UNIDECORS Vs. ORIENTAL BANK OF COMMERCE

JUDGEMENT

(1.) THIS appeal impugns the order dated 5.11.2008 passed by DRT -II, Delhi whereby Appeal No. 56/2004, M/s. Unidecors & Anr. v. Oriental Bank of Commerce, has been disposed of with the direction to the Recovery Officer (RO), to calculate the amount due after adjusting the payments made by the CDs/appellants from time -to -time and thereafter to calculate the interest on the reducing balance basis. The RO was further directed to call upon the CDs/appellants to pay the balance amount within 30 days and in case of their failure to pay such amount, to recover the amount due along with future interest @ PLR, i.e., 11% p.a. simple by sale of the mortgaged property, in accordance with law. Briefly stated, the facts giving rise to this appeal are that O.A. No. 13/2002 filed by the respondent Bank against the appellants was allowed ex parte by the DRT on 5.8.2002 directing the defendants to pay the claimed amount of Rs. 11,11,135.32 together with pendente lite and future interest @ 17% per annum with quarterly rests and cost and a Recovery Certificate (RC) was accordingly issued. The RO issued attachment order of the mortgaged property for the recovery of the decreed amount. Thereafter, the Certificate Debtors (CDs) put in their appearance before the RO and also approached the Certificate Holder (CH) Bank by making a proposal to settle the account on payment of NPA amount of Rs. 8,89,242/ - claiming adjustment of Rs. 3 lacs paid in 2002 and making an upfront payment of Rs. 1 lac to show their bona fide. However, they again made a revised proposal dated 29.5.2004 for settlement in Rs. 9 lacs with interest @ 11% per annum simple and deposited a further sum of Rs. 1 lac with the request to keep the deposited amounts in an interest bearing no lien account until a decision is taken on settlement proposal. On 21.7.2004, the CH Bank, in reply to the proposal letter dated 29.5.2004 of the CDs., offered to settle on payment of Rs. 9.84 lacs (by charging interest @ 11 % from the date of NPA) and showing the mode of payment in the manner that Rs. 2 lacs already deposited as upfront and balance in 9 EMI with interest @ PLR simple from the date till repayment of the entire settled amount and asked the CDs to convey their acceptance of the terms of offer. The CDs, disputing the settlement amount of Rs. 9.84 lacs as well as showing the deposits of Rs. 2 lacs only, made another proposal, vide letter dated 10.8.2004, for settlement in Rs. 9 lacs and, adjusting Rs. 5 lacs, offered to pay the balance amount in 9 to 12 equal monthly instalments with interest @ PLR simple. The CH Bank did not respond to this offer and made a statement before the RO that no settlement proposal was pending for consideration. Accordingly, the RO directed the issuance of the sale proclamation of the mortgaged property but, vide order dated 13.10.2004, deferring the publication of the gist of the sale proclamation in the newspaper, directed the CDs to approach the CH Bank to resolve the issue regarding adjustment of Rs. 3 lacs deposited in 2002. However, since the issue could not be resolved, the RO directed the CH Bank to proceed to complete the formalities for the sale of mortgaged properties, vide order dated 27.10.2004.

(2.) BOTH the aforesaid orders dated 13.10.2004 and 27.10.2004 were challenged by the CDs in appeal filed before the DRT under Section 30 of the RDDBFI Act. The learned Presiding Officer (PO) of the DRT found that the Bank's offer for settlement in Rs. 9.84 lacs was made after making adjustment of Rs. 3 lacs deposited by the CD/appellant in 2002. The PO also found that pursuant to the offer letter dated 10.8.2004 the CDs had made payments in instalments from 28.9.2004 till 14.7.2005 during the appeal and accordingly disposed of the appeal by order dated 5.11.2008 with the direction to the RO, as mentioned above. Feeling aggrieved, the CD/appellants directed this appeal against that order.

(3.) HE also pointed out that the appellants had approached the Bank for settlement on the basis of the revised guidelines dated 29.1.2003 issued by the Reserve Bank of India (RBI), but the Bank did not give the benefit of the said guidelines on the ground that the appellants' account was classified as NPA on 30.11.2000 whereas the said guidelines were applicable to those accounts which were classified as doubtful NPA on or before 31.3.2000. He further submitted that on 3.9.2005 the RBI issued another revised guidelines on one time settlement scheme which were applicable to all such accounts which were classified as NPA on or before 31.3.2004 with outstanding balance of Rs. 10 crores or below on the date of classification as doubtful NPA and as per its settlement formula, 100% of the outstanding balance in the account as on the date on which the account was categorized as doubtful NPA was to be recovered and the appellants' case was fully covered with that settlement scheme but again the Bank did not give any benefit of that scheme to the appellants and the learned DRT below also did not properly consider this circumstance. Mr. Nagar, relying upon the observation of the DRAT, Chennai made in the case of Neetu Autos Pvt. Ltd. & Ors. v. UCO Bank, : I (2003) BC 62, contended that it was the duty of the Bank to give benefit of the RBI guidelines to the borrower for settling the matter.