Punjab & Sind Bank vs Delhi Automobiles Ltd.

The appellant is aggrieved against the order of the DRT passing a decree on the NPA amount of Rs. 14,41,72,995/- along with interest @ 10% p.a., on the ground that this amount has been awarded against the amount of Rs. 31,92,34,594.84 as claimed in the O.A. The NPA amount was claimed with interest @ 18.75% p.a. with quarterly rests. The grievance of the Bank further is that the Tribunal has gravely erred in passing a decree of NPA amount as stated above in the background that earlier, in the year 2001, the Tribunal had already issued a Recovery Certificate for a sum of Rs. 22,86,65,077.89 against respondents 1 to 4 as interim decree on the basis of admission of the respondents. As per the appellant, once a sum of Rs. 22.86 lacs (approx.) was allowed as an interim decree in the year 2001, the Tribunal below could not have changed this to NPA amount, which was Rs. 14,41,72,995/- though with interest. The Bank has accordingly filed the present appeal.

Facts as pleaded shows that appellant had filed an Original Application (O.A. No. 677/2000) before the DRT for recovery of Rs. 32,63,59,451/- along with interest @ 18.75% p.a. with quarterly rests and costs against the respondents jointly and severally. The appellant had sought recovery of the amount by sale of the hypothecated and mortgaged property which included 1, Sikandra Road, New Delhi in the name of respondent No. 1. While issuing notice on 26.12.2000, the Tribunal directed the respondents to maintain status quo in regard to the immovable property. On being served, respondents put in appearance before the Tribunal. The appellant Bank then filed an application under Order 12 Rule 6, CPC read with Sections 19(20) of the RDDBFI Act, seeking a decree on the basis of admission of respondent No. 1 statedly made in its Balance Sheet for the financial year ending 31.3.1999. It was urged that in the said Balance Sheet, respondent No. 1 had unequivocally admitted and acknowledged the debt of Rs. 22,86,65,077.89 as payable to the appellant Bank as secured creditor. Finding this admission to be clear and unequivocal, the Tribunal, on 28.5.2001, passed a decree in the sum of Rs. 22,86,65,077.89 against respondents 1 to 4 on the basis of this admission, Respondents were directed to pay this amount within 30 days and in case of default, the amount was ordered to be recovered by sale of mortgaged property. Interim Recovery Certificate was also issued and the O.A. was ordered to continue for the balance amount, interest and cost.

It is disclosed by the Bank that in the year 2001, respondent No. 1 approached the appellant Bank for one-time settlement of the recoverable dues. The Bank considered the proposal for settlement and sanctioned the same, which was conveyed to the respondent on 28.10.2001. As per this settlement, respondents had to suffer a decree of final order for the entire claimed amount and the same was deemed to have satisfied on the payment of the settlement amount of Rs. 2222.34 lacs along with interest at PLR from the date of intimation. 25% of this amount was payable immediately, i.e. within maximum period of 30 days and the balance amount along with interest in two equal half yearly instalments. A sum of Rs. 39,36,900/- was also to be paid in respect of Bank Guarantee No. 57/90 dated 23.1.1999 issued in favour of M/s. Ind Auto Ltd. In case of any default, all concessions granted were deemed to be withdrawn automatically and full decretal amount was liable to be paid. It is alleged that the respondent miserably failed and neglected to honour the terms of settlement. They did not comply with the terms of settlement despite seeking extension on various occasions, which was considered and granted till 31.3.2004. It is alleged that a joint application for recording the compromise was prepared and filed in the Tribunal on the request of respondents, but they did not appear to accord their approval to the settlement. It is pleaded that respondents being wilful defaulter are not entitled to any relief.

It is also averred in the appeal that on the basis of judgment passed by the Apex Court in the case of Central Bank of India v. Ravindra & Ors. I (2002) BC 150 (SC)=VII (2001) SLT 400=IV (2001) CLT 127 (SC)=AIR 2001 SC 3095, the appellant had recasted the statement of accounts giving benefit to respondent No. 2 of net compounded effect of Rs. 71,24,856.16. The O.A. amount was accordingly revised to Rs. 31,92,34,594.84.

The O.A. remained pending before the Tribunal below. On 5.8.2010, the appellant Bank was directed to file statement of accounts duly verified under the Bankers' Book of Evidence Act, showing principal amount advanced, rate of interest applied from time-to-time, penal interest, if any, applied, cost and charges, if any, date of NPA and the amount thereof plus rate of interest applied after NPA. This order was passed on the basis of an interim application filed by the respondents. Vide this order, the appellant was also required to disclose the amount recovered during the course of trial and the balance amount as on the date of filing the statement of account. In compliance of these directions, the appellant filed a statement of account on 23.8.2010. Respondents raised certain objections. They were also given opportunity to file statement of account along with an affidavit, showing its liability on the basis of contractual rate of interest as on the date of filing of the O.A. It is urged that the respondents did not comply with this direction.

On 1.11.2010, the Tribunal below stayed the proceedings qua respondent No. 5 on an application filed by him. In this background, the final arguments were heard on various occasions. It is stated that the case was reserved for pronouncement of judgment on 20.6.2012 but, in the meantime, the respondents again filed an application seeking permission to address arguments and they were given another chance. The appellant had filed brief synopsis and copy of which is annexed with the appeal. In this manner, the matter was again taken up for hearing on 3.12.2012. On this date, the Counsel for the respondents offered to give up all legal issues and sought indulgence and consideration by the Tribunal regarding the rate of interest. Respondents sought and were granted time to file a formal affidavit to this effect, which they filed on 5.12.2012. In this affidavit, it is averred that the respondents were not pressing any legal issues and prayed that the concessional rate of interest be granted from the date of NPA on the amount of NPA. On this date itself, the Tribunal passed the impugned order holding that the appellant was entitled to recover a sum of Rs. 14,41,72,995/- alongwith interest @ 10% p.a. from 31.12.1998 onwards and cost and it be paid by the respondents within three months. If the amount was not paid within three months, the interest payable was to be @ 18% p.a. until recovery. The grievance of the appellant Bank in this background is that the Tribunal has allowed claim of Rs. 14,41,72,995/- against the amount of Rs. 31,92,34,594.84 as claimed in the O.A. Thus the Tribunal below has reduced the claim to Rs. 14,41,72,995/- which is even less than the interim decree. The grievance also is that against the rate of interest of claimed of 18.75% p.a. with quarterly rests the Tribunal has awarded interest of 10% p.a. simple. Terming this order to be ex facie erroneous, the appellant has filed the present appeal.

The appeal was admitted finding that arguable points are raised therein. Respondents were put to notice and they have filed reply as well.

Respondents would plead that the impugned order was passed in the presence of authorized representative of the appellant Bank and so also in the presence of the Counsel representing the Bank. It is stated that the matter was fixed for arguments on various duties when the Counsel for the respondents proposed to settle the matter at NPA and at this stage the authorized representative of the Bank as well as their Counsel never raised any objection to the proposal. It is contended that the respondents had proposed to pay the NPA amount along with interest as may be decided by the learned Tribunal below, when the Tribunal required the appellant to file an affidavit to this effect. The respondents filed this affidavit on 5.12.2012. Considering that there was no opposition offered by the Bank, the Presiding Officer passed the impugned order after considering the facts and circumstances of the case. Respondents would term this order to be reasonable and fair. According to the respondents, there is no illegality in the order which could call for interference by this Tribunal.

The respondents have rather alleged that the Bank has concealed certain material facts. As per the respondents, the appellant Bank has intentionally and deliberately not disclosed in the appeal that during the pendency of the O.A. the Bank had recovered a sum of Rs. 23,47,35,284/- from the respondents against the NPA amount of Rs. 14,41,72,995/-. Respondents would further allege that the appellant Bank has done so intentionally and deliberately as they had filed an affidavit on 23.8.2010 where the Bank itself had admitted that it had recovered an amount of about twenty three and half crore rupees. This fact is not disclosed by the appellant during the recovery proceedings and also in the appeal. As per the respondents, they had been cooperating with the appellant Bank and helping it to recover its dues. The respondents thus would allege that the present appeal is an abuse of the process of law. As per the respondent, the direction by the Tribunal below to the appellant Bank to work out the amount that may be due after giving credit of the amount recovered is not complied with till date. The respondents would allege that this is to defeat the rights of the respondents and so they would pray that the appeal is liable to be dismissed on this ground alone.

The respondents would also point out that in the affidavit dated 23.8.2010, the appellant Bank had admitted the NPA amount to be Rs. 14,41,72,995 and also the amount which has been recovered by the Bank from the respondents. Therefore, the Tribunal, after relying upon the judgment passed by the Hon'ble Supreme Court in C.K. Sasankan v. The Dhanalakshmi Bank Ltd., I (2009) CLT 368 (SC)=I (2011) BC 122 (SC)=II (2009) SLT 449=AIR 2009 SC 3171, has passed the impugned order. The respondent thus would urge that the order is perfectly legal and justified.

I have heard the Counsel for the parties. When the case came up for final hearing on 10.3.2014, it was adjourned to 11.3.2014 as the arguing Counsel for the respondents was not present. Arguments were heard on 11.3.2014 and the case was adjourned to 12.3.2014 on the request of the Counsel for the respondents. On this date, the Counsel for the respondents did not come present. Having waited for the Counsel for the respondents for a considerable period and after hearing the Counsel for the appellant, judgment was reserved giving opportunity to the Counsel for the respondents to file written submissions if so desired. Counsel for the respondents has filed written submissions which have been duly considered. The written submissions more or less are on the lines of the written statement filed by the respondents.

As already noticed, the Counsel for the appellant has only canvassed before me that the Tribunal below, while passing the impugned order in the year 2012, could not have reduced the amount to the NPA amount which was Rs. 14,41,72,995 when the interim decree was for an amount more than Rs. 22 crore (approx.). As per the Counsel, no challenge was made by the respondents to the interim decree passed and this it had become final. According to the Counsel, the Tribunal below has totally erred in reducing the amount from even the interim decree and also from the amount which claimed in the O.A.

To be frank, initially I was really taken by the submissions made on behalf of the Bank. The deeper analysis, however, has revealed something which would not be very palatable to the appellant Bank. Neither at the stage of argument nor anywhere in the appeal it is disclosed that during the period from the date of interim decree to the date of the impugned order a sum of Rs. 23,47,35,284/- has been recovered. If this fact had been disclosed, which is innocuously noticed in the impugned order, the initial impression created by the Bank that the Tribunal below has reduced the amount even below the interim decree obviously could not have been so pressed. The interim decree was for a sum of Rs. 22,86,65,077.89. As already noticed, a sum of more than Rs. 23 crores has been recovered from the sale proceeds of various properties. This fact would majority change and take the sting out of the arguments raised by the Counsel for the appellant Bank. I have to notice and observe that the Bank appears to have made an effort to withhold this information while preferring this appeal. In fairness, the Bank was expected to disclose this fact. It is then to be seen how to work out the equities and if the Tribunal has clone so. Not only that, the respondents with their written submissions have placed before me an application filed under Order 12 Rule 6, CPC which led to the passing of the order allowing interim recovery. In addition, the respondents have also placed a statement of account filed by the appellant Bank in compliance of the direction given by the Tribunal on 5.8.2010, which is referred to above. This statement of account was filed with the certificate that the entries made in the statement of account are true and correct as per the record maintained by the Bank in its usual and ordinary course of Banking business. The detailed perusal of this statement of account would show that the principal amount advanced was Rs. 12.10 crores on 21.5.1993. This was with interest @ 22.75% p.a. with quarterly rests. Another sum of Rs. 1.80 crores was advanced on 5.9.1994 with interest @ 19.75% p.a. with quarterly rests. It is also disclosed that the interest prayed in the plaint was 18.75% p.a. with quarterly rests. After the date of NPA the interest charged was as per the affidavit submitted vide Dy. No.1991 dated 4.12.2006. The cost and charges were of Rs. 7.34 lacs which were not included in the claim amount. The NPA date was 27.2.1997. The affidavit also discloses thatCC-20 Cash Credit was Rs. 4,88,98,169.77 inclusive of interest up to 31.3.1996, CC-22 Cash Credit was Rs. 83,89,538.90 inclusive interest up to 30.9.1998, WCDL-I was Rs. 5,11,25,194.00 with interest upto 31.3.1998, WCDL-II was Rs. 1,79,47,779.00 inclusive of interest up to 31.3.1998 and the LAP Term Loan was Rs. 1,78,12,314.00 inclusive of interest up to 30.9.1998. On this basis, an amount of Rs, 14,41,72,995.67 was stated to be due. After the date of NPA, the interest charged was as per the affidavit submitted vide Dy. No. 1991, as already noted. Significantly, it is disclosed that during the course of trial an amount of Rs. 23,47,35,284/- had been recovered after the filing of the O.A. and after issuance of the interim recovery certificate dated 28.5.2001. This was inclusive an amount of Rs. 5 crores which was deposited by the CDs pursuant to the interim direction passed by the Hon'ble High Court. Thereafter, the amount recoverable has been disclosed after adjusting recoveries. That being the position, the Bank while filing the appeal at least can be expected to disclose that a sum of about Rs. 23 crores had been recovered. This fact primarily has weighed with the Tribunal to pass the impugned order. The NPA amount as on 27.2.1997 was Rs. 14,41,72,995.67. The total amount claimed in the O.A. was Rs. 32,63,59,451/- out of which Rs. 23,47,35,284/- stood recovered. Thus, an amount of Rs. 9,16,24,167 remained to be recovered. The amount claimed in O.A. was exclusive of interest till the date of filing O.A. The Tribunal in this background has allowed the NPA amount in the impugned order with 10% interest from 31.12.1998. The fact that the Tribunal has clearly noticed that out of the claimed amount, over Rs. 23 crores stood recovered. This primarily weighed with the Tribunal to consider the request of the respondents to grant concessional rate of interest in terms of law laid down by the Hon'ble Supreme Court in C.K Sasankan's case (supra) The Tribunal has also placed reliance on the judgment in the case of State Bank of India v. Sarathi Textiles & Ors., II (2009) BC 696 (SC)=2008(3) SCALE 409 while granting interest at the reduced rate. The Tribunal seems to have balanced the equities while keeping in view the recovery already effected, which the Bank during the course of its arguments or in the appeal has never disclosed. It may not be an attempt to mislead but certainly the Bank is seen withholding an information which in fairness was required to be disclosed in the appeal. In view of these facts and circumstances, I am not inclined to accept the submission of the appellant Bank that through the impugned order the interim decree in any manner has been modified. This argument will lose its sting when it is noticed that an amount more than the interim recovery certificate has already been recovered. The Tribunal has allowed the NPA amount with interest @ 10% p.a. from 31.12.1998 which, in my view, seems to be fair and equitable.

I am, therefore, not inclined to interfere with the impugned order and would dismiss the appeal.

Copy of this order be furnished to the parties as per law.