Delhi HC orders Bank Chairman to inquire attachment of wrong property on private detective agency report’s basis

Delhi HC orders Bank Chairman to inquire attachment of wrong property on private detective agency report basis and fix responsibility for negligent acts without due diligence and basic title research/inspection.


ABCAUS Case Law Citation:
ABCAUS 1280 (2017) (06) HC

Brief Facts of the Case:
As per record, Canara Bank, Lucknow branch had extended loan/financial facility to four persons as principal debtors/guarantor. On account of default, the branch initiated proceedings under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (‘the Act’) at at the Debt Recovery Tribunal (DRT) at Lucknow. A name similar to the petitioner was among the four principal debtors/guarantors who were arrayed as debtors.

In DRT proceedings, in exercise of jurisdiction under sub-section 22 of Section 19 of the said Act, a certificate was issued ordering that the the bank branch was entitled to recover Rs. 12,00,099.48 together with pendente lite and future interest @ 19.25% per annum with quarterly rest from 19th January, 2000 till full realisation from the debtors. The certificate also permitted the Bank that in case the debt amount is not recovered from the sale of the “mortgaged and hypothecated properties”, then the bank would be entitled to recover the same “by selling the other personal assets/properties of the said debtors.

Having failed to recover the amount, the bank sought attachment of the property of the appellant . Based on this representation of the Bank, the Recovery Officer, DRT, issued a warrant of attachment attaching the said property towards recovery of the debt. The said warrant of attachment was executed by affixation at the said scheduled premises.

The petitioner who came to know of the attachment from banks action, filed objections against the order of attachment before the recovery officer of the DRT, Lucknow seeking vacation of the attachment and informing him that he had no connection at all with loan or the concerned party and that he had no financial dealings and had never been involved in any transactions with the Canara Bank. The petitioner had declared that he had also no connection with the person having a name similar to him who was one of the debtors to the respondent-Bank.

The petitioner disclosed the parentage and full details. He disclosed that the name of his father and wife was different. He made clear that he had no connection with the judgment debtor who had a name similar to him but had a totally different name of father and wife and also residing at a different place whereas the petitioner was a resident of Delhi.

However, the Bank filed no reply thereto. The Petitioner again additionally submitted a detailed representation to the Bank as well as to the Recovery Officer, DRT, Lucknow seeking relief which was also of no avail.

Feeling harassed, the petitioner had preferred the present writ petition before the Hon’ble Delhi High Court. The petitioner pointed out that the action of the Bank appeared to be deliberate and malafide in as much as they had diverted their entire energy into the attachment of the present petitioner’s property and thereby avoided recovery of any amount from the principal debtor and the real defaulters.

Regarding the banks public notice published in Financial Express acknowledging its mistake, the Hon’ble High Court regarded it a little solace and questioned whether a tiny publication in a corner of the Financial Express can restore the petitioner’s loss of reputation and compensate the petitioner’s loss of reputation and the humiliation which he would have suffered by the pasting of the order of attachment, its proclamation and its announcement using a loudspeaker-public addressal mode?

From the conduct of the bank, the Hon’ble High Court was satisfied that action of the Bank touted as a “mistake”, was not a genuine mistake but was a deliberate act which they have stood by even after they were put to notice that they had illegally attached the petitioner’s property. It was observed that evidently if the petitioner had not agitated before the Recovery Officer, the bank might have very well proceeded with the attachment and may have even sold the property.

The Hon’ble High Court awarded a compensation amount at the rate of Rs.15,000/- per month of the attachment period amounting to Rs. 2,62,500/- to the petitioner. Also, litigation costs quantified at Rs.1,00,000/- was also awarded to the petitioner.

However, the Hon’ble High Court noted that the present case was of utmost negligence on the part of the officials of the bank in proceeding against the property of the petitioner thereby permitting the debtors to go scot free risking the bank to financial loss.

According to the Hon’ble High Court, the present case was a fit case in which the bank was required to undertake an inquiry and fixes responsibility for the failure of its employees in ascertaining assets of the debtors as well as wrongly proceeding against the property of the petitioner without a careful due diligence and without conducting basic title research/inspection of property and municipal records.

Finally, the Hon’ble High Court issued a direction to the Chairman, Canara Bank to cause an inquiry to be conducted into the issues noted herein to fix the responsibility for the wrongful and negligent acts and omissions set out above and proceed in accordance with law against the person(s) found culpable.

attachment of wrong property

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