2021 Supreme(Del) 2408

IN THE HIGH COURT OF DELHI
Vipin Sanghi, Jasmeet Singh, JJ.
Kaushalaya Devi - Appellant
Versus
Delhi Nagrik Sehkari Bank Ltd. - Respondent
W.P.(C) 2836 of 2018
Decided On : 02-12-2021

The main legal point established in the judgment is the limitation of the Arbitrator's powers, the calculation of arbitration costs, and the recovery fee under the rules, and the court's emphasis on the respondent bank's inability to recover compound interest with monthly rests and the liability to refund the excess amount to the petitioners.

Headnote:

SARFAESI Act - Loan Dispute - Delhi Cooperative Societies Act - [NON-PERFORMING ASSET, ARBITRATION, SETTLEMENT] - [Section 13(2) of SARFAESI Act, Section 70 of Delhi Cooperative Societies Act, Rule 85 of Delhi Cooperative Societies Rules 2007, Rule 88 of Delhi Cooperative Societies Rules, Rule 125 of Delhi Cooperative Societies Rules, Rule 126 of Delhi Cooperative Societies Rules, Rule 127 of Delhi Cooperative Societies Rules] - The court discussed the application of Section 13(2) of the SARFAESI Act, the powers of the Arbitrator under Section 70 of the Delhi Cooperative Societies Act, and the relevant rules under the Delhi Cooperative Societies Rules 2007. The court emphasized the limitations of the Arbitrator's powers, the calculation of arbitration costs, and the recovery fee under the rules, and concluded that the respondent bank could not recover compound interest with monthly rests and that the excess amount recovered by it was liable to be refunded to the petitioners. The court also held that the arbitration costs and recovery fee charged by the respondent bank were exorbitant and unjustified, and ordered the respondent bank to refund the same to the petitioners.

Fact of the Case:

The respondent bank sanctioned a loan to the petitioners, which later turned into a non-performing asset. The bank invoked arbitration to recover its dues, and the Arbitral Tribunal passed an award based on a settlement between the parties. The petitioners challenged the award, and the dispute was shuttled between the Delhi Cooperative Tribunal and the Registrar of Cooperative Societies. The petitioners sought the setting aside of the orders and refund of excess amounts deposited by them.

Finding of the Court:

The court found that the Arbitrator's powers were limited, and the award, including the corrigendum, was rendered null and void due to the lack of jurisdiction. The court also held that the arbitration costs and recovery fee charged by the respondent bank were exorbitant and unjustified, and ordered the respondent bank to refund the same to the petitioners.

Issues: The issues included the limitations of the Arbitrator's powers, the calculation of arbitration costs, and the recovery fee under the rules.

Ratio Decidendi: The court emphasized the limitations of the Arbitrator's powers, the calculation of arbitration costs, and the recovery fee under the rules, and concluded that the respondent bank could not recover compound interest with monthly rests and that the excess amount recovered by it was liable to be refunded to the petitioners.

Final Decision: The court disposed of the petition with a direction to the Registrar of Cooperative Societies to have the amounts computed and determined after hearing both parties, and ordered the respondent bank to make payment of the determined amount to the petitioners within four weeks, along with interest on the excess amount found to be refundable to the petitioners.