Allowed

Indian Overseas Bank ,Patna Br v. M/S Life Line Surgicals and Medi

Patna HC24 Jul 2012L.P.A/582/2012

Case brief

AI extract

What is this about?

The Bank appealed against an order directing mediation between it and a defaulting firm. The Court held that the one-time settlement scheme was no longer operational, leaving the Bank without authority to settle, and the firm lacked bona fide intent to repay.

What did the court decide?

The appeal was allowed; the impugned order dated 23rd March 2012 directing the matter to the Mediation Centre was set aside.

Indian Overseas Bank ,Patna Br Vs M/S Life Line Surgicals… — Banking and Recovery | Patna HC (2012)

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IN THE HIGH COURT OF JUDICATURE AT PATNA Letters Patent Appeal No.582 of 2012 In

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Civil Writ Jurisdiction Case No. 2090 of 2012

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====================================================== 1. Indian Overseas Bank, Patna Branch, Frazer Road, Patna through its Branch Manager Cum Chief Manager. 2. The Branch Manager cum Chief Manager, Indian Overseas Bank, Patna Branch, Patna. .... .... Respondents/Appellant/s Versus

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M/s Life Line Surgicals & Medicals, Belwariar House, Khaderan Singh Marg, Kadamkuan, Patna, P.S.-Kadamkuan, District-Patna, through its Partner Shanti Devi W/o Late Dr. Rama Shanker Residing at Shital Chhaya, Opposite Professors Colony, Mohalla- Shahganj, Canal Road, Rampur, P.S.- Sultanganj, District- Patna

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.... .... Petitioner/Respondent

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====================================================== Appearance : For the Appellant/s : Mr. Jitendra Kumar Roy, Mrs. Sheela Sharma and Mr. Shivendra Kumar Roy, Advocates. For the Respondent/s : Mr. Sandeep Kumar, and Mr. Mukesh, Advocates. ====================================================== CORAM: HONOURABLE THE CHIEF JUSTICE and

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HONOURABLE MR. JUSTICE AHSANUDDIN AMANULLAH

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ORAL ORDER

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(Per: HONOURABLE THE CHIEF JUSTICE) 5. 24-07-2012 This Appeal under Clause 10 of the Letters Patent is preferred by the respondent-Indian Overseas Bank, Patna and another (hereinafter referred to as the „Bank‟) against the order dated 23^rd March 2012 made by the learned single Judge in C.W.J.C No. 2090 of 2012. The respondent-M/s Life Line Surgicals &

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Patna High Court LPA No.582 of 2012 (5) dt.24-07-2012

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Medicals, a partnership firm (hereinafter referred to as the „Firm‟) approached this Court under Article 226 of the Constitution in above C.W.J.C No. 2090 of 2012 to challenge the order of the Debts Recovery Officer, Patna made on 25^th November 2011 in Recovery Proceeding No. 38 of 2007. Under the said order, the Recovery Officer has directed to sell the mortgaged immovable property attached under order dated 21^st May 2008.

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According to the Firm, the mortgaged property is worth Rs. 75 lakhs which is being sold for recovery of a sum of Rs. 13 lakhs. The petition was contested by the Bank.

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According to the Bank, the Bank had, as early as on 2^nd September 2000, advanced financial aid to the Firm in the form of Cash Credit Facility upto Rs. 5 lakhs and was later enhanced to Rs. 10 lakhs. The Firm failed to repay the dues of the Bank. The Firm was declared to be “Non-Performing Asset”(NPA) on 27^th August 2003. The recovery proceeding was initiated against the Firm in Original Application No. 52 of 2005 before the Debts Recovery Tribunal, Patna for recovery of a sum of Rs. 13,03,543.84 Paise as on 26^th June 2005. The Tribunal allowed the said Original Application and directed recovery of the said sum of Rs. 13,03,543.84 paise with interest @ 9% per annum. As the Firm failed to repay its dues, the Bank approached the Recovery Officer in Recovery Proceeding Case No. 38 of 2007. Pursuant to the aforesaid order dated 25^th November 2011 made by the Recovery Officer, the Bank has got the mortgaged property valued by a registered Valuer.

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According to the said valuation report, the fair market value of the property was Rs. 26,60,325.00 and its distress sale value was Rs. 21, 28,260/-

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Patna High Court LPA No.582 of 2012 (5) dt.24-07-2012

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Before the learned single Judge the Firm had proposed to settle its dues to the Bank. Pursuant to the request made by the Firm, the learned single Judge has directed that the matter be referred to the Mediation Centre of the Patna High Court.

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Feeling aggrieved the Bank has preferred this

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Appeal.

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Learned advocate Mr. Jitendra Kumar Roy has appeared for the Bank. He has submitted that the impugned order has been made by the learned single Judge on the premise that the property was worth Rs. 75 lakhs. However, as per the valuation report it is worth around Rs. 26 lakhs. He has further submitted that the „one time settlement scheme‟ referred to by the learned single Judge is no more in operation. The said scheme was introduced by the Reserve Bank of India. In absence of such scheme operative as on the date, the Bank has no authority to make one time settlement as proposed by the Firm.

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Learned advocate Mr. Sandeep Kumar has appeared for the Firm. He has submitted that the Firm is ready and willing to settle its dues provided the Bank offers suitable installments.

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Mr. Sandeep Kumar is instructed by Mr. Lal Ratnakar son of Smt. Shanti Devi and husband of Smt. Anand Ratnakar and the brother of Ms. Manju Kumari the three partners in the Firm.

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Mr. Sandeep Kumar admits that since 2002 the Firm has not paid a farthing to the Bank. He has submitted that if the Bank settles the dues of the Firm, the Firm will raise money to satisfy the dues of the Bank. He has submitted that at the moment, none of the partners in the Firm is in a position to pay a

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Patna High Court LPA No.582 of 2012 (5) dt.24-07-2012

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single penny to the Bank. He also admits that the Firm has not got the valuation made in respect of the mortgaged property. The sum of Rs. 75 lakhs referred to by the Firm is a mere belief not supported by any document or evidence such as valuation report or a comparable sale instance in the vicinity of the mortgaged property.

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It is apparent that the Firm has no inclination to repay its dues to the Bank. The whole attempt is to while away time to delay the matter. We are sure, we do not want to be a party to the procrastination engineered by the Firm. The Firm has failed to show its bona fide to repay the Bank‟s dues.

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In the above circumstances we do not consider it expedient to propose settlement between the Bank and the Firm through the machinery of the Mediation Centre.

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For the aforesaid reasons we allow this Appeal. Impugned order dated 23^rd March 2012 made in C.W.J.C No. 2090 of 2012 is set aside.

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(R.M. Doshit, CJ)

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(Ahsanuddin Amanullah, J)

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Prakash

Indian Overseas Bank ,Patna Br v. M/S Life Line Surgicals and Medi

Case brief

What is this about?

What did the court decide?

Indian Overseas Bank ,Patna Br v. M/S Life Line Surgicals and Medi

Case brief

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