Madras High Court
R.M. Rajendran And Another vs Recovery Officer (Of Indian Bank) Debt ... on 24 March, 2000
Equivalent citations: [2001]104COMPCAS19(MAD), 2000(2)CTC99, (2000)IIMLJ171
Author: P. Sathasivam
Bench: P. Sathasivam
ORDER
1. Petitioners in C.M.P. No.1704 of 1999 in C.M.A. No.211 of 1999 on the file of IV Additional Judge, City Civil Court, Chennai are the appellants in the above appeal. They filed the present appeal under Order 43, Rule 1 of Code of Civil Procedure (hereinafter referred to as "CPC")
2. The case of the appellants herein is briefly stated hereunder;
The second appellant is the wife of the first appellant. They filed the present appeal against the order of the IV Additional Judge, City Civil Court, Chennai dismissing the injunction petition to restrain the respondents herein from auctioning the schedule mentioned property and from interfering with the peaceful possession and enjoyment of them, who are subsequent purchasers of the mortgaged property of the third defendant viz., Velur D. Narayanan who has borrowed some amount from the second respondent Indian Bank, Park Town, Chennai 3 on creating equitable mortgage in 1989. According to them the second respondent though claims to be obtained equitable mortgage did not file the case on the basis of mortgage and opted to file the suit as though it is a money claim. The Debt Recovery Tribunal (hereinafter referred to as "D.R.T.") has no powers to entertain a mortgage suit. It is further stated that initially the second (respondent has filed the suit in the High Court, but on Its return he has filed the same before the D.R.T. Without filing proper claim based on the mortgage and without impleading the appellants herein as purchasers, obtained an order from the D.R.T. Even though they had reserved Rs.15 lakhs in their sale, as a purchaser entitled to redeem the mortgage within 30 years from the date of mortgage. The second respondent deliberately failed to implead them as party respondent before the D.R.T. In the absence of any decree for mortgage, the present order by the D.R.T. against the third respondent is unenforceable in so far as the properties purchased by them. In such circumstance, they filed suit in O.S.No.6206 of 1999 before the City Civil Court, Chennai and applied for interim injunction. The learned VIII Assistant Judge, after holding that the debt is only a simple money debt, dismissed the injunction application, against which they filed...appeal CMA.No.211 of 1999 before the IV Addl. Judge, City Civil Court, Chennai. They also prayed for injunction in CMP.No.1704 of 1999 in the said appeal praying for an order of injunction. It is stated that the lower appellate Court without appreciating the merits of the case simply held that since D.R.T. has passed orders, no order can be passed, dismissed the appeal and confirmed the order of the trial Court. It is also stated that the money claimed by means of certificate is not executable against them. Notwithstanding the above position, they are prepared to deposit Rs.30 lakhs. In such circumstance, having no other remedy they filed the present appeal under Order 43, Rule 1 of C.P.C.
3. The claim of the appellants is resisted by the Chief Manager, second respondent Indian Bank. The stand of the second respondent is briefly stated hereunder. It is stated that as on date a sum of Rs.2,13,66,230.00 is due and payable by Vellur D. Narayanan, For the recovery of the above amount, the Bank had initiated recovery proceedings prior to the coming into force of the Act 51 of 1993. The Debt Recovery Tribunal was constituted on 3.11.1996 at Chennai. The mortgage suit filed by the bank on 19.8.1998 before the Original Side of this Court. On coming into force of Act 51 of 1993, the suits which were not filed before this Court for the debts due to the banks and financial institutions and the suits which were not numbered prior to 4.11.1996 were returned by this Registry with a direction to represent the same before the Tribunal. The plaint was represented before the D.R.T. and the same was numbered as O.A. 184 of 1997. On the day when the suit was filed before this Court the property was owned by the mortgagor Vellur D. Narayanan and not by the appellants. It is further stated that the present civil miscellaneous appeal is not maintainable. In view of Section 104(2) of C.P.C. the first appellant having already exhausted his remedy under Order 43 Rule 1 of C.P.C. cannot maintain a second appeal under the same provision ie., Order 43, Rule 1 of C.P.C. The borrower Vellur D. Narayanan on 27.10.1998 offered to settle the account with 72.62 lakhs with 16 per cent simple interest from 1.4.1998. The Bank has sanctioned an amount of Rs.82.50 lakhs plus 16 per cent simple interest from 1.11.1998 till the date of payment. Mr. Vellur D. Narayanan accepted the proposal on 14.12.1998, but failed to fulfill it. Even in the proposal dated 29.10.1998 he had suppressed the execution of sale deed/in favour of the subsequent purchasers. The appellants herein are not bona fide purchasers without notice of the existing mortgage. Even though it is stated in the sale deed a sale consideration of Rs.30 lakhs is said to have been retained by the appellants to settle the claim of the Bank in full, admittedly, the Bank is not a party to the ' sale transaction and there was no offer for redemption of mortgage by the mortgagor or the subsequent purchasers viz., appellants. Even on the date of sale of the property, the amount due and payable to the Bank was Rs.1,36,09,944.00. The mortgagor viz., Vellur D. Narayanan remained ex parte before the D.R.T. in spite of publication of public notice in the newspaper viz., Makkalkural on 3.7.1997. The Bank after filing D.R.C.No.48 of 1997 before the Recovery Officer. D.R.T. Chennai and the property was brought for auction sale held on 21.7.1999 and 29.9.1999 and for want of bidders, the auction was not held and it was posted to 19.1.2000 and on that date the auction was not held due to interim order granted by this Court. It is further stated that first of all the appeal itself is not maintainable and even on merits the appellants have no case for injunction. It is also stated that in view of the provisions in the D.R.T. Act and Rules, the suit filed by the appellants/plaintiffs is not maintainable and liable to be dismissed.
4. In the light of the above pleadings, I have heard Mr. R. Krishnamurthy, learned senior counsel' for appellants and Mr. A.L. Somayaji, learned senior counsel for 2nd respondent - Indian Bank.
5. Even at the outset Mr. A.L.Somayaji, learned senior counsel for the second respondent raised an objection regarding maintainability of the present appeal. According to him, inasmuch as the appellants have already exhausted their remedy of an appeal under Order 43, Rule 1 of C.P.C. by filing C.M.A.211 of 1999 before the IV Additional Judge, City Civil Court, Chennai against the order in I.A.No. 15641 of 1999 dated 11.11.1999 dismissing their injunction application, they cannot maintain further appeal under Order 43 Rule 1 C.P.C. Admittedly, against the dismissal of injunction application viz., I.A. 15641 of 1999 the appellants herein filed appeal, viz., C.M.A.No.211 of 1999 under Order 43, Rule 1 (r) of C.P.C. and the said appeal is still pending before the IV Addl. Judge, City Civil Court, Chennai. Pending disposal of the said appeal they also filed CMP. No. 1704 of 1999 seeking an order of injunction till the disposal of C.M.A.No.211 of 1999. Since the lower appellate Court has dismissed the injunction petition, again the, appellants herein filed present appeal under Order 43, Rule 1 C.P.C., which undoubtedly cannot be maintained. The said aspect has not been seriously disputed by the learned counsel for appellants. Though the present appeal is liable to be dismissed on the said ground, since both counsel advanced arguments on merits and invited this Court to pass an order on merits, I am constrained to consider the claim of both parties.
6. Regarding the merits of the claim made by the appellants viz., grant of injunction restraining the respondents 1 and 2 herein from any way auctioning the schedule- mentioned property or interfering with their possession, it is not the case of the appellants that they purchased the suit property without knowledge of the earlier mortgage. It is also not disputed that Vellur D. Narayanan borrowed loan from the second respondent Bank after executing a mortgage deed. Since he did not repay the amount the second respondent Bank constrained to file suit against the said Vellur D. Narayanan before the Original Side of this Court under Order 43, Rule 1 of C.P.C. read with Order 37, Rule 1 of O.S. Rules. Learned senior counsel for the second respondent has brought to my notice the reliefs claimed in the aforesaid suit. Perusal of the records show that the suit is based on the mortgage created by Vellur D. Narayanan for the credit facility availed by him from the bank. It is further seen that the suit was instituted on 18.8.1996 and consequent on the constitution of D.R.T, Chennai by virtue of notification issued on 4.11.1996, in exercise of the powers conferred by Section 4 of Recovery of Debts due to Banks and Financial Institution Act, 1993 (hereinafter referred to as Act 51/93), the suit pending in this court had been transferred to D.R.T. Under Section 31 of the Act and the suit has been numbered as O.A.No.184 of 1997. Though certain doubts have been raised regarding the nature of the relief claimed and the transfer of the suit from the original side of this court to D.R.T. after perusing the records, I am satisfied that the said suit had been filed initially on the original side of this court based on the mortgage created by Vellur D. Narayanan. Further, it is also relevant to refer the endorsement of the Registry directing the plaintiff (Bank) to represent the same before the Tribunal. The endorsement is as follows: " In view of the Constitution of Debts Recovery Tribunal under Section 4 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (Central Act 51/93) this may be represented before the Tribunal.
sd/Asst. Registrar-II dt.9.12.1996."
I am satisfied that the second respondent Bank has initially filed the said suit for recovery of money against the mortgage from Vellur D. Narayanan and after the constitution of D.R.T. the same had been represented before it, hence there is no force in the objection raised by the appellants.
7. Now, I shall consider whether the appellants herein are entitled for an order of injunction auctioning the schedule mentioned property pursuant to the recovery order made by the D.R.T. I have already stated that the appellants herein purchased the very same property from the i Vellur D. Narayanan on 16.10.1996. The Bank had filed the suit on the Original Side of this court on 16.08.1996. It is clear that the sale had taken place two months after the institution of the suit. I have stated that it is not the case of the appellants that they were not aware of the mortgage created by their vendor Vellur D. Narayanan. As a matter of fact, even in the sale deed itself a sum of Rs.15 lakhs had been earmarked to discharge the mortgage debt. In spite of the admitted factual position, it is not open to the appellants to dispute the filing of the suit before the Original Side of this Court and the subsequent proceedings which had taken place before the D.R.T. Inasmuch as their vendor Vellur D. Narayanan did not appear before the D.R.T., even after proper notice, after passing orders debt recovery certificate has been issued under the provisions of the Act and Rules made thereunder. It is true that the present appellants were not parties before the D.R.T., stated earlier, inasmuch as they purchased the mortgage property after the institution of the suit by the Bank, the Bank cannot be faulted with for not impleading them before the D.R.T. Their vendor Vellur D. Narayanan alone answerable to the claim.
8. It is also clear that the provisions of C.P.C. save those mentioned in Section 2 of sub-section 22 will apply to the proceedings before the D.R.T., The D.R.T., had issued Debt Recovery Certificate in accordance with provisions of the said Act. Inasmuch as recovery certificate had been issued based on the suit on mortgage the Bank is entitled to proceed with the sale of mortgaged property. The sale transaction by the appellant and their vendor Vellur D. Narayanan is hit by Section 53 of Transfer of Property Act. The Bank after completing all the formalities and in the absence of any opposition by Vellur D. Narayanan on the basis of the order of the Debt Recovery Tribunal, recovery certificate had been issued under Sub-section. 7 of Section 19 of the Act. No doubt is stated that person like appellants who purchased property subsequent to the filing of the institution of the suit have no remedy at all and it is highly doubtful regarding the maintainability of their claim petition to be filed by them before the D.R.T. As rightly contended that this court is not concerned with the hypothetical questions ' as to whether a claim petition is maintainable or whether a suit alone will be the proper remedy. I have already stated that the sale had taken place two months after' the institution of the suit. In the light of the abundant factual position and in view of the provisions of the Act and Rules made thereunder, I am of the view that the appellants are not entitled to any indulgence from this Court. Likewise, both the Courts below have rightly dismissed their claim for injunction.
9. Mr. R.Krishnamurthy, learned senior counsel appearing for the appellants finally submitted that in the light of the averments made in the plaint in their suit O.S.No.6206 of 1999 an opportunity may be given to them to contest the suit on merits and for that appellants are willing to pay a sum of Rs.15 lakhs towards interest for the amount of Rs.30 lakhs. Considering the fact that as on date the amount due and payable to the Bank is Rs.1,36,09,944.00 and in view of the fact that they had purchased the mortgaged property after the institution of the suit and in the light of the provisions of the Act, particularly Section 18 and 22, I am not inclined to accept his suggestion. Further, mere reading of Section 18 of the Act indicate that the D.R.T. exercises the powers of all the Courts except the High Court and Supreme Court under Article 226 and 32 of the Constitution. It is a substitute for Civil Courts in matters relating to Debts due to Banks and Financial Institutions. Section 22 of the Act makes applicable only certain provisions of C.P.C., in relation to proceedings before it. The said Act confers powers on the D.R.T., to regulate its own procedure. They do not contemplate passing of preliminary decree or a final decree. Section 19(4) of the Act contemplates the passing of orders on the Application filed before the D.R.T. after giving the applicant and the defendant an opportunity and under sub-Section 7 of Section 19, the D.R.T. has to issue certificate on the basis of the order passed under Sub-section 4. The recovery certificate issued under sub-section 7 of Section 19 is a decree issued by the civil courts on the basis of the orders pronounced by them. It has the force and effect of the decree passed by the civil court. The cumbersome and time consuming process adopted by the courts under C.P.C.,-have been avoided by the aforesaid Act. The Recovery Officer who proceeds on the basis of the recovery certificate under Section 19(7) of the Act is performing the functions of the Executing Court. Most of the provisions of Order 21, CPC relating to execution of decrees are contained in the Second and Third Schedules of the Income-tax Act, 1961 and the Income-tax (certificate proceedings) Rules, 1962. In the light of the provisions in the Act and Rules, I am satisfied that the 2nd respondent Bank is entitled to proceed against the suit property and the orders passed by the first respondent - D.R.T., are in accordance with law. Inasmuch as all the equities are against the appellants, they are not entitled to equitable remedy of injunction and their application for injunction from auctioning the suit property deserves to be dismissed.
10. Under these circumstances, I do not find any merit in the appeal and the same is dismissed. No costs. Consequently, connected CMPs., are also dismissed.