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Judgment
G. Chandrasekharan, Chairperson
This appeal is filed under Section 20 of RDDB & FI Act, challenging the order passed by Ld. Presiding Officer, DRT, Madurai passed in TA 156/2007 on 11.11.2011.
The appellant is the 5th defendant before the Tribunal below. Respondent Bank filed TA No.156/2007 (Originally OA 2106/2001 on the of DRT-II, Chennai) for recovery of a sum of Rs.10,93,433/- with future interest at 18% p.a. with quarterly rests from the date of filing of the application till the date of realization with costs. After contest by the appellant, Tribunal below allowed the application against defendants 1 to 3 and 5 for a sum of Rs.10,93,433/- and further simple interest at 16% p.a. (simple) from the date of filing of the application i.e. 13.7.2001 till date of realization with costs. There was also a direction to give credit to the payment of Rs.2.00 lakhs paid by 4th defendant during the pendency of the proceedings and the balance to be recovered. Another direction was also given that any amount paid by the defendants towards loan amount shall be given credit to the loan account.
Ld. Counsel for appellant submitted that appellant stood as a guarantor for only one loan amounting to Rs.2,50,000/- but the order was passed holding her also liable to pay the dues of all three loans sanctioned to the first defendant. During the pendency of the proceedings before DRT, D3 died and the whereabouts of D2 was not known. Though this fact was intimated to the Tribunal below by filing reply statement, no steps were taken by the respondent bank for impleading the legal representatives of deceased D3. Therefore, order cannot be executed against any of the defendants without impleading the LRs of deceased D3.
It is further submitted that earlier an ex parte order was passed against the appellant and on an application filed to set aside the ex parte order, the ex parte order was set aside, however, on condition of making certain payment. As per the conditional order, appellant paid a sum of Rs.4,72,547/- during the year 2008-2009. Subsequent to the disposal of the TA, appellant had also paid a sum of Rs.4.00 lakhs in the year 2014. Thus, a total sum of Rs.8,72,547/- was paid by the appellant towards loan amount. It is further submitted that 4th defendant also paid a sum o Rs.2.00 lakhs and on her payment, guarantee executed by her was discharged to the prejudice of the appellant. Without taking any steps for recovery from the principal borrower namely the first defendant, respondent bank is trying to recover amount from the appellant for the reason that appellant offered her property as security by creating mortgage by deposit of title deed and also by giving personal guarantee. It is further submitted hat Ld. Presiding Officer has not considered the payments already made by the appellant and passed an erroneous order, thus this appeal is filed.
In reply to this submission, Ld. Counsel for respondent bank submitted that it is not correct to state that appellant stood as guarantor for only one loan and she was a guarantor for all the three loans and for ensuring payment, she had executed a mortgage deed by deposit of title deed. The fact that death of D3 had been reported only through reply statement after the death of D3 in the year 2004. D3 died way back in the year 2004 in a road accident and the whereabouts of D2 is not known. It is submitted that respondent bank was not able to ascertain whether D2 is alive or dead. Immediately on filing reply statement on 22.9.2010, OA was reserved for orders and the order came to be passed only on 11.11.2011. The death of D3 had not been properly intimated to the respondent bank and that was the reason why no steps were taken for impleading the legal representatives of deceased D3. Even otherwise, order is enforceable against this appellant who contested before the Tribunal below. Respondent bank has not disputed the payments made by the appellant and the 4th defendant. Appellant had so far paid Rs.8,72,547/- i.e. Rs.4,72,547/- against the conditional order passed by the Tribunal below and Rs.4.00 lakhs in the year 2014 and 4th defendant had paid Rs.2.00 lakhs and these payments will be considered during the issuance of Recovery Certificate. Thus arguing, Ld. Counsel for respondent bank sought dismissal of the appeal.
I have considered the rival submissions and perused the record.
With regard to non impleadment of LRs of deceased defendants, this Tribunal finds that death was not reported to the Tribunal below immediately on the death of defendants. Only the death of D3 was confirmed by both the counsel. Whereabouts of D2 is not ascertained. It appears that death was mentioned only in the reply statement filed on 29.10.2010. Thereafter, TA 156/2007 was reserved for orders on the same date and the Order was passed only on 11.11.2011. When the death of D3 was brought to the notice of Tribunal only through reply statement, bank cannot be expected to take steps to implead the LRs of deceased D3. Be that as it may. At best order cannot be executed against a dead person or the LRs of a dead person. The appellant had participated in the enquiry before the Tribunal below and order was passed on merits. Thus, this Tribunal finds that claim of the appellant that order cannot be enforced against the appellant for not impleading the LRs of deceased D3 cannot be sustained.
As regards claim of Ld. Counsel for appellant that appellant stood as a guarantor for only one loan, on going through the record this Tribunal finds that appellant stood as a guarantor for all the three loans of Rs.5,10,000/-, Rs.1,10,000/- and Rs.2,50,000/-. She had executed a letter of guarantee, guaranteeing payment of Rs.5.10 lakhs sanctioned to first defendant on 24.12.1998; she had executed a letter of guarantee on 24.12.1998 guaranteeing payment of Rs.1,10,000/- sanctioned in favour of first defendant; and again on 22.1.1999, she had executed a letter of guarantee guaranteeing Rs.2.50 lakhs sanctioned to first defendant. On 28.1.1999, she had deposited her documents of title with a view to create mortgage by deposit of title deed in service of the loan sanctioned in favour of the first defendant. Therefore, submission of the appellant that appellant stood as a guarantor for only one loan cannot be accepted. As regards payments made by the appellant, Ld. Counsel for respondent bank fairly conceded that appellant made payment of Rs.4,72,547 during the pendency of the proceedings before Tribunal below and Rs.4.00 lakhs in the year 2014 after the disposal of TA 156/2007. There is also a payment made by D4 to the tune of Rs.2.00 lakhs. In fact, there is specific direction in the Order to give credit to payment of Rs.2.00 lakhs made by D4 and any amount paid by defendants towards the loan account.
In the facts and circumstances of the case, this Tribunal finds that there is no need to take a different view than that was taken by Ld. Presiding Officer DRT, Madurai in the final order passed in TA 156/2007 dated 11.11.20211. Payments made by the appellant to the tune of Rs.4,72,547/- and payment made by 4th defendant in the OA to the tune of Rs.2.00 lakhs during the pendency of the OA should be given credit towards loan account and Recovery Certificate should be issued for the balance amount. Subsequent payment of Rs.4.00 lakhs made by appellant in the year 2014, should also be given credit towards loan account.
With regard to interest, Ld. Presiding Officer, DRT, Madurai was pleased to grant interest at 16% p.a. (simple) on Rs.10,93,433/- from the date of application till the date of realization. Considering the fact that appellant is only a guarantor and it appears that no steps had been taken to recover the amount from the principal borrower, this Tribunal grants the rate of interest as 16% p.a. (simple) from the date of filing of application till the date of order i.e., 11.11.2011 and thereafter at 6% p.a. (simple) from the date of order i.e.. 11.11.2011 till date of realisaton on the amount, after giving credit to the payments made. Recovery Certificate be issued accordingly.
With the above modification, Appeal RA 31/2015 is disposed of, accordingly. Parties are directed to bear their own costs.
Pending IAs, if any stand closed.