CENTRAL BANK OF INDIA vs SUSAMMA RAJU on 3 July 2017

1. The applicant bank, a body corporate constituted under the Banking Companies (Acquisition & Transfer of Undertaking) Act 1970 with head office at Bombay and a branch among various other places at Ranni, Pathanamthitta, is represented by its Branch Manager, who is authorized to do so and to verify and sign the pleadings and to file the OA on behalf of it.

2. The defendant approached the applicant for a term loan of Rs.15,00,0000/-. The applicant bank after considering her repayment capacity sanctioned the Term Loan of Rs.15,00,000/- on 05.12.2006. The term loan was secured by the equitable mortgage of immoveable property having an extent of 88.97 Ares of land in Sy.No.443/2-1, & 459/6 and 56.66 Ares of land in Sy.No.444/5-1 of Chittar-Seethathodu Village and the defendant created a valid equitable mortgage by deposit of title deeds. The repayment of loan has been further guaranteed by guarantors and there were immovable properties which were given collateral security.

3. The defendants were not regular in repayment of monthly installment, at the request of the defendant the loan was rescheduled on 25.03.2009 with a holiday period of one year to repay the loan account in 72 equated monthly installments of Rs.39,000/- each starting from 01.03.2010. Inspite of rescheduling the account, the defendant failed to make the repayments and the account become irregular and bank has classified the account as NPA. Applicant has issued notice to the defendant and guarantors demanding the repayment of the amount with accrued interest.

4. Thereafter applicant filed PLP.156/2012 before the Lok Adalath organised by Pathanamthitta District Legal Services Authority for recovery of a sum of Rs.18,88,759/- together with interest at the rate specified therein as per annum with monthly rest. When the matter was taken upon before the Lok Adalath on 10.07.2012 the defendant agreed to settle the entire liability for Rs.18,88,000/- in two instalments, an amount of Rs.5 lakhs on or before 30.09.2012 and balance amount of Rs.13,88,000/- to be remitted on or before 28.02.2013. An award was drawn on the said stipulations and in case of default to comply with the condition stipulated in the award passed by the Lok Adalath the applicant bank is entitled to realize the entire balance loan amount together with interest as per the terms of the loan.

5. According to the applicant bank, the defendants did not repay the amount as per the terms of the Award and as per the statement of account there is an amount of Rs.24,69,504 is due to the applicant from the defendant as on 31.08.2014. Therefore applicant bank has filed present OA for issuance of Recovery Certificate for recovery of the said amount of Rs.24,69,504/- with future interest @13.5% per annum with monthly rest from 01.09.2014 on Rs.23,85,385/- from the defendant till the date of payment and full costs of the proceedings.

6. The defendant was duly served with summons and she has entered appearance through counsel and filed written statement inter alia contending that she availed a loan from the applicant for Rs.15 lakhs for purchase of agricultural land and the interest charged is exorbitant, huge and inflated and the applicant has no authority to capitalize penal interest. It is the further contended that the property covered by transaction is purely agricultural land and outside the purview of the process of this Tribunal. The land area is included in the Ecological Fragile Land and without the concurrence of the Department of the Forest and Wildlife this Tribunal cannot proceed against the property in question. On these contentions, the defendant prayed for dismissal of the OA.

7. The contention of the defendant is not sustainable as she herself was present before the Lok Adalat and on consent that an award was awarded. Having failed to adhere to the terms of the award the respondent cannot now take contentions with regard to the interest and property being an agricultural land. Hence the contention raised in the objections deserves to be dismissed.

8. The decision of the Hon'ble High Court of Kerala in Glenny v. The Catholic Syrian Bank Ltd. [reported in 2003 (2) KLT 973 (F.B.)] would show that once the amount of debt due under a decree passed by a court (in this case, the Award of the Lok Adalath) exceeds Rs.10 lakhs, such a decree has to be treated as a deemed decree passed by the Tribunal. Therefore, in view of S.19(22) r/w Ss.1(4), 17(1) and 18 of the Act, jurisdiction of civil court to execute the decree is barred and it is the Tribunal which alone has jurisdiction to recover the amount due thereunder and, the Tribunal, therefore, has to issue Recovery Certificate for recovery of the amount due under the decree.

9. While the position being so, incidentally it is worth considering another aspect with regard to the date of decree/Award. Though S.31A incorporated by way of amendment made to the Act as per Act 1 of 2000, which came into force on 17.01.2000, deals with issuance of Recovery Certificate in respect of decrees for recovery of debt passed by any court prior to the commencement of Act 1 of 2000 and which remained unexecuted, I am of the view that S.31A r/w Ss.1(4), 17(1) and 18 of the Act bars jurisdiction of civil court to recover the amount of Rs.10 lakhs and above due to a bank or a financial institution or a consortium of banks or financial institutions under a decree passed by any court subsequent to the commencement of Act 1 of 2000, and this by necessary implication empowers the Tribunal to issue Recovery Certificate for recovery of amount due under such a decree also (i.e., the decree passed on or after 17.01.2000). Any other interpretation will make S.31A of the Act redundant and a decree holder bank, which obtained a decree subsequent to the commencement of Act 1 of 2000 for recovery of amount in excess of Rs.10 lakhs, would be unable to approach for recovery of such amount either before the Tribunal or the civil court in view of the bar under Ss.17(1) and 18 r/w S.1(4) of the Act.

10. Thus, in view of the above, the applicant bank is entitled to get a final order directing to issue Recovery Certificate on the following lines:- “In the result, it is ordered to issue Recovery Certificate in terms of the Award dated 10.07.2012 in Lok Adalath Case No.85/2012 in PLP No.156/2012 of the Lok Adalath organised by Pathanamthitta District Legal Services Authority for recovery and payment to the applicant bank, the sum of 24,69,504/- (Rupees twenty four lakhs sixty nine thousand five hundred four only) with future interest on the sum of Rs.23,85,385/- (Rupees twenty three lakhs eighty five thousand three hundred and eight five only) @ 13.5% per annum from 01.09.2014 to till realisation and also the costs of the applicant bank in this proceedings from the defendant and by sale of „A‟ & „B‟ schedule properties.”

11. „A‟ & „B‟ schedules to the OA shall be appended to this order.

12. Communicate copy of this order to both parties as provided in R.16 r/w R.2(c) of the Debts Recovery Tribunal (Procedure) Rules, 1993. (Dictated to my PA directly on the computer, corrected and pronounced by me in the open Tribunal on this the 3rd day of July, 2017)

(S.V.GOWRAMMA) PRESIDING OFFICER

IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

Dated this the 3rd day of July, 2017

Present: S.V.Gowramma, B.A., LL.B Presiding Officer

Between

Central Bank of India, represented by its Branch Manager

…Applicant

And Susamma Raju

...Defendant

FINAL ORDER