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Indian Bank (erstwhile Allahabad Bank), through its Branch Manager, Singrauli v/s M/s. Hotel Tiger Inn, through its proprietor Jakir Siddique, Singrauli & Another

    Appeal Dy. No. 252 of 2020

    Decided On, 26 February 2020

    At, Debts Recovery Appellate Tribunal at Allahabad


    For the Appellant: A.K. Srivastava, Advocate. For the Respondents: Ex-parte.

Judgment Text

1. This appeal has been preferred by the appellant under section 20 of the Recovery of Debts and Bankruptcy Act, 1993 (in short “the RDB Act”) against the order dated 02.07.2020, whereby the misc. application filed by the respondents was disposed off.

2. The brief facts leading to this appeal are, that the appellant- Bank granted some credit facilities to the respondent No. 1- firm through its proprietor respondent No. 2. The borrowers failed to repay the loan in time, hence the Bank filed an Original Application (O.A.) claiming a sum of Rs. 3,13,68,363/- along with pendentelite and future interest.

3. During the pendency of the O.A., the respondentsborrowers entered into a compromise with the Bank, on the basis of which the Tribunal below vide order dated 25.04.2018 recorded a consented settlement on the terms and conditions that the borrowers shall be liable to pay Rs. 3,13,68,363/- along with pendentilite and future interest and cost, out of which the defendants were directed to pay Rs. 50,00,000/- on or before 24.05.2018 and then Rs. 50,00,000/- on or before 24.11.2018. The balance amount and interest were to be paid in next 19 EMIs. Further, it was directed that in case of default, the settlement shall stand cancelled automatically and the Bank shall be entitled to recover the entire dues after adjusting the amount already paid as claimed in O.A. Since the said compromise was not honoured by the borrowers, therefore, on the request of Bank, the recovery proceedings were initiated against the respondents.

4. It transpires that after issuance of recovery certificate and the demand notice, the borrowers approached the Bank and moved another compromise proposal to settle the account, which was settled for Rs. 2.72 crores by the Bank vide letter dated 30.10.2018. In response to it, the borrowers deposited Rs. 35.00 lacs as per schedule, but they did not comply with the condition of deposit of Rs. 30 lacs upto 25.12.2018. Thereafter, the respondents deposited Rs. 10.00 lacs and Rs. 20 lacs through cheques, but the said cheques were bounced on account of insufficient funds.

5. Subsequently, a legal notice dated 13.03.2019 was sent by the Bank to the borrowers demanding entire amount of the cheques alongwith the costs, but the borrowers did not pay any heed to it. However, the borrowers filed a Misc. Application No. 51 of 2020 before the Tribunal below seeking extension of time for deposit of amount as directed vide order dated 25.04.2018 with liberty to deposit Rs. 4.00 lacs per month till clearance of all dues.

6. The Tribunal below vide impugned order allowed the Misc. Application filed by the borrowers holding that the applicants shall be liable to pay an amount of Rs.3, 13,68,363/- minus the amount already deposited in compliance of the order dated 25.04.2018 along with interest on reducing balance w.e.f. 21.10.2017. It was further directed that in case the applicants/certificate debtors deposit a minimum amount of Rs. 15.00 lacs before the end of every month with effect from July, 2020 and clear the entire amount as directed above within a period of 24 months i.e. on or before 30.06.2022, the execution proceedings initiated against the certificate debtors/ present applicants shall be kept in abeyance. However, in case of failure to deposit the amount in the manner as directed, the execution proceedings shall be resumed with immediate effect on the application filed by the Bank. Being aggrieved by the said order, the present appeal has been filed.

7. On behalf of the respondents, reply was filed through email, to which rejoinder has also been filed by the Bank. However, thereafter, nobody has appeared on behalf of the respondents, therefore, they remained unrepresented at the time of arguments.

8. Learned counsel for the appellant submitted that the respondents have failed to comply with the terms of compromise dated 25.04.2018, therefore, the compromise stood cancelled and accordingly, the Bank was entitled to the amount claimed in the O.A., for which recovery certificate was pending before the Recovery Officer. Thus, no misc. application could have been entertained by the Tribunal below modifying the earlier compromise order. Further, the Tribunal below has misconstrued, while invoking the provisions of Order XX Rule 11(2) of the CPC, because such provision is not applicable in the proceedings under the RDB Act and also that the provision can only be applied with the consent of the decree holder. Since the Bank has vehemently opposed the modification application, so even otherwise, the order is bad in law. It was also informed that even in compliance of the impugned order, the borrowers have deposited a sum of Rs. 11.00 lacs only, whereas they were required to deposit Rs. 1.20 crores uptil now. Therefore, the impugned order be set aside.

9. Having heard the learned counsel for the appellant and considering the material available on record, it is apparent that the O.A. was decreed on the basis of compromise vide order dated 25.04.2018. The borrowers did not adhere to the terms of compromise, therefore, the recovery proceedings were initiated in terms of the decree. The Bank had again settled the amount after due adjustment of the amount deposited by the respondents. Yet they have not honoured the same and filed the Misc. Application, in which the the respondents have admitted that they could not comply with the terms of the compromise. There was clear stipulation in the compromise dated 25.04.2018 that “in case of default of any of the installments, the settlement shall stand automatically cancelled”. Undisputedly, no amount was deposited upto 25.05.2018, thus the Bank has rightly initiated the recovery proceedings. The original compromise has failed, therefore, there was no occasion for the Tribunal below to entertain the M.A. for modification of the earlier compromise order.

10. Secondly, it was a consented order, so even no appeal may be entertained much less the modification application before the DRT. The provision of Order XX Rule 11(2) of CPC is applicable to the decree passed in a money suit under the CPC, whereas the O.A. was filed under the RDBI Act, wherein the provisions of CPC can be invoked to a limited extent, as provided under section 22 of the RDB Act, in which Order XX Rule 11(2) does not find place to be invoked. Further, the said provision can be invoked only with the consent of the decree holder and no installment can be fixed without consent of such decree holder. In the instant case, the counsel for the Bank has vehemently opposed the application filed by the respondents. Thus, there was no question of any consent. So even otherwise, the Tribunal below has wrongly allowed the application under the pretext of Order XX Rule 11(2) of the CPC.

11. It is also to be noted that the respondents have again

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failed to comply with the impugned order, because even if, they might have opted to deposit the amount in the terms of the impugned order, they were required to deposit Rs. 1.20 crores in eight months starting from July, 2020, but they have deposited only a sum of Rs. 11.00 lacs, which goes to show that the respondents are interested in prolonging the matter and not to liquidate the legitimate dues of the Bank. Thus, the order impugned is not sustainable. 12. In view of the above, the appeal is allowed and the impugned order dated 02.07.2020 is set aside. The Bank is free to pursue their recovery proceedings in accordance with law. No order as to costs. 13. A copy of this judgment be forwarded to the parties as well as to the DRT concerned.