State Bank Of India vs Dharam Dass Khanna And Ors.

Ranjit Singh, J

Ninety-year-old respondent is struggling hard to seek justice. For this purpose, he has been forced to make one approach after another before various judicial forums, but still has come to suffer the effect of recovery despite having orders passed by the High Court and this Tribunal in his favour. This case has a chequered history which may have to be noticed to get the proper hang of the issues in this case.

Two appeals were filed against an order passed by the Tribunal below on 16.6.2010. One appeal was filed by the appellant Bank and the other by respondent Mr. Dharam Dass Khanna. These two appeals were disposed of by a common order dated 28.1.2011 by this Tribunal. In this order, this Tribunal had issued direction that the property belonging to Dr. Gurpal Singh was liable to come under the purview of recovery certificate and if the payment is not made, it was liable to be auctioned as per law. The R.O. was directed to expedite the recovery, with the observation that it should not take more than six months. This Tribunal had also drawn the attention of the R.O. to the orders passed by the High Court which had stayed the auction of the house of respondent Mr. Dharam Dass Khanna who had deposited a sum of Rs. 4,85,000/-. This writ petition was later dismissed as not pressed in the year 2012.

Respondent had then filed an application in the disposed of appeal, making a grievance that the appeal was disposed of mainly on the submission made by the Counsel for the Bank and no opportunity was afforded to the Counsel for the respondent Mr. Dharam Dass Khanna. The Tribunal had issued notice on this application. The application was finally disposed of by this Tribunal on 16.10.2014. Noticing the grievance of the applicant therein, this Tribunal had observed as under:

"Grievance of the applicant/appellant is that he was merely a guarantor and the Recovery Officer dealt with this case in a very unfair manner. Despite directions issued by the High Court and reiterated by this Tribunal, the Recovery Officer forced the applicant to make payment without taking any effective proceedings against Gurpal Singh who was the principal borrower. During pendency of these proceedings, the applicant/appellant was illegally coerced to settle by way of One Time Settlement. The applicant thus had to sell his house and had paid a sum of Rs. 44 lacs towards the liability of the Bank. Only rupees one lac was deposited by Mr. Gurpal Singh. This happened despite the direction issued by the High Court that property belonging to Mr. Gurpal Singh was to be auctioned and not of the applicant/appellant.

The Counsel for the applicant/appellant has now made a limited prayer. He would pray for grant of liberty and right to the applicant/appellant to be transposed in place of the Bank in terms of law of subrogation as per Sections 140 and 141 of the Indian Contract Act. The Counsel also contends that the purpose of the applicant/appellant is only to recover the amount which he has paid from the principal borrower and this, according to him, would be legally permissible."

The Bank, of course, had opposed the prayer by pointing out that it had already issued NOC to the borrower as well as to the guarantor.

This Tribunal found that the grievance raised in this application had not earlier been raised before the Tribunal below and thus had also not been adjudicated. This Tribunal, however, had observed that the respondent Mr. Dharam Dass Khanna, the appellant in the appeal, apparently had been unfairly treated and was put to prejudice despite he having obtained stay order from the Hon'ble High Court.

Counsel for the appellant Bank had relied upon a settlement arrived at between the Bank and respondent Mr. Dharam Dass Khanna pursuant to which a sum of Rs. 44 lac was deposited, but this Tribunal had observed that for this purpose the respondent was forced to do so. This Tribunal accordingly observed that the legal rights of the respondent were required to be protected as were protected to an extent by the High Court and this Tribunal while passing earlier orders. These orders had been ignored by the R.O. while allegedly forcing the respondent to accept his illegal demands. This Tribunal had also taken serious notice of conduct of the R.O. and had given liberty to the respondent to initiate criminal action against the person who had acted in this manner.

Finding that the plea for being substituted in place of the Bank was required be raised at the first instance before the Tribunal below, liberty was granted to the respondent to move an application, if permissible under law, before the Tribunal below. The Tribunal below was also directed to consider the said application and to deal with the same in accordance with law.

In this background, the respondent moved an application before the Tribunal below for recall of the order dated 25.9.2013 and for setting aside the order dated 28.4.2014 passed by the R.O. and for issuing direction to the Bank to refund Rs. 24 lac illegally withdrawn from the Savings Bank Account of the respondent.

The Tribunal below, after taking note of the background of the case, has held that the amount of OTS has not been rightly debited and credited and the respondent had fallen prey to the circumstances which resulted into direct loss to the respondent. The application accordingly was allowed. The result is that the Bank is called upon to refund a sum of Rs. 24 lac which was illegally debited from the account of the respondent without any authority. Aggrieved against this order, the Bank has now filed the present appeal.

Respondent Mr. Dharam Dass Khanna has filed caveat and has put in appearance. The caveat shall stand discharged.

Mr. S.L. Gupta appearing for the Bank has made strenuous efforts to take me through the documents to urge that respondent Mr. Dharam Dass Khanna along with Mr. Gurpal Singh had settled the issue with the Bank and both had agreed to pay the OTS amount of Rs. 45 lac. This happened before a Lok Adalat. The respondent had deposited a sum of Rs. 1 lac on 9.12.2013 and another sum of Rs. 20 lac on 11.12.2013. The balance amount was to be deposited by the borrower Mr. Gurpal Singh. As per the respondent, he was under the impression that the borrower had deposited the balance amount against the compromise. The Bank, on the other hand, had illegally withdrawn a sum of Rs. 6 lac on 27.11.2013 and Rs. 18 lac on 10.12.2013 from the Savings Bank Account of the respondent without any authorization. It is in this background that respondent had pressed his application for recall of the order dated 25.9.2013 and setting aside the order of 28.4.2014 passed by the R.O. in the recovery proceedings.

Counsel for the Bank had urged before the Tribunal below that this application was not maintainable as the respondent had a right to file an appeal against the order passed by the R.O. and could not competently file miscellaneous application. Besides, the Counsel for the Bank had pointed out that the respondent had made an offer of Rs. 45 lac before the Lok Adalat held on 25.9.2013 subject to handing over the title deed of the property of the borrower to him. The Bank had agreed for the settlement on payment of Rs. 45 lac, but had not agreed to hand over the title deeds of the property of the borrower directly to the respondent. As per the Bank, the respondent may recovery the amount from the borrower subject to the rights of the borrower as per law. The stand of the Bank further was that there was no condition with regard to the deposit of Rs. 1 lac and Rs. 20 lac by the respondent or for deposit of the rest of the amount by the borrower. The compromise was jointly entered into. Counsel for the Bank has also denied if any amount was illegally withdrawn from the Savings Bank Account of the respondent.

Counsel for the appellant Bank would also rely upon that part of the order of this Tribunal where it has noticed the plea of respondent that he had deposited a sum of Rs. 44 lac towards the liability of the Bank and Rs. 1 lac was deposited by the borrower Mr. Gurpal Singh. Counsel for the appellant would accordingly submit that such a plea on the false allegation cannot be entertained.

It is not in dispute that the borrower in this case has availed credit facilities from the Bank and even mortgaged certain properties which included a land measuring 4 bighas situated at Poanta Sahib owned by Mr. Gurpal Singh. Directions were issued for recovery of the amount from the borrower and the sale of the house was stayed. This order was duly conveyed to the R.O. who did not take care to follow the directions. The R.O. taking charge in place of earlier R.O. completely ignored this direction. It is in this background that this Tribunal gave liberty to the respondent even to initiate criminal proceedings against the R.O. against whom there was some serious unpalatable allegation made.

It seems that some inquiry was conducted where it was found that defaulting borrowers escaped from their liability to pay the dues by compelling the respondent/guarantor to pay the dues by selling his property and thus was successful in getting their own property released. As observed by the Tribunal, this has happened because the R.O. had deliberately ignored the order passed by the High Court and this Tribunal. When the matter was taken up in the Lok Adalat on 25.11.2013, one-time settlement was reached on payment of Rs. 45 lac. Respondent had paid Rs. 20 lac in addition to Rs. 4.85 lac already paid on 18.10.2001. The respondent had deposited Rs. 20 lac on 11.12.2013 whereas the original borrower deposited only Rs. 1 lac on 9.12.2013. The Bank had got the amount adjusted withdrawing from the Savings Bank Account of the respondent-Bank. The Bank had relied upon the verbal instruction in support of this plea. This has not been found acceptable by the Tribunal below. It is observed that this was not proper procedure for withdrawing the amount from the account of some account holder. Even during the course of hearing before me the Counsel for the Bank has not been able to show any authority or signature on any voucher for withdrawing this amount from the account of the respondent. In this manner, the borrower was able to hoodwink and save his property by putting the property of an old guarantor at stake, which has been found to be a colourable exercise. The Tribunal did not find any justification on the part of the Bank in withdrawing the amount from the account of the respondent without his signature.

The manner in which the R.O. has acted in this case and the casual attitude depicted by the Bank would not augur well for fair name of the Banking institution. It would be rather shocking to notice that the R.O. dared to ignore the direction of the Tribunal and has given an easy path to the borrower to save his property.

The plea that such an application is not maintainable is too technical to attract any consideration. The provisions of Section 22 of the RDDBFI Act would be a clear answer to this technical plea, which entitles the Tribunal below and the Appellate Tribunal to regulate their own procedure while being guided by the principles of natural justice. This procedural law cannot act as a roadblock to consider the plea of the respondent who has incidentally suffered enough despite having orders in his favour from the High Court and this Tribunal.

In any case, the issue in the present case is if the Bank had validly and authorisedly withdrawn this amount from the account of the respondent or not. It is not much of an issue of one-time settlement. It is a case of withdrawal of an amount from the account of one person without authority. The plea by the Counsel or the appellant that for this purpose this application would not be maintainable is a plea of desperation. If something is done, that too, in violation of the order of the High Court, then the Tribunal below or this Tribunal cannot be deterred with the plea of maintainability. After all, this amount was withdrawn towards one-time settlement and in case it is found to be unauthorisedly withdrawn, the aggrieved person cannot be left to fend for himself to approach any other Forum. That will not be doing justice. A 90-year-old who has approached almost all Forums of debts recovery and has even appeared before the R.O. should not be left to approach any Forum on the plea that the prayer made in the application would not be maintainable. This was not even urged before the Tribunal below and it was only pleaded that the appellant could file an appeal instead of filing a miscellaneous application. There may not be much difficulty to observe that this miscellaneous application can easily be treated as an appeal against the order passed by the R.O. and that would be enough to blunt the objection raised by the appellant. I find that the Tribunal below has done substantial justice in this case and has directed the Bank to refund the amount of Rs. 24 lac illegally withdrawn from the account of the respondent. The Bank cannot be permitted to act in this highhanded and arbitrary manner, it would have been rather easy for the Bank to get authorization from the respondent in case he had agreed for payment of this amount. Even if the respondent had agreed to pay the entire amount, the Bank could have withdrawn this amount from the account only on his authorization and not in the manner it has done. This approach, even if seen as extraordinary, needs to be adopted to set right totally illegal action of the R.O. in ignoring the High Court order in which the Bank may be a passive participant. The impugned order, therefore, would not call for any interference. However, the Bank would be at liberty to recover this amount from the borrower Mr. Gurpal Singh and for that purpose the Bank would be at liberty to seek attachment of any personal property of the borrower including the property which was mortgaged. For this purpose, the Bank is granted liberty to approach appropriate Forum in accordance with law.

With the above observation, the present appeal is dismissed.