Punjab National Bank vs N.s J. K. Industries & Anr

Ashok Menon, Chairperson

This appeal was filed originally by the Oriental Bank of Commerce (OBC) assailing the dismissal of the Original Application (O.A.) No. 29 of 2006 by the Debts Recovery Tribunal, Pune (D.R.T.) by judgment and order dated 30.09.2013 filed under the provisions of the Recovery of Debts Due to the Banks and Financial Institutions Act, 1993 (“RDDB & FI Act”, for short). The original appellant was thereafter substituted by the Punjab National Bank during the pendency of the appeal.

The facts and brief are thus:

The first respondent is a proprietorship represented by its sole proprietrix. She approached the Global Trust Bank (GTB) for a grant of overdraft facilities and was accordingly, granted overdraft loans from 1998 to 2001. She executed a demand promissory note on different dates, letter of lien was also executed in favour of GTB in respect of all the facilities which were granted from time to time. The second respondent stood a guarantee for the repayment of the debt. He also executed an affidavit cum declaration on 09.11.2001 creating an equitable mortgage of his properties. The first respondent had executed a letter of acknowledgement on 23.05.2001 acknowledging the outstanding dues to the tune of ₹1,13,53,345. The second respondent had also agreed to bring down the liability within the limit of 90% of the termed deposits which were offered as security. Acknowledgment of debt was again executed by the first respondent on 03.03.2003 confirming an outstanding balance of ₹1,23,27,633.36.

However, the first respondent failed to make payments regularly as a result of which the bank issued a demand notice on 30.12.2005 demanding the outstanding dues. GTB merged with OBC and the O.A. was filed for recovery of the amount of ₹63,24,598.36.

Per contra, the first respondent contended that the transaction is not as alleged by the applicant and that is the reason why the sanction letter was neither produced nor anything pleaded about it. The execution of the acknowledgement of debt is denied. The promissory notes were signed on printed form and the entities made by hand were not initialed by the first respondent. Blank signed documents were obtained by the GTB which was later misused to concoct documents in favour of the bank. There were sufficient termed deposits with the bank in the name of the first respondent offered as lien but no steps were taken by the bank on time to set off and appropriate/adjust the amount of termed deposit with interest towards the overdraft account. It is contended that there are no documents to prove the merger of GTB with OBC. The rate of interest claimed by the applicant is exorbitant and against the directions of the RBI.

The second respondent also contested the O.A. stating that the facility granted to the first respondent was that of clean cash credit/ temporary overdraft facility according to the agreement dated 02.09.1998. There was no such facility granted to the first respondent. The immovable properties of the second respondent were taken as a security in violation of the terms and conditions of the sanction letter which stated that the facility was granted against the termed deposits of the first respondent as an overdraft. The alleged execution of a personal guarantee by the second respondent is also denied. The enhancement of the overdraft facility to the first respondent was without any concurrence by the second respondent.

Documents were exhibited and affidavits were filed in support of the pleadings. After considering the evidence and hearing the arguments, the Ld. Presiding Officer (P.O.) vide the impugned order observed that the applicant has not proved the existence of outstanding dues. The accounting was not proper and the report of the Chartered Accountant appointed by the bank himself stated that the rate of interest calculated was exorbitant and against the RBI directions. The applicant was also found at fault and was not producing the original sanction letter. The term deposits in the name of the first respondent were appropriated but not in time. Had it been appropriated in time, there would not have been any outstanding dues payable and hence, the O.A. was dismissed. The Appellant is aggrieved and hence, in appeal.

It is pointed out that the first respondent had executed four promissory notes aggregating a sum of ₹1,20,00,000/- at the rate of interest mentioned therein. There is no violation of any RBI Guidelines. The acknowledgement of debt on 03.03.2003 executed by the first respondent has not been controverted which would indicate an indebtedness to the extent of ₹1,23,27,633.36 inclusive of interest up to 31.12.2002. The report given by Chartered Accountants M/s G.D. Apte & Co. pertains to seven entities of “Ayachit Group”. It does not indicate as to what amount has been overcharged for which entities. The representation was made much after the merger of GTB with OBC and the third and final letter of acknowledgment was given on 03.03.2003. Therefore, it would not lie in the mouth of the respondent to challenge the quantification of the debt. The respondents were also bound by the agreement, letter of lien, and demand promissory notes which bind them contractually to pay the amount. The Ld. Counsel appearing for the appellant points out to the decision of the Hon’ble Supreme Court in Indian Bank vs. Blue Jaggers Estates Ltd. (2010) 8 SCC 129 to submit that the documents of contract alone would govern the loan facility granted by a bank to its borrower and the borrower is obligated to repay the loan strictly in accordance with terms of the contract. Under the circumstances, recalculation of the interest done by the appellant bank and thereafter by the Chartered Accountant in dummy ledgers was contrary to settled the law. Against relying upon the report of the Chartered Accountant, the Ld. Counsel for the Appellant relies on the decision of the Hon’ble Supreme Court in State of Maharashtra vs. Damu (2000) 6 SCC 269 wherein it is held that an expert cannot be accepted without examining him.

The respondents have vehemently opposed the maintaining the appeal stating that the Chartered Accountant whose report relied upon by the D.R.T. was appointed by the OBC and not by the GTB and it is concerning the then existing rate of interest as directed by the RBI guidelines that the calculation of outstanding dues was made. The Chartered Accountant had also submitted his affidavit in support of the calculation made in the report and therefore, the contention that the expert was not examined is not true.

After considering the facts and circumstances that the OBC the applicant had itself appointed a Chartered Accountant for calculating the dues per the guidelines of the RBI from time to time. The Tribunal is not an expert in the calculation of the accounts. The Chartered Accountant who had prepared the report for the respondents had also filed an affidavit in support of his calculation. Hence, there were two reports of Chartered Accountants on either side to verify the accounts. The D.R.T had rightly relied upon the account statement given by the Chartered Accountants appointed by the Bank. The Ld. Presiding Officer has considered every aspect in great detail and I do not find any reason to upset the findings of the Ld. P.O.

Resultantly, the appeal is dismissed.