Debt Recovery Appellate Tribunal - Delhi
Rajasthan Xlo Sanwa Midland And Ors. vs State Bank Of Bikaner And Jaipur And Ors. on 3 March, 2004
Equivalent citations: I(2005)BC58
JUDGMENT
K.S. Kumaran, J. (Chairperson)
1. This is an application filed by the applicants/ appellants seeking waiver of the pre-deposit as per the Section 21 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as "the Act"), for the purpose of entertaining the appeal.
2. The 1st respondent-State Bank of Bikaner & Jaipur (hereinafter referred to as "the respondent-Bank"), filed Original Application 362/1996 before the Debts Recovery Tribunal, Jaipur (hereinafter referred to as "the DRT"), against the appellants (defendant Nos. 1 to 3); (hereinafter referred to as "the appellants-defendants") and respondent Nos. 2 to 4 in the appeal (defendants Nos. 4 to 6) for the recovery of Rs. 76,00,408.54 with interest. The learned Presiding Officer of the DRT by the impugned final order dated 13th August, 2001 directed that the respondent-Bank is entitled to receive the said amount with interest and costs from appellants-defendants jointly and severally.
3. Aggrieved, the appellants-defendants have preferred the appeal and also this application under Section 21 of the Act, seeking waiver of the pre-deposit. The respondent-Bank has filed a suitable reply opposing this application.
4. I have heard Counsel for both sides and perused the records.
5. The learned Counsel for the appellants-defendants contends that while, the 1st appellant-company is stated to be the principal borrower, the appellants- defendants 2 and 3 are stated to be the guarantors. According to him, the impugned final order passed by the learned Presiding Officer of the DRT, is un-sustainable and has to be set-aside. He contends that the appellants-defendants have a prima facie case to be argued in the appeal, that the impugned final order has been passed in violation of the principles of natural justice, and that the financial hardship of the appellants-defendants is also such that the appellants-defendants should be granted the waiver as prayed for.
6. The learned Counsel for the appellants-defendants contends that the O.A. was filed before the DRT in the year 1995, and was registered as O.A. on 6th August, 1996. He points out that as per the averments contained in the O.A., the 2nd appellant-defendant is the Managing Director of the 1st appellant-company as well as the guarantor, while the 3rd appellant is a guarantor; that appellants-defendants 2 and 3 are directly responsible for the acts and debts of the 1st appellant-Company, and that they are jointly and severally liable for the dues of the 1st appellant-Company. The learned Counsel for the appellants-defendants also refers to a Letter of Guarantee dated 1st June, 1989 executed by the 3rd appellant-defendant. He also points out that as is seen from this Letter of Guarantee it has been signed by the 2nd appellant-defendant only for and on behalf of the 3rd appellant-defendant and not in his individual capacity. He also points out that there is no allegation in the O.A. at all that the appellant-2nd defendant executed any Deed of Guarantee in his individual capacity. He also refers paragraph 5-S of the O.A., relating to the cause of action and points out that there is no averment therein that the cause of action arose on 1st June, 1989, when the appellant-2nd defendant executed a Letter of Guarantee. He also refers to the affidavit (by way of evidence) filed by Mr. H.K. Khandelwal, the then Chief Manager of the respondent-Bank and points out that he has merely stated that the appellants defendants 2 and 3 stood as guarantors for the 1st appellant-Company, and as such, they are jointly and severally liable. The learned Counsel for the appellants-defendants contends that there is no mention in this affidavit that this witness is personally aware of the signatures found it. the above said Guarantee Deed or that the appellant-2nd defendant executed the above said Deed of Guarantee in his personal capacity. He also contends that though this witness has stated in his affidavit that the appellants-defendants 1 to 3 executed the certain documents, he docs not say that he is personally aware of the signatures or that the appellant-2nd defendant executed these documents in his presence.
7. Pointing out all these aspects, the learned Counsel for the appellants-defendants contends that it is clear that the appellant-2nd defendant has not personally guaranteed the payment of any amount and has also not executed any Letter of Guarantee in his personal capacity. He, therefore, contends that there cannot be a personal decree against the appellant-2nd defendant to pay the amount.
8. But, the learned Counsel for the respondent-Bank points out that the appellant-2nd defendant has signed the pro-note dated 15th January, 1987 (Exhibit-1) in favour of the appellant-3rd defendant, and the appellant-3rd defendant has assigned the said pro-note in favour of the respondent-Bank. But, she very fairly concedes that no personal liability is attached to the appellant-2nd defendant under this pro-note. A perusal of this pro-note also shows that it was executed by the appellant-1st defendant Company, and the appellant-2nd defendant has signed the same on behalf of the appellant-1st defendant Company.
9. The learned Counsel for the respondent-Bank has not been able to point out any Guarantee Deed executed by the appellant-2nd defendant in his personal capacity or any other document to show that the appellant-2nd defendant is personally liable to pay the amount. But, as pointed out already, by the impugned final order dated 13th August, 2001, the learned Presiding Officer of the DRT held that the appellant-2nd defendant is also jointly and severally liable to pay the amount. He has observed that the appellant-2nd defendant-S.C. Saran had not filed any affidavit whereas, the affidavit of Ramesh Kumar Mongia only has been filed, which cannot be relied upon in the absence of the affidavit of appellant-2nd defendant.
10. But, in view of what has been pointed out above, the question whether the appellant-2nd defendant executed any Guarantee Letter undertaking personal liability to pay the amount or not requires consideration in the appeal.
11. The learned Counsel for the appellants-defendants next contends that even prior to the commencement of the proceedings in the O.A., proceedings against the appellant-1st defendant Company were pending before the BIFR. He points out a letter from the Rajasthan State Industrial Development and Investment Corporation, dated 3rd September, 1994, addressed to the Bench Officer of the BIFR wherein, it has been mentioned that in pursuance of the directions of the BIFR, the possession of the assets of the appellant-1st defendant Company were taken over by the RIICO on 31st August, 1994; that security staff has been posted at the site of the factory for the safety and security of the assets, costs of which shall be shared by the institutions namely, the respondent-Bank, IFCI, IDBI and ICICI. The learned Counsel for the appellants-defendants, therefore, contends that they could not file a proper written statement to the O. A. as the records could not be perused. He also refers to the order dated 16th December, 1996 passed by the DRT, whereby it was directed that the premises/godown which is in the occupation/possession of the respondent-Bank has to be inspected by the Counsel for the appellants-defendants, and the Counsel for the respondent-Bank on 20th December, 1996 in the presence of the Bank's Official. The learned Counsel for the appellants-defendants contends that this order was passed to enable the appellants-defendants to peruse the records and to take copies, so that the proper written statement could be filed. The learned Counsel for the appellants-defendants further contends that this order was not complied with by the respondent-Bank. In this connection, he points out the order dated 7th January, 1997 passed by the learned Presiding Officer of the DRT, wherein it has been indicated that the above said order has not been complied with. According to the learned Counsel for the appellants-defendants this order was not complied with even thereafter. He, therefore, contends that a proper written statement could not be filed, and the appellants-defendants had even mentioned in the written statement filed by them that they will file a detailed reply as and when the inspection is allowed. The learned Counsel for the appellants-defendants contends that the appellants-defendants did not have a reasonable and proper opportunity to file a proper and detailed written statement and, therefore, there has been a violation of the principles of natural justice.
12. A perusal of the written statement filed by the appellants-defendants also shows that the appellants-defendants have stated therein that the documents, records and account-books etc., of the appellant-1st defendant Company arc in the custody of the respondent-Bank, that the respondent-Bank was ordered by the DRT to allow inspection of the records, but as nobody had come from the Bank (as directed by the DRT) the inspection could not be taken, and, therefore, they were reserving the right to file a detailed reply after the inspection is allowed. The learned Counsel for the respondent-Bank, on the other hand, contends that though the factory premises were under the lock and key of the RIICO and the Bank, the respondent-Bank did not take possession of the assets, and that it was RIICO which was incharge. But, no material has been pointed out by the respondent-Bank to show that any opportunity was given to the appellant-1st defendant to inspect the records, accounts etc., which were in the factory premises of the appellant-1st defendant Company, which was itself under lock and key of RIICO and respondent-Bank. In the circumstances pointed out, I am of the view that the contention that there has been a violation of principles of natural justice requires consideration in appeal, in so far as the 1st appellant-defendant-Company is concerned, in that it was not allowed to file a proper written statement.
13. But, the learned Counsel for the appellants-defendants also points out that on 29th December, 1995 an inspection of the premises was made by the representative of the appellants-defendants. He points out that on that date, the said representative had requested the respondent-Bank to open the locks at the factory premises to facilitate inspection by the prospective buyers of the machinery, which request was accepted by the respondent-Bank. He also points out that a representative from the respondent-Bank was also deputed, who along with the officials of RIICO and the representative of the appellants-defendants went to the factory premises, but found the locks of the respondent-Bank broken, and lot of hypothecated goods/stocks missing. The learned Counsel for the appellants-defendants points out that the representative of the respondent-Bank had lodged a complaint with the Police on the day itself. He also points out that the respondent-Bank had also preferred a complaint before the National Consumer Disputes Redressal Commission, New Delhi against the Insurance Company claiming a sum of Rs. 35/- lacs and odd from the Insurance Company, in view of the theft. The learned Counsel for the appellants-defendants also refers to averments found in the said complaint in this behalf, specially to para 8 wherein, the above mentioned details have been mentioned. The learned Counsel for the appellants-defendants contends that this application was withdrawn without any reason and was dismissed.
14. Pointing out all these aspects, the learned Counsel for the appellants-defendants contends that it is evident that the appellant-1st defendant company has sustained loss due to the theft that had taken place, while the factory premises were under the lock and key of the respondent-Bank and the RIICO, and, therefore, the appellant-1st defendant company is entitled to recover the value of the goods etc. lost. He also refers to the pleading in this regard contained in the written statement. According to the appellants-defendants this is also one of the points, which has to be considered in the appeal.
15. The next contention of the learned Counsel for the appellants-defendants is that, as pointed out already, there was a reference to the BIFR with regard to the appellant-1st defendant company, and that the BIFR by order dated 20th July, 1994 had recommended the winding-up of the appellant-1st defendant company. He also points out that the appeal filed against the same was rejected. But, he further points out that there was a second reference regarding the appellant-1st defendant company to the BIFR, which was also rejected and an appeal was filed against the same, which was also held to be not maintainable. The learned Counsel for the appellants-defendants points out that Writ Petition 3336 of 1999 was filed challenging these orders, and the Hon'ble High Court of Delhi was pleased to remand the matter back to the BIFR for fresh consideration. In this connection, the learned Counsel for the appellants-defendants refers to the order, dated 3rd September, 2001 passed by the Hon'ble High Court of Delhi, which shows that the matter was sent back to the BIFR for consideration. The learned Counsel for the appellants-defendants contends that even after remand, the BIFR rejected the reference and the appeal filed against the same was also dismissed by the AAIFR. He contends that against these orders Civil Writ Petition has been filed before the Hon'ble High Court of Rajasthan, which is pending.
16. In these circumstances, the learned Counsel for the appellants-defendants contends that the assets of the appellant-1st defendant company are under the control of the respondent-Bank, value of which, according to the appellants-defendants, is more than Rs. 65.00 lacs. He also contends that the appellant-1st defendant company has been put to loss in view of the theft. The learned Counsel for the appellants-defendants also points out the plea in the written statement that RIICO is also a necessary party, whereas, RIICO has not been made a party to the proceedings before the O.A. He also points out the plea taken in the written statement that in view of the irresponsibility of the respondent-Bank as indicated above, the guarantors also stood discharged, and that the claim of set-off should also be allowed.
17. Pointing out all these aspects, the learned Counsel for the appellants-defendants also contends that the contentions put forward by the appellant-2nd defendant have not been properly considered by the DRT, and that no decision has been given by the DRT on the several points raised by the appellants-defendants.
18. Without meaning to express any opinion on the merits of the case in appeal, I am also of the view, taking into consideration all these aspects, that the case of the appellants-defendants deserves to be considered in the appeal.
19. So far as the financial hardship is concerned, the learned Counsel for the appellants-defendants contends that all the assets of the appellant-1st defendant company are tied-up with the creditors, and that the appellant-1st defendant company is also a sick company. So far as, the 3rd appellant-defendant is concerned, the learned Counsel for the appellants-defendants contends that though, it is a running company, it has run into losses, which is evident from the Annual Report for the year 2000-2001. He also points out this fact from the copy of the Annual Report. He refers to the Schedule-3 (at page 15 of the Report) to this Report and points out that all the assets of the 3rd appellant-defendant are under pari-passu charge for secured loans. He contends that the 3rd appellant-defendant is not a profit making company. But, the learned Counsel for the respondent-Bank on the other contends that the 3rd appellant-defendant has filed only the Annual Report and Balance Sheet regarding the year 2000-2001, and has not filed the Annual Report for the subsequent years. She contends that the status has to be seen as on dale. She points out from the Annual Report (Financial Results at page 7 of this Report) that there has been a profit. But the learned Counsel for the appellants-defendants points out that it has been clearly mentioned at the same page of this report that in view of the losses, the Board has not recommended any dividend. Of course, the learned Counsel for the respondent-Bank contends that the stocks/sales, income and fixed assets have increased, and that the 3rd appellant-defendant is a profit making company.
20. But, the learned Counsel for the appellants-defendants contends that while the appellant-1st defendant is closed, the 3rd appellant-defendant is a share-holder in the same, that the 3rd appellant-defendant, as is seen from the Annual Report, has sustained a loss, and that it is also clear that all its assets are tied-up due to the secured loans. He also points out from the report that the turnover has decreased.
21. But, as rightly pointed out by the learned Counsel for the respondent-Bank, the 3rd appellant-defendant has not produced the Annual Report and Balance Sheet regarding years after 2000-01. Therefore, by relying upon the only Report and the Balance Sheet regarding year 2000-01 it cannot be stated that the 3rd appellant-defendant has run into losses or that it cannot make any deposit.
22. I am also of the view that though, the 3rd appellant-defendant has taken the plea of discharge, it has still to be considered as to what extent the 3rd appellant-defendant is entitled to discharge.
23. Taking into consideration all these aspects, and the fact that the final order has been passed in the year 2001 for Rs. 76 lacs and odd, I am of the view that the 3rd appellant-defendant should be directed to deposit at least Rs. 10 lacs to entertain the appeal on its behalf. So far as the other appellants-defendants I and 2 are concerned, I hold that they are entitled to the waiver as prayed for.
24. Accordingly, this application is allowed in part. The appellants-defendants 1 and 2 are granted waiver from making pre-deposit. But, the 3rd appellant-defendant is directed to deposit a sum of Rs. 10 lacs with the respondent-Bank to entertain the appeal on or before 14th April, 2004.
25. This amount shall be kept by the respondent-Bank separately in an interest-bearing account, subject to the orders of this Tribunal.
List this application for further proceedings on 21st April, 2004.