Allowed

Uco Bank v. Pavanputra & Ors.

DRAT29 Sept 2023REGULAR APPEAL/83/2010

Case brief

AI extract

What is this about?

The Desk Recovery Appellate Tribunal allowed an appeal by UCO Bank against the Debt Recovery Tribunal below. The Tribunal reversed the lower court's dismissal of the claim against a guarantor's legal representatives, holding that the General Power of Attorney executed by the deceased clearly authorized his son to mortgage the property to the bank.

What did the court decide?

Impugned Order dated 30.04.2009 modified; Tribunal to issue a modified Recovery Certificate; Appeal allowed.

Uco Bank versus Pavanputra & Ors. — Contract and Commercial Disputes | DRAT (2023)

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RA 83/2010

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 29^th of September, 2023

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

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RA 83/2010

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(OA 365/2004 on the file of DRT, Bangalore)

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UCO Bank, Malleshwaram Branch, 15^th Cross, West Park road, Bangalore -560 003.

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UCO Bank, No.10, BTM Sarani, Kolkatta – 700 001.

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. . . Appellant

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Versus

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Mr. Pavan Putra Rep. by its Partners, GF 106-107, Doshi Complex, No.22, M.P. Lane, Chickpet Cross, Bangalore – 560 053.

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RA 83/2010

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Mr. Tejraj Giriya, S/o Vastimal giriya, GF 106-107, Doshi Complex, No.22, M.P. Lane, Chickpet Cross, Bangalore – 560 053.

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Mr. Naveen Kumar Jain, S/o Vastimal giriya, GF 106-107, Doshi Complex, No.22, M.P. Lane, Chickpet Cross, Bangalore – 560 053.

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Mr. Krishnappa, (since deceased), Rep. by his General Power of Attorney Holder Mr. H.K.Anjanappa, No.158/3, “Maruthi Nilaya”, Hagadur Village, Vinayakanagar, Whitefield Post, Bangalore-560 066.

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4a. H.K.Anjanappa S/o Late Krishnappa No.158/3, Hagadur Village, Vinayakanagar, K.R.Puram, Hobli, Bangalore- 560 066.

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4a1 Smt. Manjula W/o late H. K. Anjanappa, No.158/3, Hagadur Village, Vinayakanagar, Krishnapuram, Hobli, Bangalore- 560 066.

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RA 83/2010

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4a2 A. Pradeep ( since deceased) s/o late H. K. Anjanappa, No.158/3, Hagadur Village, Vinayakanagar,

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Krishnapuram, Hobli, Bangalore- 560 066.

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4a3 H. A. Prathap Kumar, W/o late H. K. Anjanappa, No.158/3, Hagadur Village, Vinayakanagar,

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Krishnapuram, Hobli, Bangalore- 560 066.

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4b. H.B. Ramamurthy, S/o Late H.K. Byrappa, No.158/3, Hagadur Village, Vinayakanagar, K.R.Puram, Hobli, Bangalore- 560 066.

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4c. H.B. Sandeep S/o Late H.K. Byrappa, No.158/3, Hagadur Village, Vinayakanagar, K.R.Puram, Hobli, Bangalore- 560 066.

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4d. H.B. Anand, S/o Late H.K.Byrappa, No.158/3, Hagadur Village, Vinayakanagar, K.R.Puram, Hobli, Bangalore- 560 066.

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RA 83/2010

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Mr. Syed Saifulla, S/o Syed Hammed, No. 47/2, Hanies Road, Frazer Town, Bangaluru. 6. Smt. Triveni, W/o late Pradeep, No. 158, Maruthi Nilaya, 1^st Main, 1^st Cross, Hagadur Village, Vinayakanagar, Krishnarajapuram, Hobli, Bangalore- 560 066. 7. Minor Master Paardhiv, S/o late Pradeep, Rep. by his Mother & Guardian, Smt. Triveni, No. 158, Maruthi Nilaya, 1^st Main, 1^st Cross, Hagadur Village, Vinayakanagar, Krishnarajapuram, Hobli, Bangalore- 560 066. . . . Respondents Appellant : Mr. V. Sudhakar Respondent 4 a (1) to 4a (3): Mr. M. A. Rajendra Respondent No. 4(b) to 4 (d): M/s. Komala. G

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Respondent No.5 : Mrs. Nalini P. Chidambaram Sr. Advocate for Mr. N. R. R. Arun Natarajan

RA 83/2010

O R D E R

This Appeal is against Order dated 30.04.2009 of

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DRT, Bangalore, in OA 365/2004.

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Brief facts leading to this Appeal are as follows:-

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Appellant herein filed above referred OA for recovery of Rs.1,51,84,375/- together with interest at contract rate of 16.5% p.a. with monthly rests from Defendants 1 to 4 in the OA. According to Appellant, first Defendant is a Partnership Firm and Defendants 2 and 3 are its Partners and Defendant No.4 is Guarantor cum Mortgagor. According to Appellant, the loan is availed for the business of Firm. In the OA, Defendants 1 to 3 remained ex parte , only Defendant No.4 resisted the claim, contending that Appellant is not legally entitled to recover from him as there is no contractual obligation. Defendant No.4 contended that he has not signed any deed of guarantee in his individual

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RA 83/2010

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capacity or otherwise. It is also contended that his son Mr. H.K. Anjappa, signed guarantee document in his individual capacity, but, not as a General Power of Attorney (GPA) holder. He also contended that the mortgaged property is an agricultural land and there is prohibition under the provision of Karnataka Land Reforms Act, and for these reasons, he contended that, the claim against him is not maintainable.

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Tribunal below, on a consideration of contentions and rival contentions of both parties, allowed OA against Defendant Nos. 1 to 3 only, fastening joint and several liability, and dismissed the claim against Defendant No.4 Guarantor. Aggrieved by said Order, Bank preferred present Appeal.

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During the pendency of Appeal, IA 987/2013 and IA 506/2016 are filed; to bring the LRs of deceased Defendant No.4 on record and to implead Auction Purchaser

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RA 83/2010

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as Respondent No.5 respectively, those Applications were allowed by this Tribunal on 22.11.2016, and LRs of deceased Defendant No.4 are impleaded as Respondent 4(a) to 4(d) and Auction Purchaser is impleaded as Respondent No.5 in the Appeal.

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This Tribunal allowed the Appeal through Order dated 09.05.2017, fastening the liability on the Guarantor also. Aggrieved by said Order, Respondent No.4(a) to 4(d) preferred Writ Petition No. 25936/2017, contending that they were not given opportunity to advance their arguments. Considering the same, Hon’ble High Court of Karnataka, by an Order dated 05.02.2019, allowed the Writ Petition observing as follows:-

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“1. …… 2 ……… 3. Without going into the merits of the petition, it is only just and appropriate that the Appellate Tribunal considers the plea of the petitions as legal representative of deceased appellant No. 4 (a) before it

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RA 83/2010

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and thereafter to pass appropriate orders in accordance with law. The petitioners to make the requisite application for bringing themselves on record. Thereafter, the Tribunal to consider the appeal on merits.

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…….”

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Thereafter, necessary Application is filed and arguments are advanced on behalf of Appellant,

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Respondents 4 (a) to 4(d) and Auction Purchaser Respondent No.5. After remand, LRs of deceased Respondent 4(a) are impleaded as Respondent 4 (a) (1) to 4 (a) (3) as per Orders dated 16.05.2019 in IA-306/2019, so also, LRs of deceased Respondent 4 (a) (2) are brought on record as Respondent Nos. 6 and 7 as per Order dated 10.03.2023 in IA 3/2023.

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Advocate for Appellant submitted that the remand

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Order of Hon’ble High Court of Karnataka, is only to a limited extent of giving an opportunity to hear the LRs of deceased Defendant No.4. He submitted, the newly added Respondents, who are the LRs of deceased Defendant No.4,

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RA 83/2010

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have not taken any fresh plea and they only reiterated the plea that was taken by Defendant No.4 in the Written Statement. It is submitted, DRT came to a wrong conclusion that Defendant No.4 has not authorized his son Mr. H.K. Anjappa, to mortgage the property, which was sold to Respondent No.5 herein, in the auction, but, the recitals of GPA are very clear authorizing Mr. H.K. Anjappa, even to give this property as security, and this Tribunal, by considering said averments, fastened the liability on Defendant No.4, also by allowing the Appeal on 09.05.2017. He further submitted, DRT also came to a wrong conclusion that the mortgaged property is an agricultural property and that finding was also set aside by this Tribunal in the earlier Order. He submitted as LRs of deceased Defendant No.4 reiterated, the self same objection, which is not tenable, Appeal has to be allowed.

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On the other hand, Advocate for LRs of deceased

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Defendant No.4 submitted that there is no whisper in GPA

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RA 83/2010

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authorizing Mr. H.K. Anjappa, to mortgage the property of Defendant No.4. As GPA does not confer any power, Mr. H.K. Anjappa, has no power to mortgage the property of Defendant No.4, therefore, Bank cannot proceed against it.

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Learned Senior Advocate for Respondent No.5, Auction Purchaser, submitted that though Sale Certificate is issued long back i.e. almost 17 years back, still possession is not given, in view of pendency of litigation. She submitted that the Auction Purchaser really suffered due to this litigation.

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I have perused the material papers including impugned Order dated 30.04.2009.

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The crucial objection of Defendant No.4, which is adopted by LRs of deceased Defendant No.4, is that Mr. H.K. Anjappa, has no power to mortgage the property of Defendant No.4.

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RA 83/2010

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On the other hand, it is the contention of Bank, as per the GPA given by Defendant No.4, Mr. H.K. Anjappa, mortgaged this property and created security interest. It is not in dispute that Mr. H.K. Anjappa, is none other than son of deceased Defendant No.4. It is also not in dispute that Defendant No.4 executed a registered GPA dated 06.02.2002. This GPA is marked as document and in para 3 of it, there is a specific reference about mortgaging of Schedule property. The right given to Mr. H.K. Anjappa, against the property is very clear from paras 2 and 3 of this GPA, and it may be relevant to read those two paras, which are as follows:-

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“1……………….

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2. To alienate the Schedule property in favour of third party or parties through absolute sale, or mortgage or lease or otherwise in any manner whatsoever and to admit, execute and register the document of sale or any document in the matter in the concerned Sub- Registrar’s Office on my behalf.

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RA 83/2010

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3. To mortgage the Schedule property to any Financial Institution/s or Bank, to raise loan for

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himself or to stand as surety (check) or guarantor to any financial institution or financial institutions or banks for raising loans by his friends or relatives or any one whomsoever as may Attorney may deem fit.

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4………………………”

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A reading of above paras, makes it very clear that this Mr. H.K. Anjappa, is authorized to mortgage the Schedule property to Financial Institution or Bank, to raise loans for himself or to stand as surety or guarantor, for raising loans by his friends or relatives or any one. So, when the clause is very clear, authorizing Mr. H.K. Anjappa to mortgage the property, any length of argument from LRs of deceased Defendant No.4, with regard to power to mortgage, cannot hold any water.

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RA 83/2010

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Defendant No.4 assigned reasons for executing the GPA in favour of his son. As seen from reasons assigned, it is quite natural, that a father authorizing his son to look after his affairs in respect of Schedule property due to old age, the same is referred in the GPA. Added to this, Defendant No.4 gave an Affidavit confirming the deposit of title deeds which reiterates the authority given to Mr. H.K. Anjappa.

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From the material documents, it is very clear that Defendant No.4 is well within the knowledge of creating the mortgage on the Schedule property, by his son Mr. H.K. Anjappa. It is also clear from the record that Defendant No.4 permitted his son Mr. H.K. Anjappa to use the original title deeds and put them in Bank, which makes it very clear that Defendant No.4 clearly intended to give his property as security. When there are several documents confirming this, DRT, without looking at these documents, simply carried away with the objections raised by Defendant No.4; without look at the Clauses 2 and 3 of GPA, which

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RA 83/2010

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makes it very clear that Mr. H.K. Anjappa is authorized even to mortgage the Schedule property to Financial Institution or Bank, either for himself or stand as Guarantor for the loan availed by friends and relatives of Mr. H.K. Anjappa. Tribunal below completely lost sight of the averments and came to a wrong conclusion.

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As rightly pointed out by Advocate for Appellant, the LRs of deceased Defendant No.4 cannot improve anything except adopting the stand taken by Defendant No.4 and that stand is completely against the documentary evidence.

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When the evidence is very clear that Mr. H.K. Anjappa deposited original title deeds, with the consent of Defendant No.4, by ignoring that, Tribunal below, in my view, has committed a grave error. When Defendant No.4 confirmed the guarantee through an Affidavit, Tribunal below ought not have ignored, such an important evidence.

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RA 83/2010

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On a scrutiny of entire material, I am of the considered

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view that the Tribunal below committed a grave error in dismissing the claim against Defendant No.4, therefore, that finding is liable to be set aside.

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In view of above, the Appeal is allowed. Impugned Order dated 30.04.2009, is modified as prayed for. Tribunal below to issue a modified Recovery Certificate, in accordance

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with law.

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In the result : Appeal RA 83/2010 is allowed. Both

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parties shall bear their own costs. All pending IAs, if any,

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stand closed.

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[Dictated to Athistamani, PS, transcribed by her, corrected, signed and pronounced by me in open court, this 29^th of September, 2023]

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[ Justice S. Ravi Kumar] CHAIRPERSON

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Uco Bank v. Pavanputra & Ors.

Case brief

What is this about?

What did the court decide?

Uco Bank v. Pavanputra & Ors.

Case brief

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