Dismissed

Srs Advertising and Marketing Pvt. Ltd. and Ors. v. Corporation Bank

DRAT9 Sept 2022REGULAR APPEAL/409/2018

Case brief

AI extract

What is this about?

The DRAT dismissed an appeal against a DRT order granting recovery of debts to Corporation Bank. The court rejected arguments regarding a forged cheque amount, holding it constitutes a 'debt' under the RDDBFI Act. The appeal was also dismissed for failure to meet Section 21 pre-deposit requirements and due to the appellant's unclean hands in concealing pending criminal charges.

What did the court decide?

Pre-deposit amount of Rs. 50,00,000/- refunded to the appellant.

Srs Advertising and Marketing Pvt. Ltd. and Ors. versus… — Banking and Recovery | DRAT (2022)

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BEFORE DEBT RECOVERY APPELLATE TRIBUNAL, NEW DELHI

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APPEAL NO. 409 OF 2018 Arising out of T.A.No.160/2015(DRT-II, Delhi)

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SRS Advertising & Marketing Pvt.Ltd. (Mr.D.S.Mendiratta)

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Mr.Davinder Singh Mendhiratta

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Ms.Grupreet Kaur …..APPELLANTS

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VERSUS

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Corporation Bank ….RESPONDENT

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Date : 09.09.2022

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CORAM : Hon‟ble Mr. Justice Brijesh Sethi, Chairperson

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Appearance :

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Mr.Avinash Kumar, Ld. Counsel for the appellant Mr.Samarendra Kumar, Ld. Counsel for the respondent

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ORDER

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This appeal is against the order dated 01.03.2016 passed by the learned Presiding Officer, DRT-II, Delhi in T.A.No.160 of 2015.

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FACTS OF THE CASE:

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The present Appeal has been filed on behalf of the Appellant Company by its authorised representative/ Director, Mr. Davinder Singh Mendhiratta, who is also Appellant No. 2.

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Respondent No.1 Bank/ applicant had filed an O.A. No. 97 of 2014 under Section 19 of the of the Recovery of Debts due to Banks & Financial Institutions Act, 1993 (hereinafter referred to as the “RDDBFI Act”) against the

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Respondents/ defendants for recovery of sum of Rs.1,37,45,742.50/- along with interest & costs.

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The facts leading to the filing of the present Appeal are that a Current Account No. 71197 was opened in the year 1996 in the name of Appellant No.1 Company with the Respondent Bank. The said Account was subsequently converted into CC Account No. CC/01/110001 on 24.07.2003.

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Subsequently, the Appellants availed the following loan facilities from the Respondent Bank on execution of various documents dated 11.02.2011 and 10.06.2011 including Deeds of Guarantee and Deeds of Hypothecation in favour of the Respondent Bank:

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(i) Cash Credit facility of Rs.25 Lacs;

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(ii) Bank Guarantee facility of Rs.35 lacs;

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(iii) Vehicle Loan facility of Rs.5,69,000/-

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It is the case of the appellants that somewhere in the month of August, 2011, one M/s. Fitness Fuel Station along with Mr. Amandeep and Harmeet (hereinafter referred to as the “accused persons”) approached the Appellants for an event management in Uttarakhand and supply of Fitness Machines. The Appellants agreed and, therefore, in consideration of the said event to be conducted in Uttarakhand, the accused persons gave one Cheque dated 01.09.2011 bearing no. 188929 for the amount of

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Rs.85,86,156/- drawn on the State Bank of India,

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Gopeshwar, Distt.-Chamoli, Uttarakhand, and issued by Herbal Research and Development Institute favouring the Appellant No. 1.

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The said Cheque dated 01.09.2011 bearing no. 188929 was deposited by the Appellants in the Current Account No. CC/01/110001 of the Appellant No. 1 with the Respondent Bank. The cheque was sent by the Respondent Bank to State Bank of India for clearance for encashment. The cheque got encashed by the State Bank of India on 03.09.2011 and the amount was duly credited in the account of the Appellant No. 1.

¶29

It is submitted that subsequent to the said encashment, the accused persons demanded their share of the professional fee and, therefore, the Appellants withdrew the sum of Rs.73 Lacs from the said account between the period 05.09.2011-12.09.2011. While the Rs.33 Lacs was paid in Cash to accused persons, Mr. Amandeep and Harmeet against Receipts, the other sum of Rs.40 Lacs was transferred to the firm, Fuel Fitness Station, vide RTGS, from the CC Account of the Appellant No. 1 at the instance of the accused persons. 8. However, subsequently on 24.09.2011, the State Bank of India informed the Respondent Bank that the Cheque bearing no. 188929 for the amount of Rs.85,86,156/- that was presented to it by the Respondent

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Bank was found to be forged and fabricated. Thus, an FIR No. 406/2011 under Section 467/468/471/120-B/34 IPC was registered with the P.S. Hauz Khas, New Delhi on 04.12.2011 in regards to the said forged cheque.

¶32

It is further the case of the appellants that on coming to know about the forgery, the State bank of India filed a Case No. PRD/21/250712 against the Respondent Bank before the Panel for Resolution Dispute of Reserve Bank of India. The Panel vide its order dated 25.07.2012 directed the Respondent Bank to refund to the State Bank of India the amount of Rs.85,86,156/- encashed on account of forged cheque in the account of the Appellant No.1.

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However, the Respondent Bank filed an Appeal No. DPSS-6/2012-13 before the Appellate Authority under the Payment and Settlement Systems Act, 2007. In the said appeal, the Respondent Bank took the categorical stand that the Appellants were genuine customers of the Bank and had submitted genuine documents to it. The Respondent Bank in the said appeal further contended that the transaction of the Appellants was not tainted, that major amounts were withdrawn by issue of cheques/ RTGS, and that even the withdrawal of the amount in cash was in the normal course of business. It was the case of the Respondent Bank‟s itself that the opening of the account and encashment of the forged cheque by the Appellants

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was not a part of any scheme. The said appeal filed by Respondent Bank was subsequently allowed by the Appellate Authority vide order dated 28.09.2012 and the decision dated 25.07.2012 directing the Respondent Bank to refund to the State Bank of India the amount of Rs.85,86,156/- encashed on account of forged cheque was held not to be enforced.

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It is further submitted the Respondent Bank, however, on 03.02.2014 filed O.A. No. 97/2014 under Section 19 of the RDDBFI Act before the DRT-IIII, Delhi, for the recovery of the sum of Rs.1,37,45,742.50/- against the Appellants. Apart from the amount of Rs.51,59,586.50/- due on account of various facilities advanced by the Bank to the Appellant No. 1 and the consequent loan agreements dated 10.06.2010 and 11.02.2011, the Respondent Bank wrongfully included the relief for the recovery of the sum of Rs.85,86,156/- on account of forged cheque against the Appellants.

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It is submitted that the above sum of Rs.85,86,156/does neither satisfy the definition of 'debt' under section 2(g) of RDDBFI Act 1993, nor the Respondent Bank incurred any liability on account of the forged cheque. Therefore, O.A. No. 97/2014 filed under the provisions of Section 19 of the RDDBFI Act, in so far as it relates to the

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recovery of the amount of Rs.85,86,156/-, was not even maintainable before the Hon‟ble Tribunal.

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It is the case of the appellants that on being served with the notice of the O.A. No. 97/2014, the Appellants appeared before the Ld. DRT-IIII, Delhi, through a Counsel on 17.07.2014. However due to shifting of Court premises from Jhandewalan to Parliament Street, O.A. No. 97/2014 was adjourned on the next date of hearing, that is, 12.11.2014. However, the Counsel for the Appellants neither informed the Appellants about the transfer of the case nor thereafter appeared in the matter.

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It is further submitted that the above matter was, thereafter, taken up by the Court on 28.01.2015 at the new Court building at Parliament Street but on that date, none had appeared on behalf of the appellants in the matter. The Tribunal, however, did not fit it deem to issue any fresh notice / summon to the Appellants/ defendants even on noticing that none had appeared on their behalf after the transfer of the Tribunal to the new premises. Thereafter on 14.09.2015, on the submission of the Counsel for the Respondent Bank, the matter was transferred from DRT-III to DRT-II and O.A. No. 97/2014 was renumbered as T.A. No. 160/2015 before DRT-II. The Ld. P.O. also, without issuing fresh notice/ summon to the Appellants on the

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transfer of the application to it, proceeded ex-parte against the Appellants on the first date itself, that is, on 05.10.2015. 15. It is submitted that after the ex-parte evidence by way of affidavit led by the Respondent Bank, the DRT-II passed an ex-parte judgment 01.03.2016 against the Appellants granting the relief for the recovery of the sum of Rs.1,37,45,742.50/- together with cost, charges and future interest at the rate of 12% simple from the date of filing till the date of realization. This sum of Rs.1,37,45,742.50/awarded by the DRT-II also included the sum of 85,86,156/on account of the forged cheque against the Appellants. The Ld. P.O. in the ex-parte judgment dated 01.03.2016, however, did not even deal with the sum of Rs.85,86,156/-, encashed on account of forged cheque and has passed the said judgment in a mechanical manner.

¶44

The Appellants have submitted that they had received the copy of the ex-parte judgment dated 01.03.2016 on 10.03.2016 and thereafter M.A. No. 32/2016 under Order IX Rule 13 CPC for setting aside the ex-parte judgment dated 01.03.2016 was filed by the Appellants on 06.04.2016. An application for condonation of delay in filing the said application was also filed along with the said M.A. No. 32/2016.

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It is further submitted that in the meanwhile, the Appellants received a copy of another O.A. No. 636/ 2018

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filed by the State Bank of India on 12.01.2018 making a claim for the sum of Rs.85,86,156/- along with interest and other charges on account of the same forged cheque against the Respondent Bank and the Appellants herein. However, the Ld. P.O., DRT-II, vide its order dated 17.07.2018 dismissed the M.A. No. 32/2016 under Order 9 Rule 13 CPC filed by the Appellants.

¶48

The present appeal has been filed challenging the impugned order dated 01.03.2016 passed by the Ld. P.O., DRT-II, in T.A. 160/ 2015 filed by the Respondent Bank against the Appellants. It is submitted that ex-parte judgment dated 01.03.2016 shows that the same has been passed in a very mechanical manner without any justification for the grant of relief of recovery of the sum of Rs.85,86,156/-, on account of forged cheque, in favour of the Respondent Bank and against the Appellants.

¶49

It is further submitted that the ex-parte judgment dated 01.03.2016 does not even mention the factum of the relief for the recovery of the sum of Rs.85,86,156/-, on account of forged cheque and the reason for its entitlement thereto in favour of the Respondent Bank and against the Appellants. On the contrary, the perusal of the judgment shows that the entitlement of the Respondent Bank against the Appellants is based on the loan agreement, deeds of hypothecation, guarantee agreements and such other

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documents dated 10.06.2010 and 09.02.2011 based on which the Appellants were granted the OD facility of Rs.25 Lacs, Bank Guarantee facility of Rs.35 Lacs, Vehicle loan facility of Rs.5,69,000/-. However, the sum of Rs.85,86,156/- is nowhere covered under any of these facilities/ documents.

¶52

It is next submitted that recovery of the sum of Rs.85,86,156/-, on account of forged cheque was not maintainable before the Tribunal in an application under Section 19 of the RDDBFI Act, since the said sum did not qualify for the definition of “debt” as defined in Section 2(g) of the RDDBFI Act.

¶53

It is submitted that since there was no pleading by the Respondent/ applicant Bank to the effect that this amount of Rs.85,86,156/- is due to the Bank from the Appellants/ defendants and that the said liability is still subsisting and legally recoverable, the relief was not the one falling within Section 19 of the RDDBFI Act. The relief could not, therefore, have been entertained and ought to have been dismissed.

¶54

It is further the case of the appellants that it is an admitted case of the Respondent Bank that this sum of Rs.85,86,156/- had, infact, been withdrawn from the account of the State Bank of India, that is, the Collecting Bank. Thus, it was not a case where any money had been

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wrongfully credited by the Respondent/ applicant Bank in the account of the Appellants from its coffers, and which the Appellants are duty bound to return back to the Respondent Bank.

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It is next submitted that Ld. DRT failed to take into account that a liability to satisfy the definition of 'debt' under section 2(g) of RDDBFI Act, 1993, it should have become due, must exist in presenti, and should be the immediate obligation of petitioners. “Debt”, as defined in Section 2(g) of the RDDBFI Act means liability which is subsisting and legally recoverable on the date on which proceedings are initiated for recovering the same. O.A. No. 97 of 2014/ T.A. No. 160 of 2015 filed under the provisions of Section 19 of the RDDBFI Act so far as it relates to the recovery of the amount of Rs.85,86,156/-, was hence not maintainable and could not therefore be granted by the Hon‟ble Tribunal.

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It is next submitted that it is the Respondent Bank‟s own case that its Appeal No. DPSS-6/2012-13 before the Appellate Authority under the Payment and Settlement Systems Act, 2007, has been allowed vide order dated 28.09.2012 and, therefore, decision dated 28.09.2012 directing the Respondent Bank to refund to the State Bank of India the amount of Rs.85,86,156/- encashed on account of forged cheque was held not to be enforced.

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It is next submitted that in the absence of any mortgage being created in favour of the Respondent/ applicant Bank for this sum of Rs.85,86,156/-, the direction of the Hon‟ble Tribunal in the impugned judgment dated 01.03.2016 to the effect that in case of failure to deposit this amount, the same shall be recovered from the immoveable assets of the Appellants which were mortgaged with the Bank for availing the other facilities is also wrong and needs to be set aside.

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It is further submitted that in view of the fact that the State Bank of India has filed another O.A. No. 636/ 2018 making the claim of this sum of Rs.85,86,156/- against the Respondent Bank and the Appellants herein, the relief granted by the Hon‟ble Tribunal in respect to the sum of Rs.85,86,156/- is liable to be set aside.

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It is next submitted that the Respondent Bank had itself filed documents on record to show that apart from the present cheque, there were four other cheques of the drawer which were forged and encashed and a case in this regard was also registered with the CBI, Economic Offences Wing. Thus, there was a complete nexus involved in the case and the Appellants were not a party but a prey to the said nexus. In fact, on investigation by the CBI, the involvement of the employee of the State Bank of India was also found in the matter.

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It is next submitted that Ld. DRT failed to take note of the fact that the O.A. No. 97 of 2014 filed before DTR-III, was transferred from the building at Jhandewalan Extension to the building at Parliament Street and thereafter from DRT-III to DRT-II and renumbered as T.A. No. 160/2015. Admittedly, the Counsel engaged by the Appellants had appeared before the DRT in the proceedings which took place in the old premises at Jhandewalan and thereafter she stopped appearing when the case was transferred to the new premises at Parliament street. However, admittedly, at no stage of such transfer, any fresh notice was issued by DRT nor received by Appellants after resumption of proceedings at the new building at Parliament Street or even after the transfer of the case from DRT-III to DRT-II.

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It is next submitted that Ld. DRT failed to give any justifiable reason for not believing the Appellants/ defendants that they had received the copy of the judgment and decree dated 01.03.2016 on 10.03.2016. The fact that the application under Order 9 Rule 13 CPC was immediately filed on 06.04.2016, the Ld. P.O. failed to appreciate that in fact there was no delay in filing the application for condonation of delay in preferring the said application. Thus, the Ld. P.O. grossly erred in rejecting the application of the Appellants/ defendants filed for

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condonation of delay in preferring the application under Order 9 Rule 13 CPC for setting aside the ex-parte judgment and decree dated 01.03.2016.

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It is next submitted that the Ld. DRT failed to appreciate that it was only vide order dated 05.10.2015 that the Appellants/ defendants had been proceeded ex-parte while the Appellants had already approached the DRT on 06.04.2016, that is, after a gap of 5 months. In such circumstances, in the interest of justice and following the principles of natural justice, the Tribunal should have allowed the application of the Appellants, set aside the exparte order dated 05.10.2015 and ex-parte judgment dated 01.03.2016.

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The appellant has prayed for quashing and setting aside of the impugned judgment dated 01.03.2016.

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Reply filed by the Respondent.

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The Respondent Bank has submitted that Appellant No.1 Company through its Director/Guarantor approached the Respondent Bank for Bank Guarantee Facility of Rs. 35 Lacs for Performance Guarantee, Cash Credit Facility of Rs. 25 Lacs for Working Capital Finance and Vehicle Loan Facility of Rs. 5,69,000/- for purchase of Maruti Dezire. The request of the Appellant No.1 Company was considered by the Respondent Bank and the aforesaid limits were sanctioned to the Appellant No.1 Company on certain terms

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and conditions stipulated in CSI dated 08.06.2010 & 09.02.2011 respectively, where the Appellant No. 2 & 3 are in the capacity Guarantor/Mortgagor.

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It is further submitted that the Appellant No.1 Company brought a Cheque dated 01.09.2011 and bearing No. 188929 for an amount of Rs. 85, 86, 156.00 drawn on State Bank of India, Gepeshwar, Distt.Chamoli, Uttrakhand favouring Appellant No.1 Company issued by Herbal Research & Development Institute having account No. 11272223298. The Appellant No.1 Company presented the same before the Respondent Bank for encashment, in response to the same Respondent Bank in normal course of Banking business sent the same for clearing to State Bank of India. On receipt of the same State Bank of India, passed/cleared the said Cheque dated 01.09.2011 and bearing No. 188929 for an amount of Rs. 85,86,156.00 drawn on State Bank of India, Gepeshwar, Dist- Chamoli, Uttrakhand on 03.09.2011. Thereafter Appellant No.1 Company withdrew the said amount in the manner Rs. 10 Lacs on 05.09.2011, Rs. 40 lacs & Rs. 10 lacs on 07.09.2011, Rs. 10 lacs on 12.09.2011 etc through RTGS, transfer and self. After a gap of about twenty days, on 24.09.2011 State Bank of India informed the Respondent Bank that the aforesaid cheque was found to be forged & fabricated, consequently the Respondent Bank after

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obtaining the report from Handwriting Expert lodged an FIR No. 406/11 dated 04.12.2011 U/S. 467/468/471/120-B/34 IPC with Police Station Hauz Khas.

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It is submitted that, thereafter, the State Bank of India approached the Panel for Resolution Dispute of Reserve Bank of India, wherein the said panel vide its order dated 25.07.2012 in Case No. PRD/21/250712 directed the Respondent Bank to refund the said amount to the State Bank of India on the ground that the Respondent Bank was responsible as a large value cheque was collected in the CC account without verifying the underlying large value cash withdrawals were allowed in the account which were not observed in the past & the Respondent Bank had collected a fake cheque for its customer (Appellant No.1 Company) and introduced it into payment system and is, therefore, responsible. Thereafter Respondent Bank vide its letter dated 07.08.2012 immediately asked the Appellant No.1 Company to remit the said amount, but the said amount was not paid by the Appellant No.1 Company, consequently the Cash Credit account of the Appellant No.1 Company was freezed by the Respondent Bank. Thereafter the Respondent Bank filed an Appeal No. DPSS-6/2012-13 before Appellate Authority under payment and settlement System Act, 2007, where in the Appellate Authority allowed the Appeal vide its order dated

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28.09.2012 and observed as “there was emphasis on non compliance of KYC norms. However, the payee Company (Respondent No.2 Company) exists at the address on records and the account was active. Therefore, it would be wrong to apportion negligence on KYC front on Corporation Bank (Respondent No.1 Bank). The key issue of fixing the responsibility on the collecting bank in a CTS environment is on the physical attributes of the instrument. Barring mentioning that the physical feel was different, all other attributes were not adversely commented upon.

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It is further submitted that it was brought to the notice of the Appellate Authority that a case was registered with Central Bureau Investigation, Economic Offences Wing based on the complaint lodged by the drawer. Besides this, four other instruments of the drawer were forged and encashed, in which, the involvement of an employee of the Applicant Bank (State Bank India) was also there. The State Bank of India had also reported about initiation of disciplinary proceedings against the concerned employees. 36. In the above circumstances, it was decided by the Appellate Authority that it would be appropriate to allow the investigation to continue. The investigating authorities/courts will determine the negligence, if any on the part of any bank and decide about the liability and held

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that the decision of PRD, New Delhi dated 25.07.2012 in Case No. PRD/21/250712 may not be enforced.

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It is submitted that in view of the various defaults committed by the Appellant No.1 Company in payment of principal, interest and other Monies due under the Loan Agreements and also in performance of the terms and conditions of the said Loan Agreements, as aforesaid, the Respondent Bank became entitled to recall the entire amounts of its said Loans together with all interest and other monies thereon under the said Loan Agreements as due and payable forthwith. It is further submitted that the in accordance with the directives of the Reserve Bank of India by way of prudent accounting norms, the Respondent Bank classified the above loan account of the Appellant No.1 Company as Non performing asset on 23.08.2012 and as per the said directives discontinued the debiting interest to the said account with effect from 01.08.2012. It is submitted that the Respondent Bank is entitled to recover the interest accrued but not debited compounded monthly with effect from 01.08.2013 till realization in full. The Respondent Bank filed an Original Application being TA No. 160/2015 for Rs 1,42,94,281.50/- (Rupees One Crore Fourty Two Lacs Ninety Four Thousand Two Hundred Eighty One and Paisa Fifty Only) inclusive of interest debited upto 06.12.2013 and excluding incidental charges.

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The said Original Application was allowed to recover an amount of Rs. 1,37,45,742. 50 (Rupees One Crores Thirty Seven Lacs Fourty Five Thousand Seven Hundred Forty Two and Paisa Fifty Only) vide order dated 01.03.2016 passed by Ld. DRT and a Recovery Certificate bearing No. 06/2016 is pending adjudication before Recovery Officer-II of Ld. DRT below. 38. It is next submitted that, thereafter, the State Bank of India, instead of filing the recovery suit within stipulated period of three years and in accordance of Section 24 of Recovery Debts and Bankruptcy Act, 1993, filed a Writ Petition bearing No. W.P (C) No. 8462/2017 before Hon‟ble Delhi High Court which was disposed off vide order dated 22.09.2017 observing that “Be that as it may, noting the order passed by the Appellate Authority dated 28.09.2012, this Court is of the view that this petition may not be maintainable but liberty is granted to the Petitioner Bank to approach the Appellate Authority for getting his prayer enforced which is that the said amount be kept in an escrow account by Respondent No.1 Bank. On the Petitioner moving an appropriate application before the Appellate Authority, the same shall be answered in accordance with law”. Thereafter the State Bank of India filed a time barred Original Application No. 636/2018 before Ld. DRT and the same is pending adjudication.

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It is further submitted that, thereafter. Ld. Recovery Officer-II, of Ld. Tribunal below vide its sale notice dated 27.02.2019 put the four mortgage property for sale which was scheduled for 10.04.2019. The sale was materialized and the auction purchaser Sh. Kamal Garg S/o. Sh. Vijay Kumar Garg, R/o. E-23, Prashant Vihar, Delhi-85 deposited an amount of Rs. 25% with the Ld. Recovery-II, DRT-II, New Delhi.

¶88

It is submitted that the Appellant has filed the present Appeal on false and flimsy ground in order to derail the present recovery proceedings initiated by Respondent Bank and the same be, therefore, dismissed in the interest of justice.

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Written submissions on behalf of appellants.

¶90

The written submissions were filed by the appellants more or less on the same line on which appeal was filed.

¶91

The appellants have submitted that the Impugned exparte order dated 01.03.2016 is ex facie erroneous and is liable to be set aside for being non-speaking, unreasoned and passed without judicial application of mind to the merits of the case and the documents on record thereby violating the principles of natural justice.

¶92

It is submitted that the following paras of the Impugned Order dated 01.03.2016 show non application of judicial mind to the merits of the case :

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“5. The applicant bank lead its ex parte evidence by filing the affidavit of evidence of Srinivas Bandi, Chief Manager of the applicant bank who has proved the documents………….

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6. This witness has fully corroborated the averments made in the O.A. Even otherwise the whole case of the applicant bank is based on the documents and the witness has duly proved all these documents.

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7. The evidence filed by the applicant bank has gone rebutted and there is no question of disbelieving the evidence lead by the applicant bank and applicant bank has proved its case beyond reasonable doubts.”

¶97

It is submitted that the paras extracted above show

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that the Ld. DRT has passed a judgment in favour of the Respondent only on the basis that the evidence filed by the Respondent bank was not rebutted by the Appellants. The absence of the Appellants cannot be said to have enabled the Ld. DRT to either do away with the enquiry or to straightaway pass judgment without discussing the merits of the case presented by the Respondent bank . There is not even a finding on liability much less any reasoning basis such finding.

¶99

It is further submitted that the Ld. DRT failed to judicially apply its mind to the case that the Respondent had presented and also failed to conduct an independent inquiry regarding the veracity and correctness of the pleadings of the Respondent Bank and the evidence in

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support of it and rendered findings contrary to the evidence on record.

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It is further submitted that it is settled law that reason is the heartbeat of every conclusion. An order without valid reasons cannot be sustained. To give reasons is the rule of natural justice. One of the most important aspect for necessitating to record reason is that it substitutes subjectivity with objectivity. Reliance is placed on para 24 of the Hon‟ble Supreme Court of India in the matter of J.

¶103

Ashoka v. University of Agricultural Sciences and Others, (2017) 2 SCC 609 .

¶104

It is further submitted that this Hon‟ble Tribunal in its judgment dated 21.11.2016 passed in the matter of Union Bank of India v. Rajan Kumar Jha and Ors., Appeal No. 164 of 2015 , MANU/DD/0037/2016 followed the decision of the Hon‟ble Supreme Court of India in Asst. Commissioner v. M/s Shukla & Brothers, (2010) 4 SCC 785 and held that an Order passed by the DRT without application of mind to the facts as well as the applicable law was totally unsustainable and in fact, perverse.

¶105

Reliance is also placed on the decision of the Hon‟ble Supreme Court of India in Ramesh Chand Ardawatiya v. Anil Panjwani, (2003) 7 SCC 350 , wherein it was held that:

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“33. …….. In a case which has proceeded ex parte the court is not bound to frame issues under Order 14 and deliver the judgment on every

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issue as required by Order 20 Rule 5. Yet the trial court should scrutinize the available pleadings and documents, consider the evidence adduced, and would do well to frame the “points for determination” and proceed to construct the ex parte judgment dealing with the points at issue one by one. Merely because the defendant is absent the court shall not admit evidence the admissibility whereof is excluded by law nor permit its decision being influenced by irrelevant or inadmissible evidence.”[@ pg. 92-93 of compilation of judgments dated 05.05.2022]

¶109

It is submitted that the finding of the Ld. DRT at para 6 of the Impugned Order dated 01.03.2016 that the Respondent bank “has fully corroborated the averments made in the O.A. Even otherwise the whole case of the applicant bank is based on the documents and the witness has duly proved all these documents” is factually incorrect.

¶110

It is further submitted that it was averred by the Respondent bank in para 5 (x) of the O.A. that the account of the Appellant was declared a Non-Performing Asset (NPA) on 31.03.2012, whereas a perusal of the documentary evidence led by the Respondent Bank indicates that the declaration of NPA was made on 23.08.2012.

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It is further submitted that the Respondent Bank averred that the account was frozen. The Respondent Bank has not stated the date and time the account of the Appellant was frozen. The Respondent Bank has not

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explained as to how the Respondent Bank could have frozen the account and under which authority of law. However, a bare perusal of the account statement of the Appellants would reveal that despite freezing, there are both credits and debits in the year 2013, even after freeze of such account belying the averment of the Respondent Bank.

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It is further submitted that the averment at para 5 (x) of the O.A. (pg. 69 of the Appeal)is as under:

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“x. That in view of the various defaults committed by the Respondents in payment of principal, interest and other monies due under the said Loan Agreements and also in performance of the terms and conditions of the said Loan Agreements, as aforesaid, the Applicant became entitled to recall the entire amounts of its said Loans together with all interest and other monies thereon under the said Loan Agreements as due and payable forthwith accordingly………”

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It is further submitted that there was only one car loan

¶117

and the remaining facilities were not Loan Agreements but a Cash Credit/CC facility and Bank Guarantee which stood encashed and only the interest was to be deducted from the CC account. The ex parte impugned judgement and final order is premised on nonexistent „loan agreements‟. Equally, there was no Recall Notice on record.

¶118

It is further submitted that at para 3 of the Impugned Order dated 01.03.2016 records the submission of the Respondent bank that “several reminders were issued to

¶119

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the defendants for repayment of the aforesaid loan amount but the defendants have failed to adhere to the financial discipline and failed to honour their commitments.” However, there is neither any averment in the O.A. with respect to the reminders and not a single alleged reminder has been placed on record by the Respondent Bank.

¶121

It is further submitted that the Hon‟ble Supreme Court of India in its decision in Union of India v. Ibrahim Uddin, (2012) 8 SCC 148 has categorically held that “ relief not founded on the pleadings cannot be granted. A decision of a case cannot be based on grounds outside the pleadings of the parties No evidence is permissible to be taken on record in the absence of the pleadings in that respect ” 55. It is further submitted that in para 5 (x) of the O.A., it has been stated by the Respondent Bank that “in accordance with the directives of the Reserve Bank of India by way of prudent accounting norms, the Applicant classified the above loan account of the Respondents as Non Performing asset on 31.03.2012”. The Respondent bank has neither specifically stated as to how the account of the Appellant became a NPA under the Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances issued by the RBI, nor has produced any document showing that the declaration of NPA was indeed under the Prudential norms on Income

¶122

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Recognition, Asset Classification and Provisioning pertaining to Advances issued by the RBI.

¶124

It is further submitted that the Respondent Bank did not even plead or prove as to how the Appellants‟ Cash Credit account with a closing balance of Rs. 11,36,460.50/as of 31.03.2012 and with continuous credits was “out of order” for it to be classified as NPA as of 31.03.2012 and thus an NPA.

¶125

It is further submitted that the Master Circular - Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances dated 01.07.2013 states as under:

¶126

“2.1 Non-performing Assets

¶127

2.1.1 An asset, including a leased asset, becomes non-performing when it ceases to generate income for the bank. 2.1.2 A non-performing asset (NPA) is a loan or an advance where; Xxxxxxx i. the account remains „out of order‟ as indicated at paragraph 2.2 below, in respect of an Overdraft/Cash Credit (OD/CC), XXXXX 2.1.3 In case of interest payments, banks should, classify an account as NPA only if the interest due and charged during any quarter is not serviced fully within 90 days from the end of the quarter. 2.1.4 In addition, an account may also be classified as NPA in terms of paragraph 4.2.4 of this Master Circular. 2.2 „Out of Order‟ status An account should be treated as 'out of order' if the outstanding balance remains continuously in excess of the sanctioned limit/drawing power for 90 days. In cases where the outstanding balance in the principal operating account is less than the sanctioned limit/drawing power, but there

¶128

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are no credits continuously for 90 days as on the date of Balance Sheet or credits are not enough to cover the interest debited during the same period, these accounts should be treated as 'out of order'.”

¶130

It is further submitted that the Appellants had a Closing balance of Rs. 11,36,460.50/- as on 31.03.2012 and there was a credit of Rs. 40,200/- (Rs. 39,400/- + Rs. 800/-) on 31.03.2012 and, thus, there being a credit on 31.03.2012, the requirement of “no credits continuously for 90 days” for it to be classified as an NPA could not have arisen. Equally, the ex parte impugned judgement and final order is outside the pleadings and the applicable law and thus bad in law.

¶131

It is further submitted that instead of a recall notice, what was issued was a defective and untenable notice under Section 13(2) of the SARFAESI Act, 2002 dated 29.01.2013. The said Notice in para 3 categorically stated that the date of classification as an NPA was 23.08.2012 which is contrary to the date 31.03.2012 as averred in the O.A. What was thus proved was the date of 23.08.2021 as mentioned in the Section 13(2) notice and not the date of 31.03.2012. Further, the Section 13(2) Notice was defective and erroneous since it included the amount of Rs. 85,86,156/- (Rupees Eighty Five Lakhs Eighty Six Thousand One Hundred Fifty Six Only) on account of encashment of forged or fabricated cheque. It is submitted that a fabricated cheque amount could not have been

¶132

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¶133

sought under Section 13 (2) of the SARFAESI Act,2002 which is issued where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any installment thereof, and his account in respect of such debt is classified by the secured creditor as non- performing asset, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice and a „security agreement‟ under Section 2 (zb) of the SARFAESI Act, 2002 means an agreement, instrument or any other document or arrangement under which security interest is created in favour of the secured creditor including the creation of mortgage by deposit of title deeds with the secured creditor. An amount allegedly liable under a forged cheque is and cannot be a liability under a security agreement.

¶134

It is further submitted that there is no pleading as to how the Appellants were liable to pay the Rs. 85,86,156/(Rupees Eighty Five Lakhs Eighty Six Thousand One Hundred Fifty Six Only) on account of encashment of forged or fabricated cheque.

¶135

It is further submitted that the Respondent bank has nowhere pleaded in its O.A. as to how the amount of Rs. 85,86,156/- (Rupees Eighty Five Lakhs Eighty Six

¶136

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¶137

Thousand One Hundred Fifty Six Only) became a liability of the Appellants towards the Respondent Bank for it to be a „debt‟ as defined under Section 2(g) under the RDDB, 1993. The O.A. as well as the impugned order is conspicuously silent as to how the Respondent Bank incurred any liability and/or loss to that extent for which the Respondent bank is entitled to be indemnified by the Appellants.

¶138

It is further submitted that the Hon‟ble High Court of Delhi in Axis Bank v. Punjab National Bank, 2015 SCC OnLine Del 8287 has categorically explained that a collecting bank being an agent of its customer, can claim indemnity from the customer for the amount for which it has been found liable to the true owner.

¶139

It is further submitted that the Respondent bank being an agent of the Appellant No. 1 for the purpose of collection, can claim indemnity from the Appellant only if the Respondent bank is found liable towards the true owner and has suffered loss on account of that liability.

¶140

It is further submitted that the Hon‟ble Supreme Court

¶141

of India in Lala Shanti Swarup v. Munshi Singh and Others, (1972) 2 SCR 312: AIR 1967 SC 1315 has held that the cause of action for indemnity arises when the indemnified person is actually damnified or suffers loss. 65. It is further submitted that, therefore, in the absence of any pleadings with respect to the amount of Rs.

¶142

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¶143

85,86,156/- (Rupees Eighty Five Lakhs Eighty Six Thousand One Hundred Fifty Six Only) being a „debt‟ or the liability of the Appellants to the extent of the said amount, the Ld. DRT could not have directed the recovery of said amount.

¶144

It is further submitted that much less proving the liability, the Respondent bank had just done the opposite by placing on record the Order dated 28.09.2012 passed by the Appellate Authority under Payment and Settlements Systems Act, 2007 whereby the said Appellate Authority had directed that the Order dated 25.07.2012 passed by the Panel for Resolution of Dispute (PRD) directing the Respondent bank to reimburse to the State Bank of India the said amount of Rs. 85,86,156/- (Rupees Eighty Five Lakhs Eighty Six Thousand One Hundred Fifty Six Only), was not required to be enforced since the negligence and liability of the Respondent bank was yet to be decided. Thus, there being no liability and consequent loss of the Respondent bank, the Respondent Bank could not have demanded and/or sue the Appellants for the same and consequently, the Appellants also could not found liable for payment of the same.

¶145

It is submitted that in view of the above submissions, the Order dated 01.03.2016 passed by the Ld. DRT in T.A. No. 160 OF 2015 is liable to be set aside.

¶146

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¶147

It is further submitted that Section 21 of the Recovery of Debt Due to Banks and Financial Institutions Act, 1993 (hereinafter “RDDBFI Act”) read with Rule 9 of the DRAT Rules, 1994 provides that where an appeal is preferred by any person from whom the amount of debt is due to a bank or a financial institution or a consortium of banks or financial institutions, such appeal shall not be entertained by the Appellate Tribunal unless such person has deposited with the Appellate Tribunal fifty per cent, of the amount of debt so due from him as determined by the Tribunal under section 19.

¶148

It is further submitted that so far as issue of predeposit is concerned, the Division Bench of the Hon‟ble High Court of Delhi in Anil Kumar Jain v. Canara Bank &Ors., W.P. (C) 410/2021 has held that for the purpose of Section 21 of the RDDBFI Act, 1993, only the amount of debt found due on the date of filing of the Original Application is required to be deposited. Further, the decision of the Hon‟ble High Court of Delhi in M/S SNF Alloys Pvt. Ltd. and Anr. v. Punjab and Sind Bank, W.P. (C) 9503/2018 , relied upon by the Respondent Bank was challenged before the Hon‟ble Supreme Court of India under Article 136 of the Constitution of India, 1950. However, the Hon‟ble Supreme Court of India declined to interfere with the decision of the Hon‟ble High Court of

¶149

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Delhi and dismissed the SLP. Since the Hon‟ble Supreme Court of India without entering into the merits of the case, refused to grant special leave to appeal, therefore, in terms of the decision of the Hon‟ble Supreme Court of India in Khoday Distilleries Ltd. and Ors. vs. Sri Mahadeshwara Sahakara Sakkare Karkhane Ltd., (2019) 4 SCC 376, the Order of the Hon‟ble Supreme Court does not get merged with the decision of the Hon‟ble Delhi High Court and thus it cannot be said that the Hon‟ble Supreme Court of India affirmed the said decision. 70. It is further submitted that the Respondent Bank has also relied on the judgment of Hon‟ble Supreme Court of India in Kotak Mahindra Bank Pvt. Ltd. v. Ambuj A. Kasliwal and Ors., MANU/SC/0081/2021 and Prudent ARC Limited v. Sidha Neelkanth Paper Industries &Ors., W.P. (C) 6060/ 2020 to contend that the amount of debt due as determined by the Tribunal under section 19 includes the pendentelite and future interest for the purposes of calculation of the amount of pre deposit under Section 21 of the RDDBFI Act. These two decisions cannot be said to be binding decisions for laying down the law that the amount of debt due as determined by the Tribunal under section 19 includes the pendentelite and future interest because no such issue was raised in these matters. Further, the judgment of the Hon‟ble High Court of Delhi in

¶151

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Prudent ARC Limited v. Sidha Neelkanth Paper Industries &Ors., W.P. (C) 6060/ 2020 was passed in matter arising under the SARFAESI Act, 2002 and the Hon‟ble High Court has clarified in para 53 and 60 of the said judgment that “It is made clear that we are only confining ourselves to the interpretation of the words “amount of debt due” for purposes of filing an appeal under Section 18 of the SARFAESI Act.” It is a settled position of law that the only the ratio decidendi of a judgment is binding and the same has been held by the Hon‟ble Supreme Court of India in Union of India v. Dhanwanti Devi, (1996) 6 SCC 44.

¶153

It is further submitted that the amount of debt as determined by the Ld. DRT under Section 19 of the RDDBFI Act, 1993 as on the date of filing of the Original Application is Rs. 1,37,45,742.50/- (Rupees One Crore Thirty Seven Lakhs Forty Five Thousand Seven Hundred Forty Two and Fifty Paise Only) and the amount required to be deposited before this Hon‟ble Tribunal as per Section 21 of the RDDBFI Act, 1993 read with Rule 9 of the DRAT Rules, 1994 is Rs. 68,72,871.25/- (Rupees Sixty Eight Lakhs Seventy Two Thousand Eight Hundred Seventy One and Twenty Five Paise Only). Against the said 50% pre deposit amount of Rs. 68,72,871.25/- (Rupees Sixty Eight Lakhs Seventy Two Thousand Eight Hundred Seventy One

¶154

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and Twenty Five Paise Only), the Appellants herein have deposited an amount of Rs. 50 lakhs which amounts to 36.37 % of Rs. 1,37,45,742.50/- (Rupees One Crore Thirty Seven Lakhs Forty Five Thousand Seven Hundred Forty Two and Fifty Paise Only).

¶156

The Appellants have sought exemption from depositing the balance 13.62% of the pre deposit amount of Rs. 18,72,871.25/- (Rupees Eighteen Lakhs Seventy Two Thousand Eight Hundred Seventy One and Twenty Five Paise only). Proviso to Section 21 of the RDDBFI Act, 1993 empowers this Tribunal to waive or reduce the condition of pre deposit to the extent of 25 % of the amount of debt due. Accordingly in the present case this Tribunal has the jurisdiction to reduce the amount of pre deposit to the extent of Rs. 34,36,435.63/- (Rupees Thirty Four Lakhs Thirty Six Thousand Four Hundred Thirty Five and Sixty Three Paise Only) i.e. 25 % of Rs. 1,37,45,742.50/(Rupees One Crore Thirty Seven Lakhs Forty Five Thousand Seven Hundred Forty Two and Fifty Paise Only). Without prejudice to the aforegoing, even if the Respondent Bank‟s version is accepted and the interest is added to the decretal amount, the same can only be counted till date of filing of the Appeal i.e. 02.08.2018 and the total amount shall be Rs. 1,95,11,629/- (Rupees One Crore Ninety Five Lakhs Eleven Thousand Six Hundred Twenty Nine Only),

¶157

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25% of which amounts to Rs. 48,77,907/- (Rupees Forty Eight Lakhs Seventy Seven Thousand Nine Hundred Seven Only) and the Appellant has already deposited Rs. 50 lakhs which is more than the 25%.

¶159

73. It is submitted that it has been held by the Hon‟ble High Court of Bombay in Sterlite Technologies Ltd. v. Union of India and Others, 2011 SCC OnLine Bom 1701 that even at the stage of deciding the application for pre deposit, the question as to whether a prima facie case has been made out has to be evaluated by the Appellate Tribunal.

¶160

It is further submitted that the waiver of pre deposit of Rs. 18,72,871.25/- (Rupees Eighteen Lakhs Seventy Two Thousand Eight Hundred Seventy One and Twenty Five Paise only) is sought on the basis that the Impugned ex parte judgment and final order dated 01.03.2016 is prima facie erroneous and is liable to be set aside for being unreasoned and passed without judicial application of mind to the merits of the case and the documents on record and further that the Ld. DRT has erroneously granted relief for recovery of Rs. 85,86,156/- (Rupees Eighty Five Lakhs Eighty Six Thousand One Hundred Fifty Six Only) as „debt‟ in favour of the Respondent Bank and the Ld. DRT failed to appreciate that the claim of Rs. 85,86,156/- (Rupees Eighty Five Lakhs Eighty Six Thousand One Hundred Fifty Six

¶161

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Only) sought to be recovered by the Respondent bank on account of encashment of a forged and fabricated cheque by State Bank of India was not even a „debt‟ recoverable under the RDDB Act, 1993 before the Respondent Bank actually suffered a loss on account of the same.

¶163

It is submitted that the limitation period for filing an Appeal before this Tribunal as per Section 20 of the RDDBFI Act, 1993 is 30 days from the date on which a copy of order made by the Tribunal is received by the person aggrieved by the order passed by the Ld. DRT. 76. It is further submitted that that in the present case, the ex-parte Impugned Order was passed by the Ld. DRT on 01.03.2016 and the same was made available to the Appellants on 10.03.2016. Therefore, the period of limitation of 30 days expired on 09.04.2016.

¶164

It is further submitted that thereafter, upon receiving a copy of the ex parte Impugned Order on 10.03.2016, the Appellants herein on 06.04.2016 preferred an application being M.A. No. 32/ 2016 filed under Order IX Rule 13 of the Code of Civil Procedure, 1908 before the Ld. DRT seeking setting aside of the ex parte Impugned Order dated 01.03.2016. The said application was dismissed by the Ld. DRT vide Order dated 17.07.2018, the certified copy of which was received by the Appellants herein on 23.07.2018.

¶165

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¶166

It is further submitted that that thereafter on 02.08.2018, the Appellants herein immediately filed the present Appeal seeking setting aside of the ex parte Impugned Order dated 01.03.2016 on merits. Thus, admittedly the present appeal was filed after 845 days from the date of expiry of the prescribed period of limitation of 30 days, however, during the said period of 845 days the Appellants were bonafidely pursuing the proceedings filed under Order IX Rule 13 of the Code of Civil Procedure, 1908. Hence, the Appellants have not adopted any dilatory tactics and there is no lack of bona fide in pursuing the remedy of appeal.

¶167

It is further submitted that that the Hon‟ble Supreme Court of India in N. Mohan v. R. Madhu, (2020) 20 SCC 302 while dealing with the issue whether the time spent in the proceedings to set aside the ex parte decree be taken as “sufficient cause” for condoning the delay in preferring the first appeal.

¶168

It is lastly submitted that the reason why the Petitioner therein was asked to deposit the entire decretal amount was because in terms of para 15, the Appellant was found to be the „unscrupulous litigant‟ who first filed an application under Order 9 Rule 13 CPC and carried the matter up to the highest forum and thereafter filed the appeal unlike the Petitioner therein, the Appellants did not

¶169

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carry the order dismissing the Order 9 Rule 13 order right up to the Apex Court but immediately filed the Appeal challenging the ex parte impugned order/judgment on merits and not on the ground basis . Order 9 Rule 13 was challenged. Hence, in view of the above decision, the period of 845 days was bonafidely spent in pursuing the remedy under Order IX Rule 13 of the Code of Civil Procedure, 1908 is required to be condoned.

¶171

In view of the above submissions, the Ld. Counsel for the appellants has prayed that impugned order is not in accordance with law and be set-aside in the interest of justice.

¶172

Written submission on behalf of respondent.

¶173

Ld. Counsel for the respondent has filed written submission more or less on the same line on which the reply was filed. It is submitted that the present appeal is not maintainable as the same has been filed on frivolous ground just to mislead this Tribunal in order to defeat the present recovery proceedings initiated by the Respondent Bank.

¶174

It is further submitted that the present Appeal has been filed against the final order/judgment dated 01.03.2016 passed by Ld. DRT-II, New Delhi. The present Appeal has been filed under Section 20 of RDB Act, 1993 where by this Tribunal vide its order dated 30.08.2018

¶175

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issued the notice on appeal subject to the decision taken on waiver application, consequent to the same present Appeal could not be entertained unless and until the Appellant has complied the mandatory provisions of Section 21 of the RDB Act, 1993.

¶177

It is further submitted that for computation of debt due, the Appellant is liable to deposit an amount of Rs. 1, 37,45,742'50 along with interest @ 12% simple from the date of filing of Original Application i.e 04.02.2014. The Respondent Bank has already filed a Computation up to 28.06.2022 till the date when fresh Application for waiver was filed by the Appellant as per which the interest component is arrived at Rs. 1,22,01,700.19, hence the total due amount as per recovery certificate comes to Rs. 2,59,47,442.69. As per settled proposition of law, the directions to comply Section 21of the RDB Act, 1993, the amount should be computed up to the date of directions.

¶178

It is submitted that appellant has failed to deposit an amount of Rs. 1,29,73,721.30 with this Tribunal towards 50% of the debt due and deposited only Rs. 50, 00, 000.00, hence the present Appeal deserves to be dismissed being not entertainable.

¶179

It is further submitted that the Present Appeal is stated to be filed on 21.08.2018 seeking setting aside of final order dated 01.03.2016 along with an condonation of

¶180

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delay application seeking delay of about 903 days. Appellant stated before this Tribunal that they have initially filed an M.A No. 32/2016 on 06.04.2016 which was ordered to be dismissed vide order dated 17.07.2018, hence the delay in filing the present Appeal is neither intentional nor malafide. It is submitted that the Appellant was initially served with the summons/Notice of OA issued by Ld. Tribunal below and appeared before Ld. DRT on 07.07.2014 where by Ld. DRT directed the Appellant to file Written Statement within 30 days from receipt of OA paper book which was delivered under an acknowledgement on 23.07.2014. The Appellant neither filed written statement within the stipulated period nor appeared on 12.11.2014 or thereafter and was watching the proceeding of present Original Application which is very much clear from the letter dated 12.01.2015. Hence the Appellant who was aware about the proceedings and in order to derail the present recovery proceedings, belatedly filed an MA No. 32/2016 which was ordered to be dismissed vide order dated 17.07.2018 passed by Ld. Tribunal below. Hence considering all these aspects, the Ld. DRT vide its order dated 17.07.2018 dismissed the MA No. 32/2016. After dismissal of MA No. 32/2016 the Appellant chose to file the present appeal against the Final order/judgment dated 01.03.2016 before this Tribunal but has failed to ask any

¶182

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relief against the order dated 17.07.2018 passed in MA No.32/2016.

¶184

It is further submitted that the Appellant relied upon the Judgment of N Mohan (supra) passed by Hon'ble Apex Court where facts and circumstances are entirely different from the facts present case and Hon'ble Apex Court in said case has held "As regards the question of condonation of delay in filing first appeal, the Honble Apex court cautioned that a court must ascertain based on the facts whether a defendant has bonafide pursued the relief of Order IX rule 13 or whether the delay in filing an appeal was only as dilatory tactic of the Defendant". The appellant was aware about the Original Application proceedings and deliberately not filed their written statement within the stipulated time despite having appeared on 07.07.2014 through Ld. Advocate Ms. Malika who is daughter of Appellant. The appellants were well aware about the proceedings which very much clear from the letter dated 12.07.2015 which is an offer of settlement where knowledge of DRT proceedings was admitted by Appellant.

¶185

It is submitted that Respondent Bank has every right to claim Rs. 85,86,156/- along with the interest from the appellant. It is further submitted that the Appellant while arguing submitted that the date of NPA mentioned in the SARFAESI notice dated 29.01.2013 is different than what is

¶186

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pleaded in the present Original Application. Hence the loan recall notice is illegal and not enforceable in the eyes of law. While submitting the same, the Appellant failed to show any mandatory provisions, where for filing an Original Application before DRT date of NPA is must and relevant for its adjudication. Although NPA is necessary for proceedings under SARFAESI and default is necessary for filing Original Application.

¶188

It is further submitted that the Appellant has also failed to demonstrate any contractual obligations where loan recall notice is mandatory to maintain an Original Application.

¶189

It is further submitted that the Reserve Bank of India in master circular for prudential norms dated 01.07.2015 stated as below:-

¶190

4.2.9 Accounts where there is erosion in the value of security/frauds committed by borrowers.

¶191

i. In respect of accounts where there are potential threats for recovery on account of erosion in the value of security or non-availability of security and existence of other factors such as frauds committed by borrowers it will not be prudent that such accounts should go through various stages of asset classification. In cases of such serious credit impairment, the asset should be straight away classified as doubtful or loss asset as appropriate.

¶192

It is further submitted that in terms of Final Order

¶193

dated 01.03.2016 the Recovery Certificate No. 06/2016 is pending wherein after numerous attempts Respondent

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Bank manage to sell the mortgage properties only in April,2019 and allowed to adjust the sale proceed only in last week of December, 2021. The Appellant has created all sort of hindrance by filing frivolous litigation with malafide intentions to derail recovery of huge public monies. It is submitted that the Appellant herein has filed the present Appeal on false and flimsy ground in order to derail the present recovery proceedings initiated by Respondent Bank. The respondent bank has, therefore, prayed for dismissal of the present Appeal with exemplary cost.

¶196

FINDINGS

¶197

This Tribunal has considered the rival submissions and gone through the record. The impugned order dated 01.03.2016, passed by the Ld. DRT-II, Delhi runs as

¶198

under:-

¶199

“Impugned order of DRT-II, Delhi is

as follows:-

FINAL ORDER

(01-03-2016)

This original application has been filed by the applicant bank vide diary no.66 dated 04.02.2015 in DRT-III, Delhi through Shri Pramod Kumar. Gupta, Chief Manager of the applicant bank. Thereafter, the said matter has been transferred to this Tribunal on 05.10.2015 and registered as TA No. 160 of 2015. This Transfer Application has been filed under Section 19 of the Recovery of Debts Due to Banks and Financial Institution Act, 1993 against the defendant nos. 1 to 3 for recovery of a sum of Rs.1,37,45,742.50 (Rupees one crone thirty seven lacs forty five thousand seven hundred forty two and

¶204

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fifty paisa only) together with cost, charges &id contractual rate of interest from 31.12.2013 till the realization in full.

¶206

The brief facts of the case are that the defendant no. 1 is the Company through defendant no. 2 had availed guarantee facility of Rs.35 lacs for performance guarantee, Cash Credit Facility of Rs.25 lacs for working capital finance and vehicle loan facility of Rs.5,69,000/- for purchase of Maruti Dzire. Applicant bank was sanctioned the aforesaid limits to the defendants on certain terms and conditions stipulated in CSI dated 09.02.2011 & 08.06.2010 respectively. The defendants agreed to repay the loan amount alongwith floating rate of interest per annum compounded monthly. The defendants agreed with the terms and conditions and acknowledge/sign the CSI 09.02.2011 and also executed the following documents dated 11.02.2011 in favour of the applicant bank:

¶207

a). Request of OD facility of Rs.25 lacs b). Common Deed of Hypothecation of Movables/Assets/Debts for an amount of Rs.60 lacs. c). Guarantee Agreement executed by Sh. D. S. Mendhiratta & Ms. Gupreet Kaur. d) . Demand Promissory Note for Rs.25 lacs . e) . Take Delivery Letter to DPN f) . Application for issuance of Bank Guarantee for Rs.35 lacs g) . Counter Guarantee for the limit sanctioned for Rs.35 lacs. h) . General Power of Attorney for book Debts and Supply Bills. j) . Memorandum of Deposit of Original Title Deeds w.r.t. 5 immovable properties

¶208

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k) . Account opening form of the Limited Company I) . Letter of Continuity.

¶210

In order to avail the aforesaid loan facility, the defendants also created an equitable mortgage by deposit of title deeds of the properties being (a). Khasra No. 786 land measuring 845 sq. mtrs. at Doon Height, Mauza Kanswali Kohari, Vikas Nagar. DistDehradun & Land bearing Khasra no. 786 land measuring 635 sq. mtrs. at Doon Height, Mauza Kanswali Kothari, Vikas Nagar, Dist-Dehradun, (b). Khasra No. 556 land measuring 518 sq. mtrs. at Doon Height, Mauza Kanswali Kothari, Vikas Nagar, DistDehradun, (c). Khasra No. 833 land measuring 334, Plot No. 224 'sq. mtrs. at Doon Height, Mauza Kanswali Kothari, Vikas Nagar, Dist.-Dehradun and (d). Khasra No. 838 land measuring 534, Plot No. 247-248 Sq. mtrs. at Door Height, Mauza Kanswali Kothari, Vikas Nagar, Dist.-Dehradun.

¶211

It is further submitted that after availing the aforesaid loan facility, the defendants have failed to comply with the terms and conditions of the loan agreement and several reminders were issued to the defendants for repayment of the aforesaid loan amount but the defendants have failed to adhere to the financial discipline and failed to honour their commitments. Thereafter the applicant bank has issued demand notice under Section 13(2) of the SARFAESI Act, 2002 on 29.01.2013 calling upon the defendants to repay the entire outstanding amount but the defendants failed to pay the outstanding dues to the applicant bank and hence the applicant bank has approached this Tribunal for recovery of their dues.

¶212

Notices of this O.A. were issued to the defendants, counsel for the defendants appeared on 17.07.2015 and filed vakalatnama vide diary no.7052 dated 23.07.2014 (DRT-III. Delhi). Thereafter, defendants have

¶213

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chosen to absent from the proceedings and proceeded ex-parte.

¶215

The applicant bank lead its ex-parte evidence by filing the affidavit of evidence of Srinivas Bandi, Chief Manager of the applicant bank who has proved the documents. The witness AW-1 submitted that he is duly authorised to file, sign, verify, depose and represent the case on behalf of the applicant bank and proved the Power of Attorney in his favour as AW-1/1. The power of attorney in favour of earlier authorized representative Shri P. K. Gupta is marked as 'X'. He further proved the documents such as CSI dated 09.02.2011 & 08.06.2010 as AW1/2 & AW1/3. Request of OD facility of Rs.25 lacs as AW1/4. Common Deed of Hypothecation of Movables/ Assets/Debts for Rs. 60 lacs as Aw1/5. Guarantee Agreement executed by Sh. D. S. Mehdhiratta & Ms. Gupreet Kaur as AW1/6. Demand Promissory Note for Rs.25 lacs as AW1/7. Take Delivery Letter to DPN as AW1/8, Application for issuance of Bank Guarantee for Rs.35 lacs as AW1/9. Counter Guarantee for the limit sanctioned for Rs.35 lacs as AW1/10. General Power of Attorney for Book Debts and Supply Bills as AW1/11. Memorandum of Charge/Lien Over Deposits as AW1/12. Memorandum of Deposit of Original Title Deeds w.r.t. 5 immovable properties as AW1/13 colly. Account Opening Form of the limited company as AW1/15. Agreement for Term Loan of Rs.5.69 lacs dated 10.06.2010 as AW1/16. Guarantee Agreement executed by Ms. Gurpreet Kaur dated 10.06.2010 as AW1/17. Agreement for Hypothecation of Vehicles dated 10.06.2010 as AW1/18. Memorandum of .Deposit of Title Deeds and title documents, cheques dated 01.09.2011 and order dated 03.08.2012 & 01.10.2012 passed by PRD Cell of RBI as AW1/19 to AW1/25. A certified statement cr account as per Bankers Book of Evidence Act is exhibited as AW1/26. He further proved the Demand notice, postal receipt,

¶216

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¶217

publication in Newspapers and affixation, Possession Notice, Loan Recall Notice etc. from AW1/27 & AW1/28 respectively.

¶218

This witness has fully corroborated the averments made in the O.A. Even otherwise the whole case .of the applicant bank 'is based on the documents and the witness has duly proved all these documents.

¶219

The evidence filed by the applicant bank gone unrebutted and there is no question of disbelieving the evidence lead by the applicant bank and applicant bank has proved its se its beyond reasonable doubts.

¶220

As per the provision of Section 19(20) of the Recovery of Debts Due to Banks and Financial Institution Act, 1993 which is analogous to Section 34 of CPC, on filing of the suit/claim, the contract between the parties comes to an end and Court/Tribunal has a discretion to award the same depending, upon the circumstances of each case. Same principal has been laid down by the Hon'ble Apex Court in the case of Cent. Bank of India Vs. Ravindra & Others. Taking stock of at ti, circumstances and keeping in view that there is a drastic fail in rates of interest globally and domestically, I am of the opinion that interest of justice will be served if the interest at the rate of 12% simple is awarded.

¶221

In the light of the above discussions, the Original Application deserves to be allowed.

¶222

ORDER

¶223

(i) I allow this OA and direct the defendant nos.1 to 3 pay jointly and severally to the applicant bank, within 30 days, a sum of Rs.1,37,45,742.50 together with cost, charges and future interest at the rate of 12% simple from the date of filing of this O.A. till the date of realization.

¶224

(ii) In case of failure to deposit the above amount within the stipulated

¶225

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period, the same shall be recovered from sale of the mortgaged properties being a). Khasra No. 786 land measuring 845 sq. mtrs. at Doon Height, Mauza Kanswali Kohari, Vikas Nagar, Dist-Dehradun & Land bearing Khasra no. 786 land measuring 635 sq. mtrs.' at Doon Height, Mauza Kanswali Kothari, Vikas Nagar, Dist-Dehradun, (b). Khasra No. 556 arid measuring 518 sq. mtrs. at Doon Height, Mauza Kanswali Kothari, Vikas Nagar, DistDehraduri, (c). Khasra No. 833 land measuring 334, Plot No. 224 sq. mtrs. at Doon Height, Mauza Kanswali Kothari, Vikas Nagar, Dist.-Dehradun and (d). Khasra No. 838 land measuring 534, Plot No. 247-248 Sq. mtrs. At Doon Height, Mauza Kanswali Kothari, Vikas Nagar, Dist.- Dehradun. (iii) In case of shortfall, the aforesaid amount shall be recovered from the movable and immovable assets of the defendants.

¶227

(iv). The recovery certificate be issued forthwith and be sent to the Recovery Officer, Debts Recovery Tribunal-III, Delhi.

¶228

(v). Parties are directed to appear before the Recovery Officer, DRT-III, Delhi on 01.04.2016.

¶229

(vi). Copies of final order as well as Recovery Certificate be sent to all concerned free of cost.”

¶230

Though this Tribunal does not find any illegality or

¶231

irregularity in the above order, however, before discussing the reasons for the same in detail, let this Tribunal first decide the issue of pre-deposit.

¶232

I.A. No. 542/2019 & 331/22 (Pre-Deposit)

¶233

Ld. Counsel for the appellant has submitted that the

¶234

O.A. was filed by the Bank for recovery of a sum of Rs.

¶235

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1,37,45,742.50 paise. According to him, the amount required to be deposited before this Tribunal, as per Section 21 of the RDDBFI Act, 1993 comes to Rs.68,72,871.25 paise. It is submitted that against the said amount of Rs. 68,72,871.25 paise, the appellant has already deposited an amount of Rs.50,00,000/- which amounts to 36.37% of Rs. 1,37,45,742.50 paise. The appellant has, thus, sought exemption from depositing the balance of 13.63% of the pre-deposit i.e. Rs. 18,72,871.25 paise. Ld. Counsel for the appellant has pleaded that this Tribunal may reduce the condition of pre-deposit to the extent of 25% of the balance amount of the pre-deposit. It is prayed that 25% of the amount be waived in the interest of justice, on the ground that there is, prima facie, case in favour of the appellant. It is further submitted that Hon‟ble High Court of Bombay in Sterlite Technologies Ltd. vs. Union of India & Ors. 2011 SCC Online Bombay 1071 has held that for granting waiver, both the elements of a prima facie case and the question of financial hardship should be considered by the Appellate Tribunal. It is further submitted that the impugned ex-parte judgment and final order dated 01.03.2016 is prima facie erroneous and the Ld. DRT has erroneously granted the relief of Rs.85,86,156/- as debt in favour of the respondent bank and the Ld. DRT has failed to appreciate the fact that the

¶237

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amount sought to be recovered by the respondent bank on account of encashment of a forged and fabricated cheque by SBI was not even a debt to be recovered under the RDDBFI Act, 1993‟.

¶239

Ld. Counsel for the respondent bank, on the other hand, has argued that total due amount, as per the Recovery Certificate, comes to Rs. 2,59,47,442.62 paise. Regarding pre-deposit, reliance is placed upon Kotak Mahindra Bank Pvt. Ltd. v. Ambuj A. Kasliwal and Ors., MANU/SC/0081/2021 decided by Hon‟ble Apex Court. Ld. Counsel for the respondent bank has further relied upon the decision of the Hon‟ble High Court of Delhi in M/S SNF Alloys Pvt. Ltd. and Anr. v. Punjab and Sind Bank, W.P. (C) 9503/2018.

¶240

Ld. Counsel for the appellant has, however, submitted that the Division Bench of Hon‟ble High Court of Delhi in Anil Kumar Jain v. Canara Bank &Ors., W.P. (C) 410/2021 has held that for the purpose of Section 21 of the RDDBFI Act, 1993, only the amount of debt found due on the date of filing of the Original Application is required to be deposited. However, according to Ld. Counsel for the respondent bank, the said judgment cannot be relied upon in view of the judgment of M/S SNF Alloys Pvt. Ltd. and Anr. v. Punjab and Sind Bank (supra) which was also challenged before the Hon‟ble Supreme Court and Hon‟ble

¶241

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Supreme Court had declined to interfere with the decision of Hon‟ble High Court and dismissed the SLP as well as judgment of Hon‟ble Supreme Court in Kotak Mahindra Bank Pvt. Ltd. v. Ambuj A. Kasliwal and Ors. (Supra). In the above said cases, the amount decreed with interest was the basis for calculation of pre-deposit amount.

¶243

I have gone through the above judgments. The Hon‟ble Supreme Court in Kotak Mahindra Bank Pvt. Ltd. v. Ambuj A. Kasliwal and Ors. (Supra) has laid down the following law:-

¶244

Para 14. Therefore, in the facts and circumstances arising herein, when further amount is due and payable in discharge of the decree/recovery certificate issued by the DRT in favour of the Appellant/Bank, the High Court does not have the power to waive the pre-deposit in its entirety, nor can it exercise discretion which is against the mandatory requirement of the statutory provision as contained in Section 21, which is extracted above. In all cases fifty per cent of the decretal amount i.e. the debt due is to be deposited before the DRAT as a mandatory requirement , but in appropriate cases for reasons to be recorded the deposit of at least twenty-five per

¶245

cent of the debt due would be permissible, but not entire waiver. Therefore, any waiver of pre-deposit to the entire extent would be against the statutory provisions and, therefore, not sustainable in law. The order of the High Court is, therefore, liable to be set aside.

¶246

Para 16. Having arrived at the above conclusion the issue is also with regard to the extent to which pre-deposit is to be ordered in the instant case. Though the learned Senior Advocates on either side have indicated different figures as

¶247

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the actual debt due as on today, we do not propose to enter into that aspect of the matter since the actual amount due is a matter which would be taken note by the DRAT while considering the appeal on merits and at the point of recovery if any, in the execution proceedings. However, for the present we would take note of the amount as indicated in the order dated 27.02.2019 passed by the DRAT. Hence, for the purpose of determining the predeposit, the decretal amount due is taken at Rs. 68,18,92,841/- (Rupees Sixty-Eight Crores Eighteen Lakhs Ninety-Two Thousand and Eight Hundred Forty-One) ...,

¶249

(Emphasis supplied)

¶250

The above judgment of the Hon‟ble Supreme Court,

¶251

which is of the year 2021, has taken the decretal amount for calculating the amount of pre-deposit and not the original amount which was claimed by the Bank in the O.A. In view of the above law laid down by the Hon‟ble Apex Court in Kotak Mahindra Bank Pvt. Ltd. v. Ambuj A. Kasliwal and Ors., (Supra), the judgments relied upon by Ld. Counsel for the appellants regarding pre-deposit do not help the appellant and, therefore, no reliance can be placed upon the same.

¶252

So far as pre-deposit is concerned, reliance can also be placed upon the judgment of Hon'ble Delhi High Court in the matter of SNF Alloys P Ltd. vs PS&SB (Supra) in which the court has observed as under:

¶253

“In the case in hand the appeal has been filed by the petitioners against the order of the DRT deciding O.A. whereby the DRT has determined the total amount of debt due from the petitioners which according to

¶254

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the respondent Bank is an amount of Rs.5 crores approximately after giving benefit of Rs. 85 Lacs approx. So, it necessarily follows that the petitioners have to deposit an amount of Rs.2.5 crores with the Tribunal, so that the appeal can be entertained by DRAT . This is the interpretation that can be given to the provisions of Section 27 and 28 of the Act of 1993 read together. The reliance placed by Mr. Hashmat Nabi on the order dated 19th December, 2017 is misplaced inasmuch in the order dated 19th December,2017, this Court had only noted the submission on behalf of the petitioners about the recovery of a sum of Rs.70.50 Lacs as proceeds of the sale of the mortgaged asset, which in their view would suffice to meet the requirement of the deposit. The order dated 19th December, 2017 no where states that the amount of Rs.70.50 Lacs, or for that matter Rs. 85 Lacs be treated as a pre-deposit for the purpose of hearing of the appeal. The issue of pre-deposit has to be seen from the perspective of Section 2 (g) and Section 21 of the Act of 1993 which according to us does not help the case of the petitioners. In so far as the judgments relied upon by Mr. Nabi are concerned, suffice to state that the two judgments of this Court and the Madras High Court have no connection / applicability to the facts / issue, which falls for our consideration in this case, the same are not applicable.

¶256

It may be noted that in SNF Alloys Pvt. Ltd. (supra) an SLP (Civil Diary) No. 4064120L9 was also filed against the order of Hon‟ble Delhi High Court, however, the same was dismissed vide order dated 25.11.2019 by the Hon'ble Apex Court. The above judgment also takes decretal amount into consideration for calculating pre-deposit to be made by the borrower.

¶257

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¶258

In view of the above law laid down by the Hon‟ble Supreme court, the amount which was to be paid by the appellant, as per Recovery Certificate, comes to Rs,. 2,59,47,442.69 paise. The 50% of the same comes to 1,29,73,721,34 paise. Ld. Counsel for the appellant has not deposited even 25% of the debt due which comes to Rs. 64,86,860.67 paise. It may be noted that the appellant has only deposited a sum of Rs. 50,00,000/-. Thus, he has not been able to satisfy the pre-condition of pre-deposit as laid down in Section 21 of the RDDBFI Act.

¶259

Ld. Counsel for the appellant has, however, argued that the amount of forged cheque of Rs. 85,86,156/- has been wrongly shown as debt due. However, in the opinion of this Tribunal, the said fact has been rightly shown as debt due and this issue has been decided by this Tribunal in the later part of the judgment. Thus, the debt due i.e. the decretal amount as decided by the Ld. DRT, has to be taken into consideration by this Tribunal for calculating predeposit and, therefore, the appellant had to pay minimum of 25% of the debt due i.e. RC amount which is 2,59,47,442/-. However, the appellants have failed to make a pre-deposit of 25% of the decretal amount, the present appeal is, therefore, not maintainable as the condition of pre-deposit, as envisaged under Section 21 of the RDDBFI Act, has not been satisfied.

¶260

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¶261

Though this appeal cannot be entertained in view of the fact that appellant has failed to make the pre-deposit of even 25% of the debt due, however, this Tribunal is of the opinion that it will be in the interest of justice to decide all the points raised by the appellant on merit as well.

¶262

I.A No. 644/2018 (Condonation of Delay)

¶263

Ld. Counsel for the appellant has argued that limitation period of filing the appeal before this Tribunal, as per Section 20 of SARFAESI Act, is 30 days from the date on which a copy of order made by the Tribunal is received by the person aggrieved. Ld. Counsel for the appellant has further submitted that in the present case, the ex-parte impugned order was passed on 01.03.2016 and the same was made available to the appellant on 10.03.2016. Therefore, the period of limitation of 30 days was to expire on 09.04.2016. However, the appellant had preferred an application under Order IX Rule 13 CPC bearing M.A. No. 32/2016 before the Ld. DRT. The said application was dismissed on 17.07.2018 and the certified copy of the same was received by the appellant on 23.07.2018. It is further submitted that thereafter on 21.08.2018, the appellant had filed the present appeal seeking setting aside of the exparte judgment. It is submitted that the present appeal was filed after 845 days. However, the appellant was pursuing his remedy under Order IX Rule 13 CPC and therefore, the

¶264

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said period is to be condoned in view of the judgment of N. Mohan v. R. Madhu, (2020) 20 SCC 302 of Hon‟ble Supreme Court.

¶266

This Tribunal has considered the above submission. There is no doubt that the period during which the appellant was pursuing his remedy under Order IX Rule 13 CPC, will have to be excluded for calculating the period of condonation of delay. Thus, so far as condonation of delay application for filing the present appeal is concerned, it is held that since the same has been filed on 21.08.2018, it is, therefore, within the limitation and the application, therefore, stands allowed.

¶267

1. Whether the Final Order passed by Ld. PO is an unreasoned and non speaking Order?:-

¶268

Ld. Counsel for the appellant has challenged the impugned order dated 01.03.2016 on the ground that it is a non-speaking and unreasoned order and cannot be sustained in the eyes of law. He has submitted that the evidence which was placed on record by the Bank was not analyzed by the Ld. DRT and it has, thus, not given a reasoned finding on the same. In this regard, he has relied upon the judgment titled J. Ashoka v. University of

¶269

Agricultural Sciences and Others, (2017) 2 SCC 609, in which it was held by the Hon‟ble Supreme Court that the reasons need to be given by the Counsel while deciding the dispute. In this regard, the Ld. Counsel has further

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relied upon the judgment Union Bank of India v. Rajan Kumar Jha and Ors. (Supra) in which it was held that order passed by the Ld. DRT without application of mind to the facts as well as the applicable law was totally unsustainable in law.

¶272

This Tribunal has given its thoughts to the above submissions of Ld. Counsel for the appellants. Perusal of the impugned order reveals that it is not a non speaking order. Ld. DRT has passed a detailed order running into seven pages. Ld. DRT has applied its mind and has gone through all the documents placed on record. It has come to the conclusion on the basis of the evidence produced by the respondent bank. Ld. PO has held that whole of the case of the bank is based on the documents and the witness has duly proved all the documents. Ld. DRT has, in fact considered all the points raised by the Bank in the O.A. and the evidence led by way of affidavit. The affidavit of evidence filed by the respondent Bank in OA runs as

¶273

under:-

¶274

EVIDENCE BY WAY OF AFFIDAVIT OF SHRI. SRINIVAS BANDI S/O B.NARASIMHA, CHIEF MANAGER OF APPLICANT BANK (AW-1)

¶275

RESPECTFULLY SHOWETH:-

¶276

I, Srinivas Bandi S/o. Shri.B.Narasimha , authorized Officer of the Applicant Bank having its office at D-1, Ground Floor, Opp. Hanuman Balaji Mandir, Vivek Vihar, Delhi do hereby solemnly affirms & declares as under:-

¶277

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¶278

The Applicant the Corporation Bank (hereinafter also referred to as "the Applicant") is a banking Companies ( Acquisition & Transfer of Undertakings) Act 1980 (Act 3 of 1980) and is having its head office at Mangla Devi Temple Road, Mangalore, Karnatka, and D-1, Ground Floor, Opp. Hanuman Balaji Mandir, Vivek Vihar, Delhi. The Applicant is a 'Bank' as defined in Sub-clause (d) of Section 2 under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and banking Regulation Act, 1949.

¶279

That on behalf of the Applicant, the pleadings have been instituted, filed, signed and verified by Mr. Srinivas Bandi , who is Chief Manager of Corporation Bank and Power of Attorney dated 22.07.2003 passed in his favour to depose the facts on behalf of the Applicant Bank and to sign, verify and file the present suit. That the said Mr. Srinivas Bandi , is also fully conversant with the facts of the case as per the information received and derived from the record and books of the Applicant Bank, maintained by the Applicant Bank in its regular course of business/activity and thus is competent to depose and verify the facts for the purposes of filing of, prosecuting or defending any suit or legal proceeding by or against Corporation Bank or in which Corporation Bank Limited is a party or may itself wish to be impleaded as a party in order to protect its interest, sign, verify and execute Vakalatnama, Plaint, Written Statement, Counter Claims, Petitions, Appeals, Review Applications, Applications, Affidavits, Power of Attorney and paper of every description that may be necessary to be signed, verified and executed for the purposes of any suit, action, appeals and proceedings of any kind whatsoever in any court of law whether of Original, Appellate Testamentary or Revisional jurisdiction established by lawful authority and to do all acts and appearances or applications to any such court or courts and forums in any suits, action, appeals or proceedings. The present suit has been filed by Sh. P. K.

¶280

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Gupta, then Chief Manager of the Applicant Bank who has now been promoted as AGM and transferred to some other place. The power of Attorney of Deponent and power of attorney of Sh. P.K. Gupta are exhibited and marked as EX AW 1/1 & MARK "X" respectively.

¶282

That the Respondent No.1 Company through Respondent No. 2 approached the Applicant Bank for Bank Guarantee Facility of Rs. 35 Lacs for Performance Guarantee, Cash Credit Facility of Rs. 25 Lacs for Working Capital Finance and Vehicle Loan Facility of Rs. 5,69,000/- for purchase of Maruti Dzire. The request of the Respondent was considered by the Applicant Bank and the aforesaid limits were sanctioned to the Respondents on certain terms and conditions stipulated in CSI dated 09.02.2011 & 08.06.2010 respectively. The Original CSI dated 09.02.2011 & 08.06.2010 are exhibited as EX AW 1/2 and EXAW 1/3 respectively. The Respondents were agreed to repay the aforesaid loan amount along with floating rate of interest per annum compounded monthly. It was also stipulated that in case of default in payment equated monthly installments on the due date penal interest @ 2 % per annum shall be charged over the normal rate of interest and recover separately. The said Respondents have agreed with terms and condition and acknowledge/sign the CSI 09.02.2011 and also executed the following documents dated 11.02.2011 in favour of the Applicant Bank:-

¶283

a). Request for OD facility of Rs. 25 Lacs EX AW 1/4.

¶284

b).Common Deed of Hypothecation of Movables/Assets/Debts for an amount of Rs. 60 Lacs EX AW 1/5.

¶285

c). Guarantee Agreement executed by Sh. D.S. Mendhiratta & Ms. Gupreet Kaur EX AW 1/6.

¶286

d). Demand Promissory Note for Rs. 25 Lacs EX AW 1/7.

¶287

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e). Take Delivery Letter to DPN EX AW 1/8.

¶289

f). Application for Issuance of Bank Guarantee for Rs. 35 Lacs EX AW 1/9.

¶290

g). Counter Guarantee for the Limit Sanctioned For Rs. 35 Lacs EX AW 1/10.

¶291

h).General Power of Attorney for Book Debts and Supply Bills EX AW 1/11.

¶292

i). Memorandum of Charge/Lien Over Deposits EXAW1/12.

¶293

j). Memorandum of Deposit of Original Title Deeds w.r.t 5 immovable properties EX AW 1/13 colly.

¶294

k). Account Opening Form of the Limited Company EX AW 1/14.

¶295

I). Letter of Continuity EX AW 1/15 colly.

¶296

The said Respondents have also agreed with terms and condition and acknowledge/sign the CSI 08.06.2010 and also executed the following documents dated 10.06.2010 in favour of the Applicant Bank:-

¶297

a). Agreement For Term Loan of Rs. 5.69 Lacs dated 10.06.2010 EX AW 1/16.

¶298

b). Guarantee Agreement executed by Ms. Gurpreet Kaur 10.06.2010 EX AW 1/17.

¶299

c). Agreement For Hypothecation of Vehicles 10.06.2010 EX AW 1/18.

¶300

That the aforesaid credit facilities were secured by the respective respondent No.1 by depositing the Original Title Deeds dated 15.10.2007 in order to mortgage the same and also letter of continuity dated 11.02.2011. The details of the properties are mentioned herein below:-

¶301

a) Memorandum of Deposit of Original Title Deed dated 15.10.2007 with respect to the properties Land Bearing Khasra No. 786 land measuring 845 Sq Mtrs at Doon Height, Mauza Kanswali Kothari, Vikas Nagar, Dist- Dehradun & Land Bearing Khasra No. 786 land measuring 635 Sq Mtrs at Doon Height, Mauza Kanswali

¶302

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Kothari, Vikas Nagar, Dist- Dehradun both owned by SRS Advertising and Marketing P Ltd the Defendant No.1 Company. The title deed is exhibited as EX AW 1/19.

¶304

b) Memorandum of Deposit of Original Title Deed dated 15.10.2007 with respect to the property Land Bearing Khasra No. 556 land measuring 518 Sq Mtrs at Doon Height, Mauza Kanswali Kothari, Vikas Nagar, Dist- Dehradun owned by SRS Advertising and Marketing P Ltd the Defendant No.1 Company. The title deed is exhibited as EX AW 1/20.

¶305

c) Memorandum of Deposit of Original Title Deed dated 15.10.2007 with respect to the property Land Bearing Khasra No. 833 land measuring 334, Plot No. 224 Sq Mtrs at Doon Height, Mauza Kanswali Kothari, Vikas Nagar, Dist- Dehradun owned by SRS Advertising and Marketing P Ltd the Defendant No.1 Company. The title deed is exhibited as EX AW 1/21.

¶306

d) Memorandum of Deposit of Original Title Deed dated 15.10.2007 with respect to the property Land Bearing Khasra No. 838 land measuring 534, Plot No. 247-248 Sq Mtrs at Doon Height, Mauza Kanswali Kothari, Vikas Nagar, Dist- Dehradun owned by SRS Advertising and Marketing P Ltd the Defendant No.1 Company. The title deed is exhibited as EX AW 1/22.

¶307

The Respondents also agreed to pay interest and other charges to the Applicant on the principal amount of the said loan from time to time as per the terms and conditions set out in the said Loan Agreements.

¶308

That in consideration of the Applicant haying agreed to grant and/or granted the said Loan and having agreed to make disbursement to the Respondent No.1, Respondent No.2-3 in their personal and individual capacity executed unconditional and irrevocable Deed(s) of Guarantees inter alia with respect to the Bank Guarantee & Cash Credit Facility facilities and Respondent No.3 in their personal and individual capacity executed

¶309

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¶310

unconditional and irrevocable Deed(s) of Guarantee with respect to the Vehicle Loan Facility in favour of the Applicant guaranteeing jointly and severally repayment of dues of the Applicant under the said Loan Agreement. In terms of the Deed(s) of Guarantee in the event of default on the part of Respondent No.1 in payment of any of the monies under the Loan Agreement or in the event of any default on the part of Respondent No.1 to comply with the formalities connected with the drawing of the said loan, Respondent No.2-3 jointly and severally, agreed to make payment forthwith on demand without demur and the Applicant was entitled to treat the Respondent No. 2-3 jointly and severally as Principal Debtors in respect of amount due under the said Loan Agreement.

¶311

That pursuant to the aforesaid documents executed and securities created, the Applicants disbursed the different sum in different facilities to the Respondents in terms of the aforesaid Loan Agreements.

¶312

That in terms of the aforesaid Loan Agreements the Respondents were required to make payment of the principal to the Applicant, in accordance with the repayment Schedule contained in the said Loan Agreements and also to pay interest and other charges to the Applicant at the rate and in the manner as set out in the said Loan Agreements.

¶313

That the Respondent No.2 brought a Cheque dated 01.09.2011 & bearing No. 188929 for an amount of Rs. 85,86,156/drawn on State Bank of India Gopeshwar, DistChamoli, Uttrakhand favouring Respondent No.1 Company issued Herbal Research & Development Institute having account No. 11272223298. The Respondent No.2 presented the same before the Applicant Bank for encashment, in response to the same Applicant Bank in normal course of Banking business sent the same for clearing to State Bank of India. On receipt of the same State Bank

¶314

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¶315

of India encashed the same, thereafter Respondent No.2 withdraw the same amount like Rs. 10 Lacs each on 05.09.2011 and 06/09/2011, Rs. 40 lacs & Rs. 10 lacs on 07.09.2011, Rs. 10 lacs on 12.09.2011 etc through RTGS, transfer and self. Later on 24.09.2011 State Bank of India informed the Applicant Bank that the aforesaid cheque was found to be forged & fabricated, consequently the Applicant Bank after obtaining the report of from Handwriting Expert lodged a Complaint with PS Hauz Khas, New Delhi thereafter a FIR No. 406/11 dated 04.12.2011 U/S. 467/468/471/1208/34 IPC was registered. Thereafter the matter was referred to Panel for Resolution Dispute of Reserve Bank of India, wherein the said panel vide its order dated 25.07.2012 in Case No. PRD/21/250712 directed the Applicant Bank to refund the said amount to the State Bank of India, thereafter Applicant Bank immediately vide its letter dated 07.08.2012 asked the Respondents to remit the said amount, but the said amount was not paid by the Respondents, consequently the cash credit account of the Respondents was freeze by the Applicant Bank. Thereafter The Applicant Bank filed an Appeal No. DPSS-6/2012-13 before Appellate Authority under payment and settlement System Act, 2007, where in the Appellate Authority allowed the Appeal vide its order dated 28.09.2012. The Cheque dated 01.09.2011 & bearing No. 188929 for an amount of Rs. 85,86,156/drawn on State Bank of India, Gopeshwar, Dist- Chamoli, Uttrakhand is exhibited as EX AW 1/23 and the orders dated 03.08.2012 and 01.10.2012 passed by PRD cell of RBI and its appellate forum are exhibited as EX AW 1/24 and EX AW 1/25.

¶316

That in view of the various defaults committed by the Respondents in payment of principal, interest and other Monies due under the said Loan Agreements and also in performance of the terms and conditions of the said Loan Agreements, as aforesaid, the Applicant became entitled to recall the entire amounts of its said Loans

¶317

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¶318

together with all interest and other monies thereon under the said Loan Agreements as due and payable forthwith and accordingly. It is further submitted that the applicant submits that in accordance with the directives of the reserve bank of India by way of prudent accounting norms, the Applicant classified the above loan account of the Respondents as Non performing asset on 31.03.2012 and as per the said directives discontinued the debiting interest to the said account with effect from 01.03.2012. However, the Applicant is entitled to recover the interest accrued but not debited compounded monthly with effect from 01.03.2012 to which forms part of the principal and interest for the Subsequent period till the date of filing of the present original application. The applicant is filing the true and certified extracts of the loan account of respondents duly certified under the Banker's Books Evidence Act and Information Technology Act which Shows the debit balance of Rs 1, 37, 45, 742.50/(Rupees One Crore Thirty Seven Lacs Fourty Five Thousand Seven Hundred Fourty Two and Paisa Fifty only) inclusive of interest debited upto 31.12.2013 and excluding incidents charges.

¶319

The Applicant Bank is entitled to charge interest accrued, but not debited, from time to time, compounded with monthly rests. The particulars of the amount due and payable by the respondents to the applicant bank as under:

¶320

The amount due to Applicant Bank in respect of loan account as on 31.12.2013 is as follows-

¶321

a) Principle Balance Outstanding in Bank Guarantee account as per book of accounts as on 31.12.2013. Rs.28,35,032/-.

¶322

b) Interest, other than overdue interest accrued but not debited compounded monthly as on 31.12.2013 which formed part of the Principal same having not been paid as and when it became due and payable Rs. 90,810/-.

¶323

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¶324

c) Aggregate of Principal (a) + (b) Rs. 29,25,842/-.

¶325

d) Principle Balance Outstanding in CC account as per book of accounts as on 31.12.2013. Rs.11,36,910.50/-.

¶326

e) Interest/other charges, other than overdue interest accrued but not debited compounded monthly from 01.03.2012 till 31.12.2013 which formed part of the Principal the same having not been paid as and when it became due and payable. Rs. 4,77,673/-.

¶327

f) Aggregate of Principal (d) + (e) Rs. 16,14,583.50/-.

¶328

g) Principle Balance Outstanding in CVEHI account as per book of accounts as on 31.12.2013. Rs.4,62,543/-.

¶329

h) Interest/other charges, other than overdue interest accrued but not debited compounded monthly from 01.03.2012 to 31.12.2013 which formed part of the Principal the same having not been paid as and when it became due and payable. Rs. 1,56,618/-.

¶330

i) Aggregate of Principal (g) + (h)

¶331

Rs. 6,19,161/-

¶332

Grand Total (c+f+i) Rs 51, 59, 586.50/ Forged Cheque Rs 85,86,156/Total Rs 1,37,45,742.50/-

¶333

The applicant bank is also entitled to pendent elite and future interest till payment at the rate of 15.50% p.a compounded with monthly rest on the aggregate principal sum of Rs. 1, 37, 45, 742.50/ as aforesaid. The certified statement of account is exhibited as EX AW 1/26.

¶334

That the Applicant thereafter called upon the Respondents to pay to the Applicant, the amount due to them under the said Loan Agreements vide demand notices under section 13 (2) of the Securitisation and Reconstruction of Financial Assets and enforcement of Security Interest Act, 2002 of dated 29.01.2013 with further interest thereon at the contractual rates till payment or realization. It is further respectfully submitted that on the receipt of the said

¶335

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¶336

demand notice the Respondents neither raised the objections nor made any payment in the account. The Demand Notice dated 29.01.2013 is exhibited as EX AW 1/27.

¶337

That consequent to the non payment of the dues of the Applicant Bank, the Applicant taken the possession of all the mortgage properties on 21.09.2013 under the measures of Section 13 (4) of the SARFEASI Act. The Respondents herein approached the Hon‟ble DRT, Lucknow in Securitisation Application and the same is pending adjudication. The possession notice of all the mortgage properties dated 21.09.2013 are exhibited as EX AW 1/28.

¶338

That despite the aforesaid demand notice having been served on the Respondents, the Respondents have failed and neglected to repay the outstanding of the said Loans to the Applicant. The Applicants as such called upon Respondents for above mentioned Loans, vide their respective demand notice dated 29.01.2013 and to pay the outstanding amounts due to the Applicant Bank.

¶339

A copy of statement of outstanding dues and duly certified statement of account in respect of the said account as per Banker's Books of Evidence Act on behalf of the Applicant is annexed hereto. Further, a certificate for the rate of interest charged by the Applicant in the said accounts from time to time is also annexed hereto.

¶340

That as per the accounts maintained by the Applicant Bank the respondents is liable to pay a sum of Rs. 1, 37, 45, 742.50/- towards principal, interest, penal interest and other charges as on 31.12.2013.

¶341

That the applicant bank is also entitled to claim interest @ 15.50% per annum on the outstanding dues against the respondent.

¶342

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¶343

The perusal of above affidavit of Sh. Srinivas Bandi, Chief Manager of the appellant Bank reveals that it refers to the relevant documents. Perusal of the affidavit further reveals it is a detailed one and runs into 12 pages and has also raised the issue of cheque of Rs. 85,86,156/- which was found to be a forged one. As discussed earlier, the PO has applied its mind and has considered the documents filed by the Bank in its OA as well as affidavit of evidence filed by the Chief Manager and the documents proved by witness and has passed a detailed order. Therefore, the contention of Ld. Counsel for the appellant that Ld. PO has passed an exparte order without application of mind cannot be accepted.

¶344

2. Whether the forged cheque of Rs. 85,86,156/- could have been considered as debt?

¶345

So far as the contention of Ld. Counsel for the appellant to the effect that the forged cheque amounting to Rs. 85,86,156/- ought not to have been shown as debt is concerned, this Tribunal is of the opinion that the same cannot be accepted for the reason that the appellant has withdrawn the amount from the bank after depositing the same. Moreover, the cheque has been found to be a forged one by the investigating agency and the same is quite clear from the charge-sheet which has been placed on record. Perusal of record reveals that even charges have been

¶346

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¶347

framed against Mr. Davinder Singh Mehndiratta who is appellant before this Tribunal. For ready reference, relevant paras of Charge-sheet and Order on charge are quoted

¶348

below:-

¶349

Charge-sheet.

¶350

During the course of investigation, site plan of place, from where the accused persons were apprehended was prepared and after obtaining sufficient evidences against the accused persons, they were arrested in the case. Disclosure statements of accused persons were recorded separately and placed on case file. During the investigation of accused Tripurari Prasad, it was disclosed that accused Harvinder Singh collected the forged from one Jamir and his son Arshad Ahmed t/o Mustafad, Delhi in the month of September, 2012, Harvinder gave him one forged cheque of Rs.8536,156/- of State Bank of India whom he got encashed in the account of one D.S.Mehanidaratta . He further disclosed that he also used forged cheques of Tis Hazari Post Office, K.G.Marg, in the account of Mehanidaratta. During the investigation of accused Harvinder Singh S/o Sh. Chanan Singh, he disclosed that today he is going to meet other associates namely Arshad Ahmed and Jameer Ahmed who are coming at Andrewzgunj Flyover to supply him forged cheque. On the instance of accused Harvinder Singh, Arshad Ahmed who was came for delivery of forged cheque was apprehended and from his search also, one Blank cheque of LIC No. 960698 was recovered. During his interrogation, he disclosed that his father Jamir Ahmed used to send him for delivery of cheques. Today also due to some urgency of work, he left to Meerut and stated that he also has forged blank cheques. After obtaining sufficient evidences against the accused Arshad Ahmed, he was arrested in the case. Disclosure statement of accused Arshad Ahmed was recorded and placed on case file. PC remand of the accused persons was obtained and during the PC remand, search of alleged Jamir Ahmed was made at his possible hide outs but he was found absconding. During the investigation of the case, it came to light that one State Bank of India Cheque no. 188929 dated 01.09.2011

¶351

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¶352

for Rs. 85,86,156/Account no. 11272223298, Harbal Research & Dev Gopeshwar (Chamoli), Uttrakhand stands paid in the company account of D.S.Mehandiratta, Managing Director, SRS Advertising & Marketing Pvt. Ltd. The above said cheque is reported to be forged/fake and the account of the receiver has been freezed. Accordingly, D.S.Mehandiratta was joined the investigation and was examined in the case and copy of account statement of company M/S SRS Advertising & Marketing Pvt. Ltd with Corporation Bank and copy of cheque accounting Rs. 85,86,156/-. Copy of invoice and estimate and complaint dated 27.10.2011 against accused Tripurari Prasad signed by Harvinder Singh and Amandeep Singh showing their involvement, the documents were collected from him and placed in case file. To verify the authenticity of recovered cheques, notices were sent to concerned banks.

¶353

Information from State Bank of India, Gopeshwar Branch, Distt. Chamoli, Uttrakhand was collected through State Bank of India, Asia Games Village Complex Branch, Shahpur Jat, (07407), New Delhi vide notice u/s 91 Cr.P.C.dated 07.12.2011 and the following information was provide. The said cheque i.e. cheque 188829 dated 01.09.2011 Rs. 85,86,156/A/c 11272223298, HRDI Mandal(Chamoli) is fake. The original cheque is kept with cheque book and deposited under Thana Gopeshwar Seal. The cheque was not issued by account holder. Statement of account 11272223298 can be collected in all SBI Branches. There are total 5 cheques withdrawn including illustrated above cheque. The copy of PIR no. 29/11 U/S 420/467/468/471 PS Gopeshwar, Chamoli, Uttrakhand registered in this regard is also provided by the bank. All the above said documents are placed on case file.

¶354

On 11.12.2011, after sufficient evidences against accused Devender Singh Mehandiratta S/o Late Sh. Manmohan Singh R/o B227, Vivek Vihar, Delhi was arrested in the case and from accused Devender Singh Mehandiratta, one cheque no. 432667, Corporation Bank, Vivek Vihar of amount Rs. Four thousand Seven Hundred pay to Ms. Usha Rawat, dated 21.09.2011, account no. CBCA/01/000156 and one deposit slip of cheque no. 516870 dated 18.07.2011 amount Rs. 852,000/- in favour of Gurpreet Kaur of account no. 52080, Corporation

¶355

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¶356

bank in Vivek Vihar Branch were recovered. The same were taken into police possession through proper seizure memo. Disclosure statement of the accused Devender Singh Mehandiratta was recorded and the same is placed on case file. Devender Singh Mehandiratta disclosed that his known person Harmeet and Amandeep introduced him with accused Tripurari Prasad and they gave him forged cheques to encash and after encashing the same, he handed over Harmeet and Amandeep Rs. 33,00,000/- after deducting his share. He also stated that on the request of accused, Amandeep and Harmeet, he also transferred Rs. 40,00,000/- to RTGS in the account of Fuel Fitness station. Accordingly, the account statement of Fuel Fitness Station A/C No. 4867002100000123 showing the alleged transaction of Rs. 40,00,000/dated 07.09.2011 was obtained from Bank Manager, PNB, Saket. Accused Devender Singh Mehandiratta also produced receipts of above payment of Rs. 33,00,000/- signed by Amandeep which were taken into police possession through seizure memo. Accordingly, Harmeet S/o Sh. Sarvan Singh R/o Narela, Delhi and Amandeep S/o G.Singh R/o Mansarovar Garden, New Delhi and Rajouri Garden, Delhi were interrogated in the case and during interrogation, they disclosed their involvement. On 11.12.2011, after recording sufficient evidences against the accused persons, Harmeet and Amandeep, they were arrested in the case. From accused Harmeet Singh, one cheque no. 937755, PNB Saket Branch of account no. 4867002100000123 of amount Rs. 2,00,000/- only by self dated 22.09.2011 issued by Fuel Fitness station was recovered. The same was taken into police possession through proper seizure memo.

¶357

In Response to information conveyed to PS Gopeshwar, Uttrakhand, vide WTM no. 4105/HKS/121211 on 13.01.2012, the complete original case file of FIR No. 29/11 u/s 420/467/471 IPC PS Gopeshwar, Uttrakhand was received at PS Hauz Khas from PS Gopeshwar, Uttrakhand vide letter no. DG-V-09/2012(1) office of Inspector General of Police, Dehradoon, Uttrakhand, for required investigation and the same was clubbed with the present case file for required investigation. The case file includes copy of

¶358

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¶359

FIR, case diaries, seizure memo in respect of stamps, HRDI, sample stamps HRDI and correspondences with bank and HRDI.

¶360

(Emphasis supplied).

¶361

Perusal of chargesheet reveals that role of the accused is that of conspirator in the offences of forgery as well as cheating. Perusal of record (chargesheet and order on arguments on charge) further reveals that appellant has committed offences of cheating and forgery not only in respect of the cheque in question i.e. of Rs.85,86,156/- but in respect of other cheques as well. The investigation has revealed that the appellant along with other accused persons (with whom the cheated money was shared) had entered into a criminal conspiracy to commit offences of cheating and forgery and it is a settled law that fraud vitiates whole of the proceedings and a person who has committed cheating or forgery or misled the court or has withheld material documents or facts from the court which have bearing on the adjudication of the case is not entitled to any relief equitable or otherwise.

¶362

In the present appeal, the appellant has submitted that he is, in fact, a victim of the offences of forgery and cheating committed regarding the cheque of Rs. 85,86,156/-. The said fact is certainly wrong. This Tribunal during the course of arguments had asked the appellant to file copy of charge-sheet and details of proceedings which have taken place in the case before the Criminal Court. It is

¶363

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¶364

only after filing of the said documents that this Tribunal came to know that a charge-sheet has been filed against the accused and other co-accuseds and charges u/s.420/467/468/471 read with Section 120B IPC have been ordered to be framed against appellant and other coaccuseds.

¶365

Let this Tribunal now quote the relevant paras of the order passed by Criminal court while directing framing of charge against the appellant. The relevant paras of the order runs as follows:-

¶366

Order on Charge passed by the Court

¶367

8.2. Harvinder Singh – It was argued on behalf of accused Harvinder Singh that except the disclosure statement of coaccused persons and the confession statement of the accused himself, no evidence against him was collected during the investigation. It is submitted that these statements are not admissible in law. Again there was no amount of money which was ever received in the bank account of the accused and accordingly it is prayed that there no charge is made out against the accused and he is entitled to be discharged.

¶368

8.2.1 Now, coming to charge sheet, it can be seen that as per the seizure memo one blank cheque bearing no. 960699 of LIC, Meerut drawn on Indian Oversees Bank was recovered from possession of accused Harvinder Singh. Certainly, at this stage the recovery of the cheque from possession of the present accused cannot be questioned and is a matter of evidence. Now, as per the record, information was given by the alleged drawer i.e. LIC that the cheque bearing no. 960699 was issued by LIC for amount of Rs. 2093/- in favour of one Vibhas Rastogi and therefore apparently at this stage, it is clear that said cheque recovered from the possession of the accused is a forged document. Moreover, burden was again upon the accused only to explain why he

¶369

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¶370

was in possession of said blank cheque, as per Section 106 of Indian Evidence Act. Therefore the arguments advanced on behalf of the accused are not of any help and strong case is made out to frame the charge against the accused u/s 474-II IPC, as being found in possession of a forged document as described under Section 467 IPC.

¶371

8.3. D.S. Mehandiratta -Accused D.S. Mehandiratta himself had sent the written submissions from e-mail id of a company i.e. SRS Advertising & Marketing Pvt. Ltd. It is submitted in the written arguments that the accused was CEO/MD of the said company, which was into print media advertising as well as organizing events for corporate and PSU sectors.

¶372

That in July 2011, co-accused Amandeep Singh and Harmeet Singh had approached him to organize an event for their client in Uttarakhand i.e.Herbal Research Developers Institute (HRDI) and on being asked by them a quotation was raised by him on behalf of his company. Thereafter certain facts are mentioned in the written submissions pertaining to co-accused Amandeep and Harmeet Singh and it is also stated that they had given a cheque of an amount of Rs. 85,86,156/- of HRDI drawn on SBI

¶373

and said cheque was presented by him and was credited in the account of his company. That thereafter he had paid Rs.33 lacs in cash to both these coaccused persons and also did an RTGS on the instance of said co-accused persons for sum of Rs.40 lacs in the account of a firm namely

¶374

Fuel Fitness Station. That subsequently he came to know that said cheque was a forged document.

¶375

8.3.1 It is to observe that law is well settled that at this stage of charge, the defence of the accused cannot be taken into consideration and only the evidence collected during the investigation and as provided along with charge-sheet has to be appreciated. Accused is certainly at liberty to prove his version at the stage of defence evidence and therefore, the entire story

¶376

put forth by the present accused in his written submission is of no consequence at this stage.

¶377

8.3.2 Now coming to the charge-sheet, it is to observe that a cheque bearing no. 188929 for amount of Rs. 85,86,156/-

¶378

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¶379

of Herbal Research and Development Institute (HRDI) drawn on SBI was encashed in the account of the company SRS Advertising & Marketing Pvt. Ltd. which was owned by the present accused only. Now as disclosed by HRDI, no cheque was ever issued by the Institute after the cheque bearing no. 188865. Again that cheque book after serial number 188865 was intact with the institute only and an the FIR was also lodged by HRDI in this regard at PS Gopeshwar, Chamoli, Uttarakhand, record of which is annexed with the charge-sheet. Information was also received from the bank concerned that said amount of Rs. 85,86,156/was debited from the account of HRDI and was credited in the account of SRS Advertising & Marketing Pvt. Ltd. The photocopy of said cheque was also recovered from possession of the present accused. Evidence was also given by HRDI that cheque bearing no. 188929 was never issued in favour of SRS Advertising & Marketing Pvt. Ltd. Accordingly, there is strong evidence at this stage that the said cheque bearing 188929, which is certainly a valuable security, was a forged document and that same was dishonestly used as genuine by the present accused.

¶380

8.3.3 Now, at this stage, there are numerous circumstances which can corroborate that the present accused had strong reason to believe said cheque to be a forged document. Firstly, no evidence was found that for what consideration accused had received the said cheque of such huge amount allegedly drawn by HRDI in favor of his company. Secondly, as reflected from the bank account of SRS Advertising & Marketing Pvt. Ltd, accused himself had transferred the amount of Rs.40 lacs to some other firm on being allegedly asked by co-accused persons namely Amandeep and Harmeet. Again, as disclosed from the receipts recovered from the possession of the present accused he had also made certain payment in cash to these co- accused persons. At this stage, it will be also important to observe that even if the said amount was subsequently returned by the bank concerned to HRDI, the offence is not mitigated.

¶381

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¶382

8.3.4 Accordingly, at this stage, strong reason is there to believe that charge is made out against the present accused u/s 471 IPC. Again, for the preceding and succeeding circumstances as discussed above and also for the reasons discussed more in succeeding paragraphs, there is sufficient evidence to believe at this stage that offence of using the forged cheque bearing no. 1888929 as genuine was committed by the present accused along with co-accused Amandeep and Harmeet in furtherance of their common intention. Accordingly, charge has to be framed against the present accused under Section 471 IPC r/w Section 34 IPC.

¶383

The criminal Court has further observed that charges u/s. Section 420, 467 and 468 IPC read with Section 120-B

¶384

are made out against all the accused persons including the

¶385

appellant and its observation runs as under:-

¶386

Charge of joint liability under Section 420, 467 and 468 IPC read with Section 120-B against all the accused persons:

¶387

9.It is to observe that as per the chargesheet, there was a large conspiracy among all the accused persons for forgery as well as cheating. Now, regarding evidence in cases of conspiracy, it has been held in case of Mohd. Khalid (supra) as follows:-

¶388

For an offence punishable under section 120-B, prosecution need not necessarily prove that the perpetrators expressly agree to do or cause to be done illegal act; the agreement may be proved by necessary implication. ......No doubt in the case of conspiracy there cannot be any direct evidence.....The essence of criminal conspiracy is an agreement to do an illegal act and such an agreement can be proved either by direct evidence or by circumstantial evidence or by both, and it is a matter of common

¶389

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¶390

experience that direct evidence to prove conspiracy is rarely available. Therefore, the circumstances proved before, during and after the occurrence have to be considered to decide about the complicity of the accused.”

¶391

9.1 In view of this legal position, let me appreciate if there is sufficient evidence at this stage in nature of preceding or succeeding circumstances to establish the conspiracy among all the accused persons. It is to observe that from the above discussion at length, following facts can be considered to have emerged to establish the prior agreement among all the accused persons to commit the offences in question:-

¶392

(a) The different forged cheques of LIC, Merrut only were separately recovered from possession of accused persons Tripurari Prasad and Harvinder Singh. Again, another scanned cheque of LIC, Merrut bearing no. 960659 was retrieved from the pen drive recovered from possession of accused Anubhav Khandelwal. This could not be a mere coincidence but sufficient evidence of conspiracy.

¶393

(b) Forged cheque of HRDI was encashed in the account of company of accused D.S. Mendiratta being in common intention with co-accused Amandeep and Harmeet, as discussed above. Again forged cheque of HRDI was encashed in the account of Nav Durga Steels at the instance of accused Ajay Garg. Now, the scanned copy of cheque of HRDI only bearing no. 188850 in name of M/s Biogen Scientific, which was

¶394

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¶395

admittedly issued by HRDI, was retrieved from the pen drive recovered from accused Anubhav Khandelwal. Not only this but another blank scanned cheque bearing no. 188850 only of HRDI was retrieved from the said pen drive. It establishes the story of chargesheet that it was said cheque bearing no. 188850 only which was used in original by some of the accused persons including Anubhav, Vipin and Kapil for making the forged cheques of HRDI by superimposing the

¶396

signatures over another scanned blank cheque through scanning. These facts again are sufficient evidence of conspiracy.

¶397

(c) The accused Brij Mohan was an employee in the SBI bank where said cheque bearing no. 188850 was presented and there could not be any person except the bank employee only who could have supplied the original cheque from the records of bank to other co-accused persons.

¶398

(d) Accused Jamir was arrested at the instance of accused persons namely Tripurari Prasad and Harvinder and accused persons namely Anubhav, Kapil, Vipin and Brij Mohan were arrested from Merrut at the instance of accused Jamir only.

¶399

(e) From possession of accused persons namely Anubhav, Kapil and Vipin recovery was made of the computer, printer and yellowish paper sheets which were used for making the forged cheques.

¶400

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¶401

(f) From the hard disc and pen drives recovered from possession of accused persons namely Anubhav, Kapil and Vipin several scanned cheques were retrieved which included the forged cheques of number of companies including of LIC and HRDI.

¶402

(g) That similar blank cheques drawn on Allahabad Bank without bearing the name of drawer were separately recovered from possession of accused Anubhav And Kapil.

¶403

9.2 Accordingly, in the given facts, there are number of circumstances to prima facie establish that a conspiracy was there among all the accused persons. It is to observe that a conspiracy is hatched in secrecy and the role of the every party to the conspiracy need not be the same. In the present case, as disclosed from the charge-sheet, it was the organized criminal activity in which the role of every person was differently assigned. Accordingly even if it is taken that cheques in question recovered from the possession of the some of the accused persons, including the cheque encashed in the account of company of accused D.S. Mehandiratta and the cheque encashed at the behest of co-accused Ajay Garg, were not forged by the those respective accused persons, all the accused persons are certainly liable to face trial for the offences of cheating the respective banks where forged cheques were encashed and for committing forgery of valuable security and with the intention of cheating and also for using the forged cheques as genuine; along with coaccused persons as being in conspiracy with them. Consequently, charge u/s 420 IPC as well as u/s 467, 468 and 471 r/w Section 120 IPC is made out against all the present 11 accused persons . (Emphasis supplied)

¶404

MM-04, South, Saket New Delhi/20.10.2020”

¶405

Thus, the above material on record, clearly reveals

¶406

that a conspiracy was hatched by all the accused persons

¶407

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¶408

(including the appellant) and in pursuance of that conspiracy, the cheque which is in question before this Tribunal was forged and deposited with the corporation Bank and the money was subsequently withdrawn by the appellant and thereafter shared with other accused persons and it cannot, therefore, be said that the forged cheque is not a debt. However, whether depositing a forged cheque (i.e. cheque in question) and withdrawal of the said amount falls under the definition of debt or not has also been considered by the Hon'ble Delhi High Court in the matter of Axis Bank Ltd vs. Punjab National (Supra) Bank has held in para 18 as under:

¶409

18. This court had the occasion to examine the width and scope of the expression "debt') as defined in RDDBFI Act, albeit in a slightly different fact-situation, in the case of M/s Paniwani Packaging Ltd. & Ors. v. Allahabad Banlg writ petition (civil) 1803/2015 (decided on25.02.2015) wherein it was held as under:"14. ...the money credited by the bank in the account of a customer by mistake, or under coercion, when retained by the customer or wrongfully withdrawn or refused to be returned, when demanded, amounts to unjust enrichment. The fact as to whether the payment was made voluntarily or otherwise is of no consequence so long as the payment was made mistakenly (or pursuant to coercion) and was not due. The mistake may have occurred inadvertently or be the result of act of commission or omission of a third person (including an employee, agent etc.) actuated by intent to deceive or defraud' By virtue of Section 72 of the Contract Act, the customer receiving the money in such facts and

¶410

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¶411

circumstances is bound to repay or return it. On account of such obligation to repay or return the money received by mistake, or under coercion, such amount is rendered due from the customer to the bank and thus in the nature of a liability constituting a "debt" which the bank may lawfully claim by way of application to the DRT under the provisions of RDDBFI Act subject, of course, to all just exceptions including the bar of limitation."

¶412

In the above judgment, the Hon‟ble Delhi High Court has also referred to the judgment of United Bank of India

¶413

Vs. Debts Recovery Tribunal,(1999) 4 SCC 69, the Apex Court has ruled that the expression "debt" has to be given the widest amplitude to mean "any liability" which is alleged by a bank as due from any person. The relevant para 17 runs as follows:-

¶414

In United Bank of India v. Debts Recovery Tribunal (1999) 4 SCC 69, the challenge was to the conclusion of the High Court that the DRT did not have the jurisdiction in a claim of an "undetermined sum". The Supreme Court ruled that the expression "debt" has to be given the widest amplitude to mean "any liability" which is alleged by a bank as due from any person during the course of any business activity undertaken by the bank either in cash or otherwise, whether secured or unsecured, whether payable under a decree or order of any court or otherwise and legally recoverable on the date of the application. The key words, thus, are "legally recoverable".

¶415

The Hon‟ble Court in para 21 has further clarified that "debt" as used in RDDBFI Act would, thus, include liability arising out of fraudulent transaction causing wrongful loss to a bank or financial institution. Para 21 runs as follows:-

¶416

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¶417

The expression "debt" as used in RDDBFI Act would, thus, include liability arising out of fraudulent transaction causing wrongful loss to a bank or financial institution. It is not correct to contend that if a cause is founded on the allegation that a debt or liability has been incurred due to fraud or by way of deceit, the recovery proceedings cannot be brought to a forum in the nature of DRT under RDDBFI Act. The amounts represented by the aforementioned transactions, thus, relate to a liability arising out of the business activity undertaken by the bank, one which is "legally recoverable" by it. The claim of PNB before DRT was, thus, for recovery of a "debt" and maintainable under Section 19 of RDDBFI Act.

¶418

Thus, from the above judgment, it becomes clear that forged cheque dated 01.09.2011 bearing no. 188929 for a sum of Rs.85,86,156/- falls under the definition of “debt” and respondent bank can claim the said amount form the appellant and more so in view of the fact that appellant has withdrawn the said amount and shared it with other coaccuseds and this also rejects the contention of Ld. Counsel for the appellant that till the respondent bank has actually suffered the loss, it cannot claim the amount and, therefore, this Tribunal is of the opinion that there is no illegality in the impugned order passed by Ld. DRT.

¶419

Whether the appellant is not entitled to any relief because of acts of forgery and cheating?

¶420

As discussed in earlier part of the order, the appellant has projected himself to be a victim of cheating. However, as discussed in the above paras, the appellant was directed to place on record the copy of charge-sheet and record of

¶421

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¶422

criminal proceedings pending against him. Perusal of the chargesheet and order on charge reveals the involvement of appellant in forgery of cheque in question as well regarding other cheques along with other co-accuseds. It is a settled law that a litigant who has misled the Court or concealed the material facts is not entitled to any relief equitable or otherwise. The Hon‟ble Supreme court in Welcome Hotel and others v. State of Andhra Pradesh and others etc. AIR 1983 SC 1015 , has held that a party which has misled the Court in passing an order in its favour is not entitled to be heard on the merits of the case. The Hon‟ble Supreme Court in S.P. Chengalvaraya Naidu (dead) by L.Rs. v. Jagannath (dead) by L.Rs. and Anrs, JT 1993 (6) SC 331 , has also held that where a preliminary decree was obtained by withholding an important document from the Court, the party concerned deserves to be thrown out at any stage of the litigation.

¶423

The Hon‟ble supreme Court in “ Oswal Fats And Oils Ltd vs Addl.Commnr., Bareilly Division on [2010] 4 SCC728 has held that it is settled law that a person who approaches the Court for grant of relief, equitable or otherwise, is under a solemn obligation to candidly disclose all the material/important facts which have bearing on the adjudication of the issues raised in the case. In other words, he owes a duty to the court to bring out all the facts

¶424

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¶425

and refrain from concealing/suppressing any material fact within his knowledge or which he could have known by exercising diligence expected of a person of ordinary prudence. If he is found guilty of concealment of material facts or making an attempt to pollute the pure stream of justice, the “court not only has the right but a duty to deny relief to such person.

¶426

The Hon‟ble Supreme Court in Prestige Lights Ltd., v. State Bank of India [(2007) 8 SCC 449] has held that if the applicant does not disclose full facts or suppresses relevant materials or is otherwise guilty of misleading the Court, the Court may dismiss the action without adjudicating the matter.

¶427

Further the Hon‟ble Supreme Court in Dalip Singh v State of U.P. & Ors.[(2010) 2 SCC 114], has observed that those who come with “unclean hands” are not entitled to be heard on the merits of their case. The post-independence period has seen drastic changes as litigants do not hesitate to take shelter of falsehood, misrepresentation and suppression of facts in the court proceedings. To face the challenge posed by this new creed of litigants, the courts have, from time to time, evolved new rules and it is now well settled that a litigant, who attempts to pollute the stream of justice or who touches the pure fountain of justice

¶428

SRS Advertising vs. Corporation Bank Page 82 of 88

¶429

with tainted hands, is not entitled to any relief, interim or final.

¶430

The Hon‟ble Supreme court in Amar Singh v Union of India and others, [(2011) 7 SCC 69] , has held that Courts have, over the centuries, frowned upon litigants who, with intent to deceive and mislead the courts, initiated proceedings without full disclosure of facts. Courts held that such litigants have come with “unclean hands” and are not entitled to be heard on the merits of their case.

¶431

In the instant appeal, as discussed earlier, the appellant had earlier projected himself to be a victim of the offence of cheating and forgery. However, in fact, he is a conspirator and charges u/s. 420/467/468 read with Section 120-B IPC have ordered to be framed against him. He had not placed on record the documents showing his involvement in the offences of cheating and forgery as well as criminal conspiracy. The said documents were only placed on record when this Tribunal during the course of arguments had asked him to do. Thus, the appellant who has concealed material fact that a charge-sheet stands filed against him by the investigating agency and charges under Section 420/467/468 read with Section 120-B IPC have been ordered to be framed against him is, therefore, not entitled to any relief whether equitable or otherwise as held by the Hon‟ble Supreme Court in the above judgments.

¶432

____________________________________________________________________ SRS Advertising vs. Corporation Bank Page 83 of 88

¶433

Whether the Account of appellant could not have been declared NPA?

¶434

Ld. Counsel for the appellant has next argued that appellants‟ account could not have been declared NPA in view of the Circular dated 01.04.2022, issued by the RBI,

¶435

relevant paras of the same are as under:-

¶436

“RBI/2022-23/15 DOR.STR.REC.4/21.04.048/2022-23 dt. April 1, 2022 Master Circular - Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances

¶437

2.2 „Out of Order‟ status 2.2.1 A CC/OD account shall be treated as „out of order‟ if:

¶438

i) The outstanding balance in the CC/OD account remains continuously in excess of the sanctioned limit/drawing power for 90 days, or ii) The outstanding balance in the CC/OD account is less than the sanctioned limit/drawing power but there are no credits continuously for 90 days, or the outstanding balance in the CC/OD account is less than the sanctioned limit/drawing power but credits are not enough to cover the interest debited during the previous 90 days period.

¶439

However, the Circular dated 01.07.2015, filed by respondent bank, reveals that if a fraud has been committed, the bank can immediately declare the account as NPA. The relevant para of this circular is as under:-

¶440

“RBI/20156/101DBR.No.BP.BC.2/21.04.048/2015 -16 July 1, 2015

¶441

Master Circular - Prudential Norms on Income Recognition, Asset

¶442

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¶443

Classification and Provisioning pertaining to Advances

¶444

4.2.9 Accounts where there is erosion in the value of security/frauds committed by borrowers

¶445

i. In respect of accounts where there are potential threats for recovery on account of erosion in the value of security or non-availability of security and existence of other factors such as frauds committed by borrowers it will not be prudent that such accounts should go through various stages of asset classification. In cases of such serious credit impairment, the asset should be straightaway classified as doubtful or loss asset as appropriate :

¶446

In view of the above Circular issued by the RBI, it is clear that if offences of forgery/ fraud has been committed, the bank can classify the account as NPA. In view of the above circular, the contention of Ld. Counsel for the appellant that appellant‟s Account could not have been declared NPA is rejected.

¶447

Whether the order passed by Ld. PO is bad in law in view of the fact that it has not framed points for determination?

¶448

Ld. Counsel for the appellant has next relied upon a judgment titled Ramesh Chand Ardawatiya v. Anil Panjwani, (2003) 7 SCC 350 in which the Hon‟ble Supreme Court has held that in case of ex-parte judgment, the Court need not frame the issues but it must frame the points for determination and since no points for determination were framed by the Ld. PO, the judgment is bad in the eyes of law.

¶449

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¶450

This Tribunal has considered the above submission of Ld. Counsel for the appellant and is of the opinion that the same does not apply in the proceeding before DRT for the reason that proceedings under RDB Act are not governed by Civil Procedure Code and strict rule of evidence also do not apply to them. No issues are framed by the DRT while deciding an OA. Moreover, this Tribunal is of the opinion that even if the points for determination have not been framed by the Ld. PO, but he has still considered all the points and passed a detailed reasoned order.

¶451

Whether the order passed by Ld. PO is illegal since no recall notice was issued by the Bank?

¶452

Ld. Counsel for the appellant has next argued that since there was no recall notice, the OA decided against the appellant cannot be held to be in accordance with law.

¶453

This Court has considered the above submissions of Ld. Counsel for the appellant. The Hon'ble Delhi High Court in the matter of ICICI Bank vs Ashok Sharma in RFA 572/2015 decided on 01.06.2018, LAWS (DLH)-2018-6-39 has held in para 13 that suit for recovery is maintainable even in the absence of loan recall notice. The relevant para of the judgment runs as follows:-

¶454

Para 11.13 "In commercial transactions, like the one in the present case i.e. a suit for recovery based on a loan transaction, the journey of procedure has resulted in complete

¶455

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¶456

injustice. The final result i.e., dismissal of the suit only on the basis of the original of the loan recall notice not being on record is unsustainable. It ought to be borne in mind that a loan recalls notice results in consequences for the person who has availed the loan. The Plaintiff bank could have maintained the suit for recovery even in the absence of the loan recall notice so long as the disbursement of loan and availing of the same is admitted. In this case, all the loan documents in original are placed on record. The loan recall notice is merely a document which takes away the luxury of payments in installments granted to the Defendants and nothing more. The fact that the Defendants have defaulted in making the payments, does not in any manner depend upon the existence of the loan recall notice. The Defendant, after service of the said notice, cannot avail of the facility of paying through installments and have to make the entire payment at one go. The Plaintiff bank could have very well filed the suit for recovery when the Defendants defaulted on making the payments. The loan recall notice merely gives closure to the entire transaction and nothing more”.

¶457

In view of the above judgment, there was no need for the Bank to issue loan recall notice. The contention of Ld. Counsel for the appellant, therefore, cannot be accepted.

¶458

Final Conclusion:-

¶459

In view of the above discussion, this Court is of the opinion that there is no illegality or irregularity in the impugned order. The appeal, thus, fails not only on merit but also fails on the ground of failure to make payment of complete amount of pre-deposit as envisaged under Section 21 of the RDB Act as well as on the ground of fraud

¶460

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¶461

and concealment of fact that appellant along with other coaccuseds has presented a forged cheque and have shared the cheated amount and has been chargesheeted by the investigating agency and even charges have been ordered to be framed against him by the Ld. Court u/s. 420/467/468/471 read with Section 120-B IPC.

¶462

In view of the above discussion, this Tribunal does not find any illegality or irregularity in the in the impugned order dated 01.03.2016. The appeal is, therefore, dismissed. File be consigned to Record Room.

¶463

Registry is directed to refund pre-deposit amount of Rs.50,00,000/- to the appellant within 15 days.

¶464

ANNOUNCED TODAY ON 9^th September, 2022

¶465

(JUSTICE BRIJESH SETHI) CHAIRPERSON

¶466

SRS Advertising vs. Corporation Bank Page 88 of 88

Srs Advertising and Marketing Pvt. Ltd. and Ors. v. Corporation Bank

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Srs Advertising and Marketing Pvt. Ltd. and Ors. v. Corporation Bank

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