Khaza Hakeemuddin v. Debts Recovery Tribunal

Order

(Per Sri Justice Ghulam Mohammed, J) Since the common issue is involved in both the writ petitions, they are being taken up for disposal by this common order.

#2. Aggrieved by the order, dated 20.06.2008, passed in R.P.No.563 of 2003 in O.A.No.1311 of 1999 on the file of the Debts Recovery Tribunal, Hyderabad (for short ‘the Tribunal’), the petitioner-Khaza Hakeemuddin filed W.P.No.24185 of 2008. Himself and others filed W.P.No.15402 of 2010 challenging the ex parte order, dated 23.10.2003, passed in O.A.No.1311 of 1999 by the Tribunal.

#3. The brief facts of the case are as follows: The 4th respondent-Syndicate Bank, Secunderabad, W.P.No.24185 of 2008, filed O.S.No.432 of 1992 on the file of the Principal Sub-Judge, Rangareddy District at Saroornagar, against the petitioner and others for recovery of a sum of Rs.12,98,236.75 ps with future interest @ 19.75% per annum with quarterly rests from the date of filing of the suit till the date of realisation. After establishment of a separate Tribunal for trial of the cases of Banks and Financial Institutions, the said suit was transferred to the Debts Recovery Tribunal, Bangalore, and it was re-numbered as O.A.No.1543 of 1997 and later, transferred to the Tribunal on the point of jurisdiction and it was re-numbered as O.A.No.1311 of

#1999. Since the petitioner and others remained set ex parte, the Tribunal allowed the said O.A. directing them to pay a sum of Rs.12,98,236.75 ps jointly and severally to the 4th respondent Bank with costs, current and future interest @ 19.75% per annum with quarterly rests from the date of filing of the O.A. till the date of realisation and the 4th respondent is at liberty to enforce the claim through due process of law. Challenging the said order, the petitioner and others filed W.P.No.15402 of 2010.

#4. After allowing the said O.A., the 4th respondent Bank obtained recovery certificate, dated 30.10.2003, for a sum of Rs.1,15,02,489.75 ps from the Recovery Officer, who in turn, had conducted auction of the mortgaged properties. The highest bidder deposited a sum of Rs.60 lakhs towards 25% of sale consideration and 1% poundage. While so, one Deveneni Lakshmi C.P.No.50 of 2007 before the Recovery Officer claiming that her 1/3rd of the properties were covered under the property put for auction. The auction purchaser filed M.P.Nos.40 of 2007 and 25 of 2008 seeking return of the deposited amount on the ground that there were certain illegalities in the proclamation of sale issued by the Recovery Officer. Thereafter, the Recovery Officer stopped further proceedings of auction and ordered for return of the deposited amount to him with interest. While so, the 4th respondent Bank had entered into compromise with the petitioner and others for a sum of Rs.95 lakhs towards full and final satisfaction of the dues and accordingly, they paid the said amount. Thereafter, the 4th respondent Bank filed R.P.No.563 of 2003 in O.A.No.1311 of 1999 stating that the petitioner and others have paid the total dues towards the loan account as per the compromise and seeks a direction from the Tribunal to return the mortgaged documents. The Tribunal vide order, dated 20.06.2008, passed the following: “1. The agreement of One Time Settlement (OTS) is contrary to Sections 16, 17 & 18 of Indian Contract Act and as such the said agreement is illegal.

#2. The OTS is forbidden by law and it is fraudulent nature and the same is opposed to public policy and as such the same is hit under Section 23 of Indian Contract Act and hence, it is declared as unlawful.

#3. The OTS is contrary to the statute i.e.,R.B.I guidelines dated 04.10.2007 bearing No.RBI/2007-2008/152- DBOD.No.BP.BC.34/21.04.048/2007-2008 and as such the same is void.

#4. The Registrar is hereby directed to take necessary steps for rectifying the Recovery Certificate ad also take necessary steps for issuing of fresh Recovery Certificate in terms of the order of this Tribunal, dated 23.10.2003, passed in the above O.A. and see that the amended Recovery Certificate be delivered to the parties.

#5. The Full Satisfaction Memo, dated 17.03.2008, is hereby rejected. Whether the bank wants to enforce the Recovery Certificate for recovery of the balance dues approximately Rs.1.45 crores as on 10.10.2007 i.e., after deducting the sum of Rs.95.00 lakhs deposited by the borrowers, is left to the wisdom of the Chairman and Managing Director of the applicant bank.

#6. The Registrar is hereby directed to issue notice to the Chairman & Managing Director of the applicant bank by enclosing a copy of this order and also a copy of brief history of note attached to the Branch letter of the applicant bank dated 13.02.2008 addressed the General Manager, Regional Officer, Hyderabad, requesting him to furnish the entire evidence as to which politicians are coming in the way of recovery of bank dues and which politicians are trying to stall the matters at the DRT, Hyderabad with a view to delay the recovery proceedings of the bank for enabling this Tribunal to take further course of action. Further the Chairman and Managing Director of the Bank may be directed to place the said evidence on or before 26.06.2008 through an Officer of Bank or its Representative.

#7. The Registrar is hereby directed to issue notice to the Chairman & Managing Director to furnish the names and addresses of the Officers including the Author of the above mentioned note and the names of Officers, who approved and who have taken note of the same for enabling this Tribunal to issue show cause notices calling their explanations under what circumstances the said allegations were made against the politicians and this DRT or otherwise the Chairman & Managing Director may direct all the said Officers to appear before this Tribunal on 26.06.2008 at 11.00 A.M.

#8. The Registrar is hereby directed to forward a copy of this order to the R.B.I. for enabling the RBI for taking necessary steps. Aggrieved by the said order, the petitioner filed W.P.No.24185 of 2008 seeking to set aside the same.

#5. When both the matters are taken up for hearing, it is represented by the learned counsel on either side that the matter has been compromised between the parties long back and that though the 4th respondent Bank had filed the Full Satisfaction Memo, dated 17.03.2008, the same was rejected by the Tribunal by the above said extracted order. They submitted that because of non-acceptance of the Full Satisfaction Memo, the mortgaged properties are seized up and that the petitioner and others are suffering loss. Thus, both the learned counsel prays to set aside the order, dated 20.06.2008, passed by the Tribunal.

#6. It is, no doubt, true that the Banks are strictly protecting its rights for recovery of the loan amounts and it can proceed against the borrowers and the guarantors for recovery of the amounts by following due process of law. In the instant case, the petitioner and others have compromised the matter with the 4th respondent Bank under OTS Scheme and accordingly, they paid a sum of Rs.95,00,000/- and the Bank had issued the Full Satisfaction Memo, dated 17.03.2008. Insofar as the entitlement of the Bank to enter into compromise for a sum of Rs.95 lakhs against the outstanding amount of Rs. 2,45,51,279.92 as per the recovery certificate, the burden is on the part of the Bank to recover the loan amount. Though the Tribunal has passed an elaborate order, since both the parties have acceded to the Full Satisfaction Memo, which is of the year 2008, and the mortgaged properties are seized up since long time, we are of the opinion that the order, dated

20.06.2008, passed in R.P.No.563 of 2003 in O.A.No.1311 of 1999 is liable to be set aside and is, accordingly, set aside.

#7. In view of the above, W.P.No.24185 of 2008 is allowed. Consequently, in W.P.No.15402 of 2010 no orders are need be passed. No order as to costs. _________________________ GHULAM MOHAMMED, J _________________ G. CHANDRAIAH, J Date:16.08.2010