2009(1) Bankmann 488
DEBT RECOVERY APPELLATE TRIBUNAL, KOLKATA.
Prabir Kumar Samanta, Chairperson.
Nopany & Sons Pvt. Ltd. –Appellant
versus
UCO Bank & Ors. –Respondents
Appeal No.10 of 2006
Decided on 12-9-2008

IMPORTANT POINT
A compromise in connection with which the parties are not ad idem cannot operate as a settlement of the dispute between them.

Headnote:Recovery of Debts Due to Banks and Financial Institutions Act, 1993—Civil Procedure Code, 1973—Order 23 Rule 3—Recovery suit decreed on compromise—Defendants 1 and 2 were principal borrower and defendants 4 & 5 were guarantors—Joint petition of compromise signed by and between appellant-bank and defendant No.1 was filed with terms of settlement—Appellant, defendant No.4 was not a signatory to said compromise petition—DRT recorded settlement of proceedings and issued certificate of recovery—Misc. petition filed by appellant for rectification of said certificate by deleting name of appellant was dismissed by DRT—Appeal—Whether a party defendant in a proceeding would be bound by compromise decree made therein which he was not a signatory? No.

       Held: In the case in hand, it may be stated at the cost of repetition that there is no material on record to establish that soon after transfer of the original suit from the Hon’ble High Court to the DRT upon enforcement of the Debts Recovery Act, 1993, the present appellant had entered appearance through its learned advocate in the proceeding before the DRT. Evidently, the present appellant was not specifically arrayed as a party-defendant in the petition of compromise nor it was a signatory to the same. Nowhere in the petition of compromise the name of the present appellant did figure in. The said petition merely mentioned the same as being on behalf of the applicant-bank/plaintiff and the defendants while the same was verified on behalf of the defendant Nos.1 and 2 only and none else. The order recording compromise only noted that Mr. K. Hamid was present on behalf of the defendants. There is no material to establish that said Mr. Hamid had ever represented the present appellant at any point of time nor he was examined in the proceeding. These facts abundantly make it clear that neither the present appellant nor any advocate representing the present appellant who having had an implied authority to enter into a compromise on behalf of his party had entered into such compromise in the proceeding before the DRT. A compromise in connection with which the parties are not ad idem cannot operate as a settlement of the dispute between them. (Para 12)

       In a suit or proceeding there may be an oral compromise and/or settlement between the parties and if such compromise and/or settlement which was arrived at by and between the parties orally, if proved by any evidence and/or materials on record then the same can be recorded as such upon the merits of such proof. In the case in hand, on the other hand, the compromise of the proceeding was effected in writing by a petition and signed by the applicant-bank and the principal-borrower/defendant No.1. It was not the case of the applicant-bank that there was a talk of settlement by and between the applicant-bank and the present appellant or that the present appellant orally agreed to the terms of settlement with the applicant-bank. On the face of the said compromise petition it could not be said by any stretch of imagination that there was an oral agreement between the applicant-bank and the present appellant for settlement of the proceeding on the said terms. There was no oral evidence forthcoming from the plaintiff-bank to establish that the present appellant had agreed to abide by the terms of compromise as recorded between the applicant-bank and the principal-borrower/defendant No.1.

       The miscellaneous application filed on behalf of all the defendants for adjustment of the aforesaid sum of Rs.1,40,00,000/- (Rupees one crore forty lacs. only) towards defaulted instalment, the only piece of evidence referred to by the applicant-bank, could at best be indicative of the fact that the present appellant was aware of the compromise recorded by and between the applicant-bank and the principal-borrower/defendant No.1. The present appellant having had knowledge of such compromise between them joined hands in recalling the said certificate No.25 of 1995 issued upon such compromise and for reissuing the same upon adjustment of the aforesaid sum of Rs. 1,40,00,000/- (Rupees one crore forty lacs only) lying in fixed deposit a/c against the defaulted instalments. Mere knowledge of settlement between the creditor bank and the principal borrower does not bind the guarantor with the terms thereof as being a party to the same except for being liable as a consequences thereof as per the provisions of law. The said miscellaneous application with all its contents and purport was made for lessening the burden of the principal-borrower and the guarantors to the loan as well. Because in the event of default by the principal-borrower the guarantor would be liable if at all for the balance of the outstanding dues upon such adjustment as per the aforesaid compromise decree. The said petition therefore cannot have in any event the effect of establishing in law an admission by the present appellant for binding itself by the aforesaid order of compromise dated 3.4.1995, or for proving the fact that the present appellant also had orally agreed to the settlement of the proceeding on the terms thereof with the applicant-bank. (Paras 13 and 14)