Allowed

Sh. Baba Bhagwant Bhajan Singh v. Recovery Officer-Ii Debt Recovery Tribunal -I

DRT2 Nov 2024MA/35/2024

Case brief

AI extract

What is this about?

In an application for refund and a bank's application for attachment of an appeal pre-deposit, the Tribunal held that while amounts deposited as a condition precedent are not secured debts, the Tribunal can attach them under Section 19(13)(A) RDB Act during pending proceedings to prevent disposal of assets before final judgment.

What did the court decide?

MA No. 35 of 2024 for refund dismissed; IA No. 1015 of 2023 for attachment of the deposited sum of Rs. 1.12 Crores allowed.

Sh. Baba Bhagwant Bhajan Singh versus Recovery Officer-Ii Debt… — Banking and Recovery | DRT (2024)

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DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

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MA No. 35 of 2024 IN Appeal No. 01 of 2023 Baba Bhagwant Bhajan Singh Versus Recovery Officer-II, DRT-I, Chandigarh and others

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Dated: 02.11.2024 Item No. 5 & 6

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Argued by: Ms.Jyoti Sareen, Counsel for the Applicant/ Baba Bhagwant Bhajan Singh. Sh.Rakesh Gupta and Sh.Yogesh Kumar, Counsel for Respondent/Canara Bank. None for other Respondents.

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This order will dispose of MA No. 35 of 2024 filed by Baba Bhagwant Bhajan Singh for refund of the sum of Rs. 1,12,50,000/- deposited by him at the time of filing appeal No. 01 of 2023 before this Tribunal against the order dated 17.11.2022 passed by the Recovery Officer in recovery proceedings of OA No. 3559 of 2017.

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By this very order, I propose to dispose of IA No. 1015 of 2023 filed by Canara Bank for attachment of the sum of Rs.1,12,50,000/- which had been deposited by Baba Bhagwant Bhajan Singh in appeal No. 01 of 2023 filed by him against the order dated 17.11.2022 whereby Recovery Officer-II, DRT-I, Chandigarh dismissed the objections filed by Baba Bhagwant Bhajan Singh in RC No. 1940 of 2018 issued in OA No. 3559 of 2017.

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I would come to both these applications a little later. Some background facts be noticed first.

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On 08.12.2016, Canara Bank filed OA No. 2581 of 2016 for the recovery of Rs.1,75,73,310/- with interest @ 10.15% with half yearly resets, in Debts Recovery Tribunal-II, Chandigarh, against Baba Bhagwant Bhajan Singh. Later, this OA was transferred to this DRT and was registered as OA No. 3559 of 2017. Vide order dated 13.03.2018, this OA was allowed by this Tribunal and the Recovery Certificate for the recovery of Rs. 1,75,73,310/- with interest @ 10.15%

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DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

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per annum with half yearly rests, from the date of filing, till the date of payment was passed. On the basis of this judgment, Recovery Certificate was issued and was sent to the Recovery Officer for recovery. On the basis of the Recovery Certificate, the Recovery Officer sold the secured asset, which Baba Bhagwant Bhajan Singh had mortgaged in favour of Canara Bank, in public auction, for Rs.1,92,00,000/-. The auction purchaser deposited the money. However, the possession of the secured asset was not delivered to him. In the meanwhile, Baba Bhagwant Bhajan Singh filed MA No. 01 of 2022 for setting aside the judgment dated 13.03.2018 on the ground that he was not served in OA No. 3559 of 2017. Vide order dated 13.06.2023, this Triubnal allowed MA No. 01 of 2022 and set aside the judgment dated 13.03.2018 passed by this Tribunal.

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After the Recovery Officer had sold the property in public auction in recovery proceedings of RC No. 1940 of 2018, Baba Bhagwant Bhajan Singh filed objections. However, vide order dated 17.11.2022, Recovery Officer-II, DRT-I, Chandigarh dismissed his objections. Against the order dated 17.11.2022, Baba Bhagwant Bhajan Singh filed an appeal before this Tribunal. Vide order dated 09.02.2023, this Tribunal rejected the appeal on the ground that Baba Bhagwant Bhajan Singh had not deposited 50% of the amount due from him, which was a condition precedent for entertaining the appeal. Against the order dated 09.02.2023, Baba Bhagwant Bhajan Singh filed CWP No. 7971 of 2023 before the Hon’ble High Court. Vide order dated 21.04.2023, the Hon’ble High Court directed that Applicant would deposit 50% and his appeal be restored. Accordingly, as per the orders of the Hon’ble High Court, Baba Bhagwant Bhajan Singh deposited Rs.1,12,50,000/- and filed an application for restoration of the appeal. Accordingly, appeal No. 01 of 2023 filed by Baba Bhagwant Bhajan Singh was restored. However, vide order dated 14.09.2023, appeal No.01 of 2023 was dismissed on merits.

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With this background, I come to MA No. 35 of 2024 filed by Baba Bhagwant Bhajan Singh for refund of the sum of Rs. 1,12,50,000/- deposited by

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DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

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him at the time of filing the appeal and IA No. 1015 of 2023 filed by Canara Bank for attachment of the sum of Rs.1,12,50,000/- deposited by Baba Bhagwant Bhajan Singh at the time of filing the appeal. This deserves to be mentioned that whereas, bank had filed IA No. 1015 of 2023 for attachment before judgment of the sum of Rs.1,12,50,000/- in OA No. 3559 of 2017 on 16.10.2023; Baba Bhagwant Bhajan Singh had filed MA No. 35 of 2024 for refund of the sum of Rs.1,12,50,000/- on 11.03.2024.

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I have heard Ms.Jyoti Sareen, Counsel for Applicant/ Baba Bhagwant Bhajan Singh and Mr.Rakesh Gupta, Counsel for Canara Bank.

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Ms.Sareen, counsel for Baba Bhagwant Bhajan Singh has submitted that the amount deposited by Baba Bhagwant Bhajan Singh at the time of filing appeal No. 01 of 2023 is liable to be refunded. The amount deposited by Baba Bhagwant Bhajan Singh is not a secured debt and Canara Bank has no right over the same. Baba Bhagwant Bhajan Singh had deposited this money as it was a condition precedent for entertaining the appeal. Once the appeal has been disposed of, this amount is liable to be refunded to the appellant i.e. Baba Bhagwant Bhajan Singh. Reliance has been placed by Ms.Sareen on the judgments passed by the Hon’ble Supreme Court of India in Civil Appeal No. 4379 of 2016, titled Axis Bank versus SBS Organics Private Limited and another, decided on 22.04.201, AIR 2016 SCC 2024; WP No. 5041 of 1995, titled Union of India versus Suvidhe Limited, decided on 07.08.1996, 2016 (11) SCC 808 and Civil Appeal No. 6016-6017 of 2019, titled M/s Kut Energy Private Limited and others versus A.O. Punjab National Bank and others, decided on 20.08.2019 .

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Ms.Sareen has further argued that this amount cannot be attached in OA No. 3559 of 2017 filed by Canara Bank against Baba Bhagwant Bhajan Singh. Accordingly, MA No. 35 of 2024 filed by Baba Bhagwant Bhajan Singh be allowed and the amount deposited by him, be refunded. Further, IA No. 1015 of 2023 filed by Canara Bank in OA No. 3559 of 2017, for attachment of this amount be dismissed.

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DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

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Per contra , Mr.Gupta, Counsel for Canara Bank has submitted that though an appellant is entitled to the refund of the money deposited by him at the time of filing the appeal, yet, this Tribunal can attach the same in case any proceedings for the recovery of the amount are pending. Mr.Gupta submitted that OA No. 3559 of 2017 is pending before this Tribunal and is at the final stage. In fact, counsel for Baba Bhagwant Bhajan Singh is not addressing arguments in OA No. 3559 of 2017 and on account of the same, this Tribunal could not dispose of the same. Be that as it may, Mr.Gupta submitted that under the Recovery of Debts and Bankruptcy Act, 1993 (RDB) this Tribunal has the jurisdiction to attach any amount belonging to a debtor which may be lying anywhere. In the case in hand, the amount deposited by Baba Bhagwant Bhajan Singh is lying in the form of FDR with this Tribunal. Since, there is every likelihood of Baba Bhagwant Bhajan Singh not depositing the money in the recovery certificate which will eventually be issued by this Tribunal, this Tribunal should attach the sum of Rs. 1,12,50,000/- lying deposited by Baba Bhagwant Bhajan Singh with this Tribunal. Mr.Gupta submitted that there is no merit in MA No. 35 of 2024 filed by Baba Bhagwant Bhajan Singh and the same be dismissed and IA No. 1015 of 2023 filed by Canara Bank in OA No. 3559 of 2017 for attachment of the sum of Rs.1,12,50,000/- be allowed.

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I have considered the rival contentions.

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I have already given the chronology of events in the opening part of the order. The factual position as it stands today is that OA No. 3559 of 2017 is pending and the proceedings in the same are complete, except arguments by the parties. The appeal filed by Baba Bhagwant Bhajan Singh against the order of Recovery Officer stands dismissed by this Tribunal vide order dated 14.09.2023. The amount deposited by Baba Bhagwant Bhajan Singh at the time of filing the appeal is lying deposited with the Bank, as per the orders passed by this Tribunal. There is no doubt about the fact that the amount deposited by the appellant against the order of Recovery Officer at the time of filing the appeal is required to be

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DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

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refunded to the appellant as it is not a secured debt. The money was deposited by the appellant as it is a pre-condition for entertaining the appeal. However, I am of the considered view that the Debts Recovery Tribunal, in its judicial discretion, is entitled to attach the same before judgment. As per Section 19 (13)(A) of the Recovery of Debts and Bankruptcy Act, 1993 (RDB), this Tribunal has the jurisdiction to attach any property before judgment, in case it is of the view that the defendant, in order to defeat the recovery may dispose of the property. At present, Bank has no security with it to recover its dues. In case, Baba Bhagwant Bhajan Singh is refunded the amount, Bank would not be in a position to recover its remaining dues. The Hon’ble Supreme Court in Axis Bank versus SBS Organics Private Limited (supra) held as under:-

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Xxx 22. The Appeal under Section 18 of the Act is
permissible only against the order passed by the
DRT under Section 17 of the Act. Under Section 17,
the scope of enquiry is limited to the steps taken
under Section 13(4) against the secured assets. The
partial deposit before the DRAT as a pre-condition
for considering the appeal on merits in terms of
Section 18 of the Act, is not a secured asset. It is not
a secured debt either, since the borrower or the
aggrieved person has not created any security
interest on such pre-deposit in favour of the secured
creditor. If that be so, on disposal of the appeal,
either on merits or on withdrawal, or on being
rendered infructuous, in case, the appellant makes a
prayer for refund of the pre-deposit, the same has to
be allowed and the pre-deposit has to be returned to
the appellant, unless the Appellate Tribunal, on the
request of the secured creditor but with the consent
of the depositors, had already appropriated the pre-
deposit towards the liability of the borrower, or
with the consent, had adjusted the amount towards
the dues, or if there be any attachment on the pre-
deposit in any proceedings under Section 13(10) of
the Act read with Rule 11 of The Security Interest

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DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

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(Enforcement) Rules, 2002, or if there be any attachment in any other proceedings known to law. Xxx

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Though, the above said observations were made by the Hon’ble Supreme Court in respect of the appeal filed by a borrower against the order passed by the Debts Recovery Tribunal to the Debts Recovery Appellate Tribunal, yet, I am of the considered view, that the same principles would apply in respect of the appeal filed by a borrower against the order passed by the Recovery Officer to the Debts Recovery Tribunal.

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I am of the considered view that in the circumstances of the case, it would be just and proper in case this amount is attached and is not refunded to Baba Bhagwant Bhajan Singh.

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In view of the above whereas, MA No. 35 of 2024 filed by Baba Bhagwant Bhajan Singh is dismissed; IA No. 1015 of 2023 filed by Canara Bank in OA No. 3559 of 2017 for attachment of the sum of Rs.1,12,50,000/- is hereby allowed.

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A copy of this order be placed on the connected files. Thereafter, file be consigned to record room after due compliance.

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Pronounced in open court. MANOJ/02.11.2024

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(A S Narang) Presiding Officer DRT-I, Chandigarh

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Sh. Baba Bhagwant Bhajan Singh v. Recovery Officer-Ii Debt Recovery Tribunal -I

Case brief

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Sh. Baba Bhagwant Bhajan Singh v. Recovery Officer-Ii Debt Recovery Tribunal -I

Case brief

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