Adherence to settlement terms is crucial, and failure to fulfill obligations can lead to dismissal of appeals and legal proceedings for recovery of dues.

B. P. Colabawalla, J.

1. This Writ Petition under Article 226 of the Constitution of India challenges the order dated 28th June, 2013 passed by the Debts Recovery Appellate Tribunal (for short, the “DRAT”) in Miscellaneous Appeal No.184 of 2010. By the impugned order, the Appeal filed by the Petitioners was dismissed by the DRAT.

2. The brief facts giving rise to the present controversy are that, Respondent No.1 – Bank granted various facilities to Petitioner No.1 in the year 1999. The credit facilities availed by the Petitioners were secured by an equitable mortgage of three properties situated at Andheri(E) and Vasai, District Thane. These properties were owned by Mr. Jujee A. Poonawala, Mr. Moiz A. Poonawala and Fatima M. Baxamusa, the guarantors of Petitioner No.1.

3. In view of the fact that Petitioner No.1 failed to pay its dues, the Respondent Bank filed an Original Application before the Debt Recovery Tribunal (for short, the “DRT”) being Original Application No.389 of 2002. This Original Application was filed against Petitioner No.1, its partners and the guarantors. Petitioner Nos.1 and 2 herein contested the Original Application while the guarantors and other partners of Petitioner No.1 did not contest the same.

4. During the pendency of this Original Application, on 9th June, 2006 Petitioner No.1 submitted a compromise/settlement proposal in the sum of Rs.65.77 lacs. This proposal was duly accepted by the Respondent Bank on the terms and conditions set out in its letter dated 26th June, 2006. Despite the Respondent Bank giving several opportunities and extensions to settle their entire dues for a sum of Rs.65.77 lacs, admittedly, the Petitioners defaulted in adhering to the terms and conditions of the said settlement proposal. In these circumstances, the Original Application filed by the Respondent Bank was proceeded with, and by an order dated 20th November, 2008 this Original Application was allowed and the Petitioners were directed to pay to the Respondent Bank a sum of Rs.87,48,616.06/- together with simple interest @ 10% per annum from the date of filing of the Original Application till payment. A Recovery Certificate was also issued accordingly.

5. After the aforesaid Original Application was decreed in favour of the Respondent Bank, the Petitioners once again, on 19th December, 2008 approached the Respondent Bank and submitted a proposal to settle the matter for a sum of Rs.75 Lacs. This proposal was accepted by the Respondent Bank and the same was duly communicated to the Petitioners by letter dated 16th February, 2009. The terms and conditions of this settlement inter alia provided that (a) Rs.50 lacs would be payable within 10 days of sanction and the documents in respect of one of the mortgaged properties (in the name of Mr Abbasbhai Poonawala) would be released; and (2) the balance amount of Rs.25 lacs would be payable on or before 28th February, 2009 and thereafter, the documents in respect of the mortgaged property in the names of Mr Moiz A. Poonawala and Mr Jujer A. Poonawala would be released.

6. Admittedly, the Petitioners could not adhere to the time frame set out in the said letter. Despite this, vide its letter dated 10th June, 2009 the Respondent Bank gave one more opportunity to the Petitioners to pay the amount of Rs.75 lacs, failing which the Petitioners were informed that it would take over possession of the mortgaged properties and recover its dues. Since the payment was not made, the Respondent Bank vide its letter dated 25th June, 2009 informed the Petitioners that it had withdrawn the compromise proposal as they have failed to abide by the terms and conditions of the settlement.

7. In view of the fact that the Petitioners did not pay the settlement amount within the stipulated period, the Recovery Officer proceeded to execute the Recovery Certificate issued in favour of the Respondent Bank to recover the decretal amount. Accordingly, the Recovery Officer on 30th April, 2010 published