CANARA BANK vs Daaj hotels and resorts Pvt Ltd on 9 April 2021

ORDER

The facts of the case may be stated in brief as follows: -

1. The appellant in this case is Canara Bank and the respondents are

1) Daaj Hotels, 2) Sri Bhupinder Singh Sahney, 3) Smt.Brijween Kau Sahney, 4) SBI CAP Trustee Company Ltd., 5) State Bank of India, 6) Phoenix ARC Private Limited.

2. In the beginning the appellant along with respondents 5 and 6 filed the OA against the respondents 1, 2, 3 & 4 in OA No.3549 of 2017 under Section 19 of the RDB Act 1993 for the recovery of a total sum of Rs.131,88,29,454/- i.e., a sum of Rs.64,37,60,776/- with interest at 13.90% per annum with monthly rests to the 5th respondent,a sum of Rs.50,47,47,470/- with interest at 15.80% per annum with monthly rests to the appellant and a sum of Rs.17,13,21,208/- with interest at 14.35% per annum with monthly rests to the 6th respondent from the date of application till the date of realization together with cost and interest to be shared on a PariPassu basis.

3. The present appeal is filed by the appellant bank under section 20 of the RDBActchallenging the order dated 03-01-2020 passed by the Debts Recovery Tribunal II, Hyderabad in OANo. 3549 of 2017.

4. The 1st, 2nd, 3rd respondents approached the appellant, the 5th and 6th respondents for credit facilities for their hotel project in Hyderabad and the appellant, the 5th and 6th respondents considered the request for the credit facilities and sanctioned a Term Loan of Rs.80 Crores as a consortium loan at the rate of Rs.40 Crores, Rs.30 Crores and Rs.10 Crores respectively with interest at 10% per annum by letters dated 21.11.2006, 21.02.2007 and 30.09.2015 and the said Term Loan was repayable in 31 quarterly instalments. Sufficient securities were obtained by the consortium. Thereafter the Term Loan facilities were rescheduled on 30.11.2008 and the respondents 1 to 3 got sanctioned another loan for Rs.25 Crores by letters dated 21.06.2010, 29.12.2010 and 30.09.2015 and later the loans were restructured under the CDR mechanism and respondents 1 to 3 also agreed for the appointment of SBI CAP Trustee Company Ltd (4th respondent) as a security trustee to act and hold the securities for the benefit of the consortium banks by letter dated 05.04.2013. The respondents 2 and 3 pledged 58.49% of the total equity of the 1st respondent company as security for the credit facilities availed and the third member of consortium of banks ie., the State Bank of Hyderabad assigned the debt to the 6th respondent and while so, the 1st respondent company and the 2nd and the 3rd respondents failed to repay the amounts that they had borrowed and therefore the members of the consortium were forced to file an OA before

DRT II, Hyderabad. Thereafter, respondents 1, 2 and 3 entered into an One Time Settlement with respondents 5 and 6 and by filing an IA in IA No.3710 of 2018 obtained a compromise decree dated 08.08.2018 against respondents 1, 2 and 3. The OTS proposal made to the appellant by respondents 1, 2 and 3 failed and therefore the appellant continued to pursue the OA that it had filed along with respondents 5 and 6 and the said OA was allowed for Rs.2021.98 Lakhs, subject to respondents 1, 2 and 3 repaying the OA amount on or before 01.03.2020 failing which the appellant would be entitled to the amount claimed in the OA with future interest.

5. A reading of the order of the Tribunal below reveals that the credit facilities had been availed by the respondent No.1 company from the consortium consisting of the appellant 5th and 6th respondents. It is also seen that the appellant took part in the joint lenders forum meet held on 11.05.2017 to consider the OTS proposal submitted by the 1st respondent company and the minutes of the meeting had been recorded to the effect that with OTS proposal had been accepted by all the members of the consortium which included the appellant. It is also seen that the OTS proposal had been moved by the respondents 1, 2 and 3 and accepted by all parties and further that it is also seen it was in conformity of the circular of the RBI dated 05.05.2017. It is seen that through Exhibit B-7 letter, the appellant bank had agreed to receive 2021.98 Lakhs towards full settlement of the claim and that the amount was to be paid by the 1st respondent company on or before 01.03.2020 and that the payment of management fee was not at all the subject matter of the OTS. A perusal of the oral testimony of AW-1 does not indicate in any way that the management fee forms part of the OA claim. It is also seen that in the absence of any mention about the management fee in the OTS terms the appellant cannot insist on payment of the management fee to give effect to the OTS. It can also be seen that the appellant is entitled to a decree against the respondents 1, 2 and 3 in terms of the OTS as set out in Exhibit B- 7 and the decree would be to the extent of Rs.2021.98 Lakhs, subject to respondents 1, 2 and 3 paying the same on or before 01.03.2020 failing which the appellant bank would be entitled to the amount claimed in the OA with future interest.

6. The Learned Counsel appearing on behalf the appellant painstakingly took this Tribunal through the matrix of the case and made an effort to demonstrate that the management fee has to be paid by the respondent hotel and distinguished the various judgments to enable this Tribunal to arrive at the conclusion that the management fee has to be paid and prayed that the appeal may be allowed.

7. The Learned Senior Counsel appearing on behalf of the 1st respondent hotel took this Tribunal through the facts of the case and through the documents in detail and explained as to how the appellant cannot claim the management fee and added that the order passed by the Tribunal below is proper and this appeal requires only to be dismissed and relied upon the following decisions in support of the respondent hotel’s case. i. AIR2001SC3095 “Central Bank of India vs Ravindra and others”. ii. AIR2010SC218 “Sardar Associates and others vs Punjab Sind Bank and others.”

8. The detailed written arguments were filed by the parties and the same form part of record.

9. The points that arise for consideration in the appeal may be stated as follows: -

i. Whether the respondents 1, 2 and 3 had availed the credit facilities from the consortium of the appellant, consisting of the respondent No.5 and 6 and the appellant.

ii. Whether the respondents 1, 2 and 3 had arrived at an OTS with the consortium.

iii. Whether the OTS agreement was in consonance with the RBI circular.

iv. Whether there was any mention about any management fee receivable from the respondents 1, 2 and 3 by the appellant in the OTS agreement and in the absence of the same is the appellant bank entitled to claim the same.

i. A reading of the order of the Tribunal below reveals that the respondents 1, 2 and 3 had requested for credit facilities and that same had been sanctioned by the consortium of Banks and further that during the course of the tenure of the loan, an OTS was brought into effect. This point is answered accordingly.

ii. A reading of paragraph 17 of the order of the Learned Tribunal below reveals that the oral testimony of AW-1 clearly indicates the existence of the OTS and more particularly the absence of a claim of the management fee in Exhibit B-7. The oral testimony also reveals that there has been no claim whatever for the management fee in the OA wherefrom it follows that OTS was brought into existence sans the management fee and a claim for management fee cannot be visualized either in the terms of the OTS or in the OA claim.

iii. A reading of the paragraph 14 of the order of the Tribunal below amply reveals that the terms and conditions of the OTS had been accepted by all the members of the consortium of banks and that it is as per the circulars of the RBI.

iv. It is seen from the order passed by the Tribunal below that OTS does not contain any material to infer any condition of payment of any kind of management fee and such being the case the appellant was not in any manner entitled to payment of any management fee.

10. Point Nos.i to iv have been answered against the appellant.

11. Therefore from the fact the Learned Presiding Officer, DRT II, Hyderabad,has in her order has rightly considered the materials on record and has correctly sifted through the evidence available in the case before arriving at her conclusions; from the fact that she has properly appreciated the binding nature of RBI guidelines / circulars; from the fact that she has properly framed the questions for consideration and has correctly answered them; from the fact that all the questions that have been framed by this Tribunal have been answered against the appellant this Tribunal has to arrive at the inescapable conclusion that the appeal warrants only a dismissal.

12. Accordingly, the appeal is dismissed and the order of the Learned Presiding Officer, DRT II, Hyderabad is confirmed.

13. Parties to bear their own costs.

(Dictated to the Stenographer, transcribed by him, corrected, signed and pronounced by me on this the 9thday of April, 2021).

Sd/= (Dr. T. Ravi Shankar) Chairperson

True / Free copy Sd/= (Dr.T. Ravi Shankar Chairperson)