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Seema Aggarwal v/s Standard Chartered Bank

    Appeal No. 377 of 2016

    Decided On, 26 April 2017

    At, Debts Recovery Appellate Tribunal at Delhi


    For the Appearing Parties: Rajeeve Mehra, Sr. Advocate with Shruti Aggarwal, Sanjeev Sagar, Advocates.

Judgment Text

P.K. Bhasin, Chairperson

1. The appellant's case is that she had mortgaged her residential house in NOIDA in favour of the respondent No. 1 Bank to secure the re-payment the loan in the form of O.D. Limits which it had sanctioned to respondent No. 3 Company M/s Shreejee Aptex (P) Ltd. in which she herself was also a director besides her estranged husband (respondent No. 2 herein) who in fact was running and managing the affairs of the said Company (hereinafter to be referred as 'the borrower Company'). He however deserted her without clearing the Bank's dues and the Bank is now bent upon selling her house in exercise of its rights under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ('SARFAESI Act' in short). The appellant in order to save her house from being sold in auction by the Bank had filed a petition under Section 17(1) of SARFAESI Act before the Debts Recovery Tribunal (DRT) in which she had impleaded her estranged husband also. That petition (being S.A. No. 53/2011) was, however, dismissed by the DRT vide its order dated 19.4.2012.

2. The appellant had claimed in the SA that she had mortgaged her house to secure the re-payment of only Rs. one crore sanctioned as loan in favour of respondent No. 3 herein by the respondent No. 1 Standard Chartered Bank and additionally charge was also created over commercial property of respondent No. (213) 3 Company in NOIDA. As per the case of the Bank in its reply to SA that was a negative lien in respect of the loan of Shreejee Apparels and as per its notice under Section 13(2) the said property was mortgaged in its favour in both the accounts of the two borrower Companies and it was not disputed during hearing of the appeal on behalf of the Bank that loan accounts of both the borrower Companies at one stage stood secured by way of equitable mortgage of the commercial property also of Shreejee Aptex in NOIDA and that fact is noted by the Hon'ble Delhi High Court also in its order dated 25.8.2014 in CWP No. 5361/2014. The further case of the appellant has been that after the relations with her husband became strained in 2007 her husband played a fraud upon her and by forging her signatures on various documents had got the loan limit extended in the name of the said borrower Company (Shreejee Aptex) to Rs. four crores and had also obtained loan of Rs. four crores fifty lacs in 2007 in the name of respondent No. 4 Company also without her knowledge and consent and by forging her signatures on loan documents including the document of extension of the mortgage of her house to the said loan also and, therefore, she could not be made to liquidate the Bank's dues in any of the accounts of the two borrower Companies and her house was not liable to be sold in auction under Sarfaesi Act.

3. The DRT has rejected the case of the appellant that her husband had committed any forgery etc. and consequently she was also liable to clear the Bank's dues being the co-guarantor with her husband as well as being the mortgagor of her house.

4. DRT has noticed the case of the appellant and dealt with the same in the following paras of the impugned order:

"4. (A) The Bank has initiated action under Section 13(4) of the Act against the property of the appellant as a counterblast to the writ petition filed by the appellant in Delhi High Court. The appellant is a promoter/Director of M/s. Shree Jee Aptex Pvt. Ltd. The appellant's husband and Sh. Sany Khemka were responsible for the day-to-day management of the Co. Sometime in early 2006 Sh. Sanjay Khemka fell seriously ill and he stopped looking into the affairs of the Co. In 2006 M/s Shree Jee Aptex Pvt. Ltd. obtained an Over Draft facility of Rs one crore from the Bank. The appellants personal property No. 104, Block-A, Sector -15 A, Noida, was offered as security by way of mortgage by deposit of title deeds. The relationship of the appellant with her husband became strained and they have been living separately since May/June 2007. The appellant came to know that her husband had forged forms, returns, Form 32 in the Registrar of Companies, and fabricated resolutions of Board meetings. Her husband had enhanced loan facility with the Bank to the tune of Rs. 2 crores. The documents produced for sanction of enhanced credit facility are forged. The appellant was not present in the Board meeting. She has not signed in the Board meeting. Her signatures as appearing in the relevant documents are found to be forged by an hand writing expert who had compared the purported signatures with the admitted signatures. All the enhancements in the credit facilities are without authority of the appellant and is non est. The appellant is the absolute owner of the property and the charge created thereon without the consent/knowledge of the appellant is illegal. The appellant has initiates criminal action against her husband for such forgery and criminal offences. The Bank has initiated action under Section 13(4) of the Act against her property. The Bank took symbolic possession of the property on 1.6.2011. The appellant seeks protection from further actions.

8. Ms. Seema Aggrawal has denied the extension of mortgage and she contends she had created equitable mortgage making the property liable for the sum of Rs. one crore only and the subsequent extension documents are fabricated. There was no complaint till March, 2010 with regard to the loan transactions. The whole episode commences on receipt of AW 1/9 letter written by Ms. Seema Aggarwal to the Bank. The letter is admitted by Ms. Seema Aggarwal. Ms. Seema Aggarwal says in her letter.

Ms. Shivani Khemka and Ms. Seema Aggarwal were the first directors of the company but the Co; was run by their husbands Mr. Sanjay Khemka and Mr. Lalit Aggarwal respectively.

Lalit Aggarwal was appointed as director in place of Ms. Shivani Khemka in 2006 and since 28.4.2006 the husband and wife were the only two directors.

The Company had taken a loan of Rs. one crore on 30.7.2006 from the Bank.

The relationship between husband and wife became strained and they started living separately since 2007.

Mr. Lalit Aggarwal defrauded the Bank by appointing Mr. Satish Chand, Ms. Anita Verma, Mr. Santokh Singh and Mr. Cursharan Singh as additional directors by creating false forged and fabricated documents and filed the same before the Registrar of companies by forging her signature in the Board resolutions, minutes of the meeting and several other documents.

The Resolution dated 12.11.2008 authorising Lalit Aggarwal for document of loan facility of Rs. 2 crores and the Board Resolution dated 12.5.2009 authorising him to execute documents for loan facility of Rs. 4.5 crores are forged.

The limit of loan facility was enhanced to Rs. 7.50 crores and creation modification of charge in respect of her property on 10.11.2009 is without her knowledge and consent and is a fraudulent transaction by Mr. Lalit Aggarwal.

The minutes of the Board Resolutions dated 12.11.2008 and 12.5.2009 contains her fabricated signature. Lalit Aggarwal and his allies have created and filed false, forged, fabricated documents in connection with loan facility from time to time and committed forgery and various other misdeeds. She has obtained handwriting expert's opinion with regard to the genuineness of her signatures on the Board Resolutions dated 12.11.2008 which shows the signatures are forged.

She has lodged a complaint as FIR 43/2010 dated 19.3.2010 at Parliament Street Police Station, New Delhi.

The Bank was requested to freeze the current a/c forthwith till investigation regarding the fraudulent acts is concluded and the dispute is resolved. The Bank was also called upon to recall the loan facility granted to the Co; on the basic of the false and fabricated documents.

15. The applicant in SA 53/2011 has contended that she had signed only initial document when her house property was mortgaged with the Bank for the liability of Rs. 1 crore. The report of the expert gives an opinion that as alleged by Ms. Seema Aggrawal, her signature was not forged by Lalit Aggrawal. This applicant has stated that post July 2007, none of the alleged papers/documents including purported document, allegedly extending the charge over her sole residential property i.e. House No. 104, Sector ISA, NOIDA (U.P.), had been signed by her. The relationship between the husband and wife got frustrated is a fact which is not disputed by the spouses. But Ms. Seema Aggrawal issued the communication to the Bank only on 3.4.2010 making allegation. If she was not continuing her relation with the company and not officiating in any of the activities of the company as one of the Directors, nothing prevented her in sending a letter earlier. She had given complaint to the police only in March, 2010. She had given a complaint to the Magistrate under Section v 125 of the Code of Criminal Procedure only in 2009 as seen by Ex. AW 1/ 7 marked on her side. Though she had produced AW1/1 to AW1/18, there documents will not go to show that there was no role on her part in extending the mortgage to continue the security in respect of the enhanced credit limit enjoyed by thg.company of which she was a Director. Thus, the contention now taken by her that the Original mortgage alone is signed by her and that he subsequent extension is not binding, as it stands now, cannot be accepted.

16. The Bank has produced the statement of account which is marked as RW1/4 collectively. The Bank has succeeded to prove that the amount outstanding in the account of the company as follows, in respect of Shreejee Apparels Pvt Ltd., as on 20.9.10, the amount due is Rs. 2,55,13,744/-.

17. On appreciating and analysing the evidence produced on either side and on considering the entire materials produced before me, I find that there is no deformity in any of the actions taken by the Bank. The Bank is perfectly justified in pursuing their action under the provisions of the Securitisation Act. None of the grounds urged by the applicant give cogent reasons in the above circumstances to restrain the Bank from further recourse to any of the actions to be taken against the security interest "

5. The appellant in the present appeal had claimed that the DRT had gone totally wrong in coming to the conclusion that her estranged husband had not forged her signatures on various documents executed to get the enhancement in the loan limit and to extend the mortgage of her house for the enhanced limits also.

6. When this appeal came up for preliminary consideration including the application of waiver of the condition of pre-deposit on 8.5.2012 the learned Senior Counsel for the appellant had volunteered that the Bank could take possession of the basement of the mortgaged house of the appellant and the appellant and her children could be permitted to live in the remaining portion of the house. Learned Counsel for the Bank while accepting that proposal of the appellant's Counsel had submitted that the Bank will defer further action for next ten days and the hearing on the miscellaneous application for waiver and stay could be adjourned for ten days.

7. However, on the adjourned date of 21.5.2012 neither this Tribunal granted any interim relief to the appellant nor the Counsel for the Bank extended his assurance given on 8.5.2016 that for ten days the Bank will not take further actions in respect of the appellant's house. From the record it is not clear as to why the Bank did not proceed further to enforce its rights under the SARFAESI Act and to take physical possession from the appellant and she continues to retain the possession and that too without clearing the Bank's dues of crores of rupees.

8. This in fact is not the only case where the Bank has permitted the defaulting borrower/guarantor/mortgagor to retain the secured asset even when there is no stay order of the Tribunal or any other Court and it has been observed by this Tribunal that in a large number of cases the Banks do not take physical possession of their secured assets in exercise of their rights under SARFAESI Act despite that fact that DRTs had declined any interim protection to the borrowers etc. against their dispossession. Perhaps the higher Authorities of the Banks are not apprised of that situation by the lower Authorities and that emboldens the defaulting borrowers not to clear the public dues, it is high time this aspect is seriously examined by all the Banks as also by the Reserve Bank of India as well as the Government which has enacted SARFAESI Act with the object of providing teeth to the Banks etc. for the recovery of public money by coercive measures made available to them by the Parliament.

(Emphasis supplied)

9. At the time of hearing in the appeal appellant's learned Senior Counsel Mr. Rajeeve Mehra had submitted that when the relations between the appellant and her husband were normal they were jointly doing business in the names of two Companies one of which was respondent No. 3 M/s. Shreejee Aptex (P) Ltd. and the other one was respondent No. 4 herein, M/s. Shreejee Apparels (P) Ltd. As per the case of the respondent Bank both these Companies had availed of financial assistance from the respondent No. 1 Bank to the tune of crores of rupees on the security of one commercial property in NOIDA in the name of respondent No. 3 and one residential house of the appellant in NOIDA, though as per the case of the appellant she had mortgaged her house only to secure the loan amount of Rs. one crore only sanctioned in 2006 by respondent No. 1 Bank in favour of respondent No. 3 Company. To secure the repayment of Bank's dues the appellant had mortgaged her house in NOIDA and her husband had also mortgaged one commercial property in NOIDA which was in the name of respondent No. 3 Company. Mr. Mehra had further submitted that with the passage of time the relations between the appellant and her husband became seriously strained and they separated sometime in 2007 and the business of the two Companies continued to be managed by her husband. During that phase her husband forged her signatures on various documents and got the loan limits enhanced and also got the mortgage of her house which was only for a sum of one crore extended to the enhanced limits and also got sanctioned loans of crores of rupees for M/s Shreejee Apparels (P) Ltd. from respondent No. 1 Bank. Then he got the accounts of both the Companies declared as NPAs giving the opportunity to the Bank to invoke its rights under SARFAESI Act for putting the mortgaged and hypothecated assets to sale after taking possession thereof. At that stage two separate petitions under Section 17(1) of Sarfaesi Act were filed by both the borrower Companies and the appellant also filed her separate petition out of which the present appeal had arisen. The DRT had rejected all the three S.As. vide its common order which is now under challenge in this appeal also. The two Companies had also filed separate appeals but during the pendency of the three S.As appellant's husband managed to steal a deal with the Bank and got rid of his liability by compromising the matter as far as the loan liability of M/s. Shreejee Aptex (P) Ltd. is concerned and then did not pursue the appeal which he had filed on behalf of this Company and he also did not pursue the appeal filed on behalf of M/s. Shreejee Apparels (P) Ltd. so that the Bank could sell appellant's house mortgaged by her and throw her out of her sole residential house. Mr. Mehra further submitted that the appellant has since then been all alone fighting her legal battle with the respondent Bank to save her house and that fight has already consumed more than six years of her life during which period she and her children have suffered a lot. However, now some relatives and other well wishers of the appellant have come forward to extend their helping hands to her to bring her out of this battle field so that she can take care of children by giving full attention to them who were being neglected all these years (218) since she was involved in this never-ending legal battle. Mr. Mehra informed that the Bank had settled its claim in respect of Shreejee Aptex (P) Ltd. for a sum of Rs. 3.60 crores with simple interest @ 11.5% as against the total demand of Rs. 2.91 crores with interest due as on 20.8.2010 raised in the demand notice under Section 13(2) of SARFAESI Act. Regarding Shreejee Apparels (P) Ltd. the demand under Section 13(2) was for Rs. 2,55,13,744.18 with interest due as on 20.8.2010.

10. Mr. Mehra submitted that the appellant had decided to clear off the entire principal amount mentioned in the demand notice in respect of Shrejee Apparels (P) Ltd. and that decision to clear-off the Bank's dues was conveyed to this Tribunal in writing also vide appellant's M. A. No. 12016/2016 in this appeal in September, 2016 wherein she had agreed to make the entire payment of Rs. 2,55,13,744/- with interest @ 8% p.a. after adjustment of payments of Rs. 64,00,000/- made from time-to-time, Rs. one crore and fourteen lacs who also paid to the Bank during the pendency of this appeal to show her bonafides. This fact is not in dispute. The prayer made on behalf of the appellant thus was for closing this legal battle by directing the appellant to clear the Bank's dues with simple interest@ 8 p.a. to be complied within the period which this Tribunal would consider to be reasonable and thereafter the Bank should be directed to release its charge over her house in Noida and also to deliver to her title documents lying with it.

11. When it was put to Mr. Mehra as to how any relief in the rate of interest could be granted to the appellant after she has decided not to pursue any of the grounds of challenge raised against the correctness of the impugned order of DRT in this appeal which had arisen out of a Securitisation Application under Section 17(1) of SARFAESI Act in which all that the DRT can examine is whether there was any illegality in any of the measures taken by the secured creditor under Section 13 of SARFAESI Act the answer was that since the Bank itself had settled the loan account of Shreejee Aptex (P) Ltd. to help the appellant's estranged husband and to put her property to sale to recover the dues of Shreejee Apparels (P) Ltd. this Tribunal can take a sympathetic view in favour of the appellant so that she does not have to run after the Bank officials for settlement and also because the appellant has decided to give up her legal battle in which she had challenged various acts of omission and commission of not only her estranged husband but also of the Bank officials and other persons who had been fraudulently inducted by her husband as Directors in the Board of Directors of the two Companies involved in this litigation.

12. As far as the stand of the respondent Bank is concerned its learned Counsel Mr. Sanjeev Sagar did not deny the factum of settlement of the Bank's claim against Shrejee Aptex (P) Ltd.. However, he did not concede to the prayer of the appellant to give her the benefit of reduction in the rate of interest with which she could clear the entire dues of the Bank, as was being volunteered by her through her Senior Counsel. At the same time, the learned Counsel for the Bank left the decision totally on the discretion of this Tribunal.

13. In this way the appellant has surrendered herself in the legal battle with the Bank and the Bank has also not claimed that in view of the fact that the appellant herself having decided not to establish that she had been defrauded by her husband in collusion with any Bank official(s) her appeal deserved to be dismissed.

14. The question now arises is whether the appellant, who has given up her challenge to the impugned decision of the DRT in entirety and has agreed to clear the Bank's dues with interest 8% p.a., can be granted any relief, be it in the matter of interest only. In the considered and firm view of this Tribunal the answer is No.

15. It is significant to notice that when the appellant had received notice under Section 13(2) of SARFAESI Act from the respondent Bank she had not made any representation against that notice which she could have done in terms of Section 13(3-A) of SARFAESI Act. She had rushed to the Hon'ble Delhi High Court and filed a writ petition but it was permitted to be withdrawn with the liberty that she could make her representation to the Bank against the demand notice which she had assailed in her writ petition. Though she made a representation to the Bank thereafter the grievances raised at that time was also about forgeries of documents of fresh loan in favour of Shreejee Apparels and enhancement of limits in the name of Shreejee Aptex and consequently she was not liable to pay any amount to the Bank nor was her house liable to be auctioned. There was not a whisper in that representation that the amount claimed in the demand notice was wrongly calculated or that the interest calculated was also not correct. Even no case in the alternative to that effect was pleaded. Even in the litigation before the DRT and then before this Tribunal no such case was pleaded. She had kept on levelling all sorts of allegations of cheating, forgeries etc. against her estranged husband and also collusion of Bank officials. The police had not found any case of forgery against her husband and complaint was closed by filing a closure report in the concerned Court. And now in this appeal the appellant has given up her fight on those allegations. She never sought any adjudication of her the amount of debt or payment of interest. Therefore, she cannot be allowed to even claim any benefit. Her Securitisation Application is liable to be dismissed in view of her own stand before this Tribunal that she had decided to make the payment to the Bank as per its demand in the notice under Section 13(2) of Sarfaesi Act.

16. The appellant cannot expect any relief even on sentimental pleas raised by her centering around her disputes with her husband. Those pleas have no role to play in the proceedings for recovery of debts by financial institutions or Banks from the defaulting borrowers and no sympathy can be shown by DRTs to them and particularly in favour persons like the appellant here who has been successful in defeating the rights of the Bank to recover crores of rupees due from her being the guarantor/mortgagor and who for years has been claiming that her husband had colluded with Bank officials and other private persons and one fine morning decides to give up all her grievances and press into service a plea which was never raised earlier that she was entitled to reduction in the rate of interest. Sentiments have role in the matter of disputes arising of commercial transactions. If DRTs get swayed sentimental pleas then the DRTs themselves will be defeating the objects for their very creation to expedite the recoveries of public money for which purpose SARFAESI Act was enacted as also the Recovery of Dues of Banks and Financial Institutions Act, 1993.

17. Mr. Mehra had laid much stress of the submission that the Bank had settled with the appellant's husband and so that is also a good reason to give some concession to the appellant also in the matter of interest. However, in my view even for this reason, no relief can be granted to the appellant which is not being sought on the basis of violation of any legal right existing in her favour. I again reiterate that DRTs do not there to decide matters coming before them at the instance of defaulting borrowers and that too at a stage when the secured creditors are attempting to take possession of secured assets on the basis of sentimental pleas. This Tribunal is however coming across many matters where the defaulting borrowers approached DRTs with Securitisation Applications under Section 17(1) of Sarfaesi Act raising all kinds of challenges against the measures taken by their secured creditors and making prayers for quashing all those measures but when the matters come up for consideration on the first date itself the defaulters simply make a prayer for fixing of instalments or volunteering to surrender possession of some of the many secured assets, as per their choice, sought to be taken over and sold by the Banks/FIs while making prayer for restraining the Banks/FIs from taking further coercive steps against the remaining secured assets. The DRTs get swayed and persuaded by the sentimental pleas and the prayers justifying interference by the DRTs in the actions I a ken/initiated by the secured creditors. Disposal of SAs in that fashion and showing misplaced sympathy to the defaulters who have been avoiding payment of public money should be avoided by the DRTs.

18. Here 1 would like to refer to the following paras from a judgment of the Hon'ble Supreme Court rendered inTeri Oat Estates (P) Ltd. v U. T. Chandigarh and Ors., Appeal (Civil) 49 of 1999 on 19 December, 2003.

"We have no doubt in our mind that sympathy or sentiment by itself cannot be a ground for passing an order in relation whereto the appellants miserably fail to establish a legal right. It is further trite that despite an extraordinary constitutional jurisdiction contained in Article 142 of the Constitution of India, this Court ordinarily would not pass an order, which would be in contravention of a statutory provision.

As early as in 1911, Farewell, L.J. inLatham v. Richard Johson & Nephew Ltd., (1911-13 AER reprint p. 117)observed :

"We must be very careful not to allow our sympathy to affect our judgment with the infant plaintiff. Sentiment is a dangerous will O' the wisp to take as a guide in the search for legal principles."

(See alsoAshoke Saha v. State of West Bengal & Ors., CLT (1999) 2 H.C. 1). InSairindhri Ddolui v. State of West Bengal, (2000) 1 SLR 803, a Division Bench of the Calcutta High Court wherein (one of us Sinha, J., was a Member), followed the aforementioned dicta.

This Court also inC.B.S.E. and Another v. P. Sunil Kumar and Others, (1998) 5 SCC 377rejecting a contention that great injustice would perpetrate as the students having been permitted to appear at the examination and having been successful and certificates had been issued in their favour, held :

"... We are conscious of the fact that our order setting aside the impugned directions of the High Court would cause injustice to these students. But to permit students of an unaffiliated institution to appear at the examination conducted by the Board under orders of the Court and then to compel the Board to issue certificates in favour of those who have undertaken examination would tantamount to subversion of law and this Court will not be justified to sustain the orders issued by the High Court on misplaced sympathy in favour of the students."

So, this appeal has to be dismissed and is hereby dismissed.

19. However, the dismissal of this appeal will not be hurdle in the way of the appellant for approaching the Bank to persuade it to settle with her also as had been done with her husband and co-guarantor Lalit Aggarwal and at whose request the Bank had released, without clearance of all its dues recoverable from the two borrower Companies, its charge over the other commercial property in NOIDA which had also been mortgaged in its favour by Shreejee Aptex (P) Ltd./Laiit Aggarwal to secure the repayment of loan advanced to Shreejee Apparels (P) Ltd. also in addition to the mortgage created by the appellant of her residential house in NOIDA. And in case the appellant approaches Standard Chartered Bank for settlement it is hoped that her case will be considered in an unbiased manner and uninfluenced by the fact that the appellant had kept her legal fight alive for a couple of years more than her husband. These observations are, however, will not be considered to be any direction from this Tribunal to the Bank.

20. A copy of this order shall be forwarded to the Ministry of Finance, Govt, of India drawing its attention to the observations of this Tribunal in para which has been underlined for emphasis so that the Ministry can in turn forward the order to the Heads of the Banks for information and necessary corrective steps which may be considered to be required to be taken in that regard. Appeal dismissed.