Unidecors And Ors. vs Oriental Bank Of Commerce

S.N.H. Zaidi, J

This appeal impugns the order dated 5.11.2008 passed by DRT-II, Delhi whereby Appeal No. 56/2004, M/s. Unidecors & Anr. v. Oriental Bank of Commerce, has been disposed of with the direction to the Recovery Officer (RO), to calculate the amount due after adjusting the payments made by the CDs/appellants from time-to-time and thereafter to calculate the interest on the reducing balance basis. The RO was further directed to call upon the CDs/appellants to pay the balance amount within 30 days and in case of their failure to pay such amount, to recover the amount due along with future interest @ PLR, i.e., 11% p.a. simple by sale of the mortgaged property, in accordance with law. Briefly stated, the facts giving rise to this appeal are that O.A. No. 13/2002 filed by the respondent Bank against the appellants was allowed ex parte by the DRT on 5.8.2002 directing the defendants to pay the claimed amount of Rs. 11,11,135.32 together with pendente lite and future interest @ 17% per annum with quarterly rests and cost and a Recovery Certificate (RC) was accordingly issued. The RO issued attachment order of the mortgaged property for the recovery of the decreed amount. Thereafter, the Certificate Debtors (CDs) put in their appearance before the RO and also approached the Certificate Holder (CH) Bank by making a proposal to settle the account on payment of NPA amount of Rs. 8,89,242/- claiming adjustment of Rs. 3 lacs paid in 2002 and making an upfront payment of Rs. 1 lac to show their bona fide. However, they again made a revised proposal dated 29.5.2004 for settlement in Rs. 9 lacs with interest @ 11% per annum simple and deposited a further sum of Rs. 1 lac with the request to keep the deposited amounts in an interest bearing no lien account until a decision is taken on settlement proposal. On 21.7.2004, the CH Bank, in reply to the proposal letter dated 29.5.2004 of the CDs., offered to settle on payment of Rs. 9.84 lacs (by charging interest @ 11 % from the date of NPA) and showing the mode of payment in the manner that Rs. 2 lacs already deposited as upfront and balance in 9 EMI with interest @ PLR simple from the date till repayment of the entire settled amount and asked the CDs to convey their acceptance of the terms of offer. The CDs, disputing the settlement amount of Rs. 9.84 lacs as well as showing the deposits of Rs. 2 lacs only, made another proposal, vide letter dated 10.8.2004, for settlement in Rs. 9 lacs and, adjusting Rs. 5 lacs, offered to pay the balance amount in 9 to 12 equal monthly instalments with interest @ PLR simple. The CH Bank did not respond to this offer and made a statement before the RO that no settlement proposal was pending for consideration. Accordingly, the RO directed the issuance of the sale proclamation of the mortgaged property but, vide order dated 13.10.2004, deferring the publication of the gist of the sale proclamation in the newspaper, directed the CDs to approach the CH Bank to resolve the issue regarding adjustment of Rs. 3 lacs deposited in 2002. However, since the issue could not be resolved, the RO directed the CH Bank to proceed to complete the formalities for the sale of mortgaged properties, vide order dated 27.10.2004.

Both the aforesaid orders dated 13.10.2004 and 27.10.2004 were challenged by the CDs in appeal filed before the DRT under Section 30 of the RDDBFI Act. The learned Presiding Officer (PO) of the DRT found that the Bank's offer for settlement in Rs. 9.84 lacs was made after making adjustment of Rs. 3 lacs deposited by the CD/appellant in 2002. The PO also found that pursuant to the offer letter dated 10.8.2004 the CDs had made payments in instalments from 28.9.2004 till 14.7.2005 during the appeal and accordingly disposed of the appeal by order dated 5.11.2008 with the direction to the RO, as mentioned above. Feeling aggrieved, the CD/appellants directed this appeal against that order.

Mr. B.S. Nagar, appearing for the appellants, submitted that the account in question was classified as NPA on 31.11.2000 and a sum of Rs. 8,89,242/- was shown as due on the appellants on that date. He also pointed out that though the appellants had earlier offered on 27.5.2004 to settle the account at the NPA amount, yet the same was subsequently revised to Rs. 9 lacs by letter dated 29.5.2004, as per agreement arrived at with the officers of the Bank in the recovery camp held on 27.5.2004, but the Bank Backtracked and did not accept the said offer and instead offered to settle at Rs. 9.84 lacs. According to Mr. Nagar, the Bank did not account for the payments of Rs. 3 lacs made by the appellants in 2002 and had only shown the payment of Rs. 2 lacs made in May, 2004 towards upfront payment.

He also pointed out that the appellants had approached the Bank for settlement on the basis of the revised guidelines dated 29.1.2003 issued by the Reserve Bank of India (RBI), but the Bank did not give the benefit of the said guidelines on the ground that the appellants' account was classified as NPA on 30.11.2000 whereas the said guidelines were applicable to those accounts which were classified as doubtful NPA on or before 31.3.2000. He further submitted that on 3.9.2005 the RBI issued another revised guidelines on one time settlement scheme which were applicable to all such accounts which were classified as NPA on or before 31.3.2004 with outstanding balance of Rs. 10 crores or below on the date of classification as doubtful NPA and as per its settlement formula, 100% of the outstanding balance in the account as on the date on which the account was categorized as doubtful NPA was to be recovered and the appellants' case was fully covered with that settlement scheme but again the Bank did not give any benefit of that scheme to the appellants and the learned DRT below also did not properly consider this circumstance. Mr. Nagar, relying upon the observation of the DRAT, Chennai made in the case of Neetu Autos Pvt. Ltd. & Ors. v. UCO Bank, I (2003) BC 62, contended that it was the duty of the Bank to give benefit of the RBI guidelines to the borrower for settling the matter.

Mr. Nagar further submitted that the appellants had made payments in instalments from 28.9.2004 to 14.7.2005 in pursuance of their settlement proposal dated 10.8.2004 and since the respondent Bank had accepted those payments, it showed that the Bank had accepted that settlement proposal and had accepted the payments in part performance of that settlement. According to him, a contract is not always required to be express and it can be oral or may be implied by law which can be inferred by acceptance of payments and other circumstances. In support of his contentions. Mr. Nagar has relied upon the judgment of Rajasthan High Court in Kanhailal v. Kantilal & Ors., AIR 1968 Raj 278. He has also relied upon the judgment of Allahabad High Court rendered in the case of Ishaq Abdul Karim & Anr. v. Madan Lal, AIR 1965 All. 34, wherein the plaintiff had accepted the payments offered to him on the condition that it should be in full satisfaction of his claim. The Hon'ble Court held that the plaintiff cannot subsequently say that he accepted the payments in part satisfaction and sue for the balance amount.

Mr. Pranav Puri, learned Counsel for the respondent Bank, contended that besides seeking the relief that impugned order be set aside, the appellants, in Sub-clause (b) of the relief clause, has only sought for a declaration that the Bank had received the entire compromise amount in full and final settlement of its dues which, in view of the circumstances of the case, cannot be allowed as neither any compromise had ever been arrived at between the parties nor the Bank had received the payments in pursuance of any compromise. According to Mr. Puri, the DRT had ordered the appellants to pay the decreed amount to the respondent Bank vide Order dated 5.8.2002 made in the O.A. and the Bank had accepted the deposits made by the appellants towards payment of decreed amount, which were made as per their convenience and not in accordance with their settlement proposal dated 10.8.2004. He also pointed out that as the appellants had never accepted the offer made by the Bank vide its letter dated 21.7.2004 by virtue of their conduct and had violated its terms, the settlement and concessions offered by the Bank were withdrawn by it vide its letter dated 30.10.2004. Mr. Puri further submitted that after the O.A. was allowed on 5.4.2002 for the recovery of about Rs. 11.11 lacs along with pendente lite and future interest, the CDs/appellants had deposited Rs. 3 lacs in September, 2002 and the Bank had made the offer of settlement in Rs. 9.84 lacs after adjusting that amount. He pointed out to an office note dated 13.7.2004 of the Bank reproduced in the impugned order in this regard.

Having given my thoughtful consideration to the submissions made by the parties' Counsel, I am of the view that the observation of the learned lower appellate Tribunal that the parties could not reach any final conclusion and, therefore, no OTS was arrived at between the parties, is fully in accordance with the facts and circumstances of the case as there is nothing on record to show that the Bank had ever accepted the settlement proposals made by the appellants vide their letters dated 29.5.2004 or 10.8.2004. It is also not the case of the appellants that they had accepted the settlement offer made by the Bank vide its letter dated 21.7.2004. The contention of Mr. Nagar that acceptance of the settlement proposal made through letter dated 10.8.2004 can be inferred from the conduct of the respondent Bank in accepting the payment of instalments of amounts made in pursuance of the said offer is not tenable and the observation of the Rajasthan High Court in Kanhailal v. Kantilal & Ors. (supra) that a contract need not always be express and there may be an oral contract or a contract may be implied by law which may be inferred from the acceptance of payment and other circumstances does not apply to this case, because in the said case the parties had agreed to the payment of the goodwill money when the plaintiff had sublet the rooms under his tenancy to the defendant and the goodwill money was also paid by the defendant to the appellant up to certain period. The facts and circumstances of the said case were entirely different as in this case the respondent Bank has in its favour a decree of a competent forum and since the appellants were under legal obligation to comply with the said order, acceptance of the payments by the Bank can validly be attributed towards the payment of the decretal amount and thus acceptance of those payments cannot be held to be implied acceptance of the terms of settlement offer made by the appellants vide their letter dated 10.8.2004. It is also pertinent to note that all the payments of instalments were also not made as per the repayment schedule made in the offer. The facts of the case of Ishaq Abdul Karim & Anr. v. Madan Lal (supra) also being different from the facts and circumstances of this case, the observation made in that case does not apply to the present case.

A perusal of the office memo of the Bank dated 13.7.2004, reproduced in the order impugned, shows that the Bank had made the offer dated 21.7.2004 for settlement in Rs. 9.84 lacs on the basis of the said memo and the said figure was arrived at after giving adjustment of payment of Rs. 3 lacs made by the appellants in 2002. Thus, in view of the said circumstances the observation of the learned Tribunal below that the parties cannot be allowed to re-agitate the issue to seek reconciliation for modification of that amount is also in accordance with the facts and, circumstances of the case and does not warrant any interference.

So far as the revised guidelines issued by the RBI qua one-time settlement scheme of the disputed NPA accounts is concerned, admittedly the offer of settlement made by the appellants under the revised guidelines dated 11.2.2003 was not accepted by the Bank on the ground that the appellants' account was not covered under that scheme as it was declared as NPA on 30.11.2000 whereas the said guidelines were applicable to those accounts which were declared as doubtful NPA on or before 31.3.2000. Since no proposal for settlement was made by the appellants under the revised guidelines issued subsequently on 3.9.2005, therefore, the appellant cannot claim any benefit under this scheme, Both the settlement proposals dated 29.5.2004 and 10.8.2004 were made by the appellants much prior to the revised guidelines for settlement were issued on 3.9.2005. Moreover, the payment chart given by the learned Tribunal below in the order impugned shows that the appellants had made the payments upto 14.7.2005, i.e., much prior to the issue of the said scheme and as such the view taken by the learned Chairperson of the DRAT Chennai in the case of Neetu Autos Pvt. Ltd. v. UCO Bank (supra) does not apply to the facts and circumstances of this case.

I am in full conformity with the order impugned that the appellants are entitled for the adjustment of payments made by them from time-to-time. The reduction of rate of interest from the claimed PLR @ 14% simple to 11% simple also does not require any interference as the same has neither been challenged by the Bank nor it could be a cause of grievance to the appellants.

In view of above discussion, the order impugned is found to be in accordance with the facts and circumstances of the case and as there is no legal infirmity in it, this appeal being devoid of any merit is liable to be dismissed. The appeal is, accordingly, dismissed without any order as to cost.

Copy of this order be furnished to the parties as per law and be also sent to the concerned DRT.