Madras High Court
Malini Srinivasan vs Canara Bank on 12 December, 2008
Equivalent citations: AIR 2009 MADRAS 94, 2009 (3) ALL LJ NOC 584, 2009 (3) AKAR (NOC) 496 (MAD), 2009 A I H C (NOC) 548 (MAD), (2009) 2 MAD LW 785, (2009) 3 BANKCAS 254
Author: V.Dhanapalan
Bench: S.J.Mukhopadhaya, V.Dhanapalan
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED :: 12-12-2008 CORAM THE HONOURABLE MR.JUSTICE S.J.MUKHOPADHAYA AND THE HONOURABLE MR.JUSTICE V.DHANAPALAN WRIT PETITION Nos.22120 & 25047 OF 2008 Malini Srinivasan ... Petitioner in both W.Ps. -vs- 1.Canara Bank, Asset Recovery Management Branch, Spencers Towers II, 4th Floor, 770-A, Anna Salai, Chennai-600 034. 2.The Debt Recovery Appellate Tribunal, represented by the Chairperson, Indian Bank Building, 4th Floor, Ethiraj Salai, Chennai. ... Respondents in both W.Ps. Petitions under Article 226 of the Constitution of India. For petitioner : Mr.C.Ramakrishna, Senior Counsel, for Mr.K.Viswanathan. For respondent 1 : Mr.L.Jayakumar COMMON JUDGMENT
V.DHANAPALAN,J.
While W.P.No.22120 of 2008 has been preferred by the petitioner to quash the interim order of the Debt Recovery Appellate Tribunal, Chennai, dated 01.08.2008, passed in I.A.No.754 of 2007 in U.R.A.No.30 of 2007, W.P.No.25047 of 2008 is to quash the final order of the said Tribunal, dated 25.09.2008, passed in U.R.A.No.30 of 2007.
2. First respondent bank (in short, "the bank") sanctioned certain loan facilities to M/s.Concise Technologies Pvt.Limited, based upon the security given by a partnership firm, namely, M/s.Venyl General Industries, in which the writ petitioner was one of the partners. Since the said loan was not paid by Concise Technologies Pvt.Ltd., the bank filed a suit on the file of this High Court vide C.S.No.33 of 1996, against the writ petitioner and ten others, claiming a sum of Rs.43,42,180/-. Subsequent to the constitution of the Tribunals, the suit was transferred to Debt Recovery Tribunal, Chennai, and renumbered as T.A.No.513 of 1997. After regular trial, the Debt Recovery Tribunal (in short, "DRT") decreed the suit as prayed for by the bank. Thereafter, the writ petitioner preferred an appeal vide U.R.A.No.30 of 2007 on the file of Debt Recovery Appellate Tribunal (in short, "DRAT") without complying with the mandatory provision of Section 21 of the Recovery of Debts Due to Banks and Financial Institutions Act,1993, with an interlocutory application vide I.A.No.754 of 2007, for waiver of 75% of the debt due. The said interlocutory application was disposed of, directing the writ petitioner to deposit about 25% of the certificate amount of Rs.43,42,180/-, rounded off to Rs.10.00 lakhs in two equal instalments of Rs.5.00 lakhs to the bank, the first of which should be payable on or before 08.09.2008 and the second one payable on or before 08.10.2008. However, the writ petitioner failed to comply with the said order. In view of such non-compliance, the appeal itself was dismissed by DRAT, which order is under challenge in one of these writ petitions.
3. Learned Senior Counsel for the petitioner would submit that the petitioner is neither a borrower nor a guarantor; no valid mortgage is created concerning the property in favour of the bank; the entries in the Equitable Mortgage Register alone are not sufficient to give legal validity to the alleged claim of the bank of an existence of an equitable mortgage; an unregistered mortgage deed cannot be called in evidence; the dates in the Equitable Mortgage Register have been malafidely altered by the bank and they are incompatible; the petitioner is not an earning member and, therefore, she is not in a position to deposit the amount, as a condition precedent for hearing the appeal by DRAT.
4. On the other hand, learned counsel for the respondent bank would contend, that, as on date, the liability of Consice Technologies Pvt.Limited is more than Rs.1.00 crore; the petitioner, without complying with the mandatory provision of Section 21 of the Act, is attempting to put forward certain issues, which are already decided by DRT; the requirement of pre-deposit under Section 21 does not militate against the maintainability of the appeal; the petitioner, after complying with the mandatory provisions of Section 21, can very well place her defence in the appeal and, therefore, the writ petitions are liable to be dismissed.
5. We have heard the learned counsel for the parties; given our thoughtful consideration to the rival submissions and also gone through the records.
6. It is not debated that first respondent bank sanctioned certain loan to M/s.Concise Technologies Pvt.Limited, based upon the security given by a partnership firm, namely, M/s.Venyl General Industries, in which the writ petitioner was one of the partners. Since the said loan was not paid by Concise Technologies, the bank filed a suit on the file of this High Court vide C.S.No.33 of 1996, against the writ petitioner and others, claiming a sum of Rs.43,42,180/-, which suit was transferred to DRT, Chennai, and decreed as prayed for, against which the petitioner preferred an appeal on the file of DRAT, Chennai, without depositing 75% of the debt due, as mandated under Section 21 of the Act. However, DRAT, on an application filed by the petitioner, reduced the pre-deposit to 25% and, in spite of that, she failed to deposit the same, which resulted in dismissal of the appeal and filing of these Writ Petitions.
7. Ex.A-32, Resolution, dated 24.10.1991, passed by the partners of M/s.Vinyl General Industries, assumes much significance for deciding the issue in question. The said resolution reads as under :
"1.Resolved that the Industrial Shed bearing No.A.14 Thiru Vi. Ka Industrial Estate, Madras-32, belonging to the firm to be offered as collateral security to Canara Bank, Nungambakkam Branch for the loan to be availed by M/s.Concise Technologies (P) Ltd., in which Thiru T.M.Kasthuri Rangan is one of the Directors.
2. It is resolved to authorise Thiru T.M.Kasthuri Rangan to sign and execute any document in favour of the said Bank for and on behalf of the firm. It is further resolved that all the partners should join the execution of the document if so insisted upon by the Bank."
8. On the strength of the above resolution, the title deeds relating to the schedule mentioned property were deposited with the bank, as a security for the liabilities of Concise Technologies P.Ltd. and an equitable mortgage was also created. In this context, it is pertinent to state that the above resolution was signed by the writ petitioner as one of the partners. The petitioner, in her evidence as D.W.1, categorically admitted that she had signed in the documents, namely, Ex.A-32, resolution, dated 24.10.1991, and also Exs.A-33 (a) and A-33(b), letter, dated 24.10.1991, evidencing deposit of title deeds. She, having signed and admitted her signatures in the resolution and the documents, cannot gainsay the liability cast on her. It is also not her case that she was compelled to sign the resolution. She, being a partner of the firm, signed the documents of her volition.
9. Much light also can be thrown to Section 21 of the Recovery of Debts Due to Banks and Financial Institutions Act,1993, which runs thus:
"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 be deposited under this section."
10. The above Section would make it clear that if an appeal is preferred by any person from whom the amount of debt is due to a bank, 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 or her, as determined by the Tribunal. Therefore, the deposit of seventy-five percent of the amount of debt due from the petitioner is a statutory requirement to entertain the appeal filed before DRAT. It is true that there is a proviso clause that the Appellate Tribunal may, for reasons to be recorded in writing, waive or reduce the amount to be deposited under this section. Debt Recovery Appellate Tribunal, satisfying with the order of Debt Recovery Tribunal, which was passed on merits and after analysing the records available and upon perusing the evidence adduced by both sides, held that the said order had to be construed to be a valid one till the correctness of the same was decided by the Appellate Tribunal, which, in our considered opinion, cannot be found fault with. The writ petitioner, in the said proceedings, was equally bound by the order passed by DRT and, hence, her contentions, now raised in these writ petitions, would have to be considered on merits, only at the time of final disposal of the appeal. Therefore, as a pre-condition to entertain the appeal, it was mandatory that the said provision of law had to be complied with by the writ petitioner in letter and spirit. It is also important to note that DRAT, instead of directing the writ petitioner to deposit seventy-five per cent of the amount of debt so due from her as determined by the Tribunal, directed for deposit of about twenty-five percent only and the said amount was also ordered to be paid in two equal monthly instalments of Rs.5.00 lakhs to the respondent bank. Even then, the petitioner had not chosen to deposit the said amount. Hence, the Appellate Tribunal dismissed the appeal for non-compliance of its earlier direction, which was mandatory in nature.
11. It is also seen from the records that during the pendency of appeal before DRAT, one M/s.Balan Bio-Sciences Pvt.Ltd. filed an application praying to implead them as a necessary party, on the ground that the property referred to in the proceeding was purchased by them under a registered sale deed, dated 21.08.2006, from Vinyl General Industries, from which it is evident that the petitioner, with an intention to drag on the proceeding, deliberately caused much hardship to the bank. If at all the rights of the petitioner were infringed, she could very well place the same before DRAT, after complying with the statutory provision of Section 21 of the Act. This Court is at a loss to understand as to how the petitioner could sell the property, given as security, to a third party, when the issue is sub-judice. Such an attitude on the part of the petitioner shall not be appreciated.
12. It is true that at page No.70 of Equitable Mortgage Register, there is a material alteration of date from 23.10.1991 to 24.10.1991. But, in the same page, the date of deposit is clearly stated as 23.10.1991 and the manager also certified that mortgagor was present on 23.10.1991 and deposited the title deeds. When the date of deposit was clear, the said material alteration, which was probably due to a clerical mistake, cannot be given much importance.
13. With regard to the grievance of the petitioner that because of the hardship she filed a petition for waiver of pre-deposit, the point is to be decided as to whether there is any undue hardship, based on which the petitioner is entitled for waiver. As regards undue hardship, a proposition has been laid down by the Supreme Court in a number of decisions. A Division Bench of this Court, on an earlier occasion, considered two of the decisions of the Supreme Court, namely, (i) S.Vasudeva v. State of Karnataka & Ors., AIR 1994 SC 923, and (ii) M/s.Benara Valves Ltd. & Ors. v. Commissioner of Central Excise & Anr., 2006 (12) SCALE 303, in an unreported judgment, dated 08.01.2008, passed in W.A.Nos.1138 to 1144 of 2007. In S.Vasudeva's case, the Supreme Court held that the expression "undue hardship" is normally related to economic hardship. "Undue" means something, which is not merited by conduct of the claimant or is very much disproportionate to it. Undue hardship is excessive hardship, that is not warranted by circumstances. In M/s.Benara Valves Ltd.'s case, the Apex Court observed as follows :
"13. For a hardship to be 'undue', it must be shown that the particular burden to have to observe or perform the requirement is out of proportion to the nature of the requirement itself, and the benefit which the applicant would derive from compliance with it."
"14. The word "undue" adds something more than just hardship. It means, an excessive hardship or a hardship greater than the circumstances warrant."
14. In this case, the capacity of the petitioner to pay the amount having been noticed and in the absence of any financial burden, it cannot be construed that there is an undue hardship for the petitioner to resort to claim waiver of pre-deposit.
15. The other aspect relates to imposition of condition to safeguard the interest of revenue. This is an aspect which the Tribunal has to bring into focus. It is for the Tribunal to impose such conditions as are deemed proper to safeguard the interest of revenue. Therefore, the Appellate Tribunal, while dealing with the application filed by the petitioner for waiver of pre-deposit, has considered the materials available on record and stipulated a condition, as required, to safeguard the interest of revenue.
16. In such circumstances and also following ratio laid down by the Supreme Court in the cases referred to above, we are of the considered opinion that the claim of the petitioner for waiver of pre-deposit cannot be granted. However, with a view to give the petitioner an opportunity, we allow a further time of 15 days to deposit the amount, if not already deposited. In the event of such deposit, the Debt Recovery Appellate Tribunal is directed to take up the appeal for hearing and decide the matter on merit and in accordance with law.
17. With the above observation, these Writ Petitions are dismissed. No costs. Consequently, the connected M.P.Nos.1 of 2008 are also dismissed.
dixit To The Chairperson, Debt Recovery Appellate Tribunal, Indian Bank Building, 4th Floor, Ethiraj Salai, Chennai