M/S Banarsi Das Khanelwal and Sons vs. Canara Bank and Ors. - Court Judgment

SooperKanoon Citationsooperkanoon.com/1214746
CourtDelhi High Court
Decided OnMay-04-2018
AppellantM/S Banarsi Das Khanelwal and Sons
Respondent Canara Bank and Ors.
Excerpt:
#25 in the high court of delhi at new delhi judgment delivered on:04. 05.2018 w.p.(c) 4692/2018 & cm appl.189043/2018 (stay) m/s banarsi das khanelwal and sons ........ petitioners versus canara bank and ors. ........ respondents advocates who appeared in this case: for the... petitioners for the... respondents : mr. ashutosh dubey and mr. arun nagar, advocates : mr. dinkar singh, advocate for r-1 mr. s.n. relan, advocate for r-3 coram: hon'ble mr. justice siddharth mridul hon'ble ms. justice deepa sharma judgment siddharth mridul, j (oral) 1. the present writ petition is directed against an order dated 20.02.2018 in appeal no.426/2016 arising out of s.a. no.24/2009 (drt-ii, delhi), titled as ‘banarsi das khandelwal & sons vs. canara bank & ors.’, w.p.(c) 4692/2018 page 1 of 6 whereby the learned debt recovery appellate tribunal (for short ‘drat’) directed the petitioner to deposit 50% of the amount of debt in question, which the bank had claimed from them, vide their demand notice, as a pre- condition for entertaining the appeal.2. as recorded in the impugned order, the petitioner had given a guarantee for repayment of loan advanced by the respondent bank to m/s. jhalani tools india ltd., the borrower company. the loan extended on behalf of the respondent bank was admittedly a term loan. it is further observed that the borrower company had also obtained loans from various other banks, all of whom became members of a consortium loan account.3. the borrower company defaulted in the subject term loan account of the respondent bank, as also in the other consortium loan accounts. the borrower company has since gone into liquidation and certain assets belonging to them have already been sold by the official liquidator appointed for the said purpose by this court. it is further observed that, from the proceeds of the sale of the said assets, certain amounts have been disbursed to the respondent bank, as well. the said amount is quantified in the aggregate in the sum of rs.66,06,753/-, in relation to the respondent bank. w.p.(c) 4692/2018 page 2 of 6 4. it is forcefully urged on behalf of the petitioner, that they are entitled to the adjustment of the said amount of rs.66,06,753/-, which have already been received from the borrower company by the respondent bank.5. the learned drat having considered the said submissions made on behalf of the petitioner held as follows:-"“reports submitted by the official liquidator in the present proceedings also show that the payment which was made to canara bank on account of its share as per its lending along with other members of the consortium. even otherwise, since in the present the to be sold and the mortgaged property is yet properties which were sold by the official liquidator were not mortgaged in the present term loan account, the appellant cannot take benefit of payment of rs.66,06,753/- to canara bank by the official liquidator.” term loan account 6. the above prima facie conclusion arrived at, was in view of the submission made on behalf of the respondent bank that, the money received from the sale of the assets of the borrower company, through the official liquidator, pertained to the consortium loan account and not to the independent term loan account for which the petitioner had furnished the guarantee.7. in the present case, it is observed that the term loan granted to the borrower company was secured by way of an equitable mortgage of w.p.(c) 4692/2018 page 3 of 6 immovable property belonging to the petitioner. when the respondent bank took steps to sell the mortgaged property, the petitioner approached the learned drt with an application under section 17 of the securitisation and reconstruction of financial assets and enforcement of security interest act, 2002 (hereinafter referred to as ‘the sarfaesi act’). the said application was disposed of by the learned drt vide order dated 18.08.2016, aggrieved by which the petitioner instituted appeal no.426/2016, as afore-stated, before the learned drat.8. the solitary submission made on behalf of the petitioner is to the effect that a one time settlement (for short ‘ots’) has been arrived at between the borrower company and the consortium banks; and assets of the said company were sold in pursuance thereof, in order to comply with the terms and conditions of the said ots and that, therefore, any sums received in pursuance to that ots should enure to the benefit of the petitioner who is the guarantor as well.9. a perusal of the material on record clearly demonstrates that, the said ots has failed and steps taken on behalf of the borrower company to revive the same have been rejected by this court. as such the submission made on behalf of the petitioner is untenable. w.p.(c) 4692/2018 page 4 of 6 10. a plain reading of the provisions of section 18 of the sarfaesi act clearly reflect that, any person aggrieved by an order made by the debt recovery tribunal, has a statutory right to prefer an appeal therefrom, subject however, to the condition laid down in the second proviso thereto. the second proviso postulates that no appeal shall be entertained unless the borrower (which includes the guarantor) has deposited with the drat, 50% of the amount of debt due from him, as claimed by the secured creditor or determined by the drt, whichever is less. although a power has been reserved to the drat, under the third proviso to the said provision, to reduce the amount, for reasons to be recorded in writing, the deposit cannot, in any event, be less than 25% of the debt referred to in the second proviso.11. in other words, there is an absolute bar to entertainment of an appeal under section 18 of the sarfaesi act, unless the condition precedent as stipulated is fulfilled. in the present case, in the facts and circumstance as elaborated hereinabove, we are of the considered view, that the order impugned in the present petition, is neither erroneous nor perverse, so as to warrant any interference by this court, under its extraordinary powers under article 226 of constitution of india. w.p.(c) 4692/2018 page 5 of 6 12. resultantly, the petition is devoid of merit and is accordingly dismissed. the pending application also stands disposed of. siddharth mridul (judge) deepa sharma (judge) may04 2018 dn w.p.(c) 4692/2018 page 6 of 6
Judgment:

#25 IN THE HIGH COURT OF DELHI AT NEW DELHI Judgment delivered on:

04. 05.2018 W.P.(C) 4692/2018 & CM APPL.189043/2018 (Stay) M/S BANARSI DAS KHANELWAL AND SONS ........ Petitioner

s versus CANARA BANK AND ORS. ........ RESPONDENTS

Advocates who appeared in this case: For the... Petitioner

s For the... RESPONDENTS

: Mr. Ashutosh Dubey and Mr. Arun Nagar, Advocates : Mr. Dinkar Singh, Advocate for R-1 Mr. S.N. Relan, Advocate for R-3 CORAM: HON'BLE MR. JUSTICE SIDDHARTH MRIDUL HON'BLE MS. JUSTICE DEEPA SHARMA JUDGMENT

SIDDHARTH MRIDUL, J (ORAL) 1. The present writ petition is directed against an order dated 20.02.2018 in Appeal No.426/2016 arising out of S.A. No.24/2009 (DRT-II, Delhi), titled as ‘Banarsi Das Khandelwal & Sons vs. Canara Bank & Ors.’, W.P.(C) 4692/2018 Page 1 of 6 whereby the learned Debt Recovery Appellate Tribunal (for short ‘DRAT’) directed the petitioner to deposit 50% of the amount of debt in question, which the bank had claimed from them, vide their demand notice, as a pre- condition for entertaining the appeal.

2. As recorded in the impugned order, the petitioner had given a guarantee for repayment of loan advanced by the respondent bank to M/s. Jhalani Tools India Ltd., the borrower company. The loan extended on behalf of the respondent bank was admittedly a term loan. It is further observed that the borrower company had also obtained loans from various other banks, all of whom became members of a consortium loan account.

3. The borrower company defaulted in the subject term loan account of the respondent bank, as also in the other consortium loan accounts. The borrower company has since gone into liquidation and certain assets belonging to them have already been sold by the Official Liquidator appointed for the said purpose by this Court. It is further observed that, from the proceeds of the sale of the said assets, certain amounts have been disbursed to the respondent bank, as well. The said amount is quantified in the aggregate in the sum of Rs.66,06,753/-, in relation to the respondent bank. W.P.(C) 4692/2018 Page 2 of 6 4. It is forcefully urged on behalf of the petitioner, that they are entitled to the adjustment of the said amount of Rs.66,06,753/-, which have already been received from the borrower company by the respondent bank.

5. The learned DRAT having considered the said submissions made on behalf of the petitioner held as follows:-

"“Reports submitted by the Official Liquidator in the present proceedings also show that the payment which was made to Canara Bank on account of its share as per its lending along with other members of the consortium. Even otherwise, since in the present the to be sold and the mortgaged property is yet properties which were sold by the Official Liquidator were not mortgaged in the present term loan account, the appellant cannot take benefit of payment of Rs.66,06,753/- to Canara Bank by the Official Liquidator.” term loan account 6. The above prima facie conclusion arrived at, was in view of the submission made on behalf of the respondent bank that, the money received from the sale of the assets of the borrower company, through the Official Liquidator, pertained to the consortium loan account and not to the independent term loan account for which the petitioner had furnished the guarantee.

7. In the present case, it is observed that the term loan granted to the borrower company was secured by way of an equitable mortgage of W.P.(C) 4692/2018 Page 3 of 6 immovable property belonging to the petitioner. When the respondent bank took steps to sell the mortgaged property, the petitioner approached the learned DRT with an application under Section 17 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘the SARFAESI Act’). The said application was disposed of by the learned DRT vide order dated 18.08.2016, aggrieved by which the petitioner instituted Appeal No.426/2016, as afore-stated, before the learned DRAT.

8. The solitary submission made on behalf of the petitioner is to the effect that a One Time Settlement (for short ‘OTS’) has been arrived at between the borrower company and the consortium banks; and assets of the said company were sold in pursuance thereof, in order to comply with the terms and conditions of the said OTS and that, therefore, any sums received in pursuance to that OTS should enure to the benefit of the petitioner who is the guarantor as well.

9. A perusal of the material on record clearly demonstrates that, the said OTS has failed and steps taken on behalf of the borrower company to revive the same have been rejected by this Court. As such the submission made on behalf of the petitioner is untenable. W.P.(C) 4692/2018 Page 4 of 6 10. A plain reading of the provisions of Section 18 of the SARFAESI Act clearly reflect that, any person aggrieved by an order made by the Debt Recovery Tribunal, has a statutory right to prefer an appeal therefrom, subject however, to the condition laid down in the second proviso thereto. The second proviso postulates that no appeal shall be entertained unless the borrower (which includes the guarantor) has deposited with the DRAT, 50% of the amount of debt due from him, as claimed by the secured creditor or determined by the DRT, whichever is less. Although a power has been reserved to the DRAT, under the third proviso to the said provision, to reduce the amount, for reasons to be recorded in writing, the deposit cannot, in any event, be less than 25% of the debt referred to in the second proviso.

11. In other words, there is an absolute bar to entertainment of an appeal under Section 18 of the SARFAESI Act, unless the condition precedent as stipulated is fulfilled. In the present case, in the facts and circumstance as elaborated hereinabove, we are of the considered view, that the order impugned in the present petition, is neither erroneous nor perverse, so as to warrant any interference by this Court, under its extraordinary powers under Article 226 of Constitution of India. W.P.(C) 4692/2018 Page 5 of 6 12. Resultantly, the petition is devoid of merit and is accordingly dismissed. The pending application also stands disposed of. SIDDHARTH MRIDUL (JUDGE) DEEPA SHARMA (JUDGE) MAY04 2018 dn W.P.(C) 4692/2018 Page 6 of 6