Allowed

Punjab National Bank v. Axis Bank Ltd.

DRAT27 Sept 2023REGULAR APPEAL/61/2018

Case brief

AI extract

What is this about?

The Debts Recovery Appellate Tribunal allowed the appeal of Punjab National Bank. The Tribunal set aside the lower court order that restrained the Appellant from receiving sale proceeds of mortgaged assets until a pending application by Axis Bank regarding priority of charge was decided.

What did the court decide?

The direction not to disburse sale proceeds to Punjab National Bank till the pending application by Axis Bank was set aside.

Punjab National Bank versus Axis Bank Ltd. — Banking and Recovery | DRAT (2023)

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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Appeal No. 61 of 2018

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(Arising out of TA No. 1526 of 2015 in DRT-3 Kolkata)

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THE HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA CHAIRPERSON

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Punjab National Bank, a body corporate constituted under the Banking companies (acquisition and Transfer of Undertakings) Act, 1970 having its Head Office at 7, Bhikhaji Cama Place, New Delhi 110 066 and carrying on business inter alia at 27 R.N. Tagore Road, Krishnanagar, Police Station Kotwali, Districts Nadia, Pin: 74110.

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…Appellants

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-Versus-

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Axis Bank Limited (previously known as UTI Bank Ltd.), a banking company registered under the Companies Act 1956 having its Central Office at Makers Towers F, 13^th Floor, Cuffe Parade, Colaba, Mumbai 400005 and Registered Office at Trishul, 3^rd Floor, Opp. Samartheshwar Temple, Near Law Garden, Ellisbridge, Ahmedabad 380006 inter alia carrying on business at Nabapally Branch, Sangam Market (1^st Floor), Colony More, Barasat, PS Barasat, Kolkata 700126.

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Sutapa Pal Chowdhury, wife of Mr. Anirban Pal Chowdhury, of 20 M. M. Ghosh Street, Krishnanagar, Nadia 741101 West Bengal and at 12 Banarasi Roy Road, Sonapatty, Goari, Krishnanagar 741101, District Nadia.

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Anirban Pal Chowdhury, son of Sri Amrita Ranjan Pal Chowdhury, proprietor of M/s. Anirban Pal Chowdhury at 20 M. M. Ghosh Street, Krishnanagar, Nadia 741101 West Bengal and at 12 Banarasi Roy Road, Sonapatty, Goari, Krishnanagar 741 101 District Nadia.

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… Respondent

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Counsel for the Appellants	Ms. Ms. Lear	Aparajita Ra Ankana ned Advocate	o with Basu,
Counsel for the Respondent	Mr. Lear	Ajit Kumar ned Advocate	Mishra,

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JUDGMENT : On 27^th September, 2023

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THE APPELLATE TRIBUNAL

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Instant appeal has been preferred by the Appellant feeling aggrieved by an order dated 13.03.2018 passed by Learned DRT-3 Kolkata in TA No. 1526 of 2015.

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2. As per the pleadings of the parties, Appellant Punjab National Bank sanctioned a housing loan to the Respondent No. 2 Anirban Pal Chowdhury and Respondent No. 3 Ms. Sutapa Pal Chowdhury for purchase of brickfield and land. The said land was mortgaged by Respondent No. 2 in favour of the Appellant on 10.02.2006. When the amount was not repaid by the Respondents No. 2 and 3, an O.A. No. 167 of 2008 under Section 19 of Recovery of Debts and Bankruptcy Act, 1993 was filed by the Appellant before DRT-2 Kolkata against Respondent No. 2 and 3 for recovery of an amount of Rs. 10,24,086/- including interest upto 10.05.2008 along with pendente lite and future interest. O.A. No. 167 of 2008 was decreed in 2011. Recovery proceedings being R.P. No. 18 of 2011 were initiated. The mortgaged property was also attached in the recovery proceedings.

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3. Pending recovery proceedings, Respondent No. 1 Axis Bank appeared and filed an application claiming that the same property was mortgaged to them by the Respondent No. 2. It is further submitted that SARFAESI action has been initiated by Respondent No. 1 against Respondent Nos. 2 and 3. The O.A. is also pending against Respondent Nos. 2 and 3.

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4. O.A, No. 268 of 2009 was filed by Respondent No. 1 against Respondent Nos. 2 and 3 under Section 19 of the Recovery of Debts and Bankruptcy Act (hereinafter referred to as the Act). It was transferred to the DRT-3 Kolkata in 2015 and was re-numbered as T.A No. 1526 of 2015. O.A. No. 268 of 2009 was also transferred to DRT-3 Kolkata. An interim order restraining the Appellant in the Recovery proceedings was passed by DRT-2 Kolkata on 06.12.2012. Application was filed by the Appellant for vacating the same. On 10.01.2018, Appellant was added as a party in T.A. No. 1527 of 2015. Sale of the property was also permitted with the consent of Respondent No. 1. On 13.03.2018, Learned DRT-3 Kolkata allowed the Recovery Officer of DRT-2 Kolkata to proceed with the sale of the secured assets. However, it was directed that the sale proceeds would not be disbursed till the right of Appellant was decided in the application filed by the Respondent No. 1 before DRT-3 Kolkata.

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5. Feeling aggrieved, Appellant preferred the Appeal.

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6. I have heard the Learned Counsel for the parties and perused the record.

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7. Learned Counsel for the Appellant would submit that the original application filed by the Appellant was already decided while the O.A. filed by the Respondent No. 1 is still pending. Appellant has a priority of judgment over any other judgment which may have been passed in the O.A. filed by the Respondent No. 1. Claim of the Respondent No.

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1 is yet to be crystalized. It is further submitted that any issue relating to the execution or any claim has to be decided in the execution proceeding itself under Section 47 of Code of Civil Procedure. Learned DRT-3 Kolkata erroneously passed an order restraining the Appellant from receiving the sale proceeds. It is further submitted that the question of determination of rights of the Appellant have attained finality which have not been challenged by the Respondent No. 1. Reliance is placed upon Allahabad Bank Vs. Canara Bank and another (2000) 4 SCC 406.

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8. Per contra, Learned Counsel for the Respondent No. 1 would submit that the loan was sanctioned by the Respondent No. 1 on 08.08.2006 while Appellants sanctioned the loan on 30^th January, 2006. Equitable mortgage was created in favour of the Respondent No. 1. Respondent No. 1 has also a right over the secured assets. An order is passed wherein sale was directed to continue, but the sale proceeds were directed not to be disbursed till the rights of Respondent No. 1 are crystalised. 9. O.A. filed by the Appellant Bank is decided on 14.02.2011. Recovery Proceedings No. 18 of 2011 were initiated. Admittedly in the O.A. filed by the Appellant Respondent No. 1 was not a party. Respondent No 1 filed a separate O.A. for determination of its debt against the Respondent Nos. 2 and 3. Application is moved by Respondent No. 1 in the O.A. proceedings wherein the

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impugned order was passed. In Allahabad Bank Versus Canara Bank 2000 (4) SCC 406, it is held in Para 55 that:

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“Under Section 73 CPC, sharing in the sale proceeds (here, sale proceeds realized under the RDB Act) is permissible only if a person seeking such share has obtained a decree or an order of adjudication from the Tribunal and has also complied with other conditions laid down under Section 73. In the present case, Canara Bank is not in a position to invoke the principles underlying Section 73 CPC because it has not yet obtained any decree or adjudication of its debt from the Tribunal. Nor has it complied with other provisions underlying Section 73 CPC. Hence, no relief can be granted on the basis of the said principles.”

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10. In the aforesaid case, Appellant Allahabad Bank filed O.A. No. 109 of 1995 before the Debts Recovery Tribunal, Delhi under Section 19 of the Recovery of Debts and Bankruptcy Act, 1993 which were decided on 13.01.1998. RC No. 09 of 1998 was filed before the Recovery Officer. O.A. No. 784 of 1996 was filed by Canara Bank also under Recovery of Debts and Bankruptcy Act before DRT Delhi which was pending adjudication. Canara Bank filed interlocutory application before the Recovery Officer for impleadment seeking pro rata distribution of sale proceeds from auction sale which were resisted by the Appellant Bank. It was further observed that the question of proportionate disbursement is premature. The Applications were dismissed on 28.09.1998.

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It was further held by the Hon’ble Apex Court that-

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“If none of the conditions required for applying section 19 (19) and Section 529-A is, therefore satisfied, then the claim of Canara Bank before the Tribunal can only be on the

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basis of principles of underlying Section 73 of Code of Civil Procedure. There being no decree in its favour from any Court or from any Tribunal, and the other conditions of Section 73 not having been satisfied, no dividend can be claimed out of moneys realized at the instance of Allahabad Bank, even if Allahabad Bank is an unsecured Creditor.”

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11. In the present case, rights of the Appellants have been determined and attained finality while the rights of Axis Bank, Respondent No. 1 have yet to be determined. Hence, the rights of the Appellant already determined can in no manner be looked into in the O.A. filed by the Respondent No. 1, Axis Bank. It is settled legal proposition of law that all the questions arising between the parties to the extent relating to the execution, discharge or satisfaction of the decree shall be determined by the Court executing the decree and not by a separate suit. In the impugned order, the Learned DRT has issued a direction for not paying the sale proceeds to the Appellant Bank till the O.A. filed by the Axis Bank is decided or priority of charge upon the property is decided by the Tribunal. Such direction could not be issued which is against law. Accordingly, such portion of the order is liable to be set aside. Appeal deserves to be allowed.

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ORDER

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Appeal is allowed. Impugned order is modified to an extent that the direction issued by Learned DRT-3 Kolkata to the effect that sale proceeds should not be given to the Certificate Holder Bank namely Punjab National Bank till the order is passed in this O.A. deciding the priority of charge

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(security) upon the property between the Applicant Bank (Axis Bank Ltd.) and the Intervenor Bank (Punjab National Bank) is set aside.

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No order as to costs.

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File be consigned to Record Room.

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Copy of the order be supplied to Appellant and the Respondents and a copy be also forwarded to the concerned DRT.

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Copy of the Judgment/ Final Order be uploaded in the Tribunal’s Website.

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Order signed and pronounced by me in the open Court on this the 27^th day of September, 2023.

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(Anil Kumar Srivastava,J) Chairperson

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Dated: 27^th September, 2023 tp

Punjab National Bank v. Axis Bank Ltd.

Case brief

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Punjab National Bank v. Axis Bank Ltd.

Case brief

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