Allowed

Assets Reconstruction Company Ltd. v. M/ S Nandan Ghar Sansar Developers Pvt. Ltd. and Otehrs

DRAT13 Feb 2024REGULAR APPEAL/157/2014

Case brief

AI extract

What is this about?

The Appellate Tribunal allowed the FI's appeal against the lower Tribunal's order directing payment of an infructuous compromise settlement amount. The Tribunal held it cannot compel a bank to accept a lesser amount after borrowers failed to honor conditions.

What did the court decide?

The impugned order dated 29.04.2014 by the lower Tribunal is set aside and the appeal is allowed.

Assets Reconstruction Company Ltd. versus M/ S… — Contract and Commercial Disputes | DRAT (2024)

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IN DEBTS RECOVERY APPELLATE TRIBUNAL, ALLAHABAD

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Regular Appeal No. 157/2014

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Assets Reconstruction Company (India) Ltd./Arms, Office at 113, Ma Bhagwati Complex, Boring Road Chauraha, East Boring Canal Road, Patna (Bihar) 800001, through its Branch Manager. ……….....……………………...………………………………………………..Appellant

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Versus

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Nandan Ghar Sansar Developers Pvt. Ltd., Saroj Complex, Moti Jheel, Muzaffarpur (Bihar)- 8452001, through its Managing Director S.N. Singh.

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………….. Borrower/Company

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1. Nandan Ghar Sansar Developers Pvt. Ltd., Bela Industrial Estate Near Muzaffarpur, (Bihar)- 8452001. Through its Managing Director S.N. Singh.

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………….. Borrower/Company

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1. S.N. Singh, Hanupriya steel, Saroj Complex, MOti Jheel, Muzaffarpur (Bihar)- 8452001.

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………….. Director/Guarantor

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Mrs. Usha Singh, W/o S.N. Singh, Kanpuriya Steel, Saroj Complex, Moti JHeel, Muzaffarpur (Bihar)- 8452001.

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………….. Director/Guarantor

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1. Israful Haq, Kanpuriya Steel, Saroj Complex, Moti JHeel, Muzaffarpur (Bihar)- 8452001. ………….. Director/Guarantor

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……….….………….…….………………………………………………….Respondents Advocates who appeared in this case

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For the appellant	Shri Ashish	Pratap Singh,
	Advocate
For the respondents	Shri V. K. Mishr	a, Advocate

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JUDGMENT

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Date of Decision: 13.02.2024

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JUSTICE R. D. KHARE, CHAIRPERSON

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The present appeal has been preferred by the appellantFinancial Institution under section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (in short “the RDDBFI Act”) against the order dated 29.04.2014 passed by the DRT, Patna, whereby the misc. application no. 137/2014 and misc. application no. 103/2014 were disposed off.

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The brief facts of the matter are that the appellant-FI filed an original application No. 01/2011 against the respondents-Borrowers before the Tribunal below, which was decreed vide consented judgment and order dated 17.04.2012 and recovery certificate for Rs. 3,18,97,260/was issued alongwith cost of Rs. 1,50,174/with pendentelite and future interest @ 14.2% per annum with monthly rests from 11.04.2010 till the date of payment and accordingly, the recovery proceeding was instituted as R.P. No. 139/2012 before the Recovery Officer of the Tribunal below.

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It appears that during the pendency of the O.A., the respondents-Borrowers vide letter dated 13.12.2011 offered a sum of Rs. 1.50 crores for one time settlement, but the appellant-FI vide letter dated 16.01.2012 suggested the borrowers to improve the offer to a maximum of Rs. 1.70 crore and submit the proposal along with an upfront amount of at least 25% of the offer by way of draft in favour of ARCIL and balance amount within 30-45 days, but the terms and conditions as specified in the said letter could not be honoured. Subsequently, the respondents-Borrowers filed a misc. application no. 457/2013 after passing of the judgment and decree dated 17.04.2012 claiming the benefit of the said compromise. The said M.A. was disposed off by the Tribunal below vide order dated 12.03.2014 with direction upon the appellant-FI to honour the proposal made by the defendants/borrowers in January 2012 by adding simple PLR over Rs. 1.70 crores. Against the said order, the appellant-FI filed misc. application no. 137/2014 and for direction to comply the said order, a Misc. Application no. 103/2014 was filed by the borrower before the Tribunal below. The appellant stated in its M.A. that the suggestion made in letter dated 16.01.2012 was not complied with by the defendants/ borrowers, thus the same

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ebbed at that stage and the suggestion mentioned in the letter dated 16.01.2012 is unacceptable.

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The Tribunal below vide order dated 29.03.2014 disposed off the aforesaid M.As. directing the borrowers to pay Rs. 85.00 lacs by 05.05.2014 and rest amount as per orders. Being aggrieved by the said order, the present appeal has been filed by the appellant-F.I.

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Learned counsel for the appellant submitted that the Tribunal below cannot compel the appellant to accept the lesser amount in view of the judgment passed by the Hon’ble Supreme Court in Civil Appeal No. 7411/2021Bijnore Urban Cooperative Bank Limited, Bijnore and others Vs. Meenal Agrawal and others, decided on 15.12.2021. The learned counsel further submitted that the original application no. 1 of 2011 filed by the appellant was decreed by the Tribunal below vide judgment dated 17.04.2012 on contest by both the parties for a sum of Rs. 3,18,97,260/along with pendentelite and future interest with monthly rest w.e.f. 11.07.2010. It was also contended that during the pendency of the said O.A., the respondents-Borrowers were offered a sum of Rs. 1.70 crores vide letter dated 16.01.2012 for settling the matter by way of compromise, but the same could not be honoured and ultimately the O.A. was allowed on contest by both the parties.

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Learned counsel for the appellant further submitted that after passing the decree, the respondents-Borrowers moved a Misc. Application No. 457/2013 for revival of already infructuous settlement by way of compromise, against which the appellant filed objection denying the settlement stating that the same had already become infructuous because of the conduct of the respondents-Borrowers. Further, on the very insistence made by the Tribunal below, a cheque of Rs. 85.00 lacs was received by the appellant, but the same has not yet been realized. As such the

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Tribunal below has repeatedly erred in passing the orders dated 12.03.2014 and 29.04.2014, therefore, the appellant opted to challenge the matter by filing the present appeal by paying full court fee as per the decree passed in the O.A., which may be allowed.

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With regard to the application filed by the respondentsborrowers challenging the sale notice and subsequent steps thereof, the learned counsel for the appellant submitted that the same is not maintainable as there is alternative remedy to challenge the sale notice, because the issuance of fresh sale notice gives rise to afresh cause of action, therefore, the same cannot be entertained in the present appeal, it is, therefore, prayed that the said application may also be dismissed on the ground of alternative remedy.

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Learned counsel for the respondents-Borrowers submitted that the O.A. No. 01/2011 preferred by the appellant was allowed ex-parte by the Tribunal below, which was challenged by the borrowers by filing the M.A. No. 457/2013 and the same was allowed vide order dated 12.03.2014 directing the borrowers to pay Rs. 1.70 crores with simple PLR and also directed the borrowers to pay Rs. 85.00 lacs on or before the due date and rest in three equal monthly installments. Pursuant to it, a cheque of Rs. 85.00 lacs was given by the borrowers to the appellant, which was accepted by the appellant before the court on the last date of hearing on 26.07.2022. The learned counsel further submitted that the present appeal is not maintainable as the same has been filed against the consenting order dated 29.04.2014 passed in M.A. No. 137/2014 and 103/2014. It was also contended that the appellant has not brought on record the order dated 29.04.2014, by which the borrowers were directed to pay Rs. 85.00 lacs on or before 05.05.2014 and accordingly, the amount was given to the appellant through cheque. Therefore, the appeal filed by the appellant

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may be dismissed with heavy costs, directing the appellant to accept the amount as ordered by the Tribunal below.

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With regard to the interim application, the learned counsel for the respondents-Borrowers submitted that the appellant after issuing the demand notice/possession notice, issued the sale notice dated 30.10.2019 scheduling the auction to be held on 09.12.2019 and the property has been sold at the lesser value. The said auction sale notice dated 30.10.2019 was challenged by the borrowers before the Hon’ble High Court by filing the CWJC No. 8801/2020 with a prayer to set aside the said sale notice and the sale certificate issued in favour of the auction purchaser. The Hon’ble High Court vide order dated 02.02.2022 disposed off the said writ petition with direction to approach before this Tribunal and file the instant application. It was, therefore, prayed that the auction sale notice dated 30.10.2019 as well as the sale certificate may be quashed and the instant application may be allowed.

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

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It is admitted that during the pendency of the O.A. No. 01/2011 filed by the appellant against the respondents, the respondents-borrowers vide letter dated 13.12.2011 had offered to the appellant-F.I. a sum of Rs. 1.50 crores for one time settlement. In response to it, the appellant vide letter dated 16.01.2012 advised the borrowers for improvement in the offer to a maximum of Rs. 1.70 crores and submits the proposal along with down payment of at least 25% of the said offer and the remaining amount within 30-45 days, but the respondents-borrowers did not honour the said offer of the F.I.

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It is observed from the judgment and decree dated 17.04.2012 passed by the Tribunal below in O.A. No. 01 of 2011 that during the course of arguments, the respondents-

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borrowers had shown their interest before the Tribunal below to settle the loan account, therefore, they were directed to approach the Bank with reasonable offer by depositing upfront amount within 7 days and if the same was filed, the Bank was to consider the same within one month from the date of receipt of it and the Bank was directed not to initiate any coercive action against them.

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Perusal of record shows that the respondents-borrowers filed a Misc. Application 457/2013 for recalling/reviewing/ modifying the order and judgment dated 17.04.2012 passed in O.A. No. 01/2011, which was disposed off by the Tribunal below vide order dated 12.03.2014, which is reproduced as under:-

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“ As per letter of Bank dated 13.01.2012 issued by Shri S.V. Venkatkrishnan, Sr. Vice President & Group Head and by this letter the proposal for Rs. 1.50 crores was enhanced to Rs. 1.70 crores and direction was to submit 25% amount as down payment and balance to be paid within 30-45 days, but the applicant has not paid the amount in time and paid 25% in very late, hence, proposal turned down and cheque was returned, then Demand Draft was deposited, but Bank authority did not consider it and the applicant has failed to fulfill the conditions of Bank.

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In view of the submissions and facts and circumstances of the case, the applicant is directed to pay Rs. 1.70 crores by adding simple PLR interest from January-2012 and accordingly, said proposal be acted upon and the applicant is directed to deposit first Rs. 85.00 lacs with the Bank by 27.03.2014 and then the Bank is to supply the calculation to the applicant and rest amount be paid within 3 months in equal monthly installment. If the applicant fails to deposit any of amount, then the Bank shall be at liberty to proceed in accordance with law.”

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The reading of the above order shows that on one hand the Tribunal below has recorded that the respondentsborrowers has failed to fulfill the condition of the Bank, but on the other hand, they were again granted further opportunity to deposit the amount as settled by way of compromise during the pendency of the O.A. without considering the objection of the appellant, wherein it was

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denied by the appellant to agree with the settlement, which had already become infructuous because of the conduct of the respondents-Borrowers.

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It is averred that against the order dated 12.03.2014 passed in M.A. No. 457/2013, a misc. application no. 137/2014 was filed by the appellant praying that the said order may be reviewed/recalled and the judgment debtors may be directed to make payment as per the judgment and decree dated 17.04.2012 passed by the Tribunal below, but the Tribunal below while passing the impugned order dated 29.04.2014 without considering the prayer of the appellant has again directed the borrowers to pay the settled amount along with simple PLR interest from January 2012, which prima facie appears to be erroneous. Any Court or Tribunal does not have power to compel the Bank to settle the account or to receive the lesser amount, as in the present case, the borrowers had got ample opportunity to honour to the offer of the Bank, but the borrowers have repeatedly failed to comply the same. Thus, the Tribunal below has exceeded in its jurisdiction in giving opportunity again and again to the borrowers to deposit the earlier settled amount, which had already become infructuous.

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The contention of the respondents-Borrowers that the present appeal has been filed against the consented order is not tenable, because no such consent has ever been recorded by the Tribunal below in its orders available on record.

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The misc. application no. 22/2022 filed by the borrowers under section 22(2)(H) of the RDB Act challenging the auction proceedings conducted by the appellant-F.I. under the SARFAESI Act is not maintainable, because the present case has been filed under the RDB Act challenging the proceedings of the said Act and also for the said proceedings, there is alternative remedy to challenge the

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same. As such the aforesaid misc. application is dismissed as not maintainable.

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In view of the aforesaid, the impugned order dated 29.04.2014 passed by the Tribunal below is set aside and the appeal filed by the appellant is allowed with no order as to costs.

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A copy of this judgment be forwarded to the parties as well as to the DRT concerned and also be uploaded on the e-DRT portal.

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CHAIRPERSON

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VN Giri

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Assets Reconstruction Company Ltd. v. M/ S Nandan Ghar Sansar Developers Pvt. Ltd. and Otehrs

Case brief

What is this about?

What did the court decide?

Assets Reconstruction Company Ltd. v. M/ S Nandan Ghar Sansar Developers Pvt. Ltd. and Otehrs

Case brief

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