1. Mr. Vakil, learned advocate has appeared for the petitioners and Mr. Motiramani, learned advocate and Mr. Biju A. Nair, learned advocate have appeared for the respondent bank (Caveator).
2. In the facts and circumstances of the case, Rule is made returnable today. Mr. Motiramani, learned advocate and Mr. Biju A. Nair, learned advocate have waived service of Notice of Rule for the respondent bank. At the request of learned advocate for the petitioners and with the consent of learned advocate for the respondent (Caveator), the petition is taken up for hearing and final decision today.
3. In present petition the petitioners have prayed, inter alia, that:-
"7 (A) To quash and set aside the first impugned judgment and order dated 09.09.2014 (Annexure-1) and the second impugned order dated 07.10.2014 (Annexure- 2) to the extent indicated hereinabove, both passed by the respondent No.2-Debt Recovery Appellate Tribunal, Mumbai below Miscellaneous Application No. 515 of 2014 and Appeal No. 143 of 2014.
(B) To stay, pending the hearing and final disposal of the present Special Civil Application, the first impugned order dated 09.09.2014 and / or to extend the time to comply with the order dated 09.09.2014 upto the sale of the immovable property of the petitioner No.1 firm described in paragraph 2.2, at serial no.(i) hereinabove.
(C) To restrain, pending the hearing and final disposal of the present Special Civil Application, the respondent bank from taking physical possession of the three residential mortgaged bungalows described in paragraph 2.2 at serial nos. (ii)(iii) and (iv) hereinabove."
4. The petitioners are aggrieved by order passed by learned Appellate Tribunal requiring the petitioners herein to deposit a sum of Rs. 1,15,00,000/-.
4.1 The said direction is passed in view of the provisions contained under Section 18 which obliges the appellant to deposit 50% of the amount in question as condition precedent for entertaining the Appeal.
4.2 The discretion to reduce the amount not below 25% is conferred on the tribunal.
4.3 In exercise of the said discretion learned tribunal passed order dated 9.9.2014 requiring the petitioners to pay a sum of Rs. 1,15,00,000/- against total amount due from the petitioner i.e. Rs. 2,75,38,595/-.
4.4 The petitioners also feel aggrieved by order dated 7.10.2014 to the extent by which the learned Appellant tribunal recorded submission of the bank's Counsel that assurance orally given by him stands withdrawn.
5. So far as factual backdrop is concerned, it has emerged from the submission by learned advocate for the petitioners and from the record that:
5.1 somewhere in 2009 the respondent bank sanctioned credit facility in the sum of Rs. 250 lacs in favour of the petitioner No.1 firm.
5.2 Subsequently the respondent bank also sanctioned credit facility to the extent of Rs. 50 lacs.
5.3 So as to secure the said credit facility the petitioners mortgaged four properties i.e. (a) factory, land and building of the petitioner No. 1 firm and (b) three residential bungalows of petitioner Nos. 3, 4 and 5 respectively.
5.4 It appears that after sometime the petitioner No. 1 firm made default in repayment of loan amount / settlement.
5.5 Therefor the respondent bank issued demand notice dated 25.6.2012 under Section 13 (2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, ("SARFAESI Act").
5.6 The said Notice seems to have been issued on or around 25.6.2012 that total outstanding against the petitioners was to the tune of Rs. 3,11,05,472/-.
5.7 It appears that after the receipt of the said notice the petitioner No.1 approached the respondent bank with the request for permission to dispose of the plant and machinery. It appears that the said request was accepted by the respondent bank vide communication dated 21.8.2012.
5.8 In pursuance of the said permission the petitioners disposed of the plant and machinery and from the sale proceeds and/or from other sources the petitioners appear to have deposited Rs. 40 lacs with the respondent bank. Subsequently i.e. in December 2012 the petitioners appear to have deposited further sum of Rs. 10 lacs with the respondent bank which was followed by further deposit of Rs. 9.5 lacs.
5.9 However, thereafter the petitioners did not make further payment, therefore the respondent bank issued another demand notice dated 22.5.2013 under the SARFAESI Act. The said notice came to be issued for recovery of Rs. 2,75,38,595/-.
5.10 It also appears that the respondent bank demanded possession of the above above mentioned four mortgaged properties and thereafter the respondent bank took symbolic possession of the said mortgaged immovable properties.
5.11 It appears that the respondent bank also instituted proceedings under Section 14 of the SARFAESI Act and on or around 15.2.2014 learned Magistrate passed order in the said proceedings under Section 14 of the SARFAESI Act.
5.12 The petitioners carried the said order before learned tribunal by filing Securitisation Application No. 32 of 2014 under Section 17 of the Securitisation Act.
5.13 Learned tribunal initially protected the petitioners, however subsequently after hearing present respondent bank and considering the facts of the case, leaned tribunal rejected the said Securitisation Application No. 32 of 2014 vide order dated 4.7.2014, however, so as to enable the petitioners to approach learned Appellate Tribunal, learned Debts Recovery Tribunal extended the protection upto 18.7.2014 which was initially granted.
5.14 Thereafter, on or around 15.7.2014 the petitioners filed Appeal before the learned Appellate Tribunal.
5.15 Along with the appeal the petitioners also filed stay application. Besides this, the petitioner also preferred application seeking waiver of the pre-condition prescribed under Section 18 of the Act for entertaining Appeal viz. condition to deposit 50% of the demand amount or such reduced amount (not less than 25% of the demand amount) as may be directed by learned Appellate Tribunal.
5.16 The appeal came to be registered as appeal No. 143 of 2014 whereas the above mentioned waiver application came to be registered as Application No. 515 of 2014 and said stay application came to be registered as application No. 514 of 2014.
6. On the other hand, while the said applications were pending before learned appellate tribunal, the respondent bank published auction notice for sale of the land and building of the erstwhile factory (which is subsequently, converted into a hotel).
6.1 Before proceeding further it may be mentioned at this stage that the petitioners and respondent have jointly submitted that the said auction failed because the respondent bank did not receive any offer matching the reserved price.
6.2 In September 2014 the learned tribunal heard the petitioners' waiver application and after considering the submission by the petitioners and the bank passed order dated 9.9.2014 granting partial waiver from the requirement to deposit 50% of the amount deposited i.e. Rs. 2,75,38,595/- and directed the petitioners to deposit Rs. 1,15,00,000/-.
6.3 It appears that some understanding, outside the Court proceedings, was arrived at between the petitioners and the respondent bank and the learned advocate representing the respondent bank. It also appears that the bank has put on record, vide communication dated 15.9.2014 and also placed the communication on record before the learned Appellate Tribunal. In the said communication the respondent bank has claimed that the petitioners have acted contrary to and in breach of the understanding between them. The learned advocate for the petitioners would claim that the observations made by learned Appellate Tribunal in the order dated 18.9.2014 reflects said assurance.
6.4 However, after placing on record the allegation/claim that the petitioners acted in breach of the understanding, the respondent Bank, in furtherance of the said communication, declared before learned tribunal that the assurance orally given on earlier occasion stands withdrawn.
6.5 Learned tribunal recorded the said aspect (i.e. withdrawal of assurance) in the order dated 7.10.2014.
6.6 It appears that some clerical error had crept in, in the learned tribunal's order with regard to the total period granted by tribunal to deposit the amount.
6.7 After hearing the parties learned tribunal ordered correction in respect of the time limit recorded in the previous order.
6.8 In this background the petitioners apprehended that the respondent bank will demand physical possession of the three residential bungalows and the petitioners will have to vacate their bungalows, and on such apprehension the petitioners have taken out present petition against above mentioned order dated 9.9.2014 and 7.10.2014 and also challenged the orders dated 9.9.2014 and 7.10.2014.
6.9 Mr. M.V. Kulkarni, Deputy General Manager, Bank of Baroda, Regional Office, Vadodara is present in the Court, and submissions and stipulations by Mr. Biju Nair and Mr. Motiramani learned advocates for the respondent bank are made under the instruction of Mr. M.V. Kulkarni, Deputy General Manager, Bank of Baroda.
7. I have heard learned advocate for the petitioners and respondent bank.
8. Mr. Vakil, learned advocate for the petitioners made elaborate and extensive submission with regard to the factual background and so also with regard to the orders passed by the learned Appellate Tribunal.
8.1 He assailed the discretionary order passed by the learned Appellate Tribunal while granting partial waiver from the condition precedent prescribed under Section 18 of the Act for entertaining the appeal and submitted that the learned Appellate Tribunal erred in not taking into account the reserved price of the property put-up for auction sale and that the Bank will be entitled to appropriate the sale proceeds and that therefore the amount required to be deposited as per Section 18 should have been fixed in light of the said fact.
8.2 At some point during his submission, learned advocate for the petitioners also assailed the tribunal's action of allowing withdrawal of the statement of learned advocate for the respondent bank and recording that the assurance earlier given during earlier proceedings stands withdrawn. As mentioned above, the respondent bank had cited reasons mentioned in the communication dated 15.9.2014 for withdrawing the stipulation made earlier. Learned advocate for the petitioners disputed the terms mentioned in the said communication dated 15.9.2014 and tried to submit other part of the factual background.
9. Be that as it may, what is relevant is the fact that during the hearing, broad agreement between the petitioners (represented by Hasmukh Natvarlal Thakkar and Mr. Viyajkumar Natvarlal Thakkar who have remained in the Court) and the respondent bank and also the learned advocate representing the contesting parties, is arrived at and that in view of the said understanding it is not necessary to record, elaborately, the contentions by the contesting parties and/or to adjudicate and to decide the controversy and the relief prayed for by the petitioners. Instead, as per the joint submissions by learned advocates for the contesting parties appropriate order, as per and according to the understanding, has to be passed. Thus, in view of such joint request following order is passed:
10. The parties have reduced in to writing broad points of Agreement arrived at between the parties. The said terms reads thus:-
"1. Petitioners to pay Rs. 150 lacs towards release of the three residential bungalows.
2. Petitioners may bring the said amount and on payment of Rs. 150 lacs, BOB will release its charge and all documents in respect of the three residential bungalows in favour of petitioners/mortgagors and/or whomsoever the petitioners say.
3. Such amount of Rs. .150 lacs to be plaid by the petitioners on or before 15.12.2014. In case the petitioners fail to pay the said amount or Rs. 150 lacs on or before 15.12.2014, they will hand over peaceful possession of the three residential bungalows to the bank.
4. So far as factory land and building is concerned, the petitioners undertake to either pay the balance amount of dues on or before 10.2.2015 including by getting a buyer. If payment is not made so, bank can proceed further for sale of the factory property.
5. All petitioners to file individual undertakings to the aforesaid effect.
6. Bank of Baroda shall not take any further measures with reference to factory, land and building upto 10.2.2015 and the three residential bungalows upto 15.12.2014
7. In the event of failure to comply on or before 15.12.2014, Bank at liberty to proceed further, against all mortgaged properties both residential and factory."
11. Learned advocate for the contesting parties submitted that the petitioners and respondent bank will act as per and abide by the said terms.
12. It follows from the aforesaid that now the cause for prosecuting the appeal before learned appellate tribunal against order dated 4.7.2014 passed by the learned Debts Recovery Tribunal at Ahmedabad will not survive.
13. Mr. Vakil, learned advocate for the petitioners upon instruction from the petitioner Nos. 2 and 3 who are present in the Court, submitted that if order in light of the terms agreed between the petitioners and respondent is passed then the petitioners would make appropriate application before learned tribunal declaring that the petitioners, in view of the order in the petition, do not intend to prosecute the appeal and the same may be disposed of, at this stage, as withdrawn / not pressed and accordingly they will withdraw the appeal and stay application.
14. In view of the above mentioned aspects, the petitioners are directed to file individual undertakings in terms of the above quoted understanding and shall undertake, stipulate and declare, inter alia that the petitioners will pay a sum of Rs. 150 lacs on or before 15.12.2014.
15. It will also be declared and stipulated, in the said undertakings, by all petitioners, that if the petitioners failed to pay said amount on
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or before 15.12.2014 then the petitioners will handover actual possession of the three residential bungalows to the respondent bank without further protest. 16. In the undertakings the petitioners will also declare and stipulate that the balance amount of total dues i.e. Rs. 2,75,38,595/- will be paid and cleared by the petitioners with interest @ 3.50% over the base rate (or further interest as maybe informed by the respondent bank to the petitioners on or before 5.11.2014) on or before 10.2.2015 and that the petitioners will abide by the terms agreed upon between the petitioners and the respondent bank, which are part of present order. 17. It is clarified that after the petitioners make payment of the above mentioned amount i.e. 150 lacs, the respondent bank is entitled to, and it can, appropriate the said amount towards the dues of the petitioners. 18. In view of the above mentioned understanding and agreement between the parties, earlier stipulation made by the respondent bank before the learned appellate tribunal and subsequent order dated 7.10.2014 by learned tribunal stand set aside and substituted by, and in terms of the above referred understanding and agreement arrived at between the parties during present petition. 19. In view of the above mentioned aspects and details and in light of the agreement arrived at between the parties, present petition is is party allowed. The order dated 9.9.2010 is set aside and modified to the aforesaid extent and in terms of the agreement between the parties. Rule is made absolute to the aforesaid extent. Orders accordingly.