Punjab-Haryana High Court
Oriental Bank Of Commerce vs Permanent Lok Adalat And Ors on 4 September, 2024
Neutral Citation No:=2024:PHHC:120550
CWP-23143
23143-2015 (O&M). -1-
IN THE PUNJAB AND HARYANA HIGH COURT AT
CHANDIGARH.
205
CWP-223143-2015 (O&M).
Date of Decision: 04.09.2024.
ORIENTAL BANK OF COMMERCE
... Petitioner
Versus
THE PERMANENT LOK ADALAT (PUBLIC UTILITY SERVICES),
NARNAUL AND OTHERS
... Respondents
CORAM: HON'BLE MR. JUSTICE VINOD S. BHARDWAJ.
Present: Mr. Raj Kumar Arora,, Advocate,
M
for the petitioner.
Mr. S.K. Yadav, Advocate,
for respondents
respondent No.2 to 4.
Mr. Ram Avtar, Advocate,
for respondent No.5.
VINOD S. BHARDWAJ, J. (ORAL)
Challenge in the present writ petition is to the award dated
26.08.2015 (Annexure P-10)
P and the order dated 09.09.2015 (Annexure P
P-
12), passed by the Permanent Lok Adalat (Public Utility Services), Narnaul,
directing the petitioner to reimburse the respondents No.2 to 4 to the extent
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of Rs.10 lakhs plus interest that has accrued on the said amount and the
subsequent correction of the inadvertent typographical errors.
2 Learned counsel appearing for the petitioner
petitioner-bank contends
that the respondent No.2 is the sole proprietorship concern under the
proprietorship of respondent No.3. A cash credit facility of Rs.10 lakhs to
respondent No.2 was sanctioned on 01.05.2012 which was duly released.
An agreement of hypothecation along with all enabling documents in this
regard was also executed on 25.05.2012. Respondent No.
No.4 stood as a
guarantor
or for repayment of the credit facility extended to respondents No.2
and 3 and executed an agreement of guarantee in favour of petitioner
petitioner-bank.
She also mortgaged her property by depositing title deed No.1311 dated
07.12.1994. It is alleged that respondents
respondents No.2 to 4 were lacking in timely
repayment
payment of the advances obtained in cash credit facility account and were
in breach of the terms and conditions of the agreement as a result whereof
there was huge sum of money overdue. The respondents No.2 to 4,
however,
r, claimed a defence that on account of a fire that occurred on the
intervening night of 20/21.02.2014, the insurance claim was lodged which
was wrongly rejected by the Insurance Company
Company, upon inspection of the
business premises of borrowers/respondents
borrow by the Surveyors/loss assessors
and as the Bank had also sold the insurance policy, the loss to be paid to the
applicant be adjusted and the balance be repaid
repaid. He further submits that
since
ince the account was not running satisfactorily
satisfactorily, it was declared as non-
performing account, hence, proceedings under the Securitisation and
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Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002 (for short hereinafter referred to as 'the SARFAESI Act, 2002')
were initiated and notice dated 02.04.2014
02.04.2014 under Section 13 (2) of the said
Act was issued. Neither any objections were filed nor the amount was
deposited whereupon the final notice under Section 13 (4) of the
SARFAESI Act, 2002 was also published.. Aggrieved of the initiation of
proceedings under
un the SARFAESI Act, 2002, respondents No.2 to 4
approached the Permanent Lok Adalat (Public Utility Services), Narnaul
praying for settlement of the dispute by exonerating the applicant from the
cash credit loan amount and to restrain the Bank from recov
recovery
ery of the same
or to sell the mortgaged property for recovery of the dues.
3 On 25.06.2014, an ex parte interim order restraining the
petitioner-bank
bank from selling the mortgaged house of respondent No.4 was
passed. Thereafter, the Permanent Lok Adalat ((Public Utility Services),
Narnaul proceeded with the adjudication of the matter under Section 22
22-C
(8) of the Legal Services Authorities Act, 1987
1987.
4 Upon consideration of the rival submissions advanced on
Upon
behalf of the parties, the Permanent Lok Adalat (Public Utility Services),
Narnaul, passed the award dated 26.08.2015
26.08.2015. The relevant observation of
the same is extracted as under:-
under:
"After hearing the counsel for the parties and the Branch
"After
Manager of the respondent No.2 and perusing the case file, we
are of the opinion that the applicant No. 2 Rajesh Kumar being
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proprietor of applicant no.1 M/s Shree Shyam Marble House
has taken cash credit limit loan to the tune of Rs.10 lacs from
the respondent No.1. The applicant No.3 has stood surety for
the repayment of the loan and interest on behalf of applicant
No.1 & 2 by mortgaging her residential house, the details of
which have been mentioned in Para No.3 of the application.
The applicant No.2 was running a shop of building material
i.e. cement, rorri, Bajri, sanitary
sanitary goods, plumbing goods and
PVC items etc. To make the business more flourish, applicant
no.2 in the name of applicant no.1 has obtained cash credit
limit loan amount to the tune of Rs.10 lacs from the respondent
No.1. The loan was taken by the appli
applicant No.2 from the
respondent no.1
no. for marble, cement, sanitary items, which
included PVC items and plumbing goods.
It was stated before us by the Branch Manager of the
respondent No.2 that bank advances loan after getting the
goods regarding, which loan is taken are got insured. A
photocopy of the proposal form Ex.RX, which was given by the
respondent No.1 to the respondent No.2 shows that, in it,
against the writing,
writing "business of proposal", marble stone only
has been written. Thereafter, the insurance ccompany has
insured only the marble stone of the shop.
A perusal of insurance policies Ex.RI and R2 shows that,
it was only for marble and necessary.
For the decision of this case, we deem it proper to refer
to the word 'Accessory', as has been mentioned in Concise
Oxford Dictionary, Twelfth Edition. In this dictionary the word
'Accessory' means (-) (1) a thing which can be added in order
to make it more useful, versatile, or attractive (-) a small
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article carried or worn to complement a garment. (2) Law a
person who assists the perpetrator of a crime without taking
part in it. ->
> adj. chiefly technical subsidiary or
supplementary. Thus, from the words, which have been written
in the insurance policies,
policies Ex. RI and R2, it could not be said
that the respondent
respondent No.2 has insured the cement, rorri, bajri,
sanitary goods, plumbing goods and PVC items etc. in the shop
of the applicant no.2. Even, from the insurance policies Ex.R5
and R6, it could not be said that the respondent no.2 has
insured the cement, rorri, bajri,
bajri, sanitary goods, plumbing
goods and PVC items etc. in the shop of the applicant No.2,
were insured by the respondent No.2 during the period when
the fire has erupted.
The contention of the counsel for the respondents to the
effect that the respondent No.1 has made a request to the
respondent no.2, to get insured stock including marble, cement,
sanitary items etc situated in the Rewari Road, Narnaul, in the
face of the proposal form Ex.RX, which was given by the
respondent no.l to the respondent no.2 ccould not be accepted.
We find no force in the contention of the counsel for the
respondent No.1 to the effect that since the policy Ex.R5 was
regarding burglary, policy Ex.R6 was regarding loss suffered
in the fire regarding cement, rorri, bajri, sanitary goods,
plumbing items etc., which were lying in the shop in question.
Now, we take the plea of the counsel for the respondent
to the effect that the present application could not be filed by
the applicant as notice Ex.C-65,
Ex.C 65, under Section 13 (2) of the
Securitization and Reconstruction of Financial Assets and
Securitization
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Enforcement of Security Interest Act, 2002, was issued to the
respondent.
A perusal of the case file shows that, an application was
filed by the respondent No.1 under Section 22 C of the LSA Act,
1987, wherein, it was mentioned as under:
1987, under:-
"The
The respondent No.1 to 3 became slack in the
repayment of the advance in CC limit loan account as
they contravened the terms and conditions of the
agreement and thus a huge sum of money became due
and payable by them
m which they failed to pay in spite of
several verbal and written requests."
The above said application was withdrawn by the
Oriental Bank of Commerce, who is respondent No.1 in this
case. The present application also resolves regarding default
in the CC limit, which was sanctioned in favour of the
applicant No.2 by the respondent No.1.
For the decision of this case, we deem it proper to refer
to Section 22 D of the LSA Act, 1987, which reads as under:
under:-
"The Permanent Lok Adalat shall, while conducting
conciliation proceedings or deciding a dispute on merit
under this Act, be guided by the principles of natural
justice, objectivity, fair play, equity and other principles
of justice, and shall not be bound by the Code of Civil
Procedure, 1908 (1 of 1872) and the Indian Evidence
Act, 1872 (5 of 1908)."
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These provisions show that while conducting the
proceedings in this case, the Court can take the help of Code of
Civil Procedure. 1908, though, the provisions of Code of Civil
procedure, 1908 were not bindin
binding while deciding the
proceedings in this case.
case
For the decision of this case, we deem it proper to refer
to Order XXIII, Rule 1, Sub
Sub-Rule 4, where, it has been
mentioned as under:-
under:
"Where the plaintiff ----
(a) Abandons any suit or part of claim under Sub-Rule
(1), or
(b) Withdraws from a suit or part of a claim without the
permission referred to in Sub
Sub-Rule 3, he shall be liable
for such costs as the Court may award and shall be
precluded from instituting any fresh suit in respect of
such subject matter
er or such part of the claim."
In view of the aforesaid provisions of CPC, the
respondent No.1 could not move under Section 13 (2) of the
Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002. Thus, the notic
notice
dated 02.04.2014,
02.04.2014 Ex.C65 could not be legally issued on the
application of the respondent No.1 against applicant no.2
Rajesh Kumar.
Keeping in view, the above facts, the authorities which
have been referred by the respondent no.1, were of no help to
the respondent No.1. The respondent No.1 could not take
possession of the property of the applicant No.3 regarding
which notice dated 02.04.2014 Ex. C65 was issued.
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From the material on the file, we find no force in the
contention of the applicants to the ef
effect that the present case
could not be decided by this Court in the summary proceedings
under L.S.A.
From the evidence on the file, we are justified that the
insurance company has legally issued the insurance policy on
the basis of proposal form Ex.RX. IIt appears they was
negligence on the part of the respondent when proposal when
proposal form was signed by respondent No.1.
From the evidence on the file, we are justified that the
applicant has suffered loss of Rs.19,32,000/
Rs.19,32,000/- The insurance
company was fully
fully justified in issuing the order dated
20.06.2014, mentioning that no claim could be given by the
respondent No.2.
No.2
We are of the view that the applicant has suffer loss
around Rs.18,82,000/-
Rs.18,82,000/ the insurance company could reimburse
the respondent no.2 to the
the extent of Rs.10 lacs plus interest,
which was accrued on that amount. Thus, the applicant is
entitled to get adjusted the amount of Rs.10 lacs and the
interest which has accrued on that amount, while calculating
the amount, which shall be found payable by the applicant
No.2 to the respondent No.1. This award is accordingly passed.
File be consigned to record."
record
5 Aggrieved thereof, the present writ petition has been filed.
6 Learned counsel appearing for the petitioner
petitioner-bank contends
that:-
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i) the mandatory procedure for conciliation as prescribed
under Section 22-C
C (2) to (7) of the Legal Services
Authorities Act, 1987,, has not been followed and no
terms of proposal/settlement was conveyed to the parties
and
ii) That the respondents No.2 to 4 were liable to reimburse
the loss/amount claimed by the petitioner
petitioner-bank and they
could at best be entitled to adjustment of Rs.10 lakhs
with respect to the insurance claim which was pending,
however, even the said differential amount has not been
paid.
7 Learned counsel for respondent
respondents No.2 to 4 could not dispute
the fact that the order passed by the Permanent Lok Adalat (Public Utility
Services), does not refer to any conciliation proceedings.
8 Initially this Court was inclined to examine the order oon merits
since the matter
matte pertained to year 2014 and a period of more than 10 years
had already elapsed and the removal would only further delay the
proceedings. Counsel for respondents No.2 to 4 was called upon to respond
to the arguments, he, however, failed
failed to make any submission. On being
asked about the last as well as the penultimate para of the award, he said he
is not in a position to respond as to what would be the effect of the finding
recorded upholding the disentitlement of respondent No.2 to th
the claim and
then direction to the Insurance Company to settle upto Rs. 10 lakhs and
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balance to be paid by the applicant. Further, the respondent
respondent-applicant was
held liable to the extent of balance amount i.e. amount over and above
Rs.10 lakhs and on being asked
asked as to whether the differential amount has
been paid or not, he submits that the same has not been paid.
9 Counsel for respondent No.5 Insurance Company, however,
submits that it has repudiated the claim and that the same having not been
challenged, the Insurance Company is not liable to pay any amount. On the
oral arguments, the order allowing the writ petition was allowed. However,
while correcting the judgment and verifying the facts from the record
independently, it transpires that the counsel for none of the parties had
prepared the case.
10 It reveals that the application under Section 22
22-C of the Legal
Services Authorities Act, 1987,
1987, did seek for the relief referred to, however,
while dealing with the dispute, the Permanent Lok Adalat (Public Utility
Services), has relied upon the letter of repudiation dated 20.06.2014 and
also set aside the same.
11 Further, the award was never passed against the Bank so far as
its entitlement to recover is concerned, but the award rules against the Bank
only
y to the extent of its objection as regards maintainability of the challenge
before the Permanent Lok Adalat (Public Utility Services), in view of the
SARFAESI Act, 2002. The Permanent Lok Adalat (Public Utility Services),
held that the Bank is estopped from
om raising the objection about the
proceedings being not maintainable in view of the SARFAESI Act, 2002,
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however, no such argument was advanced by counsel for the petitioner
petitioner-
Bank.
12 More so once award nowhere rules against the entitlement of
More-so
the Bank to recover, how could it feel prejudiced. It was in the quest of
above that the real facts emerged. Surprisingly, neither the Insurance
Company nor the respondents No.2 to 4 challenged the award and accepted
the same. There was no decree against the Bank for the amount due and the
applicant failed to file any execution.
13 This Court thus decided to refrain from commenting on merits
of the respective case of the parties. It is a position in law that if certain
correct facts are revealed before the order/judg
order/judgment is signed, the same can
be duly taken note of. The relevant extract of the judgment in the matter of
Surendra Singh and others Vs. State of Uttar Pradesh, reported as (1953)
2 SCC 468 reads thus:-
thus:
"Now up to the moment the judgment is delivered
"Now delivered, the Judges
have the right to change their mind. There is a sort of locus
p
poenitentiae,
, and indeed last minute alterations often do occur.
Therefore, however, much a draft judgment may have been
signed beforehand, it is nothing but a draft till formally
delivered as the judgment of the court. Only then does it
delivered
crystallise into a full-fledged
full fledged judgment and become operative.
It follows that the Judge who "delivers" the judgment, or
causes it to be delivered by a brother Judge, must be in
existence as a member of
of the court at the moment of delivery so
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that he can, if necessary, stop delivery and say that he has
changed his mind. There is no need for him to be physically
present in court but he must be in existence as a member of the
court and be in a position to stop delivery and effect an
alteration should there be any last minute change of mind on
his part. If he hands in a draft and signs it and indicates that he
intends that to be the final expository of his views it can be
assumed that those are still his vie
views at the moment of delivery
if he is alive and in a position to change his mind but takes no
steps to arrest delivery. But one cannot assume that he would
not have changed his mind if he is no longer in a position to do
so. A Judge's responsibility is hea
heavy and when a man's life and
liberty hang upon his decision nothing can be left to chance or
doubt or conjecture; also, a question of public policy is
involved. As we have indicated, it is frequently the practice to
send a draft, sometimes a signed draft, to a brother Judge who
also heard the case. This may be merely for his information, or
for consideration and criticism. The mere signing of the draft
does not necessarily indicate a closed mind. We feel it would
be against public policy to leave the door oopen for an
investigation whether a draft sent by a Judge was in
intended to
embody his final and unalterable opinion or was only intended
to be a tentative draft sent with an unwritten understanding
that he is free to change his mind should fresh light dawn uupon
him before the delivery of judgment."
14 It is hence decided that the question of merit need not be gone
into. The Hon'ble Supreme Court in the matter of Canara Bank Versus
G.S. Jayarama,
Jayarama (2022) 7 Supreme Court Cases 776
776, has held that the
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procedure prescribed under Sections 22-C
C (4) to 22
22-C (7) of the Legal
Services Authorities Act, 1987,
1987 is mandatory and that in the absence thereof
adjudication under Section 22-C (8) of the Act
Act, cannot be done.
15 Undisputedly, there is no reference to an
any efforts made for
settlement or any terms of settlement having been reduced to writing.
15 The present writ petition is accordingly allowed as the
mandatory statutory procedure prescribed under Sections 22
22-C (4) to 22-C
(7) of the Legal Services Authorities
Authorities Act, 1987
1987, has not been followed. The
order dated 26.08.2015 (Annexure P-10)
P 10) is set aside and the matter is
remanded back to the Permanent Lok Adalat (Public Utility Services),
Narnaul, for a fresh determination as per law and on following the
procedure.
16 Let the parties appear before the Permanent Lok Adalat (Public
Utility Services), Narnaul, on 15.10.2024 for further proceedings.
September 04,
04 2024 (VINOD
VINOD S. BHARDWA
BHARDWAJ)
raj arora JUDGE
Whether speaking/reasoned : Yes/No
Whether reportable : Yes/No
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