M/s. Moolchand Finance Ltd. vs Tamil Nadu Mercantile Bank Ltd

The 1st defendant in the OA 434/2007 filed this counter claim application for a direction to the defendant bank to pay the counter 2 claimant (i) a sum of Rs.6.99 cores under Claim No.-I and (ii) a sum of Rs.41.17 crores under Claim No.2 totalling a sum of Rs.47.85 crores after adjusting the amounts if any, that may be allowed by this Tribunal on the claims made by the defendant bank in OA 434/2007 and to render justice.

The averments in the counter claim in brief are:

The counter claimant admitted availing of two cash credit facilities. Cash Credit -I, meant for lease, finance and hire purchase and Cash Credit -2 for flat promotional activities such as construction of apartments. The procedures and the usage of funds, repayment and recovery, etc have been followed as per the terms and conditions of Sanction Ticket. In Cash Credit-I facility, the lease lending is funded 25% by the counter claimant and 75% by the bank. On this basis, an amount of Rs.6 crores was availed and machineries were leased to many companies and the business was running smoothly. The counter claimant availed Cash-Credit-II facility for construction and development of flats.

It is stated that the claimant suffered some setbacks due to recession and liquidity crunch prevailed throughout the market. Due to this, the defendant bank stopped all facilities enjoyed by the counter claimant and the defendant bank went to the extent of freezing and taking over the leasing rights and the leased machineries from the counter claimant. The defendant bank prevented the counter claimant from interfering in the leasing activity taken over by the bank and directed the counter claimant not to collect any of the lease amounts or hire charges from the Lessees vide letter dated 10.07.1996 and further instructed the Lessees not to pay the counter claimant and instructed them to pay directly to the bank. The claimant was left high and dry and were kept in the dark till date with regard to the lease amounts collected by the bank and also ask to the fate of the machineries leased.

It is stated that the bank has not given any account as to the leased amount collected or as to the salvageable value of the machineries leased. The bank is duty bound to furnish the accounts on this issue. It is submitted that as per the claimants calculations the leased amounts which should have been collected by the bank amounts to Rs.10.71 crores and the notional salvageable value of the leased machineries would amount to Rs.4.38 crores totaling to a sum of Rs.15.09 crores, of this, the Bank should have adjusted 75% of the amounts to their account, i.e., against the loan account of the counter claimant and the bank is bound to pay the balance 25% with interest to the counter claimant. The Defendant bank has not shown any of these accounts nor it is reflected in the statement of accounts filed by them in the O.A. It is, therefore, submitted that the bank is liable to furnish accounts on the leased amounts collected and should credit an amount of Rs.15.09 crores being the leased amount and the salvageable value of the leased machineries.

It is stated that the counter claimant entered into an agreement for purchase of land from M/s.Vasu Studio. The counter claimant entered into an agreement with M/s. Moolchand Constructions for development of property and obtained power of Attorney from M/s. Vasu Studios in favour of M/s. Moolchand Construction for putting up the construction. The counter claimant have paid full sale consideration to M/s. Vasu Studios and deposited the sale agreements with bank. Due to inter-linking of both these accounts, the counter claimant have suffered huge loss and hardship. The leased amount collected or as to the salvageable value of the machineries leased for which the bank has not given any account.

A joint memo of compromise was filed by bank settling the loan account as fully settled for Rs.75 lakhs. Later the bank filed a memo for modification of the order stating that the settlement is only with regard to Moolchand Construction and Vasu Studio and not with regard to the counter claimant. Even if the loan with regard to M/s. Moolchand construction is to be adjusted, the bank should have adjusted Rs.2.70 crores and amend the plaint accordingly. It is stated that the property is worth more than the liabilities alleged by the bank and the bank is liable to pay the counter claimant the value of the property for illegally discharging and releasing the property which was given as security by the counter claimant. The counter claimant relied on the statement of accounts for the period 30.6.1996 to 30.6.2009 and proof-affidavit dated 20.6.2013.Thus contending, the claimant prayed for a direction to the defendant to pay the claim amount and render justice.

The averments in the written statement of the bank in brief are:

6.1: The present claim having been filed after a lapse of 12 years is barred by limitation and liable to be rejected. It is stated that the 1st defendant/counter claimant had availed cash credit facilities on specific terms and conditions for disbursement. It is stated that Cash Credit-II facility was sanctioned to provide working capital finance facility for promotion of building complexes to construct apartments on the land mentioned in Item 2 and 3 of Schedule A in the OA. It is stated that the residential apartments are to be constructed on the land mortgaged to the bank and sold to third parties and that all amounts realized from the sale of flats to 3rd parties will be remitted into the bank to the credit of counter claimant account, until the limit is cleared and no objection certificate has to be obtained from the bank. It is stated that the most of the apartments were agreed to be sold by the counter claimant to D6 to D25 and D31 to 48 and registration of undivided shares and land were done by execution of sale deeds in their favour by receiving advances. However, the amounts received from D6 to 25 and D41 to 48 were not remitted to the bank as agreed, thereby committed default.

6.2: As per the terms and conditions agreed by the bank, the sale was completed by M/s. Moolchand Finance to all the parties i.e. D6 to D25 and D45 to D48 in the OA. Thereafter the money collected from those parties and as claimed by Bank becomes the amount payable by the counter claimant to bank for which separate transactions and conclusions were arrived at between the counter claimant and the bank.

6.3: It is stated that during June/July 1996, the bank had specifically requested towards such monies as they thought as due from the counter claimant, securities to be furnished to them covering the amount. At the request of bank securities were furnished and the Bank has also accepted the same, which act by itself would release the entire purchasers from any liability and the bank by itself does not have any claim or right for the properties which have been sold to individual purchasers.

6.4: It is stated that the counter claimant earlier known as Suvarana Securities Ltd represented by Mr.Moolchand Kothari as its Managing Director has entered into an agreement of sale dated 4.10.1994 for purchase/development of property of an extent of 26 grounds and 780 sq.ft in Saligramam Village with one M/s. Vasu Studios. The bank has no charge over the said property. The counter claimant made an internal arrangement with M/s. Moolchand Construction, a partnership firm in which 2nd defendant (in OA) Mr. Moolchand Kothari and his sons Mr. Sanjay Kothari and Rajiv Kothari are partners of M/s. Moolchand Construction, which is sister concern of Moolchand Finance Ltd and they form part of Moolchand Group.

6.5: It is stated that the 2nd defendant in OA Mr. Moolchand Kothari as a partner of M/s. Moolchand Construction informed the Defendant bank vide his letter dated 13.12.1996 that he is willing to take over the liability of Rs.2.70 crores of the counter claimant /1st defendant company and asked NOC from the bank to purchase 120 flats proposed to be constructed in the land. The defendant bank did not act as per the letter dated 13.12.1996 and defaulted in repayment. Therefore, the Defendant bank filed the OA to recover its dues.

6.6: It is stated that pending OA, a part of the property to an extent of 5867.99 sq. Feet out of 26 grounds and 780 sq. Feet was sold to various third parties without the knowledge of the bank and the defendant filed IA 1057/1999 for injunction alienating or disposing of the said property, which was granted vide order dated 12.5.1999. Thereafter, the defendant bank had entered into Memorandum of understanding dated 13.8.2003 with M/s. Moolchand Construction and M/s. Vasu Studios and it was agreed that Defendant bank was allotted with five flats constructed in the said property valuing Rs.75 lakhs. The Tribunal passed an order accepting the MoU in terms of said MoU. The claimant now making allegation that the Defendant bank has relinquished their rights over one property and the land value would be around Rs.45 crores.

6.7: It is stated that the allegation that the Defendant bank has released one of the guarantors i.e Moolchand Constructions property worth at least ten times more than the entire dues of the counter claimant for a paltry sum of Rs.75 lakhs instead of Rs.2.70 crores, which is contrary to law and these acts of bank is clearly hit by the novation of contract and the bank has come with unclean hands are denied as incorrect and false. It is stated that the Defendant bank did not seize any leased assets and no amount was appropriated by them. The counter claimant had siphoned the entire lease/ sale proceeds without remitting the same in the bank and now making baseless allegations. The Defendant bank further denied the allegation that all specific payments made by the defendants were directly made to the bank, of which, the bank has not provided any appropriate statements nor has given credit for the amounts received from the defendants in the account of the counter claimant. It is stated that the bank has only 75% of the value of the hire purchase and lease and the remaining portion of 25% belongs to the counter claimant. It is stated that the borrower has to bring his margin money and as per the terms and conditions, the counter claimant has brought that 25% of the amount of his margin money. It is stated that the claimant did not deny its liability but gave lame excuses for its failure to pay the debt.

6.8: It is further stated that the allegation that the defendant bank has agreed to release the Vasu Studio's properties is incorrect as there is no previous charge over the said property in favour of the Defendant bank. It is stated that the entire sale consideration for the Vasu Studio's property was paid by Moolchand group only out of the loan amount sanctioned by the Defendant bank and there is no previous charge on the said property in favour of Defendant bank. The Defendant bank denied the allegation the counter claimant deposited the sale agreement with the Defendant bank. It is stated that the counter claimant failed to fulfil its obligations and failed to remit the sale proceeds with the Defendant bank. It is stated that the Defendant bank neither received any amount nor seized any lease machinery as alleged, and the allegation in contra is put to strict proof. Further the payments arrived by the applicant/ counter claimant is contained in the memo of calculation are denied as they failed to produce any documents to substantiate their claim and no iota of evidence was produced how the amounts were calculated and arrived at by them.

6.9: It is stated that the counter claimant being party to the proceedings did not make any objection on the settlement arrived between the parties and the same was not challenged before the appropriate forum by the counter claimant in time and after lapse of period of limitation, the said issue has been raised in the counter claim hence the same is not maintainable under law. Thus contending, the defendant bank prayed for dismissal of the claim.

In the light of the contest as above, the following points are framed for consideration by this Tribunal:

Whether the counter claim is barred by limitation?

Whether the counter claim is not maintainable under law?

Whether the counter claimant has established its claim? If so, for what amount?

Whether the counter claimant is entitled for interest? if so, on what amount and at what rate? .

I have heard Shri. Prasanna Venkatesh and Shri. Jayanthi Venkatesh, Ld. Advocates, for the counter clamant and Shri. V. Chandrasekaran, Ld. Advocate for the defendant, perused the record, written submissions and the case law.

For Claimant: Exhibits C1 to C10 were marked through Cw1.

Point. 1:

Whether the counter claim is barred by limitation?

(a) While the claimant would contend that the claim as made is well within the period of limitation, the defendant bank would contend that counter claim is hopelessly barred by limitation. The burden lies on the counter claimant to establish that the counter claim as made is within the period of limitation.

(b) Before I proceed to discuss the subject point, I feel it appropriate to refer to section 24 of the RDB Act, which is as follows.

Section 24: Limitation. -The provisions of the Limitation Act, 1963 (36 of 1963), shall, as far as may be, apply to an application made to a Tribunal

The counter claimant in claim 1, para 19 and 20 stated as follows:

"that the claimant suffered some setbacks due to recession and liquidity crunch prevailed throughout the market. Due to this, the defendant bank stopped all facilities enjoyed by the counter claimant and the defendant bank went to the extent of freezing and taking over the leasing rights and the leased machineries from the counter claimant. The defendant bank prevented the counter claimant from interfering in the leasing activity taken over by the bank and directed the counter claimant not to collect any of the lease amounts or hire charges from the Lessees vide letter dated 10.07.1996 and further instructed the Lessees not to pay the petitioners and instructed them to pay directly to the bank. The claimant was left high and dry and were kept in the dark till date with regard to the lease amounts collected by the bank and also ask to the fate of the machineries leased.

It is stated that the bank has not given any account as to the leased amount collected or as to the salvageable value of the machineries leased. The bank is duty bound to furnish the accounts on this issue. It is submitted that as per the claimants calculations the leased amounts which should have been collected by the bank amounts to Rs.10.71 crores and the notional salvageable value of the leased machineries would amount to Rs.4.38 crores totaling to a sum of Rs.15.09 crores, of this, the Bank should have adjusted 75% of the amounts to their account, i.e., against the loan account of the counter claimant and the bank is bound to pay the balance 25% with interest to the counter claimant. The Defendant bank has not shown any of these accounts nor it is reflected in the statement of accounts filed by them in the O.A. It is, therefore, submitted that the bank is liable to furnish accounts on the leased amounts collected and should credit an amount of Rs.15.09 crores being the lease amount and the salvageable value of the leased machineries."

The subject claim being a claim based on the plea of breach of contractual obligation by the defendant the period of limitation is governed by Article 55 of limitation Act, which is as follows.

Article. 55. For compensation for the breach of any contract, express or implied not herein specially provided for three years.

The sating point of limitation. When the contract is broken or (where there are successive breaches) when the breach in respect of which the suit is instituted occurs or (where the breach is continuing) when it ceases.

Thus, article 55 provides that the time will begin to run when the contract is 'broken'.

Here it may be pertinent to state herein that a counter claim is nothing but a cross suit, all the procedural rules relating to a claim also shall apply to a counter claim. In fact, Rule of 9 DRT Procedure Rules says that:

Rule (9): A counter-claim under sub-section (8) shall have the same effect as a cross-suit so as to enable the Tribunal to pass a final order on the same application, both on the original claim and on the counter-claim.

Indisputably, the counter claim as filed by the counter claimant herein, is not in conformity with the aforesaid provision. The counter claimant failed to even adopt the standard format of a counter claim. The counter claimant also failed to plead limitation, as well the cause of action if any, for the counter claim. Admittedly, this counter claim was filed nearly four years after filing the written statement in OA 434/2007 (old OA No216/1997) by the 1st defendant/counter claimant, as the written statement was filed on 20.10 2004 and the counter claim was filed on 28.05.2008.

(d) Be that as it may, a holistic reading of the counter claim suggests that the cause of action for the subject claim appears to have arisen in between Ex.C1 letter dated 4.10.1994 and Ex. C-10 joint memo dated 19.08.2004. If that be so, the purported cause of action stated to have arises as according to the claimant the alleged breach of contractual obligation by the defendant bank had arisen during this period, hence present claim for recovery of money ought to have been filed within three years from the EX.C10 dated 19.08.2004 as per Article 55 of limitation Act, supra. However, the counter claim has been filed only on 28/05/2008. It is strange that despite specific plea in the written statement that the counter claim is barred by limitation, the counter claimant made no attempt to state how the claim is within in the period of limitation.

I therefore hereby declare that the counter claim is barred by limitation.

Point. 2:

Whether the counter claim is not maintainable under law?"

Section 19 (8) of RDB Act, which is as follows, says that,

"(8) A defendant in an application may, in addition to his right of pleading a set-off under sub-section (6), set up, by way of counter-claim against the claim of the applicant, any right or claim in respect of a cause of action accruing to the defendant against the applicant either before or after the filing of the application but before the defendant has delivered his defence or before the time limited for delivering his defence has expired, whether such counter-claim is in the nature of a claim for damages or not."

Rule 6A. of Order VIII of Code of Civil Procedure, says

1) A Defendant in a suit may, in addition to his right of pleading a set-off under rule 6, set up, by way of counter-claim against the claim of the plaintiff, any right or claim in respect of a cause action according to the defendant against the plaintiff either before or after the filing of the suit, but before the defendant against the plaintiff either before or after the filing of the suit, but before the defendant has delivered his defence or before the time limited for delivering his defence has expired, whether such counter- claim is in the nature of a claim for damage or not:

Provided that such counter-claim shall not exceed the pecuniary limits of the jurisdiction of the court.

Such counter-claim shall have the same effect as a cross-suit so as to enable the Court to pronounce a final judgment in the same suit, both on the original claim and on the counter-claim.

The plaintiff shall be at liberty to file a written statement in answer to the counter-claim of the defendant within such period as may be fixed by the Court.

The counter-claim shall be treated as a plaint and governed by the rules applicable to plaints. The effect of this rule from the point of view of pleading is to assimilate a counter-claim with a plaint in a suit and is therefore governed by the same rules of pleading as a plaint. A counter-claim is substantially a cross-action, not merely a defence to the plaintiff's claim. It must be of such a nature that the court would have jurisdiction to entertain it as a separate action.

(b) The latest legal position as to filing of counter claim can be traced from the ruling of the Hon'ble Supreme Court of India, in re, Ashok Kalra 2019(16) Scale 544 while answering the reference in Ashok Kumar Kalra, held that,

"We have gone through the judgment of the three-Judge Bench in Ashok Kumar Kalra vs. Wing Cdr. Surendra Agnihotri &Ors., 2019 (16) Scale 544, in particular, para 20 which states as follows: - "20. We sum up our findings, that Order VIII Rule 6A of the CPC does not put an embargo on filing the counter-claim after filing the written statement, rather the restriction is only with respect to the accrual of the cause of action. Having said so, this does not give absolute right to the defendant 2 to file the counter-claim with substantive delay, even if the limitation period prescribed has not elapsed. The court has to take into consideration the outer limit for filing the counter-claim, which is pegged till the issues are framed. The court in such cases have the discretion to entertain filing of the counter-claim, after taking into consideration and evaluating inclusive factors provided below which are only illustrative, though not exhaustive: i. Period of delay. ii. Prescribed limitation period for the cause of action pleaded. iii. Reason for the delay. iv. Defendant's assertion of his right. v. Similarity of cause of action between the main suit and the counterclaim. vi. Cost of fresh litigation. vii. Injustice and abuse of process. viii. Prejudice to the opposite party. ix. and facts and circumstances of each case. x. In any case, not after framing of the issues."

(c) In so far as the case on hand is concerned, admittedly years after filing the written statement of defence, the1st defendant had filed the present counter claim without obtaining the leave to file from this Tribunal and same was registered without any objection from the Registry of this Tribunal. However, if the conditions supra, are applied I am afraid the counterclaim is per se, may not maintainable. But, I am not inclined to probe the point of maintainability of the counter claim deeply at this stage of the proceedings as no such objection was taken at the threshold of the matter. In my view, had the Registry of this Tribunal, taken the objection as to the maintainability of the counter claimant at the threshold, perhaps the counter claimant would have explained its maintainability and the Tribunal then would have passed an appropriate order on maintainability. Now much water has flown under the bridge, therefore entertaining any objection as regards the maintainability of the counterclaim at this belated stage of the proceedings, in the considered view of the Tribunal, is uncalled for. Point is answered accordingly.

Point. 3:

"Whether the counter claimant has established its claim? If so for what amount?"

(a) As already stated, the burden lies on the counter claimant to establish its claim. The claimant made two claims. Claim no 1: is for Rs.6.68 crores and claim No 2 for Rs.41.17 crores.

I shall now discuss the claim No 1.

(b) According to the claimant the applicant bank had taken overEx.A-21 to A-31 leases and hire purchase agreements entered into by the 1st defendant with various 3rd parties as early as 10.7.1996 and called upon the 3rd parties to pay the lease amounts directly into the loan account lying with the applicant and also invoked clauses 20,21, 22 and 25 of Ex. A-9 Hypothecation Agreement and took over the constructive possession of the hypothecated assets and leased machineries, as such the 1st defendant had lost control over these leases and hire purchase agreements. Having thus, took possession of the hypothecated assets and leased machineries, the applicant was under contractual obligation to proceed against the hypothecated movables of defendants by selling them in public auction and adjust the sale proceeds and thereafter only shall proceed for recovery of the balance dues, if any. However, the applicant bank without discharging the said contractual obligation, unjustly filed the present claim, as such, the claim under CCH-II loan is unsustainable and liable to be dismissed with costs.

(c) The afore stated submissions of the Ld. Counsel for the claimant, when carefully examined in the backdrop of pleadings, admitted documents besides the case law, the only conclusion that I could firmly arrive is that the said submission is devoid of any merit or substance. Here are the reasons for my conclusion.

(i) A mere reading of clause 21 of Ex. A-9 Hypothecation agreement, which is as follows;

"21.That the net proceeds of any sale or the disposition by the bank of the hypothecated goods or any part thereof shall be applied in or towards the satisfaction of the moneys secured by the said hypothecation and, if such net proceeds shall be insufficient to satisfy the said moneys in full, the bank shall be at liberty, but not be bound, to apply any other moneys in the hands of the bank standing in the credit of or belonging to the borrower or any of them in or towards payment of the balance remaining due to the bank and in the event of other not being any such other moneys as aforesaid in the hands of the bank or in the event of such other moneys not being applied by the bank as aforesaid or being in sufficient for satisfaction in full of the said balance, Borrower shall forthwith pay the balance remaining due of the moneys secured by the said hypothecation provided, always, that nothing herein contained shall be deemed to negative, qualify or otherwise prejudicially affect the right of the bank (which it is hereby expressly agreed the bank shall have,) to recover from the borrowers the moneys secured by the said hypothecation notwithstanding that all or any of the hypothecated goods not have been sold or disposed of."

makes abundantly clear that claimant by executing Ex. A-9 hypothecation agreement unequivocally accepted the right of the defendant bank to recover from the borrowers the moneys secured by the said hypothecation, notwithstanding that all or any of the hypothecated goods not have been sold or disposed of.

(ii) Therefore, having admittedly signed and executed Ex. A-9 agreement, it is not open to the counter claimant to now contend contra to the clauses contained in Ex. A-9 Hypothecation Agreement. Moreover, it is not the case of the counter claimant that the defendant bank acted with malice or negligence while dealing with the hypotheca. In fact, the defendant bank, in line with the said clause while asserting its right of first charge over original application "A" & "B" Schedule properties, also prayed for the relief of sale of "B" schedule property (Hypotheca) for realization of its dues from the borrowers in the above OA. Therefore, the plea that the defendant bank acted in breach of contractual clauses shall invariably fail, I therefore, hereby accordingly hold so.

(iii) That apart, the claimant failed to establish how it had arrived at the sum claimed in its notice or in the counter claim. No oral or documentary evidence on how the claimant had arrived at the sum of Rs.6.69 crores is forthcoming. In the absence of even a basic proof, no amount can be awarded by this Tribunal, hence the claim is bound to fail. Accordingly, I hold that the claimant is not entitled for this claim. Point is answered accordingly.

(b). Claim No2:According to the counter claimant, it entered into an agreement for purchase of land from M/s.Vasu Studio and also entered into an agreement with M/s.Moolchand Constructions, for development of the said property and obtained power of Attorney from M/s. Vasu Studios in favour of M/s. Moolchand Construction for putting up the constructions therein. It is stated that the claimant paid full sale consideration to M/s. Vasu Studios and deposited the sale agreements with bank. Due to inter-linking of both these accounts, the claimant suffered huge loss and hardship. It is stated that a joint memo of compromise was filed by bank settling the loan account as fully settled for Rs.75 lakhs. Later the bank filed a memo for modification of the order stating that the settlement is only with regard to Moolchand Construction and Vasu Studio and not with claimant. It is emphatically contended that even if the loan with regard to M/s. Moolchand construction is to be adjusted, the bank should have adjusted Rs.2.70 crores and accordingly altered its claim in OA by amend the OA. It is stated that the property is worth more than the liabilities alleged by the defendant bank; hence the defendant bank is liable to pay the counter claimant the value of the property for illegally discharging and releasing the property which was given as security by the claimant. Hence the claim for Rs.41.17 crores. In support of this claim the claimant relied on Ex.C1, C2, C5, C7, C8, C9 and C10.

(c) It is to be stated that the undeniable factual matrix of the case on hand does not offer any support to the plea of the claimant that the claimant suffered loss to the tune of Rs.41.17 crores. The claimant herein which is the 1st defendant in OA 434/2007, in para 14 of its written statement in no uncertain terms asserted as follows:

"The first defendant submits that when the bank had indicated the NPA by the company, in order to protect the interest of the bank, the Managing Director of Moolchand Finance Limited, has submitted fresh securities to the bank dated 16.2.1996, 14.12.1996 and 24.10.1996 which was accepted by the bank. The bank has been given the following properties:

(a) 13 grounds in Ramapuram valued at Rs.100 lacs by deposit of title deeds.

(b) 26 grounds at Saligramam valued Rs.4 crores with a charge of Rs.2.70 crores in favour of the bank by Moolchand Constructions, Power of Attorney Holder of Vasu Studio property.

(c) 13147sq ft in second floor, Commander-in-Chief Road, Egmore valued at Rs.6.57 crores vide a Registered Power of Attorney dated 24.10.1996 vide Doc. No.926/1996.

The total value of the property offered as additional collateral security comes to Rs.11.57 crores as against the due of Rs.3 crores for cash credit II account. By this act of the 1st defendant, the applicant bank's interest was protected fully in respect of the cash credit II account. These facts were totally suppressed by the applicant bank in the O.A. No.216/1997 for the reasons best known to them."

In para16 of the written statement it was stated that" As matter of fact this property were offered as additional security for Rs.2.70 crores for transfer of cash credit limit availed for developing the same vide communication issued by Moolchand construction Ltd dated 13.12.1996 to the bank"

In para 20 of the written statement it was stated that "The 1st defendant submits that all these properties were duly given by the company to safe guard the interest of the bank and also relieve all genuine purchasers of the Adyar and T.Nagar flats who had paid full consideration to the Company".

In para 12 of the written statement it was stated that "As per the affidavit filed by the bank the account became irregular only on 16.6.1996".

Thus, it is as clear as crystal from the above unequivocal and categorical statement that in order to protect the interests of the creditor bank only, the claimant/1stdefendant under letter dated14.12.1996 has offered some more immovable properties mentioned therein, by way of additional security and under the said letter the claimant/1st defendant did not intend to substitute the existing securities with the properties mentioned in the said letter. So much so even assuming that the proposal under the said letter has been accepted either expressly or impliedly by the defendant bank, the same would result in a contract of accepting additional securities but will not result in a contract substituting of existing contract with new contract of any kind.

(d) In so far as Ex. C-5 letter from M/s.Moolchand Construction is concerned there is not even a whisper of substitution of the existing securities with any fresh properties. The letter focused only on the proposal to take over of cash credit-II liability of the 1stdefendant/claimant to the extent of Rs.2.70 crores and providing security for the same in the manner stated in the letter dated 14.12.1996.

(e) The assertion of 'charge' over Vasu Studio property by the defendant bank in its affidavit filed in IA1057/1999 Ex.C-7, when considered in the back drop of Ex.C-5 letter besides the legal notice, it is manifest that the defendant bank in its endeavor to prevent alienation of one of the properties offered as additional security, has asserted its 'charge' over the said property, perhaps rightly so, for the purpose of the said petition. So much so, by no stretch of imagination one can construe the said endeavor on the part of the defendant bank as 'consent' or implied acceptance of substitution of the existing immovable securities with the new securities. Neither the counter claimant nor M/s Moolchand Constructions, while resisting the relief prayed in IA 1057/1999Ex. C-7have claimed novation of contract. The MOU between the defendant bank and M/s.Moolchand Construction emphatically states that;

(a) M/s Moolchand Construction agreed to allot 6250 Sq. Ft. Builtup area to the applicant bank in the proposed to be developed Vasu Studio property @Rs1200 per sq ft amounting to Rs.75,00,000.00

(b) The applicant bank agreed to accept a sum of Rs.75,00,000.00 as full and final settlement towards its claim against M/s. Moolchand Construction and agreed to have the injunction obtained in IA 1057/1999 against the 1st defendant and M/s. Moolchand Construction vacated.

(c) The applicant agreed that it shall have no right or claim over the rest of the Vasu Studio property.

(d) The applicant bank agreed not to initiate any action against M/s. Moolchand Construction in respect of the remaining Vasu Studio property for recovery of any other dues of Moolchand group of Companies, its Directors, Guarantors either now or in future.

(e) Pursuant to this MOU, sale deed in favour of the applicant bank for an extent of 6250 Sq. Ft. built up area has been executed by M/s.Moolchand Construction and the sale consideration received has been credited to the loan account of the 1st defendant.

The claimant/1st defendant despite being aware of all these transactions never raised any objection. Therefore, having thus, acquiesced fully with the aforementioned transactions and actively remained silent all through, the claimant/ 1st defendant is estopped under law from now pleading novation of contract or partial discharge of liability.

Therefore, when the very foundation on which this counter claim is built itself collapsed the claim shall invariably perish. That apart, the claimant failed to establish how it had arrived at the sum claimed in the counter claims. Neither any oral nor documentary evidence on the value of the Vasu Studio property, barring the self-serving affidavit of the claimant is forthcoming. In the absence of any proof, no amount can be awarded to the counter claimant, hence the claim is bound to fail. Accordingly, I hold that the claimant is not entitled for this claim. Point is answered accordingly.

Point. 4: Whether the counter claimant is entitled for interest? if so, on what amount and at what rate?

In the light of my finding under point-3, this point is answered in negative.

Therefore, in the light my discussion as above and on careful consideration of the submissions of the ld. Counsels for both sides, on perusal of the record, this Tribunal is of the considered view that the counter claimant failed in establishing its claim, hence the claim in liable to be dismissed. Accordingly, the counter claim is hereby dismissed. However, without costs.

In the result, the counter claim is hereby dismissed, without costs and recovery certificate for NIL amount is here by ordered.

Communicate a copy of the order to the parties concerned in terms of Rule 16 read with Rule 2(c) of DRT (Procedure) Rules, 1993.

(Dictated to PS, transcript revised, corrected, signed and pronounced by me in virtual court on this 4th day of May, 2020)