Supreme Court sets aside High Court order, imposes interest, compensation, and costs on Appellants. Appellate

The Supreme Court allowed the appeal, setting aside the High Court's order. The Court directed the Appellants to pay simple interest at 24% p.a. on the agreed amount from the Lok Adalat award date to the last payment date. Additionally, the Appellants were ordered to pay an additional Rs. 10 lakhs as compensation and costs to the Bank within 45 days. Failure to comply would permit the Bank to proceed with auctioning the mortgaged property.

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Issues:
Challenge to High Court order setting aside extension of time for payment in a settlement reached in Lok Adalat.

Analysis:
The appeal challenged an order by the High Court setting aside an extension of time granted by the Debt Recovery Appellate Tribunal (DRAT) for payment delay in a settlement reached in a Lok Adalat. The Bank sought recovery of unpaid dues of Rs. 62,96,582.68 with interest at 19.8% p.a. The parties agreed in the Lok Adalat to an amount of Rs. 34.5 lakhs payable within three months. The Appellants made partial payments but defaulted on the agreed schedule. The Appellants sought an extension of time and condonation of delay before the DRT, which was initially dismissed but reversed by the DRAT. The Bank challenged the DRAT's decision in a writ petition before the High Court, leading to the current appeal.

The Supreme Court directed the parties to indicate the amounts they would offer to resolve the matter. The Appellants offered an additional Rs. 10 lakhs as compensation for the delay in payment. The Bank did not present a concrete offer but stated the total dues as Rs. 8,17,65,148/-. The Court acknowledged the delay in payment and the agreement allowing the Bank to recover the full amount in case of default. The DRAT considered the delay justifiable in favor of the borrower, leading to the matter being closed. However, the High Court reversed this position in the writ petition.

Considering the facts, the Court found the DRAT's view not unreasonable. If the agreed amount was paid with some delay, condonation of delay was deemed appropriate if justified by the grounds for delay. In this case, the Court held the Appellants liable to pay simple interest at 24% p.a. on the agreed amount of Rs. 34.5 lakhs from the Lok Adalat award date to the last payment date. Additionally, the Appellants were ordered to pay Rs. 10 lakhs as compensation and costs to the Bank within 45 days. Failure to comply would allow the Bank to proceed with auctioning the mortgaged property.

In conclusion, the appeal was allowed, setting aside the High Court's order and establishing the terms for payment and compensation to resolve the matter within 45 days to avoid auctioning the mortgaged property.

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