| SooperKanoon Citation | sooperkanoon.com/56166 |
| Court | DRAT Allahabad |
| Decided On | Oct-25-2002 |
| Judge | S Srivastava |
| Reported in | II(2003)BC122 |
| Appellant | Rama Kant Upmanyu |
| Respondent | State Bank of India |
Registrar reported that appeal is defective as compliance of Rule 9 read with Section 21 of the Act has not been made. Learned Counsel for the appellant objected against this report and submitted that main relief of the appellant is to set aside the order dated 20.3.2002 by which the application under Order IX Rule 13 of C.P.C. was rejected by the Presiding Officer of D.R.T. He further submitted that if the application for recall is allowed then the ex parte order dated 25.4.2000 will automatically be set aside. Therefore, appeal is virtually against the order dated 20.3.2000. On 6.6.20021 held that compliance of Rule 9 read with Section 21 of the Act has not to be made under the facts and circumstances of the case. On 10th July, 2002 appeal was admitted after hearing the learned Counsel for the Bank also as delay was already condoned on 12.6.2002.
2. On 13th August, 2002 learned Counsel for the appellant prayed for stay for recovery proceeding and objection was filed on behalf of the Bank by Mr. R.L. Arora, Advocate that the appellant has prayed for two reliefs which is barred under Rule 1994 and as appellant has challenged final order also, therefore, this appeal cannot be entertained unless the compliance of Section 21 read with Rule 9 of Rule 1994 has been made. He further submitted that though the appeal has been admitted but in view of the objection filed by him, the order of admission dated 10th July, 2002 may be modified.
3. The appellant had filed an application to delete second relief. On 17th September, 2002 after hearing the learned Counsels for the parties, the amendment was allowed and second relief which was for setting aside ex parte order was deleted by the appellant from the Memo appeal. Learned Counsel for the Bank submitted that since the amount of debt due has been determined, therefore, even after deleting second relief compliance of Section 21 read with Rule 9 of Rule 1994, is to be made and order of admission may be recalled.
4. The learned Counsel for the parties were heard on this point at length. Mr. Krishna Murari, Advocate submitted that after deletion of second relief the appellant has only challenged the order passed by Tribunal rejecting his application under Order IX, Rule 13 of C.P.C.through which no amount of debt due has been determined, therefore, compliance of Section 21 is not to be made in this appeal. He submitted that this question arose in a writ petition filed by Gemini Arts (P) Ltd. v. Indian Bank, and the Hon'ble High Court, Madras took the view that the requirement to deposit "determined" amount while filing the appeal could arise only in appeal against the final orders and not in other appeals against order under Section 19(6) of the Act. Mr. Murari submitted that this judgment throws light on this subject. He further cited a decision of Debt Recovery Appellate Tribunal, Mumbai in Anil Kumar Somani and Ors. v. Bank of Rajasthan Ltd., Jaipur, in which it was held that once the discretion vested with the Tribunal was exercised at the time of entertaining the appeal and appeal was admitted without deposit of 75% in that case compliance of Section 21 of the Act did not arise and the appeal cannot be disposed of in limine in Section 21 of the Act.
5. Mr. Krishna Murari further submitted that if in every appeal which is against interlocutory orders compliance of Section 21 is to be made then the provision will be too harsh as the appellant will go on depositing amounts more than what is claimed by the Bank. He further submitted that if ex parte order is passed by the D.R.T. and amount of debt is determined as claimed by the Bank and application for recall is subsequently allowed and ultimately it is held by the D.R.T. while disposing of the application under Section 19 after contest that there is no debt due against the defendant then any deposit made by the appellant under Section 21 will put the appellant to great loss, therefore, when the appeal has been filed against rejection of application under Order IX Rule 13, C.P.C. no deposit should be made by the appellant and appeal can be entrained without compliance of Section 21 read with Rule 9 of Rule 1994.
6. Mr. R.L. Arora learned Counsel for the Bank submitted that as the amount of debt has been determined though by the ex parte order the compliance of Section 21 read with Rule 9 is mandatory. He further submitted that it has never been the intention of the Legislature to entertain appeal against an order without compliance of Section 21 when the amount of debt has been determined, therefore, this appeal cannot be entertained without compliance of Section 21 of the Act. He further submitted that the Court or Tribunal has inherent power to review its own order, if it comes to the conclusion that earlier order which was passed was not justified under the facts and circumstances.
7. Mr. Arora, learned Counsel for the Bank in support of his submission placed reliance on a case in between Patwari Motors Stores and Ors. v.Central Bank of India and Ors., II (2002) BC 18 (DRAT)=2001(2) Bank C.L.R. 400 (D.R.A.T., Calcutta). On the point of Order IX, Rule 13 of C.P.C. and delay in filing the appeal, he further placed reliance on a case in Nellore District Co-operative Central Bank Limited v.President, The Nellore District Co-operative Central Bank Employees' Association and Anr., 2001(2) Vol. II Bank C.L.R. Page 405 (A.P.), on the point of power to review which can only be exercised before expiry of thirty days. He further cited a judgment of Vijay Khandsari Sugar Mills and Ors. v. State Bank of Hyderabad, II (2001) BC 95 (DRAT)=2001 Bankmann Page 865, but these judgments are not of any help of the learned Counsel for the respondent in the facts and circumstances of the present case.
8. After hearing the learned Counsels of parties at length, I am of the view that before dealing the arguments of the learned Counsel of parties it is necessary to see the relevant provisions of the Act which are involved in the present case. The relevant provision is Section 21 which is quoted herein below: "Section 21. Deposit of amount of debt due, on filing appeal.
---Where an appeal is preferred by any person from whom the amount of debt is due to a Bank 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 as determined by the Tribunal under Section 19: Provided that the Appellate Tribunal may, for reasons to be recorded in writing, waive or reduce the amount to he deposited under this section." Section 19 of the Act as amended now is the relevant provision under which the Bank or Financial Institutions has to recover the amount and the Tribunal proceeds to decide the application as per procedure laid down under Section 19. The relevant provisions of Section 19 is quoted herein below : "Section 19. Application to the Tribunal.--(1) Where a Bank or a Financial Institution has to recover any debt from any person, it may make an application to the Tribunal within the local limits of whose jurisdiction-- (a) the defendant, or each of the defendants where there are more than one, at the time, of making the application, actually and voluntarily resides, or carries on business, or personally works for again; or (b) any of the defendants where there are more than one, at the time of making the application, actually and voluntarily resides, or carries on business, or personally works for gain; or (2) Where a Bank or a financial institution which has to recover its debt from any person, has filed an application to the Tribunal under Sub-section (1) and against the same person another Bank or financial institution also has claim to recover its debt, then, the later Bank or financial institution may join the applicant Bank or financial institution at any stage of the proceedings, before the final order is passed, by making an application to that Tribunal.
(3) Every application under Sub-section (1) or Sub-section (2) shall be in such form and accompanied by such documents or other evidence and by such fee as may be prescribed : Provided that the fee they be prescribed having regard to the amount of debt to be recovered: Provided further that nothing contained in this sub-section relating to fee shall apply to cases transferred to the Tribunal under Sub-section (1) of Section 31.
(4) On receipt of the application under Sub-section (1) or Sub-section (2), the Tribunal shall issue summons requiring the defendant to show cause within thirty days of the service of summons as to why the relief prayed for should not be granted.xxxx xxxx xxxx (6) Where the defendant claims to setoff against the applicant's demand any ascertained sum of money legally recoverable by him from such applicant, the defendant may, at the first hearing of the application, but not afterwards unless permitted by the Tribunal, present a written statement containing the particulars of the debt sought to be setoff.
(11) Where a defendant sets up a counter-claim and the applicant contends that the claim thereby raised ought not to be disposed of by way of counter-claim but In an independent action, the applicant may, at any time before issues are settled in relation to the counter-claim, apply to the Tribunal for an order that such counterclaim may be excluded, and the Tribunal may, on the hearing of such application, make such order as it thinks fit.
(12) The Tribunal may make an interim order (where by way of injunction or stay or attachment) against the defendant to debar him from transferring alienating or otherwise dealing with, or disposing of, any property and assets belonging to him without the prior permission of the Tribunal.
(13)(A) Where, at any stage of the proceedings, the Tribunal is satisfied, by affidavit or otherwise, that the defendant, with intent to obstruct or delay or frustrate the execution of any order for the recovery of debt that may be passed against him-- (ii) is about to remove the whole or any part of his property from the local limits of the jurisdiction of the Tribunal; or (iii) is likely to cause any damage or mischief to the property or affect its value by misuse or creating third party interest, the Tribunal may direct the defendant, within a time to be fixed by it, either to furnish security, in such sum as may be specified in the order, to produce and place at the disposal of the Tribunal, when required, the said property or the value of the same, or such portion thereof as may be sufficient to satisfy the certificate for the recovery of debt, or to appear and show cause why he should not furnish security.
(B) Where the defendant fails to show cause why he should not furnish security, or fails to furnish the security required, within the time fixed by the Tribunal, the Tribunal may order the attachment of the whole or such portion of the properties claimed by the applicant as the properties secured in his favour or otherwise owned by the defendant as appears sufficient to satisfy any certificate for the recovery of debt.
(15) The Tribunal may also in the order direct the conditional attachment of the whole or any portion of the property specified under Sub-section (14).
(17) In the case of disobedience of an order made by the Tribunal under Sub-sections (12), (13) and (18) or breach of any of the terms on which the order was made, the Tribunal may order the properties of the person guilty of such disobedience or breach to be attached and may also order such person to be detained in the civil prison for a term not exceeding three months, unless in the meantime the Tribunal directs his release.
(18) Where it appears to the Tribunal to be just and convenient, the Tribunal may, by order-- (a) appoint a receiver of any property, whether before or after grant of certificate for recovery of debt; (b) remove any person from the possession or custody of the property; (c) commit the same to the possession, custody or management of the receiver; (d) confer upon the receiver all such powers as to bringing and defending suits in the Courts of filing and defending applications before the Tribunal and for the realization, management, protection, preservation and improvement of the property, the collection of the rents and profits thereof, the application and disposal of such rents and profits, and the execution of documents as the owner himself has, or such of those powers as the Tribunal thinks fit; and (e) appoint a Commissioner for preparation of an inventory of the properties of the defendant or for the sale thereof.
(19) Where a certificate of recovery is issued against a company registered under the Companies Act, 1956 (1 of 1956), the Tribunal may order the sale proceeds of such company to be distributed among its secured creditors in accordance with the provisions of Section 529-A of the Companies Act, 1956 (1 of 1956) and to pay the surplus, if any, to the company.
(20) The Tribunal may, after giving the applicant and the defendant, an opportunity of being heard, pass such interim or final order, including the order for payment of interest from the date on or before which payment of the amount is found due upto the date of realization of actual payment, on the application as it thinks fit to meet the ends of justice, (25) The Tribunal may make such orders and give such directions as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure the ends of justice." 9. From the reading of Section 19 quoted above, it is clear that at different stages of the proceeding under Section 19 of the Tribunal may pass interlocutory orders even under Rules, specially under Rule 12 Sub-clause (5) of the Rules made under the Act the Presiding Officer of D.R.T. may direct the defendant to pay the amount as has been admitted by the defendant to be true.
10. Apart from the Section 19 and Rule 12, Sub-clause (5), the Tribunal may pass certain orders during pendency of proceedings under Section 19 of the Act and such power is given to the Tribunal under Section 22 of the Act. Section 22 is quoted herein below: "Section 22. Procedures and powers of the Tribunal and the Appellate Tribunal.--(1) The Tribunal and the Appellate Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 (5 of 1908), but shall be guided by the principles of natural justice and, subject to the other provisions of this Act and of any Rules, the Tribunal and the Appellate Tribunal shall have powers to regulate their own procedure including the places at which they shall have their sittings.
(2) The Tribunal and the Appellate Tribunal shall have, for the purposes of discharging their functions under this Act, the same powers as are vested in a Civil Court under the Code of Civil Procedure, 1908 (5 of 1908) while trying asuit, in respect of the following matters, namely-- (a) summoning and enforcing the attendance of any person and examining him on oath; - (g) setting aside any order of dismissal of any application for default or any order passed by it ex parte; (h) any other matter which may be prescribed.
(3) Any proceeding before the Tribunal or the Appellate Tribunal shall be deemed to be a judicial proceeding within the meaning of Sections 193 and 228, and for the purposes of Section 196 of the Indian Penal Code (45 of 1860) and the Tribunal or the Appellate Tribunal shall be deemed to be a Civil Court for all the purposes of Section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974)." 11. From the perusal of Section 22 of the Act, it is clear that the Tribunal has been given power which is to be guided by the principle of natural justice, therefore, if a party is aggrieved by an order of the Tribunal, being allegedly violative of principle of natural justice, appeal may be preferred against the order.
12. The Tribunal make an order to proceed ex parte against the defendant and if an application analogous to an application under Order IX Rule 7 of the C.P.C. is made, the Tribunal may set aside that order or reject the application and party aggrieved may file appeal against that order.
13. Under Rule 5(A) of Rules 1993 made under the Act the Tribunal may make an order reviewing its decision or may make an order rejecting the application for review. Now the question is whether the provisions of Section 21 of the Recovery of Debt Due to the Banks and Financial Institutions Act, 1993 would be attracted in appeals against all the orders passed by P.O. under Sections 19 and 22. If the scrutiny is made of such orders they may be kept in three categories: Category (I) would cover those orders made by the Tribunal while application is still pending before the Tribunal.
Category (II) would be those cases by which the Tribunal determined the debt so due from the defendant (under Section 19) of the Act or under Rule 12 of Sub-clause (5) of the Rules made under the Act.
Category (III) would be those orders which are made by the Tribunal after the final order under Sub-section (20) of Section 19. In that category may come the following orders: 1. Allowing or rejecting the application for review of the final orders passed under Sub-section (20) of Section 19 or under Rule 5 of the Rules.
2. Allowing the application of the defendants for setting aside the ex parte decree.
3. Rejecting the application of the defendants for setting aside the ex parte decree.
4. Allowing the application of the Bank for restoration of the recovery application by setting aside the dismissal of the recovery application for default.
5. Dismissing an application of the Bank for restoration of the recovery application which has been dismissed for default.
The rest of the orders which have been illustrated above would go in Category I or Category II, 14. There is no doubt that an appeal against the orders made by the Tribunal as grouped in Category I will not attract the provisions of Section 21 of the Act because by then, there is no determination of the amount of debt by the Tribunal under Section 19. There is also no doubt that in appeal against the orders made by the Tribunal as grouped in Category II will definitely attract the provisions of Section 21 of the Act. It is only in respect of those orders which have been grouped in Category III, a question can be raised whether the provisions of Section 21 of the Act are attracted or not. But also there is no doubt that in respect of appeals against orders illustrated at items 2,4 and 5 above, the provisions of Section 21 of the Act are not attracted.
Thus, the controversy now is limited in respect to appeals against orders illustrated at items 1 and 3 above only which, for convenience, are reproduced as under: " 1. Allowing or rejecting the application for review of the final orders passed under Sub-section (20) of Section 19 or under Rule 5 of the Rules.
3. Rejecting the application of the defendants for setting aside the ex parte decree." 15. After considering the relevant provisions of the Act quoted above and giving full consideration to the arguments of the learned Counsels of parties, I am of the view that from the scheme of the Act, it is very clear that when final order passed by the Tribunal in which the debt due has been determined against the defendants; is sought to be reviewed by the defendants or by anyone of them, there is no provision in the Act requiring such defendants/ defendant to deposit 75% of the debts determined by the Tribunal.
16. Similarly, there is no provision in the Act requiring defendants or anyone of them to deposit 75% of the debts determined by the Tribunal under ex parte final order if such defendants/defendant move an application for setting aside of such ex parte final order. There is no scope for application of Section 21 of the Act on such applications there. If the applicants succeed, the matter is over. But if they are not successful and their applications for review of the final order or for setting aside the ex parte final order, as the case may be, is rejected and if against that order of rejection, the defendants/defendant may file appeal before the Appellate Tribunal. In my considered view, the provisions of Section 21 of the Act cannot be interpreted in such manner as are being contended by the respondent Banks.
17. In the instant case, as the appellant has deleted the relief-II, he is not required to deposit any amount under Section 21 of the Act and appeal can be entertained without any deposit.
18. The second point argued by Mr. R.L. Arora, learned Counsel for the Bank that order of admission may be recalled has no force. The appellant has not challenged the main order, therefore, the appeal which has already been admitted shall now proceed according to law.