Full Judgment
Their property therefore was put to sale and was knocked down in favour of the bidder for consideration of Rs. 36,00,786. It was only after the sale was conducted that the appellants suddenly raised certain objections with respect to the manner in which the sale was conducted, making grievance that no public auction was carried out, that some other offer made by Mr. Sanjay Modi ought to have been considered by the Recovery Officer and that the Recovery Officer had sold the flat below the market price, etc. It will have to be highlighted that no substantive appeal has been filed by the appellants/judgement debtors challenging the legality or correctness of the impugned judgment and order whereby decree was passed against them and in favour of the bank, ordering defendants to pay jointly and severally a sum of Rs. 38,56,298.18 with interest at the rate of 16.5 per cent, per annum with quarterly rests from the date of filing of the suit, i.e., from November 16, 2000, till realisation of the amount and proportionate costs of Rs. 53,446.50.
2. As a logical conclusion of the sale of the said property in question, which was purchased by respondents Nos. 2 and 3 Mr. Sanjay Modi and Smt. Binita Modi, (auction purchasers) an order came to be passed directing the appellants/judgment debtors to vacate the flat by October 15, 2004, deposit the keys on the next hearing with the Debts Recovery Tribunal and submit all the mortgage documents along with share certificates. This order was challenged under Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter to be referred to as the RDB Act), before the learned Presiding Officer, who by his order dated October 12, 2004, dismissed the appeal filed by the appellants/judgment debtors. Being aggrieved, the present appeal is now filed by the appellants under Section 20 of the RDB Act before this Appellate Tribunal. The appellants have paid proportionate court fees of Rs. 30,000 on this appeal.
3. The argument advanced by Mr. Nagori, the leaned advocate appearing for the appellants is that the office has taken out objection to the effect that the appellants have not taken out application for waiver under Section 21 of the RDB Act. It is submitted by Mr. Nagori that the appellants are not liable to pay any amount of pre-deposit towards compliance of Section 21 of the RDB Act. It is submitted by Mr. Nagori that the appellants are not challenging the final order passed by the learned Presiding Officer, disposing of the original application being O. A. No. 3569 of 2000 in favour of the applicant-bank and against the appellants, ordering them to pay to the applicant-bank a sum of Rs. 39,09,744.68 along with interest thereon and costs, etc. It is specifically argued that the appellants are not challenging the recovery certificate and that no substantive appeal has been filed by them. It is submitted by Mr. Nagori that what the appellants are challenging is the order passed by the learned Presiding Officer in appeal under Section 30 of the RDB Act, which was filed by the appellants being aggrieved by the order passed by the Recovery Officer during the recovery proceedings.
4. Mrs. Fadia appearing for the respondent-bank has vehemently opposed these contentions of Mr. Nagori submitting that since the appellants are judgment debtors and since the appeal is filed by them under Section 20 of the RDB Act, they will have to pay the amount of pre-deposit as contemplated and envisaged by Section 21 of the RDB Act.
5. I have heard Mr. Nagori for the appellants, Mrs. Fadia for respondent No. 1 bank, Mr. Naronha for respondents Nos. 2 and 3 and Mr.
Kansara for respondent No. 4. I have gone through the proceedings including the impugned order and the order passed by the Recovery Officer.
6. First of all, it has to be stated that the finding of the learned Presiding Officer that the appeal itself was not maintainable because Rules 60 and 61 of the Second Schedule to the Income-tax Act, which are applicable to the recovery proceedings as per Section 29 of the RDB Act were not followed, is questionable. Section 29 of the RDB Act says that the provisions of the Second and Third Schedules to the Income-tax Act, 1961, and the Income-tax Rules, 1962, as in force from time to time, shall, as far as possible, apply with necessary modifications as if the said provisions and rules referred to the amount of debt under this Act instead of to the income-tax.
7. However, Section 30 of the RDB Act provides for appeal against the order of the Recovery Officer, notwithstanding anything contained in Section 29 of the RDB Act. Section 30 commences with a non obstante clause, which states as follows : 30. Appeal against the order of Recovery Officer.--(1) Notwithstanding anything contained in Section 29, any person aggrieved by an order of the Recovery Officer made under this Act, may, within 30 days from the date on which a copy of the order is issued to him, prefer an appeal to the Tribunal.
8. Thus, Section 29 and Section 30 give independent, separate and distinct right to a person aggrieved by the order passed by the Recovery Officer. Section 30 provides independent remedy irrespective of whatever is contained in Section 29. The certificate debtor namely the appellants had a right to file appeal under Section 30 of the RDB Act. Therefore, what Rules 60 and 61 of the Second Schedule to the Income-tax Act lay down and the fact of non-compliance of the said Rules becomes irrelevant. The finding to that extent given by the learned Presiding Officer is therefore erroneous.
9. This Appellate Tribunal has already taken this view while sitting at Chennai as Chairperson of DRAT, Chennai, in the case of Cochin Malabar Estates and Industries Ltd. v. Federal Bank Ltd. [2005] 124 Comp Cas 133 : [2005] 1 ISJ (Banking) 80.
10. I however, reject the contention of Mr. Nagori that since the appellants have not filed substantive appeal against the main and final judgment and order passed in the Original Application No. 3569 of 2000, they are exempted from complying with the requirement of Section 21 of the RDB Act. As on today, a recovery certificate stands in favour of the bank and against the appellants who are the defaulters and who are the judgment debtors. The bank's claim against the appellants has been adjudicated by the learned Presiding Officer and certain amount has been found due and payable to the bank by the defaulters/judgment debtors under Section 19 of the RDB Act. This sum is still due and payable to the bank.
11. Section 21 of the RDB Act states that where an appeal is preferred by any person from whom the amount of debt is due to a bank (emphasis supplied) or a financial institution or a consortium of banks or financial institutions, such appeal shall not be entertained by the Appellate Tribunal unless such person has deposited with the Appellate Tribunal seventy-five per cent, of the amount of debt so due from him (emphasis supplied) as determined by the Tribunal under Section 19 12. In the present case at hand, the Tribunal under Section 19 of the RDB Act has determined the amount of debt due from the appellants/judgment debtors. This debt is still due from them to the applicant-bank. Therefore, the appeal filed by them, shall not be entertained by this Appellate Tribunal unless the appellants, who are judgment debtors, from whom the debt is due to the bank, deposit seventy-five per cent, of the amount of debt due from them. The present appeal is filed by the appellants under section 20 of the RDB Act and provisions of Section 21 of the RDB Act will be attracted. Whether the appeal is filed against the final order disposing of original application or whether it is an appeal filed against the order passed by the learned Presiding Officer under Section 30 of the RDB Act, provisions of Section 21 of the RDB Act are applicable and there is no escape for these appellants who are judgment debtors, from paying the pre-deposit amount under Section 21 of the RDB Act, if their appeal is to be entertained by this Appellate Tribunal. If the order of the Recovery Officer is challenged by any other objector during recovery proceedings, who is not a judgment debtor, the situation would be different. But the language of section 21 of the RDB Act does not leave any room for doubt that this appeal preferred by the appellants who are judgment debtors cannot be entertained by this Appellate Tribunal unless the appellants come out with an application for waiver/reduction of pre-deposit which will be decided by this Appellate Tribunal, on its own merits.
13. The proviso to Section 21 of the RDB Act, gives discretion to the chairperson, for reasons to be recorded in writing, for waiving or reducing the amount to be deposited under this section. This aspect has not been argued so far and an appropriate order will be passed on the quantum of amount of pre-deposit after hearing both the sides. However, the appellants cannot be heard to say that they are not liable to deposit any amount towards compliance of Section 21 of the RDB Act, in view of the aforesaid discussion. Their contention to that effect is therefore, rejected. Accordingly, following order is passed : 15. The appellants are held liable to comply with the provisions of Section 21 of the RDB Act in accordance with law.
16. The appellants to file the application under Section 21 of the RDB Act at the earliest and serve it upon other side who are at liberty to file their reply.
17. Order with respect to quantum of amount of pre-deposit will be passed after hearing the appellants and the respondents. M. A. No. 285 of 2005 is disposed of accordingly.