The DRAT dismissed an appeal against an order directing a real estate developer to pay the loan balance. The court held that the appellant could not disown liability after consenting to a refund before a Consumer Forum and failing to file pleadings in the lower tribunal.
Appeal RA 73/2018 dismissed with costs; pending IAs closed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
RA 73/2018
IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT CHENNAI
Dated the 23rd of January, 2024
PRESENT: Hon’ble Mr. Justice S. Ravi Kumar
CHAIRPERSON
RA 73/2018
(TA 205/2017 (OA 731/2013) on the file of DRT- II, Bangalore)
BETWEEN
Ittina Properties Limited
Represented by its Managing Director
Mr. Manu Ittina,
No.380, Ittina Centre, 16th Main, 3rd Block, Koramangala, Bangalore – 560 034.
And
Having registered office at 1054, 7th Main
3rd Block, Koramangala, Bangalore – 560 034.
….Appellant
AND
M/s. Asset Reconstruction Company (India) Ltd.,
Flat No. 305, 3rd Floor, Kedia Arcade, 92, Infantry Road, Bangalore – 560 001.
S/o K.Purandhara Raju,
No. 36/9, 13th Lane, Indira Nagar, Adyar Chennai – 600 020.
…..Respondents
Counsel for Appellants : M/s. King and Partridge Counsel for R1 : M/s. Jayachandran and Associates Counsel for R2 and R3 : Mr. S. Raghavendra
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RA 73/2018
ORDER
1. This Appeal is against Order dated 16.08.2017 of DRT-II, Bangalore, in TA 205/2017 (O A 731/2013).
2. Brief facts leading to this Appeal are as follows:-
First Respondent herein filed OA for recovery of a sum of Rs.25,96,900/- with interest, contending that, 2nd Respondent herein (Defendant No.1) is a Borrower, 3rd Respondent herein (Defendant No.2) is a Guarantor and Appellant herein (Defendant No.3) is a Builder, and that Defendants 1 and 2 availed Housing Loan of Rs.21.22 Lakhs and created mortgage in favour of Bank. It is also contended that a Tripartite Agreement dated 29.11.2005 was entered into between the Bank on the one hand and Defendants 1 to 3 on the other, and that Defendant No.3, failed to register Sale Deed in favour of 1st Defendant and Defendants 1 and 2 failed to repay the loan amount, thereby
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RA 73/2018
loan account became Non Performing Asset (NPA), and the Suit amount is due and all the Defendants are jointly and severally liable for said amount.
Defendants 1 and 2 filed Written Statement and resisted the claim of 1st Respondent Institution. Defendant No.3, though entered appearance through its Advocate, but
failed to file any Written Statement.
On a consideration of contentions and rival
contentions, and documentary evidence, Tribunal below, allowed the OA, directing 1st Respondent Institution to file a proper statement of account showing calculation for the balance amount due, after giving credit to Rs.27,97,626/-, and directed to issue Recovery Certificate against Defendant No.3 for the balance amount. Aggrieved by said direction, present Appeal is preferred by Defendant No.3.
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3. Appellant, Respondent No.1 and Respondent Nos. 2
and 3 filed their respective Written Arguments and reiterated
the same at the time of oral submissions.
4. Advocate for Appellant mainly contended that the amount deposited by Appellant before the State Consumer Disputes Reddressal Commission was attached by Bank and Bank is entitled to withdraw the entire amount, and balance amount, if any, has to be recovered from Borrower and Guarantor, and DRT failed to appreciate said fact. He submitted, as per the sanction Letter, Borrower is required to pay the loan amount and the Tripartite Agreement interpreted by DRT is wholly contrary to law. It is further submitted that DRT erroneously held that the Tripartite Agreement was acted upon between Bank and Appellant, and Borrower has little to do, ignoring that borrowing is by 2nd Respondent herein. He further submitted, DRT ought to have appreciated that Borrower initiated cancellation of Agreement for Sale, therefore, it is bounden duty to obtain
prior permission from Bank as per the Clauses of Tripartite
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Agreement, and Borrower, having failed to do so, cannot make Appellant liable. It is further submitted that DRT erred in coming to conclusion that Borrower is entitled for compensation of Rs.5 Lakhs for his mental agony, which is not granted by the State Consumer Disputes Reddressal Commission. It is further submitted that DRT exceeded its jurisdiction, on account which, Appellant was made liable, therefore, Order of DRT is liable to be set aside.
5. Advocate for first Respondent Institution submitted that there is Tripartite Agreement between Appellant, Bank and Borrowers, in which Appellant agreed to sell Flat bearing No. E-404 in Level IV in Block No. ‘E’, for a consideration of Rs.21,32,875/-, out of which, Borrower paid Rs.1.07 Lakhs, and balance is paid by Bank as per the Clauses of said Agreement. He submitted as Appellant failed in discharging its obligation, Borrower approached the State Consumer Disputes Reddressal Commission, where Appellant’s Counsel agreed to refund the money with reasonable interest, and on
that basis, a consent Order is passed by said Reddressal
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Commission. He submitted, having admitted before the
State Consumer Disputes Reddressal Commission, it is not open to Appellant now to disown the liability. He further submitted that Appellant did not file any Written Statement, though appeared through its Advocate, and all the grounds now raised, cannot be entertained as there is no pleading and evidence on behalf of Appellant. He further submitted, any length of argument without pleadings and evidence, is of no use, and Tribunal below rightly passed Order directing Appellant to pay the balance amount, if any, and that there are no grounds to interfere with the Order of Tribunal below.
6. I have perused the material papers including the impugned Order dated 16.08.2017.
7. As seen from record, Appellant agreed before the State Consumer Disputes Reddressal Commission to refund money with reasonable interest, and only on that basis, a consent Order is passed, and now the entire argument of
Appellant disowning the liability is contrary to the consent
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given before said Reddressal Commission. Further, as seen from record, when Bank sent a Letter to Appellant emphasizing payments followed by Legal Notice, Appellant never raised any objection for said Letter or even for the Legal Notice. As rightly pointed out by Advocate for first Respondent, even in the OA, Appellant appeared through its Advocate and took time for Written Statement, but failed to file Written Statement, and thereafter, Tribunal below, on the basis of pleadings of first Respondent Institution, Borrower and Guarantor, together with documents marked as Exhibits, came to the conclusion that Appellant is liable to pay the balance, if any, after adjusting money already deposited. I do not find any wrong in the Order of Tribunal below, particularly when Appellant, neither disputed the pleadings nor produced any evidence for the objections now raised herein in the Appeal. Much is argued about interpretation of Tripartite Agreement, but having consented before the State Consumer Disputes Reddressal Commission, undertaking to pay amount, which the Appellant received from Bank, it is not open to Appellant now
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to raise any objection contrary to the consent given before
said Reddressal Commission.
8. On a scrutiny of entire material, I am of the considered view that the Tribunal below perfectly justified in allowing the OA and I do not find any illegality in the Order of Tribunal below.
9. For these reasons, it is held that the Appeal is completely devoid of merits and liable to be dismissed.
10. In the result, the Appeal in RA 73/2018 is dismissed
with costs. All pending IAs, if any, stand closed.
[Dictated to Athistamani, PS, transcribed by her, corrected, signed and pronounced by me in open court, 23rd of January, 2024]
[ Justice S. Ravi Kumar]
CHAIRPERSON
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3 issues framed by the court
Whether the appellate court can be justified in dismissing the appeal filed by a developer who had already consented to refund money before a Consumer Disputes Redressal Commission.
Whether the Debts Recovery Tribunal correctly held the appellant liable for the balance loan amount despite the developer's subsequent plea.
Whether the appellant's failure to file a written statement in the lower tribunal bars their current objections in the appeal.
Ittina Properties Limited
The Officer, M/s. Asset Reconstruction Company (India) Ltd.
Mr. K.P. Prasad
Mr. K. Purandhara Raju
S. Ravi Kumar
As recorded by the court registry
19 orders share this CNR
Judgements on the same questions, provisions and authorities, from every court
