State Bank Of India vs Naushad Alam & Anr.

The present appeal has been filed under Section 20 of the Recovery of Debts and Bankruptcy Act, 1993 (in short "the RDB Act, 1993") against the order dated 07.02.2018 passed by the Tribunal below, whereby the O.A. No. 23/2018 filed by the appellant-Bank has been dismissed.

Brief facts of the case are that the respondent no. 1 was granted a term loan of Rs. 15.00 lacs, to which the respondent no. 2 stood as guarantor and the said loan was repayable in 7 years. In order to secure the said facility, a hypothecation agreement dated 26.03.2011 was executed and signed by the respondent no. 1-borrower. Since the borrower did not adhere to the terms of loan agreement, therefore, the said account was classified as NPA on 24.11.2014 and a demand notice dated 13.02.2015 under Section 13(2) of the SARFAESI Act was issued for a sum of Rs. 12,69,538/- and thereafter the appellant-Bank issued possession notice for taking possession of the vehicle, but the same could not be taken on account of non-traceability of the vehicle.

It appears that thereafter, the appellant-Bank filed an Original Application before the Tribunal for recovery of Rs. 18,65,578.66 along with interest @ 12.75% per annum with monthly rests. The Tribunal below vide order impugned dismissed the said O.A. on the ground that description of the vehicle has not been mentioned in the hypothecation agreement and the screen report dated 09.01.2018 downloaded from the website of the RTO does not bear the signature of the borrower. Being aggrieved by the said order, the present appeal has been filed by the appellant-Bank.

Learned counsel for the appellant submitted that the Tribunal below has dismissed the Original Application of the appellant on technical grounds that the description of the hypothecated vehicle has not been given, whereas the same has been given at page no. 40 of the paper book and secondly no registration certificate has been filed by the Bank, but the same has been appended at page no. 63 of the paper book. It was, therefore, contended that the said averments of the Tribunal below is incorrect and not sustainable. It was further submitted that the loan document was signed in March, 2011 and registration of the vehicle was made on 02.12.2011, therefore, the same could not have been mentioned in the same. Thus, there is no anomaly with regard to that. It was lastly contended that the loan has been admitted by the respondent-borrower and OTS proposal has also been given, which is at page no. 66 of the paper book. It was, therefore, prayed that the order impugned may be set aside.

It appears that despite service of notice through publication, no one had appeared on behalf of the respondents, therefore, they were directed to be proceeded ex-parte by this Tribunal vide order dated 09.05.2024.

Having heard the learned counsel for the appellant and considering the material available on record. Undisputedly, a term loan of Rs. 15.00 lacs was granted by the Bank to the borrower and disbursed to the borrower for purchase of a BMW Car.

The finding of the Tribunal below that neither any description of the vehicle nor any details of the same to be purchased have been mentioned in the hypothecation agreement dated 26.03.2011 or there is no such certificate of the RTO dated 09.01.2018, is erroneous. In this regard, the page no. 25 to 28 and page no. 63 are relevant. The page nos. 25 to 28 are the loan-cum-hypothecation agreement dated 26.03.2011 and page no. 63 is a copy of certificate of registration dated 09.09.2011. From it, it is clear that the Car was purchased after more than five months from the date of execution of the said agreement. Thus, there was no occasion for the Bank to mention the details of the vehicle in the same. While going through the registration certificate of the vehicle in question, it is found that in the column of hypothecation/lease agreement, the name of the appellant-Bank is mentioned. As such it appears that the vehicle in question is hypothecated with the appellant-Bank. Apart from it, there is admission of the borrower with regard to availing of the said loan, as it is evident from the letter dated 20.10.2015 of the respondent no. 1-borrower, which is at page no. 66 of the paper book, whereby the borrower had requested the Bank to settle the loan account by accepting Rs. 4.00 lacs under one time settlement scheme. Thus, it is proved that the respondent no. 1-borrower was granted loan of Rs. 15.00 lacs and the same was disbursed for purchasing BMW Car. It is also stated that if the disbursement and availing of the loan is proved and the recovery is initiated under the RDB Act, the hypothecation or the mortgage of the property in question is not very important, because once the decree has been passed, then the Bank gets every right to attach or sell any of the properties belonging to the borrower or guarantor. However, it is to be kept in mind that it is public money and its recovery and realization is must, therefore, the Court or Tribunals should not be very technical while passing the decree, but the Tribunal below has not considered these documents/facts while passing the order impugned. Thus it is a fit case for remand back to the Tribunal below for deciding it afresh.

In view of the above, the order impugned is set aside and the appeal filed by the appellant is allowed and the case is remanded back to the Tribunal below for deciding it afresh in accordance with law without being influenced by the observations made hereinabove after affording proper opportunity of hearing to the parties concerned. No order as to costs.

A copy of this judgment be forwarded to the parties as well as to the DRT concerned and also be uploaded on the e-DRT portal.