Debt Recovery Appellate Tribunal - Allahabad
Siddhivinayak Paddy Processors And ... vs State Bank Of Indore on 18 September, 2006
Equivalent citations: III(2007)BC1
JUDGMENT
P.K. Deb, J. (Chairperson)
1. This appeal has been preferred against the final judgment and order dated 31st January, 2005 passed by the learned Presiding Officer, D.R.T., Jabalpur in Original Application No. 72 of 2002, whereby and whereunder a recovery certificate has been ordered to be issued for a sum of Rs. 32,34,148.84 along with cost and pendente lite and future interest at the contracted rate jointly and severally against all defendant-appellants.
2. The cases of the parties have been elaborately stated in the impugned judgment itself and as such it is not being reiterated in this judgment. Only the salient features are being stated below for the purpose of disposal of this appeal. The appellant No. 1 is a proprietary firm and appellant No. 2 is the proprietor of the firm and appellant Nos. 3, 4 and 5 are guarantors, who have guaranteed their entire belongings including immovable properties to secure the loan amount of the Bank. According to the respondent Bank, loan was granted to the appellant No. 1-firm under different heads but as the loan account became sticky, then after giving notice instituted the Original Application for recovery of the dues to the tune of Rs. 32,34,148.84. Once the case was decreed ex parte, although the appellants had appeared and took time for filing written statement. Instead of filing of written statement, they filed two petitions which were numbered as D-l and D-2 seeking proper statement of accounts and the stock account at the time of grant of loan, but those petitioners were rejected and without giving any opportunity to file written statement, the case was taken up ex parte for hearing on that very date and judgment was also delivered on that date itself. Against the judgment a review petition was filed, which was also rejected and then appeal was preferred before this Appellate Tribunal, which was numbered as R-352/03. That appeal was heard inter-parties and by judgment dated 18th August, 2004 ex parte judgment was set aside giving liberty to the appellants to file their written statement on a pre-condition of payment of Rs. 5,000/-. After reopening of the case, the appellants not only filed written statement but also filed counter-claim/set-off in the Original Application itself. Replication was filed against the written statement and reply was filed against the counter-claim. In the written statement the case of the appellant is that the then Branch Manager of the respondent-Bank Shri G.K. Nimje for illegal grains had looked the premises of the unit of the appellant No. 1 on 15th September, 2001 behind the back of the appellants, while there was storage of paddy and rice worth Rs. 34 lakh and odd. The appellants objected to such illegal closure of the unit of the appellants and then asked by different letters to open up the unit and allow to sell the godown properties to pay up the Bank's dues. They have even asked the Bank to sell the property by the Bank itself, but none of the letters were given any reply. When those properties started deteriorating and bad smell was coming, then the neighbours objected and P.W.D. had approached the M.D., who asked the appellant to clear the damaged crops, then also the appellant wrote to the Bank but the Bank did not pay heed to it and then the appellants became bound to break the lock of the Bank in the presence of witnesses, then whole damaged garbage was burnt out after making inventories, as such the appellants had submitted in their written statement that the Bank's claim is not maintainable, when the Bank did not take any steps regarding the pledged goods and that by putting lock in the premises of the appellant, damage was caused to the appellants and as such they have claimed damages after setting off the claim of the Bank and with those contentions counter-claim was filed. In the replication filed by the Bank they have just denied the case of the appellant, although no specific denial was made regarding the factual aspect, rather stating that whatever Mr. Nimje had done was within the exercise of his power as a Branch Manager. Regarding the counter-claim it was contended from the side of the respondent Bank that liberty was given by the Appellate Tribunal only to file written statement and there was no scope to entertain any claim/set-off as no such liberty was given by the Appellate Tribunal. On the basis of the pleadings of the parties learned Tribunal had framed the following issues:
(i) Whether the defendant can file counter-claim in view of the order passed by the Hon'ble D.R.T.?
(ii) Whether Shri Ghanshym P. Nimje the then Branch Manager of the applicant branch of the Bank, due to partial and mala fide attitude illegally locked the premises of the defendant No. 1 ?
(iii) If yes, whether defendants are entitled for set-off as well as counterclaim as prayed?
(iv) Whether defendant No. 5 has not stood as guarantor/mortgagor? (v) Whether interest was accrued to be charged @ 15.5% per annum?
(vii) Whether there is miscalculation of amount of Rs. 1,30,279/- in the statement of accounts filed by the applicant Bank?
(viii) Whether the applicant Bank is entitled to recover a sum of Rs. 32,34,148.84 with interest and cost from the defendants?
3. From the side of the appellant Bank an affidavit in the form of evidence of Mr. G.P. Nimje, Branch Manager was filed alongwith the Original Application, but after reply being given, no affidavit was filed by Mr. Nimje, rather the present Branch Manager and other Bank officials have submitted their evidence in the form of affidavit. From the side of the appellants also, several witnesses have been examined including Mr. Ashok Jain, photographer, who had taken snaps of the locked premises of the Bank as per allegation made by the appellants and Shri Anoop Patel, who happened to be the chowkidar in whose presence the lock was put.
4. The learned Tribunal after considering the materials on record and the evidence adduced by the parties had found the story as depicted by the appellants to be false and the case of the respondent Bank to be genuine. In that respect although the issue No. 1 was decided in favour of the appellant, but on merit the counterclaim/set-off have been rejected. Issue No. 5 had also been decided in favour of the appellants holding miscalculation in the statement of accounts filed by the Bank but deducted amount of Rs. 1,30,279/- from the claimed amounts of the Bank. Regarding issue No. 3 it was held that defendant No. 5 was also a guarantor/ mortgagor.
5. Regarding issue Nos. 3 and 5 it is the contention of the appellant that the learned Tribunal had committed error in coming to a just decision and on the submission of the appellant on those points, the learned Advocate for the respondent Bank did not submit anything, rather admitted the position. Let me first of all take up the contention of the appellants regarding issue No. 3. On the face of the records in none of the documents of the Bank on records, defendant No. 5 was a signatory.
6. A power of attorney has been exhibited, whereby defendant No. 5 has authorised to give the property wherein he had also a share as H.U.F. to mortgage to the Bank for the purpose of securing the loan. It has been submitted from the side of the appellants that in such circumstances, liability of the defendant No. 5 remains only towards the mortgagee and he cannot be in any way personally liable regarding the Bank's dues and in that way there cannot be a decree against defendant No. 5 jointly and severally making him personally liable. On these points the Bank has not raised any objection and from the records also and the discussion made in the impugned judgment it is found that the liability of the defendant No. 5 has been drawn on the face of power of attorney alone and as stated above, the liability of defendant No. 5 can only be limited as a mortgagor at best and cannot be construed to be a guarantor and as such he cannot be made personally liable for the joint and several decree passed against him as there is no privity of contract between the defendant No. 5 and the respondent-Bank.
7. Regarding issue No. 5 the contention of the appellants were found true to the effect that there was miscalculation/wrong calculation of the amount of Rs. 1,30,279/- in the statement of accounts filed by the Bank. It has been submitted by Mr. V.D. Chauhan, learned Counsel for the appellant that when miscalculation was found to be correct as alleged by the appellants, then it was the burden of the Bank or the Tribunal to find out the source where the mistake/error had occurred. It would not be legal and logical to deduct the mistaken amount from the amount of claim only. If the error was in the statement of accounts then the source is to be found and time when such mistake/error have been incurred and from there deduction is to be made and then there would be recalculation of the subsequent amount with interest. But, that has not been done as is revealed from the impugned judgment itself. This point also Mr. G.P. Agarwal appearing for and on behalf of the respondent Bank has conceded. In that way, the determination of the amount to be recovered is required to be re-analysed asking for fresh statement of accounts from both the parties. In that way, there is error in the impugned judgment itself. On the finding regarding excess interest as being claimed from the side of the appellants towards the Bank's statement, issue No. 4 has been decided in favour of the Bank solely on the basis of the rate of interest written in the sanction letter. It is an admitted position as is revealed from the discussion under issue No. 4 and also from the records that there is variance of rate of interest in the documents of the Bank on which they have relied. The explanation given from the side of the appellants that the rate of interest have been reduced afterwards have been rejected, although some of Banking documents support the contention of the appellants. It is true that the Courts have got no power to vary the agreed rate of interest between the financial institution and the loanee as per Section 21A of the Banking Regulation Act, but when the Banking documents are in variance regarding the rate of interest, then definitely the provisions of the special statute i.e. RDDBFI Act should apply as enumerated under Section 19(20) of the RDDBFI Act itself, where the Tribunal have been given power and authority to fix/determine the interest portion as it deems fit to meet the ends of justice. But in the present case, the provisions have not been considered in their proper perspective on the face of the records.
8. Now coming to the main issue regarding the pledged articles, etc., it is the Bank's contention that as per the admission of the appellants, there was no stock of the appellants when demand was made from the side of the Bank and on inspection the premises was found to be under lock and key and as such the recovery application was filed. It is the principle of law that if loan has been granted on the basis of pledged articles, then the financial institution is to proceed against the pledged articles first and if dues are not being satisfied on sale of the pledged articles, then the financial institution can come up with claims against the borrower. According to the Bank, pledged articles were not there as per admission made by the appellants in a letter to the Bank. But, this fact has not been stated anywhere in the Original Application and evidence is also not there to that effect. In that way, it is the submission of Mr. V.D. Chauhan for and on behalf of the appellant that the respondent Bank, when after giving notice to the respondent Bank, on the basis of appellant's prayer, had not sold the pledged articles and not allowed the appellants to sell it and adjust towards the Bank's dues, the recovery application is not maintainable. Mr. G.P. Agarwal appearing for the Bank has submitted that the loan has not been secured by the pledged articles but by mortgage/hypothecation, but the document is titled as documents of pledge as submitted from the side of the Bank. Even if the loan has been secured on the basis of pledge of articles and also on mortgage or hypothecation, then also if pledged articles are there and Bank has not taken any steps towards such pledged articles, then the Bank shall have to explain the position and duty is totally cast upon the Bank. This point has not at all been considered by the learned Tribunal in the impugned judgment and such point is required to be considered as the same goes to the root of the case itself.
9. The appellants had given a story in their defence that on 15th September, 2001 the then Branch Manager Mr. Nimje had locked the premises of the unit of the appellants and the appellants had no scope to enter into it and the whole of the property have been damaged and at the instance of Dy. Commissioner, those stocks were given fire as garbage. According to the appellants, they had time and again brought the matter into the notice of the respondent Bank by writing letters at 'D' series, but the appellant did not take any steps. In the impugned judgment, learned Tribunal has held that whole story of the defence is a myth, fabricated, manufactured and an afterthought. Regarding the appellant's case, no specific denial is there from the side of the Bank, although the learned Tribunal had mentioned in para 26 that the Bank had denied the specific averments in their replication to the reply of the defence. But, on going through such replication, I do not find any specific denial. Appellants have relied on Order 8, Rule 5 of CPC, wherein it has been provided that if no specific denial is there regarding specific facts, then the same should be construed as admitted one and proof for the same is not necessary from the side, who avers such fact, but as per discretion of the Court, evidence may be adduced on such fact. Here specific allegations were brought against Mr. Nimje but Mr. Nimje had not been shown as witness to deny those facts. It has already been stated that an affidavit of Mr. Nimje was found along with the Original Application, but after the defence story was disclosed in their reply, then Mr. Nimje had not filed any affidavit, although it was incumbent on him to come forward when personal allegation have been brought. In the replication it has been stated that Mr. Nimje was a good and honest officer and whatever he had done, that was within his power and jurisdiction as Branch Manager, which according to the appellant's side is nothing but an admission of the allegation brought by the appellants. In support of the story as liscloscd by the appellants affidavits have been filed by way of evidence by different persons. In support of the story, their evidence have been rejected by the earned Tribunal holding the same to be prototype. It has also been held by the earned Tribunal that the provisions of Order 8 Rule 5 of the CPC would not be applicable as a bar as per Section 22 of the RDDBFI Act and adjudication shall be governed by the principles of natural justice. Even if it is held that pro vision of Order 8 Rule 5 is not applicable in toto for the purpose of adjudication before the D.R.T., then also normal prudence shall come into play for the purpose of natural justice. The fact alleged by the party has not been denied specifically and in evidence also the same had not been reverted, then the prima facie establishment of the case of the illigator cannot be thrown away on the ground of prototype evidence. Surely natural Justice does not relate so. The principle of natural justice is applicable to both sides and the same cannot be a one way traffic and I feel that the learned Tribunal had approached the whole case not in proper angle. It has been submitted by Mr. V.D. Chauhan that in appreciating the evidence of both the parties concerned Tribunal has maintained a double standard. I do not want to go much on this. The admitted position remains that the lock which had been produced in the Court also is having (sic)mboss of the Bank and the Bank could not give any explanation to it and the person concerned i.e. Mr. Nimje did not come to deny the fact. The whole story of the appellants have been disbelieved as the same is said to be concocted and afterhought. The receipt of the 'D' series letter issued by the appellant had never been denied specifically by the respondent-Bank in their replication or in the reply to the counter-claim. Now it is said and argued before this Appellate Tribunal that the letters sent under certificate of posting should not be relied on as the postal officials may be manipulated, so the judgment of the Apex Court has been referred to. When there is no specific denial from the side of the respondent Bank regarding receipt of those letters, can they now raise it on the ground of U.P.C. I do not want to go in details of the story. It might be concocted story made by the appellants and according to Mr. Agarwal the whole story was made up by the appellants only to defraud the Bank's dues. Here in the story as disclosed by the appellants, different organisations are involved namely Collector, P.W.D. and M.P. Mandi Parishad. Now it is to be decided whether appellants can influence all those organisations for the purpose of cooking up the story or not. Although in the impugned judgment elaborate discussion have been made by the learned Tribunal as regards the defence story but I find that the learned Tribunal had not considered the replication of the Bank and the reply of the counter-claim in their proper perspective and for that reason the same comments have been made regarding denial by the respondent Bank, although the same is not there in their replication or the reply to the counterclaim.
10. The whole matter requires reconsideration after giving opportunity to both the parties to adduce further evidence to come to a just decision as the public money is involved. The points raised cannot be decided on the basis of materials on record at the Appellate Tribunal. Some more evidence and, if necessary, some cross-examination of some of the witnesses might be necessary for the purpose of coining to a just decision. There is also error as regards liability of defendant No. 5, regarding miscalculation and determination of just interest. In that way, I have no other alternative but to allow the appeals filed and to remand them for the purpose of reconsideration of the whole case in the light of the observations made above. For reconsideration as I have already observed, some more evidence might be necessary from both sides, there might be necessity of cross-examination of some of the witnesses which the Tribunal shall consider in their proper perspective if urge has been made by the parties. Thus, both the appeals arc allowed and the impugned common judgment is hereby set aside and the whole matter is remanded back to the learned Tribunal i.e. D.R.T., Jabalpur for re-adjudication in the light of the observations made in the impugned judgment. Parties are hereby directed through their Counsel to appear before the D.R.T., Jabalpur on 23rd October, 2006.