Canara Bank vs Indian Delco Pvt. Ltd. And Ors.

Ranjit Singh, J

Pursuant to the recovery certificate (R.C.) issued by the Tribunal after allowing the O.A. for recovery of an amount of Rs. 25,41,14,536/- with simple interest @ 12% p.a. from 4.3.2011 until payment, the recovery proceedings were pending before the Recovery Officer (R.O.). In between the appellant had also approached the High Court by way of writ petition which was ultimately disposed of on 4.2.2013. It is, thereafter, the Tribunal below had allowed the O.A. on 23.9.2013 as the liability had already been settled before the High Court.

Despite the above noted position, the respondent herein pleaded before the R.O. that the R.C. had been wrongly drawn by pleading that the Bank itself had admitted that the principal amount of only Rs. 8.35 crores approx was outstanding whereas the R.C. had been issued for Rs. 25.25 crores. The plea accordingly was that the R.C. proceedings could not be continued and the same would call for amendment by the Presiding Officer. The plea further was that Bank could not sell the above property of the respondent, which was valued at Rs. 37 crores, for an outstanding amount of about Rs. 13.32 crores as per the statement of account.

The Bank, on the other hand, had opposed the prayer by pointing out that the order passed by the Presiding Officer had contained a categorical direction to the Bank to file up-to-date statement of account stating the amount recovered by giving value dating effect and as such it was urged that the prayer made for amendment of the R.C. was not a good ground to stay the recovery or to hold back the recovery.

The R.O., after hearing the arguments, did not find any ambiguity in the amount as determined in the final order. The Bank was accordingly directed to file affidavit stating minimum reserve price and the name of the officer with his landline and mobile number who was to be associated with the auction process and to provide valuation report.

Aggrieved against this order passed by the R.O., the respondent herein filed an appeal under Section 30 of the RDDBFI Act before the Tribunal below. While deciding this appeal, the Tribunal below has viewed that the question raised by the appellant is whether revised recovery certificate could have been issued after the adjusting the amount deposited by the respondents herein with the Bank or not on the basis of earlier R.C. and further that if on the basis of earlier R.C. the sale fixed was in accordance with the law or not. The Tribunal has taken notice of the fact that after the demand notice issued by the Bank for Rs. 25 crores a substantial amount of Rs. 22.25 crores had been deposited by the respondents during the pendency of the proceedings at the intervention of the Court. The Tribunal has also noticed that the decree has been passed in favour of the appellant which has upheld by the Appellate Tribunal as well as by the High Court while deciding the Writ Petition W.P. (C) No. 7572/2011. The Tribunal has even noticed the fact that the matter could not be settled between the parties and so the Bank had taken action to sell the entire property which was worth Rs. 37 crores. The admitted dues of the Bank were about Rs. 13.31 crores.

The Tribunal has observed that both the Bank and the borrower had some ego problem and had even taken note of the heated arguments raised by the Counsel of the parties. Observing that the debt of the Bank was fully secured and respondents are ready and willing to pay the dues, the Tribunal expressed that it was unable to understand as to why the matter could not be settled. The Tribunal has gone on to recognize the right of the decree-holder to get money under the decree but has also observed that the conduct of the respondents herein was not bad. In the background of these heated submissions and counter-submissions, the Counsel for the respondents herein had raised a plea before the Tribunal that if the Bank was keen to sell the property, then it should refund the money taken during the course of proceedings pursuant to various directions passed by the Tribunal. Despite stiff opposition by the Counsel for the Bank to this plea, the same seems to have found favour with the Tribunal below. The Tribunal below has thus expressed itself that if Bank still wants to recover its dues by sale of the mortgaged property, it should refund the money received from the borrower under the directions of the Tribunal, which was for the purpose of settling the dues. Aggrieved against this direction, the Bank has filed the present appeal.

The Counsel for the respondents has pursued his plea with the same heat and ferocity which perhaps was shown before the Tribunal below and is found noticed in the order. The Counsel for the Bank would primarily submit that the direction issued by the Tribunal to restrict the rights of the Bank to sell the property to recover the dues of the Bank with the condition to refund the amount would be beyond the power and jurisdiction of the Tribunal below. The Counsel for the respondents has been rather loud in pressing for refund for the amount of Rs. 22.25 crores deposited as ordered, if the Bank is keen in selling the property which is valued at Rs. 37 crores.

I find that the plea raised by the Counsel for the respondents is more emotional than legal. No doubt, the respondent had deposited a substantial sum of amount, which may be pursuant to the direction of the Tribunal below to see an amicable settlement, but there is no justification in making the right of the Bank to sell the property subservient to or with a condition to refund of the amount deposited. It ought to have been realized that this order would amount to taking away the rights of the Bank to sell the property available to the Bank under the SARFAESI Act. It is the same Tribunal which had issued the R.C. in which recovery proceedings are in progress.

The Counsel for the respondents had referred to one application filed by them for recalling of the R.C. Obviously, this prayer has not been allowed or even is not found noticed in the impugned order. It cannot be denied that the Bank is entitled to recover the entire amount of its dues. The Bank has a right to recover full amount for which R.C. is issued. The amount which is recoverable has to be only after taking into consideration the payment which has been made voluntarily or otherwise during the pending proceedings. The submission that this amount was paid prior to the decision in the O.A. and issuance of R.C. also would not change the position of law keeping in view the order in the O.A. The Tribunal below has held the Bank entitled to recover Rs. 25,41,14,536/- with simple interest @ 12% p.a. from 4.3.2011 onwards. The Tribunal has specifically directed that the payment received by the Bank after institution of the O.A. shall be credited with effect from the date on which such payments were received and the Bank shall furnish the details of the balance amount recoverable as on this date to the defendants within 30 days. The respondents were given time to make payment of the balance amount by 31.3.2014. It is well open for the respondents to plead before the R.O. about the amount which they have paid for being accounted for. The amount which is recoverable would be the balance amount as already directed by the Tribunal below. That is the only proper course and if the amount to the tune of over Rs. 13 crores is still due by making such an adjustment, then, obviously, the direction issued by the Tribunal to refund the amount deposited by the respondents would be against the spirit of the legislation introduced to ensure recovery and, that too, a speedy one.

Once the Tribunal itself had issued direction for adjusting the amount paid by the respondents while deciding the O.A., the Tribunal would not have any jurisdiction either to review or modify the order passed by it in the O.A. while deciding the appeal under Section 30 of the Act filed by the respondents to impugn the order passed by the R.O. The impugned order passed in the present appeal apparently may amount to review of the order. It may call for a notice here that the Tribunal below has decided the O.A. primarily on the basis of the High Court's order where the Counsel for the petitioner/respondents had mentioned that the figures mentioned by the Bank though were not completely accurate but, the respondents would be still willing to suffer a decree and would be ready to pay the outstanding amount as on the date when the O.A. was filed with interest @ 12% p.a. The High Court had left it for the Tribunal below to consider and pass appropriate order based on the aforesaid offer, after factoring in interest which is ordinarily awarded by the Tribunal in such like matters for the pendente lite period. If the intention was to modify or correct the R.C., then the Tribunal below ought to have passed such an order instead of passing the impugned order permitting the Bank to go ahead with the sale of the property only after refund of the amount which has been paid by the respondents. This choice given by the Tribunal to the Bank apparently is without any sanction of law and virtually takes away the right of the Bank to recover the amount due and determined. It is always understood that in case any amount is recovered or paid, the sale would be to recover the balance amount which is yet to be recovered. The case set up before me is not that the amount can be recovered by the sale of any part of the property. The right of the Bank to recover the amount which is still substantial cannot be curtailed or interfered with on the ground that some payments have been made by the respondents. Obviously, the Bank would be entitled to recover the balance amount and if the sale of the property is for an amount more than the dues of the Bank, the surplus sale proceeds has to be refunded to the respondents herein. I have not been able to find any provision under which the conditional order as passed by the Tribunal below can be justified or sustained. The present appeal is accordingly allowed. The order passed by the Tribunal below is set aside. The R.O. can now proceed with the recovery proceeding in accordance with law.