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2007 DIGILAW 675 (JHR)

Amit Raj Enterprises v. UCO Bank

2007-08-23

AMARESHWAR SAHAY

body2007
Judgment Amareshwar Sahay, J. 1. Heard Mr. Kalyan Roy, learned Counsel appearing for the petitioners and Mr. Rajen Raj, learned Counsel appearing for the respondents UCO Bank and with their consent, this application is being disposed of at this stage itself. 2. In this writ application the petitioners have challenged the notices, issued under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to SRFAESI Act) dated 02/08/2006 for Rs. 50 lacs and odd against petitioner No. 1, for Rs. 99 lacs and odd against petitioner No. 2, for Rs. 4,55,124/- against petitioner No. 3, for Rs. 1, 24, 729/- against petitioner No. 4, by the respondent Bank giving 60 days notice to the petitioners to pay the respective amounts of outstanding dues standing against them, failing which, coercive action by taking possession of the secured assets of the borrowers including the right transferred by way of lease, assignment or sale etc. may be taken as provided under Section 13(4) of the SRFAESI Act. 3. According to the petitioners, petitioner No. 1 took cash credit loan of Rs. 55 lacs, petitioner No. 2 took term loan of Rs. 47.25 lacs, petitioner No. 3 took term loan of Rs. 29.83 lacs, petitioner No. 4 took term loan of Rs. 15 lacs, petitioner No. 5 took term loan of Rs. 5 lacs whereas petitioner No. 6 took car loan of Rs. 1.78 lacs from the respondent UCO Bank, Dhanbad. Since the petitioners failed to pay the principal amount and interest accrued thereon therefore, considering the assets being None Performing Assets (N.P.A.), notices under Section 13(2) of the aforesaid Act was issued, which is under challenge in this writ application. 4. According to the petitioners, they applied to the Bank for liquidation of their clues under one time settlement scheme and offered an amount of Rs. 1.21 crores for settlement of their dues. According to them, the total amount of loan including all the petitioners comes to a sum of Rs. 1,53, 86,000/- out of which they have already paid Rs. 50 lacs towards interest to the Bank. Further according to the petitioners, the respondent Bank by issue of letter dated 09/03/2007 (Annexure-2) asked the petitioners to deposit 25 % of the amount of offer of One Time Settlement which comes to Rs. 1,53, 86,000/- out of which they have already paid Rs. 50 lacs towards interest to the Bank. Further according to the petitioners, the respondent Bank by issue of letter dated 09/03/2007 (Annexure-2) asked the petitioners to deposit 25 % of the amount of offer of One Time Settlement which comes to Rs. 30.25 lacs in order to entertain the compromise proposal of the petitioners and in response thereto the petitioners deposited a sum of Rs. 5 lacs with the Bank and requested to allow 30 days time to deposit the rest of the amount. 5. The grievance of the petitioners is that at one hand pursuant to the offer made by them for liquidation of the entire dues under one time settlement scheme was under consideration by the Bank and on the other hand they issued the impugned notices under Section 13(2) of SRFAESI Act. It is further stated by the petitioners that by issue of Annexure-2 dated 09/03/2007, the Bank asked the petitioners to deposit 25 % of the amount, offered by the petitioners, which comes to Rs. 30.25 lacs in order to entertain the compromise proposal of the petitioners and pursuant thereto they deposited a sum of Rs. 5 lacs and requested to allow 30 days time to deposit the rest of the amount. 6. By order dated 02/04/2007 this Court, on the request of the learned Counsel for the respondent Dank, allowed two weeks time to seek instructions and file counter affidavit and by the same very order, interim order was passed that if the petitioners deposit 25% of the O.T.S. amount as per the letter of the Bank dated 09/03/2007 (Annexure-2) within three weeks, no coercive steps shall be taken against them until further orders. 7. Pursuant to the said order, the petitioners have already deposited the said amount, i.e. 25% of the O.T.S. amount on 18/04/2007. 8. The stand of the respondent Bank is that the accounts of the petitioners have been declare as None Performing Assets (NPA) as per the guidelines of R.B.I. and, therefore, asked the petitioners to go for One Time Settlement Scheme but the offer of the petitioners do not fulfill the criteria of accepting a compromise proposal as per the management policy of the Bank and that the compromise proposal of Rs. 121.00 lacs made by the petitioners was earlier rejected by the Bank on 18/11/2006 in view of the fact that the minimum acceptable amount calculated as per the Modular Method, Discount Cash Flow Method and Thumb Rule Method comes to Rs. 166.26 lacs for all the petitioners and, therefore, the compromise proposal of the petitioners for Rs. 121.00 lacs was not found acceptable. In support of the statement, a copy of the decision taken by the Bank on 18/11/2006 has been annexed as Annexure-I to the counter affidavit. 9. Further case of the respondent Bank is that the offer of the Borrowers regarding the compromise proposal cannot be construed as acceptance of the compromise proposal by the Bank and the offer of the borrowers may be subject to further negotiation, acceptance with modification of terms of settlement or rejection by the competent authority. According to the Bank, the letter dated 09/03/2007 (Annexure-2) issued by the Bank does not confer any legal right upon the petitioners against the respondent Bank. Further according to the respondent Bank, the Recovery Department of the Bank, head office at Kolkata has considered the compromise proposal of the petitioners and rejected the same in the interest of the Bank in the light of its policy, which was conveyed to the petitioners vide letter dated 27/04/2007, contained in Annexure-3 (a) to the counter affidavit. 10. Mr. Rajen Raj, learned counsel appearing for the respondent Bank vehemently submitted that the offer of the petitioners for liquidation of their dues under One Time Settlement Scheme, i.e. at a sum of Rs. 1.21 crore was not acceptable to the Bank and the head office of the bank by issue of letters, as contained in Annexure- 3 (a) and 3(b) to the counter affidavit, already informed in its Regional Officer at Ranchi that offer of the petitioners was not acceptable. He further submitted that only because the letter was issued by the Bank on 09/03/2007 asking the petitioners to firstly deposit the 25 % of the amount of offer under One Time Settlement Scheme that does not mean that the Bank has accepted the offer of the petitioner for compromise or settlement of their dues at Rs. 1.21 crore. According to the Bank, any amount less than 1.66 crores and odd is not acceptable to the Bank. 11. 1.21 crore. According to the Bank, any amount less than 1.66 crores and odd is not acceptable to the Bank. 11. Annexure- 3 (a) and 3 (b) to the counter affidavit, which have been relied by the learned Counsel for the Bank are two letters, which have been issued by the Head Office of the bank on same very date, i.e. 27/04/2007. Annexure- 3(b) appears to have been written first on 27/04/2007, as the letter number mentioned therein is 165/2007-08. The second paragraph of the letter, which is relevant, reads as under: In this regard we invite your attention to our letter Nos. AD/RCR/RKS/91/2007-08 dated 11.04.2007 and AD/RCR/RKS/103/2007-08 dated 13.04.2007. We have already advised you that, no understanding was arrived at during the meeting with Mr. Mohan Prasad at head Office in respect of his compromise offer of Rs. 1.21 crores. Therefore, from the contents of this letter noticed above, it appear that the Head Office of the Bank, on consideration of the fact that the offer of the petitioners were already rejected and the decision was communicated to the Regional Officer vide letter dated 11/04/2007 and 13/04/2007 therefore, they do not wish to accept the compromise offer of Rs. 1.21 crores of the petitioners. Similar is the contents of the letter of the Head Officer contained in Annexure-3 (a) to the counter affidavit dated 27/04/2007. 12. It is relevant to notice this fact at this juncture that this Court by order dated 02/04/2007 passed an interim order that if the petitioner deposits 25% of the One Time Settlement amount as per the letter of the Bank dated 09/03/2007 (Annexure-2) within three weeks, no coercive action shall be taken against the petitioners until further order. This order was passed clearly with a view that after receipt of the 25% of the One Time Settlement amount which comes to 30 lakhs and odd the respondent Bank would consider the offer of the petitioners for liquidation of their dues under One Time Settlement Scheme pursuant to its letter dated 09/03/2007 contained in Annexure-2 and as it appears that the petitioners have already deposited 25% of their offer amount under One Time Settlement Scheme on 18/04/2007. 13. 13. When pursuant to the order of this Court dated 02/04/2007, the petitioners had already deposited 25% of the offer amount on 18/04/2007 then in all fairness the respondent Bank was obliged to consider the offer of the petitioners for settlement/liquidation of their dues under One Time Settlement Scheme afresh and if necessary, the Bank was free to invite the petitioners for negotiation and then any decision could have been taken by the Bank but instead of that the respondent Bank by issue of letter contained in Annexure-3(a) and 3(b) dated 27/04/2007 have showed their rigidness that since the offer of the petitioners was earlier rejected and communicated to the Regional Office of the Bank vide its letters dated 11/04/2007 and 13/04/2007 therefore, the offer of the petitioners was not acceptable. This stand of the Bank is not appreciated by this Court. The respondent Bank is a nationalized Bank and it has to act in fair and equitable manner. A nationalized Bank is not expected to behave like a private moneylender. I do not wish to propose that a nationalized Bank should settle its dues against the interest of the Bank but at the same time it should keep in its mind that the bank should be interested in recovery of its dues as early as possible. 14. In the present case when the petitioners are ready to liquidate their dues under one time settlement scheme, then it is in the interest of the Bank also to consider the offer of the petitioners in its right perspective and, if necessary, they can negotiate with the petitioners so that the parties may come to an amicable settlement and the Bank may be able to recover its dues. The contents of the letters, i.e. Annexure- 3 (a) and 3 (b) also do not disclose as to why the offer of the petitioners was not acceptable or on what ground it was rejected. No reason what so ever has been assigned therein. Therefore, this Court is not in a position to know the reasons behind the rejection of the offer of the petitioners. 15. No reason what so ever has been assigned therein. Therefore, this Court is not in a position to know the reasons behind the rejection of the offer of the petitioners. 15. Considering the facts and circumstances of the case and after hearing the parties, for the ends of justice, this application is being disposed of by directing the respondent Bank to consider the offer of the petitioners afresh in its right perspective and take a decision after hearing the petitioners or their representative and then pass a reasoned order in accordance with law within a period of eight weeks from the date of receipt/production of a copy of this order. For a period of ten weeks, no coercive steps shall be taken against the petitioners pursuant to the impugned notices dated 02/08/2006. With these observations and directions, this writ application stands disposed of.