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2012 Supreme(Del) 903
DELHI HIGH COURT
A. K. SIKRI, RAJIV SAHAI ENDLAW, JJ.
Vishwakarma Projects India Pvt. Ltd.
Versus
Canara Bank
L. P. A. No. 227 of 2012
Decided on : 30/03/2012
The main legal point established in the judgment is that the appellant's request for one-time settlement must be made in accordance with the RBI guidelines, and the guidelines applicable to the case should be considered. Additionally, the valuation of security is crucial in compromise settlements.
Headnote:
Bank Guarantee - Recovery of Debt - Section 19 of Recovery of Debts due to Banks and Financial Institution Act, 1993 - Guidelines of 2005 and 4-10-2007 - Lump sum payment and installment recovery - Security valuation
Fact of the Case:
The appellant entered into an agreement for the construction of chimneys and requested the bank for renewal of bank guarantees. The bank made the payment to the corporation on invocation of bank guarantees. The respondent filed an Original Application for recovery of debt, which was allowed by the Debt Recovery Tribunal. The appellant challenged the order but did not succeed. The appellant requested for settlement of the NPA account as per RBI guidelines and filed a writ petition for a direction to the respondent to settle the account. The court disposed of the writ petition with a direction to settle the account within two weeks. The respondent filed a Review Application and the court allowed the review application and modified the order.
Finding of the Court:
The court found that the appellant's request for one-time settlement was not made in terms of the RBI guidelines. The court held that the guidelines of 2005 were not applicable and the guidelines of 4-10-2007 should be considered. The court also noted that the appellant could not show that it had made any such request for one-time settlement in terms of the said scheme. The court observed that the appellant could not invoke the guidelines of 2005 due to the security valuation and the amount due in the account.
Issues: The issues involved the appellant's request for settlement of the NPA account as per RBI guidelines, the applicability of the guidelines of 2005 and 4-10-2007, and the valuation of the security held by the respondent bank.
Ratio Decidendi: The court held that the appellant's request for one-time settlement was not made in accordance with the RBI guidelines and that the guidelines of 2005 were not applicable. The court also emphasized the importance of security valuation in compromise settlements.
Final Decision: The appeal was dismissed by the court.
A. K. SIKRI, J.
This Letters Patent Appeal is preferred by the appellant assailing the order dated 3-2-2012 passed by the learned single Judge in Review Application No. 732 of 2011 in W. P. (C) No. 7261/2011, modifying the order dated 11-11-2011 in W. P. (C) 7261/2011.
2. The brief facts which led to the filing of this appeal are as follows :
The appellant entered into an agreement with Gujarat Mineral Development Corporation for brevity) on 20-2-2011 for the assignment of design and construction of 2 Nos. 130 meters high single flue chimney for Units 1 and 2 of Akrimota Thermal Power Station at village Chher, Taluka-Lakhpat, District - Kuchh, Gujarat at the final quoted price of Rs. 2,92,92,000/- (Two Crores Ninety Two Lacs and Ninety Two Thousand only). The appellant approached the respondent bank for a bank guarantee of Rs. 14,64,600/- and the respondent bank issued two performance bank guarantees in favour of GMDC. It is the case of the appellant that they time and again requested the respondent bank for renewal of bank guarantees, but the request was not acceded to by the bank as a result of which, the respondent bank made the payment to GMDC on invocation of bank guarantees.
3. Thereafter the respondent filed and Original Application under Section 19 of Recovery of Debts due to Banks and Financial Institution Act, 1993 (hereinafter referred to as the DRT Act) before the Debt Recovery Tribunal praying inter alia to declare a sum of Rs. 23,82,180/- due as debt to the bank and its guarantors. Learned counsel for the appellant has further submitted that it requested for settlement of the NPA current account No. 3114 on various occasions.
4. The Tribunal vide its order dated 2-9-2009 allowed the OA of the respondent for recovery of Rs. 23,82,180/- and issued recovery certificate. Being aggrieved by this order, the appellant filed and appeal before the Debt Recovery Appellant Tribunal, New Delhi (hereinafter referred to as). The DRAT dismissed the appeal of the appellant on 26-4-2010. Thereafter on 9-7-2010 and 3-11-2010, the Recovery Officer issued a sale proclamation for the sale of property bearing No. 2, LGF towards the right side of the building, i.e., half portion adjoining property No. B-144, Kalkaji, New Delhi.
5. The appellant challenged the order of the DRAT dated 20-4-2010 and 26-4-2010 before this Court with the prayer to permit the appellant to deposit 25% of amount in lieu of 60%, but this Court dismissed the writ petition on the ground of delay and laches. Even the SLP filed by the appellant against this order of this Court met with the same fate.
6. Thereafter, the appellant requested the respondent for the settlement of the NPA account as per guidelines for one time settlement scheme of the RBI. After inaction on the part of the respondent to settle the NPA Account, the appellant filed W. P. (C) 7261 of 2011 before this Court for a direction to the respondent to settle the account of the appellant. This Court vide its order dated 11-11-2011 disposed of the writ petition with the direction to the appellant that if he wishes to settle to NPA account in terms of the said guidelines, the appellant should do within two weeks and the respondent was also directed to consider the case of the appellant in accordance with the aforesaid guidelines of RBI. The respondent filed a Review Application No. 732 of 2011 against the order dated 11-11-2011 before this Court. Vide orders dated 3-2-2012, this Court allowed the review application of the respondent and modified the order dated 11-11-2011 to the extent that the case of the appellant may be considered in terms of guidelines dated 4-10-2007.
7. From the aforesaid facts, it becomes clear that the respondent bank had filed Original Application under Section 19 of the Debt Recovery Act way back in March, 2004 and this OA was allowed by the Debt Recovery Tribunal vide order dated 2-9-2009 whereby decree of sum of Rs. 23,82,180/- along with interest was passed in favour of t
