SCIENTIFIC INSTRUMENT CO LTD Vs. BANK OF INDIA
LAWS(DR)-2005-3-12
DEBTS RECOVERY APPELLATE TRIBUNAL
Decided on March 17,2005

Appellant
VERSUS
Respondents

JUDGEMENT

P.K.Deb, - (1.) THIS appeal has been preferred by the above named defendants/appellants against the order dated 31"1 August, 2004 passed by the learned Presiding Officer, D.R.T., Allahabad, whereby and where under the prayer made by the appellants for keeping the sale of Chennai and Mumbai properties till disposal of M.A. No. 149/2003 has been rejected. The appeal is on a short point; as to whether the D.R.T., Allahabad had any jurisdiction to order for sale of the Chennai and Mumbai properties mortgaged with the respondent-bank, when no recovery certificate have been issued till that date regarding the compromise decree passed earlier and when such compromise decree was challenged by filing an application by the respondent-bank for issuance of recovery certificate regarding the original claim amount of more than Rs. 8.00 crores, when the terms and conditions of the compromise had already been failed.
(2.) To consider the disputed point as raised in the appeal, background of the case is necessary to be reiterated. An original application was filed by the respondent-bank for claiming money from the appellants which runs to the tune of Rs. 8.00 crores and odd. The appellants as defendants filed written statement claiming set off of Rs. 3.00 crores and odd. Then there was a proposal of compromise from the side of the appellants which was accepted by the bank with some terms and conditions. The settled amount was fixed at Rs. 5.00 crores and odd and it was undertaken by the defendants to pay up the whole settled amount by sale of their properties and it was further stipulated that the amount shall be paid within a period of six months. In the process one Lucknow property was sold and the sale proceeds have been deposited with the bank. Some more amount has also been deposited with the respondent bank. On the basis of such compromise an order was passed by the learned Presiding Officer, D.R.T., Allahabad on 19th March, 2002 deciding the original application in terms of the compromise and it was further ordered that such terms of compromise shall form part of the recovery certificate. After such compromise decree was passed, it was alleged by the bank that the appellants were making sale of their properties and siphoning with the amounts without depositing it with the bank and as such on 20th February, 2004 an application was moved by the bank that appellants be restrained from transferring any of the mortgaged properties. On such application an order was passed on 20th February, 2004 by the Tribunal restraining the appellants from transferring 11 properties as detailed in the original application and also in the affidavit filed. Subsequent to passing of that order an application was moved by the appellants on 21st April, 2004 praying that the appellants who were defendants in the application be permitted to sell the mortgaged properties at Chennai for a sum of Rs. 70.00 lacs and the entire sale proceeds shall be deposited with the bank in compliance of the decree dated 19th March, 2002. In the meantime, another application was also filed by the respondent-bank on 10th July, 2003 praying for permission to sell the mortgaged properties at Mumbai. Both the applications were heard and on 31st May, 2004 the learned Presiding Officer, D.R.T., Allahabad allowed the sale of both the properties at Chennai and Mumbai with some terms and conditions and also appointed the Recovery Officer of the D.R.T., Allahabad as Special Officer to conduct the sale of Chennai and Mumbai properties as per terms and conditions and the guidelines as formulated by the Tribunal. Both the properties were ordered to be sold at Allahabad. Subsequently on 9th July, 2004 the bank made a prayer for modification of the order dated 31st May, 2004 asking for permission to sell the properties in auction at Chennai and Mumbai. On 17th August, 2004 an order was passed modifying the earlier order dated 31st May, 2004 directing the Special Officer to conduct the sale of the mortgaged properties situated at Chennai and Mumbai at respective places. Then again the appellants filed a petition to the effect that the order dated 17th August, 2004 be kept in abeyance till the final decision is arrived at of miscellaneous application No. 149/2003. It should be mentioned here that while the process of sale as initiated by both the parties regarding Chennai and Mumbai, properties were going on, the period fixed regarding settlement of amount had already been expired and as such the bank had filed a petition for issuance of recovery certificate of their original claim amounting to Rs. 8.00 crores and odd together with future and pendente lite interest, as the compromise arrived at had not been finalized within the time frame as the time was the essence of the contract. It was the contention of the appellants that when such application regarding modification of the compromise decree was pending, then no sale should be made till the decision is arrived at on such modification petition which was numbered as miscellaneous application No. 149/2003. That petition was heard in presence of both the parties by the learned Presiding Officer, D.R.T., Allahabad and by order dated 31st August, 2004 such petition of the appellants have been rejected and hence the present appeal has been filed. When the appeal was preferred before this Court, it was admitted by order dated 23rd September, 2004 but interim relief as prayed for stay of the sale proceeding had not been granted. Against that order the appellants had moved before the Hon'ble High Court, Allahabad in civil miscellaneous writ petition No. 41217 of 2004. The Hon'ble High Court did not interfere with the order passed by this Appellate Tribunal and no interim stay order was granted, rather an observation was made that the D.R.T. may proceed with the hearing of miscellaneous application No. 149/2003. The writ petition was disposed off vide order dated 23rd November, 2003 wherein it was observed that sale has already been made in respect of the Mumbai property at a price of Rs. 2,00,50,000/- and hence the question of stay does not arise at all, rather direction was made that the appeal should be disposed off by this Appellate Tribunal within the time framed. After the sale was made, then the question of confirmation of sale comes in and the appeal filed before this Tribunal could not be disposed off due to various reasons and as such the appellants again moved the Hon'ble High Court in civil miscellaneous application No. 43/2005. The said writ petition under Art. 227 of the Constitution of India was disposed off by the order dated 4th February, 2005 and it was observed that the confirmation of sale shall not be made till the disposal of the appeal before this Court.
(3.) UNDER these backgrounds, the contention of the appellants is that when a compromise decree was already passed, then the D.R.T., Allahabad became a functus officio and no order of sale of the mortgaged properties can be passed by the Presiding Officer, D.R.T., Allahabad, rather after the decree is passed, proceeding of sale can only be taken up by the Recovery Officer as per RDDBFI Act. It was further contention of the appellants that there was no provision under the RDDBFI Act for sale of any property during the pendency of the application before the Presiding Officer, D.R.T. under Section 19 of the RDDBFI Act. In that way also the order of the sale regarding Chennai and Mumbai properties were beyond the jurisdiction of the Presiding Officer, D.R.T., Allahabad. It was also contended. that when a miscellaneous application was pending for setting aside of the compromise decree, then until and unless the claim amount is determined finally, neither Presiding Officer nor Recovery Officer of the D.R.T. had any jurisdiction to proceed with the sale of the mortgaged properties. Against such submissions, it has been contended and controverted by the learned Counsel for the respondent-bank that the sale of the properties were initiated by both the parties and on their consent practically the sale was ordered and now it does not lie in the mouth of the appellants to challenge the order of the sale, when no appeal have been preferred against the orders passed on 31st May, 2004 and 1st August, 2004 and practically there was no scope for the appellants to challenge those orders as they were the consent orders. His further submission is that there is provision under Section 19 (18) (e) of the RDDBFI Act wherein in a pending case sale can be made in respect of the mortgaged properties, if the situation arises so. It is the contention of the learned Counsel for the bank that for diluting the liability of the appellants, such sale order was made and it was undertaken in the compromise process by the appellants themselves that they would sell their properties and practically deposit the sale proceeds with the bank for diluting their liabilities. Now when the sale in public auction has been made, then they are coming up with irrelevant pleas to stall the bank's claim.;


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