Borrowers have the option to file a separate civil suit or make a counter-claim in DRT proceedings, and there is no statutory bar for the borrower to initiate a separate suit despite the bank initiating DRT proceedings.

JUDGMENT

Common Order:

The primary issue, that arises for consideration in these applications, is whether a borrower is entitled to independently file a civil suit against the bank and whether such a suit will be hit by Sections 18 and 34 of the Recovery of Debts and Bankruptcy Act, 1993 (hereinafter referred to “DRT Act”).

2. Section 18 of the DRT Act is a provision, which provides for a statutory bar of any other court or other authority from exercising jurisdiction in respect of matters specified under Section 17 of the DRT Act. Section 34 of the DRT Act stipulates that provisions of the DRT Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than DRT Act.

3. The suit has been filed by the plaintiff seeking for the following reliefs:-

(a) To declare that the unilateral cancellation of the Negotiated Settlement dated 29.12.2021 by the defendants 1 and 2 is illegal, void ab initio and non-est.

(b) To declare that the Negotiated Settlement dated 29.12.2021 is valid and binding on the defendants 1 and 2.

(c) To issue an order of mandatory injunction directing the defendants 1 and 2 to release the documents of title relating to suit schedule property and to discharge the said property from encumbrance by executing and registering a proper Deed of Discharge of Mortgage before the concerned office of the Sub-Registrar.

(d) To direct the defendants 1 and 2 to pay to the plaintiff a sum of Rs.1,01,00,000/- with interest thereon @ 18% per annum from the date of the suit till realization as damages/compensation for the loss suffered, opportunity lost and agony underwent by the plaintiff on account of deliberate breach of contract and falsification and inflation of charge due on the secured asset being the suit schedule property; and

(e) To direct contesting defendants 1 and 2 to pay to the plaintiff the costs of the suit.

4. For the sake of convenience and clarity, the parties are referred to by their respective ranks in the main suit.

5. The plaintiff and the defendants 3 to 5 are the borrowers and guarantors to the loan availed by them from the defendants 1 and 2/Bank.

6. The plaintiff is the applicant in A.No.3497 of 2023. The said application has been filed seeking for a direction to the defendants 1 and 2 to release the documents of title relating to suit schedule property and to discharge the said property from encumbrance by executing and registering a proper Deed of Discharge of Mortgage before the concerned Office of the Sub Registrar, pending disposal of the suit.

7. Application No.6465 of 2023 has been filed by the bank / defendants 1 and 2 seeking to strike off prayers 1 to 3 from the plaint, as, according to them, the said prayers are barred by lack of jurisdiction in terms of Section 11 of the Commercial Courts Act, 2015.

8. According to the plaintiff, several irregularities have been committed by the defendants 1 and 2 as they have made unauthorized debits. According to them, they have complied with the terms and conditions of One Time Settlement (OTS) offer given by the defendants 1 and 2 and they have paid the entire sum of Rs.20 crores as per the OTS dated 29.12.2021. But, however, according to them, the defendants 1 and 2 have not fulfilled their promise of releasing the title deeds, which are the subject matter of the mortgages created in favour of the defendants 1 and 2. The details of the terms and conditions of the OTS have also been reproduced by the plaintiff in the affidavit filed in support of Application No.3497 of 2023.

9. However, on the other hand, the defendants 1 and 2, who are the applicants in Application No.6465 of 2023, would deny the contentions of the plaintiff and they would state that the plaintiff and other borrower/guarantors have paid only a sum of Rs.19,69,00,218.51/- instead of Rs.20