Allowed

Canara Bank v. Ms Hero Wiretex Ltd.

DRAT17 Jan 2024REGULAR APPEAL/51/2023

Case brief

AI extract

What is this about?

The DRAT allowed the bank's appeal, holding that the lower court erred in directing the release of secured property. The bank had not fully complied with the DRT order requiring payment of the entire debt, future interest, and expenses in 12 equal bi-monthly installments before release.

What did the court decide?

Impugned order directing Bank to release property under Rule 8(6) of Security Interest Enforcement Rules, 2002 is set aside.

Canara Bank versus Ms Hero Wiretex Ltd. — Company and Corporate | DRAT (2024)

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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(Appeal No. 51 of 2023)

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(Arising out of M.A. No.19 of 2021 in S.A. No. 333 of 2019 in DRTVisakhapatnam)

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THE HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA

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CHAIRPERSON

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The Authorized Officer, Canara Bank Stressed Assets Management Branch, Hyderabad Flat No. 104, 1^st Floor, H. No. 6-3-639/640/642 Goldern Edifice Complex, Khairathabad, Hyderabad -500004.

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The Chief Manager, Canara Bank Regional Office, MCB Visakhapatnam Pavan commercial complex, 1^st Floor, Dabagardens Main Road, Visakhapatnam -530020.

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…Appellants

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-Versus-

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M/s Hero Wiretex Limited (CIN: U31300AP 1991PLC012315) Factory & Registered Office: Survey No. 116, Anthakapalli, Rajam. Srikakulam District Andhra Pradesh -532127 Rep.by its Managing Director Seema Kurthi Ragunath Guptha

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… Respondents

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Counsel for the parties Ms. Aparajita Ghosh, Learned Counsel, Mr. Souvik Ghosh, Learned Counsel for the Appellant Mr. Nimesh Mishra, Learned Counsel Mr. Gaurav Singh, Learned Counsel for the Respondent.

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JUDGMENT : On 17^th January, 2024

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THE APPELLATE TRIBUNAL :

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Instant Appeal has arisen against an order dated 16^th July, 2021 passed by Learned DRT Visakhapatnam in MA. No. 19 of 2021 arising out of SA. No. 333 of 2019 M/s Hero Wiretex Limited versus Authorised officer Canara Bank wherein the Learned DRT disposed of the MA No. 19 of 2021 directing the Bank to release the item No. 2 property as mentioned in Notice dated 05.02.2020 under Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 which is mentioned as Property No. 4 in possession notice dated 20^th August, 2019 in the name of Smt. G. Susheela with a further direction to release the title deeds to the Applicant and discharge the mortgage on the property forthwith.

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2. Feeling aggrieved by the order, Appellant Bank preferred the Appeal. 3. As per the pleadings of the parties, Respondent borrower Company availed a credit facility from the Appellant amounting to Rs.23.00 crores in the year 2015 which was renewed in 2018. Account was not properly maintained and was classified as NPA on 01.05.2019. SARFAESI notice was issued under Section 13(2) of the SARFAESI Act, 2002 on 07.05.2019. Notice under Section 13(4) of the SARFAESI Act, 2002 was issued on 20^th August, 2019 which was also published in two newspapers. SARFAESI Application No. 333 of 2019 was filed before the Learned DRT Visakhapatnam challenging the action of the Bank which was decided on 27.11.2020 on the basis of settlement between the parties. It would be appropriate to quote relevant portion of the order passed by Learned DRT

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in SA No. 333 of 2019 with I.A. No. 1562 of 2020 dated 27^th November, 2020 which is as under:

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“Hence the applicants/ petitioners are directed to pay the entire debt due of RFs.19,82,91,697.84ps along with future interest and SARFAESI expenses including future interest to the Respondent Bank in 12 equal installments payable bi-monthly (i.e., in every 2 months) into the Respondent Bank starting from January 2021 to be deposited by the applicants/ petitioners into the respondent bank and the respondent bank upon receiving 3(three) bi-monthly installments from the applicants/ petitioners, shall release the item No. 2 property as mentioned in rule 8(6) notice dt.5.2.2020 which is mentioned as Property No. 4 of possession notice dt.20.08.2019 which is the property in the name of Smt. G. Susheela and release the concerned title deeds/ documents and discharge the mortgage on the property and subsequently after receiving another 3(three) bi-monthly installments from the applicants/ petitioners the Respondent shall release the item No. 1 property as mentioned in rule 8(6) notice dt.5.2.2020 which is mentioned as Property No. 3 of the possession notice dt. 20.08.2019, which is the property in the name of Sri G. Bhaskara Rao and release the concerned title deeds/ documents discharge the mortgage on the property and the Respondent Bank may file Part Satisfaction Memo in O.A. 68/2020 at DRT, Hyderabad on payment of installments by the applicants. In the meanwhile the Respondent is directed not to take any coercive action under SARFAESI Act in respect of schedule mentioned and the respondent bank is further directed to receive the entire outstanding amount plus interest and expenses incurred under SARFAESI Act in respect of schedule property from the applicants/ petitioners in 12 installments commencing from January 2021 payable bi-monthly as stated supra, and after receiving the amounts bi-monthly from the applicants, the respondent bank shall have to release the properties of the applicants/ petitioners as stated supra to the applicant/ petitioner and discharge the personal mortgage and mortgage of the concerned property and deliver all the documents to the applicants.

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If the applicants/ applicant failed to pay any two consecutive installments (payable bi-monthly) as stated above into the respondent Bank, the stay so granted shall automatically stands vacated and the Respondent Bank is at liberty to proceed further in the matter in accordance with law.

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After payment of the entire dues by the applicants, the respondent bank should withdraw all the case filed against the applicants after receiving the entire amount.”

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4. In accordance with the judgment bi-monthly instalments were paid by the Respondent and by 27.01.2021

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an amount of Rs. 1,66,00,000/- was paid. On 30^th March, 2021 an amount of Rs. 1,65,25,000/- and on 23.05.2021 an amount of Rs. 1,64,75,000/- was also paid. In compliance of the orders, Title deeds should have been returned by the Bank which was not complied on the ground that Review petition filed by the Bank is pending, Miscellaneous Application was filed with a prayer for a direction to the Bank to release the property item No. 2 as mentioned in the notice under Rule 8(6) of Security Interest (Enforcement) Rules, 2002 in favour of Smt. G. Susheela.

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5. Objections were filed by the Bank contending that the compliance of the order of DRT is not made by the Applicant. A request was made by the petitioner to the Bank on 23.12.2020/ 18.01.2021 to submit the details of the amount to be paid by them which was duly replied but the payments were not made by the Applicant in accordance with orders of the DRT. It was communicated to the Applicant that the instalments payable by the petitioner in January, 2021 was Rs.2,33,57,109.27p but was paid only Rs.1,66,00,000/-. Further, two instalments of Rs.1,65,25,000.00 were made which was not in accordance with the orders passed by the DRT in SA. Default was committed by the petitioner. If the petitioner complies the orders passed by the Learned DRT in SA. No. 333 of 2019, documents can be released.

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6. Learned DRT arrived at a conclusion that the Applicants have complied the orders passed by the Learned DRT by depositing Rs.1,66,00,000/-,Rs.1,65,25,000/-and Rs.1,64,75,000/-respectively. Accordingly, they are entitled

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for release of the documents. The question of interest and expenses can be looked into by the DRT Hyderabad in the O.A. filed before it.

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

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8. Controversy in this matter is very short. There is no dispute on the issue that the amounts of Rs.1,66,00,000/-, Rs.1,65,25,000/- and Rs.1,64,75,000/- have been deposited by the Respondent herein. Even thereafter, payments have been made. Now the only question to be looked into as to whether it is in compliance of the orders passed by the Learned DRT in SA Application No. 333 of 2019 passed on 27.11.2020 as reproduced above or it is in violation of the same?”

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9. As would appear from the order passed in S.A. relevant portion is that-

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“ Applicants/ petitioners are directed to pay the entire debt due of Rs.19,82,91,697.84ps along with future interest and SARFAESI expenses including future interest to the Respondent Bank in 12 equal instalments payable bi- monthly (i.e., in every 2 months) into the Respondent Bank starting from January 2021.”

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10. This direction in unequivocal terms would show that the entire debt due was Rs.19,82,91,697.84ps. Further, there was a direction for future interest and SARFAESI expenses including future interest to be added in it. Thereafter, the amount had to be paid in 12 bi-monthly equal instalments. There is no ambiguity in the order. It would be pertinent to mention here that this order was not challenged by the parties. Accordingly, attained finality.

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11. As would appear from the records a letter dated 23.12.2020/ 18.01.2021 was sent by the Respondent herein to the Bank to inform the amount of interest to be paid along with the instalments and cost of the SARFAESI proceedings as directed by the Court which was replied on 25.01.2021. Thereafter, another letter dated 02.02.2021 was sent by the Bank along with the revised statement wherein only the amount along with the interest, SARFAESI charges were included. It would be relevant to mention that in the SARFAESI application filed by the Respondent herein rate of interest calculated by the Bank or the SARFAESI charges etc. were not disputed or challenged by the Respondents i.e. M/s Hero Wiretex Ltd. A submission is made by the Learned Counsel for the Respondent that once the Bank has accepted the instalments paid by the Respondents without protest then now Bank cannot challenge it. A letter dated 31.03.2021 was sent by the Bank to the Respondents wherein it was stated that the amount paid by the Respondents i.e. Rs.1,66,00,000/- is not in accordance with the order passed by the Learned DRT in S.A. Hence, it cannot be accepted that the Bank accepted the amount without any protest. Further, when an order is accepted by the parties without challenge to it, then they are bound by it. Learned DRT in its order dated 27.11.2020 in unequivocal terms stated that the amount should include the future interest and the SARFAESI expenses. Then, Learned DRT has no jurisdiction to explain the same in the Miscellaneous application wherein a direction was issued by

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the Learned DRT in the impugned order that the Bank may claim the same in an O.A. filed before DRT Hyderabad. If the directions issued in the SARFAESI application were not complied by the Respondent herein, he is not entitled for the relief as provided in the order dated 27.11.2020 passed in S.A. No. 333 of 2019.

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12. On the basis of the discussion made above, I am of the considered view that the Respondents have not complied the directions passed by the Learned DRT in order dated 27.11.2020. Without complying the directions, they are not entitled for release of the documents as provided in the order dated 27.11.2020. Learned DRT has totally misdirected itself in its order dated 16.11.2021 wherein directions are issued for releasing the property item No. 2 mentioned in the notice dated 05.02.2020 under Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 and with a further direction to the Bank to claim the future interest in the O.A. filed before DRT Hyderabad. Accordingly, impugned order suffers from material illegality and is liable to be set aside.

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ORDER

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Appeal is allowed. Impugned order dated 16.11.2021 passed by Learned DRT Visakhapatnam passed in MA No. 19 of 2021 arising out of SA No. 333 of 2019 is set aside with the observations made in the body of the judgment.

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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 17^th day of January, 2024.

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(Anil Kumar Srivastava,J) Chairperson

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Dated: 17^th January, 2024 /tp

Canara Bank v. Ms Hero Wiretex Ltd.

Case brief

What is this about?

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Canara Bank v. Ms Hero Wiretex Ltd.

Case brief

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