ANIL M DESHPANDE Vs. STATE BANK OF MYSORE

JUDGEMENT

(1.) THE appeal is directed as against the order dated 25.7.1997 passed by the Presiding Officer, Debts Recovery Tribunal (DRT), Bangalore, in OA-527/1995. THE appellants are defendants 4 and 5 in the Original Application. THE PC), DRT, has passed the order allowing the application directing all the defendants jointly and severally to pay the decree amount with interest as directed in the order and further ordered that the FCNR deposits shown in Schedule 'C' are collateral security to the credit facility given to the 1st defendant and the applicant Bank is entitled to appropriate the proceeds of the sale granting three months' lime to settle the claim of the Bank failing which for sale of the 'A' Schedule properly and for balance if any to proceed personally against the defendants.

(2.) The appellants are aggrieved against the order of the PC), DRT, direct ing the appellants to pay the decree amount and also for the declaratory order passed that the FCNR deposits shown in 'C' Schedule are collateral security to the credit facility given to Ihe 1st defendant and the applicant Bank is entitled to the proceeds of the sale. The appellants-defendants 4 and 5 are having the FCNR deposits in the 1st respondent Bank. The appellants contend that they are having FCNR deposits in the 1st respondent Bank but they never executed any document offering their FCNR deposits as collateral security and they never executed any documents and they also did not create any mortgage and they never deposited the FCNR receipts as securities and absolutely there are no documents to fasten the liability due to the Bank and when the defendants never executed any documents in respect of this loan in favour of the Bank the defendants are in no way liable for the claim amount and the order passed by the PO, DRT, directing them to pay the amount and also declaring the FCNR deposits shown in 'C' Schedule as collateral security to the credit facility given to the 1st defendant and directing the applicant Bank to appropriate the proceeds of the sale is illegal, not sustainable and is liable to be set aside.

(3.) THE learned Counsel appearing for the appellants submitted that the defendants 4 and 5 are not at all concerned with the loan and they have not executed any documents in respect of this loan and they are also not partners of the 1st defendant Firm and they have no connection with the 1st defendant and they are also not connected with the loan transaction with the Bank and as no document has been executed by defendants 4 and 5, the appellants herein in respect of this loan, the defendants 4 and 5 are not liable for the suit claim. He further submitted that the appellants never offered FCNR deposits as collateral security to the Bank and viewed at any angle the appellants cannot be held liable for the loan transaction. He drew my attention to the evidence deposed by the witness on behalf of the Bank and also the other documents to substantiate the contention of the appellants that they are in no way connected with the loan transaction. THE Branch Manager of the applicant Bank who has signed and verified the plaint has been examined as AW-1 and he has categorically spoken in his evidence that there are no. documents to show that the appellants were partners of the 1st defendant and in Ex. A3 only defendants 2 and 3 are the partners. He has further admitted that the appellants-defendants 4 and 5 have not discharged the FCNR given by them to the Bank. He has further admitted that permission of the Reserve Bank of India has to be obtained whenever FCNRs are offered as security and the Bank has to make an application to the RBI for such permission and permission of RBI is not obtained in this case to accept the FCNRs of defendants 4 and 5 as collateral security,