2010 Supreme(SC) 698

2010 (7) Supreme 620
SUPREME COURT OF INDIA
G.S. Singhvi and Asok Kumar Gunguly, JJ.
Indian Bank — Appellant
versus
M/s. Blue Jaggers Estates Ltd. and others — Respondents
Civil Appeal Nos. 6395-6396 of 2010.
(Arising out of SLP(C) Nos. 4981-4982 of 2010)
Decided on : 9-8-2010

Headnote:Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002- Section 13(2),17 -Appellant-Bank sanctioned loan to M/s. N.S. Investments, a partnership firm in 1989 and again in 1991- After some time, the account of M/s. N.S. Investments was declared as non-performing asset-Initiation of proceedings under the Act since the respondents failed to clear the outstanding dues -Appeals against order passed by High Court whereby direction given by the Appellate Tribunal to deposit Rs.3 crores was held to be a nullity because the Tribunal had not determined the amount due. - Undisputedly, interlocutory conditional order passed by Appellate Tribunal had become final because respondents’ challenge to that order was negatived by High Court and this Court- Therefore, the respondents could not be allowed to indirectly question correctness of that order in the appeal preferred by the appellant against order passed by the High Court in the subsequent writ petition- Order impugned in appeal could not be sustained on premise that the Tribunal had not determined the amount required to be deposited by the respondent under Section 18(1) of the Act- A reading of order dated 9.6.2008 showed that the Tribunal had recorded a specific finding that the appellant-Bank was entitled to claim entire amount of Rs.11,59,08,727/-, which was due as on 30.9.2007 with future interest- The argument of respondents that rate of interest was unconscionable, expropriatory and contrary to law also held liable to be rejected because at no stage respondents had questioned the terms on which loan and other financial facilities were extended by the appellant.- Respondents had signed the agreement with open eyes and agreed to abide by the terms on which the loan, etc. was offered by the appellant-Therefore, the doctrine of unconscionable contract could not be invoked for frustrating the action initiated by the appellant for recovery of its dues-The respondents’ accusation that appellant had not treated them fairly sans credibility- It was they who had failed to repay the outstanding dues- Not only this, after signing two compromise deeds, they failed to fulfil their commitment and delayed the payment of Rs.63.5 lakhs by almost three years- Impugned order of the High Court set aside insofar as it declared that the direction given by the Appellate Tribunal to the respondents to deposit Rs.3 crores stands complied-Appeal allowed. (Paras 15 to 20)

       Facts of the Case :

        These appeals filed for setting aside order dated 23.10.2009 passed by the Division Bench of Madras High Court are illustrative of how a defaulting borrower can use the court process for frustrating the action initiated by a bank under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short ‘the Act’) for recovery of its dues.

       Findings of the Court :

        An order was passed by High Court whereby direction given by the Appellate Tribunal to deposit Rs.3 crores was held to be a nullity because the Tribunal had not determined the amount due. . Undisputedly, interlocutory conditional order passed by Appellate Tribunal had become final because respondents’ challenge to that order was negatived by High Court and this Court. Therefore, the respondents could not be allowed to indirectly question correctness of that order in the appeal preferred by the appellant against order passed by the High Court in the subsequent writ petition. Order impugned in appeal could not be sustained on the premise that the Tribunal had not determined the amount required to be deposited by the respondent under Section 18(1) of the Act-.A reading of order dated 9.6.2008 showed that the Tribunal had recorded a specific finding that the appellant-Bank was entitled to claim entire amount of Rs.11,59,08,727/-, which was due as on 30.9.2007 with future interest. The argument of respondents that rate of interest was unconscionable, expropriatory and contrary to law was also held liable to be rejected because at no stage respondents had questioned the terms on which loan and other financial facilities were extended by the appellant. Respondents had signed the agreement with open eyes and agreed to abide by the terms on which the loan, etc. was offered by the appellant.Therefore, the doctrine of unconscionable contract could not be invoked for frustrating the action initiated by the appellant for recovery of its dues.The respondents’ accusation that appellant had not treated them fairly sans credibility.It was they who had failed to repay the outstanding dues. Not only this, after signing two compromise deeds, they failed to fulfil their commitment and delayed the payment of Rs.63.5 lakhs by almost three years. Impugned order of the High Court set aside insofar as it declared that the direction given by the Appellate Tribunal to the respondents to deposit Rs.3 crores stands complied.Appeal was allowed.

       Result : Appeal allowed.