Richie Rich Overseas Pvt. Ltd. vs State Bank Of Patiala

The O.A. filed by State Bank of Patiala has been allowed for recovery of Rs. 37,88,700/- along with pendente lite and future interest @14% p.a. with quarterly rests. The appellants were directed to pay the amount within two months and the amount already paid during the pendency of O.A. was ordered to be adjusted. The appellants accordingly have filed the appeal against this order.

The appeal was filed with some delay and thus was accompanied with an application under Section 5 of the Limitation Act for condonation of delay. Ultimately this Tribunal found that the appeal was filed within time and accordingly disposed of the said application.

Thereafter, application under Section 21 of the RDDBFI Act for waiver of pre-deposit was considered. Finding that the appellants have already deposited a sum of Rs. 38 lacs with the Bank, the application under Section 21 of the Act was disposed with directions that the appellants were not required to make any further deposit for the entertaining the appeal. The appeal was thereafter entertained and is being heard on merit.

When the appeal came up for hearing on 11.2.2014, Counsel for the appellant stated that one of the appellants is a destitute lady who lost her husband but, still, came forward to settle the account with the Bank. The Counsel pointed out that a sum of Rs. 38 lacs had been deposited at pre-decretal stage and in this background he made a limited prayer for concession qua the interest awarded in this case. Prayer was to reduce the interest awarded. In this regard, the Counsel has handed a chart with some proposal, copy of which was supplied to the Counsel for the respondent Bank, who was asked to have instructions in this regard. The Counsel for the Bank also required to place on record the details of balance amount payable as on the date.

These instructions have been complied with and as per the Bank, the amount payable calculated at 10% p.a. simple interest would work out to be Rs. 49,74,934.56 and the amount, if calculated at 14% p.a. simple interest, would work out to be Rs. 94,97,909.10.

The Bank also pointed out that the appellants have not approached the respondent-Bank with a suitable proposal for the last 5-6 years and the recoverable amount as per RC has how become Rs. 157.92 lacs with interest calculated up to 28.2.2014. It is also pointed out that the purchaser of the mortgaged property has offered to pay Rs. 135 lacs by way of proposal dated 15.1.2014, which is pending consideration with the Bank. Accordingly the Bank has opposed the prayer of any settlement with the appellant in this background.

The Counsel for the appellant has tried to project this case as a case of a destitute woman, but the appellants herein are the company by the name Richi Rich Overseas Pvt. Ltd. along with Ms. Neelam Aggarwal and others, including Mr. Vineet Kumar Aggarwal, Mr. Arun Rishi, Mr. Rajiv Mohan Aggarwal and Mr. Satish Mohan Aggarwal. This is a case where the appellant company, is engaged in the business of export of general commodities, had approached the Bank for grant of facilities like Pre-shipment Packing Credit. Foreign Bill Purchase Discount, Inland Letter of Credit and Bank Guarantees. The company had executed various documents like Agreement of Loan, Agreement of Hypothecators of Goods and Assets, Agreement of Pledge of Goods and Assets. Agreement agreeing that the cheques, bills, Hundies and other instruments or documents lodged with the Bank for collection/discount/purchase that it shall keep the goods fully insured besides Letter of Undertaking, Deed of Guarantee, etc. In order to secure the repayment, appellants, Mr. Satish Mohan Aggarwal, Mr. Sanjay Mohan Aggarwal and Mr. Rajiv Mohan Aggarwal, had deposited the title deed of the property bearing No. 1595-1600, Main Bazar, Paharganj, New Delhi to create and equitable mortgage of the said property with the Bank. It is alleged that the appellant company did not export the goods after availing Pre-shipment Credit Facility. The Bank had advised the appellant company that Export Packing Credit against letter dated 20.5.1999 transferred partly for US$ 1,46,529/- by the beneficiary M/s. Shiva International Fashions is overdue after expiry of letter of credit. The appellant company was accordingly required to extend the validity period for shipment and negotiation, etc. The Packing Credit Advance was accordingly granted against LC for US$ 1,46,529 but documents showing the export of material against the said LC had not been submitted to the Bank. Some other violations were also alleged.

The appellants had though raised objection in the written statement, but admitted sanction of the credit facilities. The plea was that the Bank had failed to release the facilities despite repeated requests. As per the appellants, the export of goods could not be completed because of the non-cooperative attitude of the Bank. Some more pleas were also raised by different appellants.

On the basis of pleadings, the Tribunal below found that the appellants had not disputed the sanction and availing of the credit facilities. The Tribunal, after considering the pleas raised by the appellants and the Bank, found that the Bank had proved its case and held that it was entitled to recover the amount as already noticed.

The amount was held recoverable with pendente lite and future interest @ 14% p.a. with quarterly rests.

As noticed above, the limited prayer made before me is that some concession in the rate of interest be allowed. This is basically a prayer made in sympathy by pointing out that the appellant is a destitute lady who wants to settle the accounts with the Bank. During the course of arguments, I had also noticed that this O.A. which was filed in the year 2000 ultimately was decided on 31.10.20 II. The effect of the pendency of the O.A. for a prolonged period is also considered, which has led to accumulating the interest liability. Counsel for the appellants had rather over stressed and has emphasized the issue of showing consideration by allowing some concession to the appellants. The Counsel has pleaded that the appellant is a destitute lady and would deserve this consideration.

In support of this, the Counsel has made reference to the view of the Hon'ble Supreme Court where the concession in the rate of interest was allowed on pendente lite interest. Reference is made to the case of Punjab and Sind Bank v. Allied Beverage Co. Private Limited & Ors., 1 (2011) SL T83=I (2011I)BC 503 (SC)=(2010) 10 SCC 640. This is a case where High Court had modified the rate of interest to give a workable solution, which was different from the contractual rate of interest. The Hon'ble Supreme Court considered the scope and applicability of Section 34 of the Civil Procedure Code and the power of the High Court to modify the rate of interest. The DRT had decreed the recovery of debt at 18% p.a. pendente lite and future interest with monthly rests. The High Court had reduced it to 14% p.a. simple in view of financial position of the company. The Hon'ble Supreme Court has held that notwithstanding contract between parties, award of pendente lite and post-decree interest is the discretion of Court under Section 34, and went on to observe that the High Court was fair in neutralizing claim of Bank and passing workable order by reducing the rate of interest. The Hon'ble Supreme Court, however, did not accept the plea of future reduction of interest and while rejecting the same held that it was a commercial transaction and the Bank being nationalized Bank the rate could not be reduced any further.

There cannot be any dispute with the proposition that the power to reduce interest pendente lite and future may lie within the discretion of the Tribunals or Courts, but this is to be exercised only if really a case is made out for the purpose. The Counsel for the respondent-Bank would point out that the Tribunal below, vide its order dated 19.1.2001, had passed an order restraining the appellants 5 and 6 from alienating/transferring and selling their respective rights and title in the property which was mortgaged with the Bank as collateral security till the disposal of the O.A. These appellants, however, sold the said property by executing six sale deeds dated 14.5.2007 and 7.6.2007 and thus deliberately disobeyed and violated the restraint order passed by the Tribunal. The plea by the Bank, therefore, is to dismiss the appeal only on this ground as the appellants have not been sincere in obeying the directions and orders of the Tribunal. The Counsel would further point out that the buyer of this property has already lodged an FIR No. 41 of 2012, against these appellants under Sections 420/467/34, IPC for cheating, fraud and concealment of facts and the same is pending investigation by the police. Plea therefore is that the appellants had not approached this Tribunal while filing the appeal. It is also alleged that the appellants, instead of paying the dues of the Bank, had filed various frivolous litigations including Writ Petition against the action taken under Section 13(4) of the SARFAESI Act. The Writ Petition was got dismissed as withdrawn, but again a fresh Writ Petition was filed where the notice was issued on mis-representation of facts and law. The details of the said Writ Petition, which are 12 in number and include a contempt also, have been referred to in the reply, which were either dismissed or withdrawn. The delay if any thus is squarely attributable to the conduct of the appellant wherein they had made the Bank to contest one litigation after another.

The Counsel for the Bank has relied upon the judgment in Dalip Singh v. State of Uttar Pradesh & Ors., IX (2009) SLT 167=(2010) 2 SCC 114, to submit that those who do not approach the Court with clean hands can seek no sympathy or concession. The Hon'ble Supreme Court in this case has noticed the basic values of life 'Satya' (truth) and' Ahimsa' (non-violence) which the society in this country has cherished for centuries. The Court has further observed that post-Independence period has been drastic changes in the value system and materialism has overshadowed the old ethos and the quest for personal gain has become so intense that persons involved in litigation do not hesitate to take shelter of falsehood, misrepresentation and suppression of facts in the Court proceedings. In order to meet the challenge posed by the new creed of litigants, the Court has observed, the different Courts would have to evolve new rules and the litigant who attempts to pollute the stream of justice or who touches the pure fountain of justice with tainted hands, is not entitled to get any relief, interim or final.

There may not be any falsehood seen in the approach made by the appellants but the fact remains that they have resorted to various litigations and had made an attempt to withhold information from this Court while filing the appeal. Their conduct in selling the property despite a restraint order not only reflects a contemptuous misadventure but is something which really cannot be appreciated and shows that the appellants has exhibited scant regard to the orders passed by the Tribunal. Seeing then conduct, one can say that they have lost right to seek sympathetic consideration in their favour. If the property which is worth-fetching Rs. 135 lacs, it can lead to substantial recovery of Bank's dues which are about 158 lacs. It would not be appropriate to interfere in the award of interest to reduce it which may ultimately affect the recovery of the dues of the Bank.

I am, therefore, not inclined to interfere on the limited prayer addressed a before me by the Counsel for the appellant and would dismiss the appeal without any order as to cost.