Dismissed

M/S. Csango and 3 Ors. v. M/S. Navrang Leathers Pvt. Ltd. and Anr.

Bombay HC21 Aug 2008WP/2361/2007

Case brief

AI extract

What is this about?

The High Court dismissed a writ petition challenging a Debts Recovery Appellate Tribunal order. The Court held that the petitioner failed to honor a settlement offer, misused the bank's leniency by delaying payments, and thus lost the right to invoke writ jurisdiction or rely on RBI settlement guidelines after a decree was final.

What the court decided

AI extract

M/S. Csango and 3 Ors. Vs M/S. Navrang… — Contract and Commercial Disputes | Bombay HC (2008)

¶1

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

¶2

ORDINARY ORIGINAL CIVIL JURISDICTION

¶3

WRIT PETITION NO. 2361 OF 2007

¶4

1. M/s. Csango)
)
2. Mr. Dilip Narang)
partner of Petitioner No.1)
)
3. Mr. Amarchand Narang)
Partner of Petitioner No.1)
)
4. M/s.Navrang Leathers Private Limited )
Navrang Leather Pvt. Ltd.)
all having their office at E-4,)
Ashok Silks Mills Compound,)
144, Dharavi Road, Sion, Mumbai)..Petitioners

¶5

V/s.

¶6

1. Union Bank of India)
having its branch office at)
India House No.3, Oomer Park Estate)
Peddar Road, Mumbai - 400 036)
)
2. Debt Recovery Appellate Tribunal)
Mumbai)..Respondents

¶7

Mr. F. D’vitre, Sr. Adv. with N. Engineer i/by RMG Law
Associates for the Petitioners
Mr. H. Toor i/by N.S. Fadi for Respondent No.1

¶8

JUDGMENT : (PER K.K. TATED, J)

¶9

.By this Writ Petition under Article 226 of the
Constitution of India, the Petitioners are challenging

¶10

: 2 :

¶11

the oral Judgment dated 17th September, 2007 passed by
the Debts Recovery Appellate Tribunal at Mumbai in
Miscellaneous Appeal No.234 of 2006 arising out of
Judgment dated 2nd November, 2006 passed by the Debts
Recovery Tribunal, II, Mumbai in Appeal No.39 of 2006.
In the above mentioned matter, Debt Recovery Tribunal
has passed Judgment in original Application No.1368 of
1999 in favour of Respondent No.1. Thereafter, the
Respondent No.1 preferred an application for recovery
certificate and the Debt Recovery Tribunal issued the
recovery certificate for a sum of Rs.2,21,03,974.32
against the Petitioners. It is the case of the
Petitioners that on or about 5th September, 2002 i.e.
after the recovery certificate issued against them, the
Petitioners approached the Respondent-bank and offered
one time settlement proposal in the sum of Rs.200 lakhs
(Rs.2 Crores) in full and final settlement of the dues
under the recovery certificate. The said proposal for
one time settlement is at Exhibit-A to the Petition.
Pursuant to the said one time settlement offered by the
Petitioners, the Respondent-bank by their letter dated
20th September, 2002 i.e. Exhibit-B to the Petition
informed the Petitioners that if the entire payment
would be made as one timie payment within 3 to 4 months,
they would be ready and willing to accept the same.

¶12

: 3 :

¶13

Pursuant to the said one time settlement, the

¶14

Petitioner-company paid certain amount leaving balance
Rs.1.26 crores to the Respondent No.1-bank. Thereafter,
the Respondent-bank by their letter dated 1st December,
2005 called upon the Petitioners to make good the
balance payment of Rs.1.26 crores immediately, failing
which Respondent No.1 would initiate recovery
proceedings in the Court of law. Despite this, the
Petitioners failed and neglected to pay the remaining
amount as per one time settlement to the
Respondent-bank. Therefore, the Respondent-Bank

¶15

approached Debts Recovery Tribunal for execution as per
the recovery certificate. The said action was
challenged by the Petitioners before Debt Recovery

¶16

Tribunal,II by preferring Miscellaneous Appeal No.39 of
2006 under Section 13(1) of the Recovery of Debt due to
Bank and Financial Institution Act, 1993. The said
Appeal No.39 of 2006 decided by DRT-II by Judgment dated
2nd November, 2006 and dismissed the same.

¶17

2.Being aggrieved bythe said decision,

¶18

Petitioners preferred Miscellaneous Appeal No.234 of
2006 before the Debts Recovery Appellate Tribunal at
Mumbai. The said Miscellaneous Appeal also came to be
dismissed by oral Judgment dated 17th September, 2007.

¶19

: 4 :

¶20

The Appellate Tribunal observed in the Judgment that :-

¶21

"Taking advantage of the leniency of the bank
shown by extending period for payment of the
balance amount of Rs.1.26 crores as per the
offer of settlement by the appellants it is
argued that time was extended by the bank and
the balance amount of Rs.1.26 crores was paid by
the appellant to the bank along with their letter
dated 31st May, 2006. By the said letter the
bank was asked to appropriate the said amount in
their account under the OTS scheme".

¶22

3.The Appellate Tribunal observed that the
Petitioners hereinabove were intentionally prolonging
the payment under OTS scheme though the time was
extended by the bank. Considering these facts the
Appellate Tribunal dismissed the Appeal preferred by the
Petitioners being Miscellaneous Appeal No.234 of 2006.

¶23

4.The Petitioners contended that the Appellate
Tribunal failed to consider to extend the time for
payment as per OTS scheme. On the other hand, Advocate
appearing on behalf of Respondent-bank pointed out that
as per Revised Guidelines for Compromise Settlement of
Chronic Non-Performing Assets (NPAs) of Public Sector
Bank, it is not possible to settle the same if the
decree is already passed. He relied on following
guidelines for compromise settlement of chronic NPAs up
to Rs.10 crore :-

¶24

: 5 :

¶25

(A) Guidelines for compromise settlement of chronic NPAs
up to Rs.10 crore.

¶26

"(i) Coverage

¶27

a) The revised guidelines will cover all NPAs in
all sectors irrespective of the nature of
business, which have become doubtful or loss as
on 31st March, 2000 with outstanding balance of
Rs.10 crore and below on the cut off date.

¶28

b) The guidelines will also cover NPAs
classified as sub-standard as on 31st March,
2000, which have subsequently become doubtful or
loss.

¶29

c) These guidelines will cover cases on which
the banks have initiated action under the
Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act,
2002 and also cases pending before Courts / DRTs
/ BIFR, subject to consent decree being obtained
from the Courts / DRTs / BIFR.

¶30

d) Cases of wilful default, fraud and
malfeasance will not be covered.

¶31

e) The last date for receipt of applications
from borrowers would be as at the close of
business on 30th April, 2003. The processing
under the revised guidelines should be completed
by 31st October, 2003.

¶32

5.Advocate appearing for the Respondent-bank

¶33

relied on judgment in the matter of Chairman and M.D.,

¶34

NTPC Ltd. V/s. Reshmi Constructions, Builders &
Contractors reported in 2004 (2) Supreme Court Cases
(p-663). In that case before the Apex Court meaning of
the words "without prejudice" come up for consideration.

¶35

: 6 :

¶36

Para 35 of the said judgment reads as under :-

¶37

"35. Meaning of the words "without prejudice"
came up for consideration before this Court in
Supdt. (Tech.I), Central Excise V/s. Pratap
Rai wherein it has been held: (SCC p.117, paras
6-7)

¶38

"The Appellate Collector has clearly used the
words ’without prejudice’ which also indicate
that the order of the Collector was not final
and irrevocable. The term ’without prejudice’
has been defined in Black’s Law Dictionary as
follows:

¶39

’Where an offer or admission is made ’without
prejudice’ or a motion is denied or a bill in
euqity dismissed "without prejudice", it is
meant as a declaration that no rights or
privileges of the party concerned are to be
considered as thereby waived or lost, except
insofar as may be expressly conceded or decided.
See, also, Dismissal without prejudice.’
Similarly, in Wharton’s Law Lexicon the author
while interpreting the term ’without prejudice’
observed as follows:

¶40

’The words import an undertaking that if the
negotiation fails, nothing that has passed shall
be taken advantage of thereafter; so, if a
defendant offers, "without prejudice", to pay
half the claim, the plaintiff must not only rely
on the offer as an admission on his having a
right to some payment.

¶41

The rule is that nothing written or said
"without prejudice" can be considered at the
trial without the consent of both parties - not
even by a judge in determining whether or not
there is good cause for depriving a successful
litigant of costs. The word is also frequently
used without the foregoing implications in
statues and inter parties to exclude or save
transactions, acts and rights from the
consequences of a stated proposition and so as
to mean "not affecting", "saving" or
"excepting".’

¶42

: 7 :

¶43

In short, therefore, the implication of the term
’without prejudice’ means (1) that the cause or
the matter has not been decided on merits, (2)
that fresh proceedings according to law were not
barred."

¶44

6.The Advocate for Respondent also relied in the
matter of X-Calibre Knives (P) Ltd. and Anr. V/s.

¶45

State Bank of India reported in 2005 (10) Supreme Court
Cases (p-265) to show that as per guidelines issued by
Reserve Bank of India, Respondent-bank again settle the
matter under the scheme of one time settlement if the
decree is already passed by the Court. He relied on
paras 3, 4, 5 and 6 of this judgment which reads as

¶46

under.

¶47

"3. We are unable to accept the contention of
the appellants that the guidelines of Reserve
Bank of India come into play and that the Bank
was unjustified in not settling the dues in
accordance with the revised guidelines. The
guidelines of 29-1-2003 lay down:" .......

¶48

4. It is not in dispute that the Debts Recover
Tribunal has already passed an order on
31-1-2002 determining the sum payable by the
appellant and, thereafter, issued a recovery
certificate also by the time the matter was
taken up for consideration in terms of the
revised guidelines issued by Reserve Bank of
India. However, our attention has been drawn to
a letter sent by the Bank on 25-2-2003 in which
it was stated that the dues were eligible for
settlement under the guidelines of Reserve Bank
of India on the terms specified in the letter.
In the letter it is stated that the minimum
amount required to be paid by the appellant is

¶49

: 8 :

¶50

Rs.42,97,419.99 (being the outstanding balance
as on 31-3-2000). By this letter the respondent
bank proceeded on the basis that the guidelines
of Reserve Bank of India could be applied to the
appellant’s case. It is apparent that the said
letter was issued without being aware of the
stage of the proceedings before the Debts
Recovery Tribunal. Para 2 of the said letter
reads as follows:
"Since your case is pending before
Court/DRT/BIFR, any settlement will be subject
to consent decree / necessary orders from the
Court / DRT / BIFR and this letter is without
prejudice to the rights and contentions of the
Bank in the said proceedings.

¶51

5. Therefore, it is obvious that the letter was
issued without being aware of the factual
position in regard to the decision of the Debts
Recovery Tribunal and the issuance of recovery
certificate.

¶52

6. The stand taken by the respondent Bank is
reinforced by the clarification issued by
Reserve Bank of India in its communication dated
7-10-2003 that the guidelines were not
applicable to cases where decrees / necessary
orders have already been passed by the
Tribunal."

¶53

7.For the same proposition, he relied on the
decision in the matter of Sathe Biscuits and Chocolates
Company Ltd. and Anr. V/s. Bank of Maharashtra & Ors.
reported in 2004 Company Cases, Volume 122 (p-251) Court
held : "Learned counsel for the respondent-bank did not
dispute as a proposition of law that "pending
proceedings" should be construed liberally. His
endavour, however, is that once a decree is not

¶54

: 9 :

¶55

challenged or has become final, the guidelines issued by
the Reserve Bank of India would not apply because of the
phraseology used in clause C. The acceptance of the
argument of learned counsel for the petitioners would
make second part of clause C redundant and nugatory.
The reference to cases being "pending" and "subject to
consent decree being obtained from the Courts/DRTs/BIFR"
makes it abundantly clear that proceedings must be
pending before judicial or quasi-judicial authority and
must not have finally culminated and decree/order.
Since, in this case, order was final and no appeal was
filed, guidelines will not apply." Considering these
rulings it is crystal clear that once decree is passed
by the competent Court, the banks have no right to
settle the dispute as per the guidelines for compromise
settlement of chronic Non-performing Assets NPAs issued
by Reserve Bank of India.

¶56

8.In the present case, offer of the Petitioners
for one time settlement by their letter dated 5th
September, 2002 was accepted without prejudice by the
Respondent by their letter dated 28th September, 2002
and the Petitioners by their letter dated 7th October,
2002 agreed to make the payment offered by them as one
time settlement. The Petitioners did not keep up their

¶57

: 10 :

¶58

promises and though they were granted further extension,
they did not make payment within extended time and the
payment which was to be completed within 3 or 4 months
from 5th September, 2002 was not completed upto
realization of cheque dated 8th June, 2006 for Rs.26
lakhs. The offer for one time settlement was accepted
by the Bank on 5th September, 2002 even after the
recovery certificate was issued by the Debt Recovery
Tribunal, but the Petitioner did not act as per one time
settlement. On the contrary the Petitioner misused the
leniency granted by the Respondents. Under such
circumstances, the Petitioner have no legal right to
invoke the writ jurisdiction of this Court. We see no
substance in the Writ Petition and the same is dismissed
with no order as to costs.

¶59

9.Advocate appearing on behalf of the Petitioner
applied for stay of the present order. Considering the
facts in the present case, same is rejected.

¶60

(J.N. Patel, J)

M/S. Csango and 3 Ors. v. M/S. Navrang Leathers Pvt. Ltd. and Anr.

Case brief

What is this about?

What the court decided

M/S. Csango and 3 Ors. v. M/S. Navrang Leathers Pvt. Ltd. and Anr.

Case brief

What is this about?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Mr.J.P.Ribeiro, I.P.S.(Retd.) Vs the State of Maharashtra and 3 Others.

Jhuri Bihari Mallah and 21ORS. Vs Brihanmumbai Municipal Corporation and Anr.

Mr. Sanjaykumar Ramchandra Yadav Vs State of Maharashtra and Ors.

Ayodhya Co-Op. Hsg. Soc. Ltd. and Anr. Vs Municipa Corpn. of Gr. Mumbai and 6 Ors.

Surendra L. Gajbiye Vs Union of India and 5 Ors.

Seenen Yakum Khandwani Vs the Municipal Corpn. of Gr. Bombay and 8 Ors.