Satish Kumar And Ors vs Oriental Bank Of Commerce And Ors

P.K. Bhasin, J.

Appellants in Appeal No. 364/2016 had availed of a housing loan of Rs. 19,50,000/- from Oriental Bank of Commerce, the appellant in Appeal No. 109/2016. The repayment of the said loan was by way of instalments. The borrowers committed default in the payment of instalments and that led to declaration of their account as NPA and issuance of demand notice under Section 13(2) of the SARFAESI Act by the Bank. Since the borrowers did not clear the Bank's dues within the statutory period of 60 days as per the demand notice under Section 13(2) of the Act, the Bank proceeded to take over the possession of the property which had been mortgaged equitably in its favour to secure the repayment of the loan amount. Thereafter, the property was put to auction and auction was firstly fixed for 26.6.2013. However, before that date, the borrowers approached the Bank and made a payment of Rs. 4 lacs and also promised to clear the remaining amount. Believing the borrowers, the Bank cancelled the auction fixed for 26.6.2013. However, since the borrowers again failed to honour their settlement terms, the property was again put to auction on 18.11.2014, when the same was sold in favour of one Mr. Harish Kumar Aggarwal, respondent No. 3 herein, for a sum of Rs. 45,50,000/-. The recoverable amount as on that date was to the tune of Rs. 18,83,437/-. The excess amount recovered from the sale of mortgaged property was Rs. 26,56,363/-. It is undisputed that in law Bank was required to refund the said excess amount received to the borrowers.

The learned Counsel for the borrowers has confined his submissions only to the refund of excess amount for which direction has been issued by the DRT in the impugned order and which direction has been challenged by the Bank by filing a separate appeal, being Appeal No. 109/2016.

The Bank's case is that the borrowers had two more loan accounts with it in which also they owed money to the Bank and, therefore, in exercise of its general lien the excess amount was adjusted in those two loan accounts which were in the name of a partnership firm, namely, M/s. Balkar Singh and Bros. of which appellant Satish Kumar herein was one of the partners. The leaned DRT has, however, rejected this contention of the Bank of general lien over the excess amount and feeling aggrieved by that rejection, the Bank has filed its appeal.

I have perused the reply which had been filed by the Bank to the S.A. of the appellants of Appeal No. 364/2016 and find that there was no case of general lien pleaded therein. However, it was pleaded that the excess amount received from the sale of the mortgaged property in the housing loan account had been adjusted in two accounts of M/s. Balkar Singh and Bros. In my view, the Bank having not set up a case of general lien and having not pleaded foundational facts, which are necessary to be pleaded in order to resist the claim of the borrowers in the housing loan for return of the excess amount, the learned DRT was right in rejecting that argument raised at the time of hearing of the appeal and the direction given to the Bank to refund the excess amount cannot be faulted with. In these circumstances, the judgment of the Hon'ble Supreme Court in the case of Vimal Chandra Grover v. Bank of India, II (2000) CPJ 11 (SC) : IV (2000) SLT 202 : II (2000) CLT 204 (SC), Appeal (Civil) 15701 of 1996, decided on 26.4.2000, does not come to the aid of the Bank. For the same reason, another judgment, 1991 (SLT Soft) 141 : AIR 1992 SC 1066, Syndicate Bank v. Vijay Kumar & Ors., relied upon by the Counsel for the Bank also is of no help to the Bank. To claim benefit of general lien as provided under Section 171 of the Indian Contract Act, the Bank was required to plead that the above named partnership firm had taken loan from the Bank and had defaulted in repayment of the same. The learned Counsel for the Bank has drawn my attention to one document available at page No. 55 of its appeal wherein the borrowers of the housing loan had referring to the other two loan accounts promised to make payment in those loan accounts also. That document by itself, however, cannot establish Bank's claim as far as the present litigation is concerned. Counsel for the Bank has also submitted that the excess amount was adjusted only after an opportunity was given to the borrowers to clear the outstanding dues in the two accounts of M/s. Balkar Singh and Bros, and it is only when they failed to clear the dues the Bank had appropriated the excess amount received from the sale in those two accounts. This Tribunal, however, is not expected to go into the authenticity of this document and, in any case, as noticed already, the borrowers in the housing loan account having not been put to any kind of notice that the Bank was claiming its general lien in respect of the two loan accounts other than the housing loan account cannot be fastened with any liability. In case these two borrowers in the housing loan account actually owe any money to the Bank in any account other than the housing loan account, the Bank is always at liberty to recover its dues by taking recourse to appropriate legal remedy available to it in law, including measures under the SARFAESI Act in case repayment in those two accounts was secured by way of any mortgage/charge.

In view of the aforesaid conclusion that the Bank is not entitled to hold the excess payment recovered from the sale of mortgaged property in the housing loan account, its appeal is dismissed and consequently, the direction given to it by the DRT to refund the excess amount to the borrowers (security applicants) is affirmed. The amount payable by the Bank shall now be paid within 15 days, failing which it will become payable along with interest thereon @ 12% p.a. from the date of auction, i.e. 18.11.2014 till actual payment is made.

In view of the dismissal of the Bank's appeal, the appeal of the borrowers has now been rendered infructuous as their only grievance before this Tribunal is that they were not getting back the excess money recovered by the Bank from the sale of their property.