SRI. MALLESH GOUDA vs CANARA BANK on 10 January 2025

**IN THE DEBTS RECOVERY TRIBUNAL II, KARNATAKA AT BENGALURU**

Dated this the 10th day of January 2025

**Present: SRI IMTIAZ ALI Presiding Officer (I/c)**

**RA No.5/2024**

BETWEEN

Sri Mallesh Gouda, S/o. Sri Doddana Gouda, #187, Basapur Village, Sindhanur Taluk, Raichur District 584 124.

... APPLICANT

AND

Canara Bank, Sindhanur Branch, Sindhanur Taluk, Raichur District 584 128.

... RESPONDENT

Counsels on record/appeared for:

Applicant	:	Sri Puttaraju
Respondent	:	M/s.M & R Consult
		.....

**ORDER ON RA**

The present Review Application has been filed under Section 22(2)(e) of the Recovery of Debts and Bankruptcy Act 1993 to review the final order dated 30.09.2024 passed in OA 1702/2020 insofar as it relates to the applicant, and consequently to dismiss A

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the OA 1702/2020 against the Applicant/Defendant No.1 and Schedule C property to the OA.

2. The Final Order in OA No.1702/2020 was passed on 30.09.2024 and allowed the applicant bank to recover the amount as decreed thereunder from the Defendants jointly and severally.

Brief facts of the case:

3. The applicant in the RA submitted that OA No.1702/2020 was filed against the Applicant herein and three others, seeking recovery of a sum of Rs.13,15,606/- (*wrongly mentioned as Rs.35,16,606/- by Applicant in the RA*) along with interest etc. The Defendant No.1 is the borrower, Defendant No.2 is the Proprietor of M/s. Sadhu Warehouse engaged in the business of safe-keeping of agricultural produce of farmers on trusts, by issuing warehouse receipts, who has also availed Exposure Limit from the Respondent Bank, for the purpose of guaranteeing repayment of loan availed by Defendant No.1. Defendants 1 to 4 are mortgagors of properties as collateral to the exposure limit sanctioned to Defendant No.2.

4. Further, the Defendant No.1 herein had mortgaged Schedule C property for the overall exposure limit of Defendant No.2 and 3RA 5/2024

has also availed produce loan of Rs.25,00,000/- (Rupees twenty five lakh only) by pledging the paddy. Applicant further submits that no notices were issued and received from the respondent bank.

5. The Defendant No.2 who has availed Exposure Limit has given a letter to the bank on 21.10.2019 stating that he has sold the entire stored paddy and he himself is completely responsible for clearing the entire Exposure Limit including the dues in question in OA No.1702/2020 and the said document is marked as Ex.A16, which has not been looked into in its proper perspective while passing the impugned order. The Applicant is aggrieved by the final order dated 30.09.2024 in OA 1702/2020 passed by this Tribunal (Annexure 2 to the Review Application).

6. The grounds raised by the applicant, in brief, are that the Defendant No.2 being the proprietor of warehouse and custodian of the commodity pledged by applicant has admitted that he has sold the commodities stored in the warehouse of all the borrowers including that of the Applicant and admitted the liability to clear the entire exposure limit; the pledged commodities were sold by Defendant No.2 in collusion with Respondent Bank and the 4RA 5/2024

applicant is liable to pay the dues as the details of the sale and sale proceeds are not forthcoming and this applicant is not aware of such sale. The Bank has produced the copies of notices but has not produced the postal acknowledgment or the postal receipt. There is non-looking of Ex.A15 to A17 in its proper perspective. The warehouse owner having sold the pledged goods in variation of terms of contract and the bank is not entitled to claim any dues as against this applicant and the Schedule C property in the OA owned by this Applicant.

Thus, the Applicant prayed that the RA may be allowed.

6.1 The Applicant, in support of his case for review, cited the judgment in the case of "*Moran Mar Basselios Catholicos and another, Appellants Vs. Most Rev. Mar Poulose Athanasius and others, Respondents*" reported in (1954) 2 SCC 42.

7. The objections filed by Respondent bank to the RA, in brief:

7.1 The Review Application filed by the Applicant is not maintainable. The Applicant is questioning the merits of the Order in OA No.1702/2022. If the Applicant intends to challenge the order passed in the above said OA, he has to approach the Learned DRAT as per Section 20 of the Recovery of Debts and Bankruptcy Act 1993.

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7.2 The power of review can be exercise for correction of mistake and not to substitute a view. The review cannot be treated as an appeal in disguise. The Review Court does not sit in appeal over its own order. Ex.A16 is already on record and that has been taken into consideration by this Tribunal while passing the Order.

Therefore, it is prayed that the Review Application may be dismissed with costs.

8. *The point that arises for consideration is, whether the applicant has made out a case for review of the Tribunal's order dated 30.09.2024 in the RA or not?*

9. Heard the Ld. Counsels for both the parties and perused the records including the impugned order dated 30.09.2024 passed in OA 1702/2020.

10. At outset, the availing of loan, execution of loan and security documents by the Defendants and the default committed in repaying the loan are not in dispute and are admitted. In the impugned order passed in the OA, the allegations raised by Defendant No.1 regarding the sale of pledged goods by Defendant No.2 under collusion; the allegation regarding the acts and 6RA 5/2024

omissions of the applicant bank (Respondent herein) and that of the Defendants 2 to 4 to absolve the Applicant (Defendant No.1 in the OA) and to discharge the property (Schedule C); the loan and security documents executed by him and also the allegation regarding the quantum due claimed by applicant bank have clearly been mentioned and a considered order has been passed.

11. For the sake of clarity, it is to be mentioned that Ex.A16 is the notarized copy of Letter of Undertaking signed by Defendant No.2 dated 21.10.2019. It is pertinent to mention that, in para 5 of the impugned order, the sale of stock of paddy and the non-remittance of sale proceeds by Defendant No.2 has clearly been mentioned, as under:

*"5. During the stock inspection, it is observed that that Defendant Nos.1 & 2 in collusion, sold the stock of paddy stored under Trust in the Godown of Defendant No.2 with intent to cheat the Applicant bank and thereby causing wrongful loss to applicant bank and committed breach of trust. Applicant bank recalled the Produce Loan facility on 22.08.2019 and calling upon the Defendant No.1 to pay the entire dues as on 22.08.2019 before 07.09.2019 to the applicant bank. However, there was no response from the defendants.*

***Defendant No.2 vide the letter dated 21.10.2019 has admitted that he has sold the stock of paddy without informing the applicant bank and not remitted the sale produce to the concerned loan accounts and undertook to repay all the loan dues granted to the borrowers under the Exposure limit. However, Defendants failed to repay the loan dues."***

*(emphasis supplied)*

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12. Further, in paragraph Nos.10 & 11, the liability of Defendant No.1 (Review Applicant herein) and the prayer regarding release of Schedule 'C' property have been considered in detail and thereafter the impugned order has been passed. For ready reference, the relevant portion of the impugned order is extracted below:

*"10. It is alleged by Defendant No.1 that the produce pleaded by Defendant No.1 is sold by applicant in collusion with Defendant No.2; so far only one crore limit is sanctioned and disbursed and the subsequent acts and omissions of the applicant and the Defendants 2 to 4 absolve the Defendant No.1 and his property from the liability. Though this allegation has been raised by the Defendant, the Defendant failed to substantiate this allegation with any evidence or material proof. The subject loan availed by the Defendant is not in dispute and is admitted. **After availing the loan, Defendants committed default in repaying the loan. Therefore, the question of discharge of Defendant from his liability and the Schedule 'C' from the OA claim does not arise at all.***

*11. It is the allegation of the Defendant No.1 that the properties mortgaged by 2^nd Defendant who himself was custodian of the commodity will serve the dues claimed by applicant bank. **This is a vague allegation without any substance. It is true that Defendant No.2 has also mortgaged his properties to secure the loan but it does not mean that the borrower/Defendant No.1 and his properties are not liable to the OA claim and hence the prayer to discharge the Defendant No.1 and the Schedule 'C' property from the OA claim deserves no consideration.**"*

*(emphasis supplied)*

13. Further, the impugned order also mentions about the Agreement dated 30.12.2013 by Defendant No.2 in favour of applicant bank regarding the Bank's lien over the goods covered under warehouse receipts, safe keeping of goods and not to 8RA 5/2024

release the same without the written consent of the applicant bank (Respondent herein), insuring the goods adequately for its full value without charging the cost to applicant bank etc. Though the Defendant No.2 vide letter dated 21.10.2019 has admitted that he sold the stock of paddy pledged without intimation to the Respondent herein, did not remit the sale proceeds to the concerned loan accounts and only undertaken to repay all the loan dues granted to the borrowers under the Exposure limit. Defendant failed to do so till this date.

14. It is also a matter of record that the Defendant No.2, who has executed Ex.A16 and undertook to repay all the loan dues for the exposure limit, has duly been served with Summons in the OA, failed to appear and was placed *ex parte*. There is no explanation given by Defendant No.2 as to how the pledged goods under Trust in the Godown of Defendant No.2 were sold by him without the consent and knowledge of the applicant bank and his failure to remit the sale proceeds towards the loan account. The Defendant No.2 is conspicuously silent about the breach of contract and for causing wrongful loss to Respondent in respect of the sale of pledged goods without the consent of Respondent bank. Therefore, based on the undertaking by Defendant No.2 to repay 9RA 5/2024

all the loan dues, who is already liable to the OA claim as Guarantor and Mortgagor and also considering the fact that the Produce Loan was availed as early as in the year 2017 secured by execution of loan and security documents including the mortgage by other defendants as well, the question of discharge of the Review Applicant/Defendant No.1 from the liability and the release of Schedule 'C' property from the OA claim does not arise at all.

15. It is unambiguously clear that the Review Applicant (Defendant No.1 in OA) participated in the OA proceedings through his Counsel but failed to substantiate his contentions either by way of any documentary evidence or material proof. Further, the execution of documents executed by Defendants including the guarantee and mortgage over the schedule properties in the OA in favour of the applicant bank has been proved beyond any doubt. Thus, after considering all the material facts on record and the submissions made by the parties, the OA 1702/2020 has been disposed of on 30.09.2024 with a reasoned order and consequently, a Recovery Certificate has also been issued in this regard. The Applicant failed to point out any single error apparent on the face of the impugned Order dated 30.09.2024 for review.

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16. The Tribunal is mindful of the facts of the case as depicted in the records and also the relevant legal aspects in considering the review of its Order.

17. The provision to review the order of the Tribunal is enumerated in S.22 (2)(e) of the Recovery of Debts and Bankruptcy Act,1993 [for short 'Act'] read with Rule 5-A of the Debts Recovery Tribunal[Procedure] Rule,1993 [for short Rules 1993]. For better understanding, S.22[2][e] of the RDDBFI Act and Rule 5A of the Rules is extracted as under:

**S.22 Procedure and Powers of the Tribunal and the Appellate Tribunal-**

[2] *The Tribunal and the Appellate Tribunal shall have, for the purposes of discharging their functions under this Act, the same powers as are vested in a Civil Court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit, in respect of the following matters, namely:--*

- (a) .....

- (b).....

- (c).....

- (d).....

- (e) reviewing its decisions;

- (f).....

**Rule 5[A] Review—**

(1) *Any party considering itself aggrieved by an order made by the Tribunal on account of some mistake or error apparent on the face of the record desires to obtain a review of the order made against him, may apply for a review of the order to the Tribunal which had made the order.*

(2) *No application for review shall be made after the expiry of a period of **thirty days** from the date of the order and no such application shall be entertained unless it is accompanied by an affidavit verifying the application.*


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*(3) Where it appears to the Tribunal that there is no sufficient ground for a review, it shall reject the application but where the Tribunal is of opinion that the application for review shall be granted, shall grant the same:*

*PROVIDED that no such application shall be granted without previous notice to the opposite party to enable him to appear and to be heard in support of the order, a review of which is applied for.*

18. A careful reading of the above provisions clearly indicates that the Tribunal shall have power to review its own orders only on one ground namely, some mistake or error apparent on the face of record. In the instant matter, the Tribunal after considering the factual matrix of the case coupled with the documents and the submissions of the parties, passed a detailed and reasoned Order dated 30.09.2024 in the OA, which is impugned in the present Application.

19. On a careful reading of the averments/grounds urged in the review application and the order dated 30.09.2024 which is sought to be reviewed, it is crystal clear that there is no mistake or error apparent on the face of the records. On the other hand, the contentions of the review applicant are in the nature of an appeal where every effort is made in challenging the order passed by this Tribunal under the guise of review. The review applicant failed to make out a case for review.

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20. The prayer sought for in the present RA does not merit any further consideration and it is not the case of the applicant that he discovered new and important matter which they could not rely or produce before the Tribunal in spite of due diligence and the same could not be produced during the adjudication of the matter. On the other hand, the applicant have attempted to challenge the detailed and considered order under the guise of a review without making out any case for review.

21. It is pertinent to mention here that the Hon'ble Apex Court in **Civil Appeal No.3601 of 2020** [**@ Special Leave Petition (Civil) No.28150 of 2017**] decided in the case of ***Shri Ram Sahu (Dead) Through LRs Vs. Vinod Kumar Rawat & Ors*** regarding the power to review and the limitations on exercise of the power of review. It is an established fact that the Review Court does not sit in Appeal over its own order. Further, the first and foremost requirement of entertaining a review petition is that the Order, review of which is sought, suffers from any error apparent on the face of the Order. In the present case on hand, review applicant has not made out a case of any error or mistake apparent on the face of the record to review the impugned order.

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22. It is pertinent to mention here that a Recovery Certificate has already been issued consequent to the Final order passed in the OA and the recovery proceedings are in progress. The case cited by the Review Applicant i.e., (1954) 2 SCC 42-*Moran Mar Basselios Catholics and others v/s Most Rev.Mar Poulase Athanasius and others* will not inure to him as the said judgment also makes it clear that 'Mistake or error apparent on face of record' for a review and in this case, the Review Applicant has not made out a case for review of the impugned order dated 30.09.2024.

23. In these circumstances and keeping in view the principles laid down by the Hon'ble Supreme Court, this Tribunal comes to the definite conclusion that the grounds alleged in the present Review Application are neither in the nature of review nor there is an error or mistake apparent on the face of the order dated 30.09.2024 requiring review and does not merit consideration and is liable to be dismissed.

24. If the real intention of the Defendant No2 is to repay and settle all the loan dues, nothing prevents the Defendant No.2 to repay all the loan dues as undertaken and there is no bar in 14RA 5/2024

settling the dues even after the passing of the Final Order and issuance of Recovery Certificate.

25. In view of the above, the present Application does not merit review and deserves rejection. However, in the interest of justice and keeping in view the intent of the Review Applicant or Defendant No.2 to repay all the loan dues, this Tribunal is inclined to pass the following order:

- (a) The recovery proceedings under the Recovery Certificate bearing DRC No.1029/2024 issued sequel to the Final Order dated 30.09.2024 is kept in abeyance for a period of two months from today i.e., from 10.01.2025 till 10.03.2025 so as to enable the Defendants, particularly the Defendant No.2 in view of his Undertaking to settle the entire dues under the DRC 1029/2024 including interest as on the date of final payment. In the event of settlement being reported as directed above, the OA No.1702/2020 will be closed by discharging the Review Applicant/Defendant No.1 and also the other Defendants to the extent of their liability in the OA No.1702/2020 as also the Schedule 'C' property to the extent of the claim made in OA 1702/2020.

- (b) On the other hand, if there is failure or default in complying with the direction (a) above, the RA No.5/2024 shall automatically stand dismissed and the recovery proceedings would be restored under DRC No.1029/2024 against the Certificate Debtors. In this regard, it is pertinent to mention that considering the Undertaking provided by Defendant No.2 to clear the outstanding dues, this Tribunal exempts other Defendants from further liability, subject to strict compliance of the Undertaking by the Defendant No.2. However, in the event of any default by Defendant No.2 in adhering to the terms of 15RA 5/2024

the Undertaking, the Bank shall initiate recovery in terms of the Recovery Certificate against the Defendant No.2 initially and thereafter, the Bank shall be at liberty to revive its claim against the other Defendants, if the recovery certificate is not satisfied as ordered above. This will ensure a balanced order safeguarding the interests of all the parties.

26. With this observation, the RA No.5/2024 stands disposed of. The Interim Application pending, if any, in the RA stands disposed of with this Order. No order as to cost.

27. Copy of this Order be communicated to the Recovery Officer concerned.

*[Dictated to my PA directly on the computer, corrected and pronounced by me in the open Court on this the 10th day of January 2025]*

(IMTIAZ ALI) PRESIDING OFFICER(I/c) DRT-II, BENGALURU

APPENDIX

LIST OF DOCUMENTS PRODUCED BY THE APPLICANT

<table border="1"> <thead> <tr> <th>Sl. No.<br/>(D)</th> <th>Description</th> </tr> </thead> <tbody> <tr> <td>1</td> <td>Annexure-A1 Copy of Exhibit A 16 marked in OA 1702/2020 and its translated copy.</td> </tr> <tr> <td>2.</td> <td>Annexure-A2 Certified Copy of the Final Order dated 30.09.2024 in OA No.1702/2020</td> </tr> </tbody> </table>

(IMTIAZ ALI) PRESIDING OFFICER(I/c) DRT-II, BENGALURU

**IN THE DEBTS RECOVERY TRIBUNAL II, KARNATAKA AT BENGALURU**

Dated this the 10th day of January 2025

**Present: SRI IMTIAZ ALI Presiding Officer (I/c)**

**RA No.5/2024**

BETWEEN

Sri Mallesh Gouda, S/o. Sri Doddana Gouda, #187, Basapur Village, Sindhanur Taluk, Raichur District 584 124.

... APPLICANT

AND

Canara Bank, Sindhanur Branch, Sindhanur Taluk, Raichur District 584 128.

... RESPONDENT

..... **ORDER ON RA**

✓ 10.01.25