Full Text
HIGH COURT OF DELHI
Date of Decision: 28th December, 2020
ICICI BANK ..... Petitioner
Through: Mr. Punit K. Bhalla and Mr. Chetan Bhalla, Advocates. (M: 9810080772)
Through: None.
HON'BLE MR. JUSTICE SUBRAMONIUM PRASAD Prathiba M. Singh, J.(Oral)
JUDGMENT
1. This hearing has been done by video conferencing.
2. These are six petitions filed by ICICI Bank, challenging orders dated 24th December, 2020 passed by the DRAT by which the Petitioner’s applications for early hearing of their applications seeking permission to auction the commercial vehicles was rejected by the DRAT and the Petitioner- Bank (hereinafter, “Bank”) was asked to approach the DRT once again.
3. The background is that the Bank had sanctioned various loan facilities to the Respondents - Jain Logistics Ltd., which is a partnership firm, and the said borrower had defaulted from time to time. The Bank had, thereafter, 2020:DHC:3823-DB approached the DRT seeking recovery of the amounts due to it. Except in W.P.(C) 11240/2020 and W.P.(C) 11242/2020, in the other cases, the DRT had appointed a receiver to take possession of the hypothecated commercial vehicles against which the loans were sanctioned. It is the submission of Mr. Punit K. Bhalla, ld. counsel that in all the petitions, the borrower has voluntarily surrendered the vehicles as it did not have the capacity to clear the loan amounts. The surrender letters have been placed on record. One sample surrender letter reads as under: “Under the aforesaid Loan Agreement, I undertook to pay the monthly installments on the due dates mentioned therein. However, I could not pay the installements due to which sum of Rs.7,61,58,931.37 is outstanding in loan account. Consequently the vehicle has been voluntarily surrendered to Rajesh Sharma who is recovery agent on behalf of the ICICI Bank Limited on 7th, 8th & 9th Dec 2020. As I am not in a position to settle the account and to take back the vehicle, I request you to sell it against best possible price it will fetch in its “as an where in condition”. I further undertake to pay the shortfall arising post disposal of the vehicle if any as per the terms and conditions.”
4. Pursuant to the said surrender letters, the Bank is stated to have taken possession of all the commercial vehicles and they are currently in the custody of the Bank. The Bank, thereafter, moved applications before the DRT seeking permission to auction/dispose of the vehicles. This was, however, adjourned by the DRT. Early hearing applications were also moved which were not considered. Hence, the present petitions.
5. The submission of Mr. Punit K. Bhalla, ld. counsel is that the annual accounts of the Bank have to be declared by the end of the calendar year i.e., 31st December, 2020. The vehicles are lying in the godowns of the Bank and there is no impediment in disposing of the same. He thus prays for permission for the Bank to dispose of these vehicles.
6. Heard ld. counsel for the Bank. The vehicles in the present case have been surrendered by the borrower voluntarily, as is clear from the surrender letters. Thus, issuance of notice is dispensed with. In most of the matters even Receivers were appointed and the vehicles are in the Bank’s possession. With every passing day their value would be depreciated. This Court is of the opinion that no useful purpose is served in allowing commercial vehicles of high value to be kept unused in the Bank’s godown. Under such circumstances, this Court is inclined to allow the prayer of the Bank to dispose of the vehicles so that the best value for these vehicles can be recovered.
7. Following the judgment of this Court in M/s. ICICI Bank Ltd. v. Naveen Kalkal [CM(M) 1821/2019, decided on 23rd December, 2019], the Bank is permitted to dispose of the vehicles by a public auction in terms of the guidelines laid down in Naveen Kalkal (supra). After the auction has been conducted and the value of the vehicles is recovered, a detailed report shall be placed before the DRT by the official of the Bank who has been appointed as the Receiver in these cases. The entire auction process shall be conducted strictly in accordance with the guidelines laid down in Naveen Kalkal (supra). The relevant portion of the said order is extracted hereinbelow: “5. After hearing ld. counsel for the Bank and perusing the application under Order XXXIX Rule 6 CPC, handed over to Court today, as also the directions of this Court passed in M/s ICICI Bank Ltd. (supra), it is seen that the Bank has already taken possession of the vehicle. The Defendant, having continued to remain away from the Court, the Trial Court has repeatedly directed filing of fresh process fee and service by publication.
6. Considering that the value of vehicles is likely to deteriorate as time passes on and also considering that there is a steep maintenance cost on the Bank, for preservation of the vehicles, a Ld. Single Judge of this Court under similar circumstances had passed the following directions in M/s ICICI Bank Ltd. (supra):
7. A perusal of the above directions shows that in a similar matter, the Court has followed a particular procedure for dealing with the vehicles and vehicle loans. A similar approach can be followed by this Court. In general, whenever the Court finds that the availment of the loan itself is admitted, either due to the payment of some instalments or on the basis of documents, the Court can appoint a Receiver for taking the possession of the vehicle. The vehicle can be taken either from address given in the loan application or from any other location where it may be found. The directions given in paragraphs 5 to 15 above can be prescribed as a general procedure to be followed for taking possession of the vehicle, precautions to be taken during the same, preservation of evidence as to the status of the vehicle and maintenance of the safe custody of the vehicle. The Court’s judgment above has also made adequate provisions for the payments by the Defendant, even after the possession is taken. If the payments are not made, a proper course of action would be permission for sale by public auction as per paragraphs 13 and 14 of the judgment extracted above.
8. The procedure laid down in M/s ICICI Bank Ltd. (supra), thus, ought to be followed generally by the Trial Courts while dealing with the Banks’ suits, which involve vehicle loan. The preservation of the vehicle initially and thereafter permitting the public auction is essential in order to ensure that the value of the vehicle is not eroded and the Bank does not incur the additional expenses, maintenance for parking space etc. Thus, whenever the application for appointment of Receiver or for permission for sale are moved, the Trial Court shall consider the same expeditiously.
9. Under these circumstances, it is directed that the Bank would be entitled to sell the vehicle through a proper public auction with written notice to the Defendant. The notice would be served by way of speed post at the known address(es) of the Defendant, as also the location from where the possession of the vehicle was taken. The Defendant is also permitted to participate in the auction, in the manner explained in paragraph 14 of the judgment in M/s ICICI Bank Ltd. (supra). Once the auction has taken place, strictly in terms of the said judgment, a report shall be filed before the Trial Court for further proceedings.”
8. No notice has been issued in these petitions to the Respondents as the surrender of the vehicles was voluntary in nature. Thus, directing service of the Respondents would not serve any useful purpose. In any event in terms of the guidelines in Naveen Kalkal (supra), the bank would give advance intimation to the borrower by Speed post. In addition, it is directed that a telephonic call and a message on the mobile number of the Respondent, shall also be given in addition prior to putting the vehicles in a public auction.
9. With these observations, the petitions, along with all pending applications, are disposed of.
PRATHIBA M. SINGH, J (VACATION JUDGE) SUBRAMONIUM PRASAD, J (VACATION JUDGE) DECEMBER 28, 2020 dj/T