Phoenix Arc Pvt. Ltd. vs Rajinder Kumar And Ors.

Ranjit Singh, J

The appellant in this case has filed this appeal with a limited grievance in regard to the amount of NPA as determined by the Tribunal below. The appellant otherwise has taken over the assets in this case from the Catholic Syrian Bank Ltd. which had issued notice for recovery of Rs. 4,04,50,601.11 under Section 13(2) of the SARFAESI Act. In the SA filed by the respondents, the Tribunal below has determined the NPA amount as Rs. 3.70 crores and thus reduced an amount of Rs. 40 lacs while deciding the OA. The Bank has filed this appeal with a grievance that the Tribunal below has erred in reducing this NPA amount which is against the documents available on record.

The impugned order in fact has been passed disposing of the SA while considering the prayer made by the respondents/borrowers in IA No. 584 of 2011 which was filed before the Tribunal below with a prayer to pass final order on the amount of debt due as NPA, as per the statement of account with interest @ 6% p.a. from the date of NPA i.e. 30th September, 2010.

SA No. 23 of 2011 was filed by the respondents for quashing/setting aside the notice dated 8th April, 2011 and other measures taken in respect of the property No. S-257 measuring 207 sq. yards, 1st and 2nd floors along with terrace rights, Greater Kailash Part-1, New Delhi. During the pendency of this SA, the respondents filed an application stating that the property in question was the sole residential house of the respondents and so they would accept the NPA amount as Rs. 3.70 crores as on 30th September, 2010 as mentioned in the statement of account. The respondents had also pleaded that one cheque issued in favour of IATA was not honoured by the appellant-Bank and that encashment thereof was within the discretionary powers of the Bank for which respondent No. 4 suffered closure of his business. The respondents accordingly expressed them willingness to settle the recovery case and, thus, prayed for reducing interest to 6% simple on the NPA amount while disclosing that they had already deposited a sum of Rs. 40 lacs.

The Bank had opposed the prayer made in the application. The Tribunal below while considering the prayer has relied upon the notice dated 29th October, 2010 issued under Section 13(2) which was for recovery of a sum of Rs. 4,04,50,601.11 and not Rs. 3.70 crores as was claimed by the respondents. In this regard, the respondents had referred to the statement of account dated April 23, 2011 issued by the Bank which showed the outstanding amount as Rs. 3.70 crores as on September 30, 2010. Noticing that this statement of account was filed along with the reply to the SA, the Tribunal accepted the amount of NPA as Rs. 3.70 crores and accordingly passed the impugned order awarding interest @ 11% p.a. from the date of declaring the account as NPA against the prayer for awarding interest @ 6% p.a.

The Bank was directed to supply recasted statement of account within one month treating the NPA amount as Rs. 3.70 crores and doing the calculation with interest @ 11% p.a. from the date of NPA while adjusting the amount of Rs. 40 lacs which had already been paid by the respondents. Simultaneously, the Tribunal issued direction to the respondents to make payment within two months positively from the date recasted statement of account was received from the appellant. The Tribunal also observed that consideration shown in regard to fate of interest was subject to the condition of making payment within the stipulated time and in the event of failure to make the payment the Bank was given liberty to proceed further under the SARFAESI Act to recover the interest as mentioned in the notice on the NPA amount of Rs. 3.70 crores. The SA was also accordingly disposed of.

The Counsel for the appellant would refer to the notice under Section 13(2), SARFAESI Act to point out that the amount mentioned in the notice was Rs. 4,04,50,601.11 which was payable with interest @ 15.25% p.a. with monthly rests and penal interest @ 1% from 30th September, 2010. The details of the facilities and the amount due are also disclosed in this notice. Reference is then made to the reply filed by the respondents to this notice. In this reply, the respondents have clearly conceded that the respondent Company was granted ODBD facility on 17th October, 2009 for Rs. 3.50 crores and additional facility of Rs. 30 lacs was sanctioned on 27th April, 2010. The respondents had further disclosed in this response that they had suffered set back when one of their major customers went out of his business. On this account, their working capital eroded and they went out of business completely. The respondent Company had further disclosed that with the help of friends and associates they had identified an investor who had agreed to take 70% shares in the company. Since this process of due diligence was on at that time, the Company accepted to close the transactions within two weeks and accordingly had requested one month time to settle the dues with the Bank.

It is, thus, clear that there was no dispute raised in regard to the notice amount. This fact can, however, be made out from another communication dated 6th January, 2011. The Counsel will make reference to that part of the communication wherein the Company had written as under:

"With the aforesaid offer available with us and the support of Rs. 60 lacs proposed to be extended to the promoters by the friends and relatives, we would be able to garner an amount of Rs. 285 lacs against the liability of Rs. 404 lacs to CSB."

Thus, in its communication, the respondent Company admitted the liability which was Rs. 404 lacs. In the above noted background, the Counsel for the appellant would refer to the prayer made by the respondents in this IA which was filed in this SA which was with the prayer to pass final order under Section 19(20) of the DRT Act with regard to NPA amount of Rs. 3.70 crores minus Rs. 40 lacs i.e. Rs. 3.30 crores along with interest @ 6% p.a. The Counsel has also referred to the statement of account which was led in evidence to say that the balance as on 30th December, 2010 was Rs. 4,04,50,601.11.

The Counsel for the respondents, however, has referred to the statement of account filed along with the reply filed by the Bank where the balance as on 30th September, 2009 is shown as Rs. 3.70 crores. As per the Counsel, the Tribunal has taken this statement of account to hold that the NPA on 30th September, 2010 was Rs. 3.70 crores and not what was mentioned in the notice amount. The Counsel accordingly would plead that no interference in the impugned order is called for in this appeal.

In response, the Counsel for the appellant would refer to the statement of account led in evidence where unrealized interest of Rs. 34,50,601.11 has been credited on 30th September, 2010. This entry was reversed and shown in the debt as unrealized interest. This is what is reflected in the statement of account to which the Counsel for the appellant has referred. With this unrealized interest, debited in the statement of account, the amount due on 30th September, 2010 is reflected as Rs. 4,04,50,601.11. There is no difference in the statement of accounts to the one which is referred to by the respondents and the one which is being relied upon by the appellant. Whereas, the respondents would rely upon the statement of account where this unrealized interest is shown as credit entry and is reversed on the same day. This statement of account coupled with the fact that the appellant never disputed while responding to the notice that the amount due was Rs. 4,04,50,601.11. The Tribunal below seems to have erred in holding the NPA amount to be 3.70 crores.

Reference in this regard has already been made to the communication addressed by the respondents where this aspect was not disputed or rather was conceded. In my view, the Tribunal below while holding that the NPA amount was Rs. 3.70 crores has erred in reading the statement of account properly. The appeal filed by the appellant, therefore, deserves to be allowed.

Incidentally, the Counsel for the appellant has also pointed out that on 6th January, 2011 the respondents have entered into an agreement to sell the mortgaged property for a sum of Rs. 2.18 crores and in this regard the appellant has now learnt that the intending purchaser had also filed a suit before Delhi High Court. The Counsel accordingly would challenge the conduct of the respondents in expressing their inability to make the payment but, at the same time, resorted to illegal mode of selling the mortgaged property and receiving the amount as advance. As per the Counsel, the respondents have not made any payment till date. Plea thus is that the appellant would be entitled to recover the amount with interest as was claimed in the notice. Since there is no pleading available on this aspect as raised and the respondents have not been put to notice, I say nothing further on this aspect. In view of the discussion above, the present appeal is allowed and it is held that the NPA amount shall be Rs. 4,04,50,601.11. To this extent, the order passed by the Tribunal below is set aside. The appellant would be at liberty to recover the amount of Rs. 4,04,50,601.11 along with in terms and conditions as were imposed by the Tribunal below in its order passed by the Tribunal below.