HC raps bank for recovering loan from senior citizens despite settlement

MUMBAI: The Bombay high court on Wednesday rapped a nationalised bank for initiating recovery proceedings against a senior citizen and a super senior citizen after executing no dues certificates and release deeds for mortgaged property. The bank’s action was “gross and shocking”, the court said, directing the appellate tribunal to decide the matter on its merits.

The court was hearing a plea by Urmiladevi Jain, 62, and Pannalal Jain, 97 – partners in Vardhaman Enterprises who owned a 40% stake in the firm. The duo claimed that the bank had ordered recovery of ₹2.40 crore from them for sale of properties under mortgage although they had paid ₹1.6 crore to settle their debt. The bank had even issued a no dues certificate and executed release deeds in their favour for the mortgaged properties, they said.

Vardhaman Enterprises had taken a loan from the bank in Gujarat in 2015. But in October 2019, the loan account of the firm was declared as a non-performing asset (NPA) and in 2020, recovery proceedings were initiated by the bank for nearly ₹4 crore, the plea said.

While the third partner in the firm, Renudevi Jain, refused seek discharge from the dues, Urmiladevi and Pannalal Jain offered to settle the dispute by making a payment of ₹1.6 crore to the bank. The duo made the offer in a letter to the bank dated July 7, 2020, saying they would be arranging funds from near and dear ones and expected the bank to release the mortgaged properties once the payment was made, without any further questions or processes.

On receipt of ₹1.6 crore from the duo, the bank would issue no due certificates in their favour, release them from personal guarantee as partners of the firm and guarantor to the bank, and execute release deeds for two mortgaged properties, Urmiladevi and Pannalal Jain stated in their offer. The bank would also withdraw recovery proceedings filed against the duo, the noted.

Once they made the payment, the bank issued no dues certificates and executed release deeds, following which they sold one of the two properties, they said in the plea.

The bank, however, neither withdrew the proceedings against the duo, nor deleted their names from the proceedings. A debt recovery tribunal in Ahmedabad subsequently held all partners liable for nearly ₹2.4 crore. The duo challenged this decision in the appellate tribunal in Mumbai, which directed the partners to deposit ₹60 lakh in two instalments before determining the appeal.

Urmiladevi and Pannalal Jain then approached the high court. On Wednesday, the court waived the precondition of the notice and directed the appellate tribunal to decide the matter on its merits.