Karnataka High Court
Diageo Plc vs State Bank Of India on 12 October, 2022
Author: P.S. Dinesh Kumar
Bench: P.S. Dinesh Kumar
W.P No.45707/2017
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 12TH DAY OF OCTOBER, 2022
PRESENT
THE HON'BLE MR. JUSTICE P.S. DINESH KUMAR
R
AND
THE HON'BLE MR. JUSTICE C.M. POONACHA
WRIT PETITION No.45707 OF 2017 (GM-DRT)
BETWEEN :
DIAGEO PLC
A COMPANY INCORPORATED UNDER THE
LAWS OF ENGLAND AND WALES
HAVING ITS REGISTERED OFFCER AT
LAKESIDE DRIVE, PARK ROYAL
LONDON
UNITED KINGDOM NW10 7HQ
REPRESENTED BY ITS AUTHORIZED
SIGNATORY, MR. NISCHAL HINDIA ... PETITIONER
(BY SHRI. ADITYA SONDHI, SENIOR ADVOCATE FOR
SHRI. MANEESHA KONGOVI, ADVOCATE)
AND :
1. STATE BANK OF INDIA
A BANKING CORPORATION
CONSTITUTED UNDER THE
STATE BANK OF INDIA ACT
1955 (23 OF 1955)
HAVING ITS CORPORATE CENTRE
AT STATE BANK BHAVAN
MADAME CAMA ROAD
NARIMAN POINT
MUMBAI - 400 021
W.P No.45707/2017
2
AND HAVING ITS
INDUSTRIAL FINANCE BRANCH AT 61
RESIDENCY PLAZA
RESIDENCY ROAD
BANGALORE - 560 025.
REPRESENTED BY ITS DIRECTOR
2. AXIS BANK LTD.
HAVING ITS REGISTERED
OFFICE AT TRISHUL
THIRD FLOOR, OPPOSITE
SAMARTHESWAR TEMPLE
LAW GARDEN, ELLISBRIDGE
AHMEDABAD - 380 006
AND HAVING ITS CORPORATE OFFICE
AT AXIS HOUSE, C-2
WADIA INTERNATIONAL CENTRE
PANDURANG BUDHKAR MARG
WORLI, MUMBAI - 400 025
(DELETED AS PER ORDER DATED 13.6.2016)
REPRESENTED BY IT
MANAGING DIRECTOR
3. BANK OF BARODA
A BODY CORPORATE UNDER
THE BANKING COMPANIES
(ACQUISITION AND TRANSFER
OF UNDERTAKING) ACT, 1970
(5 OF 1970)
HAVING ITS HEAD OFFICE AT
BARODA HOUSE
P.B. NO. 506, MANDAVI
VADODARA - 396 006.
ACTING THROUGH ITS BRANCH
OFFICE AT P.O. BOX-11745
SAMANTA BUILDING
GENERAL BHOSALE MARG
NARIMAN POINT
MUMBAI - 400 021.
REPRESENTED BY ITS
MANAGING DIRECTOR
W.P No.45707/2017
3
4. BANK OF INDIA
HAVING ITS HEAD OFFICE AT
STAR HOUSE
C-5, G BLOCK, BANDRA KURLA COMPLEX
BANDRA (E), MUMBAI - 400 051
AND HAVING ITS LARGE CORPORATE
BRANCH AT GROUND FLOOR
ORIENTAL BUILDING
364, D.N. ROAD, FORT
MUMBAI - 400 001.
(DELETED AS PER ORDER DATED 13.6.2016)
REPRESENTED BY ITS
MANAGING DIRECTOR
5. CENTRAL BANK OF INDIA
HAVING ITS CORPORATE OFFICE
AT CHANDRAMUKHI
NARIMAN POINT, MUMBAI - 560 021.
AND HAVING ITS CORPORATE
FINANCE BRANCH
(EARLIER KNOWN AS
INDUSTRIAL FINANCE BRANCH)
AT CHANDRAMUKHI, GROUND FLOOR
NARIMAN POINT
MUMBAI - 560 021.
(DELETED AS PER ODER DATED 13.6.2016)
REPRESENTED BY ITS MANAGING DIRECTOR
6. CORPORATION BANK
A BODY CORPORATE UNDER
BANKING COMPANIES
(ACQUISITION AND TRANSFER
OF UNDERTAKING) ACT, 1980
CORPORATE OFFICE AT
MANGALADEVI TEMPLE ROAD
PANDESHWAR
MANGALORE - 575 001.
AND HAVING ITS
INDUSTRIAL FINANCE BRANCH
AT RALLARAM MEMORIAL BLDG.
1ST FLOOR, CSI COMPOUND
MISSION ROAD
BENGALURU - 560 027.
W.P No.45707/2017
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REPRESENTED BY ITS
MANAGING DIRECTOR
7. THE FEDERAL BANK LIMITED
A COMPANY WITHIN
THE MEANING OF THE
COMPANIES ACT, 1956
HAVING ITS REGISTERED OFFICE
AT FEDERAL TOWER
ALUVA - 683 101.
KERALA.
AND HAVING ITS BRANCH OFFICE
AT ST. MARKS ROAD
9, HALCYON COMPLEX
ST. MARKS ROAD
BANGALORE - 560 001.
REPRESENTED BY ITS
MANAGING DIRECTOR
8. IDBI BANK LIMITED
A COMPANY INCORPORATED
UNDER THE COMPANIES ACT, 1956
AND A BANKING COMPANY WITHIN
THE MEANING OF THE BANKING
REGULATION ACT, 1949
HAVING ITS HEAD OFFICE AT
IDBI TOWER, WTC COMPLEX
CUFFE PARADE
MUMBAI - 400 005
MAHARASTHRA, INDIA.
REPRESENTED BY ITS
MANAGING DIRECTOR
9. INDIAN OVERSEAS BANK
A BODY CORPORATE UNDER
THE BANKING COMPANIES
(ACQUISITION AND TRANSFER
OF UNDERTAKING) ACT, 1970
HAVING ITS CENTRAL OFFICE AT
763, ANNA SALAI
CHENNAI - 600 002.
W.P No.45707/2017
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AND ITS BRANCH OFFICE AT
"HARIKRIPA", 26-A, S.V. ROAD
SANTACRUZ (W)
MUMBAI-400 054.
REPRESENTED BY ITS
MANAGING DIRECTOR
10 . JAMMU & KASHMIR BANK LIMITED
A BANKING COMPANY
INCORPORATED UNDER THE
PROVISIONS OF THE JAMMU &
KASHMIR COMPANIES
ACT NO. XI OF 1977 (SAMVAT)
HAVING ITS REGISTERED OFFICE AT
CORPORATE HEADQUARTER
MAULANA AZAD ROAD
SRINAGAR
KASHMIR-190 001.
REPRESENTED BY ITS
MANAGING DIRECTOR
11 . PUNJAB & SIND BANK
A BODY CORPORATE UNDER
BANKING COMPANIES
(ACQUISITION AND TRANSFER
OF UNDERTAKING) ACT, 1980
HAVING ITS HEAD OFFICE AT 21
RAJENDRA PLACE
NEW DELHI - 110 008.
AND HAVING AMONGST OTHERS
A BRANCH OFFICE AT
J.K. SOMANI BUILDING
BRITISH HOTEL LANE
FORT, MUMBAI - 400 023.
REPRESENTED BY ITS
MANAGING DIRECTOR
12 . PUNJAB NATIONAL BANK
A BODY CORPORATE UNDER
BANKING COMPANIES
(ACQUISITION AND TRANSFER
OF UNDERTAKING) ACT, 1970
(5 OF 1970)
HAVING ITS HEAD OFFICE AT 7
W.P No.45707/2017
6
BHIKAJI CAMA PLACE
NEW DELHI - 110 607.
ACTING THROUGH ITS
LARGE CORPORATE BRANCH
AT CENTENARY BUILDING, 28
M.G. ROAD
BENGALURU - 560 001.
REPRESENTED BY ITS
MANAGING DIRECTOR
13 . STATE BANK OF MYSORE
A BODY CORPORATE CONSTITUTED
UNDER THE STATE BANK OF INDIA
(SUBSIDIARY BANKS) ACT, 1959
HAVING ITS HEAD OFFICE AT
KEMPEGOWDA ROAD
BENGALURU - 560 009.
AND ITS CORPORATE ACCOUNTS
BRANCH AT NO.18
RAMANASHREE ARCADE
M.G. ROAD
BANGALORE - 560 001.
REPRESENTED BY ITS
MANAGING DIRECTOR
14 . UCO BANK
A BODY CORPORATE CONSTITUTED
UNDER THE BANKING COMPANIES
(ACQUISITION & TRANSFER OF
UNDERTAKINGS) ACT, 1970
AND HAVING ITS HEAD OFFICE
AT 10, BTM SARANI
KOLKATA - 700 001
WEST BENGAL, INDIA
AND ITS BRANCH OFFICE AT
1ST FLOOR, 13/22, K.G. ROAD
BENGALURU - 560 009.
REPRESENTED BY ITS
MANAGING DIRECTOR
W.P No.45707/2017
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15 . UNITED BANK OF INDIA
A BODY CORPORATE UNDER
THE BANKING COMPANIES
(ACQUISITION AND TRANSFER
OF UNDERTAKING) ACT, 1970
(5 OF 1970)
HAVING ITS HEAD OFFICE
AT 11, HEMANTA BASU SARANI
KOLKATA - 700 001.
ACTING THROUGH ITS
BRANCH OFFICE AT 40, K.G. ROAD
BENGALURU - 560 009.
REPRESENTED BY ITS
MANAGING DIRECTOR
16 . JM FINANCIAL ASSET RECONSTRUCTION
COMPANY PRIVATE LIMITED
HAVING ITS REGISTERED OFFICE
AT 7TH FLOOR, CNERGY, APPASAHEB
MARATHE MARG, PRABHADEVI
MUMBAI - 400 025.
REPRESENTED BY ITS
MANAGING DIRECTOR
17 . KINGFISHER AIRLINES LIMITED
UB TOWER, LEVEL 12
UB CITY, 24
VITTAL MALLYA ROAD
BANGALORE-560 001.
REPRESENTED BY ITS
MANAGING DIRECTOR
18 . UNITED BREWERIES (HOLDINGS) LIMITED
UB TOWER, LEVEL 12
UB CITY-24
VITTAL MALLYA ROAD
BANGALORE-560 001.
KARNATAKA, INDIA.
REPRESENTED BY ITS
MANAGING DIRECTOR
19 . DR. VIJAY MALLYA
SON OF LATE SRI. VITTAL MALLYA
RESIDING AT NO.3
W.P No.45707/2017
8
VITTAL MALLYA ROAD
BENGALURU-560 001
KARNATAKA.
20 . KINGFISHER FINVEST (INDIA) LTD.
UB TOWER, LEVEL 12
UB CITY,24, VITTAL MALLYA ROAD
BENGALURU-560 001.
REPRESENTED BY ITS
MANAGING DIRECTOR
21 . SBICAP TRUSTEE COMPANY LTD.
NO. 8, 5TH FLOOR, KHETAN BHAVAN
198 JAMSHEDJI TATA ROAD
CHURCHGATE
MUMBAI - 400 020.
REPRESENTED BY ITS
MANAGING DIRECTOR
22 . THE COMMISSIONER OF SERVICE TAX - I
CENTRAL EXCISE BUILDING
M.K. ROAD
CHURCHGATE
MUMBAI - 400 020.
23 . DIAGEO HOLDINGS NETHERLANDS B. V.
MOLENWERF, NO.12, 1014
BG AMSTERDAM
NETHERLAND.
REPRESENTED BY ITS
DIRECTOR
24 . UNIT TRUST OF INDIA
INVESTMENT ADVISORY
SERVICES LIMITED
UNIT NO.2, BLOCK B, 1ST FLOOR
JVPD SCHEME, GULMOHAR CROSS ROAD
NO.9, ANDHERI (WEST)
MUMBAI - 400 049.
REPRESENTED BY ITS
MANAGING DIRECTOR
W.P No.45707/2017
9
25 . STANDARD CHARTERED BANK
1 BASINGHALL AVENUE
LONDON EC2V5DD
REPRESENTED BY ITS
MANAGING DIRECTOR ... RESPONDENTS
(BY SHRI. G. KRISHNA MURTHY, SENIOR ADVOCATE FOR
SMT. NAYANA TARA B.G., ADVOCATE FOR R1 TO R16;
SHRI. B.C. GURU, ADVOCATE FOR R2)
V/O DATED 14/03/2019 NOTICE TO
R-17 TO R-20 AND R-22 TO R25 ARE
DISPENSED WITH
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO
QUASH THE IMPUGNED ORDER DTD.22.09.2017 IN I.A.
NO.826/2017 IN AIR 102/2017 PASSED BY THE HON'BLE
DEBTS RECOVERY APPELLATE TRIBUNAL, AT CHENAI AT
ANNEX-A AND ETC.
THIS WRIT PETITION, HAVING BEEN HEARD AND
RESERVED FOR ORDERS ON 21.07.2022, COMING ON FOR
PRONOUNCEMENT OF ORDERS THIS DAY,
P.S.DINESH KUMAR J, PRONOUNCED THE FOLLOWING:-
ORDER
Diageo PLC, a Company incorporated under Laws of England and Whales; and having its registered office at London has presented this writ petition for a writ of certiorari to quash order dated W.P No.45707/2017 10 September 22, 2017 in I.A. No.826/2017 in A.I.R 102/2017 passed by the DRAT1, Chennai.
2. Brief facts of the case are, consortium of Banks led by State Bank of India have lent money to King Fisher Airlines Ltd. They filed O.A. No.766/2013 before DRT2, Bengaluru seeking recovery of about Rs.6963 Crores with interest thereon. In the O.A., they moved I.A. No.1059/2016 with a prayer inter alia to issue a garnishee order against the petitioner herein, in view of the agreement between Vijay Mallya, the petitioner herein and United Spirits Ltd. On March 7, 2016, the DRT, Bengaluru passed the following order:
"1. Till disposal of present OA, amount mentioned in the IA as sought by the applicants banks stands attached;
2. Defendant No.3 of OA temporarily shall not draw amount mentioned in the present IA till disposal of 1 Debts Recovery Appellate Tribunal 2 Debts Recovery Tribunal W.P No.45707/2017 11 the OA as sought by the Applicants banks in the present IA;
3. Diageo PLC company/Defendant No.7 and United Spirits Ltd., Company shall not temporarily disburse the amount to Defendant No.3/his nominee/his assignee or agents etc., temporarily mentioned in the IA till disposal of the OA, temporarily; and further directed Diageo PLC to deposit amount as stated in para-63 of present order;
Defendant No.3 his nominee/his assignee or agents etc., and Diageo PLC Company/Defendant No.7 and USL company are directed to furnish details of agreement as sought by the Applicants Banks as sought in the present IA on or before next date.
Issue notice of present IA to Diageo PLC (Office at: Lakeside Dr, London NW10 7HQ, United Kingdom) and R.3 of IA i.e. United Spirits Ltd., UB Tower, No.24, Vittal Mallya Road, Bangalore-560 001 by RPAD."
3. Petitioner entered appearance and contested the matter. On July 16, 2016, the DRT clarified the order and directed that if petitioner was liable to pay amount as per the agreement dated February 25, 2016 to the third defendant in the W.P No.45707/2017 12 O.A., the same shall be deposited in the DRT, Bengaluru, as per order dated March 7, 2016. It was further clarified that if the petitioner was not liable to pay the amount as per the said agreement to the third defendant, it need not deposit the amount in the DRT, Bengaluru. Petitioner challenged the said order before DRAT, Chennai in A.I.R. No.365/2016.
4. In the meanwhile, the DRT, Bengaluru passed final order dated January 19, 2017 in the O.A. The orders passed on all I.As. were made as part and parcel of the said order. Petitioner challenged the final order in appeal No.102/2017 before the DRAT. Consequently vide order dated March 16 2017, A.I.R. No.365/2016 stood dismissed as having become infructuous.
5. On March 22, 2017, DRAT directed the petitioner to comply with the Office objections W.P No.45707/2017 13 including pre-deposit. Petitioner filed I.A. No.826/2017 seeking waiver of pre-deposit and the same was contested by the respondents herein. By the impugned order dated September 22, 2017, the DRAT passed a peremptory order directing the petitioner to make pre-deposit within four weeks therefrom, failing which, the appeal would stand automatically dismissed.
6. Shri. Aditya Sondhi, learned Senior Advocate for the petitioner mainly contended that:
• under Section 21 of the RDDB3 Act, only such person from whom debt is due to a Bank or a Financial Institution, is liable to make pre-deposit;
• debt has been defined as 'any liability claimed as due by a Bank or Financial Institution during the course of any business activity'. No 3 Recovery of Debts due to Bank and Financial Institutions Act, 1993 W.P No.45707/2017 14 amount is due from the petitioner to the consortium of Banks.
7. Though Shri. Sondhi urged several other contentions, in substance, his case is, no debt is due from the petitioner to the consortium of Banks. Therefore, petitioner is not liable to make pre- deposit for consideration of its appeal on the merits by the DRAT.
8. Opposing the writ petition, Shri. Krishna Murthy, learned Senior Advocate for State Bank of India and other Banks of the consortium, contended that:
• defendants No.1 to 4 in the O.A. are defaulters. On February 25, 2016, a deed of disengagement has been entered into between the petitioner, Relay B.V., Diageo Holdings, Netherlands B.V., Vijay Mallya and W.P No.45707/2017 15 others set out in Part-I of Schedule 6 of the Agreement;
• under the said Agreement, petitioner has agreed to pay USD75,000,000(USD75 million). Petitioner has already paid USD40 million on February 25, 2016;
• the money owed by petitioner - garnishee to Vijay Mallya is a debt due to the Bank.
9. In substance, Shri. Krishnamurthy's argument is, petitioner has agreed to pay Vijay Mallya under the dis-engagement agreement. Therefore, the amount payable by the petitioner is a debt due to the Banks.
10. We have carefully considered rival contentions and perused the records.
11. The case of consortium of Banks against the petitioner hinges upon the Deed of Dis-engagement. Shri. Krishnamurthy's argument W.P No.45707/2017 16 is, under Clause 8 of the said agreement, petitioner has agreed to pay USD75 million, out of which, USD40 million has been paid. Vijay Mallya is entitled to receive the remaining sum. Vijay Mallya and others owe money to the Banks. Therefore, the consortium of Banks is entitled to recover the amount, which petitioner is due and liable to pay to Vijay Mallya.
12. We have perused the Deed of Dis-engagement. Under Clause 8.1 thereof, petitioner has agreed that subject to provisions of other Clauses mentioned therein, it would pay an aggregate sum of USD 75 million. It has paid USD 40 million. The remaining amount is payable subject to Clauses 8.3, 8.4, 9.2, 10.2, 12 and 13.
13. Shri. Aditya Sondhi submitted that Vijay Mallya has breached the terms of Deed of Dis-engagement and compelled the petitioner to file W.P No.45707/2017 17 a claim to recover the USD 40 million. Accordingly, petitioner and two others have filed Claim No.CL- 2017-000693 in the High Court of Justice, Business and Property Courts of England and Wales Commercial Court (QBD) against Vijay Mallya, Siddartha Mallya, Watson Ltd., and Continental Administration Services Ltd., making several claims.
14. The DRT vide order July 16, 2016 had clarified that if petitioner was not liable to pay any amount as per the agreement, it need not make any deposit with the DRT. Petitioner has challenged the said order, but the same has been dismissed as having become infructuous, after DRT passed the final order. The garnishee order against petitioner in the final order reads as follows:
'I.A. No.1024 OF 2016(FOR GARNISHEE ORDER AGAINST D-7)
70. The present I.A. is filed by the applicant Banks seeking a Garnishee order against 7th defendant and Diageo PLC from disbursing an alleged sum of USD 75 million to third defendant W.P No.45707/2017 18 and to direct the seventh defendant or the said Diageo PLC, to deposit the same into this Tribunal and to direct them to disclose on oath the details of all the benefits to 3rd defendant, 7th defendant Diageo PLC and USL including the details of movables and immovable properties, tangible and intangible assets. The prayer made in this I.A. is also objected to by the respondents therein, who have filed their respective objections. ORDER PASSED IN I.A. NO.1024/2016
71. The interim order passed in this I.A. shall continue and shall be decided by the ld. Recovery Officer finally in the recovery proceedings pursuant to the Recovery Certificate."
15. Though the I.A. No. is mentioned as 1024/2016, Shri. Aditya Sondhi and Shri. Krishnamurthy, learned Senior Advocates on both sides, conceded that this order is in respect of I.A. No.1059 against the petitioner but incorrectly printed as I.A. No.1024/2016.
16. It was argued by Shri. Aditya Sondhi that the DRT has delegated its power upon the Recovery officer to decide on the I.A. in the recovery proceedings. He rightly pointed out that in W.P No.45707/2017 19 order dated July 16, 2017, DRT had clarified that if petitioner was not liable to pay any amount, as per the Deed of Dis-engagement, it need not deposit the amount. However, while passing the final order, it has left the matter to the discretion of the Recovery Officer.
17. The point for our consideration is, whether petitioner is liable to make pre-deposit as required under Section 21 of the RDDB Act.
18. Section 21 reads as follows:
"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;
(Emphasis supplied) W.P No.45707/2017 20 Provided that the Appellate Tribunal may, for reasons to be recorded in writing, waive or reduce the amount to be deposited under this section."
19. In Section 2(g) of the RDDB Act, 'Debt' is defined as follows:
"2. xxxxx 2(g) "debt" means any liability (inclusive of interest) which is claimed as due from any person by a bank or a financial institution or by a consortium of banks or financial institutions during the course of any business activity undertaken by the bank or the financial institution or the consortium under any law for the time being in force, in cash or otherwise, whether secured or unsecured, or assigned, or whether payable under a decree or order of any civil court or any arbitration award or otherwise or under a mortgage and subsisting on, and legally recoverable on, the date of the application".
20. Admittedly, petitioner is not a defendant in the O.A. filed by the consortium of Banks. According to the petitioner, it has initiated recovery proceedings against Vijay Mallya and others for breach of 'Deed of Dis-engagement' by Vijay Mallya by filing a suit in the Commercial Court in England. W.P No.45707/2017 21
21. The DRAT has recorded that 'prima facie, it appears that appellant Company is also a part and parcel of the main borrower to 'some extent'. Records reveal that prior to passing of main order, Corporate veil (sic.) has been lifted, hence, Bank is at liberty to recover the dues from appellant also'.
22. Thus, DRAT has directed petitioner to make a pre-deposit of USD 35 million with the Registrar of DRAT within four weeks on the premise that petitioner is also a part and parcel of the main borrower to 'some extent'.
23. Shri. Aditya Sondhi has placed reliance on following authorities:
(a) North West KRTC Vs. State of Karnataka4 In that case, the Sales Tax Authority sought to attach the Security Deposit given by the assessee to the Road Transport Corporation. This Court, has 4 ILR 2005 KAR 1694 W.P No.45707/2017 22 held that, the amount deposited by way of guarantee for due performance of the Contract would become payable after expiry of the period of Contract or termination of Contract, whichever is earlier. The security deposit or a part there of can be forfeited in case of breach of Contract and therefore, the Security Deposit cannot be treated as a debt in existence.
(b) Gajraj Sheokarandas Vs. Sir Hukamchand Sarupchand and another5 In that case a garnishee order was sought against the East India Cotton Association with whom, the judgment debtor in that case had placed a deposit of Rs.5,000/-. The Bombay High Court held that it was impossible to hold that there was any debt until the judgment debtor had ceased to the member following the principle in Hutt Vs. Shan 5 AIR 1939 Bom 90 W.P No.45707/2017 23 (1887) 3 TLR 354 that there could be no debt till the transactions were closed.
In the case on hand, the transaction between Diageo and Vijay Mallya has not been closed on the other hand, petitioner has initiated recovery proceeding's.
(c) Shanthi Prasad Jain Vs. The Director of Enforcement6 wherein, it is held as follows:
"39. In our opinion this contention is well founded. A contingent debt is strictly speaking not a debt at all. In its ordinary as well as its legal sense, a debt is a sum of money payable under an existing obligation. It may be payable forthwith, solvendum in presenti, then it is a debt "due" or it may be payable at a future date, solvendum futur; then it is a debt "accruing". But in either case it is a debt. But a contingent debt has no present existence, because it is payable only when the contingency happens, and exhypothesi that may or may not happen."
(d) Sajeda Khatoon Vs. Bank of India7 it is held as follows:
6
AIR 1962 SC 1764 (para 37) W.P No.45707/2017 24 "On a reading of Sections 20 and 21 of the said Act, it appears that a distinction is made between persons who is a certificate debtor and who is not the certificate debtors but affected by an order. There may be a situation where in the process of execution of a certificate, the property of a third party is attached. The third party may object to such attachment and fail both before the Recovery Officer and the Presiding Officer and then such third party prefers an appeal. Does the order of rejection by the Recovery Officer and the Presiding Officer make such third party, "a person from whom the amount of debt is due to the bank" as contemplated under Section 20 of the DRT Act. Suppose, the Tribunal comes to a finding that it is a fraudulent transfer. The Tribunal may ignore such transfer and proceed with the sale of the property in question in execution of the said certificate. Such an adjudication does not make the third party a person liable to discharge the debt. Then it becomes the property of the certificate debtor liable to attachment and sale. When a statute does not create any embargo in preferring an appeal by a party who is not required to discharge the debt, the Court cannot impose any such condition since it would amount to rewriting a statute. The legislature in Section 21 has not incorporated same and/or similar conditions as contained in Section 20 and did not impose any such restriction or embargo or a 7 Laws (CAL) 2012 9 28 W.P No.45707/2017 25 condition precedent in respect of a third party in preferring an appeal against an order."
(e) M/s. St. Mary's Kalmane and Arekal Estates, Chikmagaluru Vs. Debt Recovery Appellate Tribunal and Others8 wherein it is held as follows:
"16. At this juncture, it is apropos to point out that the Supreme Court in Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 : (AIR 2012 Supp SC 444), while considering the provisions of the Arbitration and Conciliation Act, 1996, referring to the observations made by Lord Diplock in Duport Steels Ltd. v. Sirs, [1980] 1 WLR 142 : (1980) 1 All ER 529 (HL), which read as under:--
"... the role of the judiciary is confined to ascertaining from the words that Parliament has approved as expressing its intention what that intention was, and to giving effect to it. Where the meaning of the statutory words is plain and unambiguous it is not for the Judges to invent fancied ambiguities as an excuse for failing to give effect to its plain meaning because they themselves consider that the consequences of doing so would be inexpedient, or even unjust or immoral. In controversial matters such as are involved in industrial relations there is room for differences of 8 AIR 2016 Mad 47 W.P No.45707/2017 26 opinion as to what is expedient, what is just and what is morally justifiable. Under our Constitution it is Parliament's opinion on these matters that is paramount."
(Emphasis supplied) "...But if this be the case it is for Parliament, not for the judiciary, to decide whether any changes should be made to the law as stated in the Acts...."
(Emphasis supplied)
24. Shri. Krishnamurthy has placed reliance on Kotak Mahindra Bank Pvt. Ltd., Vs. Ambuj A. Kasliba and others9, In that case, respondent No.3 therein, had availed financial assistance from respondent No.6. Respondents No. 1 and 2 had offered personal guarantee. Respondents No. 1 to 3 had defaulted in payment. The account was classified as non-performing asset and auctioned by respondent No.6 wherein, Kotak Mahindra Bank was the successful bidder. The unpaid debt and the non-performing asset was assigned in its favour. The said assignment was challenged by 9 AIR 2021 SC 1041 (paras 17 and 21) W.P No.45707/2017 27 respondents No. 1 to 3 before the High Court and the same was dismissed. Further, in SLP filed before the Apex Court, compromise between the parties was recorded. Respondents No.1 to 3 did not adhere to the terms of compromise. Kotak Madindra Bank instituted recovery proceedings before the DRT. In the meanwhile, the National High Way Authority acquired a portion of mortgaged property belonging to respondent No.3. The DRT had limited the decreetal amount to Rs.145 Crores with interest at 9% till the date of realization. The Bank as also respondents No. 1 to 3, feeling aggrieved by DRT's order preferred appeals before DRAT. The DRAT had directed for making pre-deposit. Respondents No. 1 and 2 approached Delhi High Court and the Delhi High Court directed that respondents No. 1 and 2 to be permitted to prosecute the appeal without pre-deposit. The said order was under challenge W.P No.45707/2017 28 before the Hon'ble Supreme Court of India. In the facts of that case, the Apex Court has held that total waiver would be against statutory provisions. In contradistinction, in this case, petitioner is not a defendant and no money is claimed from him by the Bank. Hence, the said authority does not lend any support to the respondents herein.
25. Indubitably, petitioner is not a defendant before the DRT. The meaning of word 'due' fell for consideration in T.R.Rajakumari Vs. Tax Recovery Commissioner, Madras-1 and Another10. The Division Bench of Madras High Court after considering the Law Lexicon of British India by T. Ramanatha Aiyar has recorded that, "due" is stated to mean "As a noun as existing obligation; an indebtedness; a simple indebtedness without reference to time of payment; a debt ascertain and fixed through payable in future; As an adjective, 10 1977 SCC OnLine Mad 239 = (1979)116 ITR 306 W.P No.45707/2017 29 capable of being justly demanded; claimed as of right; owing and unpaid, remaining unpaid; payable". The court has also recorded thus: in Halsbury's Laws of England, 3rd Edition, Volume 16, at page 83, in para 124, it is stated:
" The debt must be one which the judgment debtor could himself enforce within the jurisdiction for his own benefit; for the creditor acquires no larger rights than those of the debtor".
and in para 125 it is stated:
"Money in the hands of a third person, where relation of debtor and creditor does not exist between him and the judgment debtor, cannot be attached.
26. We may reiterate that Section 21 of the RDDB Act, refers to 'any person from whom the amount of debt is due to a Bank or a Financial Institution or a Consortium of Banks'.
27. According to the petitioner, it owes no money to Vijay Mallya. The DRAT has held that petitioner is also a part and parcel of main W.P No.45707/2017 30 borrower. Consortium of Banks can lay hands only on such money which Vijay Mallya can recover from his creditor. The true test is whether Vijay Mallya can obtain or obtained a decree against the petitioner on the strength of 'Deed of Dis-agreement'. The answer must be in the negative because, petitioner has already filed its claim in the Commercial Court in England.
28. Therefore, the finding recorded by the DRAT that petitioner also is a part and parcel of main borrower is unsustainable.
29. In view of the above, the impugned order directing the petitioner to deposit USD 35 million with the Registrar of DRAT as pre-deposit, is liable to be set-aside.
W.P No.45707/201731
30. Hence, the following:
ORDER
(a) Writ petition is allowed.
(b) Rule made absolute.
(c) Order dated September 22, 2017 in A.I.R. 102/2017 passed by DRAT Chennai is quashed.
(d) DRAT shall consider the appeal on merits, without insisting for pre-deposit.
(e) It is made clear that any observation/s made by this Court in this order is for the purpose of disposal of this writ petition.
No costs.
Sd/-
JUDGE Sd/-
JUDGE SPS