State Bank Of India And Ors. vs Padam Motors Pvt. Ltd. And Ors.

P.K. Bhasin, J

Both the appellant Banks, who had as members of a consortium, lent over crores of rupees as loan to one M/s. J.S.K. Steel Pvt. Ltd. on the guarantee of respondent Nos. 3 and 4 herein and against the equitable mortgage of one industrial plot in Chandigarh created by respondent Nos. 3 and 4 (guarantors). The said borrower Company had defaulted in repayment of the loan amount and its accounts with both the Banks were declared Non-Performing Assets (NPAs) in 2012. The Banks initiated action under SARFAESI Act and State Bank of India had also filed Original Application under Section 19 of as also under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDBFI Act) against the borrower to recover its outstanding dues. At that stage respondent No. 1 herein filed a petition under Section 17(1) of SARFAESI Act before Debts Recovery Tribunal (DRT) at Chandigarh claiming itself to be a tenant in the mortgaged property from March, 2011 and it wanted to protect its possession. During the pendency of that petition (being S.A. No. 108/2013) respondent No. 1 volunteered to deposit the rent which it was paying to the borrower-landlord and accordingly a sum of Rs. 1,13,16,296/- came to be deposited with the DRT. It appears that the respondent No. 1 could not protect its possession and possession of the mortgaged property came to be surrendered by it on 15.1.2015 after its S.A. was rejected by the DRT vide order dated 30.1.2015. During the pendency of the S.A. the mortgagors moved an application (being IA No. 736/2013) before the DRT for release of part of the rent deposited by their tenant in the mortgaged property (respondent No. 1 herein). However, that application came to be rejected by the then Presiding Officer of DRT Shri A.K. Jain vide his order dated 27.11.2013.

The mortgagors then filed an appeal against this order before this Tribunal but that Appeal also was dismissed by this Tribunal vide order dated 7.8.2014. Finally the S.A. of the respondent No. 1 also came to be dismissed on 30.1.2015 by Shri Harcharan Singh, learned Presiding Officer of DRT-I who had by the that time taken over DRT-I as its Presiding Officer.

After dismissal of the S.A. the respondent Nos. 3 and 4 herein moved fresh application (being IA No. 6/2015) for the same relied of release of rent lying deposited with DRT at the instance of the tenant, respondent No. 1, which relief had earlier been declined by the predecessor Presiding Officer Shri A.K. Jain vide his order dated 27.11.2013 and even the appeal against that order had also been rejected by my learned predecessor vide order dated 7.8.2014.

Even after noticing the rejection of similar request of respondent Nos. 3 and 4 by the DRT and by DRAT the present learned Presiding Officer allowed IA No. 6 of 2015 vide impugned order dated 8.12.2015 and the entire rent lying deposited with DRT in the form of FDRs has been ordered to be released in favour of the respondent Nos. 3 and 4/mortgagors. That order is reproduced below:

"This Application has been filed by respondent Nos. 3 and 4 in SA seeking indulgence of this Court to release the amount of rent deposited by the applicant/tenant in the SA with DRT as per order dated 27.5.2013 to the applicants/respondent Nos. 3 and 4 on the grounds that they have no other source of income and are totally dependent on rent money to make both ends meet. Moreover, the properties in the hands of the Bank is more than sufficient to discharge the entire liability.

The respondent Bank has stated that filing of SA was a proxy and collusive litigation between the illegal tenants and the appellants/borrowers. The Bank has denied that the rent alone was income source of the applicants/respondents in the MA and has prayed that the MA be declined as the applicants/respondent Nos. 3 and 4 are not entitled to the attached rent rather it is the Bank who is entitled for the same and has taken support of law settled by various Courts including the Hon'ble Apex Court in the matter of Harshad Goverdhan Sondagarv. International Assets Reconstruction Co. Ltd., II (2014) CCR 137 (SC) : II (2014) BC 340 (SC) : II (2014) DLT (Cri) 836 (SC) : III (2014) SLT 469.

Counsel for the applicant argued that vide order dated 27.5.2013, this Court during the proceeding of SA 108 of 2013 which was filed by M/s. Padam Motors against the respondent Bank, wherein, the applicants guarantors of the company and owner of this property, are respondent No. 3 and 4 are entitled to the rent which is lying deposited in this Court in the shape of DFRs as the Bank has sufficient properties, the value of which are rather excess to the whole dues of the defaulters/borrowers.

Another argument of the Counsel for the applicants was that since the respondent Bank has been able to take over physical possession of this property now the Padam Motors who were rented in the premises of the applicant, were directed to deposit the remaining rent of the building in which the applicant too has share and since the applicant who is having no resource for livelihood and his daughter is marriageable age, the share of the rent be deposited directly in her account so that in hard phase of life, he should be able to discharge his liability of father and her daughter could be married.

On the other hand side, Counsel for the respondent/applicant M/s. Padam Motors, at the outset argued that this Tribunal has no jurisdiction to entertain the present application as the relief claimed by the applicant in this application is for recovery of money from third person, i.e., ex-tenant who is not a borrower and guarantor and the relief sought is beyond statutory power conferred upon this Tribunal under the Act. Moreover, the main SA filed by the non-applicant M/s. Padam Motors under Section 17, has already been dismissed/decided vide order dated 30.1.2015. It thus becomes functus officio as the SA has already been dismissed, no relief with respect to payment of arrears of rent can be granted as claimed in the present application. Now when the applicant has already vacated the premises on 15.9.2015 and the Bank has taken over the possession of the entire property in which the Bank being secured creditor and having security in its hand is at liberty to sell the same to realize debt and no right of rent can be passed to the applicant.

So far as orders of 27.5.2013 is concerned, it merely directed to deposit rent payable to the borrowers/guarantors and there was no directions for attachment of rent. There is no violation of order and no relief now can be claimed against answering respondent as no privity of contract between the said party and otherwise the Bank is stopped from claiming relief as it has vehemently refuted in reply.

On the other hand side, Counsel for respondent No. 2 SBI has argued that this application is not maintainable as the main SA has already been dismissed. Once the main case is dismissed all the interlocutory applications stand dismissed. Since the plot in question was duly mortgaged with the Bank and Bank being secured creditor was rightfully pursing for recovery of its dues along with other benefits arising out of the same and therefore the rent which the Court directed the non same and therefore the rent which the Court directed the non-applicant Padam Motors to deposit with the Registrar, should have to be released to the Bank being secured creditor.

On the other hand side, Counsel for the respondent No. 1-Canara Bank argued that since the relief prayed by the applicant has already been considered and decided by this Court vide order dated 27.11.2013 in IA 736 of 2013, re-agitating the issue now shows that it is only drama being managed by litigants/applicant/borrowers, therefore, the same should be discarded and application be dismissed and rent lying attached with DRT be kindly released to the secured creditor Bank.

I have heard the Counsel for the parties and perused the record minutely.

Before parting with the orders, few facts are necessary to be mentioned that in this case, the loan was advanced to one M/s. JSK Steel Private Ltd. with sufficient movable as well as immovable properties as securities out of which one property at Ludhiana was sold during the proceedings by the consortium member Banks whereas another property situated at 185, Industrial Area, Phase-I, Chandigarh which was in the possession being lessee is the applicants in the SA, i.e., M/s. Padam Motors Pvt. Ltd. has now been taken under physical possession by the Bank after getting it vacated and Bank has proceeded for the sale of this property and has been valued at more than Rs. 50 crores whereas the total liability of the Canara Bank is much less than that and moreover dues of both the Banks could be recovered easily after the sale of this property. Further, the liability of the State Bank of India has already been reduced considerably by selling one of the properties situated at Ludhiana.

The prayer of the applicant, i.e., respondent Nos. 3 and 4 is to allow them to enjoy benefits of the lease amount which is lying with the DRT in the shape of FDRs and was kept at the behest of the lessors. Earlier also the respondent Nos. 3 and 4 had prayed that a part of the rent should have to be allowed to be disbursed to them for their livelihood which ultimately lost in the running proceedings and the SA was disposed of. I have given deep thought on the request made by the applicants/respondent Nos. 3 and 4 who have much emphasized on the equity and natural justice than on merits.

Before considering the prayer, I have perused relevant provisions in the Act as well as in the Civil Procedure Code whereby certain exemptions for attachment of properties are provided in Section 60. The whole object of this provision was to safeguard interest of the individuals particularly watching their those benefits or interests which the law itself feels are necessary to be protected under the natural justice or equity. While going through the proceedings in the main SA, it has been found that the rent which was kept deposited in the DRT was in fact with the intention that the matter could have been settled or at that time the lessees themselves had offered to deposit the same with the DRT which could otherwise be handed over to respondent Nos. 3 and 4 who are the lessors. It was only with the consent of all the parties that they have deposited entire rent with this DRT with their clear intentions and even at that time same prayer was made to release one portion of this leased money to them. This amount has been lying till date with the Registrar and has not been disbursed for which the arrear has been claimed by respondent Nos. 3 and 4. Therefore, finding worthy and considering the prayer of the applicants, the amount which is yet to be released continue to remain money or lessor, i.e., respondent Nos. 3 and 4 and Bank cannot claim it as their charge. Moreover fully satisfied that the properties in hand of the Bank are sufficient to liquidate the whole debt of the Banks and further the prayer of the applicant is based upon the necessity to get her daughter married, as he has no other source for the same and for his livelihood. The equity and natural justice too demand that no daughter of this nation suffer just because of shortage of funds with her father, who have already given his whole property to get rid of debts sincerely which is sufficient for the whole dues of the respondent Bank which is Nationalised Bank.

I do not find any ground to retain the rent deposited further.

Therefore, in the light of the above, it is directed that the rent deposited with the DRT as given below, should be released to the applicants/respondent Nos. 3 and 4 through the Registrar immediately.

The concerned Banks are directed to release the amount on demand by the applicants with upto-date interest and benefits. So far as the arrears are concerned, the applicant is free to avail appropriate remedy before the fight forum from M/s. Padam Motors applicant in SA.

MA disposed of.

Order Dasti. File be consigned to record.

Sd/-

Presiding Officer

DRT-I, Chandigarh"

Both the Banks as members of Consortium have felt aggrieved by this order dated 8.12.2015 passed by the DRT-I and so have filed separate appeals against that order which are being disposed of by this common order since the points urged were common and were heard also together.

Despite notices of the appeals having served upon the Security Applicant as well as mortgagors they were not represented when the appeals came to be taken up for hearing on 28.11.2016 at Chandigarh and, therefore, I had heard the submissions of the learned Counsel for the two appellant Banks.

The main submission of the Counsel for the appellants was that by passing the impugned order and giving the relief of release of rent to respondent Nos. 3 and 4 (mortgagors) the learned Presiding Officer has not only overreached the order of this Appellate Tribunal passed on 7.8.2014 whereby the appeal filed by the two mortgagors against the earlier order of DRT rejecting their prayer for release of rent deposited by respondent No. 1 was rejected by this Tribunal but the impugned order also amounts to an act of judicial impropriety on the part of the Presiding Officer.

In my view the present learned Presiding Officer could not have passed the impugned order giving the mortgagors the relief of release of rent in their favour which had been deposited with DRT by their tenant who had filed the S.A. against the two Banks in view of the fact that earlier learned Presiding Officer had rejected similar prayer of the mortgagors and this Tribunal had declined to reverse that order of the DRT. There was no change in the circumstances justifying the reversal/review of earlier decision on the same point. These two appeals are, therefore, allowed and the impugned order of DRT-I, Chandigarh is set aside. The rent lying deposited with DRT will continue to remain there till both the Banks get the exact liability of the borrower/guarantors adjudicated in appropriate proceedings and when the stage comes for deciding as to in what proportion they have to share the amount which they are able to get recovered and their shares are determined they can then move the DRT for disbursement of the amount to them in accordance with their respective entitlement.