INTERNATIONAL ASSET RECONSTRUCTION COMPANY PRIVATE LIMITED vs DURA STEAMSHIP LIMITED on 1 May 2024

FINAL ORDER

(01.05.2024)

1. By way of the present MA, the Applicant prayed to issue Recovery Certificate in favour of the Applicant and against the Defendants for Recovery of the following amounts:

a. Rs.3,03,48,511.95 (Rupees Three Crore Three Lakh Forty Eight Thousand Five Hundred Eleven and paise Ninety Five only) from Defendant No.1, 3 to 5, under term loan account as per particulars of claim (Exb.B) together with further interest @14% p.a. on the principal amount of Rs.1,02,03,079.33 with quarterly rests from the date of the suit till payment in terms of the decree dated 06.10.1994 passed by the Hon’ble High Court of Bombay in Suit No.2886/1989.

b. Rs.30,69,853.95 (Rupees Thirty Lakh Sixty Nine Thousand Eight Hundred Fifty Three and paise Ninety Five only) from Defendant No.1, 3 to 5 under the overdraft account as per particulars of claim (Exb.C) with further interest at the rate of 18.5% p.a. with quarterly rests on the principal amount of Rs.21,72,936.72 from the date of suit till payment in terms of decree dated 06.10.1994 passed by the Hon’ble High Court of Bombay in Suit No.2886 of 1989).

c. Rs.25,00,000/- (Rupees Twenty Five Lakh only) from Defendant No.2 as per particulars of claim (Exb.D) with further interest at the rate of 18% p.a. on Rs.25 lakh from the date of suit till payment in terms of the decree dated 06.10.1994 passed by the Hon’ble High Court of Bombay in Suit No.2886 of 1989; Aggregated to sum of Rs.3,59,18,365.90 (Rupees Three Crore Fifty Nine Lakh Eighteen Thousand Three Hundred Sixty Five and paise Ninety only) with interest as mentioned above.

2. Brief facts of the MA are that the Defendant No.1 is the Official Liquidator of Dura Steamship Limited (“the Company) appointed by the Hon’ble High Court. By an order dated 22.08.1988 in Company Petition No.818/1987 the Company was ordered to be wound up under the provisions of the Companies Act, 1956. Prior to its winding up the Company was carrying on business inter alia of Shipping and Transport. The Defendant No.2, 3, 4 & 5 were sued as Guarantors. The Defendant No.5 is the Company incorporated under the provisions of the Companies Act, 1956. Now the said company has been wound up pursuant to the order dated 08.04.1991 passed by the Hon’ble High Court of Kolkata and the Official Liquidator attached to the Hon’ble High Court, Kolkata has been appointed as Liquidator of the said Company.

3. It is stated that the Applicant filed a Suit No.2886/1999 before the Hon’ble High Court of Bombay for recovery of an aggregate sum of

Rs.3,34,18,365.90 with interest and cost, and also prayed that the repayment of the amount mentioned was duly secured by mortgage of vessel “M.V. Ava Minti” and mortgage of immovable properties described in Exhibit “F” and “I” to the Plaint and also prayed for various other reliefs. After filing of the suit, the writ of summons issued by Hon’ble High Court, were served upon the Defendants.

4. On 06.10.1994, the above suit called out for hearing and the Hon’ble High Court pronounced a

Judgment

against the Defendants under the provisions of order VIII Rule 10 read with Rule 5(2) of the Code of Civil Procedure, 1908 as the Defendants failed to file the written statement within time after service of the writ of summons upon them. The relevant portion of the order dated 06.10.1994 is reproduced herein below: “ORDER Decree as prayed for in terms of prayer(a), subject to further interest at the rate of 14% p.a. on the principal amount of Rs.1,02,03,079.33 with quarterly rest from the date of the suit till payment; that the plaintiff would be entitled to a decree against defendant nos.1 and 3 to 5 in terms of prayer (b) subject to further interest at the rate of 18.5% per annum with quarterly rest on the principal amount to Rs.21,72,935.72. The plaintiff would also be entitled to a decree in terms of prayer (c) with further interest at the rate of 18% per annum on Rs.25,00,000/- from the date of the suit till payment. The plaintiff would also be entitled to a declaration that the repayment of the amount is duly secured by mortgage of the vessel as prayed for in terms of prayer (d). That the plaintiffs are also entitled to a declaration that the amount mentioned in prayer (a) & (b) are duly secured by mortgage of immovable properties described in Exh. ‘F’ & ‘I’ to the plaint as prayed for in terms of prayer (f) and that in the event of defendant nos. 2, 3, and 4 failing to redeem the mortgage within six months, the properties mentioned in Exh. ‘F’ & ‘I’ be sold and the net sale proceeds be paid over to the Plaintiff in or towards the plaintiff’s claim in the suit as prayed for in terms of prayer (g). As regards prayer (b) Court Receiver who has been appointed during the pendency of the suit shall continue and is hereby empowered to act as a Court Receiver with execution with all powers under Order 40 Rule 1 including the power to sell and pay ever the net sale proceeds towards the satisfaction of the plaintiff’s claim in the suit as prayed for in terms of prayer (h). As regards prayer (e) liberty is given to the plaintiff to take out notice of motion after proceedings regarding Insurance claim in respect of vessel “M.V. Ava Minti” are decided. Liberty is given to the plaintiffs accordingly to apply in terms of prayer (e) subject to the said proceedings. Plaintiff would also be entitled to a decree in terms of prayer (k). Advocate’s fees to be quantified by the office as per rules…” (emphasis supplied)

5. It is stated by the Applicant that the Defendants are jointly and severally liable to pay to the Applicant the dues as mentioned in the present MA pursuant to the decree dated 06.10.1994. The said decree was passed by the Hon’ble High Court before the commencement of the recovery of the Debts due to Banks and Financial Institutions (Amendment) Ordinance 2000 and has yet not been executed and therefore, the Applicant herein being the decree holder has become entitled to apply to this Tribunal to pass an order for recovery of the said amount and issuance of the recovery certificate in terms of the said decree.

6. Notices were issued to the Defendants. The Defendant No.2 (a) and Defendant No.3 & 4 filed their Reply respectively.

7. In the reply filed by the Defendant No.2(a), it is stated that the Defendant No.2 (a) has not inherited any assets from the deceased Defendant No.2 therefore, she is not a proper and/or necessary party to the aforesaid proceedings.

8. In the reply filed by the Defendant No.3 & 4, it is stated that:

(i) This Tribunal has no jurisdiction to try and entertain the claim filed by the Applicant;

(ii) The Applicant has suppressed the true facts from this Tribunal.

(iii) The Applicant has already realized the substantial amount by virtue of the appointment of receiver in the suit over the immovable properties mortgaged to the Applicant however, no credit and/or particulars of the rent collected through the said Receiver has been provided in the present MA. Also, the mortgaged properties are still under the Receiver who is collecting the rents from the Tenants. In the light of these facts, unless complete disclosure is made by the Bank and/or Receiver, thus, far collected out of the mortgaged property, the said execution application should be stayed and not at all be proceeded with.

(iv) Since the Applicant Bank had taken the said merchant Vessel ‘Ava Minti’ together with its insurance policies as security by way of mortgage/assignment, therefore, this Tribunal should direct the Applicant to first recovery the said insurance amount being the insured value of the vessel form the said insurers in the said suit before seeking to recover any amount from these Defendants. The Applicant’s never obtained nor produced the requisite leave under Clause XII of the Letters Patent to ascertain the jurisdiction of the Hon’ble High Court or for that matter jurisdiction of this Tribunal. Further, this Tribunal does not have jurisdiction to try and entertain the present matter since the Defendant No.2 to 5 reside at and also carry on business at Kolkata (erstwhile known as Calcutta); and the immovable properties against which loans were alleged to have been advanced by the Bank are also located at Kolkata; the Defendant No.2 had executed the guarantee at Kolkata and the equitable mortgage was executed at Kolkata therefore, the Defendants herein submit that in the light of the aforesaid statements, this Tribunal pleased be declined any further hearing on this matter and also be pleased to order the MA to move the appropriate forum.

9. Now hereinafter, I would like to decide the issue raised by the Defendant No.2(a) and Defendant No.3 & 4 in their respective Replies.

10. The Defendant No.2(a) has raised the objection that she has not inherited any assets from the deceased Defendant No.2 therefore, she is not a proper and/or necessary party to the aforesaid proceedings.

Record reveals that the Applicant is praying relief against the Defendant No.2 for an amount of Rs.25,00,000/- (Rupees Twenty Five Lakh only) with further interest at the rate of 18% p.a. from the date of suit till payment in terms of the decree dated 06.10.1994 passed by the Hon’ble High Court of Bombay in Suit No.2886 of 1989. During the pendency of the MA, the Defendant No.2 was expired and his legal heirs were impleaded in the present matter as Defendant No.2(a) and (b). As per order of Ld. Registrar dated 11.01.2007, the Defendant No.2(b) was deleted from the present matter. Therefore, the Defendant no.2(a) is liable to pay upto the extent of estate, if any, inherited by them from the deceased Defendant No.2.

11. The Defendant No.3 & 4 has raised the first objection that this Tribunal has no jurisdiction to try and entertain the claim of the Applicant. It is stated that the Applicant never obtained nor produced the requisite leave under Clause XII of the Letters Patent to ascertain the jurisdiction of the Hon’ble High Court. Further, this Tribunal does not have jurisdiction to try and entertain the present matter since the Defendant No.2 to 5 reside at and also carry on business at Kolkata (erstwhile known as Calcutta); and the immovable properties against which loans were alleged to have been advanced by the Bank are also located at Kolkata. It is also stated that the Defendant No.2 had executed the guarantee at Kolkata and the equitable mortgage was executed at Kolkata therefore, the Defendants herein submit that in the light of the aforesaid statements, thi s Tribunal pleased be declined any further hearing on this matter and also be pleased to direct the Applicant to file the MA before the appropriate forum.

Record reveals that the Assignor Bank i.e. Bank of Baroda filed the Suit against the Defendants before the Hon’ble High Court of Bombay and the said suit was decreed in favour of the Original Applicant on 06.10.1994 in Suit No.2886 of 1989. The present MA is filed on 21.06.2005. It is also reveals from the record that the branch of the Assignor Bank was situated at Bombay Samachar Marg, Fort, Mumbai and the Applicant is claiming the jurisdiction from the Branch of the Assignor Bank from where the loan was sanctioned and the documents were executed, and the same is within the jurisdiction of this Tribunal. Even otherwise, Section 31-A of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDBFI Act, 1993) (amended as “Recovery of Debts and Bankruptcy Act, 1993”), provides that: “31-A. Power of Tribunal to issue certificate of recovery in case of decree or order.

(1) Where a decree or order was passed by any Court before the commencement of the Recovery of Debts Due to Banks and Financial Institutions (Amendment) Act, and has not yet been executed, then, the decree-holder may apply to the Tribunal to pass an order for recovery of the amount.

On receipt of an application under sub-section (1), the Tribunal may issue a certificate for recovery to a Recovery Officer.

(3) On receipt of a certificate under sub-section (2), the Recovery Officer shall proceed to recover the amount as if it was a certificate in respect of a debt recoverable under this Act.]” (emphasis provided)

Therefore, after the enactment of the RDB Act, 1993, this Tribunal has jurisdiction to try and entertain the present case. Thus, the objection raised by these Defendants is not sustainable hence, rejected.

12. The next objection raised by the Defendant No.3 & 4 is that the Applicant has suppressed the true facts from this Tribunal. It is stated that the Applicant has filed a separate suit being Suit No.1532/1999 before the Hon’ble High Court of Bombay, for the recovery of Rs.5,59,99,912.33 against the New India Assurance Company together with the interest. In the said suit the Applicant had not impleaded these Defendants herein as party and also suppressed the disclosure of the factum of the filing of the said suit from this Tribunal. It is further stated that the Applicant has already realized the substantial amount by virtue of the appointment of receiver in the suit over the immovable properties mortgaged to the Applicant however, no credit and/or particulars of the rent collected through the said Receiver has been provided in the present MA. Also, the mortgaged properties are still under the possession of Receiver who is collecting the rents from the Tenants. In the light of these facts, unless complete disclosure is made by the Bank and/or Receiver, thus, far collected out of the mortgaged property, the said execution application should be stayed and not at all be proceeded with. It is also stated that the suit No.1532/1999 is still to be decided, therefore, in the interest of justice, till the disposal of the said suit, the present MA may be suspended or stayed. I have gone through the record.

Record reveals that during the pendency of the matter, it was informed by the Applicant vide (Exb.67 of OA) that the Applicant has filed suit before the Hon’ble High Court of Bombay, bearing Commercial Summary Suit No.1532/1999 against New India Assurance and others for insurance claim, therefore, it is stated that the Applicant will give the credit of the amount, if any, recover from the insurance company. Looking to the said submission of the Applicant, the objection of the Defendant No.3 & 4 is hereby rejected.

13. The next objection raised by the Defendant No.3 & 4 is that since the Applicant Bank had taken the said merchant Vessel ‘Ava Minti’ together with its insurance policies as security by way of mortgage/assignment, therefore, this Tribunal should direct the Applicant to first recover the amount from the the said insurers in the said suit before seeking recovery of any amount from these Defendants. As already informed by the Applicant (as discussed in para 12 that) that if any, amount recovered from the insurance company in respect of the insurance claim, the Applicant will give the credit of the same to the Defendants herein. Therefore, this objection of the Defendant No.3 & 4 is baseless hence, rejected.

14. In the light of the abovesaid discussions, the present MA deserves to be allowed against the Defendants in terms of the Decree dated 06.10.1994 passed by the Hon’ble High Court of Bombay in Suit No.2886/1989.

O R D E R

(i) In terms of the decree dated 06.10.1994 passed by the Hon’ble High Court of Bombay in Suit No.2886/1989, the present MA is hereby allowed and Defendant No.1 to 5 are hereby directed to pay to the Applicant, within a period of 60 days, the following sums: a. Rs.1,02,03,079.33 (Rupees One Crore Two Lakh Three Thousand Seventy Nine and paise Thirty Three only) by the Defendant No.1, 3 to 5, under term loan account together with further interest @14% p.a. with quarterly rests from the date of the filing of the Suit No.2886/1989 till payment. b. Rs.21,72,936.72 (Rupees Twenty One Lakh Seventy Two Thousand Nine Hundred Thirty Six and paise Seventy Two only) by Defendant No.1, 3 to 5 under the overdraft account with further interest at the rate of 18.5% p.a. with quarterly rests from the date of filing of the Suit No.2886/1989 till payment. c. Rs.25,00,000/- (Rupees Twenty Five Lakh only) by Defendant No.2(a) with further interest at the rate of 18% p.a. from the date of filing of the Suti No.2886/1989 till payment. Aggregating to an amount of Rs.1,48,76,016.05 (Rupees One Crore Forty Eight Lakh Seventy Six Thousand Sixteen and paise Five only) with interest as mentioned above. (After adjusting the amount, if any, recovered after the decree dated 06.10.1994 passed by the Hon’ble High Court of Bombay)

(ii) Failing which the aforesaid amount mentioned above in para

(i) (a) and (b) shall be recovered from the sale of mortgage vessel “M.V. AVA MINTI” and mortgage of immovable properties described in Exhibit “F” and “I” to the Suit No.2886/1989.

(iii) It is made clear that the liability of legal heir of deceased Defendant No.2 i.e. Defendant No. 2 (a) is upto the extent of any estate inherited by them from the deceased Defendant No.2.

(iv) As regards to the para (g) & (h) of the MA, the Applicant is hereby directed to move an appropriate application before the Ld. Recovery Officer for discharge of Court Receiver, High Court, Bombay and appointment of DRT Receiver to sell the immovable properties described in Exhibit “F” and “I” to the Suit No.2886/1989.

(v) The Official Liquidators of Defendant No.1 and Defendant No.5 are hereby directed to file their status report before the Ld. Recovery Officer of this Tribunal.

(vi) The Applicant is hereby directed to inform the Ld. Recovery Officer regarding the outcome of the Suit No.1532/1999 for insurance claim (as discussed in para 12 of this final order).

(viii) Defendants shall also pay the cost and expenses of the OA.

(ix) Recovery Certificate be issued forthwith and be sent to the Recovery Officer of this Tribunal.

Copy of this order be sent to the parties as per rules. File be consigned to record. Place: Mumbai. (Dr. Rekha G. Dhakar) Date: 01.05.2024 Presiding Officer, DRT-1, Mumbaisc