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Bank of Baroda Versus Teg's Musrado Ltd. and Ors.

2005 (11) TMI 507 - DEBTS RECOVERY APPELLATE TRIBUNAL, DELHI

Appeal No. 64 of 2005 in Original Application No. 511 of 2000 - Dated:- 29-11-2005 - Motilal B. Naik, J. (Chairman) For Appellant: Ashok Jagga, Adv. For Respondents: Kamaljeet Singh, Adv. ORDER Motilal B. Naik, 1. The appellant-bank instituted suit in O. A. No. 511 of 2000 before the Debts Recovery Tribunal (DRT), Chandigarh, for recovery of certain amounts. On the basis of pleadings and evidence, the Tribunal by order dated January 13, 2005, dismissed the suit claim of ₹ 2,33,59,138 in TL .....

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tended that the Tribunal has committed an error in dismissing the suit on three counts. According to learned Counsel, the claim of the applicant-bank is secured by equitable mortgage of four properties of the defendants. Initially, a consortium of three banks, namely, Bank of Baroda, Syndicate Bank and UCO Bank had advanced loan facilities to the defendants. The claim of the Syndicate Bank and UCO Bank have been satisfied in toto whereas the claim of the appellant-bank, i.e., the Bank of Baroda .....

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nk. He also drew my attention to Section 19 of the Limitation Act, 1963, and stated, the last correspondence dated April 3, 1995, is material for the purpose of counting the period of limitation. Counsel also stated as per the agreement in terms of letter dated March 29, 1995, though the appellant-bank did not receive any amount, but however, by letter dated April 3, 1995, the defendants deposited certain amounts which are kept in "no lien account" and as such, this letter should have .....

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ed December 12, 1994, December 13, 1994 and March 31, 1994, had been placed before the Tribunal, the Tribunal should not have ignored these entries in examining whether the suit claim is within limitation. The suit is filed in the month of March, 1997, and each of these entries in the statement of account, would bring the suit within limitation and therefore, stated this factor has also been ignored by the Tribunal. Counsel finally contended that the Tribunal has committed a great error in rejec .....

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nditions are imposed and as such, the Tribunal having regard to the facts of the case held that the suit is hit by limitation. Counsel also stated that in the pleadings by the appellant-bank, the entries in the statement of account which are referred to by the appellant are not found as a ground on which basis the cause of action against these respondents could be invoked nor was there any whisper before the Tribunal at the time of making submissions on this aspect. Counsel stated even though th .....

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o the written statement filed by these defendants where a specific stand has been taken about the suit being hit by limitation and stated, the suit is only for recovery of money and not a suit for enforcement of mortgage and therefore, the plea of period of limitation of 12 years cannot be accepted. While making this submission, counsel also drew my attention to a decision of the Debts Recovery Appellate Tribunal, Mumbai, in Kishor Kumar Agarwal v. State Bank of India [2000] II BC 97 (DRAT) wher .....

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f contentions and recorded the findings in the following manner. In para. 3 of the order, the Tribunal recorded that the applicant-bank sanctioned certain credit facilities to the defendants on January 11, 1990, which are cash credit hypothecation of ₹ 45 lakhs, sub limit (BP clean) for ₹ 6 lakhs, sub limit (BP documents) for ₹ 6 lakhs and term loan of ₹ 58 lakhs. Thereafter, the limits were enhanced on October 5, 1990, which are as follows : (i) Term loan : enhanced from .....

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ugh the credit facilities were availed of by the defendants, since they failed to pay as per agreement, one-time settlement offer was made by the defendants for consideration and the appellant-bank considered and accepted it vide letter dated April 19, 1995, for an amount of ₹ 454.70 lakhs. The defendants deposited ₹ 2,27,35,000 on April 5, 1995, with the applicant-bank under the settlement. This amount was appropriated on April 5, 1995, in the CC account by crediting ₹ 59.86 l .....

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nt, the cause of action arose for the first time in the matter on September 20, 1990, when the defendants in consideration of loan/advance facilities had executed various documents, agreements, deeds of agreements, hypothecations, deed of guarantees, etc. The cause of action again arose in favour of the applicant-bank on October 20, 1990, when fresh facilities were granted by the applicant-bank to defendant No. 1 for which necessary documents were executed by the defendants accordingly. The caus .....

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he various accounts of the term loan and credit facilities. The cause of action also arose on March 29, 1995, when defendant No. 1 had acknowledged the debts and in consideration of the same and in terms of compromising offer, paid a sum of ₹ 2,27,35,000. The cause of action still persists in favour of the applicant-bank as defendant No. 1 has not paid the amount of the dues of the outstanding till date. 7. However, the stand of the defendants has been that they have neither paid nor ackno .....

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posit the said amount in their loan accounts. The applicant-bank on its own, on April 5, 1995, appropriated this amount in cash credit, term loan-I and term loan-II accounts for the purpose of extending the period of limitation. This amount, so appropriated, is not an acknowledgment of the liabilities as pleaded. It is also averred in the written statement that the O. A. was filed in March, 1997, the cause of action arose on March 3, 1993, when the defendants executed the documents of supplement .....

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t the consent and authority of the defendants and paid in their loan accounts ? The Tribunal recorded that annexure D-13 which has been filed by the defendants along with the counter claim is a letter dated March 20, 1995, addressed by the applicant-bank to the defendant-company which factor is not disputed. In the letter, it has been advised to the defendants to deposit the funds in "no lien account" with Sector 17/B, Chandigarh Branch of the applicant-bank. In response to this letter .....

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ot; and as such, this letter cannot be construed as if it is extension of their liability in terms of Section 19 of the Limitation Act. The Tribunal has also recorded that the applicant-bank has no right to appropriate or credit the amount in the cash credit account or TL-I account or TL-II account. Thus, the appropriation of the amount on April 5, 1995, by the applicant-bank in their account was unauthorised and cannot be accepted as a deposit, so as to extend the period of limitation. 9. The T .....

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d therefore, rejected the alternative contention that the suit could be construed as a suit for enforcement of mortgage for which the period of limitation is 12 years. 10. In the light of the submissions made before this Tribunal and on the basis of the finding recorded by the Tribunal below, the controversy in my view hinges on the letter dated March 20, 1995 (exhibit D13), which was addressed by the applicant-bank to the defendants whereby the defendants are advised to deposit the funds in &qu .....

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, is in the nature of a step which falls within the ambit of Section 19 of the Limitation Act, for the purpose of limitation to maintain the suit. In order to appreciate this contention, Section 19 of the Limitation Act is abstracted hereunder : Where payment on account of a debt or of interest on a legacy is made before the expiration of the prescribed period by the person liable to pay the debt or legacy or by his agent duly authorised in this behalf, a fresh period of limitation shall be comp .....

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ranch of the applicant-bank. In response thereto, by letter dated March 29, 1995, the defendants deposited an Indian Bank cheque No. 585195, dated March 29, 1995, for ₹ 2,27,35,000 to be kept in a separate "no lien account". It is noticed that the appellant-bank later on April 5, 1995, has withdrawn the amount which was kept in "no lien account" and debited it to the loan account of the defendants without any authority of the defendants. The Tribunal noticing this aspec .....

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ounts of the respondents, no cause of action accrued to the appellant on April 5, 1995, for instituting the suit. It is not disputed that for such a withdrawal of the amount kept in "no lien account", the appellant-bank had no authority. As per the letter dated March 29, 1995, the amount of ₹ 2,27,35,000 is to be kept in "no lien account" which is as per the advice of the appellant-bank and shall not be appropriated unless final settlement is made. The claim of the appe .....

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he purpose of counting the period of limitation. 12. Though learned Counsel for the appellant stated the statement of account was filed in evidence and the Tribunal should have noticed each entry appearing in the statement of account, I do not appreciate this submission. In the written statement, the defendants have categorically denied the cause of action and have taken a definite stand that the claim is barred by limitation. An effort should have been made by the appellant to draw the attentio .....

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purpose of cause of action, the other side would have definitely reacted to the correctness of these debit entries. However, no such plea was taken before the Tribunal nor were efforts made to prove the correctness of these entries. It is, therefore, difficult at this stage of the proceedings to accept such a submission on behalf of the appellant-bank. 13. In so far as the last limb of submission that the suit filed by the appellant need not be considered as a suit for recovery of money, but it .....

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