Satinder Kapur And Ors. vs IFCI Ltd. And Ors.

J.M. Malik, J

The learned trial Court, vide its orders dated 25.10.2010 and 28.10.2010 issued a recovery certificate in the sum of Rs. 36,64,55,022.25 along with pendente lite and future interest @ 12% p.a. with quarterly rests w.e.f. 9.11.1999 till realization, and costs of Rs. 1.50 lakh against the defendants/appellants and their firm, namely, Indian Magnetics Ltd., which was arrayed as defendant No. 1 in the OA, and in favour of IFCI Ltd., Industrial Development Bank of India and 1CICI Ltd. The ICICI Ltd. is now represented by assignee Kotak Mahindra Bank Ltd. It was argued that the matter between the appellants on the one hand and IFCI and IDBI on the other hand stands almost settled. None had put appearance on their behalf during the admission of the appeal. However, no settlement could be arrived at with Kotak Mahindra Bank who was the real contesting respondent in this case at the stage of admission of the appeal.

The appellants have moved an application under Section 21 of the RDDB & FI Act for waiver of condition of pre-deposit as envisaged under the said section. It is submitted that the assets of respondent M/s. Indian Magnetics Ltd., who was defendant No. 1 in the O.A. and respondent No. 4 herein, were sold for an under valuation as well as lower than reserve price. It is also submitted that those assets were sold with the consent of the respondent Banks. Mr. Satinder Kapoor, the 1st appellant, is said to have settled the dispute with Punjab National Bank by entering into a one-time settlement for an amount of Rs. 1,38,71,000/-. It is contended that appellants 2 and 3 are senior citizens and they are not in a position to comply with the condition of pre-condition as envisaged under Section 21 of the RDDBFI Act.

I have heard the Counsel for the parties. The Counsel for the appellants contends that the appellants have submitted a proposal for one-time settlement with the Kotak Mahindra Bank, assignee of IC1CI Ltd., but without any rhyme or reason the said proposal was rejected by the Bank.

The Counsel for the appellants have presented a chart showing amounts claimed by various financial institutions/Banks and amounts admitted. The said chart is reproduced as follows:-

S. No.

Creditors

Amount

claimed

Amount admitted

Remarks

1

Kotak

Mahindra Bank (Assignee of ICICI Bank)

111,732,233

33,876,628

Paid on 28.3.2006

2

IDBI

110,786,370

3,911,523

Paid on 28.3.2006

3

IFCI Limited

232,266,146

8,129,315

Paid on 28.3.2006

4

Punjab National Bank

59,339,643

2,076,888

Paid on 28.3.2006

The Counsel for the appellants has invited the attention of the Court towards an authority by the Apex Court, Plasto Pack, Mumbai and Another v. Ratnakar Bank Ltd., : V (2001) SLT 723 : (2001) 6 SCC 683. Para 12 of the said judgment is relevant. Both the Counsel have placed reliance on this para. The Counsel for the appellants has highlighted last few sentences of this para and the Counsel for the respondent Bank has highlighted a few sentences in the beginning of the said para. In order to understand the case properly, the entire para is reproduced as follows:

By order dated 3.3.1995 relief (a) set out in the plaint was granted 'as it was', without specifying the exact decretal amount and the rate of interest allowed by the Court. Such of the prayers as were not granted by decree dated 3.3.1995 would be deemed to have been refused and to that extent the suit shall be deemed to have been dismissed. More than two years and eight months later the Court could not have, on a mere notice of motion, substituted almost a new decree in place of the old one by granting such reliefs as were not granted earlier and that too without noticing the defendant-appellants. As held in K. Rajamouli v. A. V.K.N. Swamy power to amend a decree cannot be exercised so as to add to or subtract from any relief granted earlier. A case for setting aside the decree was earlier made out. In the facts and circumstances of the case the Division Bench ought to have taken a liberal view of the events and entertained the appeal for consideration on merits by condoning the delay in filing the same. However, that was not done. We are satisfied that grave injustice has been done to the appellants by denying them anopportunity of hearing and contesting the suit on its merits. We are also of the opinion that the respondent Bank ought to have taken a reasonable stand and should have sympathetically considered the proposal of the appellants which was not lacking in bona fides and in the interest of avoiding litigation and early recovery of outstanding debts the respondent should have compromised the suit. Even if the appellants 'proposal was not acceptable to the respondent, at least a counter proposal should have been made in which case an across-the-table discussion between the parties with the assistance of their learned Counsel would have brought out a mutually accepted resolution and an end to the litigation. We are constrained to observe that this litigation is being perpetuated because of the unreasonable and rigid attitude of the respondent Bank.

The learned Counsel for the appellants submits that they had made an offer to deposit Rs. 15 lakh towards OTS as against Rs. 11,17,32,232, out of which the appellants have deposited with this Court an amount of Rs. 4 lakh. He explains that if the Bank is not satisfied with the offer of the appellants, it should give a counterproposal.

The arguments urged by the learned Counsel appellants have left no impression upon the Court, facts stated in para 12 of the judgment cited above by the learned Counsel for the appellants are different from the facts of the present case. In that case there was no determination of amount by the Court and the Hon'ble Supreme Court came to the conclusion that the parties were honest.

In this case, the amount has been determined by the lower Court, as stated above. According to the Bank, more than Rs. 11 crores are outstanding against the appellants. The OTS proposal given at the time of filing the first appeal was just an eye-wash. The proposal said to have been given by the appellants is for an amount of Rs. 15 lakh as against more than Rs. 11 crores outstanding dues. Moreover, even this amount was not deposited with the Court to show appellants bona fide. Again, the appeal was preferred before this Tribunal on 24.1.2011. Thereafter, dates after dates, i.e., 4.2.2011, 9.2.2011, 28.2.2011, 22.3.2011, 13.4.2011, 23.5.2011, were sought on the ground that negotiations with the Bank/Financial Institutions were going on. Section 20(6) of the RDDBF1 Act envisages that the appeal filed before the appellate Tribunal shall be dealt with by it as expeditiously as possible and endeavour shall be made by the Tribunal to dispose of the appeal within six months from the date of receipt of the appeal. Five months have lapsed since the filing of the appeal. The appellants have deposited only Rs. 4 lakh during this period. The law requires that in order to entertain their appeal the appellants have to deposit 75% of the debt due from them. The appellants have been pursuing the case in a lackadaisical manner. Again, they have not filed any satisfactory evidence on the record or any affidavit to show that they are not in a position to deposit the amount. No documentary evidence saw the light of the day.

Keeping in view all the facts and circumstances, I am of the considered view that the appellants must deposit at least 25% of the decretal amount, minus pendente lite and future interest and costs. Accordingly, the appellants are directed to deposit with Kotak Mahindra Bank a sum equivalent to 25% of the decretal amount, i.e., 9,90,90,363.00. minus pendente lite and future interest and costs. The deposit be made within four weeks from today and will be without prejudice to the rights of the parties. Subject to the deposit, the appeal is admitted. In case the appellants fail to comply with this order of the Court, the present appeal shall stand dismissed. The execution proceedings against the appellants are stayed for the next four weeks.

The respondent Bank is directed to file reply to the appeal within six weeks with copy to the opposite Counsel. Let the case come up for overseeing the compliance of this order and for further proceedings on 20.7.2011. So far as one-time settlement between the parties is concerned, this Court cannot compel a party to enter into compromise with another party. However, keeping in view the authority cited by the Counsel for the appellants, the Bank is directed to consider the OTS proposal of the appellants, as per rules and RBI guidelines. No proof regarding submission of OTS proposal or rejection thereof has been shown to the Court. The appellants are given 15 days' time to move a fresh OTS proposal before Kotak Mahindra Bank. The said proposal must be in accordance with the RBI guidelines. The Bank is directed to consider that proposal within one month of its receipt and intimate its decision to the appellants, giving reasons therefor. In case the Bank rejects the said proposal, it should give a counter proposal to the appellants, as required by the Hon'ble Supreme Court in the case cited above, and specify the manner and time within which the proposed settlement amount has to be deposited. In case the OTS proposal is approved by the Bank, the amount being deposited as per this order will be adjustable towards the settlement amount. In case the settlement amount is less than the amount already deposited by the appellants, the Bank shall return the excess money received to the appellants.