State Bank Of India vs Harish Kumar Aggarwal

S.N.H. Zaidi, J

This appeal impugns the order dated 13.12.2007 of the DRT, Jaipur whereby S.A. No. 29/2004 has been allowed and the appellant bank has been directed to restore back the possession of the property in question to the applicant/respondent with a cost of Rs.5,000/-.

Briefly stated, the facts of the case are that the appellant bank had sanctioned a credit facility to the respondent in September 1997 on execution of loan documents and creation of equitable mortgage of property bearing No. A-27, RIICO Housing Colony, Ambaji Industrial Area, Abu Road. When the respondent defaulted in making repayment of the loan, the appellant filed suit (No. 22/2000) for the recovery of outstanding amount, which was decreed for a sum of Rs.4,26,493/- by the Additional District Judge, Abu Road., However, a compromise was arrived at between the DH bank and the JD respondent for a sum of Rs.4.81 lacs towards full and final satisfaction of the decree, out of which the respondent had paid Rs.1 lac. Since the remaining amount of Rs. 3.81 lacs was not paid, the compromise was cancelled by the bank.

The respondent later executed an agreement dated 9.9.2003 with Smt. Vandana Bhardwaj and Rajeev Bhardwaj for the sale of the aforesaid property in Rs. 10.61 lacs and it was agreed that since the property was mortgaged with the bank, therefore, the aforesaid vendees would get the property redeemed by paying the dues of the respondent to the bank. It was also agreed that Smt. Vandana would take a loan of Rs. 9 lacs from the appellant bank which would issue one cheque of Rs.3.81 lacs for deposit in the respondent's loan account and the other cheque of Rs. 5.19 lacs would be handed over to the respondent on execution of the sale deed. On 25.9.2003, the bank sanctioned a housing loan of Rs. 9 lacs to Smt. Vandana for the purchase of the said property on the basis of the said agreement and disbursed the sanctioned amount in her account. The bank also deposited a cheque of Rs. 3.81 lacs in the respondent's loan account which stood parked in 'Advance under Collection Account' (AUCA) as per the procedure of the bank. The entries in the AUCA were accordingly reversed and the liability of the respondent qua the loan was squared off. The other cheque of Rs. 5.19 lacs made in the name of respondent, however, remained deposited with the bank for delivering to him on execution of the sale deed in favour of Smt. Vandana Bhardwaj.

On 7.1.2004, a compromise agreement was entered into between the respondent and Smt. Vandana whereby the agreement to sell the aforesaid property was cancelled and it was agreed that if any amount had been deposited by her in the loan account of the respondent, then she would have the right to recover the same from the respondent. Smt. Vandana, filing a copy of the compromise dated 7.1.2004 along with her letter dated 12.1.2004, informed the bank about the cancellation of the agreement of sale and asked the bank to transfer back the amount of Rs. 3.81 lacs from the respondent's account to her account. The appellant bank deposited the cheque of Rs. 5.19 lacs in her account and also debited Rs.3.81 lacs into the respondent's loan account. The bank thereafter issued a demand notice dated 13.1.2004 under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, the SARFAESI Act) to the respondent calling upon him to pay Rs.5,33,831/- along with interest. As the respondent did not make any payment, the bank issued a possession notice under section 13(4) of the SARFAESI Act for taking the possession of the said property and also published it in the newspaper 'Rajasthan Patrika' (Pall edition) on 19.5.2004. Being aggrieved with the actions of the bank, the respondent filed S.A. No. 29/2004 before DRT, Jaipur for quashing the possession notice. The bank contested the S.A. but the learned Tribunal below has allowed it by the order impugned and set aside the possession notice and has imposed a cost of Rs. 5,000/- against the bank. Aggrieved by that order, the bank has preferred this appeal.

Reply to the appeal was admitted on deposit of Rs.25,000/- by the respondent with the Registrar of this Tribunal through the DD, which was handed over to the bank for adjustment in the respondent's loan account.

I have heard Mr. Bharat Arora the learned counsel appearing for the appellant bank and Mr. K. Kumar the learned counsel for the respondent and perused the record.

The parties are not in conflict in respect of the facts of the case. There is also no dispute that the appellant bank had disbursed the sanctioned loan amount of Rs.9 lacs into the account of Smt. Vandana and a cheque of Rs. 3.81 lacs was drawn from her account and deposited into the respondent's loan account which was parked in AUCA and with the deposit of the said cheque, the entries in AUCA were reversed and the respondent's loan account was squared off. In view of these circumstances, the Tribunal below was right in observing that subsequent cancellation of the agreement of sale on the basis of any compromise had not given any right to the bank to debit the amount of Rs. 3.81 lacs again in the respondent's account, as the bank was neither a party to the agreement of sale nor to the compromise. I am also of the view that after the liability of the respondent towards the bank had come to an end with the deposit of Rs. 3.81 lacs in his loan account, the bank was not empowered to reopen the said account merely on the basis of the letter dated 12.1.2004 of Smt. Bhardwaj because if she was having any dispute with the respondent qua the execution of the sale deed she should have sought the remedy available to her under the law. The Tribunal has rightly observed that the compromise agreement dated 7.1.2004 clearly shows that a right was given to Smt. Bhardwaj to recover any amount deposited by her in the respondent's loan account, as such the amount of Rs. 3.81 lacs deposited as per the terms of the agreement of sale, could be recovered by her from the respondent and the bank had no authority to debit the said amount again in the respondent's loan account. The circumstances of the case show that the respondent's liability was fully squared off on 30.10.2003 after the cheque of Rs. 3.81 lacs was deposited in his loan account and the said account remained cleared until 12.1.2004 when the bank had again debited Rs. 3.81 lacs in his account without any authority.

Looking to the above circumstances, I fully agree with the learned Tribunal below that after the loan account of the respondent was squared off, issuance of the demand notice under section 13(2) of the SARFAESI Act on the basis of a debit entry made in his account on 12.1.2004 as well as issue of possession notice under section 13(4) thereof was bad in law as no amount of debt was due on the respondent on the dates when those notices were issued. The order impugned, therefore, does not suffer with any infirmity or warrant any interference of this Tribunal.

On the basis of the discussion made above, this appeal being devoid of any merit is liable to be dismissed and is dismissed accordingly with cost. The amount of Rs. 25,000/- deposited by the respondent pursuant to the direction of this Tribunal shall be returned by the appellant to him along with interest @ 9% per annum from the date of the appropriation of the said amount within six weeks from today.

Copy of this order be furnished to the parties as per law.