SHANTHI VIHAR Vs. SYNDICATE BANK

JUDGEMENT

(1.) FOR the Application filed by the applicants/plaintiffs under Order XIV, rule 8 of the original side rules read with Order 39, rules 1 and 2 of the Civil Procedure Code, 1908, to grant interim injunction restraining the respondent and their men from bringing the property mentioned in the schedule to the judge's summons to sale pursuant to the recovery certificate obtained in T.A. No. 210 of 1997, pending disposal of the suit.

(2.) THE case in brief is as follows : THE first applicant is carrying on hotel business and enjoying credit facilities with the respondent. THE first applicant offered security of the property bearing door No. 140, Royapettah High Road, Luz, Chennai-4 for the amounts advanced by the bank. THE said property originally belonged to the father of the third applicant and the uncle of the second applicant who created equitable mortgage by deposit of title deeds. THEre was default in repayment of the amount due to the respondent-bank and the bank filed C.S. No. 752 of 1993, on the file of this court for recovery of the amount. After the constitution of the Debt Recovery Tribunal the suit was transferred to the Tribunal and renumbered as T.A. No. 210 of 1997. His father died on June 7, 1997, and necessary application was taken out by the respondent to implead his legal heirs. Individual notice was not served on the legal heirs but publication was effected. THE legal heirs were never put on notice which resulted in ex parte decree being passed against the firm and its partners and the legal heirs of the late J. Sudarsanlal Gupta on April 28, 1998. On May 9, 1981, as against the payment of Rs. 3 lakhs, a portion of the property mortgaged in favour of the bank having an extent of 3 grounds and 2, 361 sq. ft. was, released by the bank. By letter dated May 9, 1981, the respondent-bank released an extent of 3, 000 sq. ft. from the property mortgaged. THE first applicant had credit facilities with the respondent-bank at the Royapettah and Nandanam branches. Out of the properties given as security two portions of the property were released in 1981. THE property described in the schedule was given as security for the dues of Atomas Exports Pvt. Ltd., in which his father was one of the directors. An offer for settlement was made by the father and the respondent-bank by letter dated November 10, 1987, accepted the offer and agreed to release the property consisting of ground and first floor portion together with its proportionate undivided share of land on payment of Rs. 150 per sq. ft. for the ground floor and Rs. 125 per sq. ft. for the first floor. THE respondent further agreed to retain the constructed area in the basement with the undivided interest over the land. As per the terms of acceptance, the father was required to execute an agreement and accordingly the father executed an agreement on November 10, 1987, whereby the respondent-bank agreed to release its charge over the constructed portions of the ground floor and first floor aggregating to 30, 000 sq. ft. in piecemeal against proportionate payment of amounts. Pursuant to the agreement, 29 agreements have been entered into for sale of the constructed area in the ground floor and 21 agreements have been entered into for sale of constructed area in the first floor. A sum of Rs. 2, 44, 200 was paid to the bank and the balance of sale consideration has been set apart for payment to the respondent-bank.THE applicants called upon the respondent-bank to release a portion of the property on payment of the proportionate value of the property. THE consideration realised out of sale of the property has been retained by his father since the bank has not co-operated and failed to give clearance to the purchasers. Suppressing the agreement dated November 10, 1987, the bank obtained recovery certificate from the Debt Recovery Tribunal in respect of portions of property already released by them and filed execution proceedings. THE agreement dated November 10, 1987, has been acted upon by both the parties. THE Debt Recovery Tribunal has no jurisdiction to entertain a claim application from any person other than the financial institution. THE applicants issued a notice on July 28, 1999, and the respondent acknowledged the same. No action has been taken to rectify the illegality. Now the respondent is proceeding with the execution against the entire property. THE recovery certificate issued by the Tribunal is null and void and it has been obtained fraudulently by suppressing the material facts. Hence this application.

(3.) PURSUANT to the agreement, 29 agreements have been entered into for sale of the constructed area in the ground floor and 21 agreements have been entered into for sale of the constructed area on the first floor.Learned senior counsel for the applicants stated that they called upon the bank to release a portion of the property on payment of the proportionate value of the property. The bank has not co-operated and has failed to give clearance to the purchasers. The bank also suppressed the agreement dated November 10, 1987, and obtained a decree in the Recovery Tribunal and also later obtained recovery certificate from the Tribunal in respect of the portions of property already released by them and filed execution proceedings. Since the agreement dated November 10, 1987, has been acted upon by both the parties, the Tribunal has no jurisdiction to entertain a claim application from any person other than the financial institution and in fact, the applicants sent a notice dated July 28, 1999, and the bank has not chosen to send any reply. Under the circumstance, the bank is not entitled to bring the property for sale based upon the recovery certificate issued by the Tribunal as it was obtained fraudulently by suppressing the material facts.