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Judgment
Anil Kumar Srivastava, Chairperson
THE APPELLATE TRIBUNAL :
THE APPELLATE TRIBUNAL :
The instant appeal is preferred by the Appellant, Punjab National Bank, against a judgment and order passed by DRT-II, Hyderabad on 26th July, 2018 in O.A. 2565 of 2017 [Old O.A. No. 1247 of 2016 of DRT-I, Hyderabad) (Punjab National Bank -vs- M/s. Qualicare Pharmaceuticals Limited)] whereby O.A. was partially allowed.
As far as the pleadings of the parties, Respondents (who are Defendants before the Learned DRT) were sanctioned Open Cash Credit Limit of Rs.45.00 lac and Term Loan of Rs.30.00 lac. Defendants No. 2 to 4 stood guarantors to the credit facilities. Schedule A property, as described in the O.A., was hypothecated as security for the credit limits. Loan documents were executed.
Defendant No. 4, i.e. Sri Ch. Lakshmi Narasimha Rao, also availed Housing Loan from the Charminar Branch of the Appellant Bank by creating mortgage over Schedule B property of the O.A. It is alleged that the Fourth Defendant executed Agreement of Mortgage for the loan availed by the First Defendant; who is also liable to pay the due amount to the Bank. Bank is having General Lien over the Schedule B property of Defendant No. 4. Defaults were committed by the Respondents. Loan Recall Notice was issued on 18.5.2015. Security Confirmation Letter was executed on 23.9.2015. Loan was classified as N.P.A. SARFAESI action was initiated by the Bank by issuing Demand Notice dated 26.10.2015 and Possession Notice dated 17.8.2016. A prayer was made for issuance of certificate for Rs.80,14,476.70p and to recover the same from Defendants No. 1 to 4 by sale of the property, as described in Schedule B of the O.A.
Defendants 1, 2 and 3 submitted that their signatures were obtained on blank documents. General Lien cannot be exercised on the Defendant No. 4. Loan was secured by hypothecation of Schedule A property. Bank has not given due consideration to the deposits made by the Defendant No. 1. It is further alleged that compliance of Confirmation Letter dated 23.9.2015 was not executed hence Bank is not entitled for charging excessive interest.
Separate written statement is filed by Respondent No. 1 (Defendant No. 4 in O.A.) stating that the Tribunal has no jurisdiction. Defendant No. 4 has availed Housing Loan and Over Draft Facilities from the Charminar Branch of the Appellant Bank which was duly discharged and the property, as mentioned in Schedule B of the O.A., is free from charge of mortgage. A letter dated 24.10.2016 was sent to the Bank for release of documents but was not released. After discharge of the loan, Registered Gift Deed regarding Schedule B property, is executed by Defendant No. 4 in favour of his daughters.
In order to prove his case, the Senior Manager of the Bank, viz. Sri K.V.V. Satyanarayana, was produced as witness. Learned DRT framed the following two issues:
(1) Whether the Appellant Bank proved its case against the Defendants and O.A. Schedule properties?
(2) To what reliefs?
Learned DRT has recorded a finding that the Bank has proved O.A. claim against Defendants No. 1 to 4 and O.A. Schedule A property but the Bank has no claim over the Schedule B property mentioned in the O.A. Accordingly, Learned DRT partially allowed the O.A. and held Defendants No. 1 to 4 jointly and severally liable to pay a sum of Rs. 80,14,476.70p with interest at the rate of 12% per annum simple. Further, it is held that the claim of the Appellant Bank is secured by way of hypothecation of the O.A. Schedule A property. As far as claim against Schedule B property is concerned, it is rejected. Feeling aggrieved by the finding that the claim against the Schedule B property was rejected, Appellant Bank preferred this appeal.
I have heard the Learned Counsel for the parties and perused the record.
At the very outset it is to be noted that Respondents No. 1 to 4 have not filed any cross appeal against the impugned judgment; only Appellant Bank has filed the appeal challenging the finding that the Bank has no claim over the Schedule B property. Hence all the findings recorded by the Learned DRT regarding sanction of loan, disbursement of loan, default committed by the Defendants and initiation of SARFAESI action by the Bank are not in dispute.
The only question to be looked into as to whether the property as mentioned in Schedule B of the O.A. was also a secured asset in the loan sanctioned to Respondent No. 1 wherein Respondent No. 2 to 4 were the Guarantors.
It is not in dispute that the Respondent No. 1 (Defendant No. 4 in the O.A.) is the owner of the Schedule B property. It is also not in dispute that he took Housing Loan and Over Draft facility from the Charminar Branch of the Appellant Bank which is totally repaid and that loan stands discharged. Learned Counsel for Respondents submits that Respondent No. 1 (Defendant No. 4 in the O.A.), after discharge of the loan, executed a registered Gift Deed in favour of his daughters; who are third party to the transaction.
Details of the Gift Deed, including the date, etc., are not filed by the Respondent No. 1. In paragraph 20 of the written statement it is only stated that the Schedule property belongs to daughters of Defendant No. 4. In paragraphs 17 and 18 it is stated that the Gift Deed is executed vide two registered Gift Deeds vide documents No. 2002 of 2016 and 2289 of 2016. As far as rights of the daughters are concerned, if it is established that the property was subject to mortgage then any right if legally transferred would be subject to mortgage. Hence, this plea cannot come in aid of the Defendant No. 4 that he had executed Gift Deeds in favour of his daughters after paying off the loan through the Charminar Branch of the Appellant Bank.
An Agreement of Guarantee was executed on 5th July 2013 between Sri Ch. Lakshmi Narasimha Rao and the Punjab National Bank regarding Cash Credit and Term Loan to M/s. Qualicare Pharmaceuticals Limited wherein he had agreed to guarantee due payment of the amount due to the Bank in respect of the said limit of Rs.75.00 lac. In paragraph 15 of the Agreement it is specifically that So long as any money remains owing under this guarantee the Bank shall have lien of all monies standing to the credit of the Guarantors and on any securities or goods in the hand of the Bank belonging to any of the guarantors and the Bank shall be entitled to appropriate/set off/realize the same. Sale Deed was executed in favour of M/s. Qualicare Pharmaceuticals Limited by Andhra Pradesh Housing Board on 29th March, 2001 regarding House bearing No. 96-MIG-1, Phase IX, Near Water Tank, KPHB Colony, Hyderabad 500 072, situated at Kakatpally. Title Deed of the same house was deposited by the Defendant No. 4 in respect of the Term Loan and Housing Loan for Rs.1,20,000.00. In the Agreement of Over Draft facility for Housing Loan executed between Defendant No. 4 and the Bank in paragraph 12 and
13 it is mentioned :
12. That the Borrowers do further agree and hereby give to the Bank during the currency and for the payment of its dues a general lien and right of set off and combine accounts without notice and charge on all moveable property of every description coming into the possession and control of the Bank on account of the Borrowers or any one of them, or for the time being held by the Bank on behalf of the borrowers of any one of them whether along or jointly with others in India or elsewhere including, without prejudice to this generality, any moneys Bank drafts, deposit receipts for moneys, promissory notes, bill of exchanges, hundies, stocks and shares goods and merchandise, bills of lading, Railway Receipts, Lorry Receipts, Government Bills with Inspection notes and other bills in course of collection, articles in safe custody and other documents of title to goods and any other negotiable or custody and other documents of title to goods and any other negotiable or transferable instrument or securities, instruments and documents of title of immovable property and mercantile documents of every description including hire purchase agreements or contracts other than those affecting immovable property and requiring registration under the Acts or law relating to registration and other documents evidencing the title of the Borrowers as creditors or members of any Corporation, Association, Registered Society, Company or Syndicate in India or elsewhere.
And it is hereby agreed that in the event of there being a surplus available after payment of all such principal and interest moneys and all charges and expenses as aforesaid of the net proceeds of such sale of security as aforesaid, it shall be lawful for the Bank to apply the said surplus as far as the same shall extend in or towards payments or liquidation of any other moneys due or to be due from the Borrowers or any one or more of them whether solely or jointly with any other persons or person, firms or company to the Bank by way of loans, Discounted Bills, Letters of Credit. Guarantee charges or of any other demand, legal or equitable, which the Bank may have against the Borrowers or any one or more of them and whether the Borrower or any one or more of them shall become or be adjudicated bankrupt or insolvent or be in liquidation or otherwise, and interest thereon from the date on which any and all advances in respect thereof shall have been made at respective rate at which the same shall have been so advanced.
Learned Counsel for Appellant would submit that in view of the provisions of Section 171 of the Indian Contract Act, a general lien was in favour of the Appellant regarding Schedule B property and the Bank was entitled to have lien over the same.
Learned Counsel for Respondent would submit that Schedule B property was a secured asset for the Housing Loan and Over Draft facility in the Charminar Branch of the Appellant Bank. Admittedly loan amount has been repaid and the security is discharged. Now Bank does not have any lien over the B Schedule property. It is further submitted that in the cross examination of the Bank witness, he has stated that Schedule B property was not mortgaged.
Learned DRT recorded finding that the security was only for Housing Loan and Over Draft facility it cannot be extended to the credit facilities availed by Respondent No. 1. Hence Bank has no lien over the Schedule B property. Section 171 of the Indian Contract Act reads as under :
171. General lien of bankers, factors, wharfingers, attorneys and policy- brokers - Bankers, factors, wharfingers, attorneys of a High Court and policy- brokers may, in the absence of a contract to the contrary, retain as a security for a general balance of account, any goods bailed to them; but no other persons have a right to retain, as a security for such balance, goods bailed to them, unless there is an express contract to that effect.
A bare perusal of the provision would show that the Bank has a general lien over the securities made by the Borrowers or the Guarantors. In the present case, there was a lien over the Schedule B property as would be apparent from the Agreement of Guarantee executed by the Defendant No. 4 on 5th July, 2013, as quoted above. If the Banks witness has stated that Schedule B property was not included, it cannot extend any favour to the Respondents as oral statement against the record is not admissible in evidence. The Bank Officer was required to depose on the basis of the documents executed by the Respondents. Bank has lien over the Schedule B property as per own admission of the Defendant No. 4 in the Agreement of Guarantor. Even if he has transferred the property in favour of his daughters through Gift Deeds since Bank has lien over the property prior to that hence the Gift Deed in favour of the daughters of Defendant No. 4 would be subject to lien and charge created over the property prior to execution of the Gift Deeds.
On the basis of the discussion made above, I am of the considered opinion that Learned DRT has erred in recording the finding that the claim of the Bank against Schedule B property could not be allowed. Accordingly, appeal deserves to be allowed.
ORDER
The appeal is allowed. Finding of the Learned DRT to the effect that the claim of the Appellant Bank against O.A. Schedule B property is rejected, is set aside. Appellant Bank is entitled to proceed against the Schedule B property to realize their claim.
No order as to costs.
Copy of the order be supplied to Appellant and the Respondents and a copy be also forwarded to the concerned DRT.
File be consigned to Record room.
Order dictated, signed, dated and pronounced in open Court.