Delhi High Court

Satinder Kapur vs Pnb & Ors on 21 December, 2009

Author: Badar Durrez Ahmed

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                      Judgment delivered on: 21.12.2009

+      W.P.(C) 10632/2009

SATINDER KAPUR                                                ..... Petitioner

                           -versus-

PNB & ORS.                                                   ..... Respondent

Advocates who appeared in this case:

For the Petitioner : Mr Rajeev Mehra, Sr Advocate with Mr Manish Gandhi and Mr Praveen Agrawal, Advocates

For the Respondent : Mr Manish Miglani, Advocate for respondent no. 1

CORAM:-

HON'BLE MR. JUSTICE BADAR DURREZ AHMED HON'BLE MS. JUSTICE VEENA BIRBAL

1. Whether the Reporters of local papers may be allowed to see the judgment? yes

2. To be referred to the Reporter or not? yes

3. Whether the judgment should be reported in Digest? yes

BADAR DURREZ AHMED, J (ORAL)

1. This writ petition has been filed challenging the order dated

21.07.2007 passed by the Debts Recovery Appellate Tribunal in an appeal

from an order dated 11.05.2009 passed by the Debts Recovery Tribunal.

The question to be considered in this writ petition is whether the Debts

Recovery Tribunal can refuse to grant permission to the applicant/Bank to

withdraw a pending application under Section 19 of the Recovery of Debts

Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as

'the said Act') when both the Bank and the debtor have entered into an out

of court settlement?

2. The question arises in the backdrop of an application which was filed

by the Bank for withdrawal of the original application no. 110/1996. In the

said application, it was clearly stated that during the pendency of the said

original application no. 110/1996, the defendants therein and the petitioner

herein had approached the Bank for a compromise. The compromise

proposal was duly accepted by the Bank and in terms of the same, the

petitioner herein deposited a sum of Rs 125 lakhs along with interest of

approximately Rs 13.71 lakhs with the Bank. The said amount was accepted

by the Bank as full and final settlement of the dues. Consequently, it was

stated in the application that the Bank, having received the total amount of

Rs 1,38,71,661/- inclusive of delayed period interest from the debtors, had

issued a „No Dues Certificate‟ in favour of the latter. It was then contended

in the application that in the light of these events, the Bank wished to

withdraw the original application no. 110/1996. However, in the prayer, the

Bank did mention that the application be dismissed as withdrawn "in terms

of the compromise". The learned counsel appearing for the petitioner as

well as for the respondent/Bank submit in unison that the words "in terms of

the compromise" ought to be disregarded inasmuch as neither party sought a

compromise decree from the Debts Recovery Tribunal. And, all that the

respondent/Bank was seeking, was permission to withdraw the original

application in view of the settlement which had already been arrived at

between the parties.

3. When the said application for withdrawal of the O.A. came up for

hearing, the Debts Recovery Tribunal took a different view of the matter and

felt that the „compromise‟ needed examination. The order passed by the

Debts Recovery Tribunal is as under:-

"I.A. No. 361/2009

This OA was filed by the bank for recovery of a sum of Rs. 5,66,39,886.16 (rupees five crores sixty six lakhs thirty nine thousand eight hundred eighty six and paise sixteen only) plus future interest in the year 2000. In the I.A., it is stated that the parties have arrived at one time settlement for a sum of Rs. 1,38,71,661.00 (rupees one crore thirty eight lacs seventy one thousand six hundred and sixty one only).

In the application, no grounds have been mentioned that for what reason the bank has sacrificed such a huge amount. The acceptance of such a compromise therefore needs examination. I, therefore direct the bank to file an affidavit on the following facts:-

1) What are the securities available with the bank? Details of securities, values thereof.

2) Whether the defendants own and possess any other personal properties apart securities in favour with the bank.

The defendants shall also file their affidavits disclosing their personal assets, if any including their source of income.

Post this OA on 10.8.2009 for further proceedings.

Let this order be communicated to all the parties for compliance by the Registry as per rules.

Order „dasti‟."

4. Being aggrieved by the said order dated 11.05.2009 passed by the

Debts Recovery Tribunal, the petitioner filed Miscellaneous Appeal No.

184/2009 before the Debts Recovery Appellate Tribunal. The Appellate

Tribunal also did not agree with the viewpoint of the petitioner and upheld

the order dated 11.05.2009 passed by the Debts Recovery Tribunal. The

operative portion of the impugned order dated 21.07.2009 passed by the

Debts Recovery Appellate Tribunal is as under:-

"6. In my view, the impugned order dated 11.5.2009 passed by the Tribunal below cannot be flawed at all. Even going by the principle enshrined in Order 23 Rule 3 CPC, it is to be proved to the satisfaction of the court that a suit has been adjusted wholly or in part by any lawful agreement or compromise.

7. The Tribunal below has not rejected the OTS. Instead, it has only ordered for the filing of certain affidavits by both the sides so as to verify that the OTS has been arrived at for bona fide and valid reasons and there is no foul-play. None of the parties should be shy to come up with the true facts. Needless to say, the Banks and Financial Institutions deal in public money and the issue of larger public interest is involved to ensure that maximum recovery is made against the money lent by them and there is transparency in the system. The court‟s power to ensure and oversee the same cannot be challenged. The ruling cited by the learned counsel for the appellant does not justify the with-holding of the affidavits containing the information desired by the Tribunal below to be placed before it.

8. Nothing more is required to be said and I would like the matter to rest here.

9. The appeal is dismissed."

(underlining added)

5. This is one of those curious cases in which both the sides support each

other but the authorities below have disagreed with them. The question that

arises is whether the Tribunal could, at all, have required examination of the

settlement terms when no approval or satisfaction of the Tribunal was asked

for? If we examine the operative portion of the impugned order, we find that

the Appellate Tribunal was perhaps examining the principles akin to that of

Order 23 Rule 3 of the Code of Civil Procedure, 1908 which pertain to

recording of compromise and, consequently, passing a compromise decree in

a suit. However, in the present case, the principles which are required to be

examined are those which are more in the nature of the provisions of Order

23 Rule 1 CPC which deal with withdrawal of suit simpliciter. In fact, the

learned counsel for the parties submitted that since no leave of the court was

necessary as stipulated in the proviso to Order 23 Rule 1, the elaborate

procedure set out in sub-Rules (2) and (3), etc. was also not required to be

followed in this case.

6. In this background, reference to a decision of the Supreme Court in

the case of M/s Hulas Rai Baij Nath v K.B. Bass & Co.; AIR 1968 SC 111

would be instructive. The Supreme Court was interpreting the provisions of

Order 23 Rule 1 of the Code of Civil Procedure. While doing so, the

Supreme Court observed that the said provision gives an unqualified right to

a plaintiff to withdraw from a suit and if no permission to file a fresh suit is

sought under sub-Rule (2) of that Rule, the plaintiff becomes liable for such

costs as the Court may award and becomes precluded from instituting any

fresh suit in respect of the subject matter under sub-Rule (3) of that Rule.

More importantly, the Supreme Court held:-

"There is no provision in the Code of Civil Procedure which requires the Court to refuse permission to withdraw the suit in such circumstances and to compel the plaintiff to proceed with it".

7. In the present case, there is no set-off or counter-claim involved and,

therefore, the principles indicated by the Supreme Court would be clearly

applicable. Although, the Code of Civil Procedure is not strictly applicable

to or binding in proceedings under the said Act because of the provisions of

Section 22 thereof, principles akin to those of the Code of Civil Procedure

have been applied from time to time. Keeping in mind the observations

made by the Supreme Court with regard to the unfettered right of a plaintiff

to withdraw a suit, we feel that the Tribunal ought not to have refused

permission to withdraw the original application no. 110/1996.

8. Moreover, neither party sought any stamp of approval or imprimatur

of the Tribunal with regard to the compromise that they had entered into.

Thus, there was no occasion for the Debts Recovery Tribunal to enter upon