P. Vijayakumari v. Indian Bank

Order

1. The challenge in this appeal is to the order dated 10-10-2007 2007 SCC OnLine Mad 816, (2007) 4 LW 909 passed by the High Court of Judicature at Madras by which the High Court in a writ petition filed by the respondent Bank had set aside the order of the Debts Recovery Appellate Tribunal (DRAT) granting extension of time by condoning the delay that has occurred on the part of the appellants in making payment of an agreed amount as per settlement reached by and between the parties in a Lok Adalat.

2. The original application before the Debts Recovery Tribunal (DRT) by the Bank was filed seeking recovery of an amount of Rs 62,96,582.68 (Rupees sixty-two lakh ninety-six thousand five hundred eighty-two and paise sixty-eight only) being the unpaid dues along with interest as on the date of filing of the OA interest at 19.8% p.a. with quarterly rests from date of filing of the OA till date of payment was also prayed for. The total financial accommodation made available to the Bank was to the extent of Rs 23 lakhs.

3. In the Lok Adalat held on 10-9-2004, the parties had agreed on an amount of Rs 34.5 lakhs payable within three months. The appellants defaulted and paid a sum of Rs 3 lakhs on 8-2-2005 and a further sum of Rs 35 lakhs on 17-10-2006 in terms of a conditional order passed by DRAT staying the sale/auction of the mortgaged property. Finally, on 29-10-2006, a further payment of Rs 3 lakhs was made. In the above manner, a sum of Rs 41 lakhs stood paid by the appellants to the respondent Bank as on 29-10-2006.

4. Before DRT, the appellants had sought for extension of time for payment and condonation of delay that had occurred in adhering to the time schedule of payment as agreed to in the Lok Adalat. DRT dismissed the application which decision was reversed in appeal in DRAT. Thereafter, the said order of DRAT was questioned by the Bank in a writ petition before the High Court. The writ petition being allowed by the impugned order 2007 SCC OnLine Mad 816, (2007) 4 LW 909 the appellants are before us in this appeal.

5. By order dated 7-12-2017 2017 SCC OnLine SC 1708 which is in the terms extracted below, we had directed as follows:

“Having heard the learned counsel for the parties we direct the appellants to indicate to us the amount which the appellants would be in a position to offer to finally close the matter. The respondent Indian Bank will also indicate the amount that the Bank expects to be offered. The said decision of the Bank will be taken at the appropriate level and will be placed before the Court in a sealed cover.”

6. The appellants, pursuant to the aforesaid order dated 7-12-2017 2017 SCC OnLine SC 1708, has made an offer of an additional payment of Rs 10 lakhs by offering a compensation of Rs 3000 per day (approx.) for the delay of 320 days that had occurred in making the payment as per the terms of the settlement reached in the Lok Adalat.

7. The respondent Bank has not come up with any concrete offer and has placed before the Court an extract of the statement of account of the appellants as on date which goes to show that the total dues as per the Bank's statement of account is Rs 8,17,65,148 (Rupees eight crore seventeen lakhs sixty-five thousand one hundred forty-eight only).

8. We have considered the matter. There was undoubtedly some delay in payment of the amount due as per the terms of the settlement reached in the Lok Adalat. It was also agreed by and between the parties that if the terms of payment including the time schedule of payment is not adhered to, the respondent Bank will be at liberty to recover the entire amount due. DRAT in the impugned order had considered the matter and had taken the view that even on the face of the express terms between the parties that the bank would have a right to recover the full amount due in the event of default on the part of the appellants, the same was not the only course of action or the sole option and that on the grounds shown for the delay the same is liable to be understood in favour of the borrower. Accordingly, the matter was closed. In the writ petition filed by the Bank the position was reversed.

9. In the facts of the present case, the view taken by the learned Appellate Tribunal (DRAT), as noted above, cannot be said to be so wholly unreasonable or unsustainable so as to justify interference by the High Court. If the agreed amount stood paid though with some delay, condonation of the delay is a possible course of action, if the grounds for delay justified a departure from what was also agreed upon i.e. the right of a Bank to recover the entire dues. All would depend on the facts of each case. Having regard to the totality of the facts of the present case, we are of the view that the ends of justice would be met if for the delay that had occurred, the appellants are made liable to pay simple interest @ 24% p.a. on the amount of Rs 34.5 lakhs (as agreed to in the Lok Adalat) for the period from the date of the award of Lok Adalat i.e. 10-9-2004 to the date of last payment i.e. 29-10-2006. In addition, a further amount of Rs 10 lakhs to be paid by the appellants to the respondent Bank as compensation and costs.

10. The above amounts will be paid by the appellants to the respondent Bank within a period of 45 days from today failing which the respondent Bank may understand the present order to be recalled and the mortgaged property to be open for auction/disposal in accordance with law.

11. Consequently, the appeal shall stand allowed to the extent indicated above. The impugned order passed by the High Court 2007 SCC OnLine Mad 816, (2007) 4 LW 909 is set aside.