Court pulls up bank for seeking payment again

-The Hindu-- 26th May 2014-

By Sri K. T. SANGAMESWARAN

If a bank proceeds against a guarantor after receiving the entire sum due from a company, can it not be called daylight robbery?

This is what the Madras High Court observed while disposing of a writ petition by a person who challenged an order of the Debts Recovery Appellate Tribunal (DRAT). P.G. Saranyan, the guarantor for a company, had paid Indian Bank, T. Nagar branch, Rs. 90.52 lakh as full and final settlement.

His case was that the debtor had paid the entire amount and the bank having accepted it, was not entitled to proceed against him.

A Division Bench comprising Justices S. Rajeswaran and Justice S. Vaidyanathan said that mechanically, a sum Rs.1.06 crore had been taken by the tribunal as the outstanding due to the bank.

The tribunal had directed the petitioner to deposit 50 per cent of the sum to entertain his appeal.

‘Correct calculation not given’

The bank was also not able to give the correct calculation as to the sum due from the guarantor.

Having accepted the entire amount as full and final settlement from the petitioner, merely because it had a court order, did not mean that the bank could mechanically invoke the powers and try to recover the same amount once again.

Without applying its mind, the bank could not try to extort the money from the petitioner.

“No Lien” account

The Bench directed the petitioner to deposit Rs.15 lakh into a “No Lien” account which would be reinvested to enable the parties to get bank rate of interest. After such deposit, the tribunal should proceed with the matter.

In case the tribunal arrived at a conclusion that the petitioner was not liable to pay the sum as the principal borrower had been discharged, the bank should identify the officers concerned and recover the sum from them.

The court directed the bank to identify the names of officers and their addresses to inform the tribunal and also the officers concerned now itself, as they should not take a stand later that they had not been intimated in advance.