Allowed

Tadikonda Prabhakar v. State Bank of India

DRT13 Dec 2023SA/239/2023

Case brief

AI extract

What is this about?

Securitization Tribunal allowed application by auction purchaser against bank for payment of interest accrued on sale proceeds retained in fixed deposit. Court held the application was within limitation due to exclusion of time spent in wrong civil forum under Section 14 of Limitation Act. Principal interest amount directed to be paid.

What did the court decide?

Allowed the application and directed the respondent bank to pay Rs. 16,99,591/- (net of TDS) as accrued interest on fixed deposit.

Tadikonda Prabhakar versus State Bank of India — Contract and Commercial Disputes | DRT (2023)

¶1

IN THE DEBTS RECOVERY TRIBUNAL-IIAT HYDERABAD

¶2

DATED THIS THE 13TH DAY OF DECEMBER,²⁰²³

¶3

PRESENT: SH. RAMESHWAR KOTHE,B.com, L.LB.(Hons.), M.A. PRESIDING OFFICER

¶4

Securitization Application No. 239 oF 2023

¶5

Tadikonda Prabhakar S/o Late Tadikonda Purna Chandra^Rao Aged about 77 years, Occ:Business 1-55- 185/SAQ/D 1/601, lvlasjid Banda SVC Tree Walk and Aquaria Se rilinga m^pa lly, Kondapu r Rangareddi-500084

¶6

.......Applicant.

¶7

Versus

¶8

The Assista nt General 14anager state Bank of India (erstwhile State Bank of Hydera bad ) Sanath nagar Branch, 7^-2-C/47 / A Industrial Estate Sa nath nagar Industrial Area Hyderabad- 500018

¶9

.......Respondent.

¶10

Counsel For the Applicant counsel for Respondent Bank

¶11

Sri Srikanth. G. Sri Prakasam G.S.

¶12

-:g-B!EB:-

¶13

The Applicant filed the^{present SecuritisationAppllcation u/s.17} of the Securitization and Reconstruction of^{FinancialAssetsand} Enforcement of Security Interest Act,^{2002 (hereinafter "the Act" for} brevity) to^grant interest of^{Rs.16,99,591/- along with interest@12olo} p.a. from 29.06.2013 till payment; in alternative^{grant damages to} 77lrtryrl/..t v_^{/r1,\ -}

¶14

2ol12

¶15

SA N0.239/2023

¶16

the extent of Rs.10,65,000/- along with interest @12olo^{p.a. from} 29,06.2013 and costs of Rs.10^lakhs.

¶17

The averments made in the application, briefly, are that^the applicant^participated in the auction held on^{27.03.2006pursuant to} publication of auction notice dated 20.03.2006. He was declared as successful bidder and^paid Rs.7,20,000/- towards^25olo of bid^amount including EMD of Rs.4,05,000/- vide receipt dated 27.03.2006.^The respondent bank issued letter dated 27.O3.2006 directed the applicant to pay balance sale consideration of Rs.33,75,000/- on or before 10.04.2006. However, on 01.04.2006 the respondent bank issued another letter informing that it was not in a^position to confirm the sale in view of DRT order in SA No.20l2006 and another order^passed by 1st Additional Chief ludge, CCC, Secunderabad in IA 21612006 in OS 4312006. The applicant vide letter dated 07.04.2006 requested the respondent bank to defer^payment of balance consideration till respondent bank would be able to execute sale certificate. The applicant vide letter dated 21.08.2007 informed the applicant to^pay balance sale consideration by 05.09.2007. Accordingly, the appllcant issued cheque for Rs.33,75,000/- which was encashed on 30.08.2007. Even after payment, the respondent bank failed to issue sale certificate on the pretext 0f pending legal disputes. The respondent bank kept the amounts in fixed deposit from 10.04.2006 till it was transferred to loan account and an amount of Rs.16,99,591/- towards interest accrued on FD. Despite oral and written requests and also legal notice, the accrued interest was not paid. Apart from lt, the respondent bank stated that it did not undertake to deliver physical possession of the property. Aggrieved by the reply, the applicant filed Civil Suit in OS 911/2014 before learned IX Chtef Judge, City Civit Courts at Hyderabad on 15.11.2014. Upon filing IA 1660/2016 by the

dx""'P

3of12

SA No.239/2023

respondent bank, the learned Civil Court passed orders on 09.02.2018 returning the plaint. Against the order, the applicant approached Hon'ble High Court by filing CMA 590 of 2018 which was atso dismissed on L7.03.2023 granting liberty to the applicant to approach this Tribunal within 45 days from date of order. The applicant has lost money, spent considerable amounts towards legal expenditure apart from that, he has not been put to enjoyment of the property. Hence this SA.

¶22

The respondent bank filed reply statement. While denying all the adverse averments, the submissions, inter alia, are that the SA is barred by limitation as per Sec.17(1) of the Act. The cause of action to file the SA would arise only when the applicant had fully paid sale price and on the date of issuance of sale certificate i.e., 30.08.2007 and 03.07.2013 respectively. The Hon'ble High Court in its order dated 07.03.2023 in IA 1 of 2018 in CMA 590 of 2018 categorica y observed that in case if the appellant flles any such application the Tribunal shall decide the same on its own merits in accordance with law being uninfluenced by the observations made by this Court or the trial court and therefore, the Tribunal may observe that the SA is hit by limitation. In spite of specific provision under Sec.34 of the Act, 2002 barring jurisdiction of Civll Court in respect of SARFAESI measures, the applicant wantonly approached the Civil Court. The applicant being buyer and not in the capacity of lender, is not entitled for any accrued interest. The respondent bank communicated vide letter dated t0.o4.2014 to the applicant that in the event of inability to handover the peaceful possession of the property, the sale amount with interest may be returned by way of indemnity only. The applicant is not entitled any relief as sought for and accordingly the SA may be d is m issed. OY**

OY**

4of12

sA No.23912023

Heard learned counsel^{for the applicant and learned counselfor} the respondent bank.^{Perusedthe writtensubmissionsfiled by both} parties and also the material brought^{on record.}

¶27

The learned counsel for^{the applicants contendsthat it is} evident from a^{combined readingof Sec.17(1) and Sec'13(4)of the} Act, 2002 that limitation^{of 45 days commencesfrom the date of} measures taken under^{Sec.13(4) i.e., take possessionof the secured} assets of the borrower^{including the right to transferby way of lease} assignment or^{sale for realising the secured asset and take over the} management of the^{business of the borrower including the right to} transfer by way of^{lease, assignment or sale for realising the secured} asset. The learned^{counsel placed reliance on the judgments of Hon'ble} Supreme Court in^{Indian OverseasBankvs. Ashok Saw Mill (2009) I SCC} 366 with emphasis on^{paragraphs 34 to 37 and AoarwalTracom(P) Ltd} vs. Punjab National Bank^{(2018)1 SCC 626 with attention to paragraphs} 27 lo 29 of the cited^{judgementwherein the Hon'ble Supreme Court} held that any of the measures^{referred to in Section 13(4) takenby} secured creditor or his authorized officer^{in Section17(1) would} include all actions taken by the^{secured creditor under the Rules} which relate to the measures specified^{in Section 13(a). The cause of} action to claim interest arose on the date^{of specific denial by the} respondent bank i.e,, on 22.10.2014 and not on 30.08.2007^or 03.07.20t3 as contended by the^{respondentbank. So, the limitation} ends on 06.12.2014, The applicant invoked^{provision underSec.17(1)} but before a wrong forum by filing OS No.911/2014 before^the learned Civil Court. Learned counsel further submits that the^Hon'ble High Court granted liberty to file application before the DRT under Sec.17(1) of the SARFAESI Act within 45 days from the date of the order and hence such liberty granted by an higher court cannot be

/X^,*

5ot12

SA No,239/2023

reviewed by a lower Court/Tribunal. According to Section 14 of the Limitation Act, the time spent diligently by the applicant before the learned Civil Court and the Hon'ble High Court has to be excluded and in which case, the SA is wlthin limitation.

¶32

The learned counsel would further contend that auction itself was a contract and gives immediate right over the money deposited by the auction purchaser. The respondent bank would accrue interest over the money when entire sale transaction was over. Learned counsel refers to definition of 'sale' and 'contract of sale' available under Sec.54 of the Transfer of Property Act, 1882. The contract of sale commenced between the respondent and the applicant when the bid for Rs.45 lakhs in the auction and payment of 25Vo thereof were accepted. The secured creditor is conferred with rights of cancellation of sale under Rule 9(5) only in case of default of payment and if the entire sale price is paid, the secured creditor is obligated under Rule 9(6) to issue a sale certificate but in the present case the respondent bank failed to issue sale certificate even after stating that all stays were vacated and ready to execute sale certificate. Only on 01.07.2013 sale certificate was issued finally before that all the moneys deposited by the applicant were withdrawn by the respondent bank and kept in interest bearing fixed deposit. Till such time the respondent bank issued sale certificate, the sale transaction was not complete and therefore, the applicant is entitled for the^accrued interest.

¶33

The learned counsel further submits that the^propertywas auctioned for Rs.45,00,000/- whereas it collected a total^{amount of} Rs.61,99,591/- which includes interest of^{Rs.16,99,591/- earned out} of amounts deposited by the applicant^{and the applicant parted with}

{(nr$

6ofL2

SA No.239/2023

the same money and deprived of benefit^{of the property for eight} years. The respondent bank gained unjust enrichment^{which is} against the^{principle laid down bY lhe Hon'ble Supreme court in Indian} Council for Enviro-Legal Action^{vs. Union of India (2011) 8 SCC 161 vide} emphasis on^paragraphs 152 to^{167 therein.}

¶38

8, With the above contentions, learned^{counsel prays to allowthe} SA.

¶39

Per contra, the learned counsel for the^{respondentbank while} reiterating the contentions made in the^{reply statement furtheradds} that the applicant since aggrieved by the delay^{would have opted for} cancellation of sale but he cleverly waited till^issuance of^sale certificate, ran litigation before wrong forum and filed the^present application after lapse of time demanding interest amount.^The applicant bank lost the opportunity to seek remedy on^L7.04.20L3 and exemption from limitation cannot be considered by the^{Tribunal in} the light of the^judgments of^(i)Hon'ble High Court of Gujarat at Ahmedabad in Corporation Bank vs. Jayshreeben D/o PF Damodar Killakar W/o Raieshkumar & 5 in Special Civil Application No.4553 of 2012 decided on 11-12/12/2012 and (ii) Hon'ble Supreme Court in Bank of Baroda vs. M/s Parasaadilal Tursiram Sheetgrah Pvt. Ltd. & Ors. in Civil Appeal No.5240 of 2022^(Arising out of SLP(C) No.6i68/2017) decided on 11.08.2022. At the same time, the Hon'ble High Court is bound by the order of Hon'ble Supreme Court in M/s Parasaadilal Tursiram Sheetgrah (supra) case insofar as limitation of 45 days is concerned. Learned counsel is in disagreement of contention of applicant with regard to limitation basing on judgment in Jayshreeben case (supra). Learned counsel finally submits that the applicant is not entitled to any relief and accordingly the SA may be dismissed. *r^,n}

*r^,n}

7ofL2

SA No.239/2023

I have given careful consideration to the arguments advanced by both learned counsel for the parties. Now, the points that arise for consideration are;-

¶44

(i) Whether the Securitization Application filed under Sec.17 of the Act, 2002 is within limitation?

¶45

(ii) Whether the applicant is 'aggrieved person' within the meaning given under Sec.17(1) of the Act, 2002?

¶46

(iii) Whether the applicant made out any valid ground to order the respondent bank for payment of accrued interest?

¶47

(iv) To what relieP

¶48

The short facts of the case are that the applicant is the auction purchaser in the auction conducted by respondent bank on 27.03.2006 in respect of application schedule property. He deposited 100/o EMD i.e., Rs.4,05,000/- and his bid of Rs.45,00,000/- was finalized by the authorized officer. Thereafter, the applicant deposited Rs.7,20,000/- towards 25olo of bid amount, including EMD, on 27.03.2006 itself and the respondent bank issued letter on the same day advising the applicant to deposit balance sale consideration of Rs.33,75,000/-on or before 10.04.2006 followed by another letter dated 01.04.2006 expressing its inability to confirm the sale in view of lnjunction orders passed in DRT as well as I Addl. Chief Judge, CCC, Secunderabad. When the applicant requested respondent bank vide letter dated 07.04.2006 to defer payment till such time the respondent would be in a position to execute sale deed, the respondent bank informed him that it would let the applicant know the exact date of payment. As per advice given vide letter dated 27.08.2007, the applicant issued cheque dated 27.08.2007 for Rs.33,75,000/- towards 75olo sale consideration which was encashed by respondent bank on 30.08.2007 i.e., well before the date (05.09.2007) fixed for payment. In spite of receipt of total sale

OYr"o

8of12

sA No.239/2023

consideration in 2007, the^{respondent bank executedsale certificate} only on 03.07.2013. The^{applicantfiled civil suit OS No.911/2014} aggrieved by the inaction of^{respondent bank in payment interest} among other issues. At the^{instance of respondentbank, theOS} No.911/2014 was returned on 09.02.2018^{whereupon the applicant} moved the Hon'ble High Court^by filing^{CIVIP No.590of 2018 and the} said CN4P was dismissed on^{77.03.2023.The respondent bank kept} the amounts deposited by the^{applicant towards sale considerationln} interest-bearing Fixed^{Deposit Receipt (FDR) No.62007420880from} 10.04.2006 till 29.06.2013 and interest accrued^{on FDR as per} tabulation drawn in the^{plaint. None} of^{the abovefacts aredisputed} by the respondent bank.

¶53

72, The^principle objection taken by^{the respondent bank is that the} SA is barred by limitation and the Tribunal is not^{empowered to} enlarge the limitation^period. In this^regard, the^{learned counsel for} bank relied upon two^judgements especially,^{M/s Parasaadilal Tursiram} sheetqrah Pvt. Ltd. case. The respondent bank^hasgone to the^extent of commenting in^{para (ix)} of written arguments that the^Hon'bleHigh Court is bound by the order^passed by the Hon'ble Supreme Court of lndia in Bank of Baroda & Anr, Vs. Parasaadilal Tursiram Sheetgrah Private Limited & ors. The learned counsel perhaps ignored that even if cited judgement 1n M/s Parasaadilal case is applicable, it is limited to the Debts Recovery Tribunals. Further, it is manifest from the order of Hon'ble High Court in IA No.1 of 2018 in CMP 590 of 2018, the respondent bank did not rely on the^judgement of Hon'ble Supreme COurt in Eark of Baroda & Anr. Vs. Parasaadilal Tursiram Sheetgrah Private Limited & Ors before the Hon'ble Hlgh Court. Under such circumstances, the respondent bank is not permitted to comment in the lower Court/Tribunal as to what Hon'ble High Court should be rlrry. * ///^'".;'t U

¶54

9oftZ

¶55

sA No.23912023

¶56

bound by. Coming to the point of liberty granted by the Hon'ble High Court to the applicant herein, the relevant portion of the order dated t7.03.2023 is extracted for reference:

¶57

"17. ...... ... .. Accordingly, this civil miscellaneous appeal is dismissed as devoid of merits with a liberty to the plaintiff to file an application before the Tribunal concerned (DRT) under Section 17(1) of the SARFAESI Act, which has got jurisdiction to entertain such application within 45 days from the date of this order. In case, if the appella nt/plaintiff files any such application the Tribunal shall decide the same on its own merits in accordance with law being uninfluenced by the observation made by this Coutt or the observations made by the trial Court in the impugned judgment."

¶58

The applicant filed the SA on 12.05.2023 which was well within 45 days time granted by the Hon'ble High Court.

¶59

Even otherwise, the applicant instituted a civil suit on 15.10.2014 aggrieved by the reply dated 22.10.2014 issued by the respondent bank. In this regard, I deem it necessary to reproduce the provision under Section 14 in The Limitation Act, 1963 as hereunder:

¶60

"14 Exclusion of time of proceeding bono fide in court without jurisdiction. -

¶61

Uln^{computingthe period of limitotion} for^{onysuit the timeduring which the} plaintiff hos been prosecuting with due diligence onother civil proceeding, whether in o court of first instonce or of appeol or revision, ogoinst the defendant sholl be excluded, where the^proceeding relotes to the sdme motter in issue and is prosecuted in^good foith in o court which, from defect of jurisdiction or other cause of o like noture, is unoble to entertoin it.

¶62

(2)tn computing the period of limitation for ony opplication, the time during which the opplicont hos been prosecuting with due diligence onother^civil proceeding, whether in o court of first instonce or of appeol or revision, ogoinst the some^porty for the some relief shall be excluded,^{where suchproceeding is} prosecuted in good faith in o court which, t'rom defect of iurisdiction or other couse of a like noture, is unoble to entertoin it.

¶63

(3) Notwithstonding onything contoined in rule 2 of Order XXlll of the Code of Civil Procedure, 1908⁽⁵ ol^{1908),the provisions of sub-section (1) sholl opply in}

ax'#

10 of 12

SA No.239/2023

relotion to a fresh suit instituted on^{permissiongrantedby the courtunder rule} 1 of thot Order where such^{permission is gronted on the groundthot the} first suit must foil by reoson of o defect in^the iurisdiction^{of the court or other} couse of a like nature,

¶68

The learned counsel for applicant relied upon^judgementof Hon'ble Supreme Court in Kalprai Dharamshi &^{Anr.Vs. Kotak Investment} Advisors Ltd. & Anr. in Civil Aopeal Nos.2943-2944 of^{2020wherein the} Hon'ble Supreme Court dealt with, in detail, about the applicability^of Sections 5 and 14 of the Limitation^{Act to the quasi-judicialbodies like} NCLT, DRT etc. The Hon'ble Supreme Court held that

¶69

"when a litigant bona fide under a mistake litigates before a^wrong forum, he would be entitled for exclusion of the^period, during which he was bona fide^prosecuting such a wrong remedy.^Though strictly, the provisions of Section 14 of the Limitation Act would not be applicable to the^proceedings before a^{quasi'judicial} tribunal, however, the principles underlying the same would be applicable i.e., the proper approach will have to be advancing the cause of justice, rather than to abort the proceedings."

¶70

It is pertinent to note that the civil suit was returned by the learned Civil Court relying on judgemenl of Hon'ble Supreme Court in Jagdish Singh vs. Heeralal and others (2014) 1 SCC 479 on the point of jurisdiction. The applicant moved the Hon'ble High Court and preferred CMP which was disposed of on 77.03.2023. Thus the applicant was diligently prosecuting his case either before learned Civil Court or the Hon'ble High Court, According to provision under sub-section (2) of Sec. 14 of the Limitation Act, the period the applicant was prosecuting his case before the learned Civil Court and Hon'ble High Court has to be excluded for limitation purpose.

¶71

In any case, I find that the Securitization Application is well within limitation period. jfuoO

jfuoO

Ll of L2

SA No.23912023

Point No.(ii):

The learned counsel for applicant submits that the applicant being auction purchaser falls within the meaning of 'any person' as mentioned under Section 17(1) of the SARFAESI Act and hence he is entitled to approach the Tribunal to challenge the action of respondent bank under Sec.13(4). As per principle laid down by Hon'ble Supreme Court in Agarwal Tracom (P) Ltd (supra), any of the meastrres referred to Section 13(4) taken by secured creditor or his authorized officer in Section 17(1) would include all actions taken by the secured creditor under the Rules which relate to the measures specified in Section 13(4). fhe secured creditor is obligated under Rule 9(6) to issue sale certificate which respondent bank failed to do for reasons whatsoever and therefore, the applicant is the 'aggrieved person' within the meaning of Sec.17(1) of the Act, 2Q02 and he is entitled to file the Securitization Application.

¶77

Point No.(iii):

¶78

Coming to the main prayer of applicant to direct respondent bank to pay interest accrued on FDR, the respondent bank is not disputing accrual of interest of Rs.16,99,59L/- on deposits made by the applicant-auction purchaser towards EMD or 25o/o or 75olo of the sale^price. It is^pertinent to note that the applicant deposited the said amounts within the timelines fixed by the respondent bank. Though the applicant^paid 75o/o sale^price in 2007, the respondent bank could not issue sale ceftificate till 2014 due to litigations against^the property. However, it closed the FDR on 29.06.2013 and transferred the amount to the loan account. The^{learned counsel states that the} respondent^gained unjust enrichment^{which is againstthe judgement} in Indian Council for Enviro-Legat Action^{vs. Unionof Indiacase(supra.).} The respondent bank deposited TDS against^{the PANnumber}

V/Y*o

t2 of L2

sA No.2391202j

(ABKPT7923Q) of the applicant. So,^{the applicant who startedmaking} payments from 2006 could not^get the^{property till 2014 for no fault} of him. Whereas, the^{respondentbank gained interest out of the} amounts deposited by^{the applicantwithoutdelivering the sale} certificate. The respondent^{bank is not justified in denying to pay such} accrued interest to the^{sourceperson. Being a Nationalized Bank, it} cannot be^permitted to^{unlawfully gain from out of depositsbelonging} to a third^party.

¶83

In view of the above^{discussion, I have no hesitationto hold} that the applicant is entitled for an^{amountof Rs.16,99,591/-after} excluding TDS amount of^Rs.l,83 ,1661-^{and the amount shall} forthwith be^paid by the^{respondent bank to the applicant.However,} this amount already being^{interestamount, interest on interestcannot} be^granted. Accordingly, the SA^{deserves to be allowed'}

¶84

Point No.(iv):

¶85

In the result, SA is allowed with a^direction to^{the respondent} bank to forthwith^pay an amount of^{Rs.16,99,591/- to the applicant} towards interest accrued on FDR No.62007420880.

¶86

No further interest is^granted on the aforesaid interest amount. 23. Consequently, Interlocutory Applications^pending if any, shall stand disposed of. No order as to costs in the circumstances of the case.

¶87

Communicate a copy of this order to the parties concerned.

¶88

(Typed to my dictotion by PS, corrected, signed ond pronounced by me in the open court on this the ljth doy of December,2023). oY** (RATIESHWAR KOTHE) PRESIDING OFFICER

Tadikonda Prabhakar v. State Bank of India

Case brief

What is this about?

What did the court decide?

Tadikonda Prabhakar v. State Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

State Bank of India versus Tagmaxx

Sanjay Jain versus Punjab National Bank

Bank of Baroda versus M/S Kumar Tiles and Sanitary Wares

Hdfc Bank versus Shri Rajiv Kumar Singla

Icici Bank Limited versus Sh. Pankaj Kumar Singh

Sarva Haryana Gramin Bank versus Sh. Baldev Kumar