2017 (12) TMI 394 - SC - Indian Laws

Supreme Court overturns High Court ruling, allows bank to recover withdrawn amount.

The Supreme Court set aside the High Court's judgment and the award passed by the MSMEDF Council. The appellant Bank was allowed to recover the amount ... Recovery proceedings - DRT jurisdiction to entertain appeal against the order of the Recovery Officer - Held that:- Order of the Recovery Officer makes it clear that the continuance of respondent No. 1 for safeguarding the auctioned property was solely on behalf of auction purchasers and the first respondent's duty as 'Court Commissioner' had ceased to exist on 13.11.2006. After 13.11.2006 or at least after 24.07.2008 (Order of DRT), for the services of respondent No. 1, if any, were availed by the auction purchasers, only the auction purchasers are liable to pay the said charges to respondent No. 1. The appellant Bank, therefore, was under no obligation to pay the charges to the first respondent in any case after 24.07.2008. The High Court has not kept in view the order of DRT dated 24.07.2008 and the order of the Recovery Officer dated 25.03.2009. The High Court was not right in saying that DRT had no jurisdiction to entertain the appeal and, therefore, the order dated 24.07.2008 would be non est. The High Court mainly seems to have proceeded with the matter as if it is a regular appeal arising out of the award passed by the MSMEDF Council and commenting upon the conduct of the Bank in not seriously pursuing the matter in challenging the award. The High Court did not consider the earlier proceedings before DRT, DRAT and before the High Court except merely referring to certain proceedings before DRT and DRAT. The High Court did not consider various orders passed by DRT and DRAT and the conduct of the parties who have been vigorously pursuing the matter before DRT, Recovery Officer and DRAT. The High Court also did not keep in view that the parties were bound by the earlier orders passed by DRT and Recovery Officer which clearly held that charges towards security services are payable only by the auction purchasers. The impugned order passed by the High Court thus suffers from serious infirmity and is liable to be set aside. Pursuant to the order dated 19.03.2013 passed by the High Court, an amount of ₹ 1,93,22,590/- was deposited by the appellant Bank. By an order dated 30.03.2016 passed by DRT, Pune, respondent No.1 has withdrawn an amount of ₹ 1,22,00,000/- (Rs.1,00,00,000/- plus accrued interest). The balance amount of ₹ 93,22,590/- is lying in deposit with the District Court, Pune. By order dated 22.04.2016, this Court has granted interim stay of the impugned order of the High Court. However, by order dated 24.10.2016, respondent No.1 was permitted to withdraw 50% of the said amount ₹ 93,22,590/- on furnishing a bank guarantee. The first respondent has not withdrawn the said 50% amount of ₹ 93,22,590/- as he has failed to furnish bank guarantee. Issues Involved:1. Obligation of the appellant Bank to pay charges for security services.2. Jurisdiction of the Debt Recovery Tribunal (DRT) to entertain the appeal.3. Appropriateness of the first respondent approaching the Micro, Small and Medium Enterprises Development Facilitation (MSMEDF) Council.4. Sustainability of the award passed by the MSMEDF Council.Detailed Analysis:1. Obligation of the Appellant Bank to Pay Charges for Security Services:The appellant Bank's obligation to pay the charges expired on 30.11.2006 when the physical possession of the property was handed over to the auction purchasers. The Debt Recovery Tribunal (DRT) on 24.07.2008 directed that the Court Commissioner’s charges be recovered from the auction purchasers from 08.05.2007. This order was not challenged by the first respondent, indicating acceptance. The Recovery Officer's order dated 25.03.2009 confirmed that the first respondent’s duty as 'Court Commissioner' ceased on 13.11.2006 and any continued services were on behalf of the auction purchasers. Therefore, the appellant Bank was under no obligation to pay charges after 24.07.2008.2. Jurisdiction of the Debt Recovery Tribunal (DRT) to Entertain the Appeal:The High Court's assertion that the DRT had no jurisdiction to entertain the appeal and that the order dated 24.07.2008 would be non est was incorrect. The respondent No. 1 had accepted and acted upon the DRT’s order dated 24.07.2008. The DRT and DRAT are quasi-judicial authorities with powers similar to civil courts, and their orders were final and binding. The High Court failed to consider that the respondent No. 1 had not challenged the jurisdiction of the DRT at the appropriate time.3. Appropriateness of the First Respondent Approaching the MSMEDF Council:The first respondent approached the MSMEDF Council after the DRT’s order had become final and binding. The MSMEDF Council had no jurisdiction to entertain the application filed by the first respondent, especially when the orders passed by the DRT were accepted and acted upon. The High Court did not consider the jurisdictional issue of the MSMEDF Council properly.4. Sustainability of the Award Passed by the MSMEDF Council:The MSMEDF Council’s award directing the appellant Bank to pay Rs. 1,62,82,079/- with interest at 24% was not sustainable. The High Court failed to consider the previous proceedings and orders by the DRT and DRAT, which clearly stated that the charges for security services were payable by the auction purchasers. The High Court’s order suffered from serious infirmities and was set aside.Conclusion:The Supreme Court set aside the High Court’s judgment and the award passed by the MSMEDF Council. The appellant Bank was permitted to recover the amount withdrawn by the first respondent after adjusting payments due up to 24.07.2008. The bank was also allowed to withdraw the remaining amount deposited with the District Court. The first respondent was granted liberty to proceed against the auction purchasers for charges payable after 24.07.2008 in accordance with the law. No order as to costs was made.