Allowed

Mrs Jessy John And Ors. v. State Bank of India

DRAT25 Jan 2024REGULAR APPEAL/303/2018

Case brief

AI extract

What is this about?

This appeal challenges an order dismissing a Money Application seeking recall of a Security Appeal dismissed as settled. The Tribunal held that the appeal was maintainable despite a procedural irregularity in citing the wrong statute, and was within limitation, as the relief for compensation had not been adjudicated.

What did the court decide?

Impugned order set aside; Money Application allowed; DRT directed to hear and dispose of the appeal specifically on the issue of compensation.

Mrs Jessy John And Ors. versus State Bank of India — Banking and Recovery | DRAT (2024)

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IN THE DEBT RECOVERY APPELLATE TRIBUNAL - KOLKATA REGULAR APPEAL/303/2018

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HON'BLE Justice Anil Kumar Srivastava, Chairperson

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Date:25/01/2024

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Mrs Jessy John And Ors having registered office at 48/7 M.A. Road Phoenix Bay Port Blair

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2.Mr Terence D Cruz residing at S/O. Late Dominic D' Cruz 48/7, M. A. Road, Phoenix Bay, Port Blair-744102

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3.Mrs Arsemary residing at W/O. Late Dominic D' Cruz 48/7, M. A. Road, Phoenix Bay, Port Blair-744102

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--Vs--

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STATE BANK OF INDIA having office at Baratang Branch North And Middle Andaman

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2.Authorised Officer State Bank Of India residing at State Bank Of India, Regional Office, Port Blair-744101

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3.Union Territory Administration of Andaman and Nicobar Island residing at Through Chief Secretary Andaman & Nicobar Administration Secretariat Building Port Blair-744105

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... Respondents

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For the appellants : Mr. Nemani Srinivas, ld. Adv.

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For the respondents:

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Ms. Mekhala Kanji, ld. Adv.

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J U D G E M E N T

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Instant appeal has arisen against the order passed by learned DRT-2, Kolkata in M.A. No. 44 of 2018 arising out of S.A. No. 334 of 2015 (Mrs. Jessy John & Ors. Vs. State Bank of India & Ors.).

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Heard learned counsel for the parties and perused the records.

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Facts of the matter are that S.A. bearing No. 334 of 2015 was filed by the appellant before learned DRT with following prayers “

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“A. To declare that all security agreement executed between the applicant and defendant bank inconnection with setting up and running of business of M/s Dewdale Resorts have become frustrated and void due to supervening impossibility and are legally un-forceable.

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B. to declare that due to the supervening frustrating even of sealing of resort on 09/02 2011 the applicants are discharged from all liabilities emerged from the secured agreement dated 24.08.2007 executed between theapplicant and defendant bank for setting up of M/s Dew Dale resorts.

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C. Set aside the notices dated 25^th November, 2014, 12 June, 2015, 15 June 2015 and letter dated 31 January 2015 issued u/s 13(2) , 13(3A) and 13(4)A of the SARFAESI Act Rule 8(1) of the Rules.

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D. To direct the defendant bank not to put the any of the secured assets through auction or liquate any asset, and also not to t4ake any steps regarding putting the secured asset through auction or liquidating any secured asset.

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E. To direct defendant bank to grant compensation to the applicant no.3, a senior citizen customer of the bank, in terms of Section 19 of the SARFAFESI Act, amounting to Rs. 17,56,800.00 on account of illegal liquidation of supersaver terms deposit no. 0769072 dated 24.08.2007 and interest @ 18% on the said amount till the date of actual payment.

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F. to direct the defendant bank to grant compensation in terms of sec. 19 of the SARFAESI act for the other claims made in the instant application amounting to Rs.1,94,28,600.00 and interest @ 18% of the said amount till the date of actual payment.

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G. to direct the defendant bank to hand over the original documents, the title deed bearing no. 2355/1997 of Survey No. 1526, siubno.3 under Corporatuonb Thirubantopuram, Pattah no. 7865 deposited with the defendant bank on 28.08.2007 to the applicant no.2.

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H. to direct the defendant bank to hand over the original documents, the life insurance policy no. 781139206 in the name of Mrs. Jessy John deposited on 31.08.2007 to applicant no.1

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I. to direct the defendant bank to hand over the original document the title deed being no. 239/06 of survey no. 3/1 and 5 at Sundargarh village, Baratang island depositedwiththe defendant bank on 28.08.2007 to applicant no.1.

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J, to direct the defendant bank to pay the cost of this application. K. such order or further order or orders directions or direction do issue, as this Tribunal may deed fit and proper.”

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The S.A. was decided on 04.07.2018. On the date fixed,

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learned counsel for the S.A. applicant prayed for time which was

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declined. Learned DRT recorded in the order that matter was settled between the parties. Hence, there is no scope for granting further time. Accordingly, S.A. was dismissed as settled. Consequent thereto M.A. No. 44 of 2018 was filed by the S.A. applicant before the learned DRT with the prayer to recall the order dated 04.07.2018 on the ground that in the S.A. claim for compensation was also sought, which was not adjudicated by the learned DRT rather the S.A. was dismissed on the ground that matter was settled. Although adjournment was sought on the date fixed that was declined. Further, since the issue of compensation, as sought in the S.A., was not adjudicated by the learned DRT, the order dated 04.07.2018 is illegal.

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Learned DRT dismissed the S.A. firstly, on the ground that the M.A. is not maintainable being filed under the wrong provision of the Act, secondly, it is time barred and thirdly, M.A. was filed in thedisposed of S.A. which could not be considered. Learned counsel for the appellant submits that impugned order suffers from material illegality. Learned counsel submits that M.A. was filed u/s 19(25) of the Recovery of Debts & Bankruptcy Act, 1993 read with Section 17(8) of the SARFAESI Act and Tribunal has powers to recall its order u/s 19(25) of the RDB Act, 1993 read with Section 17(7) of the SARFAESI Act. Learned counsel for the appellant relies upon the case of Roche Producuts Ltd. Vs. Collector of Customs & Anr. [1989 Supp(2) SCC 532]. Learned counsel further submits that even if any wrong provision of law

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referred to, learned DRT has jurisdiction to recall the order and the same should have been considered and recalled by the DRT. It is further submitted that M.A. was filed on 03.08.2018 while the impugned order was passed on 04.07.2018 which was within limitation of 30 days. It is further submitted that application was maintainable as in the S.A. claim for compensation was sought for adjudication, which was not decided by the Tribunal rather the S.A. was disposed of as the issue of debt was settled between the parties.

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Learned counsel for the respondents opposes the submission made by the learned counsel for the appellant. It is submitted that the impugned order was passed after consideration of the reliefs sought in accordance with law. M.A. was filed beyond the period of limitation. No prayer for compensation was made at the time of disposing of the matter. It is further submitted that M.A. was not maintainable under the provision of law.

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Admittedly, S.A. was decided on 04.07.2018 on the ground that matter was settled between the parties. Perusal of the relief claimed in the S.A. would show that apart from other prayers relief for compensation was also sought by the appellant, which was not considered by the learned DRT while disposing of the S.A. No doubt when the matter of debt was settled, the issue of steps undertaken by the secured creditor under the SARFAESI Act came to an end, but at the same time when another relief for compensation was sought for adjudication, it was incumbent upon

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the learned DRT to adjudicate that relief. It was under the jurisdiction of the DRT to grant or not to grant the prayer for compensation, but simply disposing of the application without recording any finding on the issue of compensation is against the law.

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As far as issue of limitation is concerned the M.A. was filed by the S.A. applicant u/s 19(25) of the RDB Act, 1993. The provision of Section 19(25) of the RDB Act read with Sec. 17(8) of the SARFAESI Act is applicable. The impugned order was passed on 04.07.2018 as per receipt issued by the Registry of learned DRT-2, Kolkata, M.A. was filed on 03.08.2018, which is within 30 days from the date of passing the impugned order, hence it cannot be accepted that M.A. was filed beyond the period of 30 days and is barred by limitation.

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As far as maintainability of M.A. is concerned, section 19(25) of the Act inputs powers upon the DRT to pass order in the interest of justice. As far as powers of DRT are concerned these powers are provided in the Act, merely wrong mentioning of the provision does not makes an application faulty or vitiate the application as has been held by the Hon’ble Apex Court in Roche Products (supra) wherein it was held that “when an authority has the power to do a certain act and in exercise of such power he does the same, but refers to a wrong provision of the law, that would be a mere irregularity and would not vitiate such act.” This principle is squarely applicable to the facts of the present case.

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Although M.A. was filed under correct provision of law, but finding of the DRT would show to the extend the application was disposed of under wrong provision of law could not be accepted.

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On the discussion made above, I am of the view that learned DRT has committed illegality in passing of the impugned order. The order is required to be set aside and appellant should be given an opportunity of hearing to press the relief of compensation as sought for in the S.A.

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O R D E R

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Appeal is allowed. Impugned order passed by learned DRT is set aside. M.A. 44 of 2018 stands allowed. Learned DRT–2, Kolkata is directed to disposal of the S.A. No. 334 of 2015 in accordance with law after affording opportunity of hearing to the parties. Needless to mention that hearing should contain to the relief relates to compensation only as claimed by the appellant in the S.A. Learned DRT shall be at liberty to decide the S.A. strictly in accordance with law. Merits of the issues are not considered in this appeal. No costs.

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File be consigned to record room.

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Copy of the order be supplied to the appellant and the respondent and a copy be also forwarded to the concerned DRT.

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Copy of the judgement/Final Order be uploaded in the Tribunal’s website.

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Order dictated, signed and pronounced by me in the open Court on this the 25 day of January, 2024.

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(Anil

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