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Judgment
Ranjit Singh, J
The Tribunal below has allowed the S.A. filed by the respondents and has set aside the notice under Section 13(2) of the SARFAESI Act and the steps taken subsequent thereto. The Tribunal below otherwise has allowed the Bank to fix the date of NPA and then proceed ahead in accordance with law. Aggrieved against the same, the Bank has filed this Appeal, which is pending since January, 2012. Considering the nature of the order passed by the Tribunal below, there is hardly any debatable issue which calls for much consideration and adjudication. Once the Tribunal below has given liberty to the Bank to fix the date of NPA, while setting aside the earlier action on the ground that three different dates of NPA had been pleaded by the Bank, the issue easily could have been decided immediately by fixing the date of NPA and then allowing the Bank to proceed ahead, more so, when the respondents had not come forward to challenge this order. The Appeal still has continued to pend for last three years for decision of this trivial issue. The contribution of the respondents in adopting one mode or other to delay the disposal of this Appeal is substantial.
Soon after filing of this Appeal, this Tribunal has suspended the operation of the impugned order by observing that the judgment of Hon'ble Jharkhand High Court relied upon by the Tribunal below to pass the impugned order had been stayed by the Division Bench on an LPA filed against the same. The effect of this order, thus, was that the Bank would have been in a position to determine the NPA date, which was even the direction issued by the Tribunal below. The Tribunal below, while permitting the Bank to fix the date of NPA and then to proceed ahead, had also held that the respondent was entitled to be informed, which in this case had not been done. The Tribunal has observed that respondents were not given an opportunity for settlement of controversy/doubt regarding classification of the asset as NPA. This right of opportunity of settlement of controversy/doubts to the respondents was so held by the Tribunal on the basis of judgment of the Hon'ble Jharkhand High Court in the case of Stan Commodities Pvt. Ltd. v. Punjab and Sind Bank, AIR 2009 Jhar. 14. As already noticed, the operation of this judgment had been stayed by the Division Bench, which fact was noticed, as that was the ground on which this Tribunal had stayed the operation of the impugned order. That being the position, the appellant Bank was at liberty to proceed ahead with the SARFAESI action but apparently that has not happened. Rather, one application or other came to be filed by the respondents in this Appeal which has led to delay in disposal of this Appeal.
Initially, an adjournment was prayed by the responded on the ground that they were in talk with the Chairman of the Bank and there was every likelihood that the dispute would be settled amicably. Plea also was that some Senior Counsel was to be engaged. The prayer for adjournment was opposed on the ground that the possession of the secured assets was with the Bank, yet it has been directed to maintain status quo in regard to the property in question. The adjournment was granted after imposing a cost.
On the next date, the respondents prayed for adjournment on the ground that Senior Counsel Rajeeve Mehra engaged by them was out of country. The case was adjourned despite opposition by the Counsel for the appellant. On this date, it was also noticed that the settlement has finally failed. Thereafter the case was heard 31st August, 2012 then on 6th December, 2012 then again to 22nd January, 2013. On the next date, it was adjourned on the joint request of the Counsel for the parties. On the subsequent date the case was adjourned as respondents had filed some application or the other. One application was for taking on record the copy of the Original Application. When queried, time was taken for verifying the date when the Original Application was filed. The adjournment as prayed was granted by imposing a cost.
The document was then taken on record. Another application came to be filed for appointment of Local Commissioner on the ground that the property had not been preserved while being in possession of the Bank. The prayer for appearing a Local Commissioner was allowed. Then the copy of the report, when filed, was considered. Thus, a considerable time was consumed in considering and deciding this side issue.
During the pendency of this Appeal, the Bank assigned the debt in question to Pridhvi Asset Reconstruction and Securitization Company Ltd. The respondents raised objection by challenging the assignment deed. This Tribunal then passed a detailed order on 17th October, 2014 and the said Asset Reconstruction Company was substituted in place of Vijaya Bank to prosecute the present Appeal. The order dated 17th October, 2014 reads as under:
"The S.A. filed by the respondents has been allowed by the Tribunal below. Appellant Bank has, however, been given liberty to fix the date of NPA and then proceed ahead in accordance with law. Aggrieved against the order, Vijaya Bank has filed this Appeal. This Tribunal has stayed the operation of the order passed by the Tribunal below. Thus status quo in regard to the possession, which was taken by the Bank was ordered to be maintained and is continuing.
Counsel were heard in this case on more than one occasion. In between, request made by the respondents for taking on record the certified copy of the Original Application was allowed. Yet another application was filed by the respondents with the grievance that some items have gone missing from the property in question which was in possession of the Bank. Allegation further was that the doors and windows of the property have been removed/damaged.
When these assertions were disputed. This Tribunal appointed a Local Commissioner to visit the property and to examine the state of affairs. The Local Commissioner filed his report on 2nd April, 2014. Copy of this report was given to Counsel for the Bank.
While all these was happening, Vijaya Bank assigned its debt to a Company, namely, Pridhvi Asset Reconstruction and Securitization Company Ltd. Notice of the application seeking substitution of company was issued. The respondents have filed reply raising objection to the assignment of debt by Vijaya Bank to the said Company.
In the application it is pleaded by the assignee Company that it is entitled to prosecute and enforce all applications, Appeals and legal proceedings which are pending on the date of the said assignment in terms of Section 5 of the SARFAESI Act. The assignment agreement has also been placed on record.
The first objection raised by the respondents is that the assignment of debt would violate the order passed for maintaining status quo. On assignment of the liability no change has taken place which would violate the status quo order. Thus, objection is accordingly rejected.
As per the respondents, Vijaya Bank has assigned all loans/financial assistance given to the respondents to a Company which is acting in its capacity as Trustee of the PARAS-VIJBPF-028 Trust for the benefit of holder of Security Receipts. Reference is made to Section 5 of the Indian Trust Act which provides that no trust in relation to immovable property is valid unless declared by a non-testamentary instrument in writing signed by the author of the trust or the trustee and registered, or by the Will of the author of the trust or of the trustee. This section further provides that no trust relating to movable property is valid unless declared as aforesaid or unless the ownership of the property is transferred to the trustee. As per the respondents, the agreement is silent of the status of the Trust as to whether it is a registered Trust or unregistered one. It is stated that any Trust for holding immovable property should be a registered Trust. Since the assignee Company has failed to file any document on record and to prove that the assignee Company is a registered Trust, the assignment cannot be said to be proper and the assignee Company should be put to strict proof to show that it is a registered Trust.
The Counsel for the Bank has made reference to agreement to point out that the assignment is to the Applicant company and not to any Trust. The contents of para 2.1.1 of the Agreement is highlighted by the Counsel for the Bank that this assignment in Trust is for the benefit of the holders of the Security Receipts issued by the Assignee pursuant to the PARAS-VJBPF-028 Trust, and the Trust Deed to the end and intent that the assignee shall hereafter be deemed to be the full and absolute legal owner, and the only person legally entitled to the loans or any part thereof, free from any or all encumbrances. The Counsel for the appellant has submitted that it is only for the purpose of receipt that Trust is referred and otherwise assignee is the Company for all intent and purpose and it is only person legally entitled to the loans or any part thereof, free from any or all encumbrances.
It is thus clear that the assignment is not in favour of any Trust for which the submissions as advanced by the Counsel for the respondents would need further consideration. As per the assignment, the assignment is in favour of the assignee Company and not in favour of any trust. I find that this objection raised by the Counsel for the respondents is frivolous and therefore would liable to be rejected.
Otherwise also, I have not been able to make out as to how the respondents who have taken advance from the Bank can have any grievance if the Bank has assigned this debt to an assignee Company. In the loan agreement between the parties, the respondent themselves has accepted and has agreed as under:
"6. It is hereby expressly agreed that the Bank shall be at liberty to assign the debt and the benefit of these presents and the securities and the documents executed by the borrower in respect of the securities (hereinafter called "the security document") without the consent of the borrower and without notice to the borrow and the borrower shall if and when required by the Bank to do so, and execute and join in doing and executing all such acts, things, deeds, documents or assurance, as the Bank may require for the effectuation of such assignment."
This objection is accordingly dismissed. The Applicant Company is substituted in place of appellant Vijaya Bank and is permitted to prosecute the present Appeal.
Adjourned to 19th November, 2011 for further proceedings."
On 19th November, 2014, no one came present on behalf of the respondents. On the next date, the case had to be adjourned as Counsel for the Bank prayed for time to have instructions as the appellant would wish to initiate fresh proceedings under the SARFAESI Act. The Counsel for the appellant, however, came forward with instruction to make submissions in the Appeal.
In the meantime, the respondents approached the High Court to challenge the order passed by this Tribunal substituting the Asset Reconstruction Company in place of the Bank, which was ultimately not pressed before the High Court. The respondents then came up with the plea to implead Vijaya Bank in addition to the Asset Reconstruction Company to which debt had been assigned. The application was ultimately rejected on 15th April, 2015 and that is how this Appeal has remained pending for all this while.
The issue in the present Appeal is rather a limited one. Even if the pleas of respondents are accepted that there were more than one date of NPA, then also not much would come out of it. The Tribunal below, after noticing all these facts has observed that the documents would show four different dates declaring the account as NPA. At the same time the Tribunal has given liberty to the Bank to fix the date of NPA and then proceed ahead in accordance with law.
When the case is called during the first round, none was present or behalf of the respondents. On request, the case was passed over. None came present during the second round as well. Instead of waiting for the Counsel for respondent, the Counsel for the appellant was asked to advance his submission.
Noticing the issue involved in this case, the Counsel for the appellant is addressed a specific query as to what should be the date of the NPA as per the Bank. The Counsel for the appellant has with some justification succeeded in showing that the date of NPA was 30th June, 2008 and that can be taken as the date of NPA which would be in accordance with law. Since the proxy Counsel was still making request on behalf of the respondents to await presence of their arguing Counsel, the case was kept for orders with liberty to the Counsel for the respondents to submit his submissions in writing. The case still is in hand when the arguing Counsel has appeared and is given opportunity to make submission.
The Counsel for the respondents at this stage is apprised that the Bank has shown that NPA date was 30th June, 2008 and accordingly the Counsel may make his submissions if the respondents have any objection in this regard. The Counsel for the respondents then prayed for time to have instructions and accordingly the case was again passed over and kept aside.
When the case was taken up during the third/fourth round in the background as noticed above, the Counsel for the respondents, instead of making submission, sought permission to file written arguments. The Counsel was the apprised that he is present and can advance his oral submissions. The Counsel however persists with his request to make written submissions. The prayer is declined as the Counsel is available and the case has been taken up for hearing in this manner on the request of the Counsel for being heard as he has prayed for making submission.
The Counsel for the appellant while making submissions specifically stated before this Tribunal that the judgment passed in the case of Stan Commodities (supra) had been stayed by the Division Bench and the same stay still continues. Even if that judgment would have been in operation, the view by the Tribunal below is to afford an opportunity to the respondents while fixing the date of classification of the NPA. The Counsel for the respondents was accordingly apprised that he is being given an opportunity to say whatever he would with to, and thus this opportunity has been so afforded to the respondents. The Counsel however submits that this opportunity is to be given by the authorized officer of the Bank. The Counsel is unable to appreciate that this view expressed by the Tribunal below is on the basis of a judgment which is stayed. There is otherwise no law brought to my notice that such opportunity is to be allowed to the borrower. The observation of the Tribunal below made on the basis of the judgment which has been stayed could not be taken as a valid settled position under law to press for such an opportunity. The Counsel, otherwise, has chosen not to make any submission and only insisted on filing written submissions. There is no justification noticed in the view expressed by the Tribunal that for classifying or declaring the account as NPA any opportunity is required to be afforded to the borrower. The law relied upon by the Tribunal below in this regard cannot be pressed into service as the operation of the said judgment has been stayed. Since the Bank is given liberty to fix the date of NPA, which it has done fixing the date to be 30th June, 2008 there is no need to pend this Appeal. The Appeal is accordingly allowed with liberty to the Bank to proceed ahead with the recovery proceedings fixing the date of NPA to be 30th June, 2008.
In view of the order, I.A. 29/2015 is rendered infructuous and is disposed of as such.