Oriental Bank Of Commerce vs Kapoor Sons Sales (P) Ltd.

Ranjit Singh, J

Through this order, the above four appeals are being disposed of together as the same order is under challenge in all these appeals.

Facts have been taken from Appeal No. 136/2012 - Oriental Bank of Commerce vs. M/s. Kapoor sons Sales (P) Ltd. & Ors. The order impugned in these appeals is dated 21.2.2011 passed by DRT-III, Delhi. The impugned order has been passed by the DRT in an appeal filed against the order of the Recovery Officer (R.O.). The grievance of the bank is that the Tribunal while dealing with this appeal has not only passed an order which would reduce the amount ordered to be recovered in the recovery certificate, but has also prematurely adjudged the amount arising in a pending O.A. It has also disposed of a pending O.A. while deciding the appeal arising out of the order passed by the R.O.

Late Mr. M.L. Kapoor had mortgaged the property with Oriental Bank of Commerce on 7.2.1996 in respect of some Cash Credit (hypothecation), clean DD and term loan. It was sanctioned in favour of M/s. Kapoor Sons Sales Pvt. Ltd. Mr. M.L. Kapoor was one of the Directors of the company. The property mortgaged was 209, Gagan Vihar, Delhi. The order shows that the same property had earlier been charged in the account maintained by M/s. Golden News Print Industries Pvt. Ltd. indicating that the same property was mortgaged by Mr. Kapoor in that account as well. During the course of hearing, however, it transpires that the property in question was not only subject to mortgage with the appellant bank in these two accounts but perhaps is subject matter of charge being mortgaged with some 6 to 7 other banks.

In this appeal, an application came to be filed on behalf of one Mr. Raj Bahadur and Ms. Ram Dulari stating that they are eager to pay within a period of 15 days the NPA amount in the account of M/s. Kapoor Sons Sales Pvt. Ltd. together with simple reducing balance basic interest @ 10.5% on such NPA amount from the date of classification/declaration of the company's account as NPA. The Tribunal was the view that the bank's claim was pending since long and such assurance given has ensured the quickest recovery against the company and disposal of the bank's claim case. The Tribunal, therefore, did not find any serious objection from the side of the bank in T.A. No. 518/2002. The advocate appearing on behalf of Mr. Raj Bahadur and Ms. Ram Dulari submitted that said Raj Bahadur and Ms. Ram Dulari were the subsequent purchaser who had acquired interest in the mortgaged property left behind by Mr. M.L. Kapoor. They assured the Tribunal of making payment of the amount claimed in the O.A. No. 638/2002, which was pending adjudication, with simple reducing balance based interest @10% on such amount from the date of the filing of the claim till the full payment within a period of 15 days from the said date. As per the Tribunal, no recovery could be prompter than such payment if made by such persons.

Counsel for the bank had opposed this prayer and claimed that the bank is entitled to contractual rate of interest and further stated that the order if passed would be protecting the interest of the purchaser.

The Tribunal, considering the submission, allowed said Mr. Raj Bahadur and Ms. Ram Dulari time till 15.3.2011 to deposit the amount, failing which recovery certificate of the entire claim amount along with interest from the date of filing till full recovery from the defendants on record was ordered. The sale which had been conduced by the bank thereafter was to stand confirmed in favour of the purchaser and the bank would be free to deliver the property to the auction purchaser in connection with the recovery proceedings stemmed from O.A. No. 638/2000.

Aggrieved against this order, the bank has filed the present appeal. Even M/s. Kapoor Sons Sales Pvt. Ltd. has also filed appeal against this order. Another appeal has been field by the bank whereby even its pending O.A. has been disposed of in this manner. With similar grievance, State Bank of Bikaner and Jaipur has also impugned this order in an appeal filed by it.

Grievance of the appellant is that in an appeal filed against the order of the R.O., the Tribunal could not have passed this type of order which even would lead to nullifying the recovery certificate as such. The counsel for the appellant would contend that the Tribunal below was only required to see if the order passed by the R.O. require any interference or not Counsel for the bank would also point out that the R.O. has considered in detail all the submissions made and had rejected the objections. Against the order passed by the R.O., an appeal was filed by Mr. Ashok Kapoor and Mr. Surinder Kapoor. Mr. Raj Bahadur and Ms. Ram Dulari have even not filed an appeal and have filed a miscellaneous application in this appeal leading to passing or the impugned order. As per the counsel for the bank, the bank would suffer substantial loss if this order is allowed to remain.

Even the borrowers have filed an appeal against this order. The counsel appearing for the borrowers would submits that on a complaint lodge by Mr. Raj Bahadur and Ms. Ram Dulari, the appellant had remained in custody. As already noticed, this property is mortgaged with a number of banks and the right of Mr. Raj Bahadur and Mrs. Ram Dulari etc. would be subject to such mortgage. Without considering this fact, the Tribunal below has passed an order which has the effect of nullifying the recovery certificate which the R.O. was, in fact, proceeding with. Similar grievance is made by State Bank of Bikaner and Jaipur.

Mr. Hemant Chaudhari appearing for Mr. Raj Bahadur and Ms. Ram Dulari, however, would submit that his clients have made a very fair offer and the only concession which has been allowed to them is reduction in the rate of interest which had facilitated the recovery.

I have considered the submissions made before me. I am constrained to observe that the Tribunal has passed the impugned order by throwing all norms to wind. While dealing with appeal against the order passed by the RO, the Tribunal has not only seriously intruded and has prejudiced the full recovery but has interfered in the order passed in the O.A. holding the bank entitled to a specified amount. The Tribunal has also decided the pending O.A. without giving opportunity to the parties to establish their claims. The process for recovery was in progress when the objection was filed before the RO. The recovery, which was to be effected from the sale etc. of the property, has been set at naught by issuing direction in an appeal which was not even filed by the person who has come forward to make this payment. As a result, substantial recovery of the bank which had succeeded in getting an order would stand nullified. I have not been able to appreciate as to how the Tribunal could have passed such an order to nullify the recovery certificate and the earlier order passed in the O.A. Mr. Bhardwaj appearing for Oriental Bank of Commerce is justified in stating that the order passed by the Tribunal below would be beyond its jurisdiction. The Tribunal could at the most consider the ground of the appeal urged against the order of the R.O. and could either allow the appeal or reject the same. The Tribunal in this manner could not have permitted a third-party to make payment which would result in recovery of reduced amount without there being any challenge raised against the order passed in the O.A. leading to the issuance of recovery certificate.

The submission that no such grievance can be made against the order made in a pending O.A. would also not appeal to me. Once the bank had filed an O.A. and once its adjudication on merit was due, the bank cannot be forced to accept the payment with interest at the rate which is much lower than the contractual rate. It would be a different matter in case the Tribunal, after considering the pleas of the parties, had passed an order in regard to the rate of interest pendente lite and future or in appeal subsequent to the passing of the order but disposing of the O.A. leading to such recovery would not appear justified. I also do not find the action of the Tribunal below justified in combining the appeal filed against the order of the R.O. with the pending O.A. and disposing these by way of a common order, which is impugned. It is not proper to adopt such a mode stating that it leads to speedy recovery.

If the amount sought to be recovered is one which is claimed in the O.A. or in the R.C., then the appellant may not be left with any grievance. But, when the order leads to nullifying the recovery certificate and leads to recovery of an amount which is much lower than what is claimed, then the bank can certainly have grievance against the same. The plea raised by the counsel for the borrowers also cannot be ignored who have come forward to say that the property ought to be put to sale as that would leads to discharging the entire liability of the borrowers. As per Mr. A.K. Sharma, counsel appearing for the borrowers, if the property is put to sale then the liability towards all the banks with which it is mortgaged would stand discharged and would also satisfy the amount which Mr. Raj Bahadur and Ms. Ram Dulari have paid as subsequent purchaser.

Considering the totality of the circumstances, I am of the considered opinion that the impugned order passed by the Tribunal below is wholly illegal and cannot be sustained. The impugned order is, therefore, set aside and all the appeals are allowed. The case is remanded back to the Tribunal below. It will consider the appeal filed against the order passed by the R.O. in accordance with law and decided the O.A. which has been disposed through the impugned order in accordance with law. There shall, however, be no order as to cost.