P RATHINASAMY vs ING VYSYA BANK on 12 April 2022

O R D E R

1. This is an Application filed under section 19 (20-A) by the Petitioners (Applicants)/Defendants and prayed that to record full satisfaction of the claim made by the Respondent/Applicant Bank, recall the Recovery Certificate and pass further orders for return of the Original Title Deeds deposited with the Respondent Bank by the Petitioners (Applicants).

2. The Ld. Counsel for the Petitioners (Applicants) submitted that the Respondent Bank having obtained an order in OA No.109/2015 dated 20.07.2017, the 1st Petitioner approached he Respondent Bank for an OTS with the Respondent Bank on 23.01.2018 and the same was accepted by the Respondent Bank by its letter dated 14.02.2018. Accordingly, the 1st petitioner fully settled the outstanding dues with the Respondent bank in terms of the OTS accepted by the Respondent Bank for a sum of Rs.51,11,050/- and the date of schedule of payment are as follows:

1. Rs.5,00,000/- 07.02.2018

2. Rs.20,00,000/- 19.02.2018

3. Rs.26,11,050/- 26.04.2018 Total Rs.51,11,050/-

3. It is the further contention of the Ld. Counsel for the Petitioner that inspite of settling the loan account to the Respondent Bank, the Respondent Bank failed to take necessary steps to get the full satisfaction (FS) recorded and to release the document to the Petitioners till date.

4. The Petitioners also on issuance of the Demand Notice by the Recovery Officer on 22.06.2020 came to know that the respondent bank has not initiated any further step to recall the DRC issued by this Hon’ble Tribunal and to return the Title Deed of the property which is now under the custody of the Respondent Bank. On receipt of the Demand Notice, the petitioners entered appearance in the Recovery Proceedings before the Recovery Officer and submitted a memo to record the full and final settlement and release of documents. However, the Respondent Bank having failed to appear before the Recovery Officer on issuing summons, the present petition is filed before this Hon’ble Tribunal.

5. Per contra, the Ld. Counsel for the Respondent/Applicant Bank disputed the claim made by the Petitioner/Defendants on the ground that the Petitioner/Defendants are also liable to pay a sum of Rs.31,59,703/- due to the Export Credit Guarantee Corporation (India) Ltd., (ECGC I Ltd.,) as the ECGC (I) Ltd., has paid the sum of Rs.31,59,703/- to the Respondent/Applicant Bank, the said amount of Rs.31,59,703/- was settled by the ECGC I Ltd., to the erstwhile ING Vysya Bank Ltd., on 31.05.2013 and hence, the petitioners are required to pay the said sum to the Respondent bank so as to pay to the ECGC (I) Ltd., by the bank. Therefore, some calculation error was committed by the Respondent/Applicant Bank while issuing the OTS proposal for a sum of Rs.51,11,050/- dated 14.02.2018.

6. It is the further contention of the Ld. Counsel for the Respondent/Applicant Bank that, even though the Petitioner/Defendants paid the amount of Rs.51,11,050/- to the Respondent/Applicant Bank, the petitioner still owe a balance of Rs.31,59,703/- to discharge the full liability of the bank. Therefore, the Respondent/Applicant Bank is entitled to proceed with the recovery certificate for the balance amount due and payable to an extent of sum of Rs.31,59,703/- by the Petitioner/Defendant. Hence, the Application filed by the petitioner/Defendant is liable to be dismissed by this Hon’ble Tribunal.

7. This Tribunal having considered the submission made by the parties and on perusal of the records, is required to consider the following points: I. Whether, the Respondent Bank is bound by the OTS offer made by the bank and having accepted by the Petitioners? II. Whether the petitioners are entitled to the relief(s) as prayed for in the petition?

8. There is no dispute with respect to the final order and the DRC issued in the case by this Tribunal. Wherein, the Petitioners (Defendants)

were set ex-parte. The Respondent Bank is also a merged entity of the erstwhile ING Vysya Bank Ltd., now KOTAK Mahindra Bank Ltd.,.

9. The Petitioners (Applicant) to support its arguments, the following decision rendered by the Hon’ble High Court of Madras and the Hon’ble High Court of Kerala was placed before this Tribunal. (I) The Hon’ble High Court of Madras in “Aruma Electronics Industries Vs. Tamil Nadu Industrial Investment Corporation Ltd., dated 11.02.2006” wherein it held that: At para – 7 : It is the grievance of the petitioner that pursuant to the intimation/request of the respondent, in as much as payment has been made accepting the OTS, the respondent is not justified in calling upon the petitioner to accept a modified scheme and asking him to pay Rs.1,54,035/- before 31.12.2003. It is not the case of the respondent that the letter dated 02.12.2002, in which the offer was made, had not been issued by the Branch Manager of the respondent corporation. In fact, the petitioner accepted the offer and enclosed a demand draft for Rs.16,928/- along with the acceptance letter as early as on 11.12.2002. Thereafter, there was no communication or whisper by the respondent retracting/repudiating the earlier offer whisper by the Respondent retracting/repudiating the earlier offer dated 02.12.2022. No doubt, learned counsel for the respondent has brought to my notice that in the letter dated 12.02.2004, there is a reference to the earlier letter dated 02.12.2002. The letter dated 12.02.2004 is available at page No.13 of the typed set. A perusal of the said letter does not show that the earlier offer/request made by way of letter dated 02.12.2002 had been sent by mistake or inadvertence etc. Even otherwise, in the absence of any reply or communication, retracting the letter dated 02.12.2002 within a reasonable time, I am of the view that the respondent is not justified in reopening the issue and calling upon the petitioner to pay the outstanding amount. Though learned counsel for the respondent informed this Court that the offer in the letter dated 02.12.2002 was a mistake, it is not reflected in any of the subsequent correspondence by the respondent. In view of the fact that the respondent intimated the proposal regarding OTS, which is applicable to the term loan disbursed to the petitioner, and that the same had been duly complied with by the Petitioner and acknowledged by the Respondent, the respondent cannot take a different stand and compel the petitioner to pay the outstanding amount of Rs.1,54,035/-, ignoring the earlier proceedings referred above.” II. The Hon’ble High Court of Kerala in W.P.(c) No.12538 of 2020 – A.V.Prasanth Vs. Syndicate Bank and others dated 26.04.2021 wherein it held that: “At Para - 18: In the Petitioner’s case, there is no dispute that the Petitioner had made an offer of one-time settlement for Rs.23.50 lakhs. The offer was addressed to the Regional Manager of the Bank. The acceptance of the offer was communicated to the petitioner by the Branch Manager. The Petitioner acted upon Ext. P-3 and paid the amount due under Ext.P-3 within the stipulated time. The Bank relied on Ext.R-1 (g) to contend that the Branch Manager or Regional Manager was not competent to enter into Ext.P-3 settlement. Ext.R-1 (g) Circular provides for Policy guidelines. The title of

Ext.R-1 (g) itself states that it is the settlement/compromise policy. Ext. R-1

(g) circular requires the Respondent Bank transact their business in a particular manner. That does not mean that whenever a direction given in the circular is violated, the contract entered into by the Bank would be invalidated. Ext. P-3 states that the OTS proposal made by the petitioner for Rs.35.5 lakhs has been accepted by the competent authority. The Petitioner had no reason to disbelieve the authority or competency of the Regional Manager or the Branch Manager of the Bank to enter into Ext. P-3 settlement. The Petitioner has acted upon Ext.P-3 and has discharged its obligations under the Agreement. Respondents 1 to 3 did not repudiate the OTS till the Petitioner paid the entire amount payable under Ext. P-3. Respondents 1 to 3 are therefore, estopped from taking the stand that the OTS is void.”

10. The Ld. Counsel for the Respondent Bank also relied upon the judgment of the Hon’ble High Court of Madras in W.P.No.15812/2006 dated 29.04.2009 wherein at Para No.3 & 4 of the order which stated that: “3. The only ground of attack of the petitioner is that the State Bank of India came forward with a compromise offer for a one time settlement with the petitioner and immediately he accepted the said and has also deposited the amount. But, there is a dispute as to whether the payment was made before or after the cancellation of the offer for one time settlement. Be that as it may, the petitioner’s contention is that since the offer was made by the State Bank of India and he had accepted the offer and paid the amount, the subsequent cancellation of the one time settlement on the ground that is is violative of the R.B.I. circular, is legally not sustainable. The compromise offer came from them and therefore he disputes the impugned order cancelling the one time settlement dated 14.11.2005.” “4……………. The one time settlement to be offered by the Bank could only be in accordance with the Reserve Bank of India Circular and the circular clearly states that the cases pending before courts where decrees have been obtained will not be covered under the RBI OTS-SME. Pursuant to the R.B.I. Circular only they have issued the impugned order and the impugned order is valid under law.”

11. This Tribunal having considered the Final Order passed by this Tribunal by its order dated 20.07.2017 and the decreed amount being a sum of Rs.92,84,139.64 and the petitioner herein having applied for an OTS by its letter dated 23.01.2018 and the Respondent Bank by its letter dated 14.02.2018 having accepted the proposal made by the Petitioner and the Petitioner also duly paid the settlement amount of Rs.51,11,050/- as agreed between the parties within the time stipulated by the Respondent Bank, the loan dues to the Respondent Bank found to have discharged by the Applicant/Petitioner.

12. However, now it is also relevant to quote the full and final settlement acceptance letter dated 14.02.2018 in respect of Loan Account No. CRN No.20876223 and Account No.428011005287 issued by the Respondent Bank which read as follows: We KOTAK MAHINDRA BANK LIMITED, a banking company within the meaning of the Banking Regulation Act, 1949 having it’s Registered Office at 27BKC, C 27, G Block, Bandra Kurla Complex, Bandra €, Mumbai – 400 051, (hereinafter referred to as “the Bank/KMBL”) and having branch office at M/s.KOTAK MAHINDRA BANK LIMITED, 1054/18 Ground Floor, Gowtham Centre Annexe, Avinashi Road, Coimbatore – 641 018. Both of you have availed a finance facility vide Loan No. CRN No.20876223 AND Account No.428011005287 for a sum of Rs.62,85,000/-. In the view of the special circumstances surrounding you as explained by you, We are agree to receive the payment in Loan Number: CRN No.20876223 AND Account Number: 428011005287 Rs.51,11,050/- (Rupees Fifty One Lakhs eleven Thousand and fifty only) to be paid in Demand Draft/Pay Orde/RTGS on or before 27.04.2018 to M/s.Kotak Mahindra Bank towards full and final settlement. Please note that this is a one-time proposal offer extended to you after taking into consideration your exceptional circumstances and does not in any manner set a precedent, Failure to abide by the stipulated deadline for the payments as mentioned in the paragraph would lead to this offer cancelled and rendered null and void, without any further notice to you, Consequently you shall be liable to pay the whole amount as on date Concessions/Waiver granted, if any shall stand withdrawn and the part payment have been made towards the settlement amount shall be adjusted against the whole outstanding as on date and we shall be at liberty to take steps to realize the shortfall as per the terms of agreement. Upon realization of this payments we will handing over the title documents in respect of loan Loan No. Loan No. CRN No.20876223 AND Account No.428011005287. Please sign a copy of this letter as your acceptance of this offer. We will release the NOC papers within 15 working days vide agreement Loan No. CRN No.20876223 AND Account No.428011005287 Payment Schedule: Date Amount (Rs.) 07.02.2018 5,00,000/- 26.02.2018 20,00,000/- 27.04.2018 26,11,050/- Total 51,11,050/-

13. This Tribunal also having given a careful consideration of the citation(s) submitted by the parties and is the view that, the Respondent Bank is estopped from taking a different stand, once having settled the loan account with the bank by the Applicant and the letter given by the Respondent Bank clearly shows that the Respondent Bank shall be releasing the document to the Applicant/Petitioner on receipt of the payment as scheduled under the OTS agreement. Either of the parties have no dispute in so far as the settlement under the OTS or making the payment as scheduled in the OTS offer by the Respondent Bank. Under such circumstances, the judgment cited by the Respondent Bank cannot be considered by this Tribunal as the Hon’ble High Court of Madras rendered the Judgement on a different context and the facts and circumstances of the same is also differ from the present case in hand. The judgement cited by the Respondent Bank wherein, at Para 3 of the order it is clearly mentioned that, …………..there is a dispute as to whether the payment was made before or after the cancellation of the offer for one time settlement………… Hence, it is not clear the payment was made on the schedule date of payment or not. Therefore, the said judgment cannot be relied upon by the Respondent Bank for the case in hand more so, the Respondent Bank was well aware about the money paid by the ECGC (I) Ltd., to the erstwhile, ING VYSYA Bank Ltd., for a sum of Rs.31,59,703/- during the year 2013 itself and hence, this fact was well within the knowledge of the Respondent Bank while entering with an OTS settlement with the Petitioner/Applicant.

14. The OTS settlement, if any, are always made between the parties with a sacrifice of certain amount of dues to be paid and therefore, once the OTS settlement is arrived between the parties and the parties are duly complied with the condition, it shall not be open to the parties to dispute the same on a different context. In the present case, the final order in the OA was passed against the petitioner for a sum of Rs.92,84,139.64 against which an OTS was arrived between the bank and the petitioner by sacrificing nearly about Rs.40.00 lakhs by the bank. Therefore, the Respondent Bank shall not make an additional claim of a sum of Rs.31,59,703/- even if it is due and payable by the petitioner. The said calm is deemed to be a waiver by the Respondent Bank while entering the OTS between the parties.

15. Therefore, this Tribunal invoke the provision contained in section 17

(7) of the SARFAESI Act read with section 19 (25) of the Recovery of Debts and Bankruptcy Act 1993, to meet the ends of justice. Accordingly, the point No.(i) & (ii) are answered as AFFIRMATIVE.

16. Under the circumstance, this Tribunal, hereby direct the Respondent Bank to release the Title Deed(s) of the property deposited with the Respondent Bank within two weeks from the date of this order.

17. It is also ordered that the debt due and payable by the Petitioner /Defendants are found satisfied to the Respondent Bank as ordered by this Tribunal by its Final Order dated 20.07.2017 in OA No.109 of 2015 and in view of the OTS granted by the Respondent Bank. Hence, the DRC No.470/2019 is also hereby recalled by this Tribunal and the Recovery Officers are directed to note the same for compliance.

18. In the result, the MA No.261 of 2020 stand Allowed and disposed of with the above directions by this Tribunal. The parties will suffer their respective costs. A copy of the order be communicated to all the parties concerned by the Registry of this Tribunal. (Dictated to my PA directly on the computer, corrected and pronounced by me in the Open Court on this 12th day of April, 2022)

Sd/- [M.P. BALASUBRAMANIAN] PRESIDING OFFICER