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Judgment
S.N.H. Zaidi, J
This appeal impugns the judgment and order dated 3.2.2011 passed by the Presiding Officer of the Debts Recovery Tribunal-III, Delhi (for short, the DRT) in O.A. No. 32 of 2005 whereby the respondents have been directed to pay an amount of Rs. 13 lacs towards settlement of two accounts, i.e., the one which was the subject matter of the said OA and the other in respect of which a suit was pending before the Delhi High Court. A resume of the factual matrix of the case would show that the appellant Bank had sanctioned a Cash Credit (Hypothecation) limit of Rs. 10 lacs for the business need of respondent No. 1, which was a partnership firm of which respondent Nos. 2 and 3 were the partners, on hypothecation of its stock and execution of security documents by respondent No. 3, who also stood as a guarantor and created equitable mortgage by deposit of the title deed of his property No. 29, Block-A, Street No. 1, Pragati Vihar, Gamri Extension, Delhi as security, The loan account became irregular and after it was classified as Non Performing Asset (NPA) on 31.3.2003, a notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, the Securitisation Act) was issued on 9.6.2003 by the Bank. When the respondents did not respond to that notice, the appellant took possession of the mortgaged property on 20.8.2004 and filed an application (OA No. 32 of 2005) under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short, the Act) on 13.1.2005 before the DRT for the recovery of Rs. 13,74,566.62 along with pendente lite and future interest @ 11% p.a. with quarterly rests. The Bank, in respect of another loan account, had also filed a suit for the recovery of Rs. 6,60,007/- against respondent No. 3, which was pending before the Delhi High Court. The respondent No. 3 moved application (I A 20/2011, before the DRT on 13.1.2011 and offered to pay Rs. 9 lacs in twelve months against the liability qua both the loan accounts. The DRT disposed of the said application as well as the OA, by the impugned order, directing the defendants/respondents to pay Rs. 13 lac in four quarterly instalments within twelve months in respect of both the OA as well as the suit pending before the Delhi High Court.
I have heard Mr Vipin Jai, the learned Counsel for the appellant, and Mr. Sanjay Kumar Jha, the learned Counsel for the respondents, and perused the record. Respondent No. 3 remained present during the hearing with his Counsel.
The submission of Mr. Vipin Jai is that the DRT below has committed grave error by travelling beyond its jurisdiction and deciding both the O.A. as well as the suit pending before the High Court with the direction to the respondents to pay Rs. 13 lacs only as against the total liability of Rs. 20,34,573/- without assigning any reason of reducing the said amount. It has also been submitted that pendente lite and future interest has also not been awarded again without giving any reason.
Mr Sanjay Kumar Jha, on the other hand, argued that the order impugned is a consent order and as such this appeal is not maintainable by virtue of Section 20(2) of the Act. He further submitted that the NPA amount before the DRT was Rs. 9,93,274/- only and the outstanding amount of the other loan account was only Rs. 4,78.009/- and as such the total liability qua both the accounts was only Rs. 14,71,283/-.
In his rejoinder, Mr. Vipin Jai vehemently denied that the appellant had given any consent to the amount, as allowed by the DRT below.
So far as the question of maintainability of the appeal is concerned, Subsection (2) of Section 20 of the Act does prohibit appeal against an order made with the consent of the parties, but since the alleged consent has been denied by the appellant, let us see what the DRT has said in this regard. The Tribunal, referring to its earlier observation dated 22.4.2010 that "If the defendants do approach to the Bank for the settlement of the two accounts for an amount of rupees thirteen lacs, the Bank should welcome it", has said that:
That day the amount of rupees thirteen lacs as arrived by this Tribunal has been the source of no loss to the Bank nor this Tribunal has tried to super impose any compromise upon the Bank and the present three defendants, because it knows that a compromise originating from the French usage is a matter of choice and an independent action. The Bank has been found this day more or less agreeable for such amount, because as a result of the recovery in the two accounts, the two NPA accounts shall be eliminated from the existing stock of NPA as suffered from by itself.
The circumstances of the case indicate that the respondents had never offered for settlement in Rs. 13 lacs, as such there was no occasion for the appellant Bank to consent to that amount. It was the suggestion of the Tribunal for settlement on that amount, but contrary to that suggestion, respondent No. 3, vide IA 20/2011, had offered to settle both the loan accounts for Rs. 9 lac only. A perusal of the above observation of the DRT clearly shows that the parties had not consented to any amount and even if it is accepted, though vehemently denied by the appellant, that the Bank was more or less agreeable for such amount, as observed by the DRT, it cannot be said that respondent No. 3 Had consented to that amount and as such it can also not be said that the impugned Order was made on the consent of the parties. It appears that since the Tribunal had itself suggested for settlement of both the accounts in Rs. 13 lacs, therefore, it had made up its mind and imposing its will upon the parties, ordered for the payment of that amount. The impugned order, being not a consented order of the parties, does not come within the mischief of Section 20(2) of the Act. This appeal is, therefore, held to be maintainable before this Tribunal.
The contention of the appellant's Counsel that the order impugned is liable to be set aside only on the ground that the DRT below has also decided the suit which was pending before the Delhi High Court for which it had no jurisdiction, has force and is acceptable. It is very surprising that despite fully knowing that the other loan account is the subject matter of a suit which is pending before the High Court, how the DRT below had assumed jurisdiction in respect thereof and passed order in relation thereto. The DRT had definitely no jurisdiction qua the subject matter of the said suit and as such the impugned order is not sustainable as the DRT had travelled beyond its jurisdiction in making it.
I am also convinced with the argument of the appellant that absence of any reason for not allowing the claimed amount as well as the pendente lite and future interest has also made the impugned order unsustainable. Section 19(20) of the Act mandates the Tribunal to order for payment of interest from the date on or before which payment of the amount is found due up to the date of realisation. If the Tribunal, in its wisdom, was not allowing the claimed amount in its totality or the pendente lite and future interest on the decreed amount, then it was to give cogent and sufficient reasons for the same but the DRT has not given any reason either for reducing the claimed amount or for not awarding the interest on the amount found due. The order impugned is thus bad in law and untenable.
The facts relating to the sanctioning of the Cash Credit limit of Rs. 10 lacs to respondent No. 1 and execution of security documents as well standing as guarantor and creating equitable mortgage of his immovable property in favour of the Bank by respondent No. 3, have been admitted by respondent No. 3 in para 5 of his reply to this appeal. It has also been admitted that after the account was classified as NPA on 31.3.2003, notice under Section 13(2) of the Securitisation Act dated 9.6.2003 was issued to the respondents and when the respondents did not respond to the notice, possession over the mortgaged property was taken by the Bank on 20.8.2004 The action of the Bank has not been challenged by the borrowers under the Securitisation Act. It appears from the record that the NPA amount was Rs. 9,93,272.62 and after the addition of the amount of interest, a demand of Rs. 11,07,354.62 was made in the aforesaid notice and the OA was filed for the recovery of Rs. 13,74,566.62. There is nothing on record which could show that any amount was paid by the respondents to the Bank after the issuance of notice and up to the filing of the OA. In view of the undisputed facts of the case, the amount of debt claimed in the OA is found to be due on the respondents for payment to the appellant and they are held liable to make payment of the amount due as has been claimed by the appellant, subject to the adjustment of any amount deposited by them, if any, during the pendency of the OA or this appeal. Considering the circumstances of the case, I am of the view that payment of simple interest on the amount found due @ 10% p.a., on reducing balance basis, as pendente lite and future interest till the date of full realisation, would meet the ends of justice.
In view of the above discussion--
(a) the appeal is allowed and the impugned order dated 3.2.2011 passed by the DRT-III Delhi in OA No. 32 of 2005 is set aside.
(b) The aforesaid O.A. is allowed and the defendants/respondents are directed to pay the applicant/appellant Rs. 13,74,566/-, subject to adjustment of any amount deposited by them with the Bank, with 10% p.a. simple interest, on reducing balance basis, w.e.f. 13.1.2005 up to the date of realisation or actual payment.
The Presiding Officer of the DRT-III Delhi is directed to issue a Certificate in accordance with Sub-section (22) of Section 19 of the Act. Let a copy of the order be sent to the parties to the appeal and to the concerned Tribunal.