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Rise Projects Pvt. Ltd. v/s Axis Bank Ltd. & Others

    Appeal No. 73 of 2020

    Decided On, 27 September 2021

    At, Debts Recovery Appellate Tribunal at Delhi

    By, THE HONOURABLE MR. JUSTICE P.K. BHASIN
    By, CHAIRPERSON

    For the Appellant: Pallav Saxena, Advocate. For the Respondent: R1, Rahul Chauhan, Advocate.



Judgment Text

1. The appellant had suffered a money decree dated 23.1.2019 for a sum of Rs. 90,60,167/- withpendente liteand future interest in the Original Application (O.A.) No. 890/2017 filed by Respondent No. 1 underSection 19 the Recovery of Debts and Bankruptcy Act, 1993 on account of its outstanding dues in the loan account of respondent Nos. 2 and 3. The appellant is builder of residential project in which respondent Nos. 2 and 3 had been allotted a flat and the respondent No. 1 had financed that flat.

2.The appellant had moved an application before the DRT under Order IX Rule 13 Code of Civil Procedure for setting aside of the final order, which according to it was anex parte finalorder. That application has been dismissed by the impugned order which order reads as under:

“1 This order shall dispose of an application bearing I.A. 2912 of 2019 filed by the defendant No. 3 seeking setting aside of theex partefinal order dated 23.1.2019 passed in OA No. 890 of 2017.

2. The brief averments made in this application are given below:

The defendant noted above has filed the present Application u/s 22(2)(g) of the RDDBFI Act for setting aside theex parteorder dated 23.1.2019 passed by this Tribunal (mortgaged property VS-6/Bungalow No. 10, Block VS-6, 10th Floor, Rise Skybungalows, Plot No. GH-02, Village Sarai-Khawaja, Sector 41, Faridabad). The applicant herein submits that on receipt of notice for the first time appeared before this Tribunal on 1.12.2017 and advised his Counsel that the claim against D-3 is not sustainable since no loan was sanctioned to D-3 but sought certain documents or preparation of WS, since documents were not readily available with D-3 and took some time, in the meantime vide order dated 2.7.2018 this Tribunal closed the right of D-3 to file WS. Admittedly, D-3 is developing the project and due to some dispute with the Municipal Corporation Faridabad (MCF) in respect of non development of metalled road and other developments outside the project and due to the default on the part of MCF, the project of the D-3 was running behind and due to this reason could not keep track of the present matter with its earlier Counsel nor the Counsel informed D-3 about the status of the proceedings. Applicant herein further submits that D-3 was not at all communicated by his earlier Counsel about the status of the case and they were under the impression that since all the documents are with the previous Counsel, necessary steps to file the WS would have been taken. On the contrary when the Counsel failed to appear on 03.12.2018, D-3 was proceededex parteon the very same dated and D-3 was not aware of passing of the said order. Applicant herein further submits that D-3 could not file its WS due to communication gap and further the liability of the OA amount be restricted only to be upon D-1&2 and not on D-3. applicant herein further contended that the documents filed along with the OA by the applicant-Bank itself shows that there is no liability of D-3, as such the applicant-Bank can recover its dues by making balance payment qua the mortgaged flat and take possession of the same or in the alternative can even sell the flat and the balance money is payable to D-3 from the sale of the flat, in such a situation the liability, responsibility with respect to D-3 cannot in any manner be extended to seek a recovery against D-3 when the principle liability, responsibility with respect to D-3 when the principle liability remains on D-1&2 and no further liability can be fastened upon the D-3 in any manner. Therefore, RC and the demand as issued against D-3 by way of adjudication is wholly untenable and therefore deserves to be set aside qua the D-3.

3. Learned Counsel for the applicant/D-3 further contended that D-3 was not aware of the aforesaid order, has got legal advice to approach this Tribunal with an application seeking review of the order dated 23.01.2019 and further filed an application under Order 9 Rule 13 CPC read with Section 22(2)(g) of the RDDBFI Act seeking setting aside of theex partefinal order. Since, D-3 has not received substantial opportunity for contesting the matter on merit, hence prayed to set aside the final order dated 23.01.2019 and grant an opportunity to contest the matter on merit. Further, the learned RO, DRT II, Delhi issued order dated 16.11.2019 and 24.11.2019 in RC No. 29 of 2019 whereby directions of attachments of the Bank Accounts of the D-3 has been given but the said notice of attachment was issued to the D-3 or its Counsels on record. It is pertinent to mention that D-3 is holding the monies lying to the credit of the attached accounts in trust for and on behalf of the home buyers and the said monies are to be exclusively used to accomplish the projects, the aforesaid obligation of the D-3 under RERA Act is unreserved and sacrosanct, it has become impossible for the D-3 to keep the project running and also the objector is not able to procure the construction material. Learned Counsel for the applicant/D-3 further referred Clause 4 of the Tripartite Agreement and submits that:

“It is agreed by and between the parties to this Agreement that in case if the Borrower fails to honour the commitment, the developer/Builder shall inform the Bank and the Bank shall have the right to pay the sale consideration and get it registered either in Bank’s name or its nominee. Likewise, in the event the Borrower defaults in payment of installments then in such event also the Bank shall have the right to inform about such default on the part of the Borrower to the Builder and shall accordingly have the right to write to the Builder for cancellation of the Agreement executed between the parties, where after the Bank shall have the right to pay the sale consideration and get the subject property registered either in the Bank’s name or in the name of the Bank’s nominee.”

D-3 further submits that as per Clause 9 of the Tripartite Agreement, applicant Bank could substitute a new borrower in case if the original borrowers (D-1&2) fails to pay the loan installments. In view of the above facts, it is prayed that this Tribunal set aside the final order dated 23.1.2019 which has been obtained by the applicant Bank by not submitting the correct facts of the case.

3. In reply, the learned Counsel for the answering applicant Bank vehemently denied the contents of the application of the D-3 and submits that as per order dated 23.1.2019 the parties were directed to appear before the learned RO on 29.3.2019, however, despite having knowledge that the RC was listed before the learned RO on 29.3.2019, D-3 failed to appear before the learned RO. Further, on 6.7.2019, the Counsel for D-3 appeared before the learned RO and submitted that they have filed a review application before this Tribunal and thereafter on subsequent dates, the Counsel for D-3 made the same submission in order to frustrate and hinder the present recovery proceedings against them. Even after filing the review application D-3 did not ever mentioned or pressed the same before this Tribunal, therefore, D-3 is just trying to gain the time and avoided their liability as long as they can in order to hinder the present recovery proceedings as they have no intention to pay the legitimate dues of the applicant-Bank. Answering Bank further submits that on the one hand D-3 is saying that they have no liability to pay the dues of the applicant-Bank and on the other hand vide order dated 15.3.2018 D-3 has admitted their liability to pay the dues of the applicant, however, D-3 right to file the WS was closed after giving sufficient opportunities and Counsel for the D-3 was continuously present before each and every dates, till their right was closed, therefore, there was no question that D-3 was unaware of the proceedings of the Tribunal. Learned RO, DRT-II has attached the Bank account of D-3 only when D-3 failed to pay the dues of the applicant and since the property in question is under construction and is under inhabitable condition, therefore, the plea of D-3 that account of RERA or home buyers money is attached is false and frivolous. The fact has already been admitted by D-3 in para 7 of the present application and the issues raised in the present application are already been adjudicated by this Tribunal. Hence, the present application filed by D-3 may be dismissed with cost.

4. I have heard learned Counsel for both sides and have gone through the record.

5. Now the point for consideration is whether the applicant/D-3 is entitled for setting aside ofex parteorder dated 23.1.2019 and allow to participate in the proceedings and defend the matter on merit, as prayed for?

6. This is an Application filed by D-3 and learned Counsel for D-3 contended that on receipt of notice for the first time appeared before this Tribunal on 1.12.2017 and advised his Counsel that the claim against D-3 is not sustainable since no loan was sanctioned to D-3 but sought certain documents for preparation of WS, since documents were not readily available with D-3 and took some time, in the meantime vide order readily available with D-3 and took some time, in the meantime vide order dated 2.7.2018 this Tribunal closed the right of D-3 to file WS. D-3 further contended that D-3 was not at all communicated by his earlier Counsel about the status of the case and they were under the impression that since all the documents are with the previous Counsel, necessary steps to file the WS would have been taken. On the contrary when the Counsel failed to appear on 3.12.2018, D-3 was proceededex parteon the very same date and D-3 was not aware of passing of the said order and after the above order, got legal advice to approach this Tribunal with an application seeking review of the order dated 23.01.2019 and further filed an application under Order 9 Rule 13, CPC read with Section 22(2)(g) of the RDDBFI Act seeking setting aside of theex partefinal order.

7. On the other hand, the contention of the applicant Bank is that D-3 is having knowledge that the RC was listed before the learned RO on 29.03.2019 but they ignore to appear before the learned RO. Further, on 06.07.2019, the Counsel for D-3 appeared before the learned RO and submitted that they have filed a review application before this Tribunal and thereafter on subsequent dates, the Counsel for D-3 made the same submission in order to frustrate and hinder the present recovery proceedings against them. Even after filing the review application D-3 did not ever mentioned or pressed the same before this Tribunal, therefore, D-3 is just trying to gain the time on the one pretext or other.

8. After giving my thoughtful consideration to the submissions made by the learned Counsels for the parties, I am of the considered opinion that the grounds as urged by the applicant herein that D-3 was not aware about the status of the case due to communication gap between the D-3 and their Counsel, is untenable and I do not find any merit for the same. Record further reveals that the learned Counsel for the D-3 never pressed for the review application, which is also barred by limitation. Further, there is no application on record for condonation of delay by the D-3. This Tribunal after assessing the pleadings of both the parties and the contentions raised during the course of arguments by both the parties, clearly and categorically holds that D-3 is not entitled for any relief and if he is aggrieved by the order of this Tribunal, the remedy available with him shall be way of appeal and not by review or setting asideex parteorder dated 23.1.2019. None of the grounds in the Review Application or Application for setting aside ex-parte order dated 23.1.2019 is valid ground and I do not see any merit in the present application and is liable to be dismissed.

9. In the result, the present application bearing IA No. 2912 of 2019 is hereby dismissed. No order as to costs.”

3.Feeling aggrieved, the appellant has approached this Tribunal by filing an appeal.

4.In order to maintain an appeal in a case where the debt against the borrower has been finally adjudicated, the appellant is supposed to make a pre-deposit of 50% of the amount found by the DRT to be payable to the borrower. However, it was argued that it is a case ofex partedecree and what the appellant was challenging before this Tribunal is the order of DRT dismissing its application under Order IX Rule 13, CPC and not the final order passed by the DRT and, therefore, in such like situation the requirement of pre-deposit does not get attracted. In support of this argument one judgment of Allahabad High Court and one decision each of this DRAT, Delhi and DRAT, Kolkatta were cited wherein it was held that when an application under Order IX Rule 13, CPC is dismissed and an appeal is filed against that order no pre-deposit is required to be made.

5.As far the submission of Mr. Pallav Saxena, leaned Counsel for the appellant that since the appellant is not claiming setting aside final order of DRT, therefore, not required to make any pre-deposit is concerned the same is liable to be rejected in view of the recent judgment of the Hon’ble Supreme Court inKotak MahindraBankv.Ambuj Kasliwal,II (2021) BC 1 (SC)=II (2021) SLT 106=2021(3) SCC 549. In that case referring to Section 21 of the Recovery of Debts and Bankruptcy Act, 1993 regarding pre-deposit observed as under:-

“A perusal of the provision which employs the phrase “appeal shall not be entertained” indicates that it injuncts the Appellate Tribunal from entertaining an appeal by a person from whom the amount of debt is due to the Bank, unless such person has deposited with the Appellate Tribunal, fifty percent of the amount of debt so due from him as determined by the Tribunal under Section 19 of the Act. The proviso to the said Section, however, grants the discretion to the Appellate Tribunal to reduce the amount to be deposited, for reasons to be recorded in writing, but such reduction shall not be less than twenty five per cent of the amount of such debt which is due. Hence the pendulum of discretion to waive pre-deposit is allowed to swing between fifty per cent and twenty-five per cent of the debt due and not below twenty-five per cent, much less not towards total waiver. It is in that background, keeping in perspective the said provision, the DRAT has in the instant case ordered deposit of fifty per cent of the amount……………………….”

(Emphasis supplied)

6.This judgment does not make any distinction between an appeal against anex parteorder where application under Order IX Rule 13, CPC has been dismissed and appeal is filed against dismissal of that application or ay appeal challenging the final order may beex parte.In both the categories the appellant wants setting aside final order. In this case the liability of the appellant has been adjudicated by the DRT in case appeal in filed in such a case that appeal can be entertained only if pre-deposit of 50% of the debt so adjudicated by the DRT is to be made. The DRAT has the discretion of reducing the pre-deposit only upto 25% for reasons to be recorded in writing. So, persuading me to make two category of cases of for the purposes of pre-deposit for the entertainment of statutory appeal is to persuade me to defy the mandate of Apex Court. This Tribunal is bound by this decision of Supre

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me Court and the judgments taking a contrary view, as cited by Mr. Pallav Saxena, need not now be considered in view of the latest pronouncement of the Hon’ble Supreme Court inAmbuj Kasliwal’sjudgement (supra). 7.I am also ofprima faciethat the submission of Mr. Pallav Saxena, learned Counsel for the appellant that this is a case under Order IX Rule 13, CPC is misleading a and on the face of record available appears to incorrect. The application under IX Rule 13, CPC itself shows that the appellant was represented by a Counsel before the DRT and time was sought for filing written statement but it failed to avail of the opportunities and later on, as usual, blame was put on the earlier Counsel for not being present on subsequent dates. Then a pea was also taken that the DRT ought to have taken into consideration the documents of Bank even if there was no written statement and if the documents had been perused DRT would have come to the conclusion that being a builder only was not liable to pay any money to the Bank and liability was only of its borrowers, respondent Nos. 2 and 3. Same pleas were also raised in grounds of appeal before this Tribunal. 8.I, therefore, call upon to make the mandatory pre-deposit of 50% of the amount decreed by the DRT calculated by including thependente liteinterest awarded by the DRT. Out of the pre-deposit amount the appellant shall pay Rs. 25% within a week and balance can be paid within three weeks thereafter. In case of default in payment of 25% within a week the appeal shall be liable to be dismissed. In case pre-deposit is made the amount shall be kept in fixed deposit with a nationalised Bank. The waiver application stands disposed of accordingly.
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