1. The O.A. filed by respondent No. 1 reconstruction company has been allowed by the Tribunal below. Respondent No. 1 is held entitled to recover Rs. 1,71,95,425/-with simple interest @ 15% p.a. from 26.2.1999 onwards until recovery with cost from appellants and others. A sum of Rs. 5,68,50,000/- is ordered to be deducted from the date of its receipt and the respondent company has been held entitled to recover the balance amount only. Aggrieved against this order, three defendants in the O.A. have filed the present appeal. Appellant No. 1 is a travel agency whereas appellant Nos. 2 and 3 stood as guarantors to the facilities granted by Bank of India to the appellant No. 1.
2. In view of the limited ground of challenge now pressed by the Counsel for the appellants, there is no need to notice the facts in detail which are noticed in detail in the impugned order. Suffice it to say that the appellants had availed Cash Credit Hypothecation of Book Debts facility of Rs. 6 lac on 24.6.1993, which was finally enhanced to Rs. 130 lacs by 24.11.1997. The amount was payable with interest @ 8.25% OBR minimum 20.25% p.a. with quarterly rests, which was also varied.
3. The appellants availed and utilized the above-said facility. When they committed default in the repayment of the dues, a notice was issued on 17.2.1999. By 24.2.1999, the amount due was Rs. 1,74,86,886/- which the respondent reconstruction company claimed in the O.A.
4. The appellants have not denied having availed the facilities but have attempted to put blame about the plight of the appellant company on the non-cooperative attitude of the Bank. It was stated that the company started generating profits and prospectively increased its book debts with the Bank. The credit facilities were increased to Rs. 15 lac and then to Rs. 25 lac and to Rs. 35 lac. This was finally increased to Rs. 100 lac on 20.3.1997. The appellant company was granted the facility of guarantee of Rs. 75 lac on net sales for a period of 30 days by TAAI. It was alleged that the Bank failed to issue Bank guarantee in favour of Indian Airlines when the company had to compromise with the Indian Airlines by reducing its fortnightly payment cycle to weekly payment cycle. This tremendously increased the financial requirement of the company and the working capital requirement reached up to Rs. 180 lac. The company had forwarded a proposal for enhancement of Cash Credit limit to the tune of Rs. 320 lac. While the said proposal was under consideration, the company had requested for an ad hoc limit of Rs. 30 lac, which was sanctioned by the Bank w.e.f. 23.10.1997 for a period of 90 days. The company requested for extending ad hoc limit by Rs. 10 lac against clearing till sanction of proposed enhanced limit, but the Bank without rhyme or reason recalled the ad hoc limit of Rs. 30 lac. This was done 15 days prior to the expiry of the said sanction. The appellant company has termed this act as an illegal one, which resulted in crash of whole financial system of the company and it came to a standstill. It was pleaded that due to non-cooperative attitude of the Bank the miseries of the company started and the company suffered huge losses and in this manner, the company suffered a loss of coverage of Rs. 1 crore due to withdrawal of facility on Indian Airlines fortnightly payment. Alleging mala fide on the part of the Bank, the appellant company had alleged that the Bank fabricated a letter by back-dating the same. The company claimed to have given a proposal for regularising the account showing its bona fide and even sought revival of sick unit and for fund-based assistance of Rs. 11.41 lac out of the fixed deposit lying with the Bank as loan and Bank guarantee of Rs. 12 lac to enable the company to come out of the vicious circle. The appellant company accordingly pleaded that the Bank was not entitled to legally recover any debt and, rather, had made a counter-claim of Rs. 20 crore for the loss caused by the Bank to the company.
5. As already noticed, the Counsel for the appellants has pressed this appeal on limited grounds which are three in number. The Counsel for the appellants would first submit that the Tribunal has allowed the claim of the respondent reconstruction company by granting interest @ 15% p.a. simple whereas no interest has been allowed by the Tribunal on the amount of Rs. 5,68,50,000/- which was received by the Bank sometime in the year 2011, which has left surplus amount payable to the appellants after adjusting the claim of the Bank. The further grievance of the appellants is that the respondent reconstruction company had charged a sum of Rs. 8,80,964/- as processing fee after the account having been declared NPA on 1.7.1998. This has not been explained with any justification and hence, the appellants would be entitled to seek adjustment of this amount towards the amount assessed as recoverable from the company. The third submission advanced is that the Bank had unlawfully encashed a sum of Rs. 2,77,055/- without taking permission from the appellants for cancellation of term deposit and release of part amount for debit in the account. Plea is that the Bank could have adjusted the entire amount on the same date and thus the liability qua interest could have been reduced to a substantial level. It is alleged that the Bank, with vested interest, did not adjust the entire FDRs resulting into loss of charging of heavy interest.
6. The Counsel for the respondent reconstruction company, however, would contest the pleas raised by the Counsel for the appellants. The Counsel points out that the S.A. filed by the appellants was dismissed by the Tribunal below and the said order passed by the Tribunal below was also upheld by this Tribunal. Even the writ petition filed before the High Court was also dismissed. This, as per the Counsel for the respondent company, would entitle the respondent to claim the amount shown in the demand notice with interest at rates contracted by the appellants. The Counsel submits that the Tribunal could not have allowed interest @15% p.a. in view of its earlier order dismissing the S.A. The Counsel has further urged that the Tribunal below was justified in declining to consider the adjustment of a sum of Rs. 8,80,964 claimed as processing fee in view of the earlier order passed by the Tribunal upholding the notice amount, which was further upheld by this Tribunal. Similarly, Counsel would also contest the submission raised in regard to the adjustment of FDRs.
7. I have considered the submissions advanced by the Counsel for the parties. Counsel for the appellants would submit that if the amount of recovery as allowed by the Tribunal with interest as allowed would fall short of the amount of Rs. 5,68,50,000/- recovered from the sale of the properties, then the surplus amount is required to be refunded to the appellants. It cannot be disputed that if the claim of the Bank as allowed by the Tribunal is less than the amount recovered by sale of property, the surplus amount has to be returned to the appellants. If the Bank has not returned any excess amount recovered, then the appellants are entitled to claim the same with interest. Counsel for the respondent reconstruction company would respond to the same by pointing out that if the claim amount is calculated with the contractual rate of interest, then no amount would be surplus which would have to be refunded to the appellants. Since the respondent has not challenged the order passed by the Tribunal below and has also not filed any cross-appeal, it cannot be heard to urge that it will still be entitled to claim interest at contractual rate. The submission by the Counsel that this pure question of law which can be raised now that the Tribunal while allowing the O.A. could not have allowed the claim with simple rate of interest in view of the earlier order passed in the S.A. can be gone into by this Tribunal even in the absence of any appeal or cross-appeal by the respondent, would not appeal to me. I am not prepared to accept the submission so made by the Counsel for the respondent reconstruction company. While deciding the S.A. the Tribunal had taken note of the pending O.A. and has well-considered the points formulated in the order itself. The Tribunal below had dismissed the S.A. where the appellants primarily were challenging the assignment of debt to the respondent reconstruction company. The Tribunal had left the liberty open to the appellants to challenge the subsequent actions/measures taken by the assignee company, if they find any illegality in the actions so taken. Accordingly, it cannot be said that determination of any amount due or justification thereof was ever adjudicated by the Tribunal while deciding the S.A. Since the Tribunal had taken note of the pending O.A., the determination of the amount due, the rate of interest etc. obviously will now be governed by the decision in the O.A. The plea by the Counsel for the appellants that rate of interest allowed is on the higher side and because of equity and fair play it be reduced is also bereft of reason and is without any basis. The Tribunal below has already granted concession in the rate of interest which is not even under challenge.
8. The reference made to the decision in the Appeal No. 83/2013 Sh. Vinod Kumar Jain v. Punjab & Sind Bank, : IV (2015) BC 87 (DRAT), decided on 24.2.2015, in this regard also cannot help the cause of the appellants. Counsel for the appellants has not been able to advance any ground justifying further concession in the rate of interest. The Tribunal has fairly allowed interest @15% p.a. simple against the contractual rate of interest, and that too, from the date of filing the O.A. In my view, no further concession in the rate of interest is called for. Even this may, to an extent, err on the side of leniency.
9. At the same time, the appellants cannot be denied the benefit of interest at the same rate on the surplus amount, if any, recovered by the Bank due to the sale of the property of the appellants, Accordingly, if the Bank has recovered any amount which is in excess of the amount which the Bank is held entitled to recover in terms of the order passed by the Tribunal below, the appellants would be entitled to the refund of the excess and recovered amount with interest @ 15% p.a. simple from the date it was recovered till the date of payment. The Bank shall refund the amount realized in excess to the appellants with interest accordingly.
10. Otherwise, I am not impressed with the other two limbs of submissions made by the Counsel for the appellants. The Tribunal is justified in declining to consider the adjustment of Rs. 8,80,964/- charged as processing fee. If the appellants had any grievance, it ought to have raised the same before the Tribunal below in the S.A. or while challenging the order passed dismissing the S.A. Once the S.A. was dismissed, the amount demanded by the respondent
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in the demand notice was held justified. This is the amount claimed in the O.A. The order passed in the S.A. was upheld by this Tribunal when the appeal was dismissed, as the appellants could not make the pre-deposit to maintain the appeal. The result in any event would be that the order passed by the Tribunal below would merge with the order passed by this Tribunal and on that count the Tribunal below is now justified in not going into this, aspect afresh while deciding the O.A. This issue could not have been gone into any further by the Tribunal below in this background. The appellants, otherwise, could not point out whether he had raised this issue of adjustment of the FDRs before the Tribunal below. A point which was not raised or agitated before the Tribunal below cannot be allowed to be raised in the present appeal. Accordingly, I find no merit on these two limbs of submissions advanced by the Counsel for the appellants. The appeal accordingly is disposed of in the light of the observations made above. The appellants are held entitled to recover the surplus amount, if any, recovered due to the sale of the property with interest at the rate of 15% p.a. simple from the date of recovery to the date of payment.