Allowed

Charminar Concrete Products Pvt. Ltd. and Others v. Idbi Bank

DRAT21 Feb 2025REGULAR APPEAL/61/2023

Case brief

AI extract

What is this about?

Appeals filed by borrowers against ITCA orders requiring bank to furnish security and handover title deeds. Tribunal held bank lacked right to retain title deeds without specific recital and denied general lien under Section 171 Contract Act, allowing appeals and quashing impugned orders.

What did the court decide?

Impugned orders dated 18.12.2019 and 30.9.2019 set aside; appellants directed to release title deeds deposited in O.A. 873 of 2015.

Charminar Concrete Products Pvt. Ltd. and Others versus Idbi… — Landlord and Tenant | DRAT (2025)

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Reportable/Non-Reportable

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Appeal No. 60 of 2023 & Appeal No. 61 of 2023-DRAT-Kolkata

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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Appeal No. 60 of 2023

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(Arising out of O.A. 803 of 2015 in DRT-I, Hyderabad) With

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Appeal No. 61 of 2023

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(Arising out of M.A. 90 of 2019 in (O.A. 873 of 2015 in DRT-I, Hyderabad)

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THE HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA CHAIRPERSON

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M/s Sri Srinivasa & Co., represented by its Partner P. Subba Rao son of Late P. Vengala Rao of New Plot No. A-28/1/B-1, Old Plot No. 28/1/B, Road No. 15, IDA, Nacharam, Hyderabad-500 039;

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Patallapalli Subba Rao, son of Late P. Vengala Rao, R/o. H. No. 16-2- 836/3, Madhava Nagar, Saidabad, Hyderabad – 500 059.

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… Appellants

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-Versus-

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IDBI Bank Limited, Mahavir House, Basheerbagh Square, Hyderabad - 500 029, represented by its Authorised Officer.

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Sri. P. Surya Prakash, S/o. Late. P. Vengala Rao, R/o .H. No. 16-2-836/3, Madhava Nagar, Saidabad, Hyderabad - 500 059;

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Smt. P. Atchamma, W/o. Late. P. Vengala Rao, R/o .H. No. 16-2-836/3, Madhava Nagar, Saidabad, Hyderabad - 500 059;

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Smt. P. Saritha, W/o. Sri. P. Subba Rao, R/o. H. No. 16-2-836/3, Madhava Nagar, Saidabad, Hyderabad - 500 059;

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Smt. M. Vengamma, W/o. Late. M. Vangaiah, R/o. H. No. 16-2-836/3, Madhava Nagar, Saidabad, Hyderabad - 500 059;

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Sri. M. Ramana, S/o. Late M. Vengaiah, R/o. H. No. 16-2-836/3, Madhava Nagar, Saidabad, Hyderabad - 500 059;

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Smt. P. Subbaratnam, D/o. Late M. Vengaiah, R/o. H. No. 16-2-836/3, Madhava Nagar, Saidabad, Hyderabad - 500 059;

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Sri. M. Kondaiah Chowdary S/o. Late M. Vengaiah, R/o. H. No. 16-2- 836/3, Madhava Nagar, Saidabad, Hyderabad - 500 059;

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Smt. P. Nagaratnam, D/o. Late M. Late M. Vengaiah, R/o. H. No. 16-2-836/3, Madhava Nagar, Saidabad, Hyderabad - 500 059. ... Respondents

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Appeal No. 60 of 2023 & Appeal No. 61 of 2023-DRAT-Kolkata Counsel for the Appellant s … Mr. Nemani Srinivas Mr. Tirthankar Das Counsel for Respondent No. 2 … Mr. Pritesh Bansod (Virtual) Mr. Supriyo Singh (Virtual)

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With

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Appeal No. 61 of 2023

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(Arising out of M.A. 90 of 2019 in (O.A. 873 of 2015 in DRT-I, Hyderabad)

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M/s. Charminar Concrete Products Private Limited, Represented by its Managing Director, Patalapalli Subba Rao, son of Late P. Vengala Rao of New Plot No. A-28/1/B-1, Old Plot No. 28/1/B, Road No. 15, IDA, Nacharam, Hyderabad-500 039;

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Patallapalli Subba Rao, Son of Late P. Vengala Rao, R/o. H. No. 16-2-836/3, Madhava Nagar, Saidabad, Hyderabad 500 059.

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… Appellants

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-Versus-

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IDBI Bank Limited, Mahavir House, Basheerbagh Square, Hyderabad - 500 029 represented by its Authorised Officer.

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Sri Pudi Bala Bhaskar Narasimha Ramamurty, Son of Sri P. Appa Rao, resident of H No. 9/156, Plot No. 242, St No. 6, HMT Colony, Nacharam, R.R. District, P.I.N. - 500 076;

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Sri V. Srinivas Rao son of Appa Rao, Resident of Q No. No. C-17, Muthampet, Metpally, Karimnagar District, P.I.N. - 505 325;

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Smt. KVSS Kalyani, wife of Sri V. Srinivas Rao, Resident of Q. No. No. C-17,Muthampet, Metpally, Karimnagar District, P.I.N. - 505 325;

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Sri Gurram Srikanth son of G. Venkat Raman, H No. 19-144, Reddy Colony, Miryalaguda District, P.I.N. – 508 207.

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... Respondents

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Counsel for the Appellant s … Mr. Nemani Srinivas Mr. Tirthankar Das

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Counsel for Respondent No. 2 … Mr. Pritesh Bansod (Virtual) Mr. Supriyo Singh (Virtual)

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JUDGMENT : 21^st February, 2025

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Appeal No. 60 of 2023 & Appeal No. 61 of 2023-DRAT-Kolkata

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THE APPELLATE TRIBUNAL :

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1. Both these appeals, Appeal No. 60 of 2023 and Appeal No. 61 of 2023, relate to the same matter pending before Learned DRT-I, Hyderabad arising out of O.A. 803 of 2015 (IDBI Bank Limited Bank Limited -vsP. Subba Rao & Others) and O.A. 873 of 2015 (IDBI Bank Limited Bank Limited -vs- M/s. Charminar Concrete Products Private Limited & Another), hence are being decided simultaneously.

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2. Appeal No. 60 of 2023 has arisen against order dated 18.12.2019 passed by DRT-I, Hyderabad in pending O.A. 803 of 2015 (IDBI Bank Limited Bank Limited -vsP. Subba Rao & Others) whereby Learned DRT directed Respondent No. 1 in the O.A. to furnish security to the extent of Rs.1, 54,46,000.00 before the Tribunal within ten days failing which order of attachment in respect of the petition schedule properties shall be passed. 3. Appeal No. 61 of 2023 has arisen against order dated 30.9.2019 passed by DRT-I, Hyderabad in pending O.A. 873 of 2015 (IDBI Bank Limited Bank Limited -vsM/s. Charminar Concrete Products Private Limited & Another) whereby Learned DRT directed the Bank to handover the title deeds to the Applicants.

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4. Heard the Learned Counsel for Appellants physically and Learned Counsel for Respondent virtually. 5. At the very outset, Learned Counsel for Appellant would submit that admittedly O.A. 873 of 2015 (IDBI Bank Limited

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Appeal No. 60 of 2023 & Appeal No. 61 of 2023-DRAT-Kolkata Bank Limited -vs- M/s. Charminar Concrete Products Private Limited & Another) was filed by the Bank for issuance of Recovery Certificate wherein a settlement was arrived at between the parties and the Appellants were entitled for release of the title deeds deposited in the O.A. 873 of 2015. An order to this effect was also passed and the O.A. was withdrawn by the Bank but the title deeds were not returned to the Appellants as another O.A. 803 of 2015 was pending which was also filed by the Respondent Bank against the Appellants herein along with other Respondents for issuance of certificate for an amount of Rs.3,04,94,735.00.

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5. After withdrawal of the O.A. 873 of 2015, I.A. 2634 of 2019 was filed in O.A. 803 of 2015 for a relief of attachment to be made in favour of the Bank in respect of the petition schedule properties, on the ground that sufficient securities are not available in O.A. 803 of 2015. Bank is holding Sale Deed No. 2234 of 2009 dated 25^th May, 2009 and Partition Deed No. 3506 of 2009 dated 27^th August, 2009 in respect of the petition schedule properties which was mortgaged by Subba Rao in O.A. 873 of 2015. The worth of the petition schedule property in O.A. 803 of 2015 is not sufficient for recovery of the claim in O.A. 803 of 2015. 6. After hearing the Learned Counsel for the parties Learned DRT recorded a finding that there exists a prima facie case in favour of the Bank as value of the security available with the Bank is Rs.5,62,95,000.00 as against the claim of Rs.11,85,70,210.00. Hence, if the of fund of the

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Appeal No. 60 of 2023 & Appeal No. 61 of 2023-DRAT-Kolkata petition schedule properties of the Respondent in O.A. 873 of 2015 is not alienated a great loss would occur to the Bank. Prima facie, balance of convenience is made out in favour of the Bank.

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7. Learned Counsel for Appellant would submit that admittedly an agreement is arrived at between the parties in O.A. 873 of 2015. Certain amount was paid. O.A. 873 of 2015 was withdrawn. In the present case, O.A. 803 of 2015, title deeds in O.A. 873 of 2015 could not be attached as no general alienation could be claimed by the Bank. Reliance is placed upon Balaram Choudhury -vs- Indian Bank (W.P. (C) No. 26178 of 2023) decided on 28.3.2024 wherein reliance is placed upon a Division Bench Judgment of Hon’ble Madras High Court passed in W.P.M.D. No. 12613 of 2016 (M. Shanti -vs- Bank of Baroda) decided on 9.8.2017. 8. Per contra Learned Counsel for Respondent would submit that admittedly, O.A. 873 of 2015 was withdrawn by the Bank as the matter was settled but there are personal guarantees of the Appellants in the present case O.A. 873 of 2015 which are liable to be attached. Prima facie case is made out in favour of the Bank. 9. Perusal of the attachment application would reveal that only ground taken was that the value of the petition secured property is not sufficient to realize the quantum claimed in the O.A. 803 of 2015. Hence, the documents of O.A. 873 of 2015 are liable to be attached in this matter.

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Appeal No. 60 of 2023 & Appeal No. 61 of 2023-DRAT-Kolkata 10. In Balaram Choudhury reliance is placed upon

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M. Shanti -vs- Bank of Baroda (supra) wherein in

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paragraphs 21 and 22 it was held :

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21. In M. Shanti -vs- Bank of Baroda, the Madras High Court concluded that the joint and several accounts managed by two or more individuals cannot be offset against the separate deposits of any one of offset against the separate them. The bank is not permitted to lay claim to the deposit of one partner, made in his distinct account, with the intention to utilize another deposit against the debt owed by the firm. In essence, partnership deposits cannot be employed to offset the individual debt of any one of the partners and vice-versa. The Court relied on the Division Bench judgment of Punjab High Court in the case of Punjab National Bank Limited -vs- Aruna Mal Durga Das, and held that:

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“In order to exercise the Banker's lien or right to set of, the demands must be mutual and between same parties. It was further held that the Bank has no lien on a partner's private account for an overdraft on partnership account or vice versa for want of reciprocity. Para 14 to 17 of the judgment are extracted below:

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(14) The rule of English law that the Bank has a lien or more appropriately, a right to set off against all monies of his customers in his hands has been accepted as the rule in India. According to this rule when monies are held by the Bank in one account and the depositor owes the Bank on another account, the Banker by virtue of his lien has a charge on all monies of the depositor in his hands and is at liberty to transfer the monies to whatever account, the banker may like with a view to set off or liquidate the debts: vide Llyods Bank Limited -vs- Administrator General of Burma, AIR 1934 Rang 66 and Devendrakumar Lalchandji -vs- Gulab Singh, AIR 1946 Nag 114.

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(15) In order to create Banker's lien on several accounts it is necessary that they must belong to the payer in one and in the same capacity. Where the person has two accounts, one a trustee account and another private account at a Bank, deposits in the two accounts cannot be set off, the one against the other (see AIR 1934 Rang 66).

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(16) Bankers have a right to combine one or more accounts of the same customer. But it cannot combine the account belonging to another or to himself alone with another account which is the joint account with another and third person, vide Radha Raman -vs- Chota Nagpur Banking Association Limited AIR 1944 Pat. 368 and Punjab National Bank Limited -vsSatyapal Virmani, AIR 1956 Punj 118.

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(17) Similarly, the Banks have no lien, on the deposit of a partner, on his separate account, for a balance due to the Bank from the firm. Therefore the banker is entitled to combine all accounts kept in the same right by the customer. It does not matter whether the accounts are current or deposit or whether they are in the same or different branches (Garnett -vs-

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Appeal No. 60 of 2023 & Appeal No. 61 of 2023-DRAT-Kolkata Mckewan (1872), 8 Ex. 10). It is of essence to the validity of a banker's lien, that there should be a mutually of claim between the Bank and the depositor. In order that it should be permissible to set off one demand against another both must mutually exist between the same parties.

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On this reasoning the joint and several accounts operated by two or more persons cannot be adjusted against the individual deposit of one of them. It is not open to the bank to claim the deposit of one partner made on his separate account in order to utilise other deposit against the debt due from the firm. In other words partnership deposits cannot be applied to the individual indebtedness of one of the partners."

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22. Ergo, in light of the aforementioned discussion, since the petitioner had cleared the outstanding balance in the home loan account where he had pledged the title deeds of the purported land as security; the Bank has no right whatsoever either under its bye-laws or any guidelines under Section 171 of the Contract Act to retain the title deeds of the petitioner. The retention of the title deeds of the petitioner by the Bank was without any authority of law and is arbitrary. Hence, the impugned notice dated 05.08.2023 is liable to be quashed and accordingly, quashed.”

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11. Further in the case of State Bank of India -vs- Joshy P.K. & Others) decided by the Division Bench of Hon’ble Kerala High

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Court in W.P. 783 of 2019 dated 12.3.2019 it was held that where admittedly title deeds were deposited with such undertaking and recitals, enables the Bank to retain the same for such other liabilities. Reliance is also placed upon Zonal Manager, Central Bank of India -vs- Devi Ispat Limited & Others [(2010) 11 SCC 186].

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12. In the present case, there is no such recital that the title deeds of O.A. 873 of 2015 were deposited to entitle the Bank to retain the same for such other liabilities. No case of general lien of Section 171 of the Contract Act could be made out, as has been held by the Learned DRT in paragraph 10 of the order in M.A. 90 of 2019 in O.A. 873 of 2015. In a case of attachment, prima facie case has to be shown by the applicant. Merely making a bald

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Appeal No. 60 of 2023 & Appeal No. 61 of 2023-DRAT-Kolkata statement that property is not sufficient to realize the amount in the Recovery Certificate is not enough rather it needs some more materials to be placed before the Court.

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12. Accordingly, I am of the considered view that the impugned order could not sustain. Appellants are entitled for the release of the title deeds which were deposited by them in O.A. 873 of 2015. However, Bank would be at liberty to proceed afresh in accordance with law.

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13. Accordingly, both the appeals deserve to be allowed. The orders dated 18.12.2019 passed by DRT-I, Hyderabad in pending O.A. 803 of 2015 (IDBI Bank Limited Bank Limited -vs- P. Subba Rao & Others) and order dated 30.9.2019 passed by DRT-I, Hyderabad in pending O.A. 873 of 2015 (IDBI Bank Limited Bank Limited -vsM/s. Charminar Concrete Products Private Limited & Another) are set aside with the observation made in the body of the judgment.

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O R D E R

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Both the appeals, Appeal No. 60 of 2023 and Appeal No. 61 of 2023, are allowed. The orders dated 18.12.2019 passed by DRT-I, Hyderabad in pending O.A. 803 of 2015 (IDBI Bank Limited Bank Limited -vsP. Subba Rao & Others) and order dated 30.9.2019 passed by DRT-I, Hyderabad in pending O.A. 873 of 2015 (IDBI Bank Limited Bank Limited -vs- M/s. Charminar Concrete Products Private Limited & Another) are set aside. Appellants are entitled for release of the title deeds which

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Appeal No. 60 of 2023 & Appeal No. 61 of 2023-DRAT-Kolkata were deposited by them in O.A. 873 of 2015. However, Bank would be at liberty to proceed afresh in accordance with law.

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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 order be retained in the records of Misc. Appeal No. 61 of 2023.

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Copy of the Judgment/Final Order be uploaded in the Tribunal’s Website.

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Order dictated and pronounced in open Court.