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2018 DIGILAW 347 (JHR)

G. K. Wires v. Bank Of India

2018-02-08

RAJESH SHANKAR

body2018
ORDER Rajesh Shankar, J. - The present writ petition has been filed for issuance of direction upon the respondent to return the original collateral securities deposited by the petitioner for securing the loan advanced by the respondent-Bank. 2. The factual background of the case, as stated in the writ petition, is that the petitioner-firm availed loan for running its business. Subsequently, the loan account became irregular and was classified as NPA, pursuant to which the Bank took action by issuing notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 [hereinafter referred to as ''the SARFAESI Act''] as well as under Section 13(4) of the SARFAESI Act for taking over the possession of the mortgaged assets. The petitioner offered a sum of Rs. 20 Lakhs as full and final settlement of the entire loan amount and the said offer was approved by the competent authority of the respondent-Bank which was duly communicated to the petitioner in terms with the letter dated 28.12.2016 and it was agreed by the petitioner that the entire sum would be paid by 27.03.2017. In terms of the settlement, the petitioner paid the entire sum to the Bank and made a representation dated 01.03.2017 requesting, inter alia, for release of the collateral securities deposited with the Bank by way of mortgage and for withdrawal of action under SARFAESI Act, however, the same has not been returned till date which gives rise to filing of the present writ petition. 3. The learned counsel for the petitioner submits that in spite of the fact that the petitioner-firm has deposited the entire compromise/settlement amount of Rs. 20 Lakhs within the stipulated time, the respondent-Bank has not released the collateral security of the petitioner on the ground that one company, namely, M/S Lucky Rice Mill Pvt. Ltd. has failed to deposit its compromise/settlement amount within the stipulated time. 20 Lakhs within the stipulated time, the respondent-Bank has not released the collateral security of the petitioner on the ground that one company, namely, M/S Lucky Rice Mill Pvt. Ltd. has failed to deposit its compromise/settlement amount within the stipulated time. The petitioner has nothing to do with M/S Lucky Rice Mill Pvt. Ltd., inasmuch as, the petitioner as well as M/s Lucky Rice Mill Pvt. Ltd. are separate legal entities having no co-relation with each other except the fact that one of the Directors of M/S Lucky Rice Mills Pvt. Ltd. is also the partner of the petitioner-firm who stood as guarantor before the Bank for the loan advanced in favour of M/S Lucky Rice Mills Pvt. Ltd. There is no provision under the SARFAESI Act which precludes a guarantor to give his guarantee only in one firm/company. If one partnership firm has failed to liquidate the dues of the Bank in terms of compromise/settlement, the Bank has no right to retain the original documents of the loan account in which the entire payment has been made by the firm only on the pretext that one of the partners as well as the guarantors of the loan has also given his guarantee in another loan account. It is further submitted that the objection of the Bank in releasing the security of the petitioner is beyond the scope and ambit of the Contract Act. The respondent-Bank has no right to retain the collateral securities despite payment of the entire settlement amount only due to the reason that one of the partners of the petitioner-firm is also the Director of another company which could not make payment of the settlement amount in terms of the settlement arrived at with the respondent-Bank. It is further submitted that in the case of another firm i.e. M/S Sai Packers, after deposit of the compromise amount, the respondent-Bank has already issued ''No Dues Certificate'' and the release of collateral security is in process. In support of the petitioner''s contention, the learned counsel for the petitioner puts reliance the judgment of the Hon''ble Supreme Court rendered in the case of Zonal Manager, Central Bank of India v. M/S Devi Ispat Ltd. & Ors. (Civil Appeal No. 6077 of 2010) . 4. In support of the petitioner''s contention, the learned counsel for the petitioner puts reliance the judgment of the Hon''ble Supreme Court rendered in the case of Zonal Manager, Central Bank of India v. M/S Devi Ispat Ltd. & Ors. (Civil Appeal No. 6077 of 2010) . 4. Per-contra, the learned counsel for the respondent-Bank submits that the present writ petition is not maintainable either on the facts or on the points of law as the petitioner has invoked the extraordinary Writ jurisdiction of this Court without taking recourse of alternative/efficacious remedy provided under law including Section 17 of the SARFAESI Act. It is further submitted that the husband of Smt. Baby Devi (the partner in the petitioner-firm), namely, Sri Gopal Narayan Das is also a partner of the petitioner-firm who had availed several loans and credit facilities from the respondent-Bank in the name of various business concerns/firms/companies such as: (i) M/S G.K Wires where Sri Gopal Narayan Das is the partner and a key person in the business (ii) M/S Sai Packers where Sri Gopal Narayan Das is the partner and also a key person in the business and (iii) M/S Lucky Rice Mill Pvt. Ltd. where Sri Gopal Narayan Das is the Director and the key person of the company. It is further submitted that credit facilities to M/S G.K Wires, M/S Sai Packers and M/S Lucky Rice Mill Pvt. Ltd. are actually operated and managed by Sri Gopal Narayan Das and all the accounts are Group Accounts which are connected with each other. All the accounts were classified as NPA and the Bank proceeded to recover the due amount of loan. In the meantime, the settlements were arrived at on 29.12.2016 in relation to all the three business concerns. The respondent-Bank approved the settlement/compromise in the Group Accounts as per the guidelines of the Reserve Bank of India and the Banking practices. It is further submitted that Sri Gopal Narayan Das has deposited the compromise/settlement amount of two loan accounts, but failed to deposit the compromise amount of M/S Lucky Rice Mill Pvt. Ltd. within the stipulated time i.e. by 20.03.2017 and as such as per the terms and condition of the compromise/settlement, the Bank has retained the security of the petitioner-firm for the purpose of recovery of remaining claim against the defaulters. 5. Heard the learned counsel for the parties and perused the materials available on record. 5. Heard the learned counsel for the parties and perused the materials available on record. Three business concerns, namely, M/S G.K Wires, M/S Sai Packers and M/S Lucky Rice Mill Pvt. Ltd. had availed loan facility from the respondent-Bank. Due to non-deposit of the loan amount, all the loan accounts of all three firms/companies were declared NPA and in course of recovery proceeding, compromise/settlement were made in relation to all the three firms/companies. On perusal of all the three compromise agreements, all dated 29.12.2016, it appears that in relation to the petitioner-firm, it was agreed that it will deposit the compromise amount of Rs. 20 Lakhs by 27.03.2017. M/S Sai Packers agreed that the compromise amount of Rs. 60 Lakhs will be paid till 20.03.2017 whereas in relation to M/S Lucky Rice Mill Pvt. Ltd. it was agreed that the compromise amount of Rs. 130 Lakhs will be paid by 20.03.2017. In all the three compromise agreements, the condition for withdrawal of SARFAESI action/suit filed in the DRT and release of securities were the same. The relevant term of the compromise is quoted as under: "4. Withdrawal of SARFAESI Action/Suit filed at DRT at and release of securities to be done on full and final payment of compromise amount in all related NPA accounts involved in the respective account as per Schedule of payments mentioned above and in others." 6. On bare perusal of the aforesaid condition of the compromise agreement, it would be evident that it was explicitly mentioned in the said compromise agreement that pre-condition of release of securities would be the full and final payment of compromise amount in all the related NPA accounts as per the schedule of payments mentioned in the agreements. It is an admitted fact that the compromise amount of M/S Lucky Rice Mill was not paid within the stipulated time. However, the learned counsel for the petitioner has submitted that the petitioner-firm is a separate legal entity and it has no concern with M/S Lucky Rice Mill. The said argument of the learned counsel for the petitioner is not acceptable. However, the learned counsel for the petitioner has submitted that the petitioner-firm is a separate legal entity and it has no concern with M/S Lucky Rice Mill. The said argument of the learned counsel for the petitioner is not acceptable. Even if it is assumed that the petitioner is a separate legal entity, in view of the aforesaid condition mentioned in the compromise agreement of the petitioner-firm, it had guaranteed the payment of other firm/company as per the compromise agreement and in case of any default, the detention of collateral security of one of the group accounts would be the obvious consequence. Otherwise also, from the facts of the case, it appears that one Gopal Narayan Das has been associated with all the three business concerns being one of the partners of M/S G.K Wires and M/S Sai Packers and the Director of M/S Lucky Rice Mill Pvt. Ltd. The respondent-Bank with an intention to recover the due loan amount of all the three firms/company had arrived at the compromise putting a specific condition in the compromise agreement that the securities would be released only after the full and final payment of compromise amount in relation to all the NPA group accounts. Since the compromise amount with regard to two firms were realized but the compromise amount of M/S Lucky Rice Mill Pvt. Ltd. was not paid, the Bank retained the securities of the petitioner-firm and thus there appears to be no infirmity in the action of the respondent-Bank. 7. I have also perused the judgment rendered by the Hon''ble Supreme Court in the case of M/S Devi Ispat Ltd. (Supra) as has been cited by the learned counsel for the petitioner. In the said case the Hon''ble Supreme Court held that in view of the settlement of the dues on the date of filing of the writ petition by arrangement made through another Nationalized Bank and the statement of accounts furnished by the appellant-Bank was showing ''nil'' outstanding, the High Court was right in directing for return of the title deeds. The fact of the present case is entirely different where the petitioner itself agreed by the terms of the agreement with the respondent-Bank for detention of its security in case the dues of any of the group accounts is not paid within time. The fact of the present case is entirely different where the petitioner itself agreed by the terms of the agreement with the respondent-Bank for detention of its security in case the dues of any of the group accounts is not paid within time. Thus, the judgment cited by the learned counsel for the petitioner is not applicable in the factual context of the present case. 8. In view of the aforesaid discussions, I find no merit in the writ petition. 9. The writ petition is accordingly dismissed.