Syndicate Bank vs Rajesh Singh

J.M. Malik, J

I have heard the Counsel for the parties. The first grievance of Syndicate Bank, the appellant, in this case is that the learned Trial Court has suo motu changed the date of NPA. The NPA was declared on 1.10.2009, but the learned Trial Court concluded the date of NPA to be 31.3.2009. I have perused the notice issued by the appellant Bank under Section 13(2) of the SRFAESI Act. By the said notice dated 1.4.2010, the Bank had raised a demand in the sum of Rs. 1,57,78,700/- as on 31.3.2010. Its relevant portion is reproduced as hereunder:

Notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002--

We have, at your request, granted to borrower's various credit limits for an aggregate amount of Rs. 1,32,20,000/- (Rupees one crore thirty-two lakh twenty thousand) only and we give below full details of various credit facilities granted by us:

Sl. No.

Name of facility

Limit

Outstanding liability as on 31.3.2010

1

SOD

Rs. 30,00,000/-

Rs. 31,77,288

2

OSL

Rs. 90,00,000/-

Rs. 1,11,79,900

3

OSL

Rs. 12,20,000/-

Rs. 14,21,512

Total

Rs. 1,32,20,000/-

Rs. 1,57,78,700

As you have defaulted in repayment of your liabilities, we have classified your accounts as Non-Performing Assets w.e.f. 1.10.2009 in accordance with the directions or guidelines issued by the Reserve Bank of India.

In view of continued default in payment as against agreed terms of loan documents, the whole amount has become payable. Hence a sum of Rs. 1,57,78,700/- (Rupees one crore fifty-seven lakh seventy-eight thousand seven hundred) is due along with interest from 1.4.2010 and costs, etc.

Further, the learned DRT, vide impugned order dated 3.1.2011, reduced the NPA amount to Rs. 1,23,75,077/-. Again, the respondent was allowed to pay this amount in 12 instalments, but did not mention the amount of each instalment. The Counsel for the respondent admitted that no money has been paid to the Bank. The Trial Court had also directed the respondent to deposit Rs. 25 lakh, but that order, too, was not complied with. The impugned order had given two dates for the end of the instalments, i.e., February, 2011 and 31.1.2012.

The other grievance of the Bank is that the learned Trial Court did not grant contractual rate of interest, but, instead, granted only 10% p.a. interest w.e.f. 1st October, 2009. Lastly, costs of the suit were also not awarded by the learned Trial Court.

The learned Counsel for the respondent Dr. Rajesh Singh stated that the respondent was ready with an OTS proposal and showed the Court a copy of such a proposal. But, during the course of argument the learned Counsel for the appellant denied having received any OTS proposal from the respondent. The respondent was asked to deposit some amount to show his bona fide, but the learned Counsel for the respondent admitted that the respondent did not have any money. It is thus clear that attempt to move the OTS was just an eyewash. It is difficult to fathom as to how the respondent can move an OTS proposal as he has got no money to pay to the Bank in case his OTS is accepted by the Bank. The finding given by the learned DRT that the respondent is entitled to Rs. 1,23,75,077/- is not sustainable. The Bank is entitled to the notice amount in the sum of Rs. 1,57,78,700/- till 31.3.2010.

The second submission made by the learned Counsel for the respondent was that the sister-in-law of Dr. Rajesh Singh. Mrs. Shashi Singh, is the owner of the property in dispute, but she has not been arrayed as a respondent in this appeal.

This argument is bereft of merit. The application under Section 17 of the SRFAESI Act was filed only by Dr. Rajesh Singh. Aggrieved by the order passed in the said application, the appellant Bank has filed this appeal only against the applicant of that application. Mrs. Shashi Singh did not initiate action against the appellant Bank. Consequently, she is not a necessary party in this case.

The third submission made by the Counsel for the respondent was that the respondent is running a charitable hospital consisting of 50 rooms from the basement and ground floor of the building and the valuation of the property at Rs. 1,50,00,000/- is on the lower side.

I see no merit in this argument. The outstanding dues against the respondent must have increased by leaps and bounds with the addition of interest on it. It is apparent that the respondent who availed the credit facilities in the year 2008 has waddled out of his commitments. He could not follow financial discipline as per the agreement between him and the Bank. Despite service of notice dated 1.4.2010 under Section 13(2) of the SRFAESI Act and the easy instalments granted by the learned Trial Court, the respondent has not been able to deposit with the Bank even a single paisa. The property in dispute is yet to be sold.

Now, I turn to the question of rate of interest. I find no fault with the order passed by the learned Trial Court in this respect. In State Bank of India v. Sarathi Textiles & Ors., II (2009) BC 696 : 2008 (3) SCALE 409, C.K. Sasankan v. Dhanalakshmi Bank Ltd., : I (2009) CLT 368 (SC) : I (2011) BC 122 (SC) : II (2009) SLT 449 : 2009 (2) D.R.T.C. 320 (SC) and Sardar Associates and Others v. Punjab & Sind Bank and Others, : VI (2009) SLT 473 : III (2009) BC 705 (SC) : III (2009) CLT 186 (SC) : AIR 2010 SC 218, it was held that it is the discretion of the Court to award the pendente lite and future interest which has to be exercised fairly. No rate of interest under the circumstances can be made a rule of thumb.

Moreover, Section 19(20) of the RDDBFI Act lays down that "the Tribunal may, after giving the applicant and the defendant an opportunity of being heard, pass such interim or final order, including the order for payment of interest from the date on or before which payment of the amount is found due upto the date of realization or actual payment, on the application as it thinks fit to meet the ends of justice."

The respondent is said to be running a charitable hospital. Consequently, the 10% p.a. interest awarded by the Tribunal is just and reasonable.

Further, the appellant is entitled to costs throughout. Counsel's fee as per Bank's norms.

The respondent is further directed to deposit the notice amount along with interest and costs within two months from today, failing which nothing will preclude the Bank from taking action against the respondent as per law. In case the entire amount as ordered is paid, the appellant Bank will issue a 'No Dues Certificate' and return the title deeds of the property within four days.

As prayed by the learned Counsel for the respondent, it is hereby ordered that if the parties arrive at a settlement through OTS pr otherwise, that compromise would prevail over this order.

The appeal stands disposed of on above said terms. Copies of this order be furnished to the parties as per law and another copy be sent to the learned DRT.