Research › Search › Judgment

Patna High Court · body

2012 DIGILAW 885 (PAT)

State Bank of India v. Union of India

2012-06-28

JAYANANDAN SINGH

body2012
ORDER 1. This Court has heard Mr. S.D. Sanjay in the matter yesterday. Mr. Binod Kumar Singh, appearing for the respondents commences his submissions, in reply to the submissions of Mr. Sanjay, yesterday itself and has continued till today. However, this Court is of the view that the entire submissions of Mr. Singh, in reply to the submissions of Mr. Sanjay, was out of contest, irrelevant and wastage of Court’s time. 2. Mr. Sanjay, learned counsel for the petitioner Bank has challenged the order of the Debts Recovery Tribunal dated 09.01.2012, as contained in Annexure-5, only to the extent that while disposing of the O.A. filed by it, the Tribunal has held that the private respondent was entitled for compensation of Rs.5 lacs from the Bank. He did not challenge nor did he request this Court to take into account the other directions of the Tribunal for any purpose. 3. The facts in brief, as placed by Mr. Sanjay before this Court are that the Company, of which respondent no.3 claims to be the Managing Director, had taken loan from the Bank. It did not repay the loan in time and the same was declared NPA. Thereafter Bank proceeded against the loanee and the factory premises was seized. Mr. Sanjay submitted that the Company and its functionaries moved against the action of the Bank before this Court and was allowed some reliefs by learned Single Judge. Against the said order of the learned Single Judge, the Bank moved in appeal and a Division Bench of this Court set aside the order of the learned Single Judge and dismissed the writ application. It is not disputed that against the judgment of the Division Bench Company and its functionaries moved the Apex Court where their Special Leave Petition was dismissed in limine. 4. The Bank found that it was not possible for it to recover its entire loan amount with interest and costs from the said seized factory premises. Hence, it filed an O.A. before the Debts Recovery Tribunal, Patna under the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. This application was registered as O.A. No.26/07 which has finally been disposed of by the impugned order. 5. Learned counsel for the Company and its functionaries did not take steps at the initial stage and hence, the case was decided ex parte. This application was registered as O.A. No.26/07 which has finally been disposed of by the impugned order. 5. Learned counsel for the Company and its functionaries did not take steps at the initial stage and hence, the case was decided ex parte. However, a new learned counsel appeared on their behalf later on and filed an application for recall of the order and rehearing which was allowed. Thereafter a written statement was also filed in the case on their behalf and also an application raising counter claim. A 3rd application was filed in the case for calling some paper of inspection held on 27.12.2011 in which articles, goods and stocks seen at the time of inspection were mentioned. The Tribunal considered the applications and, in the light of the provisions of Section 19 of the said 1993 Act, rejected all the three applications as not maintainable. The Tribunal also held that the defendants, i.e., Company and its functionaries could not challenge actions taken under SARFAESI Act in this O.A. for which they were required to file separate application. It was noticed by the Tribunal that the defendants, i.e., Company and its functionaries had moved this Court and up to the Supreme Court, but had lost. However, it noticed that, “as per report of the Recovery Officer, some mistakes has been done in completion of Panchnama and finished goods were destroyed in the meantime due to more time.” However, thereafter the Tribunal recorded that “since the counter claim petition is not in accordance with law, hence, no relief can be made to the defendants.” However, in the next paragraph the Tribunal recorded that “ looking to the facts and circumstances of the case and also visit report of the Recovery Officer, I am of the considered opinion to meet the ends of justice that the defendants are liable to get Rs.5 lacs as compensation only …………..” 6. Mr. Sanjay has challenged this award of compensation to the Company and its functionaries. He submitted that once the written statement, counter claim and the application for calling for the paper, filed on behalf of the Company and its functionaries had been rejected by the Tribunal, the Tribunal had no authority at all to award compensation to the defendants. Mr. Sanjay has challenged this award of compensation to the Company and its functionaries. He submitted that once the written statement, counter claim and the application for calling for the paper, filed on behalf of the Company and its functionaries had been rejected by the Tribunal, the Tribunal had no authority at all to award compensation to the defendants. He submitted that any compensation could be awarded to the defendants only in accordance with the provisions of 1993 Act and only if their claim was found maintainable and valid. Since counter claim had been rejected by the Tribunal, the Tribunal was totally devoid of any authority to award compensation to the defendants. 7. Mr. Singh in reply has made elaborate arguments. He submitted that the Tribunal awarded the compensation in the light of the facts and circumstances of the case. He submitted that the facts and circumstances of the case shows that the actions taken by the Bank and its officials under SARFAESI Act were apparently malafide and against the provisions of the SARFAESI Act and Security Interest (Enforcement) Rules, 2002. He submitted that there was no valid seizure of the property by the Bank and its officials under the provisions of the said Act and the Rules and the inventory and Panchnama shows that there was interpolation in the same and the officials of the Bank manufactured this document just to circumvent the orders passed by this Court on 11.07.2007 in the writ application of the respondents, i.e., CWJC No.6500 of 2007 (Annexure-1 with the counter affidavit). He placed the seizure documents annexed with the writ application and particularly the security responsibility, annexed as Annexure-1/A with the writ application, and its photocopy annexed with the counter affidavit as Annexure-2, in an attempt to show that there was a manipulation of time at the end of the document to circumvent the orders of this Court passed in the said writ application. He submitted that the respondents are in a position to establish this interpolation and anti-dating of time on the basis of informations, received by them with regard to movement of police force and the Enforcement Officer, collected by them from the different police offices and police stations. He submitted that initially, in the O.A. functionaries of the Company were mislead by the lawyer because of which they could not file their written statement and counter claim in time. He submitted that initially, in the O.A. functionaries of the Company were mislead by the lawyer because of which they could not file their written statement and counter claim in time. When they came to know about the ex parte order, then only they changed the lawyer and took steps. He raised other grounds also in challenge to the genuineness and authenticity of the Panchanama and raised serious objection for not producing the inventory along with the writ application by the petitioner. He also submitted that the Panchanama and inventory were not prepared and singed by the authorized officers in terms of the said Rules and in the form provided in Appendix-A and 2 of the Rules. He submitted that in the circumstances the officials of the Bank were liable to be proceeded with and punished under Section 166 and 167 of the Indian Penal Code, as authorities had not acted in the manner prescribed under the SARFAESI Act and the said Rules. He submitted that Section 19 of the SARFAESI Act provides for award of compensation. However, he informed this Court, towards end of his arguments that against the impugned order of the Tribunal, the Company and its functionaries have already moved in appeal before the Appellate Tribunal. Hence, he submitted that, in the circumstances, petitioner should also have filed appeal before the Tribunal instead of coming to this Court. 8. The submissions of Mr. Singh, as noticed above, apparently, shows that his entire challenge is to the action taken by the Bank officials under the SARFAESI Act, i.e., seizure of the property and taking over of possession of the factory premises by the Bank officials under Section 13(4) of the SARFAESI Act. He also submitted that the Bank had not declared the property as NPA and had not considered objection filed by the Company and its functionaries for which direction had been issued to them by the said order dated 11.07.2007 passed in the earlier writ application. Thus it is apparent that all these submissions of Mr. Singh was in connection with the actions taken by the Bank under the SARFAESI Act, whereas the impugned order was passed by the Tribunal on an O.A. filed by the Bank under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. Thus it is apparent that all these submissions of Mr. Singh was in connection with the actions taken by the Bank under the SARFAESI Act, whereas the impugned order was passed by the Tribunal on an O.A. filed by the Bank under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. It is an admitted position that the written statement, counter claim and application of the defendants, i.e., the Company and its functionaries were rejected by the Tribunal in the O.A., against which they have filed their appeal before the Appellate Tribunal. In view of rejection of the said petitions, under what authority and under what law the Tribunal had awarded compensation to them, Mr. Singh totally failed to demonstrate. In fact, he did not advance any argument on the question as to under what provision of law the Tribunal exercised its jurisdiction and awarded compensation, once the counter claim and written statement of the defendants, i.e., the Company and its functionaries had been rejected by it. The entire thrust of his argument was that since the Bank and its officials had acted illegally and malafide while acting under SARFAESI Act, the Tribunal had awarded the compensation. It may be pointed out that in the previous paragraph the Tribunal had clearly observed that the defendants could not challenge the actions taken under SARFAESI Act in the O.A. and they had to file separate application under SARFAESI Act and not in the O.A. It cannot be disputed that the jurisdiction of the Tribunal under the two Acts, i.e., SARFAESI Act and 1993 Act are separate and independent and is governed by the provisions of the respective Acts. It is obvious that the Tribunal could not exercise its powers under one Act in any proceeding under the other Act. Hence, this Court is of the opinion that, having rejected the written statement and counter claim of the Company and its functionaries the Tribunal acted wholly without jurisdiction in awarding compensation to the defendants by the impugned order for some alleged lapses on the part of the Bank officials in their conduct under SARFAESI Act. As a result only that part of the impugned order, by which a compensation of Rs.5 lacs was awarded by the Tribunal in favour of the defendants, is quashed. 9. As a result only that part of the impugned order, by which a compensation of Rs.5 lacs was awarded by the Tribunal in favour of the defendants, is quashed. 9. This Court has taken care not to make any observation in respect of facts placed by Mr. Singh as he apprehends that the same may prejudice his case before the Tribunal. Therefore, this Court makes it clear that this order is confined only to the issue of the jurisdiction of the Tribunal in awarding compensation to the defendants, i.e., Company and its functionaries in view of the rejection of their written statement and counter claim and its finding that the actions of the Bank under SARFAESI Act could not be challenged by the defendants, i.e., the Company and its functionaries in the O.A. and they have to file separate application under SARFAESI Act. 10. This writ application is allowed with the aforesaid observations and directions.