DHULE AND NANDURBAR DISTRICT CENTRAL CO OP BANK LTD vs Shirpur Shetkari Sahakari Sakhar Karkhana Ltd on 19 February 2019

JUDGMENT

1. The present Misc. Application is taken out by the applicant seeking direction to defendant karkhana through its Office bearers to accept the peaceful possession back from the applicant bank of the secured assets stated in the demand notice, of which the possession was taken on 06th October, 2012 under sub-section (4) of section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, “The 2002 Act”). The factual matrix of the case is as under:

2. It is the case of the applicant that defendant karkhana had filed application under section 17 of the 2002 Act by filing Securitisation Application No.37/2013. It is stated that on 20th January, 2014 Securitisation Application No.37/2013 was disposed of. By the present Misc. Application, the applicant as secured creditor intends to hand back the physical possession of the secured assets through its Authorised Officer to defendant karkhana. It is stated that the applicant as secured creditor had preferred Appeal No.61/2014 before the Hon’ble DRAT, Mumbai, challenging the order passed in Securitisation Application No.37/2013. It is further stated that on 01st August, 2017 Appeal filed by the applicant as secured creditor was dismissed by the Hon’ble DRAT, Mumbai.

3. It is stated that pending appeal, on 29th April, 2017 the applicant addressed letter to defendant karkhana informing them that it intends to hand back the possession to defendant karkhana on 11th May, 2017 and requested them to remain present.

4. On 11th May, 2017 defendant karkhana informed the applicant that its members have held a meeting on 10th May, 2017 and have unanimously decided that they would take legal advice from their legal advisors and will inform the applicant accordingly.

5. Thereafter, the applicant vide its letters dated 01st June, 2017, 18th July, 2017 and 28th July, 2017 made enquiries with defendant karkhana with regard to the legal advice for taking back the possession of the secured assets.

6. On 10th August, 2017 the applicant once again addressed letter to defendant karkhana through its Chairman thereby intimating them that the Appeal filed by it before the Hon’ble DRAT, Mumbai, has been dismissed and therefore, the order passed in Securitisation Application No.37/2013

holds good. The applicant therefore, requested them to take back the possession of the movable and immovable assets.

7. On 29th August, 2017 the applicant addressed letter to defendant karkhana with regard to the expenses incurred by it for safeguarding the assets of defendant karkhana between the period from 2012 to 2017 which amounts to Rs.65.74 lakhs.

8. The applicant informed defendant karkhana that it intends to hand back the possession to defendant karkhana on 11th September, 2017 and requested them to remain present.

9. It is stated that instead of taking back the possession, defendant karkhana refused to take back the possession on some false grounds. Therefore, on 13th October, 2017 the applicant addressed one more letter to the members of Board of Directors of defendant karkhana thereby requesting to take back the physical possession on 13th November, 2017.

10. Defendant karkhana responded that it is ready to take back the possession of the secured assets. Defendant karkhana placed on record that the encumbrances noted by the Provident Fund Department be removed from the encumbrances. Therefore, unless the encumbrances by way of attachment of the Provident Fund Department is not removed, defendant karkhana cannot take back the possession of the assets from the applicant bank.

11. The applicant therefore, states that defendant karkhana has refused to take back the possession of the secured assets.

12. The mutation entry no.5092 made by the Provident Fund Department in the 7/12 extract is recorded by it. Defendant karkhana has challenged the attachment made by the Provident Fund Department by preferring an Appeal bearing ATA No.203(9) of 2017 and is pending before the Employees Provident Fund Appellate Tribunal at New Delhi. Therefore, there cannot be any impediment for defendant karkhana to take back the possession of the secured assets from the applicant bank. The applicant karkhana therefore, seeks direction to defendant karkhana to accept the peaceful possession of the secured assets.

13. Misc. Application is opposed by defendant karkhana by filing their reply (Exhibit-31). It is stated that 12th June, 2012 the applicant bank issued demand notice under sub-section

(2) of section 13 of the 2002 Act. On 06th December, 2012 without following the due process of law, the applicant bank

forcibly took physical possession of the secured assets without filing application under section 14 of the 2002 Act. On 21st November, defendant karkhana filed application under section 17 being Securitisation Application No.37/2013. On 20th January, 2014 Securitisation Application No.37/2013 was allowed. On 14th March, 2014 the applicant bank preferred Appeal being Appeal No.61/2014 before the Hon’ble DRAT, Mumbai, against the order dated 20th January, passed in Securitisation Application No.37/2013. In 2016, the Managing Committee of defendant karkhana underwent composition changes. On 29th April, 2017 the applicant bank held the meeting of its Board members. On 29th April, 2017 the applicant addressed letter to defendant karkhana that they are ready and willing to restore the possession during pendency of the Appeal before the Hon’ble DRAT. Defendant karkhana pointed out that on one hand, the applicant bank had preferred appeal and on the other hand they want to restore the possession by handing it back to defendant karkhana. On 11th May, 2017 defendant karkhana replied to the applicant bank stating that they are seeking legal advise with regard to accepting the possession back in view of pendency of the appeal before the

Hon’ble DRAT. On 01st August, 2017 Appeal No.61/2014 filed by the applicant was dismissed for non-compliance of the orders of the Hon’ble DRAT. It is stated that the order dated 20th January, 2014 was not stayed by the Hon’ble DRAT. On 29th August, 2017 the applicant bank once again addressed letter to defendant karkhana that it intends to hand back the possession to defendant karkhana on 11th September, 2017 and requested the Board of Directors and Officers to remain present on that day at factory site. On 13th October, 2017 the applicant addressed similar letter to defendant karkhana intimating it to take back physical possession of the movables and immovables from the applicant bank on or before 13th November, 2017.

14. This was the official call to take back the possession. It is stated that defendant karkhana asked for the copy of panchanama and inventory for taking back the physical possession. It is stated that during the period of illegal possession of the secured assets by the applicant bank, the Provident Fund Authority notified its charge upto Rs.32.50 crore. The applicant did not raise any objection to the action of the Provident Fund Authority. On 11th November, 2017 defendant karkhana replied to the letter dated 13th October,

2017 informing that defendant karkhana is ready to take back the possession in the same position and condition, of which the physical possession was forcibly taken by the applicant. The present Misc. Application filed by the applicant against defendant karkhana for taking back possession is filed at very belated stage, i.e. for almost four years from the date of order of this Tribunal. Defendant karkhana could not encash the opportunity of almost six crushing seasons. Misc. Application filed by the applicant bank is beyond limitation. The applicant bank has not pointed out that under what provision of law, this Misc. Application is filed. No explanation for delay is explained. The disobedience of the order dated 20th January, 2014 is also not explained. The averments with regard to the order dated 20th January, 2014 discussed in the meeting held on 29th April, 2017 with regard to the disobedience is totally misconceived. It is stated that the applicant bank preferred Appeal against the order dated 20th January, 2014 and on the other hand decided to obey the order dated 20th January, 2014. Defendant karkhana seeks the physical possession back based on the panchanama and inventory and list of movables and immovables made while taking over the physical possession. The applicant bank has avoided to produce the panchanama and inventory list in this Misc. Application. The restoration of the possession cannot be random. It is stated that on 06th December, 2012 the applicant bank took the physical possession of the secured assets which was free from all encumbrances. But, during the period of its illegal possession, the Provident Fund Department has mutated its charge over the property, which the applicant did not resist. It amounts to be dereliction and negligence on the part of the applicant bank. Defendant karkhana seeks the appointment of DRT Receiver/ Commissioner/Technical Expert for restoration of the possession of movable as well as immovable assets of defendant karkhana. The applicant bank has failed to produce the copies of the possession notice and the panchanama made at the time taking possession. These documents were required to be placed by the applicant bank for deciding the present Misc. Application. Therefore, DRT Receiver/Commissioner/Technical Expert is required to be appointed for the purchase of handing back the possession of the secured assets by the applicant bank to defendant karkhana. The Commissioner/Receiver would be in a position to ascertain the value of the machinery which is in the possession of the applicant bank since last six years. The Commissioner/Receiver would be in a better position to restore back the possession to defendant karkhana. Defendant karkhana apprehends that the machinery and goods taken into the possession by the applicant bank by now would have been rusted and would be in a dilapidated condition. The applicant bank is solely responsible for the damages caused to the assets of defendant karkhana as the applicant bank continued its illegal possession despite orders of this Tribunal. Defendant karkhana seeks the appointment of the DRT Receiver/Commissioner/Technical Expert for handing back the possession. Defendant karkhana also seeks direction against the DRT Receiver/Commissioner/ Technical Expert to submit their report regarding the usability of the machineries alongwith the market value. Defendant karkhana seeks direction to the applicant bank to place on record the panchanama and inventory list prepared at the time of taking physical possession. Defendant karkhana also seeks direction to the applicant bank to place on record the minutes of the meeting dated 29th April, 2017.

15. I have before me this Misc. Application filed by the applicant bank as secured creditor seeking direction to defendant karkhana to accept the peaceful possession back from it. On 20th January, 2014 the order was passed in Securitisation Application No.37/2013 allowing the application made by defendant karkhana. By this order, the action of the secured creditor i.e. applicant bank, was quashed and set aside. No order with regard to the cost and compensation was awarded. Against the order dated 20th January, 2014 the applicant as secured creditor preferred Appeal bearing No.61/2014 on 14th March, 2014. During pendency of the Appeal, the applicant bank addressed letter on 29th April, 2017 to defendant karkhana informing that it intends to hand back the possession to defendant karkhana on 11th May, 2017 at 11.00 AM. The applicant bank recorded that the possession will be handed over and against handing over of the possession, it requested defendant karkhana to issue the possession receipt. It appears that defendant karkhana had held a meeting whereby it was resolved that they will abide by the legal advise offered by their legal advisor with regard to taking back of the possession of the secured assets. Since no communication was received from defendant karkhana, the applicant bank once again addressed letter to defendant karkhana on 01st June, 2017 requesting them to convey the decision of the legal advisors so that the applicant bank could complete the process of handing back the possession to defendant karkhana. Despite letter dated 01st June, 2017 defendant karkhana did not respond with regard to the legal advise obtained by it. Therefore, on 18th July, 2017 the applicant bank once again addressed letter to defendant karkhana requesting them to convey the decision of the legal advisors so that the applicant bank can immediately complete the process of handing back the possession to defendant karkhana. Since no response was given by defendant karkhana, the applicant bank once again addressed letter to defendant karkhana on 28th July, 2017 placing on record that it does not convey its decision of the legal advisors.

16. Even the letter dated 28th July, 2017 was not responded by defendant karkhana. The applicant bank thereafter, addressed letter on 10th August, 2017 requesting defendant karkhana to convey to the applicant bank the date of handing back the possession so that the applicant bank can hand back the possession of the secured assets to defendant karkhana. Even letter dated 10th August, 2017 was not responded by defendant karkhana. On 29th August, 2017 the applicant bank once again addressed letter to defendant karkhana for handing back the possession on 11th September, 2017. The applicant bank requested the Board of Directors and Officers of defendant karkhana to remain present at site for taking back the possession of the movable and immovable assets without fail.

17. On 13th October, 2017 the applicant bank addressed letter to Shri Madhavrao Anandrao Patil and 18 others giving them final intimation to take back the possession of the movable and immovable properties. By the said letter, the applicant bank placed on record that the order passed by this Tribunal on 20th January, in Securitisation Application No.37/2013 has attained the finality. The applicant bank therefore, is required to hand back the possession to defendant karkhana. The applicant bank reproduced the operative part of the order.

18. The applicant bank has further recorded that defendant karkhana refused to take back the possession pursuant to the notice dated 29th August, 2017. It is recorded that the managing committee of defendant karkhana refused to take

back the possession on the ground that the issue of provident fund be resolved, which according to the applicant bank as secured creditor, is not concerned with it. The applicant bank further stated that if defendant karkhana fails to take back the possession, it will invoke the inherent powers of the Tribunal under sub-section (25) of section 19 of the Recovery of Debts and Bankruptcy Act, 1993 to give effect to the orders and to prevent the abuse of the process of the said Tribunal.

19. On 11th November, 2017 defendant karkhana addressed letter to the applicant bank stating that its action was held void ab-initio and illegal by this Tribunal. Defendant karkhana recorded that there was no encumbrances at the time of taking possession and therefore, requested the applicant bank to make the property free from encumbrances and attachment of the Provident Fund Department and thereafter handover the possession to it.

20. In the order sheet dated 19th February, 2019 recorded separately stated that Mr. M M Avhad, the learned counsel for defendants has misbehaved and was speaking over me when I intended to put a question to him with regard to placing of the proceedings before me so as to seek assistance from it. Be that as it may, Mr. Avhad argued to the top of his voice and shown no respect to this Tribunal. According to Mr. Avhad, this Tribunal cannot put any question to the counsel arguing the case. Mr. Avhad made reckless allegations in this regard. Intention of this Tribunal was to do justice between the parties, but Mr. Avhad prevented this Tribunal from doing so by raising his voice and speaking over me. Despite misbehavior by Mr. Avhad, this Tribunal gave him opportunity to argue the case based on the case of defendant karkhana and the material on record. However, Mr. Avhad declined to argue. Therefore, based on the facts before me and the material placed before me, I proceeded to pass the order.

21. It is pertinent to note that Securitisation Application No.37/2013 was disposed of on 20th January, 2014. The Operative part of the Order does not reflect what has to be done with regard to the handing back the physical possession. It was in this context that I put the question to Mr. Avhad with regard to placing of Securitisation Application No.37/2013. Instead of co-operating this Tribunal, Mr. Avhad started arguing to the top of his voice and speaking over me and not allowing me to put the question to him or to complete my question.

22. However, the applicant bank as secured creditor has shown its readiness and willingness to hand back the possession of the secured assets. The communications placed on record by the applicant bank clearly reveals that defendant karkhana has avoided to take back the possession of the secured assets. From the communications, it also reveals that defendant karkhana has imposed the conditions with regard to removal of encumbrances and attachment of the Employees Provident Fund.

23. In paragraph no.5.11 of this Misc. Application, the applicant bank has made the averment that defendant karkhana has disputed the liability of the Provident Fund Department and has therefore, preferred Appeal bearing ATA No.203(9) of 2017 which is pending before the Employees Provident Fund Appellate Tribunal at New Delhi. Be that as it may, in the affidavit in reply filed by defendant karkhana, it is stated that the attachment by the Provident Fund Department and the mutation of its charge over the property is the net result of the dereliction and negligence on the part of the applicant bank. It is pertinent to note that the applicant bank has shown the readiness and willingness to hand back the possession. Defendant karkhana is fighting its litigation with the Provident Fund Department before the appropriate forum. As aforesaid, defendant karkhana has already preferred Appeal which is pending. It is not the case of defendant karkhana that the Provident Fund Department has made the attachment because of the fault of the applicant bank. From the case made in the proceedings by both parties, it appears that the Employees Provident Fund has attached the property of defendant karkhana which was already under attachment of the applicant bank. The issue of the Employees Provident Fund is not before me nor am I competent to deal with the issue which is beyond jurisdiction of this Tribunal.

24. The dispute with regard to the attachment made by the Employees Provident Fund Department on the secured assets has to be dealt with by defendant karkhana in appropriate proceedings before the appropriate forum.

25. It is also pertinent to note that defendant karkhana intends to appoint the DRT Receiver/Commissioner/Technical Expert for taking back the physical possession of the secured assets from the applicant bank. As far as this Misc. Application is concerned, the applicant bank has made only one prayer i.e. prayer clause 6(B) with regard to seeking direction against defendant karkhana to accept the peaceful possession back from the applicant bank. I am required to pass the order in this Misc. Application, in which I do not find the prayer for appointment of DRT Receiver/Commissioner/Technical Expert. Here, I would like to take the assistance of the law laid down by the Hon’ble Supreme Court in the case of Standard Chartered Bank V/s Dharminder Bhohi and others, reported in (2013)15 SCC 341. In this case, it is held by the Hon’ble Supreme Court that the Tribunal cannot travel beyond the scope of the pleadings/prayers. In the present case, the applicant bank has not made any such prayers in this regard. Be that as it may, the physical possession of the secured assets was taken by the Authorised Officer of the applicant bank and he is duty bound to restore it to defendant karkhana under the provisions of the 2002 Act.

26. It is, therefore, necessary that the Authorised Officer of the applicant to hand back the possession of the immovable and movable properties by making panchanama and inventory at site in presence of the representatives and panchas of both side parties. Now, Mr. Avhad, the learned counsel for defendants has suggested that the Chairman of defendant karkhana will remain present on 28th February, 2019 at 11.00

AM at factory site. Mr. Avhad submits that the defendant karkhana be permitted to take video recording while taking possession of the secured assets by it from the applicant bank. Mr. Deshpande, the learned counsel for the applicant bank has no objection in this regard. Both the parties to have their two independent panchas to record the proceedings. In view of the above, it is necessary to give directions to the applicant bank and defendant karkhana so as to resolve the issue with regard to handing back the possession of the secured assets.

27. In view of the observations made hereinabove, this Misc. Application filed by the applicant bank is required to be disposed of accordingly. Hence, I pass the following order:-

ORDER

1. Misc. Application No.12/2018 stands disposed of with no order as to cost.

2. The applicant bank is directed to hand back the possession of the secured assets to defendant bank on 28th February, 2019 at 11.00 AM.

3. The Chairman of defendant karkhana shall remain present at the site on 28th February, 2019 at 11.00 AM and shall take back the possession.

4. Simultaneously, both the parties are directed to make panchanama and inventory list of the secured assets in presence of two independent panchas of each side with video recording to be made by both the parties.

5. Mr. Avhad left the Court Hall without tendering apology before this Tribunal.

(Deepak M Thakkar) I/c Presiding Officer, Debts Recovery Tribunal, Aurangabad.