SRI RAGHAVENDRA THEATRE Vs. BANK OF INDIA
LAWS(DR)-2003-2-7
DEBTS RECOVERY APPELLATE TRIBUNAL
Decided on February 27,2003

Appellant
VERSUS
Respondents

JUDGEMENT

A. Subbulakshmy, J. (Chairperson ) - (1.)THE appellant filed appeal AOR-1/ 2002 on the file of DRT, Bangalore to pass order to the effect that the 1st respondent Bank is not entitled to recover the amount from the appellants in terms of the decree passed by the DRT in OA-878/1995 dated 10.6.1997 and direct the 1st respondent Bank to accept a sum of Rs. 33,75,000/- in all as full and final settlement of their dues as per the compromise dated 3.2.2001 and withdraw the Recovery Certificate DRC No. 360/1997, dated 26.10.1997 and also withdraw the Recovery Certificate No. 182/2001, dated 26.10.1997. THE Tribunal heard the matter and dismissed that petition. Aggrieved against that order the appellant has preferred this appeal. THE OA was disposed of and final order was passed in the OA on 10.6.1997.
(2.)Counsel for the appellant submitted that subsequent to the passing of the final order the matter was compromised between the Bank and the appellant and One Time Settlement (OTS) was arrived at and the matter was compromised for a sum of Rs. 45 lakhs and the appellant paid a sum of Rs. 13.25 lakhs and there is balance of Rs. 33.75 lakhs and the Bank must be directed to accept only that amount in view of the compromise effected and the final order passed by the Presiding Officer, DRT, and the Recovery Certificate issued in consequence of that final order cannot be proceeded with and the Bank is not entitled to recover the amount in terms of the decree passed by the DRT and the Bank must be directed to accept the balance amount of Rs. 33.75 lakhs in full and final settlement of the dues as per the compromise effected and the Recovery Certificate issued by the DRT is also to be withdrawn. Counsel for the appellants further submitted that the Bank has to settle the matter in the light of the Reserve Bank of India (RBI) guidelines which was in force at the time of settling this matter and invoking the RBI guidelines alone the matter can be disposed of and accordingly the compromise effected on 3.2.2001 has to be given effect to, only the amount arrived at in the compromise has to be received by the Bank in full and final settlement of the claim and the Bank is not entitled to recover the amount in terms of the decree passed by the Presiding Officer, DRT.
The appellant sent a requisition to the Bank on 25.1.2001 for making a compromise by offering Rs. 45 lakhs towards full and final settlement of the dues due to the Bank. The appellant has also given proposal in the letter with regard to the mode of payment that the appellant would pay Rs. 11.25 lakhs out of the compromise amount of Rs. 45 lakhs within 8 days from the date of the Bank's acceptance of their offer and the appellant also agreed to pay the balance amount of Rs. 33.75 lakhs in six monthly instalments of Rs. 5,62,500/- per month and the appellant also agreed to pay simple interest at 12.5% per annum on the above mentioned reducing balance one month after the date of acceptance of compromise and on deposit of the entire amount, they also sought for withdrawal of the case from the DRT and arrange for delivery of the title deeds mortgaged to the Bank and security in the captioned account. The offer made by the appellant was accepted by the Bank by letter dated 3.2.2001. The Bank has accepted for compromise for a sum of Rs. 45 lakhs in full and final settlement of the dues due to the Bank and also directed the appellant to pay Rs. 13.25 lakhs immediately not later than 8 days from the date of that letter and also directed the appellant to pay the balance amount of Rs. 33.75 lakhs in six monthly instalments of Rs. 5,62,500/- each commencing from March, 2001 and ending in August, 2001. Interest is to be paid by the appellant at existing PLR i.e. 12.5% p.a. Simple on the reducing balance one month after date of acceptance of the offer of compromise by the Bank i.e. from 5.3.2001 till full and final payment by the appellant. A single default clause was also imposed in the compromise letter dated 3.2.2001 i.e. the terms of compromise would be treated as broken by the appellant if the appellant fails to pay even a single monthly instalment and the Bank would be free in such case to proceed with the execution and all other legal proceedings against the appellant and the partners. On payment of the entire compromise amount, security documents also would be released and it was also agreed in that letter that the appellant would withdraw the writ petitions filed against the Bank immediately and not file any petitions nor to proceed against the Bank legally in any manner till the conclusion of the terms of compromise.

(3.)COUNSEL for the appellant vehemently argued that since the compromise has been effected the Bank receive only the compromise amount and the Bank has necessarily to settle the matter as per the RBI guidelines and the Bank will have to receive the amount only as per the compromise effected and the Bank cannot enforce the decree passed by the Presiding Officer, DRT. COUNSEL for the respondent Bank submitted that the appellant is not entitled to invoke the RBI guidelines since he is a wilful defaulter. The RBI guidelines provide that the guidelines will not, however, cover cases of wilful default, fraud and malfeasance. It is also stipulated in the guidelines that these guidelines will also cover cases pending before Courts/DRTs/BIFR subject to consent decree being obtained from the Courts/DRTs/BIFR, but cases of wilful default, fraud and malfeasance will not be covered. The guidelines further provide that the minimum amount that should be recovered under the revised guidelines in respect of compromise settlement of NPAs classified as doubtful or loss as on 31.3.1997 would be 100% of the outstanding balance in the account as on the date of transfer to the protested bills account or the amount outstanding as on the date on which the account was categorised as doubtful NPAs, whichever happened earlier, as the case may be. It is further stated in the guidelines that the amount of settlement arrived at should preferably be paid in one lumpsum. In cases where the borrowers are unable to pay the entire amount in one lump-sum, at least 25% of the settlement amount should be paid up front and the balance amount of 75% should be recovered in instalments within a period of one year together with interest at the existing Prime Lending Rate (PLR) from the date of settlement upto the date of final payment.


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