Dismissed

Punjab National Bank v. M/S Essare International and Ors.

DRAT15 Sept 2023REGULAR APPEAL/22/2022

Case brief

AI extract

What is this about?

The appellate court dismissed the bank's appeal against the Debts Recovery Tribunal's order dismissing claims against two respondents accused of forgery. The court held that considering the Vigilance Report did not constitute a decision on the merits of fraud by the Tribunal.

What did the court decide?

The appeal was dismissed and the judgment of the Debts Recovery Tribunal was affirmed.

Punjab National Bank versus M/S Essare International and Ors. — Banking and Recovery | DRAT (2023)

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IN DEBTS RECOVERY APPELLATE TRIBUNAL, ALLAHABAD

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Regular Appeal No. 22/2022

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(Arising out of O.A. No. 902/2017 of DRT, Allahabad)

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Punjab National Bank, Branch at Dayal Bagh, Agra, U.P.208002.

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……….....……………………...………………………………………………..Appellant Versus

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M/s Essare International, proprietorship firm through its Proprietor Shri Rajat Kulshreshtha having its registered office at 71, Vardhman House, M.G. Road, Opposite Subhash Park, Agra-282001.

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Shri Rajat Kulshreshtha, R/o 71, Vardhman House, M.G. Road, Opposite Subhash Park, Agra-282001.

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Shri Ambarish Kulshreshtha, R/o 71, Vardhman House, M.G. Road, Opposite Subhash Park, Agra-282001.

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Shri Manoj Kulshreshtha, R/o 71, Vardhman House, M.G. Road, Opposite Subhash Park, Agra-282001.

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Shri Rajeev Kulshreshtha, R/o 71, Vardhman House, M.G. Road, Opposite Subhash Park, Agra-282001.

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Shri Rahul Kulshreshtha, R/o 71, Vardhman House, M.G. Road, Opposite Subhash Park, Agra-282001.

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……….….………….…….………………………………………………….Respondents

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Advocates who appeared in this case

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For the appellant-Bank Shri Sanjai Singh, Advocate For the respondent no. 4 Shri S. K. Gupta, Advocate For the other respondents None

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JUDGMENT

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Date of Decision: 15.09.2023

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JUSTICE R. D. KHARE, CHAIRPERSON

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The present appeal has been preferred by the appellantBank under section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (in short “the RDDBFI Act”) against the judgment and order dated 15.11.2019 passed by the DRT, Allahabad, whereby the O.A. No. 902/2017 filed by the Bank was partly allowed holding that the defendant nos. 1 to 3 & 5 are liable to pay

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jointly and severally the amount as claimed by the Bank along with interest and has dismissed the claim against the defendant nos. 4 & 6.

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The brief facts of the matter are that the respondent no. 1- firm was granted various credit facilities by the appellantBank through its proprietor-respondent no. 2. In order to secure the said facilities, the respondent nos. 3 to 6 created an equitable mortgage over their property by depositing the title deed with the appellant-Bank. Despite various demand notices issued by the appellant-Bank, the defendant nos. 1 to 6 did not repay any amount, therefore, the accounts were classified as NPA on 10.06.2017. Thereafter, the appellant-Bank filed an O.A. No. 902/2017 under section 19 of the RDDB Act before the Tribunal below for recovery of Rs. 1,94,66,408/- along with future interest @ 12.40 % per annum with monthly rests. The Tribunal below vide order impugned decreed the said O.A. in toto against the respondent no. 1 to 3 & 5, but dismissed the same against the respondent nos. 4 & 6 holding that signatures of the defendant nos. 4 & 6 on the loan documents were forged and fabricated by the defendant no. 2-borrower. Being aggrieved by the said order, the present appeal has been filed by the Bank.

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Learned counsel for the appellant submitted that the Tribunal below has decided the original application filed by the Bank relying upon the vigilance report dated 04.07.2017. It is further contended that in view of the judgment passed by the Hon’ble Guwahati High Court in the case of Bhopal Thapa Vs. Girijesh Tiwari and others, decided on 01.09.2014, the Tribunal below has no jurisdiction to consider the internal documents and the vigilance report. It is further contended that the Tribunal below has no

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jurisdiction to decide the fraud, if any, whereas the jurisdiction in order to decide the fraud vests with the civil court.

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Learned counsel for the appellant further submitted that the Bank has also filed an application under section 156(3) of the Cr.P.C. before the concerned Court, which is stated to be pending against the respondent nos. 2 to 6.

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Learned counsel for the respondent no. 4 submitted that the Tribunal below has decided the O.A. on the basis of the documents, which was filed by the respondent no. 4. It is further submitted that the Tribunal below has only taken note of vigilance report dated 04.07.2017, which was filed by the respondent no. 4 for appreciation of correct facts and for deciding the case. The said report was obtained by the respondent no. 4 under the RTI Act from the CPIO of the respondent-Bank vide letter dated 17.05.2018, which is the document of the Bank itself.

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It is also contended that the said vigilance report has duly been accepted by the Bank and has never been objected to by either of the parties. The next argument is that the Tribunal below has not decided the question of fraud and has only relied upon the vigilance report, which pertains to playing fraud by the defendant no. 2, the then Branch Manager and the officials of the Bank. It was therefore prayed that the appeal may be dismissed with heavy costs.

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No one has appeared on behalf of the respondent nos. 1, 2, 3 & 5 despite service of notice through paper publication and the respondent no. 6 had initially appeared and filed reply, but later on he has opted not to appear and argue the case.

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Heard the learned counsels for the parties and considered the material available on record.

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In the present matter, the moot question of the appellant is that the Tribunal had no jurisdiction to decide the fraud and forgery occurred in the case.

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This is to be seen that on the complaints made by the defendant nos. 4 & 6 -Shri Manoj Kumar Kulshresth and Shri Rahul Kulshresth against the Branch of the Bank at Dayalbagh, Agra, the vigilance department of the Bank had visited the said Branch and given a report dated 04.07.2017 observing that “ the undersigned is of the view that Shri Rajat Kulshresth is a fraud person and his mode of apprentice of doing fraud is same as published in the newspaper and in this case by making fabricated documents. So it seems that the complaint of Shri Manoj Kumar Kulshresth is genuine and the document of complainants, which were used in the loan records are found to be fabricated. ”

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From the above, it is clear that defendants no. 4 & 6 have never created any mortgage over their share of the property in question, which was inherited by them from their mother, who was the real owner of the said property and it is observed that the respondent no. 2, proprietor of the respondent no. 1-firm has mortgaged the share of the said respondents with Bank fraudulently by putting their signatures on the loan documents with the collusion of the then some Bank officials. As such the Tribunal below has rightly dismissed the claim of the Bank against the said defendants.

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So far as the jurisdiction and power of the Tribunal below to decide the fraud is concerned, it is found that the Tribunal

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below has not decided the fraud, but it has only considered the vigilance report dated 04.07.2017 filed by the defendant no. 4 for deciding the issue raised by the said respondents. If the Tribunal below had decided the fraud, not only claim of the Bank would have been rejected against the said respondents, but some concerned persons would have also been penalized. For deciding the claim, documents/evidence filed by the parties are to be considered by the Tribunal below. Hence it cannot be said that the Tribunal below has decided the fraud and forgery committed by the parties, but it can be said that the Tribunal below has only considered the vigilance report dated 04.07.2017, which is the document of the Bank itself for deciding the issue raised by the respondents no. 4 & 6. Therefore, contention of the appellant that the Tribunal below has no jurisdiction to decide the fraud, is not tenable.

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Further contention of the appellant that the Tribunal below has failed to appreciate the judgment passed by the Hon’ble Supreme Court in Nahar Industrial Enterprises Ltd. Vs. Hong Kong and Sanghai Banking Corporation, reported in (2009) 8 SCC 646 is also not sustainable because the facts of the said case is different to the facts and circumstances of the present case.

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In view of the aforesaid, the appeal is dismissed and the impugned judgment and order dated 15.11.2019 passed by the Tribunal below is affirmed.

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A copy of this judgment be forwarded to the parties as well as to the DRT concerned.

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CHAIRPERSON

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VN Giri

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Punjab National Bank v. M/S Essare International and Ors.

Case brief

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Punjab National Bank v. M/S Essare International and Ors.

Case brief

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