SHANTHI BEULAH PRINCE vs THE MALLESHWARAM CO OPERATIVE BANK LTD on 20 March 2025

ORDER

Miscellaneous Application No.3/2025 was filed on 01 02 2025 under S 17(7) of the Securitisation and Reconstruction of Financial Assets and llnfbrcement of Secudty lnterest Act, 2002 (as amended from time to time) - hereinafter ref'ered to as 'the Act' r/w 5.19(25) of the Recovery of Debts and Bar cuptcy Act' 1993 (as amended from time to time) praying for a direction to the I't respondenVl" defendant to comply with the directionofthisTribunalinthefinalolderdated3l.l2.2024passedinSA33T/2024.The petitioners are none other than the applicants in the SA'

2. The case set out by the petitioners/applicants in the memorandum accompanying MA No.3/2025 in b ef is as fbllows:- These petitioners/applicants on l5.O't.2024 filed SA 33712024 under S.l7(1) of the Act praying to set aside the sale notice dated 06.07.2024 issued under 5.13(4) of the Act by the autho sed otficer of the 1'r respondent/I't defendant in respect ofthe schedr-rle immovable property proposing the sale of the same on 23.07.2024. The said SA was allowed as per the final order dated 31.12.2024 restoring the physical possession of the schedule immovable property in favour ofthe petitioners/applicants along with a direction 1(] appropriate the deposit made before this Tribunal towards the outstanding under the loan account. The l't respondenv l't defendant has not yet complied with the directions of this Tribunal in the aforesaid final order dated 31.12.2024 and hence the MA

3. The 1'1 respondent/l'l defendant filed a statement of objection on 10.02.2025 contending as follows:- The Hon'ble High Court of Kamataka in Wdt Petition No.22496l2024 directed the petitioners/applicants to deposit a sum of {18,56,429l- before this Tribunal. But they cleverly deposited the said amount in term deposit receipt in their name and wrote the name of'The Registrar, Debts Recovery Tribunal l, Bangalore' on the demand dra1i. This Tribtmal directed the Registrar to handover the demand draft in favour of the bank and the bank has collectcd the demand \ MANo l/2025 in SA No 13712014 draft. The receipt of the demand draft is of no use to the bank as the same is a telm deposit receipt in the name of the petitioner's/applicants The bank cannot encash the demand draft as it is not in their name' Therefore' the petitioners/applicants have to collect the fixed deposit from the bank and encash the same Aom the issuilg bank and thercafter deposit the same to the respondent bank on or before 15'02 2025 The l't respondenvl't defendant prayed for disposal ofthe MA with the aforesaid direction'

4. The only point arises 1br consideration is as to whether the relief prayed for by the petitioners/appticants can be granted?

5. The Point:- The petitioneN/applicants filed the above Securitisation Application (SA) or 15.07.2024 under S.17(l) of the Act praying to set aside the sale notice dated 06.07.2024 issued under S.l3(4) of the Act by the authorised officer of the l'r respondentTl" defendant in respect ofthe schedule immovable property proposing the sale ofthe same on 23.07.2024.

6. SA No.337l2024 was allowed as per the final order passed on 3l'12 2024 with the following directions/declarations:- " (, this Tribunal declares that the neasues taken b' the t"' delendont bank undet S' I 3 of the Acl including the issuance of rlemand notice ttated 09.06.2t)2 I and the fulther proceedings putsuont theteto orc nNalid and not in dccordoncewith law ond thus set aside; (i, the sdte ofthe schedule innotable propertv held on 23.07.2021 for a sale coh'iderution of {1,03,15,000.- wrsuant to the sale no,ice dated 06.07.2021 hsued bv the d thotised olJicer of the I'1 Aekkdakt han* n|alout olttu oJdttional 2d dPtcnJdnt is void dnd thus \et 6tJ?. (ii, the autho sed ofrcer ofthe 1^' defen.lant bank is .lirected to rcstote possession ofthe schedule innowble propeiy to the applicants within sden days frod tadav:

(iv) the autho sed ofricet of the l'' delbndoht bank is entitled to in roke the prcceedinss under the Act ond the Rules nade thercuruler connencingfion the issuance ofd denond notice undet S I3(2) of the Act afresh neticulol ty in accordance with la|| fot recowry ol rhe secured debt fion the secued debtots by enforcinsthe sec rity interest ovet the secwed a.\set:

(v) the pa ies shall sufet their rcspecttue costs-

19. The Registry is dirccted to rele$e the otiginol of the fixed deposit reeipt No.|3374219780 dated 21.09.2024 onoutuing to the smt of{18,56,a29/- drNn in fuvour of the Reqbtrat DRT- I , Bangalore lot a period of 365 days Iron 24.09-2021 to 21.09.202 5 to the Ld counsel fot the I't defendant bink \|ithin seven dcJs fon tollay, who sha appropriate rhe proceeds thercoI forttwith to\tards the outstanding under the loan uc.aunt Na.001800100003277 rclating to the tetd lodn of a60 lakhs oailed bi the applicatus lron it.

7. There was a direction by this Tribunal in the aforesaid final order dated 31.12.2024 to the ls rcspondent/l'r defendant to restore possession of the schedule MA No ri2025 in SANo 1r?r2024 \ immovable property to the petitioners/applicants and to appropriate the proceeds of the fixed deposit ieceipt mentioned therein lbrthwith towards the outstanding under the loan account No.00180010000327'l rclating to the term loan of 160 lak:hs availed by them from it within seven days frcm 31.12.2024. According to the petitioners/applicants, the I't respondent/l't del'endant has not so lar complied with the same. The l,rrespondenVl.t defendant instead of complying with tle aloresaid directions is dictaring terms to this Tribunal to comply with the aforesaid directions relying upon the banking terms, procedures and rules.

8. It may be noted that this Tribunal in the aforesaid final order dated 31.12.2024 has noted that the petitioners/applicants have produced fixed deposit receipt No.43374249780 dated 24.09.2024 lbr the sum of t18,56,429l- drawn liom the State Bank of India, Dollar Colony (Bengaluru) S-44, M S Complex, New BEL Road, Bengaluru, Kamataka - 560054 in favour ofthe Registrar, DRT-I, Bangalore for a period of 365 days ftom 24.09.2024 to 24.09.2025. The fixed deposit receipt is generated by computer in the name of the lst petitioner/l't applicant and it is assigned in the name of the Registrar, Debts Recovery Tribunal t, Bangalore. All these things were in the mind of the Tribunal when the aforesaid directions were issued. But the same was surrendered and placed at the disposal ofthis Tribunal voluntarily by the holder of the sam€ with an intention to be appropriated towards the dues in dispute. In the legal context, banking rules and practices, while being important, cannot prcvail over, supersede or overide an order passed by a competent judicial authority. They can only supplement but cannot supplanr the valid judicial order passed in accordance with law. Such orders are binding and all those who come under the same should obey the conrmand of the order, unless and until the same is got set aside by a higher judicial forum. Generally, the money deposited before this Tribunal by either ofthe party in a dispute belbre it is held by ir in ::, ,". tn" benefit of the parties involved and the disbursal or any kind of transacrion \ withthesameissubiecttofuthelordersfromthisTribunalonly.onceanamountolany kind of security is deposited before this Tribunal by way ol cheque/DD/FDR or by any othelmeans,thesamebecomescuslodialegis'meaningitisheldinthecustodyofthe Tribunal and is placed beyond the reach of the parties involved 'Custodia legis' is a latin phdase that means .in 1he custody of the law,, referring to the propelty taken into the control and custody by a judicial authority during the intervening period of a legal dispute and the same cannot be interlered without the permission of such authodty ln the instant case, the fixed deposit receipl was assigned in favour of the Registar' D€bts Recovery Tribunal - l, Bangalore by the holder of the same Now' the Registrar acts as a Trustee for this Tribunal holding the same awaiting any further order from this Tribunal as to how it should be disbursed. Once, the lixed deposit receipt was surrendered and deposited before this Tribunal, the holder of the sarne lost absolute control over the same' The issuing branch also cannot transact with the same without the consent and permission of this Tribunal, subject to the intimation of such deposit to it by either of the parties involved in this dispute.

9. The legal position being so, Ld counsel for the 1" respondent/l't defendant. who is the absolute end beneficiary in this case, filed a memo only on 16.01.2025 before the Registry seeking for release of the fixed deposit receipt, who received the same on 24.01.2025. as could be infened liom the acknowledgement in the proceeding sheet. Yet, the 1'r respondenVl'r defendant so far could not comply with the directions of this Tribunal in the aforesaid final order dated 31.12.2024, which is only sheer disobedience of this Tribunal. A mandatum of seven days was given in the aforesaid final order dated 31.12.2024 to complete the overall action taking into consideration the immediate benefit of the security to the secured creditor, who himself has Iapsed the same. However, the original fixed deposit receipt was redelivered to the RegistEr ofthis Tribunal by Ld counsel for the I't respondent/l'I defendant vide memo

Ilta No 112025 in sA No l17/2014 frled on 14.02.2025 with a direction to this Tribunal to comply with the aforesaid direction. The memo reads thus:- "The above nanetl respon'lent nost rcsPeculbr submits thot ds p{ lhe odet af this Hon'ble coutt. rcsponde t is dne"'"d '" h;:";; ';;;6-b'rhi aeg*trar an't kc Rcslrar is directed tu issue tertet to sBt k) rctease th" '^"""' ;:';: ';;;";;)i i"t ri" *" r"'a^e 'v!r the FD No.13374)1e780 'n'in" a"gi'tro, * nx aov tu neet the en^ o1iustile'"

10. 'Ihe lst respondent/lst delendant has no case that it has approached the issuing branch ofthe fixed deposit receipt in \4riting along with the original fixed deposit receipt and a copy ofthe final order dated 31 12'2024 for due compliance on its pan lt is nobody's case that the final order dated 31 12 2024 is not executable Neither side has a case that it has gone in appeal ofthe same Therefore' the hnal order dated 31 12'2024 has become absolute and firEl. Every party relating to the same has to obey the command of the final order and no excuse for the same The 1'r respondent/l't defendant did not wilfully obey the command under the final order dated 3 1 12 2024 citing banking policies and rules, which this Tribunal found unsustainable in the eye of law The said laches and wilful default and disobedience occurred due to ignorance of law only One should not take advantage of one's oun del'ault. As pel O.24 R.3 of the Code of Civil Procedure' 1908, no interest can be allowed to the plaintiff on any sum deposited by the defendant fiom the date of the receipt of notice of deposit, whether the sum deposited is in full satisfaction of the claim or falls short thereof. As per S.84 of the Transfer of Property Act, 1882, when the mortgagor or such other person has tendered or deposited in Court any amount remaining due on the mortgage, intelest on the principal money shall cease from the date of the tender or as soon as the mortgagor or such other person has donc all that has to be done by him to enable the mortgagee to take such amount out ofCourt. The factum of deposit of the fixed deposit receipt before this Tribunal by the petitioners/ applicants and the release of the same by this Tribunal as per the final order dated \ :t.tz.:Ou+ were within tle constructive notice and knowledge of the l'r respondent/l't Y defendant. If it failed to appropriate the proceeds of the fixed deposit towards the Nra No rr025 in sA No l71l0l4 I outstanding under the loan in compliance of the aforesaid order dated 31 12'2024' ir should suffer its consequences. The delay in this case in complying with the command of the final order dated 31.12.2024 reflects the inactivity and the inaction on the part ofthe l't respondenvl'r defendant only. If it does so it is at its risk and responsibility only The failure on the part of the 1'1 respondent/l'l defendant in not showing due diligence in complying with the direction of this Tribunal at the dght time and the delay taken in complying with the same can only be construed, in the absence of any valid explanation, as gross negligence and lack of bonafides on its part. In the above facts and circumstances of the case and in view of the discussion as above, no interest can be allowed to the I't respondent/l't defendant on the sum of {18,56,429l- deposited by the petitionervapplicants before this Tribunal liom 08.01.2025 under the loan account No.001800100001277 relating to the term loan of a60 lakhs availed by them from it. In the above circumstances, the 1'1 respondent/I" defendant is bound to credit the sum of {18,56,429l- under the loan account No.00180010000327'1 as on 08.01.2025 and the accrued interest thereof shall be appropriated thereunder as on the date of receipt of the electronic transfer ofthe same by the issuing bank branch to it. ll. As stated above, once the fixed deposit receipt was surendered and deposited befbre this Tribunal knowingly and voluntarily, the petitioneG/applicants lost the dght to transact over the same without the consent and permission of this TribuEl. They approached this Tribunal by way of MA 3D025 on 01.02.2025 aggrieved by the reason that the lst respondent/lst defendant had not complied with the directions of this Tribunal in the final order dated, 31.1,2.2024. But, pending the proceedings, the petitioners/applicants, collected a demand draft No.296039 for an amount of {18,56,429l- from the issuing branch of the fixed deposit, as could be infened from the copy of the letter dated 03.02.2025 issued by them to the Branch Manager, SBI, which was enclosed with the memo filed on 10.03.2025 beforc this Tribunal. The memo further shows that \ the petitioners/applicants issued a further letter dated 07 .03.2025 to thc Chief Manager' SBI seeking for updated status ofthe DD, which they surrendered to the branch. Finally' they filed a memo on 10.03.2025 before this Tribunal admitting the receipt and the retum ofthe DD to the issuing bmnch. The relevant portions read as under:- ''4. However, instedd olen-cashing the tern clepasit atuire ds pet due ptocess, the bank bf mistake, issue.l u denand &af (DD) to the appellants, ide DD No.296039 datetl 27.02.2025 for an anoubt of a18,56,129/- in falout of the responclent bakk. The Malleshwatun Caoperutive Bank Linited without colecting the ofisinol tern deposit d.lvice or seeking fuiher directions Itoh thi! Hon ble

As a rcsult, the appe ants werc in possession ofthe dforcnentione.l DD ruising concems reAadikg ., 'h?lidnt, ||tth thc Itihunal ! otd.r upob reolxing the procedural error, the oppellants innedidtely suftendered the DD k) SBl, Dollats Colon, Branch, Bdngalote and obtained an ack awledgenent ddted 03.03.2025 conrtming

7. The SBI, Dollars Colony, Bangalarc ^ no\1 ttctively coodinatinE with this Hon'ble Ttibunal ta eNure prop* conplidnce eith the Tribundl's diections-

12. lt was none of the business of the petitioners/applicants to interfere in the matter. They transacted with the security deposit before this Tribunal without the consent and permission of this Tribunal. No direction was given by this Tribunal to the petitionervapplicaots to intefere into the matter. They have really scratched their head with fire by doing so. If the SBI of1icials have advised them to do so, they could have easily bring the direction ofthis Tribunal in the aforesaid final order dated 31.12.2024 to their notice. They have no such case. No such proof has been produced by them before this Tribunal. Therefore, if they have received any amount out of the proceeds of the aforementioned fixed deposit rcceipt deposited before this Tribunal without its permission, they are bound to recoup the same to the issuing branch, failing which the same shall be deducted under their loan account.

13. The issuing branch of the lixed deposit receipt was a third pany in the proceedings, who unnecessarily put itself into trouble for not having the legal knowledge. They were aware that the original fixed deposit receipt is surrendered and deposited before this Tribunal. Still, they closed the fixed deposit account and disbursed the am.unts to the petitioners/applicants without the pemission of this Tribunal and even \ without ensuring the srmender of the original fixed deposil receipt issued by it. On its own naration as per their letter dated 13.03.2025, the following events happened:- "Considering the subject maaet stated in lettet No.DRT'l/2025/MA/03/2025 dated 26.42.2025, the cantent oI the leiet wa.t un.l stood by branch for rctease of the rtxLd deposit a ount to M/s Males\.edram Cooperati'e Bank Linite.l, hence Branch has ck^ed theixed deposit dn l the Demand Druf i,as issue!1 favouting nt/s Mdlles*,arun Cooperutive bdnk Linited. The said DD \|as handed ow tu the Shatui Beulah Prihce in order to serve to the beneliciaty arul a nail conlimation was sent to the Registrat DRT-I, Bangalole- Again on rcceipt ofcloilcation on the rcquest nude bt DRT that the DRT fianted to kno\| only the process related to the lixed deposit reledte, Branch has rcculled the Denand DruJt lion the applicant and resbte.l the position b| ndkingjixed deposit on 07.8.2A25 nith eflect liod 28.02.2025."

14. The State Bank of Indi4 the biggest public sector bank in India, which is having a good support of its legal officers, was not supposed to act in the above manner showing disrespect to the order of this Tribunal. The concemed Branch Manager could have obtained a legal opinion from its legal cell ofits Local Head Office in Bangalore. if he was unable to understand the dictum of the order or the legal procedure to comply with the sarne. lt should not have followed the executive instructions in this regard. This Tribunal is unconcemed of the closing of the fixed deposit account and reopening the same on 07.03.2025 with effect from 27.02.2025 etc, which are all done by the SBI at its own risk and responsibility only. In the above circumstances, thc issuing branch of the State Bank of India in respect of the fixed deposit receipt in issue is bound to credit the proceeds of the original fixed deposit receipt No.43374249780 dated 24.09.2024 for the sum of {18,56,429l- dmun Aom the State Bank of India, Dollar Colony (Bengaluru) S- 44, M S Complex, New BEL Road, Bengaluflt Kamataka - 560054 1br a pedod of 365 days ftom 24.09.2024 to 24.09.2025 along with accrued interest till the date of closing forthwith with applicable rate in case of prematue closing, if any, less permissible tax deduction, if any, by electronic transfer towards the outstanding under the loan account No.001800100003277 in the name of the petitioners/applicants with the l'r respondent/ 1'l defendant irrnediately as and when the 1'r respondent/l'l defendant has requested it in writing along with a copy of the order in MA 312025 as well as the llnal order dated 31.12.2024 passed by this Tribural in SA 33712024. If any anount out of the proceeds

MANo:lro25 r sA Norr?i?024 thereofhadbeendisbursedinadveltentlytothepetitionec/applicants,thesamcmaybe recalledflomthemandindefaltoflecollpingbythem,thesamemaybeintimatedtothe I't respondent/l't defendant, who shall recoup the same and debit such amounts under the loan account as on that date. It is reiteBted that the deficiency of interest if any by the system in closing and restoring the fixed deposit account during the intervening period without the permission of this Tribunal shall be bome out by the issuing branch of SBI only. With the above observations, MA 3/2025 is disposed of in the following manner:- (D the issuing branch of the State Bank of ludia in respect of the fixed deposit receipt in issue is directed to credit forthwith the proceeds of the original fixed deposit receipt No.43374249780 dated 24.09.2024 fbr the sum of 118,56,429l- drawn from the State Bank of lndia, Dollar Colony (Bengaluru) S-44, M S Complex, New BEL Road, Bengaluru, Kamataka - 560054 for a pe od of365 days from 24.09.2024 to 24'09'2025 along with accrued interest till the date of closing with the applicable rate in case of premature closing, if any, less permissible tax deduction, if any, by electonic hansfer towards the outstanding under the loan account No.001800100003277 in the name ofthe petitioners/applicants with the l't respondenVl'r defendant immediately as and when the l't respondenVl'l defendant has requested it in wfiting along with a copy of the order in MA,312O25 as well as the final order dated 31.12.2024 passed by this Tribunal in SA 337 t2024: (iD ilany amount out ofthe proceeds thereofhad been disbursed inadvertently to the petitioners/applicants, the same may be recalled from them and in default of recouping by them, the same may be intimated to the 1'r respondent/l'r defendant, who shall recoup the same and debit such amounts under the loan account as on that date; (iiD deficiency of interest, ifany, by the system due to closing and restoring of the fixed deposit account during the intervening period without the pemission of this Tribunal shall be bome out by the issuing branch ofSBI only; l0 I

MA No lr0r5 in sA No:r:r?to2,r I1 (i") if the petitioners/applicants have received any amount out of the proceeds of the aforementioned fixed deposit receipt deposited before this Tdbunal without its permission, they are directed to recoup the same to the issuing branch, failing which the same shall be deducted under their loan account:

(v) the 1'r respondenUl " defendant is bound to credit the sum of t18,56,429l- (Rupees eighteen lakhs fifty six thousand four hurdred and twenty nine only) under the loan account No.001800100003277 as on 08.01.2025 and the accrued interest thereof shall be appropriated thereunder as on the date of receipt ofthe electronic tansfer ofthe same by the issuing bank branch to it;

(vi) the authorised offrcer ofthe lsr respondent/l'r defendant bank is directed to restore possession of the schedule immovable property to the petitioners/applicants within seven days from today along with a compensation of <15,000/- (Rupees filleen thousand only);

(vii) the parties shall suffer their respective costs.

15. The Registry is direct€d to release the original of the fixed deposit receipl No.43374249780 daled 24.09.2024 amounting to the sum of 118,56,429l- drawn in favour of the Registrar, DRT-I, Bangalore for a period of 365 days ftorr, 24.09.2024 to 24-09.2025 to the Ld counsel for the l't defenda[t bank within seven days fiom today, who shall take necessary steps to approp ate the proceeds thereof forthwith towards the outstanding u[der the loan accotmt No.001800100003277 relating to the term loan of <60 lakls availed by the petitioners/applicants ftom it.

16. For reponing compliance by either side, adjoumed to 03.04.2025. lDi.tated to Dy l'A. tanscibed by hin. orrecEd aad ptoaouaced b] h? td thc dprn fnbunal rn th6 the 2Ch da! of Va^h.2n251 \v I IMTIAZ ALI ]

IN THE DEBTS RECOVERY TzuBUNAL . 1. KARNATAKA AT BANGALORE PRESENT: Szu IMTIAZ ALI PRESIDING OFFICER Dated the 20d day of March, 2025 MISCELLANEOUS $PLICATION No.3 OF 2025 IN SECURITISATION APPLICATION NO.337 OF 2124 Between Shanthi Beulah Prince- w/o P nce Devaraj Jarnes, 556, Behind Gadi Muddanna House, Kamakshipalya, Bengaluru, Kamataka - 560079 and another. ... .....Petitioners/applicants And M/s the Malleswaram Cooperative Bank Limited, 102, East Park Road, 7th Cross, Malleshwaram. Bengaluru, Kamataka - 560003, represented by its authorised omcer and another. Respondents/Defendants

ORDER

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