Delhi High Court
Anand Shri Vastav And Anr. vs Kotak Mahindra Bank And Anr. on 20 April, 2015
Author: S.Ravindra Bhat
$~38
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Decided on 20th April, 2015
+ W.P.(C) 3823/2015 & C.M.No.6830-31/2015
ANAND SHRI VASTAV AND ANR. ..... Petitioners
Through: Mr.Pallav Saxena, Mr. Visheshwar
Shrivastav and Mr.Abhishek Kumar,
Advs.
versus
KOTAK MAHINDRA BANK AND ANR. ..... Respondents
Through: Mr.Sresh Dutt Dobhal, Adv. for R-1.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE R.K.GAUBA
MR. JUSTICE S. RAVINDRA BHAT (OPEN COURT)
%
1. The petitioner is aggrieved by an order of the Debts Recovery
Appellate Tribunal (DRAT) dated 20.11.2014 rejecting his appeal
No.167/2014. That appeal was directed against an order of the DRT dated
22.08.2013 in an application filed by the respondent (hereinafter referred to
as "the Bank") i.e. O.A.No. 567/1999.
2. The brief facts are that concededly the petitioner availed of credit
facility from the bank based upon an agreement dated 02.12.1994. The
amount released to the petitioner was to the tune of Rs.4.37 crores. Upon its
default in the repayment in terms of the agreement the bank initiated
proceedings before the DRT being O.A.No. 567/1999 under Section 19 of
the Recovery of Debts Due to Banks and Financial Institutions, 1993
WP(C)3823 /2015 Page 1
(hereinafter referred to as "Recovery Act"). The petitioner's defence was
that , inter alia, that application was time barred since the alleged cause of
action had occurred long prior to the institution of proceedings. It was
secondly urged that the bank's representative who had in fact executed the
documents was not authorized to do so and consequently the terms of the
agreement were not binding upon petitioner. This was after acknowledging
receipt of Rs.4.37 crores which concededly the petitioner availed of. The
third ground urged was that the guarantees were not invoked legally in
terms of the documents which sought to recall the loan. The DRT in its
order rejected all the three contentions. Aggrieved, the petitioner
approached the DRAT and repeated the same contentions before it.
3. The DRAT relied upon the decision in State of Tripura vs. Arabinda
Chakraborty 2014 6 SCC 460 and after analysis of the relevant facts held
that the plea in respect of limitation lacks substance. The second ground i.e.
disbursal of the loan being in violation of the sanction letter too was
rejected:
To substantiate his plea that the loan was disbursed in violation
of sanction letter, the counsel for the appellants has referred to
special conditions where the disbursement was to be made only
on furnishing of additional unconditional and irrevocable
personal guarantee of Mr. Anand Srivastava, Mr. G.P.
Srivastava and corporate guarantee from IEPC Limited in
favour of the Lender. In this regard, reference is made to
Articles 3.4 of the agreement, which is as under:
"3.4 GUARANTEE
The Borrower shall procure irrevocable and
unconditional a personal guarantee from Mr.
Anand Shrivastav, in favour of the Lender and a
corporate guarantee from IEPC Limited in favour
WP(C)3823 /2015 Page 2
of the Lender, for the due repayment of the Loan
and the payment of all interest and other monies
payable by the Borrower in the form prescribed by
the Lender and to be delivered to the Lender
before any part of the Loan is advanced. The
Borrower shall not pay any guarantee commission
to the said Guarantors."
As per the counsel, this is the document relied upon by the
bank. The plea also is that the O.A. was not filed by a
competent officer. In this regard, the counsel has referred to
Annexure A-1 as per which DGM, Legal had the authority to
sign the plaint, affidavit etc.
I have not been able to appreciate the argument advanced by
Mr. Saxena that violation of terms of getting additional
guarantee before disbursement of loan would relieve the
appellant borrowers from the liability to repay the amount
which he has taken as advance. The reference made by the
counsel to the definition of term 'debt' in section 2(g) of the
RDDBFI Act even if read in any manner cannot lend support to
the submission made by the counsel for the appellants. As per
this section, 'debt' means any liability which is claimed as due
from a person by the bank etc. during the course of any
business activity, which may be in cash or otherwise, whether
secured or unsecured or assigned or whether payable under a
decree or order of any civil court or any arbitration award or
otherwise or under a mortgage and subsisting on and legally
recoverable on, the date of the application. The emphasis by
the counsel on the words 'legally recoverable', in my view,
would not mean that if this additional security was not taken
before disbursement the loan, it will fall out of the definition of
the term 'debt'.
To meet the objection that the O.A. was bad for non joinder of
necessary party, the counsel for the respondent would refer to
WP(C)3823 /2015 Page 3
Memorandum of Entry to show that Shri Anand Srivastav,
Director of the company had made the deposit of the title
stating that he was doing so on behalf of the company. The
counsel would thus submit that this company was impleaded as
party, as it was owning the property. The property was
mortgaged being on lease with the company and, therefore,
cannot be said that this O.A. was bad for non joinder of any
necessary party."
4. This Court has considered the contention of the petitioner.
Significantly, the petitioner does not dispute the disbursement of`Rs.4.37
crores pursuant to the agreement signed. Its first plea that the bank
representative was not authorised to execute the terms is in our opinion
devoid of merits. Having availed the credit facilities extended by the Bank
without any demur, the question of authorization - at least with regard to
credit facility could not have been urged by the petitioner. So far as the
ground of limitation goes, the material on record shows that in terms of the
agreement, the last payment was to be made by April, 2002. Taking note of
this contention, the DRT as well as subsequently the DRAT were of the
opinion that the application under Section 19 was filed within the period of
limitation. Likewise, the plea with regard to recall of loan being contrary to
law lacks in merits.
5. To invoke the discretionary jurisdiction of this Court, the litigant has
to show not merely some error but something that touches upon the
foundation of the findings of the Tribunal or Tribunals below. Judicial
review be permissible on grounds of illegality procedural irregularity,
malafide that leads to a result which is manifestly erroneous on the face of
the record or so irrational that no reasonable minded person could have
WP(C)3823 /2015 Page 4
arrived at it. The Writ Court is not a Court of fact and is obliged to the
record in every case.
6. We see none of these elements herein calling for interference.
Consequently, we hold that the writ petition is lacking in merits and,
therefore stands dismissed.
S. RAVINDRA BHAT, J
R.K.GAUBA, J
APRIL 20, 2015
mr
WP(C)3823 /2015 Page 5
