1.00. As common question of law and facts arise in both these appeals and as such arise out of common judgement and order dtd.18/3/2008 passed by the learned Single Judge in Special Civil Application Nos.22089 and 22093 of 2007, the same are heard, decided and disposed of by this common judgement and order. 2.00. Facts leading to the present Letters Patent Appeals, in nutshell, are as under :-
2.01. That the private respondents herein – original petitioners, who are husband and wife had taken Housing Loan and as the loan was not paid, proceedings were initiated by the appellant Bank before the Debt Recovery Tribunal and thereafter proceedings under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as “the Securitization Act”) were initiated for disposal of the property. It appears that when the process of disposal of the property was undertaken, the original petitioners challenged the action of the Bank by preferring writ petitions and the said writ petitions came to be dismissed, against which Letters Patent Appeals were preferred and the same also came to be dismissed, however, liberty was reserved in favour of the original petitioners - private respondents herein to offer buyer for the higher amount by approaching the Bank. That thereafter property in question came to be sold and the bank realised the amount and recovered full amount due and payable by the original petitioners under the Housing Loan Account. It appears that, however, there was a surplus amount of Rs.16,75,890.75 ps. with the Bank after recovering full amount due under the Housing Loan Account. Therefore, the original petitioners requested to return the said amount of Rs.16,75,890.75 ps. but the bank did not return the said amount and communicated to the petitioners that the amount is deposited in sundry deposit account and the matter is referred to the higher authority and therefore, the respondents herein – original petitioners preferred Special Civil Application Nos. 22089 and 22093 of 2007 directing the Bank to return the aforesaid balance amount of Rs.16,75,890.75 ps. to the original petitioners.
2.02. That the aforesaid Special Civil Applications were opposed by the appellant herein – Bank by submitting that as such both the petitioners have executed Deed of Guarantee for Rs.328 Lacs on 19/1/2000 in connection with the loan transaction with M/s.Printpack Industries Limited (which has subsequently gone into Liquidation), which was granted for Loan Credit Facility aggregating Rs.328 Lacs and one of the petitioners i.e. petitioner of Special Civil Application No. 22089 of 2007 was the main director. It was also submitted on behalf of the bank that under the Deed of Guarantee executed by the original petitioners dtd.19/1/2000, the bank had a right of lien to appropriate the amount standing in the account of the original petitioners and therefore, the Bank had exercised right of lien as provided under the Deed of Guarantee executed by the original petitioners dtd.19/1/2000. It was also submitted on behalf of the Bank that even the Bank had filed O.A. No.110 of 2004 against the Company and the original petitioners as directors as well as Guarantors for recovery of Rs.4,93,51,692/- with interest and cost before the Debt Recovery Tribunal and the same is pending. It was submitted that even in the said suit the Bank submitted an application for attachment of the property in question which was sold subsequently. However, in view of the proceedings under the Securitization Act, no further orders were passed. Therefore, it was requested to dismiss the aforesaid Special Civil Applications.
2.3. That the learned Single Judge by the impugned common Judgement and Order has allowed the aforesaid Special Civil Applications by holding the action of the Bank of not returning the amount of Rs.16,75,890.75 ps. and retaining the same without right or authority and consequently the Bank will be required to return the aforesaid amount of Rs.16,75,890.75 ps. with interest at the rate of 8% per annum. As during the pendency of the aforesaid Special Civil Applications, the Bank had already deposited the amount with the registry of this Court pursuant to the order dtd.18/2/208 while allowing the aforesaid Special Civil Applications, the learned Single Judge permitted the original petitioners to withdraw the said amount with the interest accrued thereon.
The learned Single Judge also clarified that the aforesaid Judgement and Order shall not prejudice the rights of the either side in the proceedings of O.A. No.110 of 2004 pending before the Debt Recovery Tribunal for the loan transaction with the Bank nor the same shall prejudice the right of the Bank, if available, under the law, for an interim order in such proceedings and consequently the learned Single Judge by the impugned common judgement and order has allowed the aforesaid Special Civil Applications. Being aggrieved by and dissatisfied with the common judgement order dtd.18/3/2008 passed by the learned Single Judge in Special Civil Application Nos. 22089 and 22093 of 2007, appellant herein – original respondent - Bank has preferred both these Letters Patent Appeals.
2.04. This Court heard the learned advocates appearing on behalf of the respective parties at length. Number of submissions were made by the learned advocates appearing on behalf of the respective parties on interpretation of section 13(7) of the Securitization Act and/or whether the Bank / Secured Creditor can pray to appropriate the amount / dues from the amount realised under the provisions of the Securitization Act by selling the security / property of the debtor and/or whether the Bank was justified in exercising the right of lien as provided under the Deed of Guarantee executed by the original petitioners dtd.19/1/2000. However, considering the fact that though specifically contended and submitted, the learned Single Judge has not decided on merits with respect to the right of the appellant bank to exercise right of lien as provided under the Deed of Guarantee executed by the original petitioners dtd.19/1/2000 and even the learned Single Judge has not decided and/or interpreted the provisions of section 13(7) of the Securitization Act on the aspect whether when the amount has been realised by the financial institution under the provisions of the Securitization Act by selling the security and/or property of the debtor whether considering provisions of section 13(7) of the Securitization Act, and after recovering the entire debt and thereafter after appropriating the amount of costs, expenses etc., whether balance amount can be adjusted and/or appropriated towards the dues of the secured creditor as provided in the category under section 13(7) of the Securitization Act, there is broad consensus between the learned advocates appearing on behalf of the respective parties to quash and set aside the impugned common Judgement and Order passed by the learned Single Judge and to remand the matters to the learned Single Judge to decide the said issues and to decide the same afresh in accordance with law and on merits and on all the points inclusive of the aforesaid points / issues. As it is reported that the original petitioners have withdrawn the amount of Rs.16,75,890.75 ps. with interest accrued thereon, pursuant to the impugned common Judgement and Order passed by the learned Single Judge, Mr.Jal Unwala learned advocate appearing on behalf of the original petitioners, under the instructions of his clients, has stated at the bar that the respective original petitioners shall deposit the entire amount withdrawn by them pursuant to the impugned Judgement and Order passed by the learned Single Judge, with the registry of this Court, within a period of three months from today without prejudice to the rights and contentions of the original petitioners in the main Special Civil Applications.
2.05. Ms.Lodha, learned advocate appearing on behalf of the appellant Bank has stated that even subsequently O.A. No.110 of 2004 instituted by the bank against the company - M/s.Printpack Industries Limited (as principal debtor) and even the original petitioners (as guarantors), has been decreed and therefore, even otherwise, now the Bank can recover and/or appropriate the said amount under the execution of the said order. To that Mr.Unwala, learned advocate appearing on behalf of the original petitioners has submitted that as on today, no execution petition has been instituted by the Bank and therefore, he has requested not to make any observations on the same.
In view of the above, the learned advocates appearing on behalf of the respective parties do not invite further reasoned order while quashing and setting aside the impugned common Judgement and Order and remanding the matter to the learned Single Judge and hence we do not pass further reasoned order while quashing and setting aside the impugned common Judgement and Order passed by the learned Single Judge, as even otherwise, as the matters are being remanded, any observations made by this Court would prejudice the case of either of the parties before the learned Single Judge on remand.
3.00. In view of the above broad consensus between the learned advocates appearing on behalf of the respective parties, as recorded hereinabove, both these Letters Patent Appeals succeed. The common judgement and order dtd.18/3/2008 passed by the learned Single Judge in Special Civil Application Nos.22089 and 22093 of 2007 is hereby quashed and set aside and the matters are remanded to the learned Single Judge to decide the said Special Civil Applications afresh, in accordance with law and on merits and the learned Single Judge to consider all the issues afresh, inclusive of issues / question whether the appellant Bank was justified in exercising lien as provided under the Deed of Guarantee executed by the original petitioners dtd.19/1/2000 and also issue whether after recovering the entire amount due and payable by the debtor under a particular Account for which proceedings under the Securitization Act were initiated, by selling the property / security under the Securitization Act, and after appropriating the amount of costs, expenses etc. as provided under section 13(7) of the Securitization Act, whether the secured creditor can appropriate its dues under another account of loan / financial institution and only thereafter balance amount, if any, to be paid to the debtor i.e. on interpretation of section 13(7) of the Securitization Act. That the original petitioners to deposit the entire amount withdrawn by them pursuant to the impugned common Judgement and Order passed by the learned Single Judge with the registry of this Court within a period of three months from today (as stated by their advocate) without prejudice to the rights and contention of the respective parties in the main Special Civil Applications and on such deposit, registry is directed to invest the same in the name of the Registrar General, Gujarat High Court, initially for a period of one year and to continue to renew the same till final disposal of the main Special Civil Applications and thereafter the registry to place the main Special Civil Applications before the Court taking up such matters for final hearing and the learned Single Judge is requested to finally decide and dispose of the main Special Civil Applications at the earliest, however, only after the aforesaid amount is deposited by the original petitioners. Both these Letters Patent Appeals are accordingly allowed to the aforesaid extent. In the facts and circumstances of the case, there shall be no order as to costs.
(M.R.SHAH, J.) (S.H.VORA, J.) Rafik