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2001 DIGILAW 64 (CAL)

Chanda Engineers (I) Limited v. UCO Bank

2001-02-09

Subhro Kamal Mukherjee

body2001
JUDGMENT Subhro Kamal Mukherjee, J. : This is an application under Article 227 of the Constitution of India against an order dated March 22, 2000 passed by the learned Presiding Officer, Debts Recovery Tribunal, Calcutta in M.A. No. 17 of 1997. 2. The Bank instituted Title Suit No. 110 of 1986 in the court of the learned Assistant District Judge, First Court at Alipore for realisation of money advanced, mortgage and hypothecation. By judgement and decree dated September 13, 1990 the learned Assistant District Judge decreed the suit ex parte with cost in preliminary form against the defendants. The petitioners on or about March 26, 1991 filed an application under Order 9, Rule 13 read with section 151 of the Code of Civil Procedure for restoration of the suit after setting aside of the ex parte decree dated September 13, 1990. It was contended in the said application that the suit was decreed in preliminary form ex parte due to no fault of the defendants. 3. The said proceeding was registered as Misc. Case No. 12 of 1991 in the court of the learned Assistant District Judge, First Court at Alipore. In view of coming into operation of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 the original suit and the said proceeding for restoration have been transferred to the Debts Recovery Tribunal, Calcutta and has since been re-numbered as T.A. No. 208 of 1994 and M.A. No.17 of 1997 respectively. 4. On February 20, 1997 the Tribunal dismissed M.A. No. 12 of 1997 the Tribunal dismissed M.A. No. 12 of 1991 for default and, also, disposed of the main proceeding being T.A. No. 208 of 1994 which was pending for final decree by holding that the bank was entitled to realise the amount in terms of the preliminary decree. On March 17, 1997 petitioners filed an application for recalling of the said order dated February 20, 1997 and for restoration of the M.A. No. 12 of 1991. The said proceeding was registered as M.A. No. 17 of 1997 before the said Tribunal. On March 26, 1997 the records were put up before the learned Presiding Officer on the prayer of the petitioners and the petitioners moved an application for an interim order for keeping the preparation of the certificate in abeyance till the disposal of the M.A. No. 17 of 1997. On March 26, 1997 the records were put up before the learned Presiding Officer on the prayer of the petitioners and the petitioners moved an application for an interim order for keeping the preparation of the certificate in abeyance till the disposal of the M.A. No. 17 of 1997. By order No.15 dated March 26, 1997 the learned Presiding Officer, inter alia, deferred the issuance of the certificate till April 10, 1997 and directed that the prayers of the petitioners will be considered if the petitioners deposit a sum equivalent to 5% of the claim of the bank within 15 days from the date of the order. An application under Article 227 of the Constitution of India was moved before this court being Civil Order No. 1908 of 1997 by the petitioners and Bhaskar Bhattacharya, J., by order dated February 9, 1999 dismissed the said application, but the time to deposit the amount fixed by the Tribunal was extended till February 28, 1999. 5. On February 23, 1999 M/s. Chanda Engineers (I) Limited addressed a letter to the Chief Manager, U.Co. Bank, New Market branch indicating that certain fixed deposits mentioned in the said letter are lying with the bank and those deposits are earning interest from time to time. The Bank was requested to realise the 5% of the claim, as directed by the Tribunal, out of the total accrual from the said fixed deposit receipts. The bank replied to the said letter under reference No. New/ADV/927/98-99 dated February 24, 1999 contending that the said fixed deposit receipts are kept under lien to the bank against various guarantees issued on behalf of the company and as such those can not be adjusted as requested by the company. It was asserted that as per order of the Tribunal the petitioners have to deposit 5% of the amount of their own without falling back on the securities held by the bank as lien. It was asserted that as per order of the Tribunal the petitioners have to deposit 5% of the amount of their own without falling back on the securities held by the bank as lien. The said letter of the bank was replied to by a letter dated March 1, 1999 by the company contending, inter alia, that while the company undertook certain jobs of Calcutta Port Trust and other Government departments, the bank provided certain amount by way of ad hoc advance and/or by way of performance guarantees and the said guarantees were issued with margin money of 10% by way of fixed deposit receipts and with efflux of time the bank guarantees long expired and there is no enforceable claim by the beneficiaries against the bank. It is contended that the principal sum deposited with the bank by way of fixed deposit receipts and accrued interest thereon are still lying with the bank free from any charges or encumbrances. In the said letter further list of fixed deposit receipts were furnished indicating that those fixed deposit receipts could also be utilised for realisation of 5% of the claim of the bank. 6. In the aforesaid background the petitioners filed an application praying for necessary order for keeping the preparation of the certificate in abeyance till the disposal of the M.A. No. 17 of1997. In connection with the said application a supplementary affidavit was filed where those letters, referred to hereinabove, have been disclosed and it was categorically asserted in paragraph 8 of the said supplementary affidavit that the amount involved in the said fixed deposits together with the accrued interest thereon is more than sufficient to cover the amount of 5% of the claim. It is pertinent to mention here that no written objection was filed to the said application or the supplementary affidavit by the bank. 7. The learned Presiding Officer by the order impugned dismissed the application filed by the petitioners as the learned Presiding Officer was of the opinion that the petitioners were to make fresh deposit as per order of this court and as within the period fixed by this court deposit was not made, there can not be any stay of the issuance of the certificates. The learned Presiding Officer observed "It appears to me that the Hon'ble Court also having passed orders directing the defendants to deposit 5% of the decretal dues they can not fall back upon the fixed deposit receipts which have been kept under lien with the bank against various guarantees issued in their favour. The adjustment can not be allowed. They were to make fresh deposit as per order of the Hon'ble Court." 8. Being aggrieved the petitioners have come up with this application under Article 227 of the Constitution of India. 9. Mr. Joydeep Kar, learned Advocate for the petitioners, contended that the Tribunal below completely misconstrued the order passed by this court inasmuch as the intention of the Tribunal and this court while passing the order directing the petitioners to secure 5% of the claim of the bank was to impose a condition to consider the application for stay to keep the issuance of the certificate in abeyance. Neither the Tribunal nor this court imposed any condition either as to the manner of such payment nor pin pointed the source out of which the said security is to be furnished. Mr. Kar, further, submitted that the bank not having filed any written objection to the application dated February 25, 1999 and to the supplementary affidavit, the contention of the petitioner that the mentioned fixed deposits are lying with the bank free from all encumbrances ought to have been accepted by the Tribunal and the Tribunal went wrong in proceeding on the basis that those fixed deposits are kept under lien with the bank against various guarantees. Mr. Joydeep Kar referred to the case of Radha Raman Choudhury vs. Chota Nagpur Banking Association Limited, reported in 15 Company Cases page 4 : AIR 1944 Patna 368. 10. Mr. Subrata Roy, learned Senior Advocate for the opposite party/bank, however, contended that the Tribunal below while passing the order rightly construed the order and directions passed by the Tribunal earlier which has since been affirmed by this court and committed no jurisdictional error in deciding the matter. The issue sought to be raised in the application by the petitioners are not within the domain of the Tribunal and as such the Tribunal was justified in refusing to go into those controversies. He, accordingly, submitted that the present revisional application should be dismissed. 11. The issue sought to be raised in the application by the petitioners are not within the domain of the Tribunal and as such the Tribunal was justified in refusing to go into those controversies. He, accordingly, submitted that the present revisional application should be dismissed. 11. In my opinion, the approach of the learned Presiding Officer in the matter was too technical. The petitioners in connection with their prayer for restoration moved an application for stay of issuance of the certificate. The Tribunal directed that 5% of the claim of the bank was to be deposited. The said order was affirmed by this court. In my opinion it was not the intention of the Tribunal and of this court to direct physical deposit of money with the bank in terms of the order. Releasing of the amount covered by fixed deposit receipts in favour of the bank should be construed sufficient compliance of the order. The intention of the court was to see that at least 5% of the claim of the bank is secured. It is not for the court to suggest the source of the fund, but it was the desire of the court to see that certain sum is secured in favour of the bank. In my view, therefore, the approach of the petitioners asking the bank to adjust the sum covered by the fixed deposit receipts in sufficient compliance of the orders. 12. But the question is whether the amount covered by the fixed deposit receipts have been kept under lien with the bank against various guarantee issued in their favour. Unfortunately, in this case the bank has not filed any written objection to the application and the supplementary affidavit wherein it was categorically asserted that the amount involved in the fixed deposit receipts are lying free from all encumbrances. In reply to the letter dated February 24, 1999 of the bank, the company on March 1, 1999 not only contended that there is no enforceable claim by the beneficiaries against the bank, but contended further, that the amount covered by the fixed deposit receipts including accrued interest thereon are lying with the bank free from any charge or encumbrance. It was, also, asserted that there are other fixed deposit receipts than those mentioned in the letter dated February 23, 1999. It was, also, asserted that there are other fixed deposit receipts than those mentioned in the letter dated February 23, 1999. In the case of Radha Raman Choudhury (supra) a Division Bench of the Patna High Court held that bank's right of lien can only attach to money so long as it remains such an earmarked sum of money; while after it has ceased to be such a separate earmarked sum of money and is represented only by a balance of account of debt due from the bank no lien can continue to attach to it, though the rights of the bank by way of set off will not thereby be affected. I respectfully agree with the observations. 13. In the premises, I have no other option, but to set aside the order impugned and direct re-hearing of the application filed by the petitioners on merits and direct the Tribunal to come to a finding whether from the amount covered by the said fixed deposit receipts with accrued interest thereon 5% claim of the bank could be secured and whether those fixed deposit receipts are kept under lien with the bank against the various guarantees issued by the bank on behalf of the company and as such not adjustable, I direct the bank/opposite party to file written objection to the application and to the supplementary affidavit by three weeks from today and. I grant liberty to the petitioners to file their reply thereto, if any, within a week thereafter. The Tribunal is directed to dispose of the application within eight weeks from the date of communication of the order. The learned Advocates of the respective parties are authorised to communicate the gist of this order and Tribunal is directed to act on such communication without insisting for production of an authenticated copy thereon. 14. Till the disposal of the said application the certificate issued by the Tribunal, if any, will be kept in abeyance. 15. The application under Article 227 of the Constitution of India is thus allowed. There will be no order as to costs. 16. Xerox certified copy of this order, if applied for, be supplied to the parties within ten days. Appeal allowed.