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2018 Supreme(Mad) 492
IN THE HIGH COURT OF JUDICATURE AT MADRAS
S. MANIKUMAR, M. GOVINDARAJ, JJ.
Kothari Industrial Corporation Limited, Rep. by its Chairman and Managing Director, Pradip D. Kothari, Chennai - Petitioner
Versus
HDFC Bank Limited, Represented by its General Manager Head, Chennai & Others - Respondent
W.P. No. 26469 of 2016
Decided On : 07-03-2018
For the Petitioner:P.V. Balasubramaniam, T. Mahendran, Advocates.
For the Respondents:Suresh, Shabnam, Advocates.
Headnote:
Withdrawal - Recovery Proceedings - RDB Act 1993, Sections 17 and 18 - The court analyzed the conduct of the parties, the assignment of debt, and the simultaneous recovery proceedings initiated by the bank and the assignee. The court held that the withdrawal of the recovery proceedings by the bank was not sustainable, as the assignee had tacitly permitted the bank to continue the proceedings, and the petitioner had submitted to a decree and paid a substantial amount towards the claim. The court also emphasized the public interest in recovering the debt and the illegality of withdrawing the proceedings while a simultaneous suit's maintainability was under question.
Fact of the Case:
The petitioner availed a term loan from Times Bank Limited, which was later taken over by HDFC Bank Ltd. Recovery proceedings were initiated for the remaining amount, and the debt was assigned to Bekey Properties (P) Ltd. The bank sought to withdraw the recovery proceedings, but the court found the withdrawal unsustainable due to the conduct of the parties and the public interest in recovering the debt.
Finding of the Court:
The court found that the withdrawal of the recovery proceedings by the bank was not sustainable, as the assignee had tacitly permitted the bank to continue the proceedings, and the petitioner had submitted to a decree and paid a substantial amount towards the claim.
Issues: (i) Whether the writ petition is maintainable or not? (ii) Whether the impugned order dated 29.06.2016 passed by the Debts Recovery Tribunal is sustainable in law or not? (iii) Whether the assignee is a necessary party to the proceedings or not?
Ratio Decidendi: The court emphasized the public interest in recovering the debt and the illegality of withdrawing the proceedings while a simultaneous suit's maintainability was under question. It also considered the conduct of the parties, the assignment of debt, and the simultaneous recovery proceedings initiated by the bank and the assignee.
Final Decision: The court set aside the order dated 29.06.2016 passed by the Debts Recovery Tribunal, allowing the first respondent to withdraw the recovery proceedings. The writ petition was allowed, and no costs were imposed. Impleading petitions and miscellaneous petitions were dismissed or closed.
M. Govindaraj, J.
1. The present writ petition is directed against the order passed by the Debts Recovery Tribunal - I, Chennai, dated 29.06.2016 in Memo dated 18.06.2016 in O.A.No.925 of 2000.
2. Originally, in the year 1996, the petitioner had availed term loan of Rs.5 Crores from Times Bank Limited. By the end of 1998, the petitioner repaid 50% of the borrowed amount and the balance was to be paid. While the matter stood thus, the Times Bank Limited was taken over by the first respondent/HDFC Bank Ltd. The first respondent, in the year 2000, initiated recovery proceedings, by filing O.A.No.925 of 2000, before the Debts Recovery Tribunal-I, for recovery of a sum of Rs.3,44,62,144.80, with future interest. The petitioner admitted the liability to an extent of Rs.2.35 Crores and contested the excess amount demanded. While the Original Application was pending before the Tribunal, an interim Debt Recovery Certificate in DRC No.259 of 2002 was issued for an admitted amount of Rs.2.35 crores. The petitioner paid a sum of Rs.55,00,000/- towards interim recovery certificate.
3. In the year 2006, the petitioner entered into a Memorandum of Understanding with one Subuthi Finance Limited for settling the debts to the Banks. During the same time, the first respondent assigned the debt along with the securities covered in O.A.No.925 of 2000 to one Bekey Properties (P) Ltd., through an assignment deed dated 08.11.2006 for a consideration of Rs.4,50,00,000.00. The assignment was accepted by the petitioner and given an undertaking that they will not challenge the assignment.
4. While the matter stood thus, on 31.03.2009, the Original Application before the Tribunal was dismissed for default. Later, at the instance of the assignee, the respondents had taken steps to restore the proceedings before the Tribunal and accordingly, on 21.05.2009, applications were filed by the first respondent to restore the Original Application, in I.A.Nos.64 and 1935 of 2009. During the pendency of the interlocutory application to restore the Original Application, the assignee filed a suit in C.S.No.468 of 2011 before this Court for recovery of the amount due and payable by the petitioner. Both the Original Application and the Civil Suit were proceeded simultaneously for the recovery of the same debt. On 12.01.2012, the interlocutory application, to restore the Original Application was allowed and O.A.No.925 of 2000 was taken on file by the Debts Recovery Tribunal. Though the debt was assigned, the applicant Bank continued the recovery proceedings. On 05.03.2012, the petitioner filed I.A.No.98 of 2012 for passing final orders in O.A.No.925 of 2000 and sought for remission of pendent lite interest.
5. On 01.02.2013, the Debts Recovery Tribunal, directed the petitioner to bring a demand draft for the claim amount in the Original Application, with 10% interest. But the assignee filed a transfer application before this Court in Transfer Application No.732 of 2013 seeking transfer of the Original Application in O.A.No.925 of 2000 pending before the Tribunal to be tried along with the civil suit in C.S.No.468 of 2011 on the file of this Court. The proceedings could not continue and became still.
6. It is also important to note that an impleading application vide I.A.No.44 of 2013 was filed by the assignee to implead him as a party before the Debts Recovery Tribunal in O.A.No.925 of 2000. But the impleading application was dismissed on 10.06.2016. The assignee had also obtained a direction from this Court in C.S.No.468 of 2011 for deposit of monthly rentals to the suit account on 04.08.2014. Against the direction issued by this Court, dated 04.08.2014, to deposit rentals, the petitioner preferred an appeal, in O.S.A.No.251 of 2014. A Hon'ble Division Bench of this Court disposed of O.S.A.No.251 of 2014 on 31.10.2014, with an observation that the petitioner can move an application to appropriate the rent to be deposited to the credit of the proceedings initiated by
