M/s Aceagro Biosciences Ltd. vs STATE BANK OF INDIA on 25 April 2024

JUDGEMENT

(Delivered on 25th April, 2024)

1. At the outset, I refer parties in their original capacity for sake of convenience.

2. The facts of the case can be summarized as under: The Recovery Officer initiated recovery proceedings of RP No.174/2024 on the basis of Recovery Certificate issued in OA No.186/2013 against the present defendants. The Recovery Officer also initiated recovery proceedings in respect of Recovery Certificate issued in OA No.187/2013 against the Group Companies of defendants by name M/s. Ace Agro Bio Energy Farms Pvt. Ltd., M/s. Ace Nurseries Pvt. Ltd., and M/s. Sona Organic Farms Pvt. Ltd. The Recovery Certificates in respect of OA No.188/2013 and OA No.189/2013 are yet to be issued.

3. The Recovery Officer put the mortgaged suit properties for auction on two occasions in the year 2017 after attachment but it was not materialized. In the meanwhile, the applicant Bank in the month of September, 2017 issued offer letter of OTS to defendants and its Group Companies by quoting different amounts for

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different Recovery Proceedings. However, defendants could not take benefit of said scheme for want of necessary finances. Thereafter, upto 20th October, 2020, the applicant Bank gave letter of offer of OTS for four times on different dates for different amounts. Though, defendants deposited 5% of OTS amount, they could not pay balance amount. Therefore, OTS proposals prior to 20th October, 2020 could not be complied with by the defendants.

4. Lastly, on 20th October, 2020 the applicant Bank again issued letter of OTS to defendants for Rs.2,48,56,334/- as full and final settlement. So also, OTS was given to Group Companies of defendants on the same date for amount of Rs.16,61,603/-, Rs.58,68,652/- and Rs.28,35,450/-, respectively.

5. The applicant bank by letter dated 7th November, 2020 informed defendants and their Group Companies that it would release all mortgaged properties from the charge if it receives entire amount of OTS and also grant incentive of 15% if entire amount is paid within one month i.e. upto 9th December, 2020. The applicant bank by letter dated 9th November, 2020 granted period for payment of OTS

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amount upto 8th July, 2021.

6. The defendants and their Group Companies immediately deposited 5% of OTS amount and for remaining amount they purchased Demand Drafts and within a month from offer of OTS they offered Demand Drafts to applicant bank to grant incentive of 15%. However, applicant bank refused to accept the Demand Drafts on the pretext that since Recovery Officer of DRT has put mortgaged properties for sale which was fixed on 8th December, 2020, it cannot accept the amount of OTS.

7. The applicant bank by letter dated 3rd December, 2020 withdrew OTS benefit by stating that same was given by mistake. Therefore, defendants issued Legal Notice to which evasive reply is given by the bank. The scheme of OTS excludes cases admitted before NCLT and the cases under liquidation from the benefit of the scheme. However, there is no reference of cases of recovery proceedings. Hence, reasons given by applicant bank is not tenable.

8. On 4th December, 2020 defendants filed Writ Petition in High Court challenging action of applicant bank rejecting

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benefit of OTS to the defendants, of which hearing was fixed on 8th December, 2020. On 8th December, 2020 though Hon’ble High Court directed to re-schedule date of sale and fixed it on 14th January, 2020, the sale of mortgaged suit properties was conducted and confirmed before matter was called out before Hon’ble High Court on that date i.e. on 8th December, 2020. Thereafter, the Auction Purchaser was directed to deposit 75% of bid amount by 28th December, 2020. The Order dated 8th December, 2020 of Hon’ble High Court was brought to the notice of Recovery Officer by the applicant bank. Therefore, the alleged sale conducted on 8th December, 2020 and further proceedings conducted on 23rd December, 2020 are totally illegal. Anyhow, the applicant bank made statement before Hon’ble High Court that Sale Certificate shall not be issued to the Auction Purchaser. On 6th May, 2022 the Hon’ble High Court disposed the said Writ Petition with direction to defendants to approach DRT which was challenged by them by filing Special Leave Petition before the Hon’ble Apex Court on 17th May, 2022, which has been dismissed.

9. Therefore, defendants filed this application and claimed

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following reliefs:

(a) That the applicant bank may kindly be directed to accept an amount of Rs.2,81,75,733/- from the defendants in full and final settlement of all their dues in accordance with the benefit of OTS granted by the applicant bank to the defendants in accordance with their letters dated 09.11.2020 and that the applicant bank may kindly be further directed to release its charge over all the properties mortgaged in favour of the applicant bank.

(b) That it may kindly be declared that the contract of OTS between the parties is a concluded contract and that both the parties i.e. the applicant bank and the defendants are under obligation to discharge their part of obligations accordingly.

(c) That the letters of the applicant bank dated 03.12.2020 rejecting the benefit of OTS granted to the defendants may kindly be declared as null and void and may kindly be quashed and set aside.

10. The applicant bank by filing Reply (Exhibit-6) resisted the application. It is contended that OTS offer given to

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defendants was withdrawn vide letter dated 30th December, 2020 in view of RBI circular which states that OTS can be given only, where the cases are pending before the DRT, BIFR, subject to the Consent Decree being obtained from the Courts/DRTs/BIFR. Further, OTS offer was given due to mistake. The application is barred by limitation. Hence, the application may be dismissed.

11. The following points arise for my determination and I record my findings thereon as under:

Whether defendants are entitled for reliefs claimed in prayer clause of this application?

What order?

Findings:

1. Point No.1 – In the negative.

2. Point No.2 – As per final order.

Reasons

12. The learned Advocates for both the parties submitted Written Notes of Arguments (Exibit-7) and (Exhibit-8) respectively in which they reiterated facts mentioned in the application and reply. They also made same oral arguments.

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As to Point Nos.1 and 2

13. Prime allegation of the defendants is that the applicant bank offered OTS several times and lastly in the year 2020 offered OTS of Rs.2,81,75,733/- during pendency of recovery proceedings. When the defendants were ready to pay the OTS amount and went to applicant bank for handing over Demand Drafts of the OTS amount, it refused to accept on the ground that OTS offers were given by mistake and the sale of mortgaged suit properties was going to take place on 8th December, 2020 through Recovery Officer of this DRT. Therefore, direction may be given to accept an amount of Rs.2,81,75,733/- from defendants in full and final settlement of all their dues in accordance with the benefit of OTS granted by the applicant bank through their letter dated 9th November, 2020 and also direct applicant bank to release charge over mortgaged suit properties. At this juncture, it is to be noted that DRT has no jurisdiction to give such direction to the bank, particularly, to accept OTS of borrower. Same view has been taken by Hon’ble Supreme Court in trail of cases.

14. As per Circular of Reserve Bank of India dated 29th January,

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2003, compromise can be taken only in cases pending before Court/DRTs/BIFR. The same view has been taken by Hon’ble Bombay High Court in the matter of Chemosyn Ltd., Vs. Union Bank of India [I (2005) BC 77] and by Hon’ble Delhi High Court in the matter of M/s. Mono Caps (India) Vs. State Bank of India and others [CW.No.5137/2002 decided on 30th April, 2004]

15. Admittedly, in the present case, compromise through OTS offer was not made by the applicant bank to defendants during pendency of Original Application. Per contra, whatever OTS offers given were during pendency of recovery proceedings and it is not applicable as per above referred RBI Circular dated 29th January, 2003. Therefore, defendants are not entitled for reliefs as claimed. It should not be ignored that applicant bank though having knowledge of RBI Circular dated 29th January, 2003, had given OTS offers not at one time but at several times during pendency of recovery proceedings. According to applicant bank OTS offers were given by mistake. In the circumstances, I am of opinion that the applicant bank has committed blunder mistake not at one time but several

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times. Therefore, costs is required to be imposed upon it. In view of above observations, I answer these points accordingly. Hence, I pass the following order:

ORDER

A. Miscellaneous Application No.17/2023 filed by defendants is hereby dismissed with costs.

B. The applicant bank shall deposit cost of Rs.1,00,000/- (Rupees One Lakh only) to Prime Minister’s National Relief Fund within two weeks from the date of this order.

Pronounced in open Court.

Place : Pune Date: 25.04.2024 Sd/- (Dilip G. Murumkar) Presiding Officer Debts Recovery Tribunal, Pune