Babusha International vs Canara Bank
2006 Latest Caselaw 826 Del

JUDGMENT

Vikramajit Sen, J.

1. I have once again heard the extensive arguments of learned Counsel for the parties. I find no reasons to review or depart from the Orders dated 6.2.2006, which for facility of reference, are reproduced below:

CM 1489/2006 in W.P.(C) 19842/2005

This application has been argued in great detail.

The facts of the case are that One Time Settlement (OTS) had been arrived at aggregating a sum of Rs. 85,00,000/- (Rupees eighty five lacs). Time was extended on several occasions, eventually up to 31.8.2005, with interest liability at 'PLR' with effect from 11.5.2005. In this interregnum, it appears that certain complaints have been received by the Respondents. Before the expiry of the extension period, the OTS Agreement was unilaterally terminated by the Respondent. The legal propriety of the termination is to be fully and finally considered in these proceedings. By way of collateral for the loan the Petitioners had mortgaged property bearing No. KP-124, HSIDC, Industrial Area, Kundli Tehsil, District Sonepat, Haryana. When payments were not forthcoming in recovery proceedings before the DRT a Proclamation for the auction of this mortgaged property had been issued indicating that the reserved price below which the property shall not be sold is Rs. 65,60,000/- (Rupees sixty five lacs and sixty thousand).

Mr. H.L. Tiku, learned Senior Advocate appearing for the Petitioner, has drawn my attention to the Memorandum of Understanding dated 27.1.2006 arrived at between the Petitioner and Shri Sanjay Batra and payments of this obligation seeks the Court's imprimatur that too. The Understanding between these two parties is that on receiving Court's approval, a sum of Rs. 10,00,000/- (Rupees ten lacs) shall be deposited with the Registrar General of this Court within seven days from today, and the remaining payment of Rs. 75,00,000/- (Rupees seventy five lacs) would be deposited with the Registrar General on or before 28.3.2006.

I grant approval to the sale of the said property since it is substantially higher than the reserve price fixed by the DRT. A sum of Rs. 10,00,000/- shall be deposited with the Registrar General of this Court within seven days from today. The balance payment of Rs. 75,00,000/- shall be deposited with the Registrar General of this Court on or before 28.3.2006. On making these deposits, the property shall be transferred to Shri Sanjay Batra and Shri Harminder Kohli who are the parties to the Memorandum of Understanding.

Thereafter, this Court would consider whether the OTS was legally cancelled. The Court will quantify the amount payable by the Petitioner to the Respondent-Bank.

Subject to the payment being made in the aforesaid manner, the impugned RC-154/2003 shall stand stayed.

In terms of the above, this application along with CM 12806/2005 stand disposed of.

2. Learned Counsel for the Respondent seeks to rely on Divya Manufacturing Co. (P) Ltd. v. Union of India which, however, does not further the case of the Respondent-Bank. The sale in question was under the Companies Act in respect of a Company which was in liquidation. The scope of those proceedings are unique, in that the Company Judge and the Official Liquidator have been invested with the obligation of watching the interest of the several creditors of the Company which have gone into liquidation. It has been my experience as the Company Judge that parties are hesitant to bid in Court auctions/sales since invariably the proceedings are protracted on one ground or the other with the result that the investments remain fallow, if not totally unproductive and jeopardized. A reversal of the approach, even so far as the proceedings under the Companies Act are concerned, is essential, i.e. imparting finality to Court sales. This would have the salutary effect of attracting more purchasers and thereby enabling the Court to collect higher amounts from sale of assets, ultimately for distribution to the creditors.

3. In the present case, the Reserve Price was fixed by the Respondent-Bank initially at Rs. 85 lacs (Rupees eighty five lacs only) by the Debt Recovery Tribunal but the efforts to sell it proved to be totally sterile/futile. Therefore, the Reserve Price was reduced by the Respondent-Bank to Rs. 65 lacs (Rupees sixty five lacs only). As has been pointed out by the learned Counsel for the Petitioner, the present valuation of the property in question by the Bank is Rs. 1.30 crores (Rupees one crore thirty lacs only) as on March, 2006, but the realizable value has been pegged by the Bank at 75 per cent thereof i.e. approximately Rs. 85 lacs (Rupees eighty five lacs only).

4. Since this Court is dealing only with one creditor i.e. Respondent-Bank, the decision in Divya Manufacturing Co. (P) Ltd. (supra) cannot be extrapolated onto the present dispute.

5. It is not in controversy that a sum of Rs. 6,50,000/- (Rupees six lacs fifty thousand) was paid in Installments when the One Time Settlement (OTS) was arrived at by mutual consent. Thereafter, Rs. 10,00,000/- (Rupees ten lacs only) was paid in compliance with the Court's Orders. The Court purchaser has now deposited a sum of Rs. 85,00,000/- (Rupees eighty five lacs only). In this manner, a total sum of Rs. 1,01,50,000/- (Rupees one crore one lakh and fifty thousand only) has been deposited for the satisfaction of the Respondent-Bank's claims. In the Orders dated 6.2.2006, extracted above, the question of the dues of the Respondent-Bank was left to be finally determined. It should not be forgotten that efforts of the Debt Recovery Tribunal in selling the immovable collateral while executing the decree, have not attained fruition. It is, therefore, entirely because of these proceedings that a further sum of Rs. 95 lacs (Rupees ninety five lacs only) has been collected, which would eventually ensure to the benefit of the Respondent-Bank. It cannot also be overlooked that so far as the OTS is concerned, a sum of Rs. 85,00,000/- (Rupees eighty five lacs only) was payable by the Petitioner up to the extended period of 31.8.2005.

6. Mr. Anil Panwar, learned Counsel for the Respondent, highlights that interest on the OTS at the rate of 10.75 per cent PLR is payable on the OTS with effect from 11.5.2005. Even if this is added to the OTS, there is more than adequate amount standing deposited in this Court. If any further amounts are found due by the Court, the Petitioner would be bound to make the shortfall good. Mr. H.L.Tiku, learned Senior counsel appearing for the Petitioner, on instructions, extends the Petitioner's assurance on this score.

7. S/Shri Sanjay Batra and Harminder Kohli have already deposited a sum of Rs. 85 lacs (Rupees eighty five lacs only). The Statement that the Respondent-Bank had received an offer of Rs. 92 lacs (Rupees ninety two lacs only), considering the date on which it has been supposedly received, makes it extremely doubtful. As I have already observed, if finality is not imparted to Court sales, it will have the deleterious effect of dissuading persons from participating in sales or auction conducted by the Court. I am of the view that S/Shri Sanjay Batra and Harminder Kohli, having deposited a large sum of money, should be enabled to enjoy the usufruct and possession of the property in question.

8. In these circumstances, the Respondent-Bank is directed to hand over possession of the property in question to S/Shri Sanjay Batra and Harminder Kohli within a period of two weeks from today.

9. Mr. Tiku states that so far as the Petitioners are concerned, they are eager for the release to the Respondent Bank of the OTS together with interest thereon at the aforementioned rate of 10.75 per cent from 11.5.2005 aggregating Rs. 90,00,000/- (Rupees ninety lakhs only) so that the Petitioner's liability towards payment of interest may come to a halt.

10. In these circumstances, upon possession together with the title deeds of the property, being handed over to Shri Sanjay Batra and Shri Harminder Kohli, the Registrar General shall forthwith release a sum of Rs. 90 lacs (Rupees ninety lacs only) to the Respondent-Bank without prejudice to the determination of the dues of the Petitioner viz-a-viz the Respondent-Bank.

11. Renotify on 29th May, 2006.

12. Copy of this Order be given dusty to the learned Counsel for the parties.