At, Debt Recovery Appellate Tribunal At Chennai
By, THE HONORABLE JUSTICE: A. SUBBULAKSHMY. (CHAIRPERSON)
1. Aggrieved against the Order passed by the Presiding Officer, Debts Recovery Tribunal (DRT), Hyderabad, directing the defendants to deposit Rs. 50,000 per month into the Tribunal towards the credit of OA-330/2000 by 10th of every month failing which the relief sought by the petitioner to sell the hypothecated animals and other movables mentioned in the Schedule report and depositing the proceedings before the Tribunal through the Commissioner would stand ordered, the appellant has come forward with this appeal.
2. Counsel for the appellant at the outset submitted that the animals and other movables mentioned in the Schedule report are not in the hypothecated goods and so the Order passed by the Presiding Officer, DRT, ordering sale of the hypothecated goods is not sustainable and so the conditional order passed by the Presiding Officer, DRT is liable to be set aside.
3. On the other hand, Counsel for the respondent-Bank submitted that the Bank submitted petition only for sale of the hypothecated goods and
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as per the Agreement entered into between the appellant and the respondent-Bank the animals and the movables in the report are the hypothecated goods and these goods are liable to be brought for sale in case of default in the payment of installment. He strenuously argued that the buffaloes, cattle, bulls, lambs and other animals kept in the livestock of the borrower are hypothecated under the Agreement and only the hypothecated goods are sought to be brought for sale and the Presiding Officer, DRT has rightly passed the order.4. The Counsel for the respondent-Bank drew my attention to the various clauses in the Agreement. Clause 2 of the Agreement states that the borrower both hereby hypothecates by way of first charge in favour of the Bank livestock of the borrower including buffaloes, dry cattle, bulls, young calves sheep, lambs, donkeys, ponies, camels, pigs and all other animals so far kept or found which may hereafter during the continuance of this security stabled or kept or found upon or in the Borrowers premises, dairy farm, farm house shed, barn and situated in the Village, District are in the course of the transfer under the Agreement and the stock of cattle feed, dairy equipment, plant and machinery and other tools and machinery are also hypothecated. The entire stock of the animals and other domestic birds now kept or contained during the continuance of the security are also hypothecated and all of which are referred to as "the hypothecated poultry livestock". Clause 10 of the agreement provides that i f the borrower makes any default in payment of any instalment of principal or interest on the said loan or any part of such instalment or if any circumstance shall occur which shall in the opinion of the Bank be prejudicial to or endanger or be likely a danger this security or if any other event or circumstances mentioned in Clause 9 above happens or if the Bank if it thinks fit shall be entitled at the risk and expense of the Borrower without any notice at any time after such default or event or circumstances occurs or happens to enter (and for that purpose to do any necessary act, deed or thing) and remain upon any place where the hypotheca or the books of account of the Borrower may be and to inspect, value, insure and take charge or possession and/or to seize, recover, receive, appoint receivers of all or any part of the hypotheca or books of account and thereupon forthwith or at any time and from time-to-time but after giving not less than 48 hours notice at least to sell either by public auction or private contract or otherwise dispose of or deal with the hypotheca in such manner and upon such terms and conditions as the Bank shall think fit and to apply the net sale proceeds towards repayment of the ultimate balance due in the said Loan Account and interest due thereon upto the date of such application And to enforce, realize, settle, compromise and deal with any rights aforesaid without being to exercise any of these powers or being liable for any losses in the exercise thereof and without prejudice to the Bank's rights and remedies of suit or otherwise and notwithstanding there may be any pending suit or other proceeding. The Borrower hereby also agrees to accept the Bank's accounts of sales and realization and to pay any shortfall or deficiency thereby shown. And if the net sum realized by such sale shall be insufficient to pay the total amount secured hereunder the Bank shall be at liberty to apply any other money or moneys in the hands of the Bank standing to the credit of or belonging to the Borrower in or towards the payment of the balance and in the event of there being still a deficiency, the Borrower, shall forthwith pay such deficiency. Provided that nothing herein contained shall in any manner prejudice or affect the Bank's remedy against the Borrower personally.5. Counsel for the appellant further submitted that the Presiding Officer, DRT has observed in his Order dated 5.9.2001 that the defendant is at liberty to agitate his rights and claims in the main OA in respect of the hypothecated goods and the inventory made by the Commissioner will be considered after the trial of the case. The Presiding Officer, DRT has passed this order on 5.9.2001 directing the Commissioner to make an inventory as per the Schedule and the Commissioner was not obliged to call for the statement of the applicant Bank with regard to the 'hypothecated articles, at the instance of the 3rd defendant. He further submitted that there is no specific mention with regard to the hypothecated items and it is also not specifically stated which of the animals are hypothecated and the number of animals and so the Order passed by the Presiding Officer, DRT is not sustainable.6. The Order is passed by the Presiding Officer, DRT for sale of the hypothecated animals and movables mentioned in the Schedule report. On a perusal of the agreement, it is clearly seen that the entire stock of the buffaloes, cows, cattle, bulls, etc. and other utensils and machines which are found in the premises are hypothecated to the Bank. So it is evident from the Agreement that all the bulls, cows, buffaloes and animals and the stock found in the premises of the appellant are hypothecated to the Bank. So it is futile on the part of the appellant to contend that there is no specific mention with regard to the hypothecated items. All the animals found in the Borrower's premises are hypothecated to the Bank. As per Clause 10 of the agreement in case of any default in the payment of instalments the Bank is at liberty to bring the hypothecated goods to sale for seizure and taking possession of the same. As the appellant has committed default in payment of instalments, the Bank has sought seizure and sale of the goods through Court. Clause 10 clearly provides for this. The Bank is at liberty to bring the hypothecated goods for sale either to be auctioned or by private contract or otherwise dispose of the hypotheca in such manner and upon such terms and conditions as the Bank shall think fit and applying the net sale proceeds towards repayment or the ultimate balance due in the loan account as per Clause 10 of the Agreement.7. On a perusal of the records it is crystal clear that only the hypothecated goods have been ordered to be sold and the proceeds to be deposited before the Tribunal. As the appellant has committed default in payment of the instalments, the hypothecated goods are brought for sale as per the terms and conditions of the Agreement entered into between the parties. The Tribunal has passed only conditional order directing the defendants to deposit Rs. 50,000 per month into the Tribunal towards the credit of the OA by 10th of every month failing which the relief sought by the petitioner i.e. for sale of the hypothecated goods would stand ordered. The Tribunal has considered all the aspects and has passed the Order rightly. I find no error in the Order passed by the Presiding Officer, DRT, Hyderabad.8. Counsel for the appellant further submitted that the appellant has mortgaged properties worth more than Rs. 2 crores i.e. above the amount due from the appellants to the Bank and so the question of sale of the hypothecated goods does not now arise at all and even on this ground the Order passed by the Presiding Officer, DRT is liable to be set aside. The records reveal that the defendants 2 to 4 and defendant No. 8 deposited title deeds of immovable properties with intention to create mortgage and the mortgage was created. Of course, the defendants have deposited title deeds and they created mortgage but that will not prevent the Bank from bringing the hypothecated stocks viz. animals and movables for sale. The fact that immovable property has been mortgaged by deposit of title deeds will not disentitle the Bank from bringing the hypothecated goods viz. animals and other stocks for sale. The Agreement clearly provides that on default of payment of the installment the Bank is at liberty to bring the hypothecated goods for sale. The defendants have committed default in payment of installment and thus the OA has arisen. Under such circumstances, the Bank is at liberty to bring the hypothecated goods for sale. So it cannot be stated that the order passed by the Presiding Officer, DRT is vitiated.9. Counsel for the respondent-Bank further submitted that the appeal filed after the period of limitation is barred by limitation. The order was passed on 16.11.2001. The appellant's Counsel contends that the appellant filed copy application, obtained copy and filed the appeal and he has also filed Memo to that effect. In the Memo it is stated that the copy application filed on 26.12.2001 in CA-665/01 was rejected and the second copy application was filed on 3.1.2002 and copy was delivered on 9.1.2002 and the true copy of the Order filed in the appeal has been delivered on 28.1.2.002 and after 9.1.2002 the appellant cannot apply for a true copy which was delivered on 28.1.2002 and so the appeal is barred by limitation. The appeal was filed on 11.2.2002. The copy was delivered on 9.1.2002. From that date the appeal is filed in time.10. A perusal of the entire records goes to establish that the PO, DRT has rightly passed the order. I find no error in the order passed by the PO, DRT, Hyderabad.11. Appeal dismissed. No costs.