BADMA TOOL MANUFACTURERS PVT LTD Vs. INDIAN BANK

JUDGEMENT

(1.) This Writ Petition has been filed to declare that the award passed by the Lok Adalat on 28.8.2004 is binding on the Respondent and any action taken by the Bank in derogation of Legal Services Authorities Act is not valid and binding under any law in force including the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short, "SARFAESI Act").

(2.) The Writ Petitioner is a Private Limited company. In the year 1990, for its business purpose, Petitioner has availed various financial facilities - (i) open cash credit facility of Rs. 1,30,000/-, (ii) medium term loan to the tune of Rs. 25,00,000/- and (iii) supply bills purchased facility of Rs. 2,80,000/-. The Writ Petitioner failed to pay the amounts and committed default in repaying the amount due. The loan accounts have been classified as Non-Performing Asset since 31.3.1997. Originally, the claim was filed in 1998 in O.A. No. 1706 of 1998 before the Debt Recovery Tribunal-I, Chennai, which was later transferred to Debt Recovery Tribunal-II, Chennai in O.A. No. 1405 of 2001. Debt Recovery Tribunal-II passed the order on 1.4.2002 in O.A. No. 1405 of 2001 directing the Petitioner to pay a sum of Rs. 1,07,16,917.72 towards the loan availed from the Respondent Bank and consequently the Recovery Certificate was issued. Subsequently, the matter was considered by the Lok Adalat and by consent of both parties, Award was passed for a sum of Rs. 75,00,000/-, whereunder the Petitioner agreed to pay Rs. 10 lakhs on 1.9.2004, Rs. 10 lakhs on or before 10.9.2004 and the balance amount of Rs. 55 lakhs on or before 31.12.2004 with PLR simple interest from 28.8.2004 till the date of full and final payment. Further the Award contained the conditional clause to the effect that in case of default in the payment of the said amounts as per the compromise, the Respondent bank is entitled to recover the entire amount as prayed for in the O.A. On the basis of the award of Lok Adalat, final order was passed in O.A. No. 1405 of 2001 on 14.10.2004. The Petitioner paid only Rs. 10 lakhs and failed to comply with the terms of the award passed in the Lok Adalat. Petitioner filed applications -I.A. Nos. 438 and 439 of 1996 on 4.9.2006 in the Debt Recovery Tribunal (in short, "DRT") to direct the Respondent bank to extend time for payment of the said amount and also to stay further proceedings in the recovery certificate No. 99/2002. Application for extension of time was dismissed by DRT.

(3.) The Petitioner filed appeal in M.A. No. 148 of 2007 on the file of DRAT and on the date of hearing, on 29.8.2007, the counsel for the Petitioner was not present and hence the said appeal was dismissed and DRT was directed to proceed with the matter in accordance with law. Thereafter, the Petitioner has filed Petition - I.N. No. 668 of 2007 in M.A. No. 148 of 2007 to review the order passed by the DRAT. The said Review Application -I.N. No. 668 of 2007 was dismissed on 9.1.2008. The said order dismissing the Review Application was challenged in W.P. No. 3738 of 2008. Pointing out that the Petitioner did not choose to pay the remaining amount the said writ petition was dismissed on 13.2.2008.