M/S.Eminent Agencies And Anr vs Bank Of Baroda And 2 Ors
2015 Latest Caselaw 446 Bom

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              IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                   ORDINARY ORIGINAL CIVIL JURISDICTION




                                                                                            
                            WRIT PETITION NO.1726 OF 2013




                                                                   
    Messrs Eminent Agencies and Another                                      ..Petitioners
           Vs.
    Bank of Baroda and Others                                                ..Respondents




                                                                  
    Mr. Dinesh Purandare, Mr Rafeeq Peer Mohideen, Mr T. N.
    Tripathi, Ms. Sapna Rachure, for the Petitioners.




                                                         
    Mr. Anant B. Shinde, for Respondent No.1.
                                      
                                            CORAM :- S. C. DHARMADHIKARI,J. &
                                     
                                                     B. P. COLABAWALLA, J.

RESERVED ON :- October 9, 2015.

PRONOUNCED ON :- October 17, 2015.

JUDGMENT :- [Per B. P. Colabawalla, J]

1. This Writ Petition under Article 226 of the

Constitution of India challenges the order dated 28th June, 2013

passed by the Debts Recovery Appellate Tribunal (for short, the

"DRAT") in Miscellaneous Appeal No.184 of 2010. By the

impugned order, the Appeal filed by the Petitioners was dismissed

by the DRAT.

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2. The brief facts giving rise to the present controversy

are that, Respondent No.1 - Bank granted various facilities to

Petitioner No.1 in the year 1999. The credit facilities availed by

the Petitioners were secured by an equitable mortgage of three

properties situated at Andheri(E) and Vasai, District Thane.

These properties were owned by Mr. Jujee A. Poonawala, Mr. Moiz

A. Poonawala and Fatima M. Baxamusa, the guarantors of

Petitioner No.1.

3. In view of the fact that Petitioner No.1 failed to pay its

dues, the Respondent Bank filed an Original Application before the

Debt Recovery Tribunal (for short, the "DRT") being Original

Application No.389 of 2002. This Original Application was filed

against Petitioner No.1, its partners and the guarantors.

Petitioner Nos.1 and 2 herein contested the Original Application

while the guarantors and other partners of Petitioner No.1 did not

contest the same.

4. During the pendency of this Original Application, on 9th

June, 2006 Petitioner No.1 submitted a compromise/settlement

proposal in the sum of Rs.65.77 lacs. This proposal was duly

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accepted by the Respondent Bank on the terms and conditions set

out in its letter dated 26th June, 2006. Despite the Respondent

Bank giving several opportunities and extensions to settle their

entire dues for a sum of Rs.65.77 lacs, admittedly, the Petitioners

defaulted in adhering to the terms and conditions of the said

settlement proposal. In these circumstances, the Original

Application filed by the Respondent Bank was proceeded with, and

by an order dated 20th November, 2008 this Original Application

was allowed and the Petitioners were directed to pay to the

Respondent Bank a sum of Rs.87,48,616.06/- together with simple

interest @ 10% per annum from the date of filing of the Original

Application till payment. A Recovery Certificate was also issued

accordingly.

5. After the aforesaid Original Application was decreed in

favour of the Respondent Bank, the Petitioners once again, on 19th

December, 2008 approached the Respondent Bank and submitted

a proposal to settle the matter for a sum of Rs.75 Lacs. This

proposal was accepted by the Respondent Bank and the same was

duly communicated to the Petitioners by letter dated 16th

February, 2009. The terms and conditions of this settlement inter

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alia provided that (a) Rs.50 lacs would be payable within 10 days

of sanction and the documents in respect of one of the mortgaged

properties (in the name of Mr Abbasbhai Poonawala) would be

released; and (2) the balance amount of Rs.25 lacs would be

payable on or before 28th February, 2009 and thereafter, the

documents in respect of the mortgaged property in the names of

Mr Moiz A. Poonawala and Mr Jujer A. Poonawala would be

released.

6. Admittedly, the Petitioners could not adhere to the

time frame set out in the said letter. Despite this, vide its letter

dated 10th June, 2009 the Respondent Bank gave one more

opportunity to the Petitioners to pay the amount of Rs.75 lacs,

failing which the Petitioners were informed that it would take over

possession of the mortgaged properties and recover its dues.

Since the payment was not made, the Respondent Bank vide its

letter dated 25th June, 2009 informed the Petitioners that it had

withdrawn the compromise proposal as they have failed to abide

by the terms and conditions of the settlement.

7. In view of the fact that the Petitioners did not pay the

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settlement amount within the stipulated period, the Recovery

Officer proceeded to execute the Recovery Certificate issued in

favour of the Respondent Bank to recover the decretal amount.

Accordingly, the Recovery Officer on 30th April, 2010 published a

sale notice in the newspaper (Free Press Journal) fixing 31st May,

2010 as the date for conducting the sale of the mortgaged

properties. The auction sale was accordingly conducted on the said

date. It is not disputed that these mortgaged properties have been

sold in the public auction for an amount of Rs.52,00,000/- and

37,50,000/- respectively to the auction purchaser and the sale has

been confirmed in their favour.

8. In the meanwhile, the Petitioners on 24th May, 2010

filed Miscellaneous Application No.101 of 2010 under Section

19(25) of the Recovery of Debts Due to Banks and Financial

Institutions Act, 1993 (for short, "the RDDB Act, 1993") before

the DRT inter alia praying that the Respondent Bank be ordered

and directed to accept the balance OTS amount of Rs.64.50 lacs

together with interest at the rate of 10% p. a. from 16th February,

2009 or such other rate as the DRT deems fit. In other words, by

the said Miscellaneous Application, the Petitioners sought

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enforcement of the settlement proposal dated 19th December,

2008. This Miscellaneous Application was heard by the DRT-III,

Mumbai and by its detailed order dated 26th July, 2010 dismissed

the same.

9. Being aggrieved by the aforesaid dismissal, the

Petitioners preferred Miscellaneous Appeal No.184 of 2010 before

the DRAT, Mumbai. The DRAT also, by an elaborate and reasoned

order dated 28th June, 2013 dismissed the Petitioners' Appeal. It

is in these circumstances the Petitioners are before us questioning

the validity and legality of the order dated 28th June, 2013 passed

by the DRAT in Miscellaneous Appeal No.184 of 2010.

10. In this factual background, Mr Purandare, learned

counsel appearing on behalf of the Petitioners submitted that the

OTS proposal given by the Petitioners to the Respondent Bank was

a bonafide one and the Petitioners could not adhere to the time

schedule of the said OTS as there were genuine difficulties in

raising the money in time. He submitted a chart inter alia

indicating how the payments have been made, though belatedly,

and therefore as per the OTS, only an amount of Rs.99,690.08 was

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outstanding as on 9th October, 2015. The Petitioners, having

shown their willingness to pay interest for the delayed period, no

prejudice was likely to be caused to the Respondent Bank, was the

submission of Mr Purandare. In these circumstances, he

submitted that the DRT ought to have directed the Respondent

Bank to accept the OTS amount by extending the time and not

recover the amounts in terms of the judgment and order dated

20th November, 2008 passed in Original Application No.389 of

2002.

In light of the facts highlighted above, according to Mr

Purandare, the DRT and the DRAT, had both gone wrong in

dismissing the Miscellaneous Application as well as the Appeal of

the Petitioners which require our interference under Article 226

of the Constitution of India.

11. On the other hand, Mr Shinde, learned counsel for the

Respondent Bank, sought to support the impugned order on all

counts. He firstly submitted that the Petitioners are guilty of

suppression in as much as, the Petitioners in their Miscellaneous

Application filed before the DRT, did not disclose the first

settlement proposal submitted by them in the year 2006.

Admittedly, the Petitioners do not adhere to the aforesaid

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settlement proposal and it was in these circumstances, that the

Original Application filed by the Respondent Bank came to be

allowed and the Petitioners were directed to pay a sum of

Rs.87,48,616.06/- to the Respondent Bank with simple interest

calculated at the rate of 10% p. a. from the date of the Original

Application till payment. After the Original Application was

decreed in favour of the Respondent Bank, the Petitioners once

again approached the Respondent Bank for settling its dues and

submitted the Settlement Proposal dated 19th December, 2008. In

the said proposal, the Petitioners agreed to pay a sum of Rs.75

lacs. Even the time frame set out in this settlement proposal was

not adhered to by the Petitioners. It is in these circumstances,

that the Recovery Officer proceeded to execute the Recovery

Certificate and has in fact sold the mortgaged properties in favour

of the auction purchasers and recovered the amounts. According

to Mr Shinde, even after giving credit of all monies paid by the

Petitioners as well as the monies received from the sale of the

mortgaged properties, there is still an amount of

Rs.1,07,83,232.06/- outstanding as on 22nd August, 2013. In

these circumstances, Mr Shinde submitted that enough

indulgence has been shown to the Petitioners and it is too late in

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the day for them to contend that the Respondents be ordered and

directed to accept the amounts as per the settlement proposal

dated 19th December, 2008 together with interest at the rate of

10% p. a. from 16th February, 2009 till payment. He, therefore,

submitted that there was no merit in this Writ Petition and the

same ought to be dismissed with costs.

12. With the help of the learned counsel, we have perused

the papers and proceedings in this Writ Petition along with the

impugned order dated 28th June, 2013. At the out set, we must

mention that even though several authorities/decisions are

referred to in the Writ Petition, apart from the above argument, no

other argument was advanced on behalf of the Petitioners and

neither were any of these authorities/decisions cited before us. It

is in these circumstances, that we have not been called upon to

deal with the same.

13. Having said this, we shall now deal with the arguments

as canvassed by Mr Purandare. The facts of this case clearly

reveal that in the year 2006 (and while the Original Application

was pending) the Petitioners approached the Respondent Bank,

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with a settlement proposal to pay a sum of Rs.65.77 Lacs. This

proposal was accepted by the bank vide its letter dated 26th June,

2006 which envisaged that the Petitioners pay a sum of Rs.65.77

lacs towards full and final settlement of its dues on the terms and

conditions set out therein. The terms and conditions inter alia

stipulated that the settlement amount would be paid in the

following manner:- (a) 10% of the settlement amount on or before

28th June, 2006; (b) another 10% of the settlement amount on or

before 15th July, 2006; and (c) the balance 80% would be paid in

17 equal monthly installments of Rs.2.93 lacs and the 18th

installment would be of Rs.2.85 lacs. The first installment was due

on 15th August, 2006 and so on.

14. Admittedly, the Petitioners failed to deposit 10% of the

settlement amount on or before 28th June, 2006. The Petitioners

therefore approached the Respondent Bank and sought time to

deposit the amount up to 5th July, 2006 which was allowed by the

Respondent Bank. Even then, the Petitioners did not pay the

aforesaid amount. Thereafter, on 13th July, 2006 the Respondent

Bank addressed another letter to Petitioner No.1 calling upon

them to deposit the amount of Rs.13.15 lacs on or before 15th July,

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2006. It was informed to the Petitioners that in case they fail to

deposit the aforesaid amount, it would be treated as a default as

per the terms and conditions of the settlement proposal. It is not

in dispute that the Petitioners could not pay any amount despite

seeking extension of time from the bank. It was in these

circumstances that this settlement of 2006 was withdrawn and

the Original Application was proceeded with and a decree in the

sum of Rs.87,48,616.06/- came to be passed.

15. Be that as it may, we find that even the second

settlement proposal dated 19th December, 2008 (in the sum of

Rs.75 Lacs) has not been adhered to by the Petitioners. This

settlement proposal clearly stipulated that Rs. 50 lacs would be

paid within 10 days of sanction of the said proposal and the

balance 25 lacs would be paid on or before 28th February, 2009.

The only amount paid was a sum of Rs.10 lacs on 3rd June, 2009.

Despite this, the Respondent Bank, vide its letter dated 10th June,

2009 informed the Petitioners that they could pay the entire

settlement amount immediately without any further delay. It was

further informed that in case the Petitioners fail to pay the

settlement amount, the Respondent Bank would take over

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possession of the secured assets to recover its dues. Thereafter,

further extensions were granted by the Respondent Bank to

Petitioner No.1 to make the payments as per the settlement

proposal dated 19th December, 2008. Despite this, the payments

were not made as per the extensions granted. The details of these

extensions have been elaborately set out in paragraphs 28 and 29

of the impugned order and in view of the fact that what is stated

therein is undisputed, we did not think it necessary to reproduce

the same once again in this judgment.

16. Looking to the totality of the facts of this case and as

narrated above, it is clear that the Respondent Bank had taken a

very lenient view in the matter. Despite several extensions being

granted to the Petitioners, they failed to deposit/pay the

settlement amount to the Respondent Bank. In this view of the

matter, we do not think that the DRT or the DRAT can be faulted

in dismissing Miscellaneous Application No.101 of 2010 or

Miscellaneous Appeal No.184 of 2010 respectively. The DRT as

well as the DRAT have passed detailed reasoned orders

considering the arguments of the Petitioners including the

judgments/decisions on which reliance was placed. After

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considering all the arguments, the DRT and the DRAT dismissed

the Miscellaneous Application as well as the Appeal of the

Petitioners. On going through these orders, we do not think that

they suffer from any patent illegality and/or perversity that would

persuade us to interfere in our extraordinary, equitable and

discretionary jurisdiction under Article 226 of the Constitution of

India. We do not think that in the facts of the present case, justice

lies on the side of the Petitioners for us to interfere with the

impugned orders.

17. Before parting, we must mention here that we

seriously doubt whether the DRT had jurisdiction to entertain the

prayer sought for by the Petitioners in Miscellaneous Application

No.101 of 2010. In the said Application, the Petitioners, in effect

sought enforcement of the settlement proposal dated 19th

December, 2008. In view of the fact that the DRT had already

decreed the Original Application filed by the Respondent Bank, it

had become functus officio and therefore we seriously doubt that

at the instance of the debtor such a Misc Application seeking

enforcement of the settlement proposal dated 19th December,

2008 could have been entertained by the DRT under section

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19(25) of the RDDB Act, 1993. However, since this issue was

neither argued nor raised by the parties, we leave this point open

to be considered in an appropriate case.

18. In view of our discussion earlier, we find no merit in

this Writ Petition. It is accordingly, dismissed. However, in the

facts and circumstances of the case, we leave the parties to bear

their own costs.

( B. P. COLABAWALLA, J.) (S. C. DHARMADHIKARI, J.)

At this stage, Mr Tripathi prays that the ad-interim order passed

in this Petition be continued so as to enable the Petitioners to take

appropriate steps including challenging this order in a higher

court. This request is opposed by Mr. Shinde on behalf of the

Secured Creditor-Respondent No.1 - bank. After having heard

both sides on this point, we are of the view that taking into

account the conduct of the Petitioners in not abiding by all the

opportunities to compromise and settle the 1st Respondent's claim,

this request cannot be granted. The request is therefore refused.

       ( B. P. COLABAWALLA, J.)             (S. C. DHARMADHIKARI, J.)

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