Dismissed

Mr.Prabhakar & Anr. v. Central Bank Of India And Another

DRAT2 Aug 2022REGULAR APPEAL/188/2017

Case brief

AI extract

What is this about?

This appeal challenged the Debt Recovery Tribunal's order fixing personal liability on the Appellants for a housing loan. The Tribunal dismissed the appeal, holding that admitted execution of documents created personal liability and no grounds existed to set aside the order.

What did the court decide?

The appeal is dismissed; the impugned order dated 02.08.2017 stands affirmed; all pending interim applications stand closed.

Mr.Prabhakar & Anr. versus Central Bank Of India… — Contract and Commercial Disputes | DRAT (2022)

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RA 188/2017

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IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 2^nd of August, 2022

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

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RA 188/2017

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[OA 236/2014 (old OA 188/2009) on the file of DRT-II, Chennai)

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Between

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Mr. P. Prabhakar,

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16-S-5, Gokul Flats, No.15, Parankusapuram, Kodambakkam,

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Chennai – 600 024.

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Mrs. G. Sujatha, 15 (New No.37), Flat No.8, Jubilee Road, West Mambalam, Chennai-600 033.

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……Appellants

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And

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Central Bank of India, Triplicane Branch, “Hameediya Complex”, Triplicane High Road, Chennai – 600 005.

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RA 188/2017

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B. Sivaganesan, “Sri Hariharasuthan Illam”, New No.15, Old No.8, Nethaji Nagar, Thiruvanmiyur, Chennai – 600 041.

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Sri Sasthru Associates Kadenthethi Pvt. Ltd., Rep. by its Managing Director, B. Sivaganesan, 397, Precision Plaza (Basement), Anna Salai, Teynampet, Chennai – 600 018. ….. Respondents Counsel for Appellants : Mr. O. Padmaprakash Counsel for R1 : Mr. B. Thilak Narayanan

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ORDER

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1. This Appeal is against judgement dated 02.08.2017 in OA 236/2014 ( old OA No.188/2009 before DRT-I, Chennai ) on the file of DRT-II, Chennai.

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2. B rief relevant facts necessary for the purpose of this Appeal are as follows:-

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RA 188/2017

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First Respondent Bank initially filed OA 188 /2009 before

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DRT-1, Chennai for recovery of Rs.11,25,149/- together with

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interest on contractual rate from the date of Application till the date of realization, and thereafter, OA was transferred to DRT-II, Chennai on point of jurisdiction and numbered as OA 236/2014.

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It is contended that 1^st Appellant herein approached 1^st Respondent Bank for Housing Loan i.e. acquisition of an undivided extent of 418.25 sq. ft., scheduled in Schedule ‘B’ to OA, out of a total extent of 1673 sq. ft. of land, which is described in Schedule ‘A’ to OA, for construction of flat with built up area of

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790 sq. ft., promoted by 3^rd Respondent herein and that 1^st Appellant availed said loan on 07.05.2007, executed necessary documents and also created mortgage over property described in Schedule ‘B’ to OA on execution of Sale Deed in his favour. Second Appellant stood as guarantor for Housing Loan and 1^st Respondent Bank released money from time to time and in total a sum of Rs. 9.65 Lakhs has been released. In spite of release of payments, no construction activity commenced and as

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Defendants failed to discharge the amount, 1^st Respondent Bank

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filed OA for recovery of outstanding dues. Appellants herein filed

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RA 188/2017

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Written Statement denying the claim of 1^st Respondent Bank, contending that they never approached Applicant Bank themselves for Housing Loan, but 2^nd Respondent herein took them to 1^st Respondent Bank promising to arrange Housing Loan where Manager of 1^st Respondent Bank furnished them with application form for Housing Loan, and they signed as borrower and guarantor respectively on request of 2^nd Respondent herein. It is further contended 2^nd Respondent herein alone was dealing with 1^st Respondent Bank, and they were not aware of details of sanction and disbursement. They also contended they have not even paid marginal money which is a pre condition for disbursement of loan and they were summoned by CBI Authorities for investigation of a complaint lodged against Manager of 1^st Respondent Bank. It is further contended that 3^rd Respondent herein never constructed Flats as proposed and they have not received loan amount from 1^st Respondent Bank. They also contended no sale deed conveying undivided share was executed and registered in favour of 1^st Appellant, therefore, they are not personally liable for OA amount and they have no objection to sale of suit property.

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RA 188/2017

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3. Tribunal below on a consideration of pleadings of both parties and evidence, disallowed the contentions of Appellants herein, and allowed OA fixing personal liability also on Appellants for OA amount. Aggrieved by fixing personal liability, Appellants preferred present Appeal.

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4. Both parties filed Written Arguments and Learned Advocates reiterated the same through oral submissions.

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5. Advocate for Appellants submitted Appellants are victims of

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a fraud played by Manager of 1^st Respondent Bank and Builder, i.e. 3^rd Respondent herein, and Appellants have not received a single pie from Bank. It is further submitted that though Appellants have not received any money, Tribunal below fixed personal liability on them. He submitted that remedy of Bank should be against Builder, i.e. 3^rd Respondent herein, but not against Appellants. He further submitted Loan Agreement is not signed by Bank and that itself shows fraud and collusion. He submitted that in a similar case, Tribunal below has not fixed

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RA 188/2017

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personal liability on Borrowers and Guarantors and liability was

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fixed to the extent to mortgaged property, and at best, a similar Order ought to have been passed in this case also, for these reasons, Order of Tribunal below is liable to be set aside.

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6. On the other hand, Advocate for 1^st Respondent Bank submitted that Bank has preferred Appeal in that case where personal liability is not fixed against borrowers, and one such Appeal is also posted along with this Appeal i.e. Appeal No. 150/2018 . He submitted that Loan Agreement stipulates conditions and Bank strictly in accordance with said conditions, released money, and Appellants, having admitted execution of Loan Agreement and Guarantee Agreement, cannot disown their liability. He further submitted that Loan Agreement not signed, is not at all pleaded in Written Statement, and Appellants cannot

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be permitted to raise such contentions at Appellate stage. He further submitted that Tribunal below rightly allowed OA and that there are no grounds to interfere with Order of Tribunal below.

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RA 188/2017

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7. I have perused the material papers including impugned Order and Written Submissions of both sides.

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8. One of the arguments advanced vehemently on behalf of Appellants is that Loan Agreement is not signed by both parties, for this submission, Advocate for 1^st Respondent Bank contended that no such plea is raised in Written Statement, and such contention cannot be entertained at Appellate stage. As seen from Written Statement, as rightly pointed out by Advocate for 1^st Respondent Bank, no such plea is taken in Written Statement, and on the other hand, it is specifically pleaded that on the request of 3^rd Defendant in OA i.e. 2^nd Respondent herein, Appellants executed documents as borrower and guarantor. Having admitted execution of documents, the burden is on Appellants to prove their contention. But, as rightly pointed out by Advocate for 1^st Respondent Bank, there is no pleading in Written Statement, therefore, argument of Advocate for Appellants cannot be sustained.

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RA 188/2017

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9. Another contention of Appellants is that they have not

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received any money from Bank and they never authorized to disburse any money to 2^nd Respondent or 3^rd Respondent herein. As already referred to above, Bank relied on Loan Agreement dated 18.01.2007, which contains several clauses, and Article 2.5 deals with Mode of Disbursement, according to which, disbursements may be in the discretion of Bank, to be made either by crediting to Borrower’s deposit account for onward payment towards house construction or by Banker’s cheque drawn in favour of builder. So, from a reading of this clause, the contention of Appellants that they have not authorized Bank, has no force.

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10. The other contention of Appellants is that they have not received any amount. First Respondent Bank has produced statement of accounts which indicates, out of sanctioned loan amount, a sum of Rs.9,86,955/ - is availed. In a Housing Loan, as per practice, borrower will never receive loan amount directly,

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and amount will be paid to builder by Bank on behalf of

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RA 188/2017

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borrower, which means, the beneficiary is borrower, and for that reason, he is liable to discharge loan. Tribunal below, after considering evidence produced on behalf of Bank, fixed liability on Appellants as there is no rebuttal evidence to disprove the claim of Bank.

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11. One more contention of Appellants is that Tribunal below in similar cases, restricted liability of Borrower to the extent of mortgaged property and not fixed any personal liability, and Tribunal ought to have passed a similar Order in this case also. In fact, this point was urged before Tribunal below and Learned Presiding Officer in para 13 of his judgement, recorded reasons for not accepting the request of Appellants’ Counsel. I do not find any wrong in the reasons recorded by Tribunal below. In fact, there cannot be any restriction, in particular, when documents fixed the liability. Question of restriction of liability would arise, only where there is a contract between parties to that effect. But here, admittedly, there is no such contract, therefore, there is nothing wrong in fixing personal liability on Appellants.

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RA 188/2017

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12. On a scrutiny of entire material, I am of the considered view that Tribunal below was right in allowing OA and not committed

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any wrong in fixing the liability on Appellants.

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13. For the reasons stated above, it is held that there are no grounds to interfere with Order dated 02.08.2017, which is impugned in this Appeal and that, Appeal is liable to be dismissed. Accordingly Appeal R A 188/2017 is dismissed. There shall be no order as to costs. All pending IAs, if any, stand closed.

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[Dictated to Athistamani, PS transcribed by her, corrected, signed and pronounced by me in open court, this 2^nd of August, 2022]

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[ Justice S. Ravi Kumar] CHAIRPERSON

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Mr.Prabhakar & Anr. v. Central Bank Of India And Another

Case brief

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Mr.Prabhakar & Anr. v. Central Bank Of India And Another

Case brief

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