Dismissed

Vinod Bhatia v. State Bank of India and Ors.

DRAT5 Aug 2024REGULAR APPEAL/82/2009

Case brief

AI extract

What is this about?

The Debts Recovery Appellate Tribunal dismissed the appeal against an order allowing a review application in part. The Tribunal held that the lower court correctly rejected the counter-claim for the loss of hypothecated goods as there was no error apparent on the face of the record and the appellant failed to prove the bank's negligence.

What did the court decide?

None. The appeal was dismissed without substantive relief being granted.

Vinod Bhatia versus State Bank of India and Ors. — Banking and Recovery | DRAT (2024)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr Justice Ashok Menon, Chairperson

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Appeal No.82/2009

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Between

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Vinod Bhatia … Appellant/s

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V/s.

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State Bank of India & Ors. …Respondent/s

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Mr Harjot Singh Alang, i/b M/s Raval Shah & Co. Advocate for Appellant .

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Mr Vivek Sawant, Advocate for Respondent Bank.

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This appeal challenges the order dated 04/02/2009 in Review Application No. 1 of 2008 in Original Application (O.A.) No. 3653 of 2000 on the files of the Debts Recovery Tribunal-I, Mumbai (D.R.T.) allowing the application only in part. The appellant is the third defendant in the O.A. described above and the applicant in the Review Application and had sought a review of the judgment and the order of the D.R.T. dated 06/06/2002 in the O.A. mentioned above. 2. The facts, in brief, are thus:

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The first respondent State Bank of India (SBI) is the creditor, which granted various credit facilities to the second respondent M/s SLBS Ispat Pvt. Ltd., the principal borrower with the appellant is one of the guarantors/mortgagors in the year 1989. Repayment of the loan was defaulted resulting in the SBI filing Suit No. 1192 of 1995 before the Hon'ble High Court of Bombay. The suit was later transferred to the DRT and refiled as O.A.

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The defendants filed a written statement with a counter-claim. In the counter-claim, it was contended that as per the statement of stock dated 15/05/1993. There was a stock of 130 M.T. of MS plates valued at ₹24.05 lakhs and 120 M.T. of tin plates worth ₹42 lakhs as hypothecated goods of the first defendant debtor. A Court receiver was appointed by the Hon'ble High Court on 19/04/1995 and the aforesaid stock came into the possession of the receiver. The bank obtained an order of sale of the aforesaid hypothecated goods on 03/08/1996. It is alleged that no steps were taken to sell the hypothecated goods expeditiously. The aforesaid goods were perishable on account of being corrosive due to moisture. The defendants had allegedly, through their advocates written letters on 04/03/1996, 20/05/1996, 23/06/1996 and 21/08/1996 requesting the Court receiver as well as the bank to shift the said hypothecated goods to a proper godown for safekeeping, storing to prevent deterioration and pilferage. The defendants contend that as of the date of filing of the written statement, on 18/11/1996, there was an existing stock of only 30 M.T. of MS plates and 70 M.T. of tin plates worth ₹3 lakhs and ₹7 lakhs respectively. This fact is also substantiated by the report of the Court receiver dated 03/07/1996. The defendants contend that because of the negligence of the bank in storing the hypothecated goods, the defendants suffered a loss of those goods which they estimate at ₹55 lakhs. In their counter-claim, the defendants seek the aforesaid amount together with interest at the rate of 24% per annum, adding up to ₹115.12 lakhs as compensation from the bank. No written statement was filed by the bank against the

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counter-claim.

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In the impugned judgment, the DRT found that the applicant has proved its claim against the defendants and it was further observed that the counter-claim has not been proved by the defendants. It was found that the Court receiver could sell the hypothecated goods only after the order of the Hon'ble High Court was obtained on 03/08/1996. The DRT also found that once the Court receiver takes possession of the goods, the applicant bank could not have sold them. It is also observed that the applicant bank could not have been blamed for any reduction in the hypothecated goods. The counter-claim was dismissed and the boy was allowed to direct the defendants to pay to the applicant bank a sum of ₹81,21,856.85 together with interest at the rate of 16.5% per annum with effect from the date of filing of the suit before the Hon'ble High Court till realisation. The mortgaged decree was also passed and a Recovery Certificate was issued.

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The third defendant filed the aforesaid Review Application No. 1 of 2008 while the Recovery Proceedings No. 305 of 2002, was pending before the Recovery Officer for execution. It was pointed out that ₹19.65 lakhs was paid directly to the bank during the pendency of the O.A. This fact was not brought to the notice of the DRT, and therefore, the amount as claimed in the O.A. was allowed to be recovered from the defendants. It was also contended that the counter-claim was not controverted by the bank by filing a written statement, and therefore, it should have been allowed. The third defendant, therefore, prays that the review application be allowed. 6. In the impugned order, the DRT observed that the applicant

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bank has admitted that the sum of ₹19.65 lakhs was directly deposited by the defendants during the pendency of the O.A. Hence, the review to that extent was allowed. Concerning the counter-claim, it was observed that not filing a written statement of the counter-claim is no reason to allow it without there being any substance in the claim. It cannot be said that it is an error apparent on the face of the record. Hence, the review was allowed in part, and the Recovery Certificate was directed to be rectified. The appellant is aggrieved and hence in appeal.

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I heard the Ld. Counsel for the appellant, Mr Harjot Singh Alang and Mr Vivek Sawant, the Ld. Counsel appearing for the respondent bank. The records perused.

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The learned counsel appearing for the appellant submits that in May 1993, the bank had appointed security guards for the movable goods to restrain the movement of those hypothecated goods. It is pointed out that goods worth ₹66 lakhs were taken possession of by the bank and security guards were being paid ₹15,000/- per month towards the charges involved. The said amount was also being debated from the debtor's account. It is taking into view, the possibility of pilferage that the goods are entrusted to the Court receiver appointed by the High Court. The appellant had repeatedly written letters through counsel requesting the Court receiver to shift the goods to a godown to avoid deterioration and pilferage. It was only on the 21^st of August 1996 that the Court receiver took physical possession of the goods and by that time, the goods for found to have been reduced in quantity. The security guards were changed by the

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receiver and ₹9000/- per month was being charged. The appellant also would rely on a letter dated 23/09/1996 written by the Court receiver to the counsel appearing for the appellant informing about the negligence of the security guards deployed by the bank. There was no response by the bank in this regard. The suit was transferred from the High Court to the D.RT. on 06/06/2000. In August 2003, the Recovery Officer disposed of the movable goods for ₹10.18 lakhs. The Ld. Counsel for the appellant submits that in the letter dated 15/05/1993, the details of the hypothecated goods held by the company as of date were informed to the bank. It is in that letter that the quantity of MS plates is shown as 130 M.T valued at ₹24.05 lakhs at the rate of ₹18.50 per metric ton. The quantity of the tin plates is shown as 120 M.T. valued at ₹ 42 lakhs at the rate of ₹35/-per metric ton. An additional affidavit was filed containing the report dated 31/10/1996, which shows the total weight of the goods as 105.250 M.T. There is also an evaluation report filed by the valuer to indicate that the total weight of the goods removed in trucks was 92.456 M.T. and the total value of the goods is given as ₹11,73,615/-. The learned counsel relies on the decision of the Hon'ble Supreme Court in Rajender Singh vs. Lieutenant Governor, Andaman & Nicobar Islands & Ors (2005) 13 SCC 289 to argue that when material records were ignored, a good case for review of the order is made out.

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Per contra, the Ld. Counsel appearing for the bank submits that a letter was written on 21/08/1996 by the appellant to their counsel stating that he was willing to hand over the goods to the Court receiver but the plaintiff refused to take possession stating that they have not

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arranged for the labour and transport. It was also informed to the Court receiver's representative and the representative of the bank that the materials are prone to pilferage and deterioration. The Ld. Counsel submits that the very claim of the appellant that the bank had possession of the goods since 1993 is belied by this letter, wherein the appellant has admitted that he was willing to hand over the goods to the Court receiver on 21/08/1996. It is further submitted that appreciation of evidence and material afresh in the review application is not permissible. The allegation that the D.R.T. did not consider the counter-claim is also not true, submits the Ld. Counsel. The D.R.T. has in paragraph 8 of the judgment discussed the counter-claim in detail and had disallowed it. Hence, it was not possible to reconsider the counter-claim once again in the review application. In the written statement filed by the defendants. It is admitted that the plaintiff is entitled to appoint guards under the documents signed by the defendants. The only objection was that the salary paid to the guards was exorbitant. The fact that guards were deployed as early as 1993, indicates that there was no negligence on the part of the bank, submits the Ld. Counsel.

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The specific case of the appellant is that the bank has been negligent in not taking proper care of the hypothecated movables which resulted in the deterioration and pilferage of the goods. It is pertinent to note that apart from the report of the Court receiver, there is no inventory to prove the quantity of the available goods. The letter that is relied upon by the appellant dated 21/08/1996, indicates that the bank did not have the goods in its possession. The argument of

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the Ld. Counsel for the appellant that evidence regarding payment of salary to the guards would by itself indicate that the bank had possession of the goods. This argument of the Ld. Counsel is not acceptable because, from his letter, there is an admission that he was willing to hand over the goods to the Court receiver in 1996. The deployment of the guards by the bank was only intended to see that the appellant was not himself removing the goods. No inventory is taken before the movement of the articles as reported in the Court receiver's report dated 31/10/1996, which would indicate that the goods available were only 92.456 M.T. valued at ₹11,73,615/-. Hence, it cannot be said that the appellant had succeeded in establishing the decrease in the quantity of the goods after the bank had taken possession.

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An application for review is not a rehearing of the case. The Hon’ble Supreme Court has in Inderchand Jain (D) through L. Rs. v. Motilal (D) through L. Rs. 2009 (14) SCC 663 held thus:

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“7. S.114 of the Code of Civil Procedure (for short "the Code") provides for a substantive power of review by a Civil Court and consequently by the appellate courts. The words "subject as aforesaid" occurring in S.114 of the Code means subject to such conditions and limitations as may be prescribed as appearing in S.113 thereof and for the said purpose, the procedural conditions contained in O.47 of the Code must be taken into consideration. S.114 of the Code although does not prescribe any limitation on the power of the court but such limitations have been provided for in O.47 of the Code; R.1 whereof reads as under:

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"17. The power of a civil court to review its judgment/decision is traceable in S.114 CPC. The grounds on which review can be sought are enumerated in O.47 R.1 CPC, which reads as under:

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"1. Application for review of judgment.-- (1) Any person

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considering himself aggrieved –

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(a) by a decree or order from which an appeal is allowed, but

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from which no appeal has been preferred,

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(b) by a decree or order from which no appeal is allowed, or

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and who, from the discovery of new and important matter or evidence which, after the exercise of due diligence, was not within his knowledge or could not be produced by him at the time when the decree was passed or order made, or on account of some mistake or error apparent on the face of the record, or for any other sufficient reason, desires to obtain a review of the decree passed or order made against him, may apply for a review of judgment to the court which passed the decree or made the order."

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An application for review would lie inter alia when the order suffers from an error apparent on the face of the record and permitting the same to continue would lead to failure of justice. In Rajendra Kumar v. Rambai, AIR 2003 SC 2095 , this Court held :

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"6. The limitations on exercise of the power of review are well settled. The first and foremost requirement of entertaining a review petition is that the order, review of which is sought, suffers from any error apparent on the face of the order and permitting the order to stand will lead to failure of justice. In the absence of any such error, finality attached to the judgment/order cannot be disturbed."

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The power of review can also be exercised by the court in the event discovery of new and important matter or evidence takes place which despite exercise of due diligence was not within the knowledge of the applicant or could not be produced by him at the time when the order was made. An application for review would also lie if the order has been passed on account of some mistake. Furthermore, an application for review shall also lie for any other sufficient reason.

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It is beyond any doubt or dispute that the review court does not sit in appeal over its own order. A rehearing of the matter is impermissible in law. It constitutes an exception to the general rule that once a judgment is signed or pronounced, it should not be altered. It is also trite that exercise of inherent jurisdiction is not invoked for reviewing any order.”

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Review is not appeal in disguise. In Lily Thomas v. Union of India, AIR 2000 SC 1650 , the Hon’ble Supreme Court held :

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"56. It follows, therefore, that the power of review can be exercised for correction of a mistake and not to substitute a view. Such powers can be exercised within the limits of the statute dealing with the exercise of power. The review cannot be treated an appeal in disguise."

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The Hon’ble Supreme Court has in State of West Bengal and Others

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v. Kamal Sengupta and Another (2008 )8 SCC 612 Observed thus:

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“22. The term “mistake or error apparent” by its very connotation signifies an error which is evident per se from the record of the case and does not require detailed examination, scrutiny and elucidation either of the facts or the legal position. If an error is not self-evident and detection thereof requires long debate and process of reasoning, it cannot be treated as an error apparent on the face of the record for the purpose of O.47 R.1 CPC or S.22(3)(f) of the Act. To put it differently an order or decision or judgment cannot be corrected merely because it is erroneous in law or on the ground that a different view could have

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been taken by the Court/Tribunal on a point of fact or law. In any case, while exercising the power of review, the Court/Tribunal concerned cannot sit in appeal over its judgment/decision.”

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In the instant case, the review application was filed almost a year after

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the O.A. was disposed of. The Ld. Presiding Officer has discussed the counter-claim put forth by the appellant and concluded that there is no sufficient material to prove any negligence on the part of the bank. It was also observed that the counter-claim is to be proved and established by the defendant independently. The fact that no written statement is filed will not be proof regarding the claim put forth by the defendant. Hence, I find that the Ld. Presiding Officer had rightly rejected the review application, concerning the counter-claim.

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I find no reason to interfere with the findings in the impugned order. The appeal has no merits and is, therefore, dismissed.

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Sd/Chairperson

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mks-01

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Vinod Bhatia v. State Bank of India and Ors.

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What is this about?

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Vinod Bhatia v. State Bank of India and Ors.

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