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Judgment
Anil Kumar Srivastava, Chairperson
THE APPELLATE TRIBUNAL :
Instant Appeal has arisen against an order dated 24.12.2021 passed by Ld. DRT-2 Kolkata in I.A. No. 983 of 2021 arising out of O.A. No. 94 of 2015.
As per the pleadings of the parties, O.A. No. 94 of 2015 was filed by the Appellant Bank for a certificate of Recovery for a sum of Rs.23,69,08,035/- with interest thereon. Apart from it, proceedings under the SARFAESI Act were also initiated by the Bank. Respondent filed an S.A. No. 134 of 2014 against the purported possession notice. S.A. No. 134 of 2014 was decided by Ld. DRT on 28.09.2018 with the direction to the Appellant Bank to furnish up to date statement of Account after adjusting the amounts received subsequently after issuance of SARFAESI notice. Respondent was further required to submit concrete proposal for settlement of its dues or to seek for restructuring of its loan accounts.
O.T.S. proposal was submitted by the Respondent on 26.09.2019 which was approved by the Appellant and sanctioned an OTS proposal for Rs. 5.5 crores. An amount of Rs. 2.40 crore was deposited by the Respondent under the O.T.S. Subsequent thereto Covid 19 Pandemic was there since 21.03.2020. Appellant granted extension of time for payment of remaining dues of Rs. 3.10 crore on the Respondent’s request till 31.08.2020. An amount of Rs. 1 crore was deposited on 30th June, 2020. Due to covid 19 Pandemic, Respondent’s institution could not be opened even at the end of August, 2020. However, Respondent deposited an amount of Rs. 75 lacs during July and August, 2020. Respondent apprised the Bank about the critical financial position vide letter dated 28.08.2020.
Through an email dated 01.09.2020, Appellant asked the Respondent to deposit the balance amount. In response, Respondent wrote a letter dated 02.09.2020 informing the Appellant that he could not deposit the remaining amount of Rs. 1.3 crores in August 2020. On 29.09.2020 and 30.09.2020, an amount of Rs. 1 crore was deposited leaving a balance of Rs. 35 lacs only. On 31.10.2020, Respondent deposited Rs. 35 lacs. Accordingly, full and final payment was made.
When the ‘NOC’ was not issued and Title Deeds were not released, Respondent sent a letter dated 19.11.2020 to the Appellant to expedite the proceedings. In response to same, Appellant Bank advised vide letter dated 25.11.2020 to make payment of an amount of Rs.27,33,836/- towards delayed payment interest. Respondent make a payment of Rs. 10 lacs. Despite Respondent’s requests, neither the ‘NOC’ was issued nor title Deeds were released. Then, Respondent made a payment of Rs. 27,33,836/- through Demand Draft and informed the Bank on 13.08.2021 which was returned by the Bank. Respondent moved an interim Application with a prayer to record the full satisfaction and payment of claim to the Bank and with a direction to the Bank to issue ‘No Due Certificate’ and release the Title Deeds.
Appellant Bank opposed the prayer and submitted that the Respondent failed to honour the O.T.S. proposal, terms and conditions of the O.T.S. proposal were not followed. Payments were not made in time. Accordingly, O.T.S. proposal has lost its efficacy due to efflux of time. It was also communicated to the Respondent vide letter dated 09.06.2020, 14.09.2021 and 30.09.2021.
After hearing the Learned Counsel for the parties, Ld. DRT allowed the interim application and directed the Respondent to make a payment of Rs. 27,33,836/- within 10 days and also to pay contractual rate of interest on the partial amount deposited with delay as calculated by the Bank. For the subsequent delay caused and compliance of the O.T.S. settlement proposal, Bank was directed to accept the payments and to calculate the subsequent delayed period of simple interest under the contractual rate to be paid by the Respondent. Thereafter, Bank shall issue ‘No Due Certificate’ and also release the original Title Deeds.
Feeling aggrieved by the impugned order, Appellant Bank has preferred an Appeal.
I have heard the Learned Counsel for the parties and perused the record.
Learned Counsel for the Appellant submitted that the Ld. DRT has exceeded its jurisdiction in passing the impugned order. It is further submitted that the DRT cannot compel the Bank to enter into an O.T.S. with the borrower. It is a commercial decision of the Bank. It is further stated that the terms of the O.T.S. were not complied by the Respondent. Hence, now the O.T.S. could not be enforced. It is further submitted that the letter dated 25.11.2020 was recalled by the Bank on 26.11.2020. No extension was given to the Respondent by the Bank after 30th August, 2020. Learned Counsel has placed reliance upon a judgment of the Hon’ble Supreme Court reported in Bijnor Urban Cooperative Bank Ltd. versus Meenal Agarwal and ors 2021 SCC On Line S.C. 1255.
Per contra, Learned Counsel for the Respondent submits that the O.T.S. proposal was accepted by the Appellant Bank for an amount of Rs. 5.50 crores. Extension of time in making the payments was granted till 30th August, 2020. Even thereafter Respondent made a deposit of Rs. 1,35,00,000/- in the month of September and October, 2020 which were accepted by the Bank without raising any objection. Hence, now Bank cannot raise any objection and estopped from raising the objection. It is further submitted that it cannot be said that the O.T.S. failed as the subsequent deposits in the month of September and October 2020 were accepted by the Bank
Learned Counsel for the Respondent further submitted that Respondent is not a willful defaulter as Bank has accepted subsequent deposits further.
Learned Counsel further submits that time was not the essence of the contract as no external time limit was fixed in the O.T.S. proposal. Hence, it cannot be said that after 26.09.2019, a period of three months was granted till 26.12.2019 and the proposal shall come to an end on that day.
There are certain admitted facts which are necessary to be brought on record.
O.A. No. 94 of 2015 was filed by the Bank for a certificate of recovery for a sum of Rs. 23,69,08,035/- with interest thereon. Proceedings under the SARFAESI Act were also initiated by the Bank. Respondent challenged the SARFAESI Action by filing S.A. No. 134 of 2014 before the Ld. DRT-1 which was decided on 28.09.2018 with directions to the Bank. O.T.S. proposal submitted by the Respondent was accepted by the Appellant and a letter was sent on 16.09.2019. wherein the relevant paragraphs 2 reads as under:
In the instant case the entire O.T.S. amount, as per instalment terms finalized in the sanction is to be paid within three months/ 90 days if paid, no interest will be charged. However, simple interest at the rate of MCLR for one year (applicable on the date of sanction) on reducing balance basis will be charged where O.T.S. amount is paid beyond three months effective from the date of sanction). It is provided in Para 8 that default in payment of O.T.S. amount and interest as per terms approved shall render the O.T.S. as failed and all reliefs, concessions shall leave automatically and Bank will be entitled to recover the entire dues as per the documents/ prayer in the plaint after adjusting the payments if any, received. This O.T.S. proposal is a basis for making payments, an extension was sought by the Respondent vide letter dated 17.06.2020 which was allowed by the Bank on 18.06.2020 wherein it is provided that Rs. 1 crore will be deposited within 30th June, 2020 and remaining balance O.T.S. amount for Rs. 2.10 crore will be deposited within next two months in instalments i. e. within 31st August, 2020. Reason for the extension was outbreak of the Pandemic Covid 19. An amount of Rs. 1 crore was deposited by the Respondent on 26.06.2020.
On 28.08.2020, Respondent made a request to the Appellant Bank for extension of time upto 30th September, 2020 for making payment of Rs. 1,35,00,000/- (Rupees one crore thirty five lacs). It was stated in the letter that due to Pandemic Covid 19, normal resumption of academic activities in educational institutions could not be resumed. Admittedly the branch Manager was competent to make extension till 30th September 2020, but the Respondents were asked to make the payment on 1st September, 2020. Again a request was made by the Respondent on 02.09.2020 for extension of time till 30th September, 2020 for making payment of Rs. 1.35 crores. Thereafter, by 30th September, 2020, Respondent deposited an amount of Rs. 1 crore and it was communicated vide letter dated 30th September, 2020. Thereafter by 31.10.2020, amount of Rs. 35 lacs was also deposited. There is nothing on record to show that the letter dated 02.09.2020 and 30th September, 2020, they are responded by the Appellant Bank rather record shows that these letters were never responded by the Bank and no reply either positive or negative was ever sent to the Respondents. It is also not denied rather admitted that amounts of Rs. 1 crore was deposited by 30th September, 2020 and Rs. 35 lac was deposited on 29.10.2020 and 31.10.2020. These amounts were accepted by the Appellant Bank without any protest on their behalf. If the Bank was not willing to continue with the O.T.S., then a legal bounden duty was upon them to communicate the Respondent regarding rejection of the O.T.S. proposal for non-compliance of the terms and conditions. But neither any communication was sent for rejection of the proposal nor the amount was accepted under protest. When the amount was accepted without raising any objection then now Bank is estopped from challenging the O.T.S. proposal on the ground that the instalments were not paid within time.
According to the Respondents, delay in making the payments of the instalments was due to the pandemic Covid 19 situation.
Respondent is an educational institution, due to Covid 19, institutions were closed and even the regular income was withheld. In such circumstances, the delay in making the payment should have been sympathetically considered by the Appellant Bank. It is further submitted that even the Hon’ble Supreme Court had condoned the delay in making payments on this ground. In a case of M/s Ganga Foundation Pvt. Ltd. Versus State Bank of India and anr especially to Appeal No. 14979-14980 of 2021, the Hon’ble Supreme Court in order dated 02.03.2022 had allowed the extension of time due to Pandemic Covid 19. In Bindu Vijayakumar Vs. The Regional Manager S.B.I, Hon’ble Kerala High Court in W.P.(C) No. 19672 of 2021) dated 03.01.2022 extended the period for making the payment under O.T.S. scheme under the exceptional circumstances of Covid 19. In nu Bhalla and Another V. District Magistrate, Pathankot and another (AIR 2021 Punjab and Haryana also the Hon’ble Supreme Court has extended the period of payments of installments in O.T.S. scheme due to Pandemic Covid 19. Certain illustrations were also placed before the Hon’ble Supreme Court wherein it was held that the Bank themselves have the discretion to extend the period of O.T.S. keeping in view attending and demanding circumstances which is only to ensure that ultimately the purpose of settlement is achieved. Extension can be considered and granted in deserving cases. In the present case, extension was sought on the ground of Pandemic Covid 19. We can take judicial notice of the fact that whole nation came to a standstill during that period, even the Hon’ble Apex Court had extended the period of Limitation for filing the petitions in suo motu case No. 3 of 2020. In such circumstances, Appellant Bank should have sympathetically considered and allowed the extension for making the payments of instalments. It is also pertinent to mention that the Respondent is a bona fide borrower which was held by the Ld. DRT in the SARFAESI Application. No Appeal was filed against the order passed on SARFAESI Application. Payments were made by the Respondent.
In the O.T.S. settlement letter dated 26.09.2019, initial period of 3 months was settled for making payments, but there was a clause that in case of appeal simple interest at the rate of NCLR (applicable on the date of sanction on reducing balance basis will be charged. It means that even at the time of finalizing the O.T.S. proposal Bank was conscious of the fact that there may arise a situation when the payments could not be made by the borrower in time. Hence, there was a provision for charging the interest. It was not a time bound proposal or a scheme, rather extension was permissible. Initially extension was also granted by the Bank upto 31st August, 2020. Respondent sought extension twice till October, 2020 which were never denied by the Appellants. The rejection was communicated to the Respondent on 14.09.2021 and 30th September, 2021 when the interim application was pending before the Ld. DRT. Why the rejections were not communicated earlier could not be explained by the Bank. Hence, non-communication of the rejection before accepting an amount of Rs. 1,35,000/- would act estopel against the Bank.
Learned Counsel for the Appellant has placed reliance upon the judgment of the Supreme Court in Bijnor Urban Cooperative Bank Limited, and others Vs Meenal Agarwal and others 2021 SCC On Line SC 1255. It is submitted that the Bank or Financial Institutions cannot be compelled to enter into settlement with the borrower. In the present case, the Appellant was not asked by the DRT to enter into a settlement rather, settlement arrived at between the parties and thereafter some delay was made by the Respondent in making the payments. Hence, the facts of the present case are different.
Whether the time was the essence of the contract or not is to be looked into with the perspective that in the settlement scheme, no specific time frame was fixed rather initially three month’s time was mentioned in the letter dated 26.09.2019. Further, time was extended, even delayed payments were accepted by the Bank. If the time was the essence of the contract, then the Bank should not have accepted the delayed payments or a particular date should have been fixed in the O.T.S. letter dated 26.09.2019. Hence, I am of the view that time was not the essence of the contract.
It was held by the Hon’ble Supreme Court in P. Vijay Kumari versus Indian Bank AIR 2018 Supreme Court 759 that if the agreed amount is to be paid though with some delay, contention of the delay is course of action. If the grounds for delay justified a departure from what was also agreed upon i.e. the right of a Bank to recover the entire dues. Hence, the time period for making payments can validly be extended.
On the basis of discussion made above, I do not find any illegality or irregularity of the impugned order passed by the DRT on 24.12.2021. Accordingly, Appeal lacks merit and is liable to be dismissed.
ORDER
Appel being Dy. No. 12 of 2022 is dismissed. Order dated 24.12.2021 passed by the DRT is hereby confirmed.
Party shall bear their own cost.
Copy of the order be supplied to Appellants and the Respondents and a copy be also forwarded to the concerned DRT.
File be consigned to Record room.
Order signed, dated and pronounced in open Court.