Ramanjit Kaur vs Punjab And Sind Bank

S.N.H. Zaidi, J

The instant application has been filed under Section 21 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short, the RDDBFI Act) for waiver of the deposit required for the entertainment of appeal. Though the respondent Bank is opposing this application, yet it has not filed any formal reply to the application and has prayed for treating the reply filed to the appeal as the reply to this application also.

I have heard Mr. Amit Dhupar, the learned Counsel appearing for the appellant and Mr. Rajinder Wali, the learned Counsel for the respondent Bank and perused the record. The appellant has also filed written submissions qua the said application.

The accompanying appeal has been filed by the appellant/applicant against the order dated 21.4.2011 passed by DRT-II. Delhi in OA No. 276/1996, allowing the O.A. for the recovery of Rs. 41,26,988.58 jointly and severally against the defendants, including the appellant, along with cost and interest @ 13.5% per annum with quarterly rests from the date of filing of the O.A. with the observation that in case of failure within the given time, the amount would be recovered from the sale of the mortgaged property bearing No. 8/25, West Patel Nagar, New Delhi.

The relevant facts for the purpose of disposal of this application, in brief, are that the respondent Bank had sanctioned the credit facility of Overdraft against property (ODP) limit to the extent of Rs. 6.5 lacs to respondent No. 2, on 20.2.1977, on execution of loan documents and creation of equitable mortgage of two properties of, (i) Vasant Vihar, New Delhi and (ii) Naraina Industrial Area, Ring Road, New Delhi. The borrower/respondent No. 2, however, requested the Bank for release of the aforesaid properties, stating that the sanctioned limit would be secured by another property bearing No. 8/25, West Patel Nagar, New Delhi. She also requested the Bank to reduce and convert the ODP Limit of Rs. 6.5 lacs into a term loan of Rs. 4 lacs. The Bank accordingly sanctioned the term loan of Rs. 4 lacs, against the equitable mortgage of the said Patel Nagar property, which was jointly owned by the appellant and respondent Nos. 2 and 3, to which the appellant and respondent No. 3 stood as guarantors and necessary documents, including guarantee agreement and Form 84AA regarding the deposit of title deeds, were executed by them. The said loan was termed as Loan against Property (LAP). The borrower/respondent No. 2 failed to regularize the balance amount of Rs. 2.5 lacs in the ODP account and the LAP account also became irregular. The borrower, despite acknowledging her liability of Rs. 2.97 lacs in the ODP account as on 11.8.1979 failed to repay the same. On 27.11.1981, a sum of Rs. 4,91,785.21 was outstanding in the ODP account and an amount of Rs. 6,85,791.80 was outstanding in the LAP account on 19.12.1981 qua which respondent Nos. 2 and 4 had executed a guarantee agreement, balance confirmation letter and fresh security documents. Respondent No. 5 also secured the lean by creating equitable mortgage of his property bearing No. E-20, Panchsheel Park, New Delhi and took personal guarantee for the repayment of the loan amount. When the borrower defaulted in payment of the amount of the debt due qua both the accounts, the Bank filed a civil suit OS (CS) No. 2752/1988 before the Delhi High Court for the recovery of Rs. 43,92,661/- along with pendente lite and future interest. However, on coming into force of the RDDBFI Act, the suit was transferred to the DRT where it was registered as O.A. No. 276/1996.

Defendant No. 3, the appellant herein, who was shown as co-mortgagor and guarantor to the loan of Rs. 4 lacs in the LAP account, had denied the alleged mortgage of West Patel Nagar property as well as execution of Form 84AA and guarantee agreement, in her written statement. The Bank filed a revised/recasted statement claiming an amount of Rs. 41,26,988.58, in the light of the law laid down by the Hon'ble 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, as due and payable against the defendants. During the pendency of the O.A. the defendants tried to settle the dispute and in order to redeem the mortgaged property of West Patel Nagar, an amount of Rs. 25 lacs was deposited with the Bank and a further sum of Rs. 25 lacs was also deposited by respondent No. 5. The Tribunal below has allowed the O.A. for the recovery of the revised claim of Rs. 41,26,988.58 by the order impugned dated 21.4.2011 along with cost and interest and the observations, as stated above. Feeling aggrieved with that order, defendant No. 3 has filed the appeal along with the instant application for waiver of the requirement of pre-deposit.

Mr. Dhupar has contended that as against the claim of Rs. 43,92,661/- made in the suit/O.A. an amount of Rs. 50 lacs has already been deposited with the Bank. He has further contended that even if it is assumed that the appellant had created equitable mortgage of West Patel Nagar property along with co-mortgagors and had executed the guarantee agreement and other documents, it was done qua the term loan account (LAP account) of Rs. 4 lacs with simple interest @ 15% p.a., as such she is not liable for the payment of any amount qua the ODP account. Mr. Dhupar also submitted that the appellant is an old lady of about 65 years and has no means to make the deposit as per the requirement of Section 21 of the RDDBFI Act.

Mr. Rajinder Wali, opposing the application, has pointed out that the respondent Bank has also filed an appeal qua the order impugned whereby the Tribunal below has directed for the release of Panchsheel Park property in favour of defendant No. 5 and the said appeal has been admitted by this Tribunal. He has also pointed out that respondent No. 2, the principal borrower, is the wife of respondent No. 4 and entire properties of respondent No. 4, including the West Patel Nagar property, had already been attached by the order of the Hon'ble Supreme Court passed in the case of Delhi Development Authority v. Skipper Constructions Ltd., 1996 (4) SCC 624. He has contended that even assuming that the liability of the appellant was limited to Rs. 4 lacs under the LAP account, but it had become Rs. 24,50,965/- at the time of filing the suit and on calculating the interest at the awarded rate on that amount and on giving adjustment of Rs. 25 lacs deposited by the appellant, the respondent Bank is still entitled to recover an amount of Rs. 4,22,83,385/-, as per the chart given in paragraph 5 of the reply to the appeal. He has further contended that the deed of guarantee bears the signatures of all the guarantors, including the appellant, and the appellant had only made a bald denial qua the guarantee agreement in her written statement filed to the O.A. and had not given any explanation as to how the documents pertaining to the West Patel Nagar property remained deposited with the Bank for such a long time. It has also been contended that no financial hardship qua the requirement of deposit for the entertainment of the appeal has been alleged by the appellant in her application. Having considered the submissions of the parties' Counsel and looking to the facts and circumstances of the case, I am of the view that since the disputed questions of fact are not required to be scrutinized for the purposes of disposal of the instant application, as such no view can be expressed qua them at this stage and the same shall be made while disposing of the appeal. I am, however, convinced that the issues raised by the appellant's Counsel qua the order impugned are worth considering and prima facie sufficient for the admission of the appeal. However, so far as the requirement of the deposit under Section 21 of the RDDBFI Act is concerned, since the O.A. has been allowed for the recovery of Rs. 41,26,988.58 against all the defendants, including the appellant, jointly and severally, therefore, looking to the circumstances of the case the appellant appears entitled for the reduction of deposit to 50% from 75% of the amount of debt as determined by the Tribunal below. Since 50% of Rs. 41,26,988.58 is less than Rs. 25 lacs, which has admittedly been deposited by the appellant during the pendency of the O.A. and is entitled to be adjusted towards the amount of debt due, as determined by the order impugned, the appellant is not required to make any further deposit for the entertainment of this appeal. The application stands disposed of accordingly.

List the matter on 27.3.2014 for arguments on appeal.