Madras High Court
M/S.Raj Bai Anusuya Devi Gulacha ... vs Housing And Urban Development ... on 10 March, 2021
CRP No.4 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 10.03.2021
CORAM :
THE HON'BLE MR.SANJIB BANERJEE, CHIEF JUSTICE
AND
THE HON'BLE MR.JUSTICE SENTHILKUMAR RAMAMOORTHY
CRP No. 4 of 2021 & CMP No.47 of 2021
M/s.Raj Bai Anusuya Devi Gulacha Memorial
Charitable Trust,
rep. By its Managing Trustee,
Mr.Nalin Gulechha ... Petitioner
Vs.
1. Housing and Urban Development Corporation Limited,
5th Floor, CMDA Tower-1,
Gandhi Irwin Road, Egmore,
Chennai-600 008.
2. Shri Krishna Trust,
No.8, Ponni Amman Koil Street,
Hastinapuram, Chennai-600 064. ... Respondents
Prayer: Petition under Article 227 of the Constitution of India against
the order dated 16.12.2020 in Appeal No.1 of 2020 on the file of the
Debt Recovery Tribunal-1, Chennai, the learned Recovery Officer – II,
DRT-1, Chennai.
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For Petitioners : Mr. AR.L.Sundaresan, SC for
M/s.Anil Relwani
For Respondents : Mr.K.S.Sundar
for respondent-1
Mr. Jayesh B.Dolia for
M/s.Aiyar & Dolia
for respondent-2
ORDER
(Made by the Hon'ble Chief Justice)
The petitioner questions the propriety of an order dated
December 16, 2020 passed by the Debts Recovery Tribunal in
proceedings under Section 30 of the Recovery of Debts and
Bankruptcy Act, 1993.
2. At the outset, it must be noticed that the order impugned
herein is appellable and the petitioner ought to have carried an appeal
to the Debts Recovery Appellate Tribunal, instead of invoking this
extraordinary jurisdiction under Article 226 of the Constitution of India.
However, the petitioner says that since the matter turns on the
interpretation of an order of this Court passed on June 10, 2019, the
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petitioner would rather have this Court interpret the order than the
Debt Recovery Appellate Tribunal.
3. The order that was carried by way of an appeal under Section
30 of the said Act, was one dated January 20, 2020 passed by the
Recovery Officer in DRT-I, Chennai. The Recovery Officer held that the
bank was entitled to a claim of Rs.14,47,00,950/- as at October 31,
2019 and after adjusting and after making over such amount from the
account held by the Recovery Officer, the excess amount of about
Rs.6.50 crore ought to be returned to the petitioner herein. However,
the petitioner says that both the Recovery Officer at DRT-I and the
Tribunal failed to comprehend the purport, scope and effect of the
operative part of an order of this Court rendered on June 10, 2019 in a
previous round of proceedings.
4. The facts are not much in dispute. The petitioner herein is
indebted to the first respondent Urban Development Corporation and
the petitioner initially failed to pay heed to any of the several demands
raised by the first respondent secured creditor. Following previous
rounds of battle before the Debts Recovery Tribunal and the Appellate
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Tribunal, both the petitioner and the secured creditor reached this
Court, along with the auction-purchaser, who participated in a sale
that was concluded in 2015, and put in the entire consideration and
has still not obtained possession of the relevant property. On June
10, 2019, a Division Bench of this Court disposed of W.P.Nos.31295
and 31296 of 2017 along with W.P.Nos.1829 and 1830 of 2018. Two
of the petitions were by the petitioner trust and the other two by the
auction-purchaser, which is also a trust. The two sets of writ petitions
emanating from the challenge to the orders passed by the Debts
Recovery Tribunal or the Appellate Tribunal were disposed of with the
following operative order of June 10, 2019:
“58. Under these circumstances, we are of the opinion
that the rate of interest fixed by the Debt Recovery
Appellate Tribunal at 10% from 6% to that of interest
fixed by the Debt Recovery Tribunal is also meagre and
it is modified to 12% simple interest to be paid by the
petitioner Trust. The petitioner shall pay the remaining
amount, calculating the interest from the date on which
auction-purchaser made the deposit i.e., from
26.09.2014 on Rs.75,00,000/-; and from 30.09.2014
on Rs.1,15,00,000/-; and from 13.10.2014 on
Rs.5,68,51,000/-. The above payment shall be made
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CRP No.4 of 2021
by the petitioner Trust in W.P.Nos.31295 and 31296 of
2017, within a period of eight weeks from the date of
receipt of copy of this order, failing which, the auction-
purchaser is entitled to get the possession of the
property and consequently, the certificate holder is
entitled for appropriation of the sale proceeds arising
out of the sale held on 30.09.2014."
5. The petitioner claims that the order dated June 10, 2019
implied further payment to be made to the auction-purchaser if any
amount was due and for the default clause to operate only if a further
sum was found due and the petitioner was in default. The petitioner
says that it would be inequitable to read the relevant order in a one-
sided manner and keep the interest running on the auction-purchaser's
claim while arresting the same in respect of the payments already
tendered by the petitioner.
6. According to the petitioner, the payment due had been
deposited earlier and, on November 6, 2015, of a total amount in
excess of Rs.8.83 crore had been deposited and such deposit was also
made by taking into account the lower rate of interest directed to be
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CRP No.4 of 2021
paid by the Recovery Officer and the Debts Recovery Tribunal. The
petitioner seeks to suggest that the moment the petitioner made any
deposit, the petitioner's account with the bank would stand notionally
credited and the bank would no longer be entitled to claim any further
interest on the sum as the petitioner was out of pocket upon making
the deposit.
7. On the petitioner's understanding that no further amount was
due in terms of the order of this Court dated June 10, 2019, the
petitioner did not tender any further payment within the eight-week
period permitted by the relevant order of this Court, whereupon,
certificate proceedings commenced before the Recovery Officer. The
petitioner asserted its case before the Recovery Officer, but the
concerned official disregarded the same and held that as at October
31, 2019, the secured creditor was entitled to receive
Rs.14,47,00,950/- against the total value of deposit lying with the
Recovery Officer to the extent of Rs.21,09,08,263/-. The Recovery
Officer recorded that he held, in all, a sum of Rs.21,09,63,263/- as at
January 14, 2020. The Recovery Officer assessed that after paying the
dues of the bank, there would be a substantial amount which the
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CRP No.4 of 2021
petitioner could take back. The Recovery Officer proceeded on the
basis that the auction sale stood confirmed since the petitioner herein
had failed to comply with the order dated June 10, 2019 and made no
further deposit after the date of pronouncement of this Court's order.
8. The order of January 20, 2020 passed by the Recovery
Officer, has, ultimately been upheld in the appeal by the Tribunal by
holding that the auction-purchaser was entitled to the property since
the petitioner herein had failed to comply with the order of this Court
of June 10, 2019. For the present purpose, paragraph 16 of the order
impugned dated December 16, 2020 passed by the Debts Recovery
Tribunal is relevant, particularly, the three charts indicated thereunder.
9. It may be clarified at this stage that the four tranches of
deposit that the petitioner herein made were with the Recovery Officer
and the Recovery Officer has invested such amounts to yield interest
at the rate of 5% p.a.
10. The Debts Recovery Tribunal referred to the dates of the
individual deposits made by the petitioner herein and permitted such
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money to be shown to have earned interest at the rate of 5% p.a.
simple, till the date due for the balance payment to be made by the
petitioner herein in terms of the order dated June 10, 2019. However,
it is the admitted position that a further deposit of Rs.7.42 lakh made
by the petitioner herein with the Recovery Officer on December 28,
2015 was inadvertently not included in the first chart appearing under
paragraph 16 of the impugned order.
11. After ascertaining what the deposits made by the petitioner
herein had swelled to as at October 10, 2019, which was the time
within which the balance payment ought to have been made by the
petitioner in terms of the order dated June 10, 2019, the relevant
Debts Recovery Tribunal proceeded to ascertain the amount due to the
auction-purchaser in terms of paragraph 58 of this Court's order of
June 10, 2019. The second chart under paragraph 16 of the Debts
Recovery Tribunal order dated December 16, 2020 came to be made.
The grand total of the first chart revealed that the value of the
deposits made by the petitioner swelled to Rs.10,56,21,369.98
(though an amount of Rs.7.42 lakh deposited on December 28, 2015
and the interest thereon were not credited in favour of the petitioner
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herein). The Debts Recovery Tribunal also found that the amount due
in terms of the order of this Court of June 10, 2019 to the auction-
purchaser was Rs.12,17,26,978.97 as at October 23, 2019, the date
within which the payment ought to have been made by the petitioner
herein in terms of this Court's order of June 10, 2019.
12. The Debts Recovery Tribunal reasoned that since there was a
shortfall of Rs.1,61,05,680.99 which the petitioner herein failed to pay
to the auction-purchaser, the auction-purchaser was entitled to the
property. Incidentally, at a time when the appeal before the Debts
Recovery Tribunal was pending, the sale certificate was issued by the
Recovery Officer in favour of the auction-purchaser on February 20,
2020.
13. The petitioner, however, maintains that since only the
interest component was enhanced from 6% as granted by the Debts
Recovery Tribunal to 10% as provided by the appellate authority and,
finally, to 12% by this Court, the petitioner had sought to make the
calculation on the basis of the differential rate of interest rather than
the full complement of 12% interest. According to the petitioner, the
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entire amount due to the auction-purchaser had stood satisfied prior to
the date on which the order dated June 10, 2019 came to be
pronounced. A rather convoluted set of calculations is attempted to be
pushed through to sustain the petitioner's stand.
14. The order dated June 10, 2019 is clear in what it required
the petitioner to pay. Such order took into account the deposits
already made and perceived that the payment that such order
required to be made by the petitioner to the auction-purchaser,
entailed further amounts to be paid. The expression used in the
relevant paragraph was “remaining amount” and nowhere in the order
did the relevant Division Bench indicate that it had any doubt as to
whether any further sum was due by using the words “if any”.
15. In the light of the Division Bench order, the appropriate
calculations in such regard were furnished by the Debts Recovery
Tribunal in paragraph 16 of the order impugned, though a deposit of
Rs.7.42 lakh made by the petitioner herein on December 28, 2015
was missed out.
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16. The petitioner says that it is evident from the previous order
of this Court of June 10, 2019 that the Court wanted the petitioner to
continue with the school run at the premises in question and this Court
saw an element of public interest in such regard. The petitioner claims
that this Court may even now balance the equities by directing the
same high rate of interest to be paid to the auction-purchaser for the
petitioner to be entitled to redeem the mortgaged property.
17. The auction-purchaser, however, submits that if the auction-
purchaser wanted to invest its money and wait for a good return, the
auction-purchaser would have chosen some other forum or instrument.
The auction-purchaser maintains that it is the immovable property that
attracted the auction-purchaser and since it has deposited the entire
consideration more than six years back and the petitioner herein
defaulted in complying with the conditional order of June 10, 2019, the
matter was sealed in favour of the auction-purchaser and even a sale
certificate was signed and delivered to the auction-purchaser by the
Recovery Officer on February 20, 2020.
18. The auction-purchaser relies on a judgment reported at
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(2017) 8 SCC 272 (Allokam Peddabbayya v. Allahabad Bank) to place
a passage from paragraph 23 of the report that says that a right of
redemption may be exercised till the relevant proviso to Section 60 of
the Transfer of Property Act, 1882 comes into play. In terms of such
proviso, the right of redemption remains till extinguished by act of the
parties or by decree of a Court. In the present context, the right of
redemption would be lost upon the sale being completed by due
execution of documents.
19. The secured creditor appears to support the auction-
purchaser and says that the conduct of the petitioner herein has been
predictable and there is no doubt that even after the present order,
the petitioner would attempt to stretch the matter and not give it a
closure. Like the auction-purchaser, the bank refers to several orders
passed at various levels to make the point that previous opportunities
afforded to the petitioner were not availed of and the petitioner seeks
to cite the fact that it runs a school to buy time on each occasion to
pay off its dues.
20. What is of relevance is that the order of June 10, 2019 binds
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the parties and such order recognised the petitioner's right to redeem
the property upon making payment to the auction-purchaser at a
higher rate of interest. The order recorded that it was in public
interest that the redemption should be permitted, so that the school
run by the petitioner charitable trust could continue to function. There
is no doubt that the auction-purchaser trust must have pointed out
that it was also a trust and entitled to equal discretion as the petitioner
trust.
21. Since the auction-purchaser's right to obtain the property
was extinguished, so as to say, by the order dated June 10, 2019
except in a default scenario and the auction-purchaser did not
complain thereagainst, such aspect of the matter has to carry
considerable weight with the Court while deciding the present lis. It
may also be noticed in such context that the petitioner herein had
preferred a special leave petition against the order dated June 10,
2019, but the attempt to appeal was repelled by the Supreme Court
with the observation that there was no ground to interfere with such
order. Though the auction-purchaser's assertion that by virtue of the
rejection of the SLP, the date of final payment in terms of the order
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dated June 10, 2019 attained finality and can no longer be altered,
cannot be accepted, the measure of compensation awarded to the
auction-purchaser by the order dated June 10, 2019 cannot be
lessened. The only thing that can be done is to extend the time for
making payment strictly in terms of the order dated June 10, 2019 and
as charted out in paragraph 16 of the impugned order of the Debts
Recovery Tribunal dated December 16, 2020.
22. One way of looking at the matter is that neither the
Recovery Officer in the order of January 20, 2020 nor the Debts
Recovery Tribunal in the order of December 16, 2020 committed a
mistake in following the order of this Court of June 10, 2019 and, as
such, the petitioner herein is not entitled to any relief. The other way
of looking at it is that if the measure of compensation provided for the
auction-purchaser in the order dated June 10, 2019 is not reduced
and, consequently, the petitioner herein be made to fork out more,
and at a high rate of interest of 12% per annum, the public interest
that the order dated June 10, 2019 sought to sub-serve by permitting
the petitioner to continue running the school, may be achieved. It is
such course of action which is preferred by balancing the equities and
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adequately compensating the auction-purchaser, including by way of
additional costs that the auction-purchaser may have incurred in
course of the certificate proceedings before the Debts Recovery
Tribunal-I, the appeal therefrom and the present proceedings.
23. Accordingly, the petitioner is permitted time till March 31,
2021 to deposit the balance amount due till such date with the
Recovery Officer of the Debts Recovery Tribunal, for the petitioner to
be entitled to retain the mortgaged property. The terms of paragraph
58 of the order dated June 10, 2019 remain unaltered in essence. The
first chart under paragraph 16 of the impugned order of December 16,
2020 passed by the Debts Recovery Tribunal has to be corrected by
incorporating the deposit of Rs.7.42 lakh made by the petitioner herein
on December 28, 2015 and by considering the interest thereon at 5%,
as in respect of the other deposits made by the petitioner. Upon
correcting such first chart under paragraph 16 of the Debts Recovery
Tribunal's order, the only further alteration that has to be effected
thereto is the date of “23-10-2019” has to be replaced by “31-03-
2021” in the first chart.
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24. In the second chart under paragraph 16 of the order passed
by the Debts Recovery Tribunal on December 16, 2020, the date
"23-10-2019" appearing at three places should be replaced by the
date “31-03-2021”. As a consequence, the resultant number of days
in each of the relevant three rows in such second chart would stand
altered to indicate a different set of calculations, just as the altered
date in the amended first chart would also throw up a different set of
figures on the extreme right-hand column.
25. The modified figures when incorporated in the third chart in
the Debts Recovery Tribunal's order impugned dated December 16,
2020 will indicate the resultant amount that the petitioner would be
required to pay the auction-purchaser on March 31, 2021, since the
relevant figures in the third chart would be the total according to the
first chart, subtracted from the total according to the second chart, to
indicate the exact amount due and payable by the petitioner.
26. Upon such amount being deposited with the Recovery Officer
by the stipulated date, the Recovery Officer will carry out fresh
calculations on the basis of the bank's entitlement, to ascertain the
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amount that would be refunded to the petitioner herein. However, the
entire amount due to the auction-purchaser in terms of this order as at
March 31, 2021 should be released to the auction-purchaser by April 7,
2021.
27. In default of the payment by the petitioner, in terms of this
order being made on or before March 31 2021, the petitioner will have
no further right to the property and the sale certificate issued by the
Recovery Officer would attain finality upon March 31, 2021 passing and
the payment in terms of this order not being made by the petitioner,
without any further act or deed on the part of any other.
28. The Recovery Officer shall ensure that bank's dues are also
cleared by April 7, 2021 and reminder made over to the petitioner
within a fortnight thereafter.
29. Since the sale notice in this case was issued at a time when
the order of the Recovery Officer had not attained finality and was
subject to consideration in the appeal, the dictum in the judgment
cited by the auction-purchaser is found not to be applicable in the facts
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and circumstances of the present case.
30. C.R.P. No.4 of 2021 is disposed of by modifying the order
dated December 16, 2020 passed by the Debts Recovery Tribunal and
the order dated January 20, 2020 passed by the Recovery Officer. The
sale certificate of February 20, 2020 issued in favour of the auction-
purchaser will stand set aside and the sale confirmed in favour of the
auction-purchaser will also stand set aside, subject to the balance
payment being made by March 31, 2021. As a consequence, CMP
No.47 of 2021 is closed.
31. In addition, the petitioner herein will pay costs assessed at
Rs.5 lakh to the auction-purchaser for vexing the auction-purchaser
from 2015 till date. Any further stretching of the matter by the
petitioner has to be treated as a contumacious gimmick and dealt with
accordingly.
(S.B., CJ.) (S.K.R., J.)
10.03.2021
Index : No
kpl/suk
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CRP No.4 of 2021
THE HON'BLE CHIEF JUSTICE
AND
SENTHILKUMAR RAMAMOORTHY, J.
(suk)
CRP No.4 of 2021
10.03.2021
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