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2008 DIGILAW 1318 (PNJ)

Mohit Pratap Singh v. Oriental Bank Of Commerce

2008-08-05

DAYA CHAUDHARY, SATISH KUMAR MITTAL

body2008
Judgment Satish Kumar Mittal, J. 1. The petitioner has filed this writ petition for quashing the settlement arrived at between respondent No. 3 and respondent No. 1 (hereinafter referred to as the respondent bank) as contained in the joint application dated 20.9.2007; and the order dated 4.10.2007 passed by the Debt Recovery Appellate Tribunal, Delhi (hereinafter referred to as the Appellate Tribunal) accepting the said settlement. 2. In this case, respondent No. 3-Company had obtained Credit and Loan facility from respondent No. 1. It defaulted in re-payment of the said loan/credit facility. Consequently, the respondent bank initiated proceedings for recovery by filing an original application before the Debt Recovery Tribunal, Chandigarh. Thereupon, respondent No. 3 filed a reference under Section 15(1) of Sick Industrial Companies (Special Provisions) Act, 1985 before the BIFR. In the meantime, the Debt Recovery Tribunal passed exparte decree against respondent No. 3 for the amount claimed and issued a recovery certificate. Subsequently, respondent No. 3 filed an application before the Debt Recovery Tribunal, Chandigarh for setting aside the exparte judgment and decree. The said application was dismissed by the Debt Recovery Tribunal vide order dated 18.10.2005. Against the said order, respondent No. 3 filed an appeal before the Appellate Tribunal. In the meantime, in execution of the judgment and decree, the mortgaged property of respondent No. 3 was auctioned on 22.10.2005 and the petitioner gave the highest bid for Rs. 1.76 crores against the reserve price of Rs. 60.00 lacs. He also deposited 25% of the bid amount as per the requirement of the auction notice. 3. It is the case of the petitioner that subsequently the petitioner also deposited the remaining sale consideration within the stipulated period. However, it is admitted fact that the auction sale was not confirmed in favour of the petitioner as the Appellate Tribunal vide his order dated 22.11.2005 had stayed the proceedings of the auction sale. During the pendency of appeal, the petitioner moved an application dated 25.5.2006 before the Recovery Officer for refund of the sale amount with an undertaking to furnish bank guarantee in lieu thereof. However, the said application was rejected by the Recovery Officer vide order dated 20.10.2006 while observing that there is no such provision for refund of the auction amount to the auction purchaser because the confirmation of auction sale has been stayed by the Appellate Tribunal. However, the said application was rejected by the Recovery Officer vide order dated 20.10.2006 while observing that there is no such provision for refund of the auction amount to the auction purchaser because the confirmation of auction sale has been stayed by the Appellate Tribunal. During the pendency of the appeal before the Appellate Tribunal respondent bank and respondent No. 3 entered into a settlement, according to which, respondent No. 3 shall pay to the respondent bank an amount of Rs. 3,41,61,411.36 as on 30.6.2006 along with 13.25% interest p.a. w.e.f. 30.6.2006 till the adjustment of the account. The said settlement was approved by the Appellate Tribunal. 4. Now the petitioner, who is the highest bidder, has filed the instant petition for quashing the aforesaid settlement arrived at between respondent No. 3 and the respondent bank as well as the order dated 4.10.2007 passed by the Appellate Tribunal, and for directing the respondent bank to hand over the vacant possession of the property auctioned in favour of the petitioner on 22.10.2005 by confirming the sale. 5. It is the case of the petitioner that he gave the highest bid in the auction sale and has also deposited the entire amount. Now the respondent bank cannot be allowed to enter into a settlement with respondent No. 3 as by the said settlement the rights of the petitioner have been affected and he has suffered huge losses. It is further the case of the petitioner that the respondent bank has entered into a settlement with respondent No. 3 against the guidelines issued by the Reserve Bank of India. Therefore, the said settle-Went is illegal and the same is liable to be quashed. 6. We have heard the counsel for the petitioner. In our view, the petitioner company being the highest bidder in the auction sale, has no vested right in the property till the auction sale is confirmed in his favour. He cannot compel the respondent bank to accept his bid and confirm the sale in his favour. In the present case, admittedly the auction sale has not been confirmed as it was stayed by the Appellate Tribunal. While adjudicating the dispute between the respondent bank and respondent No. 3, the Appellate Tribunal had accepted the settlement arrived at between the parties. The petitioner, who was not a party in those proceedings, cannot be permitted to challenge the said settlement. While adjudicating the dispute between the respondent bank and respondent No. 3, the Appellate Tribunal had accepted the settlement arrived at between the parties. The petitioner, who was not a party in those proceedings, cannot be permitted to challenge the said settlement. It was for the respondent bank and respondent No. 3 Company, which is a borrower, to settle the matter. As far as the petitioner is concerned, who is a highest bidder, he has no right to compel the respondent bank to accept his bid and confirm the sale in his favour. The petitioner has no right to claim the property, which was mortgaged property, as the matter has been settled between the parties, and as per Clause (5) of the said settlement, if the auction purchaser is held entitled to any damages/claim or interest by the Appellate Tribunal, Debt Recovery Tribunal or by any court, respondent No. 3 shall be liable to pay the same in its entirety. Therefore, in our opinion, the aforesaid settlement entered into between the parties, cannot be quashed. Thus, we do not find any merit in this petition and the same is hereby dismissed. 7. However, it will be open for the petitioner to claim damages from the respondent bank, if he has suffered any losses, by initiating proceedings before the appropriate forum.