Shashi Jain vs Punjab National Bank And Ors

P.K. Bhasin, J

The appellant is aggrieved by the dismissal of her application filed to protect her property which, indisputably, has been mortgaged in favour of the respondent Punjab National Bank to secure the repayment of the loans advanced by the said Bank to respondent No. 3 herein-M/s. Quality Electro Wire Industries Pvt. Ltd. (principal borrower). Appellant's case before the DRT was that the Bank had entered into a settlement with the said borrower Company and the other two guarantors whereunder these people were to clear off their liability by 31.12.2016. However, the Bank before 31.12.2016 sought to auction the appellant's mortgaged property without waiting for other people to clear off the dues as per the one-time settlement (OTS).

The liability of the principal borrower and the guarantors at the relevant time was over Rs. 9 crores. The Bank had agreed to close the chapter of recovery of its dues by accepting OTS payment of Rs. 6.08 crores. Bank's case has been that it was always the understanding between the parties that the OTS was being arrived at among the Bank, principal borrower and guarantors including the appellant though there was no written document got signed by the Bank from the guarantors including the appellant herein.

The DRT vide order dated 26.12.2016 declined the relief of interim injunction against the auction of the appellant's property and as a result thereof the same came to be sold on 15.12.2016 for a sum of Rs. 50.15 lacs.

The appellant's S.A. is stated to be still pending though the appellant has not taken so far any steps to challenge the auction of her property having been conducted during pendency of her S.A.

The appellant's grievance is that she was not a party to the OTS nor had she given any consent to the co-guarantors to agree with the Bank for sale of her property towards discharge of the obligations under the OTS and that as far as her consent for sale of the property relied upon by the Bank is concerned, that consent was given only if that property was to be sold to a particular person, namely, Mr. Anuj Goel.

It is not in dispute that in case the appellant's property had not been auctioned and a sum of Rs. 50.15 lacs was not recovered, the parties to the OTS could be stated to have not honoured their obligations under the OTS within the time given. The learned Counsel for the Bank has submitted that if the sale proceeds of the appellant's property are not to be given credit to the OTS, then, of course, the OTS can be said to have failed with the result that the entire liability of the principal borrower as well as that of the guarantors including the present appellant stands revived and in this legal battle the appellant will only stand to lose while the Bank will stand to gain as the unrecovered amount of Rs. 5 crores will become recoverable from everyone including the appellant.

After giving my due consideration to the entire aspect of the matter, I am of the view that as far as the auction of the appellant's property is concerned, the same having been challenged only for the reason that before 31.12.2016 the same could not have been sold, is concerned, the same is devoid of any merit. The appellant was never a party to the OTS and, therefore, her status always remained as defaulter qua the Bank and she could not have resisted the auction of her property for the reason it could not have been put to auction before 31.12.2016.

As far as her consent given for the sale of the property to Mr. Anuj Goel is concerned, the same is not binding on the Bank, as being defaulter the appellant could not have directed the Bank to act in a particular way and sell her property only to someone known to her and that too at a price determined by her in her letter dated 21.4.2016.

As far as the failure of OTS because the parties to the OTS which include the principal borrower and the other guarantors failed to pay the full amount of Rs. 6.08 crores to the Bank from their own sources is concerned, it would now be for the Bank to have its own decision as to the consequences of the principal borrower and other guarantors having failed to honour their commitments under the OTS and the appellant having taken a stand that she was never a party to the OTS and consequently, the sale proceeds of her property cannot be appropriated towards the OTS amount. In view of the aforesaid discussion, appeal fails and is, therefore, dismissed.