Debt Recovery Appellate Tribunal - Mumbai
Dena Bank vs Bankim Mehta And Ors. on 11 July, 2005
Equivalent citations: III(2006)BC248
JUDGMENT
Pratibha Upasani, J. (Chairperson)
1. This appeal is filed by the appellants/original applicants Dena Bank being aggrieved by the judgment and order dated 25th August, 2004 passed by the learned Presiding Officer of the D.R.T.-I, Mumbai in Original Application No. 641/2001. By the impugned judgment and order, the learned Presiding Officer dismissed the Original Application. Being aggrieved, the present appeal is filed.
2. I have heard Mr. Chothani for the appellant Bank and Mr. Desai for the respondents. I have also gone through the proceedings including the impugned judgment and order and in my view, there is no infirmity in the impugned order.
3. Few facts, which are required to be stated are as follows:
It is the case of the appellant Bank that the defendant No. 1 Bankim Mehta had requested for a cash credit against the hypothecation of book debts of Rs. 40 lacs, which was granted to him by the applicant Bank. The defendant No. 1 had executed demand promissory note, agreement of hypothecation, letter of continuity, general letter of lien and set-off and letter of undertaking. He had also deposited title deeds in respect of immovable property described in Exhibit B to the Original Application with an intention to create equitable mortgage. The defendant No. 2 Pravin Mehta and defendant No. 3 Banhem Properties Pvt. Ltd. executed a deed of guarantee. After having availed the facility, the defendant No. 1 failed to regularize the account. The Bank therefore, sent a recall notice, but there was no response. Therefore, the original application came to be filed by the Bank against the defendants claiming Rs. 55,20,213.00 as outstanding.
4. The defendants appeared and filed their written statement. Various defences were taken like, that the documents were not properly stamped and, therefore, were not admissible in evidence, that the applicant Bank had made payment of amount of Rs. 3,92,234/-, but had not given credit for the same, that the rate of interest was exorbitant, etc. It was prayed that the Original Application be dismissed.
5. The applicant Bank filed its claim affidavit wherein the facts stated in the Original Application were reiterated.
6. The defendant No. 1 also filed his claim affidavit, wherein it was stated that despite executing the power of attorney in favour of the applicant Bank to recover the debt, the Bank had failed and neglected to recover the same. It was contended that from time-to-time statement of outstanding book debts were issued to the Bank and that by November, 2000, there were book debts of over Rs. 55 lacs. Grievance was made that those book debts had become time-barred and therefore, the defendant No. 1 was entitled for being compensated for the loss and the Original Application was liable to be dismissed.
7. In short, it was the case of the defendant No. 1 that on account of negligence on the part of the applicant Bank, the defendant No. 1 suffered loss. It was contended that in view of the power of attorney executed by him, he could not recover the book debts and the Bank also failed to recover the same. It was vehemently argued that the book debts had now become time-barred due to the negligence of the applicant Bank and, therefore, the defendant No. 1 was entitled for equitable set-off and the Original Application was liable to be dismissed.
The learned Presiding Officer, however, was not very much impressed by this argument. He pointed out that in the power of attorney, there was a specific clause, which said that the Bank would be under no obligation or duty to exercise the powers conferred under the same and, thus, the execution of the said power of attorney had permitted the applicant Bank to recover the book debts. However, it did not prevent the defendant No. 1 from recovering the same. He, therefore, correctly observed that it could not be said that the defendant No. 1 was unable to recover the book debts after having executed the power of attorney. The learned Presiding Officer, therefore, rejected the claim of the defendant No. 1 for equitable set-off.
The learned Presiding Officer however was in agreement with the other submission made on behalf of the defendants that they had specifically averred in their written statement that the applicant Bank had charged exorbitant rate of interest and that certain amounts were repaid, which were not accounted for. The defendants had also alleged that the Bank had not maintained the books of accounts properly and in the ordinary course of business. It was contended that although there were entries showing charging of interest and penal interest, neither the rate of interest was mentioned nor it was clarified as to whether penal interest was compounded or not. It was pointed out that it was against the guidelines issued by Hon'ble Supreme Court in the case of Central Bank of India v. Ravindra I . It was pointed out that the statement did not even bear the certificate, which was required to be furnished under the Banker's Book Evidence Act. It was, therefore, contended that the said statement of account was not admissible at all.
8. Similar arguments were made before me. It is relevant to produce Regulation 4(2) framed by the D.R.T., which is as follows:
Regulation 4(2)-A statement of accounts stating the rate of interest/compound interest and that it has been charged at such rate and capitalized at such periodical rests as are permitted by the R.B.I. It shall also show details of rate of interest, penal interest and period, for which the interest has been charged and compounded4, preferably in tabular form and give particulars of credit and debit entries.
A statement of account shall bear a certificate as provided under Sections 2(8) and 2-A of Banker's Book Evidence Act.
It appears that the applicant Bank adopted very casual approach. This attitude of the applicant Bank leaves much to be desired. Not only that the rate of interest is not mentioned in the statement of accounts, but it is also not stated as to whether penal interest is compounded or not. The statement of accounts without a certificate under Sections 2(8) and 2A of the Banker's Evidence Act would not be admissible in evidence. In spite of the arguments made by the defendant's Advocate that the statement of accounts was submitted without the required certificate, the Bank did not take any step to furnish the same. The learned Presiding Officer, therefore, rightly did not look into the said statement of accounts, which was without such certificate.
Once the statement of accounts was excluded, there was nothing on record from which the liability of the defendant No. 1 could be ascertained or it could be said that a certain amount was due on the date of filing of the application. Therefore, there was no option before the learned Presiding Officer to record that the applicant Bank had failed in proving that a certain amount was outstanding on the date of filing of the application. Observing this, he dismissed the Original Application and in my view, rightly so! In view of the aforesaid discussion, I do not find any infirmity in the impugned order. The same, therefore, will have to be upheld and appeal will have to be dismissed, Accordingly following order is passed:
ORDER Appeal No. 246/2004 is dismissed in limine. In view of this, Misc. Application No. 856/2004 does not survive and is disposed of accordingly.