- (1.) The borrower and the guarantors of the financial assistance granted by the State Bank of India have filed this petition for quashing the order dated 2nd April, 2012 passed by the Debts Recovery Tribunal, Allahabad by which the application filed by M/s. Kotak Mahindra Bank Ltd. (hereinafter referred to as the ''Kotak Mahindra Bank') for its substitution in place of the State Bank of India in the recovery certificate on the basis of the assignment deed dated 29th March, 2006 has been allowed. The petitioners have also sought the quashing of the order dated 11th May, 2012 passed by the Debts Recovery Appellate Tribunal by which the appeal filed by the petitioners for setting aside the aforesaid order of the Debts Recovery Tribunal has been dismissed.
(2.) It transpires from the records of the writ petition that petitioner no.3-M/s. Chopra Fabricators and Manufacturers Pvt. Ltd., which is engaged in fabrication and manufacturing work, was granted financial assistance by the State Bank of India with petitioner nos.1 and 2 as the guarantors of the loan and for this purpose a mortgage by deposit of title deed of House No.17/23, Kamla Nehru Road, Allahabad was executed. The account of the borrower firm became irregular and the State Bank of India filed Suit No.535 of 1993 against the petitioners for recovery of a sum of Rs.1,41,71,528.57 together with cost and pendentelite and future interest @ 16.5% per annum with quarterly rests from the date of filling of the suit till full realisation. The suit was transferred to the Debts Recovery Tribunal, Allahabad and was registered as Transfer Application No.112 of 2000. It is during the pendency of the Transfer Application that a deed of assignment was executed between the Kotak Mahindra Bank (assignee) and the State Bank of India (assignor) on 29th March, 2006. Under Clause 1.2.1 of the deed, the assignee acquired from the assignor all the assignors right, title, interest in the debts and the financial instruments and the assignor became the legal and beneficial owner entitled to demand, receive and recover the debts in its own name and right. Under Clause 1.2.2 of the deed, all legal proceedings by the assignor relating to the debts and pending on the date were assigned to the assignee and were to continue as per the directions of the assignee at the cost and risk of the assignee and could be enforced by the assignee. It was further provided that on such transfer, the assignee shall stand subrogated in place of the assignor in respect of the debts. Clause 2.4.1 of the deed further provides that the assignee shall have the sole and absolute right of collecting all amount representing the debts in such manner as the assignee in its absolute discretion determines. Clause 2.4.1 of the deed also provides that the assignee shall have all the rights under the decree, if any, issued by any Court or Tribunal in favour of the assignor in respect of the debts as if they were issued in favour of the assignee and under Clause 2.4.5 of the deed the assignee was entitled to the security available for due repayment of the debts.
(3.) The State Bank of India, accordingly, sent a letter dated 29th March, 2006 to the petitioners informing them of the aforesaid deed of assignment. Kotak Mahindra Bank did not take any steps for getting itself impleaded on the basis of the assignment deed during the pendency of the Transfer Application and when the Transfer Application No.112 of 2000 came up for hearing on 10th May, 2006 before the Debts Recovery Tribunal, an application was filed by the petitioners (defendants in the said Transfer Application) for dismissal of the Transfer Application as the State Bank of India had had no interest left after the execution of the assignment deed in favour of Kotak Mahindra Bank. This application was rejected by the Debts Recovery Tribunal by the order dated 10th May, 2006 and the Tribunal heard the Transfer Application on merits. Thereafter, by the order dated 12th May, 2006, the Tribunal allowed the Transfer Application for issuance of recovery certificate of Rs.1,41,74,520.37 together with interest @ 16.5% per annum with quarterly rest from the date of filing of the suit till the full realisation subject to the adjustment of the admitted deposit of Rs.25 lacs under the One Time Settlement Scheme with the Bank.;