K.R Subbaiah And Another v. Indian Bank, Madurai .

R.M Lodha, J.— The judgment-debtors are in appeal, by special leave. Indian Bank, the respondent (for short “the Bank”) sued the appellants for recovery of a sum of Rs. 14,06,152.80 with interest and costs before the Principal Sub-Court, Madurai. On 7-1-1986, a preliminary decree was passed by the trial court against the appellants ex parte, as prayed for by the Bank, and one month's time was given for payment. On 12-11-1986 an ex parte final decree was passed against the appellants in terms of the preliminary decree.

2. The Bank levied execution of the decree wherein two properties belonging to the first appellant were sold and a sum of Rs. 4,07,000 was realised from that sale. During the pendency of the execution proceedings, the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short “the 1993 Act”) came into force and the execution proceedings were transferred to the Debts Recovery Tribunal, Chennai (for short “the Tribunal”). On 26-4-2000 the Tribunal issued recovery certificate in favour of the Bank for a sum of Rs. 15,66,731.49 with future interest @ 18% p.a on Rs. 11,95,200 from the date of decree till the date of realisation with costs and for sale of the properties mentioned in the Schedule. The proceedings before the Tribunal also remained ex parte.

3. It appears that pursuant to the recovery certificate dated 26-4-2000, initially an order of attachment of the judgment-debtors' two properties was passed on 9-8-2002 and then the order of proclamation of sale was made on 11-10-2002. The Debts Recovery Officer fixed 15-11-2002 as the date for auction of these two properties.

4. The appellants approached the High Court of Judicature of Madras by filing a civil revision petition challenging the debt recovery certificate, the order of proclamation of sale and the proceedings before the Debts Recovery Officer. The High Court, however, dismissed the civil revision petition on 3-2-2003 as not maintainable as the appellants had a statutory remedy of appeal under Section 20 of the 1993 Act. It may be noted here that while dismissing the civil revision petition, the High Court observed about the appellants' willingness to pay Rs. 15,00,000 in full and final settlement of the Bank's claim. As regards the rate of interest, the High Court observed that the appellants may raise this aspect before the Debts Recovery Appellate Tribunal (for short “the Appellate Tribunal”), if so advised.

5. The appellants then preferred an appeal before the Appellate Tribunal, Chennai and since it was barred by time, they also prayed for condonation of delay in filing the same. However, the Appellate Tribunal was not convinced by the explanation put forth by the appellants and dismissed the appeal on 2-7-2003 on the ground of delay.

6. The appellants then approached the High Court of Judicature of Madras challenging the order of the Appellate Tribunal. The High Court held that the Appellate Tribunal did not err in dismissing the appeal on the ground of delay and accordingly dismissed the revision petition on 23-12-2003. It is from this order that the present appeal has arisen.

7. On 7-5-2004 before this Court an amount of Rs. 16 lakhs was handed over by the appellants to the Bank by way of bank drafts. The Court noticed this fact and passed the following order (2010) 8 SCC 654:

“1. The petitioners have handed over an amount of Rs. 16 lakhs by way of bank drafts to the respondent Bank. According to this Court's order dated 16-4-2004 the decretal amount was to be deposited. According to the petitioner this amount is the principal amount of Rs. 11,95,200 (Rupees eleven lakhs ninety-five thousand and two hundred only) with 18% interest on the amount are up to the date of the decree and 6% interest on the principal amount.

2. The bank drafts are accepted by the learned counsel appearing on behalf of the respondent without prejudice. The respondent is entitled to appropriate the same towards the decretal dues. The amount which has been handed over in this Court shall be adjusted first against the decretal amount and thereafter against interest. In view of the payment made, issue notice. Notice is accepted by Mr Himanshu Munshi, learned counsel appearing for the respondent.

3. Counter-affidavit, if any, be filed within four weeks. Rejoinder-affidavit may be filed within two weeks thereafter.

4. Pending disposal of the matter by this Court the attachment will continue but no further steps to be taken for sale of the petitioners' property”.

8. The Bank filed counter-affidavit in opposition to SLP on 23-7-2004. We shall refer to the counter-affidavit a little later. On 29-11-2004, leave was granted and interim order was directed to remain operative.

9. When the appeal was taken up for hearing by us, the learned counsel for the appellants submitted that the appellants desire to put an end to the litigation by making payment of the outstandings as on date on the basis of the statement (Annexure R-1) submitted by the Bank before this Court along with the counter-affidavit. The learned counsel submitted that the appellants shall pay interest @ 6% p.a as reflected in the statement (Annexure R-1) on the remaining amount after adjustment of Rs. 16 lakhs which was paid to the Bank by way of bank drafts on 7-5-2004.

10. Mr Himanshu Munshi, learned counsel for the Bank, however, submitted that the appellants have to pay interest @ 18% p.a on Rs. 11,95,200 from the date of decree till the date of realisation as per the final decree. As regards the statement (Annexure R-1) annexed with the counter-affidavit filed by the Bank, the learned counsel submitted that interest calculated therein @ 6% was an error on the part of the Assistant General Manager, Circle Office, Madurai.

11. The short controversy that survives for consideration is whether the submission made on behalf of the appellants to pay off the Bank's outstandings as per the statement (Annexure R-1) merits acceptance or not. Pertinently, the appellants' case before the Appellate Tribunal as well as the High Court was that the Principal Sub-Court, Madurai had passed the final decree on 12-11-1986 against them for Rs. 15,60,562.75 and as per the said decree it was ordered that the Bank is entitled to interest prescribed under Order 34 Rule 11 of the Code of Civil Procedure, 1908. The appellants' contention that the Bank is entitled to subsequent interest @ 6% for the period after the decree on the principal amount of Rs. 11,95,200 until realisation was not gone into by the Appellate Tribunal since the appeal was time-barred. The High Court also did not advert to this aspect as it found that dismissal of appeal by the Appellate Tribunal on the ground of delay was justified.

12. It is true that in the recovery certificate it is mentioned that the Bank is entitled to recover a sum of Rs. 15,66,731.49 with future interest at the rate of 18% p.a from the date of decree till the date of realisation but the statement (Annexure R-1) submitted by the Bank along with the counter-affidavit shows otherwise. Annexure R-1 is as follows:

Statement of Outstandings as per respondent Bank Amount due as on 13-10-1985 (date of filing suit) 14,06,152.80 Add: Interest due till 12-11-1986 @ 18% (final decree) 2,32,818.40 Amount due as on 12-11-1986 16,38,971.20 Add: Interest @ 6% on Rs. 16,38,971.20* from 12-11-1986 17,20,515.60 Amount due 33,59,486.80 Less: Amount recovered from sale in 1993 4,07,700 Interest received from court 83,559 Amount received at our end on 4-3-1997 4,91,259.00 Amount due 28,68,227.80 Less: Interest @ 6% on Rs. 4,91,259 from 4-3-1997 to 27-7-2004 2,11,658.60 Amount due 26,56,569.20 Less: Deposited in Coimbatore DRT and received at our end on 12-3-2004 3,78,500.00 Amount due 22,78,069.20 Less: Interest @ 6% on 3,78,500 = from 12-3-2004 to 27-7-2004 8524.00 Amount due 22,69,545.20 Less: Provident fund received from HO personnel on 24-6-1988 38,966.00 Amount due 22,30,579.20 Less: Interest due on provident fund @ 10% – Outstanding amount 22,30,579.20

13. A close look at the aforesaid statement would show that the interest until the date of the final decree was payable by the appellants at the rate of 18% p.a and thereafter at the rate of 6% p.a on due amount. Para 5(iii) of the counter-affidavit filed by the Bank states that the calculation (Annexure R-1) is as per records of the Bank. When the statement (Annexure R-1) has been prepared by the Bank as per its records, we find no merit in off the cuff argument advanced by the learned counsel for the Bank that there is an error in the statement (Annexure R-1) with regard to the rate of interest. If that were so, the Bank could have filed some supplementary affidavit for which they had ample opportunity in the last six years.

14. We are, thus, satisfied that the statement of the learned counsel for the appellants that the appellants shall discharge their liability till the date of actual payment on the basis of the statement (Annexure R-1) deserves to be accepted.

15. The appeal is, accordingly, disposed of by the following order:

(i) The statement (Annexure R-1) annexed by the Bank with their counter-affidavit shall be the basis for calculating the due amount against the appellants as on 31-7-2010.

(ii) The Bank shall communicate to the appellants exact amount due against them as on 31-7-2010 as indicated above. The amount of Rs. 16 lakhs paid by the appellants by way of bank drafts on 7-5-2004 shall be adjusted against the appellants' dues as directed by this Court in the order dated 7-5-2004 (2010) 8 SCC 654.

(iii) The appellants shall pay the due amount within 15 days of the receipt of such communication along with further interest that may become due up to the date of payment.

(iv) On payment of the said amount, the liability of the appellants under the recovery certificate dated 26-4-2000 and any other recovery certificate issued thereafter shall be discharged and the attachment order dated 9-8-2002 shall stand raised and the order of proclamation of sale dated 11-10-2002 shall stand set aside.

(v) If the appellants fail to pay their dues as indicated above, the Debts Recovery Officer shall be at liberty to proceed with the auction of the attached properties. After recovery of the outstanding amount from the sale proceeds, the balance, if any, shall be paid to the appellants.

16. The parties shall bear their own costs.