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2009 DIGILAW 3006 (MAD)

Suresh Vaswani & Others v. State Bank of India

2009-08-06

P.K.MISRA, R.SUBBIAH

body2009
Judgment :- R. Subbiah, J. The revision petition is preferred against the order of dismissal dated 01.09.2008 passed by the Debts Recovery Appellate Tribunal, Chennai, in M.A.No.34 of 2007, whereby the order dated 112. 2006 passed by the Debts Recovery Tribunal, Bangalore, in I.R.No.378 of 2001 in O.A.No.687 of 1999 was confirmed. 2. The revision petitioners are the Directors of M/s.Vandana Electronics Private Limited. They availed a loan for their business from the respondent bank in April, 1994 and they stood as guarantors for the said loan. Since the petitioners failed to repay the loan amount, the bank has filed O.A.No.687 of 1999 under the Recovery of Debts Due to Banks and Financial Institutions, 1993 for recovery of a sum of Rs.42,88,4067. In the said O.A., an ex parte order was passed against the borrowers/petitioners on 31.05.2000. Consequently, an ex parte Recovery Certificate was issued. In the meantime, the Reserve Bank of India announced One Time Settlement (OTS) for the cases below Rs.10 Crores. Hence, the bank had offered the said Scheme to be availed by the borrowers/revision petitioners on 28.06.2001. Pursuant to the offer, OTS was arrived at between the respondent bank and the revision petitioners for a sum of Rs.39,69,000/-. Further, it was agreed that the said amount should be paid on or before 31.05.2004. However, the said time was subsequently extended up to 31st August, 2004. Though it was agreed, the revision petitioners have paid only 50% of OTS amount, namely, 19,84,336/- up to 31.08.2004 i.e. the last day of payment as per OTS. Since the amount as per OTS was not paid within the stipulated time, the respondent bank proceeded against the mortgaged property as per the Recovery Certificate issued by the Debts Recovery Tribunal (in short "DRT") Bangalore. Pursuant to the necessary forms submitted by the bank, the Recovery Officer ordered attachment of the scheduled properties on 13.09.2004. Thereafter, the revision petitioners filed necessary applications I.A.No.253 and 254 of 2005 along with I.R.378 of 2001 to set aside the ex parte order and filed a memo before the DRT, Bangalore, enclosing demand drafts for the balance amount of Rs.19,85,723.20 as per OTS, seeking to raise the order of attachment. Thereafter, the revision petitioners filed necessary applications I.A.No.253 and 254 of 2005 along with I.R.378 of 2001 to set aside the ex parte order and filed a memo before the DRT, Bangalore, enclosing demand drafts for the balance amount of Rs.19,85,723.20 as per OTS, seeking to raise the order of attachment. The DRT, Bangalore, by order, dated 24.03.2005, directed the bank to accept the balance amount of Rs.19,84,337/-which is lying with the Recovery Officer, DRT, Bangalore, along with the prime lending rate of interest at 10.5% amounting to Rs.5,39,321/- being the interest calculated on the balance amount payable by the borrowers and further directed the borrowers/revision petitioners to make the said payment within 15 days from the date of order, failing which, the said order shall stand automatically vacated and the bank is at liberty to take action, according to law. In the order, it has been further observed that on payment, the bank has to return all the original title deeds to the borrowers. 3. Aggrieved over the said order, the bank has filed M.A.52 of 2005 before the Debts Recovery Appellate Tribunal (in short "DRAT"), Chennai. But, the DRAT, Chennai, by an order dated 09.06.2005, remitted the matter to the DRT, Bangalore, for passing appropriate orders in I.R.378 of 2001 filed by the borrowers to set aside the ex parte order dated 31.05.2000 in O.A.No.687 of 1999. But, after remand, the DRT, Bangalore, dismissed I.R.378 of 2001 with exemplary costs of Rs.10,000/- by order dated 112. 2006. Challenging the same, the borrowers have preferred an appeal in M.A.No.34 of 2007 before the DRAT, Chennai. The appellate Tribunal has dismissed the appeal and confirmed the order passed by the DRT, Bangalore, by order dated 01.09.2008. Aggrieved over the said order of dismissal, the present revision petition is filed by the borrowers. 4. Learned counsel for the petitioners vehemently contended that when the DRAT remitted I.R.378 of 2001, by order dated 09.06.2005, it was specifically observed that if I.R.378 of 2001 is allowed in favour of the borrowers, the entire matter stands restored to its original position and then it would amount that the matter is pending adjudication and therefore, the clarification issued by the Reserve Bank of India in its communication dated 010. 2003 will not come in the way in recording the OTS filed on 16.04.2004 between the borrowers and the bank. 2003 will not come in the way in recording the OTS filed on 16.04.2004 between the borrowers and the bank. Thus, by pointing out the observation made by the DRAT, learned counsel for the revision petitioners contended that on earlier occasions, the DRAT remanded the matters only with an intention to facilitate the settlement of the disputes between the parties and the bank. But the DRT, without properly appreciating the spirit of the remand order, dismissed I.R.378/2001 filed by the borrowers, which was confirmed in M.A.No.34/2007. 5. During the course of arguments, the learned counsel for the revision petitioners submitted that though the revision petition is filed against the dismissal of the application to set aside the ex parte order dated 31.05.2000, the borrowers are more interested in settling the disputes in this revision petition itself since already OTS was entered into between the parties and the entire amount has been paid. 6. Learned counsel for the respondent bank opposed the same and contended that the borrowers have agreed to make the entire payment on or before 31.08.2004. But up to 31.08.2004 they have paid only 50% of the settled amount. Therefore, on expiry of the time stipulated, the Scheme comes to an end. Therefore, the question of settling the dispute based on OTS, which was entered into as early as on 16.04.2004, does not arise at this stage. He further submitted that the petitioners are bound to pay the amount as per the ex parte order dated 31.05.2000. 7. An elaborate argument was advanced by the learned counsel for both sides about the balance amount in respect of the loan availed by the revision petitioners. As per the directions of this Court, both the counsel have filed separate statement of account showing payments made by the petitioners to the bank. 8. Learned counsel for the petitioners submitted that the statement of account filed on their side would show that the petitioners have paid the amount much more than that of the decretal amount and therefore, there is no justification in the contentions urged on the side of the bank to claim further payment from the petitioners. Per contra, learned counsel for the bank contended that the petitioners are bound to pay a sum of Rs.20,18,369.05 even after giving credit to the payments since they have violated the terms of OTS. 9. Per contra, learned counsel for the bank contended that the petitioners are bound to pay a sum of Rs.20,18,369.05 even after giving credit to the payments since they have violated the terms of OTS. 9. We have gone through the statement of accounts filed by both parties as well as the materials placed before us. 10. It has been contended by the learned counsel for the revision petitioners that even if the ex parte order dated 31.05.2000 is set aside, they have to go back to the DRT and face the proceedings once again from the beginning. In our opinion, the said exercise would cause much hardship to the parties. Therefore, based on the statement of accounts and other materials, this Court itself can pass an order to give a quietus to the issue, particularly in the circumstances when the substantial payment has already been made by the petitioners towards the loan amount. But, at the same time, we are of the view that we cannot compel the bank to settle the matter based on OTS entered into in November, 2003 which came to an end on 31.08.2004 while exercising the jurisdiction under Article 227 of the Constitution of India. Therefore, we are of the view that since the substantial payment has already been made by the petitioners, they shall pay the balance decretal amount on simple interest. 11. In this regard, an useful reference could be placed on the judgment relied upon by the learned counsel for the petitioners in C.K.SASANKAN ..vs.. THE DHANALAKSHMI BANK LTD., (2009(2) CTC 381), wherein it has been held as follows: "8. The quantum and rate of interest which the appellant in the present case is entitled to would be in accordance with the provisions of Section 34 of the Code. According to the provisions of Section 34 of the Code interest is to be awarded at a reasonable rate and on the principal amount. The quantum and rate of interest which the appellant in the present case is entitled to would be in accordance with the provisions of Section 34 of the Code. According to the provisions of Section 34 of the Code interest is to be awarded at a reasonable rate and on the principal amount. It is needless to point out that although the amount of interest from the date of filing of the suit till the date of the decree and thereafter till realisation is in the discretion of the Court as is confirmed by the use of the word may but such discretion has to be exercised by the Court properly, reasonably and on sound legal principles and not arbitrarily and while doing so the Court is also to consider the parameter, scope and ambit of Section 34 of the Code. .... 10. Considering the facts and circumstances of the present case, we find that the rate of interest as awarded for pendente lite and future interest is exorbitant and thus we direct that pendente lite and future interest at the rate of 9% shall be paid which is found to be just, proper and reasonable" 12. Learned counsel for the petitioners also relied on the decision reported in XCALIBRE KNIVES (P) LTD., AND ANOTHER ..vs.. STATE BANK OF INDIA ( (2005) 10 SCC 265 ), wherein it has been held as follows: "8. .... However, in view of the pendency of the litigation which the appellant has been bona fide pursuing, we do not think it just and proper to burden the appellants with further interest from the date of the communication sent by the respondent bank or the order of the High Court passed subsequent thereto. Now we are inclined to grant instalments for payment of Rs.1.10 crores at this point of time. 9. In the circumstances, we dispose of the appeal with a direction that if a sum of Rs.85 lakhs (Rs.1.10 crores minus Rs.25 lakhs already paid) is paid within a period of three months from today, the outstanding loan amount shall be deemed to have been cleared in full and recovery proceedings should then stop; otherwise, the respondent Bank is free to recover the amount as per the order of the Debts Recovery Tribunal". Considering the guidelines made in the above decisions, we hold that the petitioners are permitted to pay the amount as per the ex parte order with 9% simple interest from the date of decree for pendent lite and future interest after adjusting the amounts already paid by the petitioners to the bank towards the principal, from the date on which those payments have been made. The petitioners are permitted to pay the said amount within a period of four weeks from the date of receipt of a copy of this order, failing which, the original ex parte final order would be operative. The writ petition is disposed of with the above direction. No costs. Consequently, connected M.P. is closed.