Jharkhand High Court
Bank Of Baroda Is A Body Corporate ... vs Mukesh Kumar Sinha on 8 March, 2021
Equivalent citations: AIRONLINE 2021 JHA 391, 2021 (3) AJR 243
Author: Rajesh Shankar
Bench: Rajesh Shankar
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P.(C) No. 3161 of 2020
Bank of Baroda is a body corporate constituted under the Banking
Companies (Acquisition and Transfer of Undertaking) Act, 1970 having its
Head Office at Baroda Bhavan, R.C. Dutt Road, Alkapuri, Baroda-390007,
Gujarat represented by its Principal Officer and Power of Attorney Holder
Mr. Ashok Kumar Verma. ..... ... Petitioner
Versus
1. Mukesh Kumar Sinha.
2. Smt. Kapur Devi.
3. Bibi Sahida Khatoon.
4. Smt. Dropadi Devi.
5. Smt. Firoza Khatoon.
6. Smt. Padmini Devi.
7. Sri Arun Kumar Mehta.
8. Sri Rajesh Kumar Sinha. .... .... Respondents
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CORAM : HON'BLE MR. JUSTICE RAJESH SHANKAR
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For the Petitioner : Mr. Lalan Kumar Singh, Advocate
Mr. Sanjay Kumar, Advocate
For the Respondents :
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05/08.03.2021 The present writ petition is taken up today through Video
conferencing.
2. The present writ petition has been filed for quashing of the judgment and certificate dated 18th May, 2016 (Annexure-33 to the writ petition) passed by the Presiding Officer, Debts Recovery Tribunal, Ranchi in O.A No.112 of 2015. Further prayer has been made for quashing the judgment dated 29th July, 2019 passed by the Chairperson, Debts Recovery Appellate Tribunal, Allahabad in Appeal Sr. No.288 of 2016. The petitioner has also prayed for an order to the effect that the respondent nos.1 to 8 are jointly liable to pay a sum of Rs.27,27,711.29/- only with contractual rate of interest at the rate of 14.75% (BPLR)+2% penal charge per annum with monthly rest in connection with the CCM Loan Account and that the respondents are liable to pay the future and pendente lite interest on the due amount w.e.f. 1st January, 2013 till realization. Further prayer has been made for passing the order of attachment for all the movable and immovable properties and other assets of the respondents and also order for sale of those properties for realization and discharge of debts.
3. The factual matrix of the case as appears from the writ petition is that the respondent no.1 is the proprietor of M/s. Satya Sai Digital Studio, -2- Hazaribagh who had taken CCM Loan facility of Rs.20,00,000/- on 6th March, 2009 from Vijaya Bank which has now been amalgamated with the petitioner-Bank in view of the scheme of amalgamation notified and published in gazette of India vide G.S.R No.2(E) dated 02nd January, 2019 by the Ministry of Finance (Department of Financial Services) and the said notification came into force w.e.f. 1st April, 2019. In order to secure the repayment of loan amount, the respondent no.1 had executed various documents such as a demand promissory note, a letter of repayment, letters of lien and a copy of overdraft agreement to the then lender i.e., Vijaya Bank. The respondent nos. 2 to 8 executed letters of guarantee to secure the loan amount of the respondent no.1. The respondent no.2 to 6 deposited their respective letters of guarantee as well as original title deeds along with other documents of their landed properties and created equitable mortgage as security in favour of the aforesaid bank. The respondent no.1 was required to repay the loan amount with prescribed interest within 18 months, however, he failed to pay the same and as such the loan account of the respondent no.1 became Non Performing Asset (NPA) on 31st December, 2010. Thereafter, the petitioner repeatedly made demand of the due loan amount with interest by serving notices and lastly by serving a final reminder on 13th November, 2014 addressed to the respondents, however, they failed to pay the dues of the petitioner. The petitioner, thereafter moved before the Debts Recovery Tribunal (in short 'DRT'), Ranchi for recovery of the loan amount with interest by filing O.A No.112 of 2015 which was partly allowed to the extent of Rs.19,46,303.29 only against the respondent no.1 and the case against the respondent no.2 to 8 was dismissed with costs. Further, the petitioner was directed to pay Rs.10,000/- each to the respondent no.2 to 6 as compensation. Aggrieved by the said order, the petitioner preferred an appeal before the Debts Recovery Appellate Tribunal (in short 'DRAT'), Allahabad vide Appeal Sr. No.288 of 2016 and the DRAT, Allahabad vide order dated 29th July, 2019 modified the order of the DRT, Ranchi to the extent that the petitioner-Bank was entitled for total claimed amount of Rs.27,27,711.29/- together with cost against the respondent no.1 and future simple interest at the rate of 10% per annum from the date of filing of the original application till realization and the cost as well as compensation of Rs.10,000/- each was not considered as liable to be paid -3- by the petitioner-bank to the respondent no. 2 to 6, as imposed by the DRT, Ranchi and the same was waived. Hence, the present writ petition.
4. The learned counsel for the petitioner submits that the courts below failed to appreciate that the security documents were executed by the respondents after understanding the terms and conditions of the sanction of loan and merely by the fact that the respondent no.2 to 6 instituted criminal case against the Branch Manager of the petitioner and the respondent no.1, cannot absolve the liability of the respondent no.2 to 8 under the law of guarantee. The criminal case has not yet attained finality and any reference to that case in arriving at a conclusion may not be said to be good in law. The courts below instead of relying on the security documents and material available on record, emphasized on the fact that complaint cases were filed by the respondent no.2 to 6 against the Branch Manager of the petitioner-bank and the respondent no.1. The petitioner-Bank is legally entitled to recover its dues along with interest after the date of NPA till realization of its dues. O.A. No.112 of 2015 was filed well within the period of limitation. It is a common practice in banking business that even if an account is rendered as NPA, parallel action can be initiated under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter to be referred as the 'Act, 2002'). Moreover, the defaulters use to have full knowledge that until they repay the dues of Bank, they will be liable to pay the interest for the entire period of non-payment. The respondent no.1 delayed the repayment of the loan amount despite knowing the fact that delay in payment of the loan would result in capitalization of interest at the contractual rate since the date of NPA.
5. Heard the learned counsel for the petitioner and perused the materials available on record. It is evident that the respondent no.2 to 6 had stated before the DRT, Ranchi that the Branch Manager of the petitioner-Bank and the respondent no.1 conspired together and cheated them and as soon as they came to know about their fraudulent act, complaint cases were instituted against them in the court of Chief Judicial Magistrate, Hazaribagh and in the said cases, the accused persons were granted bail after six months. It was claimed by the respondent no.2 to 6 that they had deposited their respective title deeds for obtaining agricultural loan and had also put their thumb impression on some -4- documents with the hope of availing loan of Rs.5.00 lacs. So far as the claim of interest over the dues amount is concerned, the learned DRT, Ranchi observed that since the loan account had gone NPA on 31st December, 2010, the bank should have filed the recovery case within a maximum period of two years thereafter. However, the Bank waited till 4th February, 2015 for filing of case for recovery of dues and as such the delay was committed by the bank for no valid reason which continued to charge interest and capitalizing the same. The delay on the part of the Bank to approach the DRT is illegitimate as the bank gained unfair advantages over the borrower and the outstanding loan as on 31st October, 2012 i.e., Rs.19,46,303.29/- got inflated to Rs. 27,27,711.29/-. Thus, the interest charged by the Bank after 31st December, 2010 till filling of case was found not legally payable. It was further held by the DRT, Ranchi that the bank did not file reply to the written statement of the respondent nos. 2 to 6. The Bank despite being aware of the fact that the respondent nos. 2 to 8 had no liability as guarantor or as mortgagors, filed a false case against them and as such the defendants nos.2 to 6 were directed to be compensated by the Bank imposing Rs.10,000/- each, and the same was to be paid to them as cost/compensation amount within 2 months from the date of receipt of copy of the order.
6. In appeal, the order passed by the DRT, Ranchi was however modified by the DRAT, Allahabad. The Appellate Tribunal confirmed the order passed by the DRT to the extent of absolving the respondent nos. 2 to 6 from the liability of making payment of the loan amount holding inter alia that they had specifically pleaded in the written statement that they had not signed the documents of guarantee with regard to the loan advanced to the respondent no.1 and had submitted their respective title deeds on assurance of grant of loan. As such they had signed the documents under the pretext of getting loan, however, the same were mischievously used by the Branch Manager of the petitioner-Bank and the respondent no.1 as guarantee documents for which complaint cases were filed by them. The said fact was not denied by the petitioner-bank by filing reply to the written statement which suggested that they were misrepresented and cheated while putting signatures on the documents and delivering the title deeds. It was further observed that merely by the fact that an amount of Rs.3.88 lacs had been transferred in the account -5- of the respondent no.7 (the husband of the respondent no.4) from the account of the respondent no.1 was not a sufficient ground for holding the transferee would be liable as guarantor of the loan. It was thus held that the Bank failed to prove on record that any revival of guarantee or balance confirmation was taken from the respondent no.7 and 8 and also that any demand notice was served to the respondent no. 2 to 6 or the respondent no. 7 and 8. Thus, none of the alleged guarantors was found liable for payment of the claimed amount. So far the order of the learned DRT, Ranchi whereby the interest was denied to the petitioner for the period from 31st December, 2010 till the date of fling of original application is concerned, the said part of the order was modified by the DRAT, Allahabad by holding that there was no legal obligation of the Bank to file original application within two years from the date of declaration of the account as NPA. The bank had placed on record that the balance confirmation was taken from the respondent no.1 (borrower) on 9th February, 2012 which was not disputed by the respondent no.1. Hence, according to the learned DRAT, Allahabad, the bank was free to file the original application within three years from such acknowledgement which was filed on 4th February, 2015 i.e., well within limitation period. It was further held that the discretion could be exercised for pendent lite interest and future interest which was properly exercised by the DRT, Ranchi by reducing the rate of interest from 12.75% per annum to 10% per annum. However, the liability of the bank for payment of Rs.10,000/- each to the respondent no.2 to 6 as compensation and the cost so imposed, was waived.
7. Though, the petitioner-Bank claimed that the respondent nos.2 to 8 stood as guarantor of the respondent no.1, the said fact was denied by the respondent no.2 to 8. They also filed complaint cases against the Branch Manager of the petitioner and the respondent no.1 for the alleged fraud committed by them. It was specifically stated by the respondent nos.2 to 6 that they had submitted their respective title deeds for getting loan from the bank which were fraudulently used for extending loan to the respondent no.1. The said specific statement of the respondent nos.2 to 6 in their written statements was not controverted by the petitioner- Bank by filing reply to the same. Moreover, the petitioner failed to show before the courts below that any revival of guarantee or balance -6- confirmation was taken from the respondent nos.7 and 8 and any such demand notice was served to the guarantors. Thus, I am of the considered view that once the respondent nos.2 to 8 denied execution of guarantee for the said loan, the burden of proof had shifted to the petitioner-Bank to controvert the claim of the respondent no. 2 to 8 by placing sufficient material on record.
8. So far the claim of interest pendent lite and future interest at the rate of 14.75% (BPLR)+2% penal charge per annum with monthly rest as claimed by the petitioner is concerned, the DRT, Ranchi reduced the interest from 12.75% per annum to 10% per annum by exercising its discretion and the DRAT, Allahabad also did not find any infirmity in the said decision.
9. The Hon'ble Supreme Court in the case of State Bank of India Vs. Sarathi Textiles & Others reported in (2009) 16 SCC 328 has held as under:-
"4. The present proceeding arises out of an application filed before the Debts Recovery Tribunal under the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, hereinafter referred to as "the Act". The Tribunal did grant interest @ 19½%, but on appeal being carried, the same has been reduced to 10% by the Appellate Tribunal.
5. The Act clearly stipulates that the provisions of the Code of Civil Procedure will have no application except certain provisions thereof as mentioned in Section 22. Section 19 deals with the procedure to be followed by the Tribunal on an application being filed by the banks and financial institutions and sub-section (20) deals with the power of the Tribunal in the matter of grant of interest. A special procedure having been provided in the special enactment for recovery of debts due to the banks and financial institutions and special procedure having been provided therein, the question of considering the provisions of Order 34 Rules 2, 3, 4 and 11 CPC in the case in hand, does not arise.
6. Prima facie, sub-section (20) of Section 19 confers a discretion on the Tribunal to award interest on an application being filed as it thinks fit to meet the ends of justice. That being so, in the case in hand, we see no justification for interference by this Court under Article 136 of the Constitution of India against the appellate order of the Tribunal. This petition accordingly stands dismissed."
10. In the present case, the learned Debts Recovery Tribunal, Ranchi under the given facts and circumstance of the case and having taken into consideration the conduct of the petitioner-Bank, reduced the rate of pendent lite and future interest from 12.75% per annum to 10% per annum which was also confirmed by the learned DRAT, Allahabad. The petitioner-Bank has failed to show any such infirmity in the orders of the -7- DRT, Ranchi and DRAT, Allahabad in reducing the rate of interest which could have been a ground for exercising extraordinary writ jurisdiction by this Court.
11. Under the aforesaid facts and circumstances, I do not find any infirmity in the order dated 18th May, 2016 passed by the Debts Recovery Tribunal, Ranchi in O.A No. 112 of 2015 as modified vide order dated 29th July, 2019 passed by the Debts Recovery Appellate Tribunal, Allahabad in Appeal Sr. No. 288 of 2016.
12. The writ petition being devoid of merit is, accordingly, dismissed.
(Rajesh Shankar, J.) Rohit