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Bank of India Versus Yadav Consultancy Services (P) Ltd. And Ors.

2017 (12) TMI 394 - SUPREME COURT OF INDIA

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 .....

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ld 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 .....

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.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 By an order dated 30.03.2016 passed by DRT, Pune, respondent No.1 has withdrawn an amount of ₹ 1,22,00,000/- (Rs.1,00,00,000/- plus accrued interest).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, res .....

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missing the appeal of the appellant Bank thereby affirming the judgment of the District Judge, Pune and the award passed by the MSMEDF Council directing the appellant Bank to pay ₹ 1,62,82,079/- with interest at the rate of 24% to respondent No. 1 and also pay cost of ₹ 5,00,000/- to respondent No. 1. 2. The matter has a chequered history of two decades. Brief facts which led to filing of this appeal are as follows:- The appellant Bank filed suit in Special Suit No. 628 of 1998 for r .....

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08.03.2006. By order of DRT dated 14.07.2006, certificate of sale was issued in favour of auction purchasers-respondents No. 3 to 5. Since the Certificate Debtors (Mortgagor/Guarantor) were said to be creating obstruction in delivery of possession of the property to the auction purchasers, by order dated 26.07.2006, the Recovery Officer, DRT, Pune appointed respondent No.1 as "Court Commissioner". The appellant Bank was directed to pay service charges to the first respondent. Responden .....

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d conditions of the compromise. Appellant Bank sent letter dated 04.05.2007 informing the first respondent that they had decided to discharge the Court Commissioner with effect from 08.05.2007 and the Bank also paid the charges of respondent No. 1 up to 08.05.2007. However, the Recovery Officer by his order dated 12.06.2007 directed the appellant Bank to continue to pay the charges to respondent No. 1 which was challenged by the appellant Bank before the Presiding Officer, DRT, Pune by preferrin .....

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r of DRT dated 24.07.2008 before Debt Recovery Appellate Tribunal (DRAT), Mumbai in Appeal No. 589 of 2008 wherein respondent No. 1 was one of the respondents. When the said appeal filed by the auction purchasers was pending before DRAT, the first respondent filed Writ Petition No. 10259 of 2011 seeking direction from the High Court to expedite hearing of the said appeal and dispose the same at an early date. The said writ petition was disposed of by order dated 16.01.2012 directing DRAT, Mumbai .....

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d an ex parte award on 12.09.2012 directing the appellant Bank to pay a sum of ₹ 1,62,82,079/- to respondent No. 1 within the period of one month from the date of award i.e. 12.09.2012 with interest at the rate of 24%. In the incidental proceedings arising out of the award passed by the MSMEDF Council, by order dated 19.03.2013 in Writ Petition No. 2877 of 2013 filed by the appellant Bank, the High Court stayed the order of the District Judge, Pune passed in DKT No. 1741 of 2012, subject t .....

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, 1996 in Arbitration Petition No. 15 of 2014 came to be dismissed by the High Court inter alia on various grounds:- (i) DRT has no jurisdiction to entertain the appeal and therefore order dated 24.07.2008 would be non est; (ii) MSMED Act, 2006 was specially enacted to deal with dispute of delayed payments to service providers and the MSMEDF Council had jurisdiction to adjudicate the dispute; and (iii) Bank has not taken any step to take possession from Court Commissioner after paying the charge .....

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e for consideration in this appeal:- i. When the obligation of the appellant Bank to pay the charges expired on 30.11.2006, when the physical possession of the subject property was handed over to the auction purchasers and when the order dated 24.07.2008 of Debt Recovery Appellate Tribunal, Pune has attained finality, can the first respondent claim charges for security services from the appellant Bank? ii. Whether the High Court was right in saying that DRT had no jurisdiction to entertain the a .....

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ed by the Micro, Small and Medium Enterprises Development Facilitation (MSMEDF) Council, Pune affirmed by the District Court and also by the High Court is sustainable? 7. The auction of the property was conducted on 08.03.2006 and the sale of the auctioned property was confirmed on 14.07.2006 and the sale certificate was issued in favour of the auction purchasers on the same date. The Recovery Officer appointed the first respondent as Court Commissioner on 26.07.2006 and the fees of the first re .....

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chasers was also filed in R.P. No. 06 of 2002 before DRT in and by which the auction purchasers undertook to pay all expenses as required to protect their possession. Purshis of expenses filed by the auction purchasers reads as under:- "Purshis of expenses Purshis on behalf of auction purchaser is as under: a) That from the time of taking possession i.e. 13.11.2006 of auctioned property as purchased i.e., "Pavitra Hall", the Auction Purchaser shall bear all the expenses as may be .....

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the said communication, Bank had made it clear that ".....no further payment will be made to you (Yadav Consultancy) by the Bank....."; however, the Recovery Officer by his letter dated 12.06.2007 directed the appellant Bank to continue to pay the charges for security services to the first respondent. Appellant Bank challenged the said order of Recovery Officer dated 12.06.2007 before DRT in Appeal No. 25 of 2007. DRT set aside the said order of the Recovery Officer and directed the R .....

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charges from 08.05.2007 till his discharge from the auction purchasers........" 9. The first respondent has not challenged the order of DRT dated 24.07.2008; but even filed application on 07.11.2008 before DRT, Pune seeking for direction to the auction purchasers to pay the Court Commissioner charges to the first respondent. The first respondent had also filed contempt petition against the appellant Bank and the auction purchasers. The Recovery Officer had heard all the parties including t .....

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erty was solely on behalf of auction purchasers and his duty as "Court Commissioner" had ceased to exist on 13.11.2006. 10. Order of the Recovery Officer dated 25.03.2009 makes it clear that the continuation of the services of the first respondent was only on behalf of auction purchasers and that only the auction purchasers were bound to pay the charges for security services to the first respondent. The relevant portion of the order of the Recovery Officer reads as under:- "8..... .....

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ts, and discretion, as the CH has no concern in the preservation or protection of the auctioned property from 13.11.2006 i.e., since the Auction Purchasers having filed Undertaking at Exh 225. 9..........The status of the said Agency as "Court Commissioner" appears to be lost from 13.11.2006, as thereafter the "Court Commissioner" appears to have continued to safeguard the auctioned property for and on behalf of the Auction Purchasers, in furtherance of their private arrangem .....

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e been directed to pay the Court Commissioner charges w.e.f. 08.05.2007. Therefore, I am not required to go into the said aspects again, as the same having reached finality, as from the available record and papers, no appeal appears to be filed against the said order dated 24.07.2008...." The above 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&# .....

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.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. 11. After the above order of the Recovery Officer, respondent No. 1 filed MA No. 35 of 2009 before DRT seeking payment of charges for security services from the auction purchasers as directed by DRT in its order dated 24.07.2008 which clearly indicates that the first respondent had .....

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by the High Court and it was held that ".........DRT had no jurisdiction to entertain Appeal No. 25/2007, the order dated 24.07.2008 passed by it ...... would be non est and hence must be ignored." In our view, the High Court did not keep in view that the respondent No. 1 had not challenged the order of DRT dated 24.07.2008; and had acquiesced to the said order dated 24.07.2008 and also acted upon it. As discussed earlier, the subsequent proceedings clearly show that respondent No. 1 .....

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DRT's order dated 24.07.2008 and had become final and binding and was also accepted and acted upon by respondent No.1. As per Section 5 of the RDDBFI Act, the Debt Recovery Tribunal is headed by the Presiding Officer who is or has been or is qualified to be a District Judge. Likewise, as per Section 10 of the said Act, the Appellate Tribunal is headed by the Chairperson who is or has been or is qualified to be a judge of a High Court. DRT and DRAT are not merely having the trappings of the c .....

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o.1. The High Court did not consider the question of lack of jurisdiction of MSMEDF Council. 13. 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 befor .....

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