CANARA BANK vs M/S Deepa Enterprises on 30 June 2021

FINAL ORDER

(1) The present appeal is filed under Section 30(1) read with Section 22 of lhe Recovery of Debts Due to the Bank And Financial Institution Act, 1-993 by the Appellant Bank seeking to set aside the order dated L2'OL'201-8 passed by the Recovery Officer-ll of this Tribunal and the Appellant Bank further sought to direct the Recovery Officer-ll to initiate the proceedings against the Respondents a mortgaged property and recover the amount d No.3468 passed by this Tribunal in O'A'No' under grant costs of the proceedings under the circumstances of the case, in the interest ofjustice and equity.

The grounds, inter alia, urged by the Appellant Bank who is Certificate Holder are, the impugned order passed by the Recovery Officer is wholly erroneous, vitiated in law and is passed without following the procedure as prescribed under Schedule II of Income Tax Act, 1961 and without jurisdiction; the Recovery Officer has misread the entire facts of the case while passing the order; Recovery Officer should calculate interest at L5.75o/o p.a. compounded quarterly and direct the Respondents to pay the amount in terms of recovery certificate; Recovery Officer has failed to understand that the Respondents have not challenged the order passed by this Tribunal in OA No.47l2003 and DCP 3468 passed by this Tribunal before any court of law or Tribunal; Recovery Officer has failed to understand that the Res challenged the proceedings and Final W.P.No.34491l2009 before the Hon'ble Hig in of Cou in DCP N0.3468 in OA No.4712003 Karnataka and the Hon'ble High Court has upheld the order of this Tribunal in the aforesaid Writ Petition and further confirmed in CCC No.1035/2011 and W.P.No.44736/201L by the Hon'ble High Court of Karnataka; Recovery Officer misinterpreted the order of the Hon'ble High Court of Karnataka in the above proceedings and held that the Respondents have discharged the entire amount as per the recovery certificate; the said payment discharges only part of the amount due by the Respondents and not the entire liability of the Appellant; the total amount due by the Respondents as on 30.09.201-6 is Rs.50,90,L53/- which is as per the order passed by this Tribunal in OA No'47/2003 and DCP 3468 and this fact is brought to the notice of the Recovery Officer by the Appellant in its reply to the objection; the Hon'ble High Court order is crystal clear that the Respondents have been granted time till end of December 2010 for payment of entire liaplity the Appellant Bank, which fact has r""n ,irufrstood by Recovery Officer the impugned order (. **,1, l/

AOR No.l /2018

inconsistent with the directions given by this Tribunal in the Final Order dated 20.09.2004 in OA No.47/2003; Recovery Officer failed to consider the reply filed by the Appellant Bank to the objection filed by the Respondents; the impugned order is not in accordance with law and procedure prescribed under Rules (52) to (55) Schedule of Income Tax Act, 1-961; Recovery Officer failed to note that the schedule property is mortgaged in favour of Appellant and it belongs to the Appellant and ordered to be sold as per O.A.No.47l2003 order passed by this Tribunal; Recovery Officer failed to note that the Respondents have not at all challenged the order passed in O.A'No.47l2003 and the same is binding on the Respondents; Recovery Officer has acted in excess of the powers which are not vested with him and exercised the powers which are not vested with him' Appellant Bank further contended that the impugned order has resulted in miscarriage of justice and hence so setting aside the impugned order. Appel produced copy of High Court ordet in OA N0.4712003 W.P.No.34491/2009 vide Annexure-Al-; copy of statement of account vide Annexure-A2; copy of order passed in CCC 1035/2}tl vide Annexure-A3; copy of High Court order passed in W.P.No.44736/2OLL vide Annexure-A4 and copy of order passed in DCP 3468 by Recovery Officer-Il of this Tribunal vide Annexure-A5.

(3) In response the notice, the ResPondent No.2 counsel and filed statement of appeared through objections to the appeal filed by the Appellant Bank, contending that the appeal filed by Appellant Bank is misconceived and the Appellant Bank has suppressed the material facts; Respondent No.1 is a defunct/wound up partnership firm and Respondents No.2 and 3 were its erstwhile partners who obtained SOD (Sanction Overdraft) loan of Rs.20.00 lac, created an equitable mortgage in favour of Appellant Bank and availed a loan of Rs.10.00 said partnership firm was dissolved on further contended that on the demise of to its the It is

AOR No.I /2018

Respondent No.2 was saddled with the responsibility to discharge the debt, liability and outstanding incurred by the firm and further the legal heirs of deceased Respondent No.3 were not partners in the Respondent No.1 firm. Other contentions of Respondent No.2 are, the Appellant Bank obtained ex parte award behind his back in the above Original Application; averments made by the Appellant Bank that the OA was allowed after being contested by the Respondents is false; Respondent No.2 on coming to know about the sale and the order passed by the Tribunal only during October 2009 and he challenged the said notice dated 09.10.2009 before the Hon'ble High Court of Karnataka inW.P.3449L/2009 and in compliance of conditional order of stay dated 24.1L.2009 granted therein, Respondent No'2 deposited Rs.10.00 lac on 04.12.2009; while the matter was pending before the Hon'ble High Court, the Appellant Bank admitted the wrong interest debit of Rs.12,96,595/' to account of Respondents No.1 to 3 and recomputed the outstanding debt as Rs.73,454.13 as per the stateme of accounts produced by the Appellant Bank before the Hon'ble High Court; the said fact of wrong interest debit was admitted by Appellant Bank and was never disputed in the whole proceedings by the Appellant Bank in the said Writ Petition; based on the admissions made by the Appellant Bank, the Hon'ble High Court has made an observation in this regard and disposed of the said Writ Petition on O1.l2.2OlO directing the Respondents to pay the entire amount due by him within the end of December 2010 and further directed the Appellant Bank to return the title deeds to the Respondents on receipt of the dues within one week thereafter, against which order, the Appellant Bank never preferred any appeal and in spite of clearing the dues by Respondent No.2 as stipulated by the Hon'ble High Court, Appellant Bank has not returned the title deeds in spite of repeated requests. Respondent No.2 further contended that the Appellant Bank issued a notice dated 21. Annexure-R8 with respect to the said loan upon Respondent to pay the amount of in DCP N0.3468 in OA No.4712003 fallen due towards the total loan amount due and on receipt of the said notice, the Respondent approached the Appellant Bank clarifying that the Banker's cheque was issued on 22.12.2010 but the bank presented it for clearance only on 01.03.2011- and hence the Respondent is not liable to pay the excess interest charged by the Appellant Bank and is also not liable to pay the other charges as the Respondent has paid the complete amount that was due as on December 2010 as was adjudicated by the Hon'ble High Court of Karnataka in W.P.No.34491/2009 which became final and is binding on the Appellant Bank as no appeal is preferred by them. It is further contended that the notice dated 21.70.2015 which is Annexure-R8 issued by the Appellant Bank has put an end to all the disputes with respect to amount that is due by the Respondent to the Appellant Bank and accordingly the said appeal is liable to be dismissed. It is the further contention of the Respondent No.2 that suppressing the mate the true facts, the Appellant Bank after six years justification issued a notice on 03.72.201

proclamation and auction sale of the mortgaged property claiming a sum of Rs.49,92,200/- which was imaginary, fraudulent and the Respondent No'2 was put to untold agony and harassment in the hands of the Appellant Bank' It is contended that aggrieved by the said unjustifiable claim, the Respondent was constrained to approach the Recovery Officer-l(2), DRT Bangalore by filing an application/ memorandum of objections to the sale proclamation notice dated 03.12.2015 under Rule 16 of the Certificate Rules of 1962 rlw Section 15 of the II Schedule of the Income Tax Act, 1961. It is further contended that the said Recovery Officer after detailed adjudication has rightly held that the Respondent has paid the entire loan amount mentioned in the bank's account statement and allowed the application filed by the Respondent and rejected the rejoinder filed by the CHB/Appellant Bank on 15.09.2016. It is the further contention of the Respondent No.2 that he is a and heart patient and in spite of payment of amount long back in the year 2010 as ad i,at"fov entire

Hon'ble High Court of Karnataka in W.P.No.3449l/2009 which has become final as no appeal is preferred against the said order, the Appellant Bank after a lapse of six years is making illegal and unlawful huge claims against the Respondent No.2 with an intention to know off the property and to take physical possession of the mortgaged property which is the only source of shelter to the Respondent No.2. It is further contended that despite collecting the whole amount, the Appellant Bank has made the aged Respondent No.2 to run from pillar to post to get the title deeds/ documents of the property due to which the Respondent No.2 has undergone untold mental harassment and depression and is doomed to die. In view of the above reasons, the Respondent No.2 has sought for the dismissal/ rejection of the above appeal with exemplary cost and further sought to direct the Appellant Bank to return Respondent No.2 given title deeds/documents to equitable mortgage by him as nd in the interest of riustice

AoR No.1 /2018

equity. The Annexures produced by Respondent No'2 along with his statement of objections are true copy of interim order passed by the Hon'ble High Court of Karnataka in W.P.No.34491/2009 filed by Respondent No'2 vide Annexure-Rl-; true copy of receipt of having deposited Rs.10.00 lac vide Annexure-R2 in compliance of Annexure-R1; true copy of statement of account for the period 04'09'2009 to 20.10.2010 vide Annexure-R3; true copy of Final Order in W.P.344gL/2009 vide Annexure-R4; true copy of the banker's cheque daled 22.L2.20L0 vide Annexure-R5; true copy of the bank challan/endorsement issued by the bank dated 22.12.20L0 depositing the DD in favour of the Appellant Bank vide Annexure-R6; true copy of the statement of loan account issued by the Appellant Bank vide letter dated 28.09.2011 for the period from 01.09'2005 to 18'09'2011 obtained under RTI Act vide Annexure-R7 and copy of notice dated 2L.L0.2015 addressed by the Afpellant -l l nk to Respondent No.3-Mr Krishnappa R, vide Anrfexure- i,

AOR No.1 /2018 in DCP N0.3468 in OA No.47l2003

(4) On the above background, I have gone through the records, heard the arguments advanced by Learned Counsels appearing for both sides and their written arguments; and the following points arise for my consideration:

(a) Whether the Appellant Bank has made out the case to allow the appeal? and

(b) To what relief, the parties are entitled?

REASONS

The present appeal has been filed by the Appellant Bank seeking to set aside the order dated 12.01.2018 passed by the Recovery Officer-Il of this Tribunal stating that the Certificate Debtor has paid the entire dues mentioned in the Bank's Account statement and thus allowing the application filed by the Certificate Debtor on 18.01.2016 and rejecting the Rejoinder filed by the Certificate Holder Bank on 15.09.2016. Both the sides have filed their pl (s) written arguments in the matter. The facts not

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the Respondent No.2 has approached the Hon'ble High Court by filing W.P'No.3449U2009 for quashing the impugned order dated 20.Og.2OO4 in O'A'No'47/2003 passed by the Tribunal and also proclamation of sale on 09'10'2009 fixing the date of auction on 26.1-1.2009 and also praying for a direction to the bank to release the original title deeds deposited by the Petitioner (Respondent No'2 herein) with the Appellant Bank (Respondent in WP) while securing the loan since he was ready to deposit the entire amount due by him. The Hon'ble High Court after hearing the counsels of both sides disposed of the said Writ Petition directing the Petitioner (Respondent No.2 herein) to deposit the entire amount due by him to the bank within end of December 2010 after factoring Rs.10 lac deposited on 05'12'2009 by the Respondent No.2 herein and upon compliance of the said order i.e. depositing entire amount due with interest up to the date of deposit, the title deeds/documents pr the Petitioner (Respondent No.2 herein) with the Responde Bank (Appellant Bank herein) shall be in DCP No.3458 in OA No.4712003 Petitioner (Respondent No.2 herein) within one week thereafter after completion of all the formalities. The said Writ Petition came to be disposed of accordingly. The Petitioner (Respondent No.2 herein) paid Rs.77,200/- which is credited to the account on 0l-.03.2011. The Petitioner/Respondent No.2 herein thereafter filed petition before the Hon'ble High Court of Karnataka in CCC No.1035/2011 praying to punish the accused for willful disobedience of the order passed by the Hon'ble High Court on 01.12.2010 in W.P.No.34491'/2009. The Hon'ble High Court on 29.07.2071dismissed the said CCC No.1035/2011 by passing the following order: "Accused present. This Contempt Petition is filed complaining of disobedience of the order passed by this Court on 1,.72.2010 in W.P.No.3449L/2009. The gri as per the terms of the order, the Petiti paise due Rs.73,454.13 and the same

AOR No.1 /2018 in DCP No.3458 in OA N0.4712003 been deposited in terms of the order but in terms of the order, the Bank is not returning the documents which are in their possession'

2. The learned counsel for the Bank submits, the amounts as held due by the Debts Recovery Tribunal has not been paid. The amount payable is in terms of the order passed by the Tribunal with interest and consequential reliefs granted therein' It is only on payment of the said amount' complainant will be entitled to get back the documents.

3. We do not see any justification in the said submission that the amount mentioned in the order has been Paid and theY are any amount in terms of the award' pay dismissed."

in DCP N0.3468 in OA No.47l2003

(6) The Respondent No.2 herein filed another W.P.No.44736l2011 before the Hon'ble High Court for a direction to the Appellant Bank herein to deliver the documents in terms of the order passed on 01.12.2010 in W.P.No.34491/2009 which was dismissed by the Hon'ble High Court on 16.01.2013. It will be relevant to extract paras- 4 and 5 of the said order of the Hon'ble High Court as under: "4. I have perused paragraph 3 of the order dated l't December 2010. My attention was then invited to the order passed by the Division Bench dated 29th )uly, 20L1, in CCC 1035/2otl seeking action for willful disobedience of the order dated L.12.2010. The order dated 29.07.2011 of the Division Bench reads thus: "Accused present. This Contempt Petition is filed complaining of disobedience of the order passed by this Court on 7.72.2010) W.P.No.34491l2009. The grievance is, as t7 per the terms of the order, the was due Rs.73,454.13 paise and the same amount has been deposited in terms of the order but in terms of the order, the Bank is not returning the documents which are in their possession.

2. The learned counsel for the Bank submits, the amounts as held due by the Debts Recovery Tribunal has not been paid' The amount payable is in terms of the order passed bY the Tribunal with interest and consequential reliefs granted therein. It is only on payment of the said amount, complainant will be entitled to get back the documents'

3. We do not see any justification in the said submission that the amount mentioned in the order has been paid and they are not liable to pay any amount in terms of the award. CCC dismissed'" (emphasis suPPlied) It is in this backdroP, following order was Passed. on 12.10

in OA N0.4712003 "Learned Counsel for Respondent No.1 seeks time to file affidavit of Branch Manager explaining the entry in the statement of account dated 30.3.2010 which, according to him, wrongly shows interest debit of Rs.12,96,595/-. Learned Counsel submits that in fact interest was credited to the loan account and it was wrongly mentioned as 'debited'. It would be necessary, in the interest of justice, to allow the Branch Manager to file additional affidavit explaining the said entry in the statement of loan accou nt. S.O to 16-11-2012.

5. The respondent - Bank has accordingly filed affidavit stating that the statement of account dated 30.3.2010 wrongly shows interest Rs.12,96,595/- and in fact interest was ited the loan account and it was wronglY entioned debited. Keeping that in view, and considering the orders passed by this Court dated 1't December, 2010 and 29th July, 20LL, l do not find any merit in the writ petition. Accordingly, the writ petition is dismissed."

(7) A conjoined reading of the order passed by the Hon'ble High Court on 01'12.2010 in W.P.No.3449l/2009 in CCC No.1035/2011 on 29.07.201'7 and order dated 16.01.2013 in W.P.No.44736/2OLl would amply make it clear that the contentions raised by the Respondent No'2 herein were brought to the notice of the Hon'ble High Court in the aforesaid petitions and the Hon'ble High Court had in the latter portion of para- of the order also referred to an interim order passed on 07.L2.20t2 in W.P.No'44736/207L reading as under:

"2. The learned submits, the amounts as Recovery Tribunal has counsel for held due by Ban not been Debts

AOR No.l /2018 in DCP N0.3468 in OA No.47l2003 amount payable is in terms of the order passed by the Tribunal with interest and consequential reliefs granted therein. It is only on payment of the said amount, complainant will be entitled to get back the documents." Therefore in para-S of the said order of Hon'ble High Court of Karnataka, it was stated that the Respondent Bank has accordingly filed affidavit stating that the statement of account dated 31.03.2010 wrongly shows interest debit of Rs.L2,96,595/- and in fact interest was credited to the loan account and it was wrongly mentioned as debited. Keeping that in view and considering the orders passed by the Hon'ble High Court dated 01.12.2010 and 29.07.2011, the Hon'ble High Court held that they do not find any merit in Writ Petition No.44736/2011 (GM-DRT) and therefore Writ Petition was dismissed.

The whole confusion narration given bY the bank which an affidavit came to be is created because for treatment of filed before the of entry

AOR No.1 /201'8 in DCP N0.3468 in OA No.4712003 Court and the Hon'ble High Court after considering all the aspects has dismissed the Writ Petition filed again by the Respondent No.2 herein in W.P.No.44736/20L1 holding that the claim made by Respondent No'2 before the Hon'ble High Court do not find merit in the writ petition' Thus' the contentions and arguments raised by Respondent No'2 in the present proceedings which are already raised before Hon'ble High Court cannot be permitted to be reagitated again, where finding is already given by Hon'ble High Court' The bank could have been careful to avoid such inadvertence of mistake which was brought to the notice of the Hon'ble High Court and which was taken cognizance of while dismissing the second W.P.No'44736/2OtL on 16'01'2013' Therefore, the contentions that the Respondent raised herein that it is not liable to pay the adjudicated dues as awarded by this Tribunal cannot be accepted as the final order passed in O.A.No.47l2003 has attained finality as the same been challenged before the Appellate Tri Recovery Officer has not considered the orders AOR No.1/2018

subsequent proceedings before the Hon'ble High Court i.e. in CCC No.1035 /20L1 and W.P.No.44736l201-1 before passing the impugned order, which therefore is liable to be set aside as prayed for by the Appellant Bank herein.

(9) The Respondent No.2 herein has also raised other contentions that the Final Order passed by the Tribunal in O.A.No.47l2003 was an expafte order and not contested as alleged by the Applicant Bank. In any case, the said Final Order had attained finality as the same has not been challenged by the Respondent No.2 herein or any other Defendant. The Respondent No.2 cannot question such order which has attained finality. The Respondent No.2 has raised another contention that the claim of the Certificate Holder Bank is barred by limitation. This is also not factually correct as the Respondent No.2 has challenged the execution before the Hon'ble High Court by filing repeated peti stated supra as well as by filing appeal against

(_ Officer before the Tribunal. The time

AOR No.1/2018 in DCP No.3468 in OA N0.4712003 proceedings will have to be excluded for the purpose of computation of limitation under Section 14 of the Limitation Act and by doing so his contentions are found to be devoid of merit. Therefore, these contentions are also liable to be rejected and rejected. I, therefore, pass following:

ORDER

In the result, AOR No.1/2018 in DCP No.3468 in O.A.No.47l2003 stands allowed by setting aside the order dated 12'01'2018 of Recovery Officer-ll. Consequently, Recovery Officer is directed to proceed with execution of DCP No'3468 in O.A.No.4712003 in accordance with law' Before proceeding with execution of DCP No.3468 in O.A.No.47l2003, the Appellant B-q( shall file fresh memo of calculation amount after adjusting the amounts claim by

Defendants including the amount paid during the pendency of Writ Petition No.34491/2009 and subsequently by Respondent No.2 herein' The Appellant Bank shall also not compound penal interest in accordance with law. There will be no order as to cost. (Dictated to the Stenographer, after its transcription and nec€ssary corrections' and pronorn."d by me in the Open Court on this 30'" day of June 2021) (K. MVINDRAN Presiding Officer DRT-I, Bengaluru '*.sh*