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Grandtech Builders & Developers Pvt. Ltd., v. Kerala Transport Development Finance Corporation Limited - Ktdfc

Kerala HC18 Mar 2022WP(C)/5611/2022

Case brief

AI extract

What is this about?

Petitioner, facing revenue recovery for outstanding loans, challenged demand for further 10% principal remittance to attend One Time Settlement (OTS) Adalat. Court held petitioner eligible to attend next Adalat without further payment as earlier remittances entitled to three attendances, directing respondents to permit participation and halt coercive steps.

What did the court decide?

Directed 1st Respondent to permit petitioner to participate in next OTS Adalat without insisting on further 10% remittance; prohibited any coercive steps.

Grandtech Builders & Developers Pvt. Ltd… — Contract and Commercial Disputes | Kerala HC (2022)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE N.NAGARESH

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FRIDAY, THE 18^TH DAY OF MARCH 2022 / 27TH PHALGUNA, 1943 WP(C) NO. 5611 OF 2022

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PETITIONER:

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GRANDTECH BUILDERS & DEVELOPERS PVT LTD., GULMOHAR, T.C. 3/3603, KESAVADASAPURAM, THIRUVANANTHAPURAM-695 003, REPRESENTED BY ITS MANAGING DIRECTOR, SALIM M. KABIR, AGED 50, S/O. MOHAMMED KABIR.

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BY ADVS. R.T.PRADEEP SAIJO HASSAN K.C.HARISH

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RESPONDENTS:

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1 KERALA TRANSPORT DEVELOPMENT FINANCE CORPORATION LIMITED - KTDFC REPRESENTED BY ITS MANAGING DIRECTOR, LEVEL 8 (6TH FLOOR), TRANS TOWERS, VAZHUTHACAUD, THIRUVANANTHAPURAM-695 014.

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2 THE DISTRICT COLLECTOR KUDDAPPANAKUNNU P.O, THIRUVANANTHAPURAM-695 043.

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3 DEPUTY COLLECTOR (REVENUE RECOVERY), COLLECTORATE, KUDDAPPANAKUNNU P.O,THIRUVANANTHAPURAM-695 043.

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4 TAHSILDAR (R.R.), TALUK OFFICE, EAST FORT, THIRUVANANTHAPURAM-695 023.

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W.P.(C) No.5611/2022

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5	TAHSILDAR,
	TALUK OFFICE, KATTAKKADA,
	THIRUVANANTHAPURAM-695 572

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6 DEPUTY TAHSILDAR (RR), TALUK OFFICE, KATTAKKADA, THIRUVANANTHAPURAM-695 572 BY ADV SHRI.T.P.SAJAN, SC, KTDFC SRI.APPU PS, GOVERNMENT PLEADER

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THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 18.03.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

W.P.(C) No.5611/2022

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N. NAGARESH, J.

W.P.(C) No.5611 of 2022

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Dated this the 18^th day of March, 2022

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J U D G M E N T

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~ ~ ~ ~ ~ ~ ~ ~ ~

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The petitioner, a Private Limited Company doing business in development of land and construction of villas, high-rise buildings and residential apartments, has approached this Court seeking to quash Exts.P11 and P14 to the extent they insist remittance of 10% of principal amount dehors the remittance by Exts.P7 and P8. The petitioner also seeks to direct the respondents to allow the petitioner to participate in the Adalat for One Time Settlement by reckoning remittance of 10% of principal amount by Exts.P7 and P8 dehors the insistence for further remittance of 10%. 2. The petitioner availed a loan of ₹10 Crores for

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Phase-I of their Villa project in the year 2010. For Phase-II,

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the petitioner availed ₹3.90 Crores. The petitioner could not make prompt repayment and the 1^st respondent-Kerala Transport Development Finance Corporation Limited initiated coercive proceedings. The petitioner, therefore, requested the 1^st respondent for One Time Settlement of the outstanding loans, as per Ext.P3 request dated 11.12.2017.

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The petitioner states that the 1^st respondent initiated revenue recovery proceedings against the petitioner. The petitioner hence filed W.P.(C) No.28620/2018 and this Court directed the petitioner to pay 10% of the principal amount outstanding, to participate in the Adalat. The revenue recovery proceedings were kept in abeyance. The petitioner remitted ₹51,05,250/- for the loan for Phase-I and ₹40,00,000/- for the loan for Phase-II. As per Ext.P9 OTS Adalat Scheme, if the loanee remits 10% of the outstanding principal, the loanee can participate in altogether three Adalats, contends the petitioner.

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The petitioner states that in the first Adalat, the 1^st respondent took a stand that the principal outstanding for the

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loan of Phase-I is ₹5,09,43,150/-. The said estimated amount was excessive as the 1^st respondent added defaulted EMIs also to the actual principal amount. Hence, the Presiding Officers of the Adalat required the 1^st respondent to rework the figure. Both parties were required to engage Chartered Accountants to work out the actual principal amount.

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In the second sitting of the Adalat, the 1^st respondent stated that the amounts worked out by their Chartered Accountant is ₹8,64,36,223/- for Phase-I loan and ₹10,39,52,429/- for Phase-II loan. According to the Chartered Accountant of the petitioner, the amount is ₹3,76,11,754/- for Phase-I loan. The Presiding Officers noted that the wide difference in the figures is due to the fact that the unpaid EMI with principal amount and interest is mulcted with interest and overdue interest for the whole amount of EMI instead of on the principal component alone. By this process, the interest levied would be 38%, contended the petitioner.

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The petitioner was not called for the third sitting of the Adalat. Hence, the petitioner gave a letter of participation for the next Adalat. The petitioner has not received any communication thereafter. WP(C) No.28620/2018 was closed directing the petitioner to raise objections to the quantification. The petitioner thereafter was served with Ext.P11 requiring the petitioner to make an application for OTS remitting 10% of the principal amount. The petitioner sent a reply stating that the 10% remittance is already made by the petitioner for OTS and the same should be reckoned. The petitioner also stated that they cannot participate in the Adalat scheduled on 20.01.2022 and requested to permit to participate in the Adalat in the month of March, 2022. The respondents, however, issued Ext.P14 stating that the further remittance of 10% is required to participate in the next Adalat and that unless the loan is settled, revenue recovery proceedings will be resorted to.

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Aggrieved by Ext.P14, the petitioner has filed this writ petition. The counsel for the petitioner argued that the

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petitioner is entitled to participate in the Adalat for One Time Settlement for the remittance of 10% of the principal amount by Exts.P7 and P8. That remittance confer right upon the petitioner to participate in three Adalats. He had participated only in two Adalats. Hence, the insistence in Exts.P11 and P14 for further remittance of 10% of the principal amount without reckoning the remittance by Exts.P7 and P8 is arbitrary, perverse, unreasonable and violative of Article 14 of the Constitution of India.

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The learned Standing Counsel representing the 1^st respondent resisted the writ petition. The 1^st respondent stated that as per the terms of the OTS Scheme, the petitioner remitted 10% of the principal amount for participating in the OTS. It is not correct to state that remaining loan amount in respect of Phase-I of the project after rescheduling 42 EMIs would come to ₹2,18,00,000/-. As per the computations of KTDFC, the balance principal amount remaining in the loan will come to ₹5,09,43,150/-. The outstanding amount worked out by the Chartered

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Accountant appointed by the KTDFC was ₹8,64,35,379/-.

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The calculation made by the Chartered Accountant of the petitioner is at a figure of ₹3,76,11,754/for Phase-I loan. The amount calculated by that Chartered Accountant was by taking the figure of principal amount and without taking into account the interest portion. The outstanding balance in the loan account was calculated as per the terms of the loan agreement. As per the OTS Guidelines 2018 of the KTDFC, if a loanee is ready to attend OTS, he will be eligible for attending one sitting. In the case of the petitioner, he had been given two chances to attend the OTS Adalat on the strength of Exts.P7 and P8 remittance. There is no provision in the OTS Adalat Scheme to participate an applicant in the OTS Adalat for the third time on the strength of the remittance made. In view of the above facts, the petitioner is not eligible to participate in the OTS on the strength of the remittance of 10% of the principal sum as per Exts.P7 and P8 on the basis of which the petitioner had been allowed to participate in the Adalat on two occasions.

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I have heard the learned counsel for the petitioner,

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the learned Standing Counsel for the 1^st respondent and the learned Government Pleader representing respondents 2 to 6.

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The issue arising for consideration in this writ petition is whether the petitioner is eligible to attend OTS Adalat and if so, whether the petitioner is bound to remit an additional 10% amount for attending the Adalat.

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The petitioner had loans of ₹10 Crores for their Phase-I and ₹3.90 Crores for their Phase-II of the Villa project. The petitioner has repaid ₹11,32,48,174/- till 12.08.2015. The 1^st respondent’s NOC was required to sell the Villas. According to the petitioner, the 1^st respondent issued NOC only for ₹5,07,97,074.98 so far as Phase-I is concerned. The remittances fell into arrears and when revenue recovery proceedings were initiated, the matter was brought before this Court by the petitioner filing W.P.(C) No.32943/2014. By Ext.P1 judgment, this Court gave specific direction to put up for sale the unsold Villas out of the

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completed 111 Villas in the Phase-I project and to liquidate the liability out of the sale proceeds. An officer of the 1^st respondent-Corporation was assigned the task of putting up for sale the unsold Villas.

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Though the 1^st respondent adopted e-tender process for sale of Villas through an online site, there were no buyers. It was in such circumstances that the petitioner approached the 1^st respondent for One Time Settlement. The petitioner remitted ₹51,05,250/- for the loan for Phase-I and ₹40 lakhs for the loan for Phase-II, which is the 10% remittance required for participating in the OTS Adalat. The remittances are evidenced by Exts.P7 and P8. In the Adalat, dispute arose as to the principal amount outstanding to be computed. According to the petitioner, the principal amount outstanding for Phase-I would be ₹5,09,43,150/-. According to the 1^st respondent, the principal amount was much higher. The Presiding Officers of Adalat directed the parties to figure out the amount outstanding, engaging their Chartered Accountants.

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In the second sitting of Adalat, the 1^st respondent claimed that ₹8,64,36,223/- is the principal outstanding for loan for Phase-I. According to the Chartered Accountant engaged by the petitioner, the principal outstanding would be ₹3,76,11,754/- for the loan for Phase-I. According to the petitioner, this wide gap in the calculations of principal amount is due to the fact that the 1^st respondent mulcted the unpaid EMI amounts with the principal amount. According to the 1^st respondent, they have computed the principal amount strictly in accordance with the terms of the agreement. It is the specific case of the petitioner that the Presiding Officers of the Adalat reached a consensus with all the parties to have a rework in the amount outstanding and to consider the matter in the next sitting.

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The petitioner could not attend the Adalat held in the month of January, 2022 and requested the respondents to permit the petitioner to participate in the Adalat scheduled in the month of March, 2022. The 1^st respondent thereupon issued Ext.P14 communication stating that the petitioner can

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participate in the Adalat now only on payment of 10% of the principal amount. The petitioner states that they are eligible to participate in the next Adalat also on the basis of the payment already made as per Exts.P7 and P8.

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Ext.P9 OTS Adalat Scheme provides that “if the loanee remits the 10% of the outstanding principal for participation in OTS Adalat, but fails to attend the next two Adalats or fails to settle the loan in the next two Adalats, the amount so remitted will be adjusted to the loan account in accordance with the original terms and conditions of the loan”. The said Clause will indicate that it is only when the petitioner fails to attend the next two Adalats or fails to settle the loan in the next two Adalats, that the 10% amount can be adjusted by the 1^st respondent against the loan outstanding.

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In the case of the petitioner, both in the first and second sitting of Adalat, no settlement could be arrived at for the reason that the petitioner and the 1^st respondent could not arrive at an acceptable figure as regards the outstanding principal amount. Even the presiding officers of the Adalat

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required the parties to consult their respective Chartered Accountants. The Chartered Accountants of the petitioner and of the 1^st respondent gave different opinions. According to the 1^st respondent, while calculating the principal amount, they have adhered to the provisions of the agreement. The issue is whether defaulted EMI can be added to the principal outstanding for the purpose of calculation of principal amount for the purpose of OTS. This is a fundamental difference of opinion emanating from accounting standards and accounting practices. The learned Standing Counsel for the 1^st respondent would urge that as long as the petitioner cannot agree with the amount arrived at by the 1^st respondent as regards the principal outstanding, there will be no use in petitioner participating in the OTS Adalat. Unless the petitioner agrees to the principal outstanding amount arrived at by the 1^st respondent, the OTS attempts will not be fructified.

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I am unable to accept the argument of the 1^st respondent. In any Adalat, difference of opinion between the

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parties would invariably arise. It is to sort out the said difference of opinion and to arrive at an amicable settlement that the OTS Schemes are framed. It will be a travesty of justice if one of the party is forced to agree to a disputed proposition, as a condition precedent for participating in the Adalat, when the Adalat themselves are intended to iron out such difference of opinion and difference in perception. In the facts and circumstances of the case, I am of the firm view that the petitioner shall be permitted to sort out the disputes with the 1^st respondent in the next/ensuing OTS Adalat of the 1^st respondent. As the petitioner has made 10% remittance as evidenced by Exts.P7 and P8, the petitioner should be permitted to participate in the next/ensuing Adalat without insisting for further remittance.

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The writ petition is therefore disposed of directing the 1^st respondent to permit the petitioner to participate in the next ensuing OTS Adalat without insisting on further 10% remittance. Till the petitioner is given the afore opportunity,

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no coercive steps shall be initiated or proceeded with against

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the petitioner.

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Sd/-

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N. NAGARESH, JUDGE

aks/18.03.2022

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APPENDIX OF WP(C) 5611/2022

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PETITIONER'S EXHIBITS

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Exhibit P1	TRUE COPY	OF THE JUDGMENT DATED
	17.3.2017	IN W.P.C NO. 12644/2013,
	W.P.C NO. 32943/2014.	13098/2013 AND W.P.C NO.
Exhibit P2	TRUE COPY	OF THE E-TENDER DATED
	22.09.2017 VILLAS BY T	PUBLISHED FOR SALE OF HE CORPORATION.
Exhibit P3	TRUE COPY SETTLEMENT 1ST RESPOND	OF THE REQUEST FOR ONE TIME DATED 11.12.2017 BEFORE THE ENT.
Exhibit P4	TRUE COPY	OF COMMUNICATION DATED
	20.08.2018 PETITIONER SETTLEMENT.	BY 1ST RESPONDENT TO CALLING UPON FOR ONE TIME
Exhibit P5	TRUE COPY 21.7.2018 RESPONDENT.	OF COMMUNICATION DATED FROM 3RD RESPONDENT TO 4TH
Exhibit P6	TRUE COPY IN W.P.C NO	OF ORDER DATED 30.08. 2018 . 28620/2018
Exhibit P7	TRUE COPY OF REMITTAN	OF RECEIPT DATED 3.10.2018 CE OF RS. 51,05,250/-.
Exhibit P8	TRUE COPY OF REMITTAN	OF RECEIPT DATED 15.10.2018 CE OF RS. 40,00, 000/-.
Exhibit P9	TRUE COPY SETTLEMENT	OF GUIDELINES FOR ONE TIME SCHEME OF THE COPORATION.
Exhibit P10	TRUE COPY IN W.P.C NO	OF JUDGMENT DATED 3.3.2020 . 28620/2018
Exhibit P11	TRUE COPY 13.1.2022 THE COMPANY	OF COMMUNICATION DATED OF THE CORPORATION INVITING FOR ONE TIME SETTLEMENT.
Exhibit P12	TRUE COP	Y OF APPLICATION DATED
	17.1.2022 SETTLEMENT	BY PETITIONER FOR ONE TIME BY RECKONING THE EARLIER
	REMITTANCE AMOUNT.	OF 10 % OF THE PRINCIPAL

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Exhibit P13 TRUE COPY OF REPRESENTATION DATED 20.01.2022 BY PETITIONER FOR CONSIDERATION FOR ONE TIME SETTLEMENT BY RECKONING THE EARLIER REMITTANCE OF 10 % OF THE PRINCIPAL AMOUNT. Exhibit P14 TRUE COPY OF COMMUNICATION DATED 5.2.2022 FROM THE CORPORATION. Exhibit P15 JUDGMENT DATED 10.03.2020 IN W.P.C NO. 2615/2020

Grandtech Builders & Developers Pvt. Ltd., v. Kerala Transport Development Finance Corporation Limited - Ktdfc

Case brief

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Grandtech Builders & Developers Pvt. Ltd., v. Kerala Transport Development Finance Corporation Limited - Ktdfc

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