Dismissed

State Bank of India v. The Repatriates co-operative Finance Ltd. & Ors.

DRAT25 Nov 2022MISC APPEAL/160/2013

Case brief

AI extract

What is this about?

This appeal concerned the entitlement to surplus proceeds from a property sold in execution of a recovery certificate. The Respondent Bank purchased the property at auction. The Appellant argued for a lien on surplus funds held for its pending suit. The Tribunal directed payment to the Respondent, holding no general lien existed as the property was already encumbered. The High Court dismissed the

What did the court decide?

Appeal MA 160/2013 dismissed with no order as to costs; all pending IAs disposed of.

State Bank of India versus The Repatriates co-operative… — Banking and Recovery | DRAT (2022)

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MA 160/2013

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IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 25^th of November, 2022

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PRESENT: Hon’ble Mr. Justice S. Ravi Kumar CHAIRPERSON

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MA 160/2013

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[Appeal No.9/2012 in MA Nos. 9 & 10/2012 in DRC No. 53/2010 in OA 47/2008 on the file of DRT-II, Chennai]

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Between

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State Bank of India, Stressed Asset Recovery Branch, Red Cross Building, II Floor, No.32, Montieth Road, Egmore, Chennai – 600 008. Represented by its Deputy Manager.

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……Appellant

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And

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The Repatriates Co. operative Finance and Development Bank Ltd., (REPCO Bank), No.33, North Usman Road, T. Nagar, Chennai – 600 017. Rep. by its Asst. General Manager (Law).

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MA 160/2013

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Mrs. S. Shiyamala, W/o Mr. M.Srinivasan. No.1866, I – Block, 26^th Street, Thiruvalluvar Kudiyiruppu, Anna Nagar West, Chennai – 600 040.

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Mr. M. Srinivasan, S/o Mr. G. Mariappan No.1866, I – Block, 26^th Street, Thiruvalluvar Kudiyiruppu, Anna Nagar West, Chennai – 600 040.

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Mrs. C. Jayalakshmi, W/o Mr. Chandrasekar, No. 311/3, Appu Colony, Belle Area, Anna Nagar West, Chennai – 600 040.

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….. Respondents

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Counsel for Appellant : Mr. K.R.A. Muthukrishnan Counsel for Respondent No.1: Mr. Ilangovan

MA 160/2013

ORDER

This Appeal is against Order dated 08.10.2013 in Appeal No.9/2012 in MA Nos. 9 & 10/2012 in DRC No. 53/2010 in OA 47/2008 on the file of DRT-II, Chennai.

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Brief facts leading to this Appeal are as follows:-

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First Respondent Bank herein sanctioned loan to one Smt. Shyamala and 2 others, on 17.05.2004, on security offered bearing Flat Nos. ‘C’ & ‘D’ on the first floor and Flat Nos. ‘G’ & ‘H’ on the 2^nd floor at Plot No. 1866, 26^th Street, ‘I’ Block, Thiruvalluvar Kudiyiruppu, Anna Nagar (West), Chennai-40. Borrowers committed default, and mortgaged properties were sold in public auction in view of Arbitration Award through E.P. No. 204/2007 in O.P. No.886/2005, in which, 1^st Respondent Bank itself purchased four flats in the year 2007 and Sale Certificate was obtained and registered in its name.

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MA 160/2013

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Appellant Bank herein sanctioned Housing Loan to the very same borrowers for purchase of the very same properties, who mortgaged it to Appellant Bank on 23.10.2002 by depositing the title deeds. When borrowers committed default, Appellant Bank filed OA 47/2008 and obtained Recovery Certificate DRC No. 53/2010. Recovery Officer, in execution of Recovery Certificate, sold the property, Flat No. ‘G’ in 2^nd floor, to one Mrs. C. Jayalakshmi, for a sum of Rs.49 Lakhs.

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During pendency of recovery proceedings, 1^st

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Respondent Bank herein filed two Miscellaneous Applications before Recovery Officer; one to allow the claim of 1^st Respondent Bank and release the properties described in the Schedule to said IA, i.e. Flat ‘G’ and stay all further proceedings in DRC No. 53/2010, and those Applications were enquired and ultimately dismissed on 22.03.2012 by Recovery Officer. After disposal of those Applications, property Flat No. ‘G’ in 2^nd floor, was sold for a sum of Rs.49 Lakhs, and out of which, Rs.15,24,794/- was appropriated

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MA 160/2013

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towards the claim in DRC No.53/2010 in OA 47/2008 and Rs. 13,80,411/- was appropriated towards the claim in DRC No.250/2010 in OA 44/2009, and surplus amount of Rs.20,54,351/- is kept in the form of Fixed Deposit, and aggrieved by dismissal of two Applications, 1^st Respondent Bank filed Appeal No. 9/2012 before DRT-2, Chennai.

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Learned Presiding Officer, DRT-II, Chennai, on a consideration of contentions and rival contentions of both parties, disposed of Appeal directing payment of amount kept in Fixed Deposit, being surplus sale proceeds, i.e. Rs.20,54,351/-, together with accrued interest, to 1^st Respondent Bank herein, and directed 1^st Respondent Bank herein, to hand over possession and keys pertaining to Flat No. ’G’ to Recovery Officer, and aggrieved by which, Appellant Bank preferred present Appeal.

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Heard Learned Advocates of both parties.

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MA 160/2013

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Advocate for Appellant Bank submitted that Order of

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DRT-2, Chennai, is against law and vitiated with material irregularities. It is the contention of Appellant Bank that DRT-2, Chennai, ought to have dismissed the Appeal, and directing Appellant Bank to pay the balance money to 1^st Respondent Bank is unwarranted. According to Appellant Bank, it filed OA 237/2010 before DRT-I, Chennai, against 2^nd Respondent herein, Mrs. S. Shiyamala, one of the borrowers, for recovery of Rs.23,59,652/- together with interest, and said case is pending, therefore, Bank has to appropriate said surplus proceeds towards that claim. It is submitted Tribunal below failed to consider that Appellant has Banker’s lien over the balance money, therefore, impugned Order dated 08.10.2013 is to be set aside.

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On the other hand, Advocate for 1^st Respondent Bank submitted that property in question was first brought to sale by 1^st Respondent Bank, and when 1^st Respondent Bank also had mortgage over the very same properties, contention of Appellant Bank about their lien is not tenable, and Tribunal

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MA 160/2013

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below rightly ordered to pay excess amount to 1^st Respondent Bank, being one of the Secured Creditors. It is submitted that Order of Tribunal below is a very reasonable and protecting interests of both parties, therefore, Appeal is devoid of merits and liable to be dismissed.

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I have perused the material papers including Orders of Recovery Officer and Learned Presiding Officer, DRT-2, Chennai.

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Learned Presiding Officer framed as many as four points

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for consideration, and dealt with them meticulously with reference to contentions and rival contentions of both Banks.

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As rightly pointed out by Learned Advocate for 1^st Respondent Bank, when Respondent No.1 Bank has also advanced loan on very same property taking it as security, and obtained an Award in respect of its claim, and purchased the very same property in auction, and that auction would be normally subject to mortgage in favour of Appellant, which is earlier in point of time. So, Appellant, can only realize its

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MA 160/2013

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dues covered by OA-47/2008, in which the very same property was mortgaged, and it cannot contend that it has general lien, and can retain the balance sale proceeds. Tribunal below examined every aspect and passed a very justifiable Order protecting interest of both Banks, and I do not find any wrong in the approach of Tribunal below.

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On a scrutiny of entire material, I am of the considered view that there are absolutely no grounds to interfere with Order dated 08.10.2013, impugned in this Appeal, and that, Appeal is liable to be dismissed.

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In the result, Appeal MA 160/2013 is dismissed with no order as to costs. All pending IAs, if any, stand disposed of.

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[Dictated to Athistamani, PS transcribed by her, corrected, signed and pronounced by me in open court, this 25^th of November, 2022]

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State Bank of India v. The Repatriates co-operative Finance Ltd. & Ors.

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State Bank of India v. The Repatriates co-operative Finance Ltd. & Ors.

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