CENTRAL BANK OF INDIA Vs. SANJAY GOSWAMI

JUDGEMENT

(1.) CENTRAL Bank of India, as appellant herein, has approached this Tribunal challenging the judgment and order dated 27th September, 2005 passed by learned Debts Recovery Tribunal -II, Kolkata in O.A. No. 39 of 2004. Grievances of the appellant, as ventilated herein, may briefly be stated as follows:

(2.) THE appellant, as applicant, filed one application under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as RDDBFI, Act, 1993) before the DRT -II, Kolkata against the respondent/defendants for recovery of a sum of Rs. 40,66,818/ - (Rupees forty lacs sixty -six thousand eight hundred eighteen only) including interest as calculated upto 29th February, 2004 along with pendente lite interest at the rate of 21.75% per annum and interest on judgment till realisation of the entire dues. Respondent No. 1 is a proprietorship concern. It obtained term loan which was subsequently converted into overdraft facilities by the appellant's New Jalpaiguri Branch against hypothecation of business assets and by execution of demand promissory notes and other security documents. The term loan which was subsequently converted into the overdraft facilities was guaranteed by the respondent Nos. 4, 5 and 6 who created equitable mortgage of their immovable properties. Respondent No. 1 made an application before the appellant Bank on 2nd August, 1995. Being requested by respondent No. 2, being the proprietor of respondent No. 1 it was converted into an overdraft limit account. Respondent No. 2 duly executed an undertaking dated 8th November, 1995, demand promissory note of Rs. 10/ - lacs dated 8th November, 1995 letter of waiver dated 8th November, 1995 term loan agreement dated 8th November, 1995 and letter of hypothecation dated 8th November, 1995 to secure payment of cash credit against goods. On 21st May, 1996 respondent No. 5 visited Siliguri Branch of the appellant -Bank having authority to record creation of equitable mortgage in respect of two immovable properties. The loan facility granted and/or sanctioned by the appellant -Bank to the respondent No. 1 was repayable on demand along with interest at the rate of 21.75% per annum with quarterly rests from the date of disbursement of money. In course of time, the loan account of respondent No. 1 became irregular and appellant -Bank by letter dated 19th December, 2002 recalled the loan facility and called upon the respondents to pay the outstanding dues along with interest thereon. For the purpose of recording transaction concerning the aforesaid loan account the appellant -Bank in its usual manner opened a current account. After giving due credit for all sums paid by or received on behalf of the respondent No. 1 and after appropriating all items of credit to the item of debt there became due and payable an aggregating sum of Rs. 40,46,818/ - including interest at the contract rate calculated upto 29th February, 2004.

(3.) IN response to this, respondent Nos. 1 and 2 filed affidavit -in -opposition, inter alia denying all the material allegations made by the appellant -Bank. Respondents admitted that on 8th November, 1995 a term loan facility of Rs. 10/ - lacs (Rupees ten lacs only) was sanctioned by the appellant -Bank and it was subsequently converted into overdraft facilities. After February, 1996 the appellant -Bank did not allow the firm to operate the Bank account for reasons of default and this resulted in closing down of the business. Respondent No. 1 at the first opportunity informed the learned DRT that it was interested to have One Time Settlement (OTS) under the Reserve Bank of India norms. A letter in this regard was submitted on 31st July, 2004. The appellant -Bank by a petition dated 15th December, 2005 informed the learned Presiding Officer, that the appellant -Bank recommended the said case for settlement under OTS to the Regional Office. respondent No. 1 deposited an amount of Rs. 1,07,500/ - (Rupees one lakh seven thousand five hundreds only) in the Bank. The hearing of the matter before the learned Tribunal was adjourned on quite a few occasions and it was essentially for effecting a compromise. Learned Tribunal took serious note of consistent negligence and inaction on the part of the Bank officials including the Chairman. There is a proceeding for recovery of outstanding under OTS i.e., the sum of Rs. 3,42,758.56 (Rupees three lacs forty -two thousand seven hundred fifty -eight and fifty -six paise) after adjustment of 25% i.e., the sum of Rs. 1,07,660/ - (Rupees one lakh seven thousand six hundred sixty only). Respondent No. 2 further mentioned about the series of ailments he had been passing through. He had further undertaken that he would deposit the balance certificate amount by instalments within 2 (two) months after the appellant agrees to accept the same and receive an amount of Rs. 3,42,758.51 (Rupees three lacs forty -two thousand seven hundred fifty -eight and fifty -one paise) as full and final payment. It had been further claimed that after declaring the account as NPA, the appellant Bank is not entitled to charge interest. The appellant -Bank could not have had any discretion to revive the said account with giving prior intimation and without getting permission of RBI.