IFCI Ltd vs MS SILICONES INDUSTRIES on 28 January 2019

FINAL ORDER

(28.01.2019) Present:

1. This appeal has been filed under Section 30(1) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993

NR (hereinafter referred to as ‘RDDB&FI Act’), by the appellant bank on 23.03.2016 against the order dated 02.02.2016 of the Ld. Recovery Officer, DRT-I, in RC no. 82 of 2009, praying the setting aside of the said order, whereby the Ld. Recovery Officer has directed to the CH FI “to provide the records of the OTS entered into with CD No. 3, to the satisfaction of the Ld. RO failing which it shall be deemed that the CH FI in not willing to pursue the recovery proceeding in a rightful manner and the recovery proceedings shall be adjourned sine-die.

2. Brief facts as stated in the present appeal is that the present appeal is filed by Smt. Pooja Tiku, Deputy General Manager (Law) of the appellant FI, who has been authorized by resolution dated 17.04.2012 against the order dated 02.02.2016 of the Ld. Recovery Officer in R. C. No. 89 of 2009. Defendant No. 1 is a limited Company constituted under the Companies Act, 1956. . It has been stated that the CH bank had filed an OA No. 21 of 2001 against the respondent nos. 1 to 4 for recovery of a sum of Rs. 66,10,72,321/-. The OA was finally allowed and an R. C. No. 82 of 2009 was issued by this Tribunal. During the pendency of the recovery proceedings, the appellant FI, on 23.08.2010, had entered into an OTS with the defendant No. 3 for a sum of Rs. 12.50 Lakhs and released her as a Guarantor, on receipt of the said amount. It is stated that it was a commercial decision taken by the appellant, through its competent Authority and the said information was placed on record in RC proceedings before the Ld. RO.

5. It is also stated that this decision of the appellant to make recovery efforts did not go well with the Ld. RO, who on 28.09.2015 directed the appellant to explain on what ground the CH FI has settled the matter and also made uncalled for observations regarding

NR the working of the applicant FI mentioning inter-alia that prima facie, there appears to be collusiveness and conspiracy by the CDs as well as CH FI to frustrate the recovery proceedings and that the appellant transgressed his authority as it was not competent to discharge any CD of its liability without seeking leave of the Ld. RO, threatening the Appellant with complaints to EOW, CBI and Ministry of Finance.

6. It is further stated that it is well settled law that no court much less the Ld. RO, can sit over the commercial judgment of the CH FI/ appellant regarding a compromise and the Ld. RO was completely out of established law in seeking explanation of reasons on what ground the CH FI has settled the matter with CD No. 3. Further, it is stated that even though, the Ld. RO was without any powers or competence, the appellant by way of filing affidavit on 15.10.2015, informed the Ld, RO that CD No. 3 has very limited financial means and as such it was to the wisdom of the competent authority of the CH FI/appellant that decision was taken accordingly.

7. It is further stated that despite producing a judgment of the Hon’ble High Court of Delhi, wherein it was held that court has no role to play in the settlement/compromise between parties, the Ld. RO has arbitrarily and in an illegal manner observed in his order dated 02.02.2016 that though the court cannot decide at what value bank/FI should settle its dues with the borrower, the RO can look into the fact whether the CH FI has applied due diligence and invoked its administrative discretion with application of mind and followed the due process of law. Hence this appeal has been filed.

8. Notices were issued to all the respondents. Despite ample opportunity provided to them, the respondents failed to file a reply and their rights to file a reply were closed by order dated 10.10.2017.

NR

9. During the hearing Ld. Counsel for the respondents has not raised any objections in the present appeal

10. A perusal of the impugned order reveals that the Ld. Recovery Officer has come to the conclusion that CH FI is not competent to discharge any of the CDs from the liability without seeking leave of this forum. Further, Ld. Recovery Officer has directed to the CH FI to explain reasons and grounds for discharge of CD No. 3 from personal guarantee in consideration of a meager amount, when huge amount of public money is involved and also he has observed that in case the CH FI fails to explain the reasons and grounds for settlement at a small figure, the matter will be brought to the notice of their CMD, EOW, CBI and the Ministry of Finance. This is the trigger for filing the present appeal.

11. Hon’ble Delhi High Court in a similar matter i.e. Satish Chander & Ors. Vs SBI & Ors. in WP ( C) No. 2588/2010 – CM No. 5167 & 5168/2010, (wherein the respondent bank there had released defendant nos. 2, 4 & 5 - guarantors of that case, for an amount of Rs. 30.0 Lakhs, as against the claim amount of Rs. 8,00,48,755.48) has held that "A perusal of the order of DRT shows that the same is practically devoid of any reason. All it states that some of the defendants in the AO would be discharged as a consequence of the settlement. If it be so, the DRT can have no objection to the same as the bank which is the claimant has agreed to the same. The bank is a dominus litis and it is for the bank to decide as to against which party it desires the litigation to continue. It is purely a contractual matter and the bank in its wisdom decided to settle the claim against the petitioners on payment of one time settlement….. … The DRAT is no one to decide as to at what value the bank should settle its dues with the borrower especially when the bank has Managers who have acted in pursuance to

NR authorization in their favour and after due consideration of the proposal of the petitioners….“

12. In view of the clear observation of the Hon’ble Delhi High Court, the Ld. Recovery Officer is hereby directed to examine the present case in view of the direction of the Hon’ble Delhi High Court in the Satish Chander & Ors. Vs SBI & Ors.(Supra) and the appellant herein is directed to produce all the relevant record before the Ld. Recovery Officer to examine the issue in right perspective and also to assist the Ld. Recovery Officer.

13. In the light of above directions, this appeal is disposed off and the matter is remanded back to the Ld. Recovery Officer to decide the issue afresh.

14. A copy of the orders be given to both the parties as per rules and file be consigned to records.

15. A copy of this order be also sent to the Recovery Officer concerned.

(Dr. Rekha G. Dhakar) Presiding Officer DRT-I Delhi (Pronounced in open court) January 28, 2019