Asma Rubber Products (P) Ltd. vs State Bank of India, Oversees Branch and Others

K.P. Balachandran, J.—M/s. Asma Rubber Products (P) Ltd., the 15th defendant in O.S. No. 85/07 on the file of the Sub Court, Pala, is the petitioner. O.A. No. 105/07 is already filed before the Debt Recovery Tribunal, Ernakulam by the first respondent/State Bank of India for recovery of the amounts due from the petitioner company; the 16th defendant, who is one of the Directors of the company and from defendants 1 to 4, who are submitted to be the sureties to the loan availed of by C.P.A.Yusuf, the late father of defendants 1 to 4, 16 and 18, who was the Managing Director of the petitioner/15th defendant company.

The suit O.S. No. 85/07 also is filed by the first respondent/bank for a decree declaring that several documents enlisted in the relief column executed by defendants 1 to 4, 16 and 18 in respect of the scheduled properties are void and not binding on the plaintiff and other creditors, those documents having been executed in fraud of creditors and the Bank is entitled to avoid those alienations.

It is vehemently contended before me by the learned counsel for the petitioner that the questions involved for adjudication in the OA and in the original suit are substantially the same, but the court below, by Exhibit P7 impugned order, has refused to stay the proceedings u/s 10 of the CPC on the ground that the issues to be considered in the present suit are entirely different from the issues involved in the OA pending before the DRT; that the said observation of the Sub Judge is incorrect; that unless amounts are found to be due to the first respondent/Bank in excess of the amounts that can be satisfied by sale the properties furnished as security, the question of application of Section 53 of the Transfer of Properties Act will not arise; that therefore, the finding as to what is the exact amount due to the first respondent/Bank is a matter for decision by the DRT and unless that is decided, the question of avoidance of alienations, made mention of in the prayer column in the suit, does not arise and that therefore, it is only proper that till a finding is entered into by the DRT as regards existence of debt in excess of the amounts, for which the security has been furnished, the suit for avoidance of alienations is stayed. In support of the arguments so advanced, counsel for the petitioner has invited my attention to paragraph 19 of Exhibit P1 plaint to the following effect:

The plaintiff submits that the properties mortgaged by defendants 1 to 4, 16, 17 and 18 are not by themselves sufficient and adequate to satisfy the entire liabilities due from them. It is also submitted that if the mortgage debt is not satisfied, the plaintiff bank is always entitled to get a personal decree against the defendants and in satisfaction of that personal decree, the other properties and assets belonging to the defendants/mortgagors 1 to 4, 16 and 18, can be proceeded with by the Debt Recovery Tribunal for realisation of the balance mortgage debt. In any view, the value of the mortgaged/ hypothecated items of properties is grossly insufficient and inadequate to satisfy the claims of the plaintiff bank. A notarised copy of the valuation report is produced herewith in the list of documents as item No. 30.

It is true that unless the amounts due to the first respondent/Bank exceed the amounts that are already secured by hypothecation of immovable properties, there is no need to grant a declaration in favour of the first respondent/Bank to the effect that transactions in respect of the scheduled properties, which are not hypothecated to the Bank, are void and not binding on the plaintiff. It is true that the legal position is so. But, all the same, the relief to avoid an alienation has to be sought for within the period of limitation and to hold that alienations effected, as mentioned in the relief column, are not binding on the plaintiff, being in fraud of creditors, is a declaratory decree that can be granted to the plaintiff the moment it is found that the first respondent/Bank is the creditor of the petitioner company, as the 16th defendant is one of its Directors and defendants 1 to 4 are the sureties to the loan availed of by their late father C.P.A. Yusuf on behalf of the petitioner company and defendants 1 to 4 as also 16 and 18 are children of the said C.P.A.Yusuf. Even if a decree is granted as prayed for by the first respondent/Bank, the right to proceed against the scheduled properties will arise only in the event of debt not being fully discharged by sale of the properties hypothecated to the Bank. That is a provision that can be made in the decree and however, the prayer in the plaint is not one which renders the suit liable to be stayed u/s 10 of the CPC on account of the pendency of O.A. No. 105/07 before the DRT.

This writ petition, in the circumstances, is dismissed.