Allowed

Union Bank of India v. Mrs. Madhuri Mukund Pendse & Ors.

DRAT11 Nov 2024REGULAR APPEAL/84/2017

Case brief

AI extract

What is this about?

The DRT Appellate Tribunal allowed an appeal by Union Bank of India against the dismissal of its recovery application. The Tribunal below had dismissed the case for lack of pecuniary jurisdiction, having disallowed interest due to lack of arithmetic proof. The Appellate Tribunal set aside the lower order, held the bank's evidence prima facie correct in view of the缺席 of rebuttal, and restored the o

What did the court decide?

The impugned judgment is set aside. O.A. No. 123 of 2008 allowed directing defendants to pay ₹11,41,293/- with interest at 18% per annum till 01.03.2016 and 12% thereafter, plus costs.

Union Bank of India versus Mrs. Madhuri Mukund Pendse & 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. 84/2017

Between

Union Bank of India

… Appellant/s

V/s.

Madhuri Mukund Pendse & Ors.

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…Respondent/s

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Mr. Nainesh Amin, Advocate for Appellant.

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-: Order dated: 11/11/2024:-

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The appellant Union Bank of India assails the judgment dated 01.03.2016 of the Debts Recovery Tribunal, Pune (DRT ) dismissing the Original Application (O.A.) No. 123 of 2008, which was filed by the bank to recover debt allegedly due from the respondents under the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (“RDDB & FI Act”, for short).

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The facts can be encapsulated thus:

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The respondents borrowed money in 2004 from GIC Housing Finance Ltd. and a sum of ₹10 lakhs was sanctioned to purchase flat No. A/15 on the third floor of Omkar Apartments admeasuring 730 ft² and a terrace admeasuring 200 ft² Bhusari Colony, Kothrud, Pune. Repayment was to be made in 180 equated monthly instalments. An equitable mortgage was created on 29/09/04 by deposit of title deeds. Other documents such as a promissory note and hypothecation agreement were also executed. ₹8,28,650/-was disbursed by way of a pay order dated 27/09/04. The appellant bank took over the loan from GIC Housing Finance Ltd.

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The respondents defaulted in repaying the amount. On 25/11/06 they signed and executed a debit balance confirmation note admitting the outstanding liability of ₹8,33,738/-. By 30/05/08, the outstanding dues had become ₹11,41,293/-. A demand notice was issued on 03/07/08 demanding the debt due. There was no response and hence the appellant was constrained to file the OA.

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The respondents had appeared before the DRT and filed a written statement challenging the claim on grounds such as pecuniary jurisdiction, limitation, and also denying the fact regarding availing of loan and creation of equitable mortgage. The rate of interest claimed was also challenged. It was pointed out that the subject flat was already sold by the Recovery Officer in consequence of the recovery certificate issued in O.A. No. 821 of 2001 filed by the Canara Bank.

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The appellant bank filed an affidavit of evidence in support of their developments in the O.A. and documents were exhibited. Though a written statement was filed, there was no representation for the defendants either at the time of evidence or at the time of the hearing.

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In the impugned order, the Ld. Presiding Officer observed that the O.A. was filed within the period of limitation. The execution of the documents and creation of the equitable mortgage was also found in favour of the appellant. It was observed that there was no evidence available regarding the sale of the subject property in the execution proceedings by the Canara Bank.

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The Ld. Presiding Officer however concluded in the impugned judgment that the interest charged was exorbitant. It is also observed

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that the applicant did not succeed in establishing how the claim amount of ₹11,41,293/-was arrived at. It was noted that the bank has capitalised penal interest from 30/10/04 till 31/05/05. The Ld. Presiding Officer held that the applicant could not prove that the interest charged was as per the contract. In case the interest for the period starting from March 2007 to May 2008 is disallowed, the amount of interest would be reduced drastically, observes the DRT. The Ld. Counsel for the applicant was found at fault for not assisting the Tribunal with the arithmetical calculation. Hence, it was concluded that if the interest from the year 2006 is disallowed, the total amount claimed would come to less than ₹10 lakhs. On this premise, the Tribunal below held that it has no pecuniary jurisdiction to entertain an application as a claim amount less than ₹10 lakhs. Thus, the application was dismissed. The appellant is aggrieved, and hence in appeal.

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Heard the Ld. Counsel appearing for the appellant. The respondents remained ex-parte. Records perused.

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The Ld. Presiding Officer has accepted the case of the applicant in the O.A. on most of the issues which arose for determination. The question of limitation raised by the respondent was found in favour of the applicant for the reason that it is a mortgage debt and the period of limitation under Article 62 of the Limitation Act is 12 years. At the beginning of the judgment, Ld. Presiding Officer opines that since the claim is about ₹10 lakhs, the DRT has jurisdiction to entertain the application. However, at the later part of the judgment, the Ld. Presiding Officer concludes that the counsel for the bank did not assist

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in the calculation of interest to satisfy the Tribunal about the correctness of the amount of interest claimed, so the interest was excluded and the total claim was brought down to less than ₹10 lakhs, and the O.A. was dismissed.

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I find no justification in the Ld. Presiding Officer to disbelieve the case of the applicant. The account statement has been produced to prove the principal amount and interest. A proof affidavit has been filed by the officer of the bank in support of the claim of the applicant. Although the defendants had filed the written statement, they did not support their contentions in the written statement or contradict the affidavit filed by the officer of the bank. The statement submitted by the bank under the Bankers Book of Evidence Act is prima facie evidence regarding the correctness of the statement. That statement is also supported by the claim affidavit filed by the officer of the bank. The interest that is claimed by the bank is in accordance with the contract entered into between the creditor and the borrower and as per Sec. 34 of the CPC the Court is under obligation to allow interest at the contractual rate for a commercial transaction even for pendent lite and future interest. In the instant case, there is no contra evidence forthcoming from the defendants. Hence, it was incumbent upon the Tribunal to have decreed the application as prayed for. The Hon’ble Supreme Court has in A.B. Govardhan vs. P. Ragothaman 2024 SCC OnLine SC 2284 , held that once a contractual rate of interest was agreed upon by the parties, there was no scope for the Division Bench of the High Court to state that there was no stipulation to pay interest in the agreement. The agreement had to be read in conjunction with

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various promissory notes and documents evidencing the mortgage and repayment of the loan with interest. The is no contra evidence by the defendant to challenge the evidence adduced by the bank. The Hon’ble Allahabad High Court has in Managing Committee, Shiksha Parishad Nagawa, Ballia & Ano. vs. Assistant Registrar Firms, Chits & Societies , Azamgarh & Ors 2004 SSC OnLine All 1280 held thus:

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“6. The respondents till date have not filed their counter-affidavit in rebuttal to the averments made in the writ petition, inspite of time being granted to them on several dates on the request of their Ld. Counsel. It is settled law that if no affidavit, in rebuttal, is filed and the averments made in the affidavit are not controverted, then the said averments must be accepted as true and correct and the presumption in favour of the petitioner in terms of Sec. 114, Illustration (g) of the Indian Evidence Act, 1872 as laid down in catena of decisions including AIR 1966 All 156, AIR 1962 All 407, AIR 1987 SC 479 and 1999 (82) FLR 709. In the absence of the counter-affidavit, this Court is left with no option, but to accept the averments made in the writ petition to be correct and true. I find that the impugned order deserves to be quashed having not been passed in accordance with law.

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Given the above findings, I find that the Ld. Presiding Officer

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was not justified in dismissing the O.A. The appeal is, therefore, allowed and the impugned judgment and order are set aside and the O.A. No. 123 of 2008 on the files of the DRT, Pune is allowed directing the defendants therein to jointly and severally pay a sum of ₹11,41,293/- together with interest at the rate of 18% per annum with quarterly rest from the date of filing of the O.A. till 01/03/2016 and future interest at the rate of 12% per annum till realisation and the cost of the proceedings. A recovery certificate shall be issued accordingly.

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Sd/Chairperson

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mks-02

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Union Bank of India v. Mrs. Madhuri Mukund Pendse & Ors.

Case brief

What is this about?

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Union Bank of India v. Mrs. Madhuri Mukund Pendse & Ors.

Case brief

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