Bhagya Products P. Ltd. And Ors. vs Bank Of India And Ors.
2007 Latest Caselaw 2101 Del

JUDGMENT

S. Ravindra Bhat, J.

1. Rule. Mr. S.V. Tyagi, Advocate for respondent No. 1 and Mr. Harish Gulati, Advocate for respondent No. 2/CBI waive notice of the Rule. With the consent of the learned Counsel for the parties, the petition was heard finally.

2. The dispute in this case concerns the legality of a letter/communication of the respondent dated 5.3.2007 by which the Bank of India (hereafter called "the Bank") required the petitioner to pay the balance compromise amount along with interest.

3. The undisputed facts are that the petitioner availed of credit facilities from the Bank. The dispute is about the repayment for which parties moved a joint compromise application, a consent decree before the Debt Recovery Tribunal. During the pendency of the proceedings, the parties had entered into a compromise and filed joint memo of compromise. In terms of the document dated 7.12.2005, the petitioner agreed to re-pay the total amount, i.e. Rs. 1.4 crores.

4. The relevant part of the compromise memo which was decreed in terms agreed upon, on 7.12.2005 itself by the Debt Recovery Tribunal is extracted below:

(f) Upon payment of 50% of the compromise amount i.e. Rs. 70.00 lacs the Bank would release the title deeds of the property measuring 525 sq. yds. Khasra No. 298/32 in the name of Santosh Kumar, Village Ghitorni, Tehsil Kapashera, New Delhi whereupon the said Mr. Santosh Kumar shall be free to deal with the subject matter land as he may deem fit and proper.

(g) Upon payment of another 25% of the compromise i.e. total amount of Rs. 105.00 lacs the Bank would release the title deeds of property measuring 200 sq. yards Khasra No. 298/33/1 in the name Sh. Santosh Kumar Village Ghitorni, Tehsil Kapahera, New Delhi whereupon the said Mr. Santosh Kumar shall be free to deal with the subject matter land as he may deem fit and proper.

(h) Upon payment of final 25% of the compromise amount i.e. Rs. 140 lacs the Bank would release the title deeds of property measuring 500 sq. yards Khasra No. 298/32 in the name of M/s. Bhagya Products Pvt. Ltd., Village Ghitorni, Tehsil Kapashera, New Delhi whereupon the said company shall be free to deal with the subject matter land as he may deem fit and proper.

(i) This acceptance of the offer is subject to strict compliance by the parties of all the terms stated above. Acceptance by the bank shall not in any event be construed as reducing the actual liability under the facilities granted to the company and a reflected in the a/c. Of the company with the Applicant Bank. The Bank expressly reserve all the rights in enforcing all the claims arising out of various credit facilities granted to the company and acceptance of the offer by the Bank is not in derogating of rights available to the Bank under the laws inforce and the Bank is entitled to enforce all the rights and recover all the liabilities due to the Bank from the Company and its directors/guarantors as if the offer had never been accepted by the Bank in the event of the default of any two consecutive installments/non payment of cheques or not compliance with the terms stated above.

(j) Bank would withdraw DRT case and not pursue any other complaint filed against the company or its guarantor and directors in this account once the company pays the agreed compromise as per terms above agreed upon by them. Bank WILL after receiving full amount of compromise with interest take appropriate steps in this regard.

5. It is further an admitted fact that the petitioner complied with the terms and deposited their 50% of amount agreed in the tune of Clause (f), i.e. Rs. 70 lacs which formed the part of the decree, within time. In June, 2006, the petitioner was, therefore, required to make the balance amount of 50% to be paid in terms of the Settlement.

6. In the meanwhile, apparently prior to entering into the Settlement, the Bank had lodged a criminal complaint which led to the registration of the case by the CBI on 29.12.2003 alleging inter alia that the petitioner and another were guilty of committing offences under Section 420 & 120B of the Indian Penal Code. On the strength of the said criminal proceedings, the title deeds of the property were seized by the Bank. The Bank, therefore, could not comply with the terms of the agreement and hand over the title deeds of the property measuring 500 sq. yards Khasra No. 298/32 in the name of M/s. Bhagya Products Pvt. Ltd., Village Ghitorni, Tehsil Kapashera, New Delhi, as it was required to in terms of the compromise decree. Consequently, the petitioner did not pay the balance amounts.

7. In this background of facts, the respondent issued an order which has been impugned in the present case. The said order reads as follows:

  Ref. No. NDARB/HGM/1267                                                March 5, 2007
 

M/s. Bhagya Products (P) Ltd. 
Y-14A, Green Park Extn., 
New Delhi  110 016.
 

Sir,
 

Your compromise offer for settlement of Bank's dues
 

We invite your kind attention to the copy of consent decree dated 07.12.05 passed by the Hon'ble P.O., DRT-I wherein you had consented to abide the terms of compromise as agreed between Bank and yourself. We regret to observe that you have failed to deposit the agreed installments after June '06. In terms of 'e' of the above consent decree, which read that non-realization of cheques or non-payment of any two consecutive installments, the Bank would reserve the right to invoke the same by giving 2 weeks notice and be entitled to recover the entire O.A. amount as prayed. By not paying further installments on due date/balance amount as per terms of contract, you have rescinded the contract and hence the contract/terms of compromise stand as terminated by you. We, therefore, serve you notice to pay the balance compromise stand as terminated by you. We, therefore, serve you notice to pay the balance compromise amount along with interest, within 15 days of this notice failing which your above compromise offer would automatically stand revoked, which you please note.

Thanking you

8. It is contended by Mr. Chetan Sharma, learned Senior Counsel that the petitioner acted to its disadvantage and paid 50% of the amount. Even at the time when the settlement was arrived at between the parties, the Bank did not disclose the initiation of the First Information Report. Consequently, after having paid the amount, the Bank turned around and declined to release the title deeds as agreed in the terms of the compromise.

9. In these circumstances, the Bank could not without fulfilling its part of the bargain have resoled from the settlement; it was bound to honour the agreed terms. The action was, therefore, arbitrary, according to the counsel.

10. Learned Counsel for the Bank defended the impugned order and submitted that though there is no material on the record, the petitioner was fully aware of the criminal proceedings. Counsel submitted that irrespective of the fact whether the title deeds could or should have been released, or received by the petitioner, the latter was duty bound to pay the amount. In these circumstances, no exception can be taken to the impugned order.

11. Mr. Harish Gulati, learned Counsel for the Central Bureau of Investigation (CBI), imp leaded in the present proceeding as respondent No. 2, submitted that the Bank moved the application under Section 457 of the Criminal Procedure Code for release of the title deeds since the parties are entered into the agreement. According to counsel, since the charge sheet has already been filed, the matter is seized by the Criminal Court. The said three title deeds are case property which are in the custody of the Court and subject to its orders.

12. It was also submitted that the Court should desist from making any order directing release of the documents which are part of the charge sheet as its release would be governed by the terms of the order of the Special Judge.

13. The above narrative shows that essentially there are two components to the present disputes. The first is legality of the impugned order and the second, release of documents.

14. The parties undisputedly entered into a compromise agreement which contemplated release of the title deeds upon payment of dues. It is a matter of record that the petitioner paid 50% of the amount agreed entitling it to the release of one set of title deeds. In the circumstances, the stand of the Bank, in my considered opinion, is unreasonable. Whatever be the previous position as to the filing of the FIR, the Bank should not have, without awaiting the formal orders of the Criminal Court (before which it had preferred an application) concluded that nothing survived in the compromise order. The petitioner acted to its disadvantage, paid Rs. 70 lakhs within the stipulated time, as agreed by parties and pursuant to the decree. It had a right to expect the Bank to release one set of documents. In these circumstances, the impugned letter/communication cannot be sustained.

15. That brings me to the next limb of the dispute, i.e whether the Court can direct the release of the documents. Although the parties to the compromise agreement, consented that upon payment of various amounts on different dates, three sets of title deeds would be released, the fact remains that the criminal proceedings commenced with the lodging of the FIR.

16. In the circumstances, the proper course would be that the Special Judge seized of the matter (and before whom an application has been preferred by the Bank) should decide the same at the earliest and while doing so, also indicate suitable terms to safeguard the interests of the parties as well as the process, if the Court is inclined to release the title deeds.

17. In view of the above, the impugned order is hereby set aside. The Bank is directed to keep in abeyance its decision in regard to the payment of the balance amount and shall communicate its fresh decision after considering relevant materials, to the petitioner within four weeks. The Special Judge seized of the matter shall decide the application by the Bank or by the petitioner, (if it choses to file another application) in accordance with law. Such application shall be decided as early as possible and in any case within three months from today. If Court is of the view that such title deeds can be released having regard to the nature of the offences, it shall impose suitable conditions in that regard.

18. In view of the above order, the proceedings before the Recovery Officer, Debt Recovery Tribunal-I shall be forthwith discontinued and dropped.

19. The writ petition and pending applications are allowed in the above terms.

20. Copies of this order shall be furnished dusty to the parties.