DHANLAKSHMI BANK LTD Vs. BANK OF INDIA
LAWS(DR)-2005-7-10
DEBTS RECOVERY APPELLATE TRIBUNAL
Decided on July 26,2005

Appellant
VERSUS
Respondents

JUDGEMENT

Pratibha Upasani, - (1.) THIS appeal is filed by the appellants/original defendant No. 3 Dhanlakshmi Bank Ltd. being aggrieved by the judgment and order dated 1st April, 2005 passed by the learned Presiding Officer of the D.R.T.-II, Mumbai in AppealNo. 114/2004. The impugned order was passed by the learned Presiding Officer on the appeal filed by one Swift Finlease (India) Ltd; it filed the said appeal under Section 17 of the SRFAESI Act, 2002. The appeal pertains to commercial premises being office Nos. 101 to 106, 1st Floor, Nilkanth Commercial Centre, Sahar Road, Andheri (East), Mumbai.
(2.) Few facts, which are required to be stated are as follows: The appellant in Appeal No. 114/2004 (on which the impugned order has been passed) was Bank of India/respondent NO. 1' s constituent since 1989. At or about 1985, the appellant company was enjoying cash credit facility of Rs. 3.50 crores granted by the respondent No. 1 Bank of India inter alia against equitable mortgage (created in February 1995) of the property. The appellant could not clear the outstandings. The appellant company's case is that the respondent No. 2 Bank of Baroda had sanctioned cash credit facility of Rs. 2.50 crores to it some time in March/April 1995, which is an admitted position. Similarly, the grant of credit facility by the respondent No. 2 Bank of Baroda to the extent of Rs. 1.50 crores also is an admitted position. As in 1997, the working capital facility enjoyed by the appellant from the respondent No. 1 Bank of India was to the extent of Rs. 3.50 crores, respondent No. 2 to the extent of Rs. 2.50 crores and respondent No. 3 Dhanlakshmi Bank Ltd. to the extent of Rs. 1.50 crores. The appellant's case further before the D.R.T. was that non-repayment of the outstandings was for the reasons beyond its control, but that the respondents charged penal interest and levied processing charges, leading manager's fees etc. even while the appellants had explained its position and committed for repayment at the earliest. It is contended by the appellants that though the Original Application was filed against the appellants in the Tribunal for recovery of their amount, the respondent No. 1 Bank of India issued notice under Section 13(2)of the SRFAESI Act for Rs. 2, 05, 61, 966/- and on failure to pay the amount, the respondent No. 1 took possession of the property on 27th October, 1994. It is the case of the appellants that the respondent No. 1 Bank acted illegally with ulterior motive and mala fide intention failed to disclose that it had agreed with respondent No. 2 Bank of Baroda and respondent No. 3 Dhanlakshmi Bank Ltd. to treat the mortgage property on pari passu basis. It is averred by the appellants that in the year 1996, it was decided between the respondents to form a consortium of which respondent No. 1 Bank of India was to be a lead Bank. It was further contended that the exchange letters between the respondents inter se in this connection had taken place and in fact, the drafts of the agreement also were prepared and were duly approved by the parties. According to the appellant company, there was a valid subsisting binding agreement between the respondent Banks inter se to share on pan passu basis the property. It is further contended that the respondent Nos. 2 and 3 have security interest in the property and as such, the respondent No. 1 Bank alone could not have exercised right under Section 13(4) of the SRFAESI Act. According to the appellant company, the respondent NO. 1's action was bad in law and was required to be struck down.
(3.) THE respondent No. 1 Bank of India filed reply in the nature of affidavit of one Mr. Pandarinath S. and denied that there was any consortium between the respondents inter se and that the respondent Nos. 1 and 3 were standing (ranking) pari passu. It was contended by the respondent No. 1 Bank that the agreement between the respondents inter se did not culminate into a binding contract for formation of consortium and sharing of the property by them. THE respondent No. 1 Bank also contended that they were well within their rights to take action under the SRFAESI Act after filing of the Original Application for recovery of the amount.;


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