Allahabad High Court
Sunil Poddar And Ors. vs Chairperson, Debt Recovery Appellate ... on 13 May, 2002
Equivalent citations: [2005]123COMPCAS517(ALL), (2005)3COMPLJ337(ALL)
Author: S. Harkauli
Bench: S. Harkauli
JUDGMENT S. Harkauli, J.
1. I have heard learned counsel for the petitioners as well as Sri Kushal Kant, learned counsel representing the respondent-bank.
2. The brief relevant facts are that the respondent-bank, i.e., Union Bank of India, advanced a loan to a company known as M/s. Adhunik Detergent Ltd. For that loan, the petitioners who were then directors of that company stood guarantors. In view of the guarantee, the petitioners were also made defendants in the claim by the bank before the Debt Recovery Tribunal. The claim is alleged to have been decreed ex parte by the DRT on December 15, 2000. The petitioners moved an application for setting aside that ex parte order. The application was rejected by the DRT by order dated December 20, 2001.
3. The above order dated December 20, 2001, was challenged by the petitioners in an appeal before the DRAT.
4. By the impugned order dated April 4, 2002, the DRAT has rejected the contention of the petitioners that the appeal was not under Section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, but was under Section 17A of the said Act.
Point No. 1 :
5. Section 17A of the Act gives to the DRAT a general power of superintendence and control over the DRTs which are under the jurisdiction of that DRAT. In my opinion, this power of superintendence even if it is assumed to include the power to judicially correct the errors of DRT by the DRAT is not to be allowed to be invoked where a specific statutory remedy of appeal has been provided to the litigant. The reason is that the provision of appeal contained under Sections 20 and 21 of the Act read with the Rules relating to the procedure of DRAT known as the Debt Recovery Appellate Tribunal (Procedure) Rules, 1994, attach some obligations to the right of appeal, namely payment of court fees and making of pre-deposit of debt due, unless waived by the DRAT. No litigant should be permitted to defeat this mandate of the Legislature by circumventing the statutory provision of appeal and invoking the general power of superintendence of DRAT. The obligations have been imposed by the Legislature with a definite object in mind and any interpretation, which detracts from that object, should be avoided.
6. In these circumstances, this was not a case where the general power of superintendence could be invoked.
Point No. 2 :
7. There was a decision by a learned single judge of this court that an appeal under Section 20 lies from every order passed by the DRT. In view of a Supreme Court decision, which had not been noticed by the learned single judge, the matter has been referred to the larger Bench. However, even that decision of the Supreme Court while interpreting similar provision in another statute had held that an appeal would not lie against every order but would lie against orders, which determine important rights of the parties. The order refusing to set aside an ex parte decree or order definitely determines important rights of the parties and therefore even in the light of that Supreme Court decision, such an order would fall within the purview of Section 20 and an appeal would be maintainable.
Point No. 3 :
8. If the appeal is maintainable, two further questions arise. First, whether in such an appeal against refusal of setting aside the ex parte decree, the provision of Section 21 apply which requires pre-deposits and the second whether court fee as given in Rule 8(2) of the Debt Recovery Appellate Tribunal (Procedure) Rules would be payable on such appeals.
Point No. 3(a) :
9. Section 21 does not talk of appeal against decrees or final judgments of the Tribunal only and therefore prima facie it includes within its ambit appeals from orders which are passed by the DRT subsequent to adjudication of dues. That Section 21 lays down that when an appeal is filed, the amount of debt due (meaning adjudicated to be due) will have to be deposited as a pre-condition for entertainment of that appeal by the DRAT. However, the proviso to that section gives power to the DRAT to waive this condition of pre-deposit for reasons to be recorded in writing or even to reduce the amount that requires to be deposited. Therefore, I am of the opinion that Section 21 will apply to appeals not only against the orders adjudicating the amount due but also against subsequent orders.
Point No. 3(b) :
10. Similarly, Rule 8 also does not talk of appeals only against orders by which the claim is adjudicated and the amount due is determined, therefore, there appears no reason to confine Rule 8 only to such appeals and not to appeals against subsequent orders. However, prima fade this Rule 8 will not apply where the amount due has yet to be adjudicated as the words "debt due" cannot be held to include the "debt claimed by the plaintiff". Debt due must be "found to be due" or "admitted to be due". Therefore in the present case the court fee will have to be paid in accordance with Rule 8(2).
Point No. 4 :
11. The petitioners' claim that they had withdrawn the guarantee given by them. A guarantee which has been acted upon by advancement of the loan cannot be withdrawn unilaterally as a view to the contrary would have disastrous results. Any person will give a guarantee to obtain loan and as soon as loan money is received the guarantor will withdraw guarantee immediately and run away. Therefore this kind of contention cannot be accepted.
Point No. 5 :
12. Learned counsel for the petitioners has argued that where a guarantor withdraws his guarantee, even unilaterally, he cannot be held to be liable for any loan advanced subsequent to the knowledge of withdrawal on the part of the bank. This proposition appears to be correct. However, it will have to be established on the facts and circumstances before the DRAT whether the whole or any part of the claim of the bank is in respect of any amount advanced by the bank subsequent to the date when the bank obtained knowledge of withdrawal of the guarantee. These questions of fact cannot appropriately be examined in this writ petition therefore the petitioners may approach the DRAT by paying court fee and making an application for waiver and in such an event the DRAT will pass appropriate orders after recording reasons as required under Section 21.
13. The writ petition is disposed of as above.