Appeal against DRT impugned order directing deposit to settle SBI loan. Tribunal held directing bank to settle loan under OTS contrary to law where eligibility criteria not met. Dismissed S.A. before allowing appeal and setting aside impugned order.
Impugned order dated 29.02.2020 set aside. S.A. 38 of 2017 dismissed.
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.
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Reportable / not reportable
IN THE DEBT RECOVERY APPELLATE TRIBUNAL - KOLKATA
HON'BLE Justice Anil Kumar Srivastava, Chairperson
REGULAR APPEAL No. 23 of 2023
(Arising out of S.A. No. 38 of 2017 – DRT-Cuttack)
22.04.2025
2.KANAKA RAY, Residing at Vill. Bidyadharpur,NayabazarCuttack – 753004 Odisha
3.BISWA RANJAN RAY, Bidyadharpur,NayabazarCuttack – 753004 Odisha
... Appellants
--Vs--
2.STATE BANK OF INDIA, Madhupatna Cuttack 753010.
3.MS CELLMATE STOCK POINT, Thoria Sahi. PS Mangalabag, Cuttack, 753001.
4.SMT SABITA SINHA, Thoria Sahi. PS Mangalabag, Cuttack, 753001.
5.SRI NALINIKANTA DASH at Gopabandhu Nagar, Chauliaganj, Nayabazar, Cuttack – 753004.
... Respondents
For Appellant : Mr. Ranjan Kr. Rout, Ld. Adv.
For Respondent:Mr. Nemani Srinivas, ld. adv.
Mr. Debasish Chakraborty, ld. adv.
The Appellate Tribunal
Instant appeal has arisen against the judgement dated
29.02.2020 passed by learned DRT Cuttack in S.A. No. 38 of
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2017 [Sri Sruti Ranjan Ray & Ors. Vs. Authorised Officer, State
Bank of India & Ors]
Ray and appellant no.3 Biswa Ranjan Ray are the son of late Bijay Kumar Ray and appellant no.2 Kanaka Ray is the wife of late Bijay Kumar Ray, mortgager, who died on 11.10.2014. Appellant no.3 Biswa Ranjan Ray is one of the partners of M/s Cellmate Stock Point. Appellant no.3 along with other partners started business in the name and style of M/s Cellmate Stock Point. Secured creditor State Bank of India, respondent herein, sanctioned a sum of Rs.40.00 lakh cash credit limit on 17.12.2004. The loan account became irregular and was classified NPA on 31.03.2007. Notice u/s 13(2) of the SARFAESI Act, 2002 (hereinafter referred to as Act) was issued. Loan was secured by creating equitable mortgage of immovable property of late Bijay Kr. Ray, who is father of appellant no.1 and 3 and husband of appellant no.2. Notice u/s 13(4) of the Act was issued on 16.03.2012.
of the RDB Act, 1993 which was allowed by issuing recovery
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certificate for an amount of Rs.43,82,303/- along with interest @ 12% per annum pendente lite and future from 11.12.2007 till the
date of realisation.
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date on 29.03.2016 for a reserve price of Rs.69.00 lakhs. S.A. 23 of 2016 was filed challenging the same. Pending S.A. Auction sale was re-scheduled for a reserve price of Rs.43.35 lakhs.
date on 28.03.2017, which was published in the newspapers on 11.03.2017 fixing reserve price at Rs.43.35 lakh. Prayer of the applicants to settle the matter under SBI Scheme 2016was rejected by the bank vide letter dated on 18.03.2017. Appellants
filed securitization application u/s 17 of the Act for quashing the
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notice dated 04.03.2017, paper publication dated 11.03.2017 and
the rejection of the letter for settlement of the loan amount dated 18.03.2017 with consequential reliefs.
by filing opposition wherein it is stated that the loan account was classified as NPA and notice u/s 13(2) was issued in accordance with law. E-auction notice was duly served and property was put
to auction on 28.03.2018, which was auctioned in favour of the highest bidder one Nalinikanta Dash at Rs.43.45 lakhs and the sale price was duly deposited in time. Sale certificate was also issued in accordance with law.
auction sale and not to hand over possession of the secured asset subject to deposit of Rs.20 Lakhs by the appellants, but the same was not complied. Accordingly, interim order was vacated on 11.07.2017. Possession of secured asset was taken under the order of the District Magistrate passed u/s 14 of the Act. Sale certificate was also issued in favour of the auction purchaser. It is further submitted that long litigations were made by the appellants, borrowers and guarantors.
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action which was dismissed as not pressed on 05.01.2009.
order for depositing Rs.8.00 lakh and subsequent Rs.38.00 lakh
as directed by the Hon’ble High Court of Orissa vide order dated
15.05.2014.
Sinha which was also disposed of due to non-compliance of the order dated 17.06.2013 for deposit of Rs.7.00 lakh.
the auction sale notice dated 21.01.2015 which was dismissed by
the DRT.
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Kanaka Ray for acceptance of the OTS proposal under SBI Scheme 2016 which was disposed of. An interim order was passed by the DRT not to hand over the possession subject to deposit of Rs.20 lakh before the Registry of the DRT, which was not complied.
the SBI Scheme 2016, accordingly, the same was not accepted. Award of Lok Adalat was not honoured by the appellants. Learned DRT consequently passed the impugned order giving opportunity to the appellants to deposit a sum of Rs. 50.00 lakhs within one month from the date of the order with the respondent
bank and on deposit of the amount, bank is directed to return the
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amount of the auction purchaser and if the amount is not deposited bank would be at liberty to register the property in
favour of the auction purchaser. This order is also not complied
by the appellants rather challenged by preferring the appeal.
He died on 11.10.2014. Matter was taken up in Lok Adalat before
the learned DRT and was settled. But the sale notice was published in the name of Bijoy Kr. Ray, a dead person and no notice was issued against the appellants. It is further argued that even in WP No. 919 of 2016 direction was issued by the Hon’ble
Orissa High Court for settlement of the matter in view of the SBI
Scheme 2016, but the same was not complied by the bank.
Actual amount of claim was not reflected in the sale notice. It is further argued that property was sold on under valuation.
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large number of litigations with the intention to drag on the proceedings so that secured creditor may not realise the amount. Appellants are not even honouring their own commitment when the matter was settled before the Lok Adalat in DRT wherein amount was settled to be paid, but the same was not complied. Thereafter, in the Hon’ble High Court a settlement was made for settling the amount in terms of the SBI Scheme 2016, but the loan amount was not covered under the same OTS scheme, hence, the loan account was not settled. Appellants have never made any proposal for settling the loan account or made any deposit with the bank for settlement of the account. Sufficient time was granted to them to deposit the loan amount, but was not complied by them. Notice under Rule 8(6) was duly published and receipt of the same was admitted by the appellants.
by the appellants to the authorised officer about the reserve price. Hence, now they cannot raise a plea of under valuation.
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Notice under Rule 8(6) was duly issued and served upon the
appellants and also duly published.
is the wife of late Bijoy Kr. Ray. It is not in dispute that Bijoy Kr. Ray was the guarantor who created equitable mortgage in favour of the secured creditor bank. Matter was settled in the Lok
Adalat on 25.08.2012. But the terms and conditions of the award of the Lok Adalat was not complied by the appellants. It is pertinent to note here that Bijoy Kr. Ray, guarantor, was alive on
that date. Terms and conditions of the award of the Lok Adalat have a binding effect upon the parties in favour of whom it was
passed that isBijoy Kr. Ray, the guarantor, during his life time the
award was passed. Appellants herein are the legal heirs who are
also bound by the award as the same was passed during the life
time of Bijoy Kr. Ray. Bijoy Kr. Ray had not challenged the award
passed by the Lok Adalat. It has been held in P. T. Thomas Vs.
Thomas Job [(2005) 6 SCC 478] that award passed in Lok Adalat is final and binding upon the parties and is executable.
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are legal heirs of Bijoy Kr. Ray are estopped from challenging the
award or the proceeding conducted in the Lok Adalat in DRT.
11.02.2017 which reads as under :
“Both the parties are present and agreed that the loan amount of the petitioner shall be settled in terms of the SBI OTS manufacturing, Trade and Services 2016.
Both the parties filed a compromise petition to the above effect and the same is made part and parcel of the order.
The Writ Petition is accordingly disposed of.”
settled in terms of SBI Scheme 2016. When the appellants move
the application for settlement of the loan account in terms of the
order, then bank communicated by letter dated 18.03.2017 that
the case of the appellants is not coming under the purview of the
SBI Scheme 2016. However, bank offered the appellants for
arriving at a compromise settlement by 24.03.2017. Hon’ble
High Court has recorded that the loan account of the petition shall
be settled in terms of the SBI OTS manufacturing, Trade and
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Services 2016, but when the appellants’ loan account was not covered under the condition of the SBI OTS manufacturing, Trade
and Services 2016, bank has rightly rejected the proposal submitted by the appellants. There is no violation of the direction issued by the Hon’ble High Court.
are adopting all the methods to restrict the bank from realising the loan amount. Even when the learned DRT passed the impugned order giving option to the appellant to make payment of Rs.50.00 lakhs in the loan account, then also the appellant did
not avail the opportunity and did not deposit the amount. Although the direction issued by the learned DRT is not in accordance with the law. It has been held by the Hon’ble Apex
Court in The Bijnor Urban Cooperative Bank Vs Meenal
Agarwal [(2023) 2 SCC 805] has held as under :
“The sum and substance of the aforesaid discussion would be that no writ of mandamus can be issued by the High Court in exercise of powers under Article 226 of the Constitution of India, directing a financial institution/bank to positively grant the benefit of OTS to a borrower. The grant of benefit under the OTS is always subject to the eligibility criteria mentioned under the OTS Scheme and the guidelines issued from time to time. If the bank/financial institution is of the opinion that the loanee has the capacity to make the payment and/or that the bank/financial institution is able to recover the entire loan amount even by auctioning the mortgaged property/secured property, either from the loanee and/or guarantor, the bank would be justified in
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refusing to grant the benefit under the OTS Scheme. Ultimately, sucha decision should be left to thecommercial wisdom of the bank whose amount is involved and it is always to be presumed that the financial institution/bank shall take a prudent decision whether to grant the benefit or not under the OTS Scheme, having regard to the public interest involved and having regard to the factors which are narrated hereinabove.”
into the area which is prohibited in the law. Tribunal cannot settle the matter fixing the terms and conditions between the parties. Learned DRT by passing the impugned order giving an option to the appellants to make a deposit of Rs.50.00 lakhs to
settle the terms of settlement which is against the law.
assessed by the Valuer. Valuation was fixed on the basis of valuation report obtained from the Valuer. Property was not sold less value or under value.
purchaser. In the securitization application relief claimed is regarding quashing of annexure 9, 10 and 11 i.e. sale notice dated 04.03.2017; Paper publication dated 11.03.2017 and
rejection of proposal of settlement in terms of SBI OTS manufacturing, Trade and Services 2016 dated 18.03.2007.
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Further relief is sought to direct the bank to settle the loan account in terms of SBI OTS manufacturing, Trade and Services
by the bank and sale certificate issued in favour of the successful auction purchaser. Bank has rightly issued letter dated 18.03.2017 for not accepting the settlement proposal under the SBI OTS manufacturing, Trade and Services 2016 as the loan account of the appellants is not covered under the terms and conditions of the SBI OTS manufacturing, Trade and Services
aside. Accordingly, S.A. is also liable to be dismissed.
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O R D E R
aside. Consequently, S.A. 38 of 2017 is dismissed. Costs easy.
File be consigned to record room.
Copy of the order be supplied to the appellant and the respondents and a copy be also forwarded to the concerned DRT. Copy of the judgement/Final Order be uploaded in the Tribunal’s website.
Order dictated, signed and pronounced by me in the open Court on this the 22nd day of April, 2024.
(Anil Kumar Srivastava, J) Chairperson
Dated : 22.04.2025 /pkb
2 issues framed by the court
Whether the Appellate Tribunal committed a patent illegality by directing the bank to settle the loan account under the SBI OTS Scheme despite the case not meeting eligibility criteria.
Whether the Appellate Tribunal could fix terms and conditions for settlement between the borrower and the secured creditor.
Colour shows how this judgement treated each authority
P. T. Thomas Vs. Thomas JobExplained¶99
P. T. Thomas Vs. Thomas Job [(2005) 6 SCC 478] · Who else cites this
The Bijnor Urban Cooperative Bank Vs Meenal AgarwalApplied¶126
The Bijnor Urban Cooperative Bank Vs Meenal Agarwal [(2023) 2 SCC 805] · Who else cites this
4 provisions across 2 enactments
Sruti Ranjan Ray
KAnaka Ray
Biswa Ranjan Ray
Chief Manager & AO, SARB, STATE BANK OF INDIA
STATE BANK OF INDIA
MS CELLMATE STOCK POINT
Anil Kumar Srivastava
As recorded by the court registry
9 orders share this CNR
Judgements on the same questions, provisions and authorities, from every court
