2007 (3) TMI 387 - SC - Companies Law

Default in payment - there was non-compliance with the terms of the compromise/settlement therefore the appellant-bank was entitled to recover the entire decreetal amount - Held that - Appeal dismissed. Do not find this to be a fit case where jurisdiction under article 136 of the Constitution of India 1950 is to be exercised. As the respondent had paid Rs. 45, 000 as interest for the defaulted period. Interestingly pursuant to the direction of the High Court the appellant-bank had charged interest of Rs. 29, 353. There into arrangements with third party for selling the property but the payment in respect of the sale was to be made directly to the bank. It is noted that Bank at no point of time before the final payment was made appear to have indicated that settlement failed because of failure to stick to the time schedule.

Summary

Issues:
Challenge to order passed by Division Bench of Punjab and Haryana High Court regarding a recovery petition filed by the appellant-bank before the Debt Recovery Tribunal, Chandigarh.

Detailed Analysis:
1. Background Facts: The appellant-bank filed a recovery petition before the Debt Recovery Tribunal claiming Rs. 14,92,295.99. A compromise deed was filed at the Lok Adalat, requiring the respondent to deposit 20% of the amount within 30 days and the remaining in instalments. Default in payment led the bank to seek recovery of the entire amount.

2. Writ Petition and High Court Decision: A writ petition was filed citing difficulties in making payments on time. The High Court acknowledged some default but noted that the full amount was paid by a certain date along with interest. It found the difficulties genuine, upheld the compromise, and directed the bank to charge interest for the defaulted period.

3. Arguments in Appeal: The appellant-bank argued that the default clause should have applied when payments were not made as per schedule, and the High Court erred in supporting the defaulter. On the other hand, the respondent's counsel emphasized the bank's agreement to settle despite the defaults and the High Court's consideration of all relevant factors.

4. Payment Details and Interest: The respondent made several payments, including interest for the defaulted period. The High Court directed interest to be charged, which the bank complied with. The bank also received interest pursuant to the court's direction and had arrangements for property sale proceeds to be directly paid to them.

5. Court's Observations: The Court noted that the bank did not raise concerns about the settlement failure due to timing issues before the final payment was made. Considering the circumstances, the Court found no grounds to exercise jurisdiction under Article 136 of the Constitution of India and dismissed the appeal.

In conclusion, the Supreme Court upheld the High Court's decision, emphasizing the genuine difficulties faced by the respondent, the bank's acceptance of the settlement terms despite defaults, and the overall fulfillment of the compromise agreement.