The Tribunal allowed IDBI Bank's appeal dismissing DRT's decision to non-suit the bank. Holding that relief against a firm includes its partners and fraud must be proved, the Tribunal quashed the lower order and directed recovery.
Recovery of ₹2,42,70,933.67 with interest directed; issue of recovery certificate; dismissal of lower order quashed.
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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr. Justice Ashok Menon, Chairperson
Appeal No. 07/2020
Between
IDBI Bank
V/s.
M/s. Chintamani Enterprises & Ors. …Respondent/s
Mr. Vijay V. Chandavle along with Mr. Vishal Tambe, Advocate for Appellant.
The IDBI Bank is aggrieved by the dismissal of the Original Application (O.A.) No. 569/2016 by the Debts Recovery Tribunal, Pune (DRT), vide judgment and order dated 16.10.2018. The O.A. was filed for recovery of ₹2,42,70,933.67 together with interest from the defendants jointly and severally from out of the mortgaged property, other assets and personally under the provisions of Recovery of Debts Due to Banks & Financial Institutions Act, 1993 (“RDDB Act”, for short).
The defendants in the O.A. are the respondents herein. The 1st defendant is a firm of which defendant Nos. 1(a) to 1(d) are the partners. The firm and its partners had availed of two term loan facilities and a cash credit facility from Rajguru Sahakari Bank Ltd. On 11.08.2010 they approached the appellant bank to take over the credit facilities granted to them by the Rajguru Sahakari Bank Ld. and the
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appellant agreed. Yet another term loan was granted by the appellant to the borrowers. The aggregate debt granted to the borrowers was ₹1.93 crores. Respondents Nos. 2 to 5, stood as guarantors to the transactions. A demand draft was issued to Rajguru Sahakari Bank Ltd. for settling the dues and releasing the mortgage, and that mortgage was released on 06.10.2010 vide a registered lease deed. Demand promissory notes and hypothecation agreements were executed by the borrowers in respect of each transaction. Guarantee agreements were also executed by respondents Nos. 2 to 5 in respect of each of the transactions. Mortgage by way of deposit of title deeds was created to secure all the four facilities concerning 1/3 share of respondent 1 (a) concerning property comprised in Gat No. 650/2B/2/B and Pad land total admeasuring 6 Hectares and 46 Ares in Thembhurni village, Madha Taluk, Sholapur District. A mortgage was also created by depositing the title deeds concerning the property situated at Sortapwadi, Haveli Taluk in Pune District admeasuring 28,589 ft². On 31.03.2012, the appellant sanctioned the renewal of the facilities as requested by the respondents. Revival letters were executed by the respondents. The respondents had also executed an acknowledgement letter of confirmation on 01.08.2013. 3. The respondent defaulted in repayment and the appellant demanded repayment. On failure to repay, the O.A. was filed. All the defendants were served. Defendants Nos. 1(a), (b) and 2 to 4 appeared and filed written statements admitting the claim. Defendants No. 1(c) and (d) filed written statements, admitting that they were partners of the firm. However, defendant No. 1(c) claims to be an illiterate person
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ignorant about the business of manufacturing ash bricks by the firm. The firm was being managed by defendant No. 1(a), and defendants Nos. 1(c) and (d) were mere sleeping partners. It is pointed out that the beneficiaries of the loan obtained from Rajguru Sahakari Bank Ltd. were originally defendant Nos. 1(a) and (b) alone. Signatures of defendants Nos. 1(c) and (d) were fraudulently obtained in the proposal submitted to the appellant bank by defendant No. 1(a) in collusion with the bank officials. The funds obtained for the firm were all diverted by defendant No. 1(a) fraudulently and defendants Nos. 1(c) and (d) came to know about the transactions only after receiving the summons in the O.A. The officers of the bank had also informed defendant No. 1(c) and the husband of defendant No. 1(d) that the loan was being restructured on receiving ₹50 lakhs from defendant Nos. 1(a) to (d) and a further sum of ₹25 lakhs from defendants Nos. 1(a) and (b). It is contended that the bank officials in collusion with defendant No. 1(a) had cheated defendant No. 1(c) by taking advantage of his being an illiterate person.
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of defendants signing and executing the documents including the renewable document. The DRT further finds that there is no documentary evidence pointing to the authority of defendant No. 1(c) to create a mortgage. And it was also observed in the impugned judgment, that the merger of three term loans is neither pleaded nor proved. The O.A. was also dismissed on grounds of capitalisation of penal interest. The Ld. Presiding Officer observes that the renewal of the cash credit facility was on 31.03.2012 and that the O.A. filed is beyond the period of limitation only on 05.06.2015. The appellant is aggrieved and hence in appeal.
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compendium of persons described as its partners. The partners of the 1st defendant firm have been arrayed in the O.A. as defendant Nos. 1 (a) to (d). Hence, when relief is sought against defendants Nos. 1 to 5, it necessarily includes defendants Nos. 1 (a) to (d) also. The interpretation of the Ld. Presiding Officer is curious and pedantic. Hence, the dismissal of the appeal on that ground is ex facie unsustainable. Reliance on the decision Noble Kumar (supra) and the interpretation of the Ld. Presiding officer is out of place. the ratiodecidendi is contrary to the observation of the DRT.
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is that respondent No. 1 (c) had been misled by the bank official in collusion with respondent No. 1 (a) to execute certain documents in favour of the bank to create the liability. There is not a scintilla of evidence to prove the existence of fraud and collusion as alleged.
The appeal and the O.A. are allowed. Defendants No. 1 to 5 jointly and severally directed to pay to the appellant bank a sum of ₹ 2,42,70,933.67 together with interest @ of 13.25% p.a with monthly rests with effect from the date of filing of the O.A. till realisation, personally and from out of the mortgaged properties referred to in the O.A. and the other assets. A recovery certificate be issued in favour of the appellant bank in the above terms.
psa-02
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3 issues framed by the court
Whether relief sought against the firm necessarily includes relief against its partners listed as separate defendants.
Whether the burden to prove fraud and collusion lies on the party asserting it given admitted execution of documents.
Whether the Debts Recovery Tribunal's non-suit of the appellant was correct in light of admitted debt execution.
Colour shows how this judgement treated each authority
Standard Chartered Bank vs. Noble Kumar & Anr.Distinguished¶7
Standard Chartered Bank vs. Noble Kumar & Anr. (2013) 9 SCC 620 · Who else cites this
Rangammal vs. Kuppuswami and Ano.Explained¶10
Rangammal vs. Kuppuswami and Ano. (2011)12 SCC 220 · Who else cites this
M. Sankaranarayanan vs. Deputy Commissioner, Bangalore & OrsExplained¶10
M. Sankaranarayanan vs. Deputy Commissioner, Bangalore & Ors (2017) 13 SCC 661 · Who else cites this
1 provisions across 1 enactments
IDBI Bank
M/s. Chintamani Enterprises & Ors.
Ashok Menon
As recorded by the court registry
11 orders share this CNR
Judgements on the same questions, provisions and authorities, from every court
