Allowed

Bank of India v. M/S. Krishna Tea Traders and Ors.

DRAT16 Jun 2022REGULAR APPEAL/21/2020

Case brief

AI extract

What is this about?

Bank of India appealed an order by the Debts Recovery Tribunal accusing its officers of forgery. The Tribunal held the appeal, found no fraudulent intent, and expunged passages imputing dishonesty to the Bank officers regarding a re-executed acknowledgment of debt.

What did the court decide?

The entire observations in the impugned order attributing dishonesty or forgery to the Bank officers and the directions to share the order with higher authorities are expunged.

Bank of India versus M/S. Krishna Tea Traders and Ors. — Banking and Recovery | DRAT (2022)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr. Justice Ashok Menon, Chairperson Appeal No. 21/2020

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Between

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Bank of India … Appellant/s V/s.

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M/s. Krishna Tea Traders …Respondent/s (Proprietorship Firm) & 3 Ors.

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Mr. C. P. Ravindranath Menon, Advocate for Appellant.

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-: Order dated: 16/06/2022:-

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This Appeal is filed under section 20 of the Recovery of Debts & Bankruptcy Act, 1993 (the RDB Act for short) challenging the impugned order of the Presiding Officer, D.R.T.-I, Ahmedabad, in Original Application (O.A.) No. 520 of 2014 dated 28.10.2020. The facts, in brief, can be encapsulated thus:

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The Appellant is the Bank of India (BOI for short). The first Respondent is a proprietary concern with the second Respondent as its sole proprietor, engaged in trading of consumer goods like grocery/provision items, tea, etc.

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Second Respondent, as the sole proprietor of the first Respondent concern, approached Appellant Bank for Cash Credit Facility, and the Bank granted Cash Credit with a limit of Rs.2.50 Lakhs on 03.03.1997 on which date, securities such as Demand Promissory Note, Agreement for Hypothecation of tangible movable goods regarding stock of all types of tea, letter of lien, continuing security bond, etc; were executed by the Respondents.

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Respondent Nos.3 and 4 stood as guarantors for the aforesaid transactions and the Deed of Guarantee was also executed by them in favour of the Appellant Bank. On 24.07.1998, the Respondents Nos.1 to 4 executed a Letter of Acknowledgment of the Debt (AOD) for the outstanding amount of Rs.2,43,379.02.

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Thereafter, Respondent Nos.1 to 4 approached Appellant Bank again for granting Temporary Overlimit on the Cash Credit and that too was allowed on 19.08.1998 and the Deeds mentioned aforesaid were executed and the Guarantee Deed was also executed.

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On 10.07.1999, the second Respondent converted aforesaid Temporary Overlimit into Regular Limit making total Cash Credit of Rs.5 Lakhs, and the all the documents as mentioned above were executed afresh.

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The Respondents again approached the Bank requesting for enhancement of Cash Credit limit up to Rs.10 Lakhs and on 27.03.2012 Cash Credit limit was enhanced to Rs.9 Lakhs and consequent to that also documents evidencing transaction were executed.

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On 01.06.2012, the second Respondent again requested the Bank to enhance the Cash Credit limit to Rs125 Lakhs which too was agreed, and documents were executed accordingly. The Deed of Guarantee was also executed by Respondent Nos.3 and 4 on 05.07.2012. AODs were executed regularly by Respondent Nos.1 to 4 on 02.01.2001, 24.12.2001, 21.01.2004, 29.07.2006,

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20.01.2008, 02.03.2010, 05.07.2012 and 23.09.2013 in favour of Appellant Bank, acknowledging the debt. That apart, an equitable mortgage was also created by deposit of title deeds of the second Respondent's land situated in Taluka: Dasada, District: Surendra Nagar in favour of Appellant Bank, and the Memorandum was also duly registered with the Office of Sub-Registrar, Dasada, vide Registration No. 1243 of 2012 on 26.06.2012.

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The Second Respondent, however, was not regular in repayment of the amount and defaulted payment. Consequently, the BOI had no other option but to classify the account as a Non-Performing Asset (N.P.A.) on 15.05.2014. Notice u/s 13 (2) of the Securitization & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (the SARFAESI Act) was also issued on 02.08.2014. Despite receipt of the notice the Respondents did not repay the outstanding amount, and hence, the BOI was constrained to file Original Application (O.A.) No. 520 of 2014 before the D.R.T.-I, Ahmedabad, on 26.11.2014 for recovery of a total sum of Rs.1,40,73,057/- together with future interest. Copy of the O.A. is annexed at Exhibit B.

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The Respondents contested and filed Written Statement. Documents were produced.

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When the O.A. was ripe for being considered on merits, the P.O., D.R.T.-I, Ahmedabad, raised an objection concerning an AOD dated 23.09.2013 which was signed by Respondent Nos.1 and 2, observing that the document is forged and created at a later date. In consequence to that, on 23.08.2018 the following order

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was made by the Presiding Officer :

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“In inspection of earlier document, I found that Bank has produced one letter of acknowledgement of debt dated 23.09.2013 whereas as per print line the said format of letter of acknowledgement of debt was published in February 2014. I feel judicious to direct the bank to file appropriate affidavit about the execution of alleged letter of acknowledgement of debt and further bank may call its concerned officials to verify authenticity, geniuses and due execution of alleged letter. This tribunal would pass appropriate order after giving due opportunity to the concerned official. Let original document be retained with the Registry in sealed cover for further action. Remaining original documents seen and returned. Registrar is directed to keep this document in safe custody. Case is adjourned to 18.10.2018." (Sic)

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In the meanwhile, the BOI following the policy guidelines also explored the possibility of a compromise in tune with the policy of the Bank, and accordingly, the Respondents approached with a 'One Time Settlement (OTS for short) which was placed before the Board of Directors and found to comply with extant to the direction of the Reserve Bank of India (RBI for short) and the Respondents paid a sum of Rs.31,20,000/-in full and final settlement of the dues.

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Given the acceptance of the OTS proposal, the Appellant filed an Affidavit of withdrawal before the D.R.T. on 26.08.2019. The Ld. P.O. refused to accept the proposal for withdrawal stating that the earlier order dated 24.08.2018 at Exhibit C was not complied with and hence the O.A. was adjourned to 30.09.2019.

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To comply with the order at Exhibit C, Ms. Pushpa Kumari, the then Authorized Officer of the BOI filed an Affidavit dated 27.09.2019 which is exhibited as Exhibit E stating that she joined

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the Applicant's Branch on 04.07.2013 and continued to work in the Branch till 19.08.2016. During this time, she came to know that the Respondents were old customers having transactions with the Bank since 1997. At the time of arranging the document during the year 2014, it was found that AOD dated 23.09.2013 was not traceable and, therefore, the Respondents were called to the Branch and made to sign fresh AOD in the year 2014 affixing the date as 23.09.2013 to replace the AOD which was misplaced and set the documents right. This AOD was produced along with the other documents at the time of filing of the O.A. in the year 2014. She has in her Affidavit made it clear that there was no mala-fide and ill-intention on her part or on the part of the Respondents to substitute the missing AOD.

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The Ld. P.O. thereafter adjourned the O.A. and also passed the order which is at Exhibit F accusing the Appellant of producing fabricated documents before the Tribunal and filing a false Affidavit and evidence and compromising the loan account sacrificing huge public money. A query was also put to the Appellant as to what was the value of the mortgaged property at the time of enhancement of the loan. On 27.10.2020 the Ld P.O. observed that despite being given an opportunity to the Bank to produce the valuation report of the mortgaged assets, no steps were taken, and hence, the O.A. was adjourned to 28.10.2020. On that date, Exhibit H order was pronounced permitting the Appellant Bank to withdraw the O.A. but making the following observations :

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“(i) one document (Letter of Acknowledgment of Debt dated 23 September 2013) is patently antedated and forged document and conduct of bank to hide real facts and imposed a cost of Rs.5,00,000/-.

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(ii) the Registrar of the Hon'ble DRT-I, Ahmedabad was directed to send a copy of the Order to the Joint Secretary, Ministry of Finance, Deputy Governor Reserve Bank of India, Chairman-Indian Bankers Association and Central Vigilance Commissioner for appropriate action with a copy of a letter of acknowledgement of debt annexed to Page 244 of the Original Application."

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The Appellant was aggrieved and hence, this Appeal. It is stated that the Ld. P.O. has in the impugned order observed that the officer of the Appellant had committed forgery without even offering an opportunity to explain and without taking a note of the Affidavit of the then Authorized Officer of the Bank, Ms. Pushpa Kumari at Exhibit E.

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It is submitted that the Respondents would not be interested since the loan transaction was already closed based on the O.T.S. and they had nothing to say regarding alleged comments made by the Ld. P.O. about the forgery in the documents, therefore, they remain ex-parte in this Appeal.

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The Ld. Counsel appearing for the Appellant was heard at length and records and documents were perused. It was brought to the light of this Tribunal that the Ld. P.O. had thereafter amended the order and incorporated a paragraph regarding his comments on the Affidavit that was filed by the Officer of the Bank at Exhibit E.

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The Ld. Counsel has extensively argued about the comments of the Ld. P.O. against BOI and has attributed it to vengeance by

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the Ld. P.O. against the Bank which started way back when he was the P.O. of the D.R.T. at Allahabad and passed similar orders accusing the Bank of forgery and had directed taking punitive action against the officers of the Bank. The said order of the Ld. P.O. was challenged before the D.R.A.T., Allahabad and the D.R.A.T. observed that the Ld. P.O. has committed an act of 'judicial impropriety' by entertaining petition u/s 17 (1) of the SARFAESI Act at the instance of defaulting borrowers before there having such actual physical possession of the mortgaged property by ignoring the binding decisions of the Hon'ble High Court of Allahabad and the Hon'ble Supreme Court. Personal allegations against the P.O. were raised by the Bank for not complying with the favours asked for from the Bank and, therefore, he was allegedly holding a grudge against the officers of the Bank. The Ld. C.P., D.R.A.T. Did not enter a finding regarding the veracity of those allegations since he was also seized of the complaint on the very same allegations on the administrative side and had already called for the response of the P.O.

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Coming to the facts of this case, the specific allegation is that the then officer of the Bank, Ms. Pushpa Kumari, had while she was working in the concerned branch found that the AOD executed on 23.09.2013 is misplaced, and thereafter she called upon the Respondents to execute a fresh AOD with the old date but the form of the AOD used to execute that document was printed in 2014 and hence it was discovered by the Ld. P.O. that it was the document which was created subsequently and pre dated.

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And on this basis, the Ld. P.O. accused the officers of the Bank of committing forgery.

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The Ld. P.O. has extracted a portion of Tennan's Bankers Manual to delve into the definition of forgery as defined u/s 463 of the Indian Penal Code, but despite having quoted in extenso from the commentaries relied upon by the Ld. P.O. I would have to observe that he failed to under the purport of Section 463 of the Indian Penal Code.

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Section 463 of the Indian Penal Code reads thus :

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“463. Forgery. - Whoever makes any false documents or false electronic record or part of a document or electronic record, with intent to cause damage or injury, to the public or any person, or to support any claim or title, or to cause any person to part with property, or to enter into any express or implied contract, or with intent to commit fraud or that fraud may be committed, commits forgery."

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From a reading of the section extracted above, it is clear that the basic elements to attract an offence of forgery are; (1) Making of false documents or part of it; (2) such making should be with such intention as is specified in the section viz. (a) to cause damage or injury; (i) public; or (ii) any person; or (b) to support any claim or title; or (c) to cause any person to part with the property; or (d) to cause any person to enter into any express or implied contract; or (e) to commit fraud or that fraud may be committed. (See Sushil Suri Vs. C.B.I. & Anr. AIR 2011 SC 1713) .

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Even to attract an offence u/s 463 I.P.C, the person can be accused of making a false document only if he makes the false

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document dishonestly or fraudulently. The learned counsel for Appellant has relied on the decision of the Hon'ble Apex Court in Criminal Bir Singh vs Mukesh Kumar (2019) 4 SCC 197 , wherein the question that arose for determination was whether the subsequent filling of the unsigned cheque would amount to material alteration, and it was held thus :

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“42. In the absence of any finding that the cheque in question was not signed by the respondent-accused or not voluntarily made over to the payee and in the absence of any evidence concerning the circumstances in which a blank signed cheque had been given to the appellant-complainant, it may reasonably be presumed that the cheque was filled in by the appellantcomplainant being the payee in the presence of the respondent-accused being the drawer, at his request and/or with his acquiescence. The subsequent filling in of an unfilled signed cheque is not an alternation. There was no change in the amount of the cheque, its date or the name of the payee. The High Court ought not to have acquitted the respondent-accused of the charge under Section 138 of the Negotiable Instruments Act."

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In another decision of the Hon’ble Apex Court in Parminder Kaur Vs. State of U.P. & Ors.AIR 2010 SC 840 the specific allegation against the accused in the FIR or the complaint was that the Appellant had altered certain dates in a document that was produced before the Court to defraud the Court and when the false document was produced, it was asserted that this has been done by the Appellant to save the limitation. The Hon'ble Supreme Court observed that even if the Appellant had done the said act of altering the date, it could not have saved the limitation. Even if it is presumed that the accused had done so, it does not become a forged document. After dealing with the provisions

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regarding forgery and connected offences under Sections 463, 464, 467, and 468 of the Indian Penal Code, the Hon'ble Supreme Court held that to attract the offence under the aforesaid provisions there has to be an alternation of document dishonestly and fraudulently, and hence, the accused was exonerated ultimately by observing thus:

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“We have deliberately quoted the whole para in order to show that even the respondent no.2 has not been able to show as to how the appellant could be benefited in any manner by changing the dates. We, therefore, find that since there was no question of the appellant gaining anything, she would not have made the aforementioned changes in the document. How the document is changed is not for us to explain. However, whosoever may have changed those documents, the said change did not and could not result in any illegal gains to the appellant or illegal loss to anybody. Such changes were, therefore, innocuous and did not give rise to any offences.”

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In the instant case, the officer in charge of the document during the relevant period had filed an Affidavit at Exhibit E explaining the circumstances under which the AOD was substituted. Even if the AOD was forged and subsequently created, it would not have saved the limitation because there was already an equitable mortgage created in favour of the Appellant Bank and subsequent AODs were also executed and the limitation would have not run against the Appellant and hence the production of the allegedly forged AOD was innocuous and inconsequential. There is no indication that the officer of the Bank had any fraudulent intention to deceive the Respondents or any member of the public by replacing the document. The Respondents have filed Written Statement. They have not disputed

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the relevant document or attributed forgery or dishonest alteration. On the other hand, I find that there is material to show that the Ld. P.O. was prejudiced towards the Appellant Bank and was waiting for an opportunity to wreak vengeance. No judicial officer should have taken things personally to perform such an act, which is not befitting the noble profession of a judicial officer. Appeal, therefore, is to be allowed and I do so. The entire observations made in the impugned order attributing dishonesty or forgery on the Officers of the Bank of India, as also the directions to send the copy of the order to the higher-ups, are expunged.

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Appeal is allowed and Miscellaneous Applications, if any, are dismissed as infructuous.

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Sd/Chairperson

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dpj-1

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Bank of India v. M/S. Krishna Tea Traders and Ors.

Case brief

What is this about?

What did the court decide?

Bank of India v. M/S. Krishna Tea Traders and Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

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