2007& M.P.Nos.1 and 2 (for each cases) of 2007 Chand Narain Langar v. Punjab & Sindh Bank, Abids Road Branch, Hyderabad.2. M/s.S.R.Imaging System, a Partnership

In the High Court of Judicature at MadrasDated: 11 - 2 – 2008Coram:The Honourable Mr.Justice S.J.MUKHOPADHAYAandThe Honourable Mr.Justice M.VENUGOPALW.P.Nos.16068 and 16069 of 2007& M.P.Nos.1 and 2 (for each cases) of 2007Chand Narain Langar .. Petitioner in both the Writ Petitions vs.1. Punjab & Sindh Bank, Abids Road Branch, Hyderabad.2. M/s.S.R.Imaging System, a Partnership Firm, represented by its Partners.3. S.Jayalakshmi4. S.Hamsa5. S.Ramakrishna6. The Registrar, Debt Recovery Appellate Tribunal, Chennai.7. Kamala Manchanda, rep. by her Power of Attorney Y.S.Manchanda(Respondent-7 impleaded in both the Writ Petitions,as per the Order dated 12.10.2007 passed inM.P.Nos.3 (2 cases) of 2007 in W.P.Nos.16068 and16069 of 2007) .. Respondents in both the Writ Petitions Writ Petition No.16068 of 2007 filed under Article 226 of theConstitution of India, praying for issuance of a Writ of Certiorari,calling for the records of the Debt Recovery Appellate Tribunal, Chennaiin U.R.A.No.9 of 2007, dated 17.4.2007 and quash the same.Writ Petition No.16069 of 2007 filed under Article 226 of theConstitution of India, praying for issuance of a Writ of Certiorari,calling for the records of the Debt Recovery Appellate Tribunal, Chennaiin I.A.No.104 of 2007 in U.R.A.No.9 of 2007, dated 10.4.2007 and quash thesame. https://hcservices.ecourts.gov.in/hcservices/ For petitioner : Mr.J.Srinivasa MohanFor respondents : Mr.V.Srinivas for M/s.N.V.S.Associates for R-1 Mrs.Chitra Sampath for R-5 Ms.Pushpa Menon for R-7Common OrderS.J.Mukhopadhaya,JAs both the Writ Petitions have been preferred by the commonpetitioner against the common respondents and arise out of the orderspassed by the Debts Recovery Appellate Tribunal, Chennai (for short,'Appellate Tribunal') in a common proceedings, they were heard togetherand disposed of by this common order.2(i). The petitioner preferred an appeal before the AppellateTribunal against the decree passed by the Debts Recovery Tribunal (forshort, 'Tribunal'), Hyderabad. In the said appeal, he preferred a petitionunder proviso to Section 21 of the Recovery of Debts due to Banks andFinancial Institutions Act, 1993 (hereinafter referred to as 'the Act')for waiver of the amount as required to be deposited under Section 21 ofthe Act. The Appellate Tribunal, Chennai, vide the impugned order dated10.4.2007, directed the petitioner to deposit a sum of Rupees One Croreonly, with the first respondent-Bank in instalments, i.e. Rs.25 lakhs onor before 16.4.2007 and the balance Rs.75 lakhs in three equal instalmentsat Rs.25 lakhs each, on 16.5.2007, 16.6.2007 and 16.7.2007. Theconditional interim order of stay was passed, subject to the payment ofthe aforesaid amounts and on being failure to pay the first instalment onor before 16.4.2007, the Bank was given liberty to proceed against him forrealisation of the amount. W.P.No.16069 of 2007 had been preferred by thepetitioner against the said order dated 10.4.2007.(ii) Having failed to deposit the amount, the Appellate Tribunal, bythe order dated 17.4.2007, vacated the order of interim stay and rejectedthe appeal for non-compliance of the conditions, with liberty to the Bankto proceed with the further proceedings for realisation of the amount inaccordance with law. The said order had been challenged by the petitionerin the other Writ Petition, namely W.P.No.16068 of 2007.3(i). Learned counsel for the petitioner placed relevant facts tosuggest that the petitioner was justified in claiming complete waiver ofthe amount for hearing of the appeal, in view of the undue hardship facedby him. The following facts were highlighted:According to the petitioner, as the respondents 2 to 5 who availedthe credit facility of Rs.65 lakhs, out of which, a margin money wasretained by the first respondent-Punjab and Sindh Bank; the creditfacility was for the project of making the Voter's Identity Card for the https://hcservices.ecourts.gov.in/hcservices/ Election Commission of India (for short, 'ECI') meant for the people ofGirdhi (in the State of Jharkhand) and Samastipur Constituencies (in theState of Bihar), which were the constituencies of Bihar; the ElectronicSystem Punjab Limited, (for short 'ESPL'), Mohali, now merged withElectronic Corporation of Punjab Limited, got the order from the ECI andin turn, they placed the order on the principal borrower, namelyM/s.S.R.Imaging System, the second respondent herein, a partnership firm.The Election Cards were delivered to ESPL in Bihar. In general terms ofthe Bank agreement, the Bills ought to have been routed through the Bank,but the ESPL did not route the Bills through the Bank, resulting in thenon-receipt of proceeds by the Bank in the said transaction. With such aconduct of the ESPL, the Bank and the principal borrower, according to thepetitioner, conspired, which calls for interference.(ii) Further case of the petitioner is that the respondents 3 to 5were introduced to the petitioner by the common friend and after gainingconfidence of the petitioner, had taken the documents relating to thepetitioner's property and deposited the same with the first respondent-Bank. (iii) The Bank approached the Tribunal at Hyderabad for recovery ofthe amount/facility advanced. It was allowed on 21.2.2001 and the RecoveryCertificate was also issued. The said Recovery Certificate was sought tobe executed in Delhi against the property of the petitioner. Consequently,the petitioner submitted that it was at that stage that the petitionercould come to know about the fraud played by the respondents 2 to 4 withthe connivance of the first respondent-Bank.(iv) Having found that the Bank had not acted properly or dischargedits duties in keeping a watch on the loan transaction qua the principalborrower, i.e. Respondents 2 to 5, the petitioner took steps before theTribunal at Delhi in the Recovery Proceedings and the respondents 3 to 5appeared. They (respondents 3 to 5) tried to take steps to arrive at asettlement with the Bank and "One Time Settlement" (for short, "OTS") wasarrived at and accepted by the Bank for a sum of Rs.90 lakhs.(v) It was submitted by the learned counsel for the petitioner thatfrom the proceedings before the Tribunal at Delhi, it will be clear thatthe claim of the Bank had been settled and counsel for the Bank also madesubmission on those lines before the Tribunal at Delhi. The Bank hadreceived a sum of Rs.5 lakhs and cheques were also issued for furtheramounts, which are stated to have been encashed. (vi) It was submitted on behalf of the petitioner that the moment asettlement is arrived at between the Bank and the borrower(s) and suchissue is settled by the Tribunal, the guarantors stand discharged; thesame puts and end to the liability of the guarantors. What happened afterthe settlement is not the issue for the guarantors to keep in track who isentitled to get back the document. The OTS once accepted and acted upon,the earlier agreement stands discarded and cannot be acted upon.(vii) As an ex-parte order was passed on the basis of the originalagreement between the parties, and the matter was subsequently settled interms of the OTS before the Tribunal at Delhi, the petitioner filed anapplication to set aside the ex-parte order passed by the Tribunal atHyderabad in 2001. It was submitted that the said application in effect https://hcservices.ecourts.gov.in/hcservices/ should have been treated as an application for discharge of liability. Butno substantive relief having been granted, the petitioner had to movebefore the Appellate Tribunal at Chennai against the ex-parte order ofthe Tribunal at Hyderabad, wherein the aforesaid conditional interim orderwas initially passed, followed by the dismissal of the appeal for non-compliance of the interim order, which are under challenge. 4. The Bank has appeared and not disputed the fact that a compromisewas going on between the parties. According to the first respondent-Bank,it received the proposal for compromise only from Mr.Ramakrishna, one ofthe guarantors to the loan, against its proposal to Rs.90 lakhs. The Bankdemanded that he should remit atleast Rs.92.50 lakhs and furthercommunicated that on failure, the Bank may recover the entire amount.Therefore, the proposal of the fourth respondent-Ramakrishna was subjectto the condition. After the first cheque, the second cheque No.009762,dated 21.6.2003 was issued by Mr.Ramakrishna for Rs.45 lakhs, but it wasdishonoured by the Union Bank of India with a reason "Payments Stopped"and thereafter, no payment was made either by the borrower(s) or by theguarantors.5. The seventh respondent is the auction purchaser. Learned counselfor the seventh respondent submitted that in response to a public noticefor public auction, scheduled to be held on 20.4.2007 in respect of aresidential building bearing No.437, Block "S", Greater Kailash-II, NewDelhi, the seventh respondent participated in the said auction-sale andthereafter, the auction was re-scheduled to take place on 30.4.2007 at12.30 p.m. in New Delhi and on the said date, i.e. 30.4.2007, the seventhrespondent deposited 25% of the bid amount, amounting to Rs.1,17,31,210/-and the said amount included the participation in the bid amount of Rs.90lakhs and 1% poundage fee. It is stated that the highest bid made by theseventh respondent was accepted, but in view of the interim order of staypassed by this Court on 2.5.2007 in the present Writ Petitions, nothingproceeded. Inspite of the fact that there was an order of stay passed bythis Court, the Recovery Officer of the Tribunal at Hyderabad, directedthe auction purchaser (the seventh respondent) to deposit the balanceamount of Rs.3,38,40,000/- which the seventh respondent was forced todeposit. Later on, when it was brought to the notice of the RecoveryOfficer that the demand was so made against the High Court's order of stayand that the dispute may continue for longer, the Recovery Officer, videthe order dated 19.11.2007 (as seen from page 1 of the typed set filed bythe seventh respondent), ordered to pay back the amount to the auctionpurchaser (seventh respondent). Learned counsel appearing for the seventhrespondent submitted that atleast the amount deposited in view of theorder passed by the Recovery Officer i.e. Rs.3,38,40,000/- should berefunded immediately in view of the Recovery Officer's order dated19.11.2007.6(i). In the present case, we are not supposed to decide the questionwhether OTS was arrived at and thereby the petitioner should have beendischarged from the liability. We are also not inclined to decide whether https://hcservices.ecourts.gov.in/hcservices/ the ex-parte order as was passed by the Tribunal at Hyderabad, andchallenged in the appeal before the Appellate Tribunal at Chennai, wasjustified or not.(ii) The only question for determination is whether the amountrequired to be deposited under Section 21 of the Act should have beenwaived by the Appellate Tribunal, at Chennai, in the facts andcircumstances brought by the petitioner before the Appellate Tribunal. 7. The petitioner has specifically taken a plea that he is an agedperson (senior citizen i.e. more than 60 years old). He is suffering fromCancer and has no source of income and the land and the building inquestion which are put on auction, is his residential building where he isresiding while suffering from Cancer. This has been pleaded by thepetitioner specifically at paragraph 3 of the affidavit filed in supportof the Writ Petitions, wherein he has stated that he is taking medicaltreatment for Cancer and undergoing Chemotherapy. Similar plea was takenbefore the Appellate Tribunal at Chennai as is evident from the lastportion of paragraph 2 of the impugned order dated 10.4.2007, wherein theAppellate Tribunal noticed that the petitioner is under medical treatmentand he is facing severe financial constraints and therefore, he is not ina position to deposit the amount as required under Section 21 of the Actand prayed for waiver.8(i). The Appellate Tribunal failed to address on the issue whetherin the facts and circumstances, 100% waiver was called for. On the otherhand, the Appellate Tribunal proceeded on the merits of the appeal, havingnoticed the objection of the Bank. (ii) In our view, it was a fit case for waiver of 100% of the amountas required to be deposited as a pre-condition under Section 21 of theAct, as a case of undue hardship had been made out by the petitioner.9. As the Appellate Tribunal at Chennai failed to appreciate theaforesaid question and erred in dismissing the appeal, we are settingaside both the orders dated 10.4.2007 and 17.4.2007 which are impugned inthese Writ Petitions, and restore the appeal with a direction to theAppellate Tribunal at Chennai to decide the appeal on merits, waiving 100%of the amount as required to be deposited under Section 21 of the Act,with a further direction to continue the interim order of stay as waspassed in the said appeal, without pre-condition. It is expected that theappeal shall be determined at an early date and the parties will not askfor unnecessary adjournment.10. So far as the seventh respondent is concerned, the RecoveryOfficer having passed favourable order in her favour, dated 19.11.2007,the concerned authority/respondent will pay back the amount to the seventhrespondent as and when the seventh respondent approaches suchauthority/respondent. https://hcservices.ecourts.gov.in/hcservices/

11. Both the Writ Petitions are allowed with the aforesaidobservation and directions. There shall be no order as to costs. TheMiscellaneous Petitions are closed.csSd/-Asst.Registrar/true copy/ Sub Asst.RegistrarTo1. The Registrar, Debt Recovery Appellate Tribunal, Chennai. 2. The Senior Manager, Punjab & Sindh Bank, Abids Road Branch, Hyderabad.+2 ccs to Mr.J.Srinivasa Mohan, Advocate Sr.No.6817,6818.+1 cc to M/s.Chitra Sampath, Advocate Sr.No.6960.+1 cc to M/s.N.V.S.Associates, Sr.No.6936.+1 cc to M/s.Pushpa Menon,Advocate Sr.No.6935.MDR(CO)DCP/13.2W.P.Nos.16068 and 16069 of 2007