Negligence of the Bank in stock management led to the discharge of liabilities of the petitioners and the direction for the preparation of recovery certificates by the Debts Recovery Tribunal.

JUDGMENT :

L. Mohapatra, J. - Two writ applications, one at the instance of the Bank of India (W.P.(C) No. 7823 of 2009) and one at the instance of the present review petitioners (W.P.(C) No. 9765 of 2009) were filed challenging the order dated 1.8.2008 passed by the Debts Recovery Appellate Tribunal, at Kolkata in Appeal No. 28 of 2007. Both the writ applications were disposed of by this Court in a common order dated 1.10.2010. Against the said order, the present two review petitions were filed. An application was also filed by the Bank for modification of the said order dated 1.10.2010. By order dated 10.11.2010, the review petitions were disposed of. Challenging the order passed in two review petitions, Civil Appeal Nos. 6002-6006 of 2011 were filed before the Hon'ble Apex Court and the order passed in the review petitions was set aside and the matter has been remitted back to this Court for hearing of both the review petitions and the application filed by the Bank for modification of the order dated 1.10.2010 afresh. The facts leading to filing of the two review petitions and the application for modification are as follows:-

Bank of India filed Original Application No. 26 of 2002 before the Debts Recovery Tribunal, Cuttack seeking for recovery of Rs. 92,63,594/- with interest at the rate of 16% per annum with quarterly rests, pendent lite and future from the date of the application till the date of realization and costs from all the defendants jointly and severally and from their personal assets. Opposite party no. 2, M/s. Sri Krishna Pipes Ltd. was defendant no. 1 and opposite party nos. 3 and 4 were the defendants 2 and 3 respectively. It was the case of the Bank that defendant no. 2 was the Managing Director and defendants 3 to 5 were the Directors. Defendant no. 6 was the guarantor. On the basis of an application, Bank had sanctioned a cash credit of Rs. 25.00 lakhs against hypothecation of stock, cash credit limit of Rs. 25.00 lakhs against hypothecation book debts, the bank guarantee limit of Rs. 5.00 lakhs and the defendants had agreed to pay interest at 20.25% per annum with quarterly rests. Required agreements were executed with the parties and also O.S.F.C. from whom financial assistance had been taken by the defendants. Petitioner no. 1, who was defendant no. 4, along with defendants 2 and 3 as well as defendant no. 6 placed their L.I.C. policies and petitioner no. 1 also made an equitable mortgage of his landed properties. Subsequently, another request was made for another TOD limit of Rs. 15.00 lakhs and the same was also sanctioned with interest at the rate of 22.25% per annum. The defendants having neglected to pay the dues, the Original Application was filed for realization of the dues as stated earlier. The Debts Recovery Tribunal, Cuttack allowed the Original Application by order dated 19th of April, 2005. It was held that all the defendants are jointly and severally liable to pay a sum of Rs. 92,63,594/- with interest at the rate of 12% per annum from the date of the application till the date of realization with costs and it was also directed that the Bank is entitled to recover the said amount from the properties given as security. It was also directed that the Bank shall deduct a sum of Rs. 25,25,250/- with counter interest at the rate of 12% from 1.8.2003 from the certificate amount as the said amount was realised by the Bank towards sale price of the prosperities of defendant no. 1-company. Challenging the said order of the Debts Recovery Tribunal, an appeal was filed by the present petitioners. In Appeal, the Debts Recovery Appellate Tribunal, Kolkata found that on 2.12.1999 at the time of physical verification of stock the value thereof was assessed at Rs. 74.57 lakhs. Sureties had demanded to reclaim the loan but the Bank failed to keep vigilant eye on the hypothecated stocks. On 3.5.2000 the Industrial Unit of the principal debtor was seized and the Bank took control and custody of the entire stock