1 wpl1476.11.sxw IN THE HIGH COURT OF JDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION (L) No. 1476 OF 2011 1. M/s. Avis Marine Engineers (P) Ltd. A Company incorporated under the provisions of Companies Act, 1956, having their Registered Office at 715 Raheja Chambers, Nariman Point, Mumbai 400 021 2. M/s. Avis Marine Services (Goa) having their Registered office at 715, Raheja Chambers, Nariman Point, Mumbai-400 021 ..Petitioners (Orig.Defendant Nos.1 &4) Vs. Asset Reconstruction Company (India) Ltd. through industrial and Technical Consultancy Organisation of Tamilnadu Ltd. (ITCOT), the Constituted Attorney, having its office at 17th Floor, Express Tower, Nariman Point, Mumbai-400 021 ..Respondent (Orig. Applicant) Mr. Kamal Khata with Manish Bohara i/by M/s A.S. Khan & Associates for the Appellant. Mr. Vinod Kothari i/by Apex Law Partner for the Respondent. 2 wpl1476.11.sxw CORAM : J.P. DEVADHAR AND A.A. SAYED, JJ. DATE : 28TH JULY, 2011. JUDGMENT ( PER A.A. SAYED, J.) 1. The above petition is directed against the order dated 8th March, 2011 passed by the Debt Recovery Appellate Tribunal (DRAT), Mumbai dismissing the Appeal filed by the Petitioners, affirming thereby, the order dated 17th July, 2006 passed by the Presiding Officer, Debt Recovery Tribunal (DRT) which had allowed the Original Application of the Respondent. 2. On or about 8th June, 1999, State Bank of India (SBI), had sanctioned to the Petitioner No.1 (Original Defendant No.1), a Bank Guarantee of Rs. 50 lacs against the guarantee by the Petitioner No.2 (Original Defendant No. 4) and its Directors (Original Defendant Nos. 2 and 3). A collateral security was also given by way of mortgage by deposit of title deeds by Petitioner No.2 of its property being Unit No.715, 7th floor, Raheja Chamber, Nariman Point, Mumbai-400 001. The Petitioner No.2 was thus the guarantor-cum- mortgagor. On or about 23rd March, 2001, SBI also sanctioned three facilities to Petitioner No.1, two out of them (one being Bank Guarantee) were by way of renewal and the third facility of Overdraft of Rs. 55 lacs. Petitioner No.1 executed Demand Promissory Note and usual security documents while Petitioner No.2 continued the equitable mortgage. The 3 wpl1476.11.sxw Petitioner No.1 however, failed to make any payment despite repeated demands, which lead to the filing of Original Application by SBI before the DRT. 3. During the pendency of the proceedings before DRT, the present Respondent was brought on record pursuant to the assignment of debt by SBI in their favour. The Original Application ultimately came to be allowed and recovery certificate was ordered to be issued against the Petitioner Nos. 1 and 2. The liability of Petitioner No.2 was held to be limited to the extent of the mortgaged property. It was directed that over and above Rs. 8,47,549.56 lying with SBI, the Petitioners would pay to the Respondent a sum of Rs. 54,85,880.44 with further interest at the rate of 6% p.a. from the date of filing of the Original Application till payment and/or realization. The outstandings were declared to be secured by equitable mortgage of the property of Petitioner No.2. The Petitioner No.2 was granted liberty to pay outstanding amount within a period of three months for avoiding sale of the said property. 4. The aforesaid order of the DRT was subjected to challenge before the DRAT, which dismissed the appeal of the Petitioners thereby confirming the order of the DRT - hence, the present petition. 5. The learned Counsel for the Petitioners submitted that there was a novation of contract between the parties. He pointed out that the Petitioner No.1 had by their letter dated 18-06-2003 written to the SBI to accept a sum of Rs.30 lacs as one time settlement of dues payable within 4 months. On 20-06-2003, SBI replied to the letter advising Petitioner No.1 to increase 4 wpl1476.11.sxw the compromise amount and also to deposit 25% of compromise offer. By their letter dated 5-07-2003, Petitioner No.1 deposited with SBI an amount of Rs.7.50 lacs by a pay order, which was 25% of the amount of Rs. 30 lacs and informed SBI that they were not in a position to improve the offer at that stage and requested SBI to accept the offer. The learned Counsel submitted that inasmuch as SBI accepted the payment of Rs. 7.50 lacs and since there was no reply from SBI to the letter dated 5-07-2003 of the Petitioner No.1, it would amount to acceptance of the offer by SBI and consequently the original contract would cease to exist and the rights and liabilities of the parties arising therefrom would be extinguished and it would constitute novation of the contract between the parties. The learned Counsel relied upon the case of Ramji Dayawala and Sons Pvt. Ltd. Vs. Invest Import, reported in 1981 (1) SCC 80. He invited our attention to para 15 of the said judgment which reads as follows: "15. Now, once it is admitted and established that the letter and the cable were received by the Respondent, ordinarily if the contents of the letter and cable are not acceptable to Respondent, a reply to that effect is naturally expected. Contention is that accepted the change in arbitration clause proposed by the appellant sub silentio coupled with subsequent conduct. It is a fact that the Respondent did not write back saying that if the arbitration agreement was not acceptable to the appellant the subcontract would not be acceptable as a whole to the Respondent. On the contrary, after a specific objection only with regard to arbitration agreement in the subcontract Exh.A by the appellant, the Respondent allowed the appellant to proceed further with the implementation and execution of the subcontract, without controverting what the appellant had stated in the letter and the cable. This would unmistakably show that the Respondent accepted the alteration as suggested by the appellant in that the arbitration agreement was deemed to have been deleted from the subcontract Exh.A. Add to this the circumstance that a petty 5 wpl1476.11.sxw labour contractor could not have been expected to or was not likely to agree to arbitration by a foreign arbitral tribunal stationed in Paris because it would be beyond its reach to seek relief by arbitration in a foreign country." 6. Having heard the learned Counsel for the Petitioners and learned Counsel for the Respondent, we are unable to see any merit in the contention. It is significant to note that the amount of Rs. 7.50 lacs was deposited by Petitioner No.1 by a pay order with SBI in "no lien account" and it was not as if the amount was paid to SBI to be appropriated by them against their outstanding dues. The pay order was made out in the name of "SBI A/c Avis Marine Engineers Pvt. Ltd. - No Lien Account". The acceptance of the said pay order by the Respondent would not therefore from any angle constitute an acceptance of the offer of the Petitioner No.1. Pertinently the Respondent herein had filed an Application (Exh.55) before the DRT for appropriation of the said sum of Rs. 7.50 lacs alongwith accrued interest. The DRT however deemed it appropriate to decide the Original Application itself and in its order disposing of the Original Application it interalia permitted the Respondent to withdraw the said amount alongwith the accrued interest lying with SBI. We are thus, unable to accept the contention of the learned Counsel on behalf of the Petitioners that SBI had accepted the payment and agreed to the one time settlement offer of the Petitioners No.1. 7. Even otherwise, as rightly held by the DRAT, there was no concluded contract between the parties. Merely because, there was a proposal on behalf of the Petitioners for one time settlement and the Petitioner No.1 deposited a sum of Rs. 7.50 lacs with the SBI in "no lien account" would in no manner bind the Respondent. The correspondence clearly reveals that SBI had not 6 wpl1476.11.sxw accepted the offer of the Petitioner No.1 and had called upon them to improve their offer, which Petitioner No.1 did not agree and expressed their unwillingness in that behalf. The contention of the learned Counsel for the Petitioners that since SBI did not reply to the letter of 5th July, 2003 wherein Petitioner No.1 had informed SBI that they were not in a position to improve their offer at that stage and since they received no reply from SBI, it would constitute a deemed acceptance, does not commend to us. It is pertinent to note that in the said letter dated 5th July, 2003, the Petitioner No.1 themselves have requested the Respondent to "accept the offer as made". This itself suggests that it was only an offer made by the Petitioners No.1. Thus, merely because the Respondent did not further respond to this letter would in no manner mean the Respondent had accepted the offer and that there was novation of contract as sought to be suggested. The facts in the case of Ramji Dayawalal (supra) relied upon by the learned Counsel for the Petitioners are entirely different and the said ruling would have no application in the facts of the present case. 8. The Petitioner No.1 have acknowledged the debt on 28-11-2002. The argument on behalf of the Petitioners therefore, that the claim having been filed in DRT in July, 2003 on the Bank Guarantee which expired in June, 2000, would be time barred, is untenable and is rejected. No other argument is canvassed before us. 9. In this view of the matter, no interference is called for at the hands of this Court in exercise of its extraordinary writ jurisdiction, so as to disturb the concurrent findings arrived at by the DRT and DRAT. 7 wpl1476.11.sxw 10. The petition is dismissed with costs. ( A.A. SAYED, J. ) ( J.P. DEVADHAR , J.)