. 10.2008, the appellant did not make the payment in terms of the said letter and therefore, the appellant defaulted in honouring its commitment. It is stated that the action of IFCI in forfeiting the amount deposited in no lien account as well as revoking the said arrangement is completely in accordance with the settled legal position. It has also been denied that the IFCI cannot forfeit the amount without complying with the conditions of their approval letter dated 08.07.2008 wherein IFCI has clearly stated that till the confirmation of sale by the DRT Delhi, the amount shall be kept in No Lien Account. It has been submitted that the sale in question was dependent on the payment of entire sale consideration an since the appellant admittedly did not make the payment of entire sale consideration, the amount deposited by the appellant was kept in No Lien Account. The said amount kept in no lien account was in fact towards to repayment of the loan in question in terms of respondent No. 2's letter dated 08.07.2008 and subsequent correspondence by the appellant itself with the IFCI. It has further been submitted that the IFCI has shown due indulgence to the appellant by accepting its proposal for extension of time for payment of sale consideration. However, the appellant did not even comply with the offer made by itself in this regard and defaulted. Thus, the appellant cannot claim equity when it has itself defaulted in discharge of its legal obligations arising out of agreement.
It has further been submitted by the IFCI that since the recovery proceedings/execution proceedings are going on before the Ld. RO, there was no eventuality in which the land could be sold to the appellant. As per the provisions of DRT act, the said land, if at all sold, could be sold by public auction and that too by the learned DRT. It was in the eventuality of the settlement of dues that the land in question could have been released by the DRT on payment of entire settlement amount. In view of this, it has been prayed to dismiss the present appeal.
The respondents' No. 2 and 3 also filed their reply to the present appeal and submitted that the impugned order does not suffer from any infirmity. The IFCI has rightly forfeited the amount of Rs. 170.00 lacs which was deposited as part payment towards the settlement amount of Rs. 3.80 crores. It has further been alleged that as per the documents placed on record by the appellant, the appellant had agreed to pay an amount of Rs. 380. 00 lacs to IFCI in order to have the Sale Certificate for the land in question. However, the appellant has defaulted in making the payment of Rs. 380.00 lacs and vide letter dated 23. 10.2008 requested the IFCI to extend the time for making the balance payment. The IFCI vide letter dated 29.10.2008 agreed to extend the time for receiving the balance payment. However, since the appellant had again defaulted in making the payment within time, therefore, IFCI has forfeited the amounts which are deposited by the appellant and the same is legally correct. It has further been alleged that this Tribunal is not competent to decide the issue of forfeiture of amount and the same can only be decided by a civil court. Lastly, it has been contended that the issue of settlement between the parties is an internal arrangement between two and the same depends upon the financialpolicy and decision making of the bank and the same cannot be questioned by the court. In nutshell, it has been prayed to dismiss the present appeal.
The respondent No. 4/BOI has also filed its reply on the same lines of IFCI and prayed to dismiss the resent appeal.
I have heard the arguments advanced by Ld. Counsel for the parties and gave my thoughtful consideration to the same. I have also gone through the entire material available on record.
Ld. Counsel for the appellant argued that the appellant was not acting either as an agent or as a representative of ASL/respondent No. 2 in its dealings with regard to the said offer with IFCI. At no point of time, the appellant represented to IFCI that it was making payments to IFCI/BOI on behalf of respondent No.2/ASL. He has also referred letters dated 8. 07.2008 written by the IFCI to appellant and appellant to the IFCI. He further submits that in various correspondences, the IFCI has written directly to the appellant which clearly proves that the appellant is acting on its own and not on behalf of the ASL. He further submits that the amount of Rs. 170.00 lacs was deposited by the appellant in a No Lien Account in the name of "IFCI Limited A/c AEC Ssanygong Ltd.). The payments made to Bank of India were also in No Line Account. He further submits that in the letter dated 08.07.2008, it was clearly mentioned that payment was made in the No Lien Account to show bonafides and it was clearly stipulated that payment of agreed consideration of Rs. 380 lacs for the subject property was for arranging sale certificate for the property from DRT Delhi. IFCI also confirmed that money would be kept in the No Lien amount deposited in the No Lien Account, in no circumstances can be forfeited or appropriated. It can only be appropriated upon issuance of sale certificate by the DRT Delhi.
Ld. Counsel for the appellant further argued that vide letter dated 08.09.2008, the IFCI sought to introduce a condition of forfeiture of money but the appellant vide letter dated 23. 10.2008 rejected the said condition and after considering the said letter dated 23.10.2008, IFCI agreed to the request of appellant company and requested appellant to make balance payment. Hence the condition of forfeiture would not apply in the present case.
Ld. Counsel for the appellant further argued that the IFCI in para 38(c) of its reply acknowledged the fact that since recovery proceedings were going on before DRT, land could only be sold to the appellant by the DRT and not by the IFCI. The appellant further submits that the jurisdiction of DRT is exclusive in matters of adjudication and recovery and all matters connected thereto can only be adjudicated by DRT and no other court. Therefore, he submits that the arguments of respondents that this Tribunal has no jurisdiction to hear this appeal are baseless. In support of his contentions, he referred the judgment of Hon'ble Bombay High Court in the matter of Hill Properties Ltd. Vs Union Bank of Indian.
Ld. Counsel for the appellant further argued that OTS offer dated 17.02.2011 of ASL to IFCI/Bank of India is on the clear premise that the amount of Rs. 170 lacs deposited by the appellant would be appropriated by IFCI/Bank of India by way of onetime settlement. The IFCI consented to the same vide letter dated 15.03.2011 and they have challenged the same before this Tribunal in view of the liberty granted by the Hon'ble High Court vide order dated 17.07.2014. He further submits that the contention of IFCI that the appellant has no privity of contract with the IFCI is totally wrong and misplaced.
Ld. Counsel for the appellant further argued that the respondents No. 2 and 3 have contended before this Tribunal that IFCI has rightly appropriated the amount paid by the appellant towards the outstanding dues of the borrower. He submits that the stand of the respondents No. 2 and 3 is contrary to the stand taken by them in writ petition No. 13923/2009 filed by the appellant before the Hon'ble High Court wherein they have contended that IFCI has no right to appropriate the money deposited by the appellant in a No Lien Account. He, therefore, argued that these respondents cannot be allowed to take different stands at different forums.
He, therefore, submits that the Recovery Officer has failed to consider the prayer of the appellant and prayed that the impugned order of Ld. RO be recalled/set aside and the amount of Rs. 170 lacs be refunded alongwith upto date interest.
Ld. Counsel for the respondent No. 1/IFCI submits that there is a privity of contract between the respondent No. 1 and respondents No. 2 and 3/borrower and mortgagor and there is not privity of contract between the appellant and respondent No. 1. She further submits that as per the OTS arrived at between the IFCI and borrowers, they were supposed to deposit Rs. 380. 00 lacs with the bank within the time stipulated. However, they have failed to do so. She further submits that letters which were addressed to the appellant were not sent directly to the appellant but were sent to the borrower/mortgagors. She further submits that the bank has not declined the forfeiture clause. Thus, when the appellant failed to deposit the remaining amount of the settlement within the stipulated time, the IFCI has forfeited the said amount already deposited by the appellant towards the compromise and appropriated the same in the account of the respondent No.2/borrower.
Ld. Counsel for the respondent no. 4/BOI had adopted the arguments advanced by respondent no. 1/IFCI and he further submits that the Bank of India has already appropriated the amount received by it from the appellant towards the compromise.
Ld. Counsel for respondents No. 2 and 3 denied appropriation of amount by the IFCI. Ld. Counsel for the respondents No. 2 and 3/borrower and mortgagor submits that this Tribunal has no jurisdiction to decide the issue of forfeiture of amount and the same can only be decided by a Civil Court........................................
He further submits that since the transactions were between the respondent No. 1 FI and borrowers, therefore, the Ld. RO has rightly rejected the objections of the appellant. He further submits that the appellant herein has challenged the order of Recovery Officer before the Hon'ble High Court instead of before this Tribunal. Since the factual aspects are to be determined, therefore, Hon'ble High Court has disposed off that writ petition with the direction of this Tribunal to decide the matter. He further contends that on the assurance of the appellant, the respondent No.2 has entered into the OTS with the bank. However, because of inaction of the appellant, that OTS was failed, therefore, borrowers have suffered losses due to inaction of the appellant. He further submits that another OTS was arrived at between the bank for Rs. 360.00 lacs which is Available at page 193 of this petition whereby the amount deposited by the appellant of Rs. 170 lacs was already adjusted and thereafter settlement was arrived at for Rs. 360 lacs. The property has already been auctioned and the auction purchaser has deposited the amount and the same was challenged before the DRT and thereafter before the Hon'ble DRAT and Hon'ble high Court vide order dated 07.04.2015 has directed to the borrower to refund the amount the amount of auction purchaser by 30.04.2015. However, he submits that the borrower has failed to deposit the said amount and as per the orders of Hon'ble High Court the sale has been confirmed in favour of the auction purchaser.
I have considered all the aspects of the present appeal in detail. So far as the argument of respondents No. 2 and 3 is concerned that this Tribunal is not competent to decide the issue of forfeiture, the same is totally vague and misplaced. Keeping in view the controversy involved in the matter, there is no doubt at all that this Tribunal has no jurisdiction to entertain the issue involved. This objection of the respondent No. 2 & 3 is rejected.
The issue involved in the present appeal is whether the IFCI is entitled to forfeit the amount deposited by the appellant towards purchase of property-in-question. As per the contention of IFCI, the appellant is acting as an agent of borrower and IFCI has entered into a settlement with the borrower and since the borrower has failed to pay the settled amount within the stipulated time, they have cancelled the settlement and forfeited the amount already deposited by the appellant. It has also been argued that respondent No. 3 wh is a sister concern of respondent No. 2 has the majority stake in the appellant company.
On the other hand, the contention of appellant is that he is not acting on behalf of anyone. No money has been invested by the respondent No. 3 in the present company. The entire money has been invested by the appellant. It has also been brought to the notice of this Tribunal that the appellant has filed an affidavit before the Hon'ble high Court On 14.07.2010 and gave the details of the shareholding and directorship of the appellant. As per the said affidavit, the appellant was formed as a special purpose vehicle for operationalising the SEZ project. AMPL and Fast Mobile Data Services (FMDD) are partners in the appellant in the ration of 60:40 equity partnerships. The entire investment for this project has been made by FMDS for its 40% stake in the appellant and the contribution of AMPL was only as SEZ approval obtained from Ministry of Commerce.
I have also gone through the various correspondence exchanged between the parties in the present matter. The letter dated 08.07.2008 (Annexure A-2) written by the respondent No.2/borrower to the IFCI reads as under:-
"This is with reference to our ongoing discussions and correspondence, we wish to brig to your kind notice that the buyer M/s AEC Marketing Pvt. Ltd. has already deposited Rs. 25.00 lacs in the past to Bank of India to prove their bonafide and seriousness about purchase of the land at Morkhal, Silvasa for Rs. 380 lacs.
We also wish to inform you that Buyer M/s AEC Marketing Pvt. Ltd. will buy the aforesaid land in the name of M/s Infinity SEZ Private Limited (the name recently changed from earlier name of 'PSR Softcom Private Limited)"a company in which AEC Marketing Pvt. Ltd. have majority stake. We request you to accord your approval and confirm the same to M/s AEC Marketing Pvt. Ltd./Infinity SEZ Private Limited, as well as, provide your consent for the same to DRT.
Assuming the foregoing and to show further bonafide and seriousness towards making payment for land, M/s Infinity SEZ Private Limited is giving a cheque of Rs. 20 lacs favouring 'IFCI Limited A/c AEC Ssangyong Limited 'No Lien Account" under the cover of their letter of even date. Kindly accept the same and issue your official receipt.
We also wish to confirm that M/s Infinity SEZ Pvt. Ltd. will pay the balance amount of Rs. 335 lacs on or before 26th August, 2008. We are seeking this time as a matter of extreme precaution, however, it will be our buyer's endeavour to pay the balance amount of Rs. 335 lacs at the earliest. Trust, you will extend full Co-operation in this matter, as we have really been trying very hard and to our best to complete the partial settlement process at the earliest."
What I have gathered from this letter is that respondent No. 2introduced the appellant herein to the respondent F1 that the appellant is ready to purchase the mortgaged property at Rs. 380 lacs and also that the appellant is a company in which the respondent No. 3 has a majority stake. The borrower has introduced the appellant as a buyer of the property and not that the appellant is paying the amount towards the settlement or if any settlement has already been arrived at between the parties. The amount was also deposited in a No Lien Account. This letter further puts a condition to the IFCI to provide consent to the DRT.
On the basis of correspondence exchanged between the parties during 08.07.2008 to 21.01.2009 clearly reveals that borrower herein i.e. respondents No. has entered into OTS for settlement with an arrangement and in the said arrangement the applicant herein was supposed to deposit Rs. 380 lacs with respondent No. 1 FI. Therefore, I find that the said settlement was basically between the respondents No. 1 and 2 with the help of appellant. Thus, I find that appellant is a necessary party and since appellant has deposited substantial amount of Rs. 170.00 lacs with the respondent FI, therefore, also it is necessary party. OTS is always between the parties and the court or Tribunal has no interference in any of the OTS.
It is important in this matter that respondent No. 2 after failing of the first OTS, again approached respondent No. 1 for fresh OTS vide letter dated 17.02.2011. In the said letter, the respondent No. 2 admitted that payment made by the appellant was appropriated towards their liability. The relevant portion of letter dated 17.02.2011 of respondent No. 2 to respondent No. 1 reads as under:-
"That AEC Ssangyong Ltd. had entered into One Time settlement with IFCI in April, 2008 duly approved by IFCI in June, 2008. Towards the part payment of said settlement Rs. 170 lacs was paid by us by arranging the same from Infinity SEZ. Due to default in payment of OTS terms, the said OTS was revoked and the amount has already been appropriated by IFCI Ltd. towards our liabilities. As we have already made payment of Rs. 170 lacs under previous OTS, we are now pleased to make you our offer for Rs. 3.60 crores for redeeming our land from you and settling with you additionally."
The said proposal was duly accepted by the respondent FI vide their latter dated 15.03.2011.
On perusal of the OTS, it is clear that respondent No. 2 has allowed the respondent FI to appropriate Rs. 170.00 lacs which was deposited by the appellant herein in their account towards their liability and thereafter they also agreed to pay Rs. 360.00 lacs. Therefore, I find that the respondent No. 2 has utilized and enjoyed Rs. 170.00 lacs which were deposited by the appellant herein. So far as forfeiture is concerned, respondent FI has appropriated Rs. 170 lacs in the account of respondent No. 2 and during the course of arguments, Ld Counsel for the respondent FI has also stated that Rs. 170 lacs were appropriated in the account respondents No.2.
After perusing the entire transactions, I find that amount was not forfeited but it was appropriated. .....................................
Therefore, in case respondent FI would have forfeited the amount of Rs. 170.00 lacs deposited by the appellant, then it could not appropriate the same in the account of respondent No.2. However, as per second OTS the amount of Rs. 170.00 lacs was appropriated towards the dues of Respondent No.2. Therefore, I find that appellant herein is entitled for the said amount.
In these peculiar circumstances, I find that respondent No.2 has since utilized the amount deposited by the appellant herein, therefore, they are liable for refund of the said amount to the appellant herein with interest.
In the given facts and circumstances of the case the appeal is hereby allowed and respondent No. 2 herein is directed to refund the amount of Rs. 170 lacs deposited by the appellant with the respondent No.1 alongwith interest @10% p.a. from the date of the individual amounts deposited by appellant, within a period of 30 days from the date of this order."(highlighting is mine)
It is clear from the aforesaid narration that whatever understanding was there between the appellant, IFCI Ltd. and the borrower Company was arrived at the back of the Recovery Officer who was seized of the recovery matter and had already put the property in question to auction. He was not kept in the loop at any stage of the negotiations between these parties. The property in question had already become custodia legis. The Recovery Officer or the DRT had not asked the appellant to pay any money to IFCI for purchase of the land in question. All the parties knew that without getting green signal from the Recovery Officer who had already started the process of sale of the mortgaged property by public auction the same could not be purchased by anyone by way of private treaty. Recovery Officer was, however, not approached at any stage by any of the three parties who had arrived at such an understanding and the learned Recovery Officer had also observed so in his order rejecting the objection and in fact he had warned IFCI not to continue with parallel recovery proceedings keeping 'this forum in dark' . Where was thus any occasion for the appellant to have approached the Recovery Officer for seeking his intervention in getting its money back from IFCI. The Recovery Officer was thus right in throwing out the objection petition of the appellant-objector.
Learned counsel for the appellant in his written submissions had relied upon judgment of the Hon'ble Supreme Court in " Allahabad Bank vs Canara Bank", (2000) 4 Supreme Court Cases 406, in support of the submission that in such like cases where a third party is claiming some monetary relief from a Bank which it had received from the third party, like the appellant, to clear its charge over its mortgaged asset only DRTs and Recovery Officers attached to DRTs have the exclusive jurisdiction to resolve the disputes and not any other forum. However, this judgment is of no help to the appellant since it was held therein that all disputes between a Bank and defaulter borrower have to be decided by DRT and similarly all disputes relating to the execution of recovery certificate have to be decided by the Recovery Officer. However, in the present case neither there was any dispute of any kind between the creditor IFCI Ltd. and its borrower nor was there any dispute relating to the execution of the recovery certificate. Recovery proceedings before the Recovery Officer were going on smoothly for sale of the mortgaged land in question. As observed already, the alleged tripartite transaction between the IFCI, the appellant as the intending buyer of the mortgaged land, which was already being sought to be auctioned by recovery officer in execution proceedings, was without the involvement of the DRT and the Recovery Officer. Everything was planned and decided privately. Therefore, neither the DRT nor the recovery officer could enter into the controversy between the appellant and IFCI Ltd. and the recovery officer rightly had refused to come to the rescue of the appellant-objector.
The learned counsel for the appellant had also cited one judgment dated 18.03.216 of Hon'ble Delhi High Court in WP(C) NO. 6126/2015, "Rohtash Yadav VS Punjab and Sind Bank", wherein the DRT had directed the Bank to return the money it had received from a third party who wanted to purchase the mortgaged property. In that case some payments were made to the Bank by the third party pursuant to the directions of the DRT. So, the High Court had confirmed the decision of the DRT while setting aside the decision of DRAT which had reversed the decision of DRT in appeal filed by the Bank. Except these two decisions cited before me, which do no advance the case of the appellant, no provision of law/Rule was brought to my notice by the learned counsel for the appellant objector which gives the authority to the Recovery Officer to give a direction for payment of money to a third party, like the appellant-objector herein, out of some property transaction arrived at outside the recovery/adjudication proceedings.
Learned counsel for the IFCI had submitted that the only provision of law which could be said to be available to a person like the appellant-objector herein is Rule 11 of the Rules framed under Second Schedule to the Income Tax Act whereunder someone claiming to be having some kind of interest in the property which is sought to auctioned by Recovery Officer can approach the Recovery Officer and claim that the property being sold was not liable to be sold in execution of the recovery certificate issued by DRT. In the present case the appellant-objector had claimed so before the Recovery Officer that the property in question should be not sold till the time IFCI, which claimed to have appropriated the amount of Rs. 170 lacs received from the appellant in the account of its borrower Company, returns Rs. 170 lacs to the appellant. The property in question, informed learned counsel for the IFCI, has not been in any case sold finally since there was another settlement between the IFCI and its borrower Company, respondent no.2 herein and the DRT has closed the recovery case as satisfied. Counsel further submitted that even in the present appeal the only relief now being claimed is a direction to IFCI to return Rs. 170 lacs to the appellant-objector which kind of relief does not find within the scope of Rule 11 which reads as under:-
"Investigation by Tax Recovery Officer.
(1) Where any claim is preferred to, or any objection is made to the attachment or sale of, any property in execution of a certificate, on the ground that such property is not liable to such attachment or sale, the Tax Recovery Officer shall proceed to investigate the claim or objection provided that no such investigation shall be made where the Tax Recovery Officer considers that the claim or objection was designedly or unnecessarily delayed.
(2) Where the property to which the claim or objection applies has been advertised for sale, the Tax Recovery Officer ordering the sale may postpone it pending the investigation of the claim or objection, upon such terms as to security or otherwise as the Tax Recovery Officer shall deem fit.
(3) The claimant or objector must adduce evidence to show that-
(a ) (in the case of immovable property) at the date of the service of the notice issued under this Schedule to pay the arrears, or
(b ) (in the case of movable property) at the date of the attachment, he had some interest in, or was possessed 31 of, the property in question.
(4) Where, upon the said investigation, the Tax Recovery Officer is satisfied that, for the reason stated in the claim or objection, such property was not, at the said date, in the possession of the defaulter or of some person in trust for him or in the occupancy of a tenant or other person paying rent to him, or that, being in the possession of the defaulter at the said date, it was so in his possession, not on his own account or as his own property, but on account of or in trust for some other person, or partly on his own account and partly on account of some other person, the Tax Recovery Officer shall make an order releasing the property, wholly or to such extent as he thinks fit, from attachment or sale.
(5) Where the Tax Recovery Officer is satisfied that the property was, at the said date, in the possession of the defaulter as his own property and not on account of any other person, or was in the possession of some other person in trust for him, or in the occupancy of a tenant or other person paying rent to him, the Tax Recovery Officer shall disallow the claim.
(6) Where a claim or an objection is preferred, the party against whom an order is made may institute a suit in a civil court to establish the right which he claims to the property in dispute; but, subject to the result of such suit (if any), the order of the Tax Recovery Officer shall be conclusive."
I am in full agreement with these submissions made by the learned counsel for the IFCI. As observed already, no other Rule or any other provision of law was brought to my notice on behalf of the appellant-objector.
The appellant had approached the Presiding Officer of the DRT and the learned Presiding Office instead of dismissing the appeal for the reason that disputes, if any, between the appellant-objector and IFCI could not be entertained either by the Recovery Officer or even by the DRT went into the question as to whether the appellant-objector was entitled get back Rs. 170 lacs from IFCI and came to the conclusion that though the appellant-objector was entitled to get back Rs. 170 lacs but it was entitled to get the payment from the borrower Company and not from IFCI. The appellant's grievance is that IFCI is liable to refund the money to the appellant and not the borrower Company since there was an agreement for sale of property in question between the appellant and IFCI and borrower had nothing to do with that transaction except that the appellant was introduced to IFCI as the interested buyer and nothing beyond that and so the DRT ought to have directed IFCI to return Rs. 170 lacs to the appellant-objector. In my view, learned presiding officer of DRT had also no jurisdiction to decide such like disputes. DRTs are supposed to function within the four corners of the authority conferred upon them under the statute under which they are established, namely, Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The resolution of disputes like the one which was raised by the appellant-objector is not covered under any provision of this Act.
Hon'nble Supreme Court in "Standard Chartered Bank Vs. Dharmender Bohi", 2013 (12) SCALE 124, held that the DRT is required to function within its statutory parameters and does not have any inherent powers. While observing that Section 19(25) of the DRT Act confers limited powers, it was held:
"27. The aforesaid provision makes it quite clear that the tribunal has been given power under the statute to pass such other orders and give such directions to give effect to its orders or to prevent abuse of its process or to secure the ends of justice. Thus, the tribunal is required to function within the statutory parameters. The tribunal does not have any inherent powers and it is limpid that Section 19(25) confers limited powers. In this context, we may refer to a three-Judge Bench decision in Upper Doab Sugar Mills Ltd. v. Shahdara (Delhi) Saharanpur Light Rly. Co. Ltd.,AIR 1963 SC 217 wherein it has been held that when the tribunal has not been conferred with the jurisdiction to direct for refund, it cannot do so.
The said principle has been followed in Union of India v. Orient Paper and Industries Limited (2009) 16 SCC 286."
It was further observed that:-
".......................... The tribunal under the RDB Act has been established with a specific purpose and we have already focused on the same. Its duty is to see that the disputes are disposed of quickly regard being had to the larger public interest. It is also graphically clear that the role of the tribunal has not been fettered by technicalities. The tribunal is required to bestow attention and give priority to the real controversy before it............................"(emphasis supplied)
Hon'ble Supreme Court had also made it clear that the Tribunals cannot assume the role of a Court of different nature which really can grant "liberty to initiate any action against the Bank" and that it is only required to decide the lis that comes within its own domain.
So, this Tribunal is of the view that the direction given by the DRT that the appellant before it, the appellant herein also, was entitled to get refund of its money from the borrower of IFCI was beyond the scope of DRT's authority. In any case, the appellant has not even availed of that direction of the DRT by not pressing for its implementation before any forum.
This appeal is accordingly dismissed.
The records of the DRT/Recovery Officer be sent back with a copy of this order.