Debt Recovery Appellate Tribunal - Delhi
Almania Foods And Ors. vs Catholic Syrian Bank on 26 June, 2002
ORDER
A.K. Srivastava, J. (Chairman) M.A. No. 292/2002 in Misc. Appeal No. 256/2001
1. This application has been moved by the appellant under Section 21 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter called 'the Act') for waiver of required deposit under that section. Reply to this application has been filed by the respondent Bank whereby the prayer has been vehemently opposed.
2. Heard learned Counsels for the parties.
3. The Misc. Appeal in which this application for waiver has been moved, has been filed by the appellants against order dated 3.12.2001 passed by DRT-II, Delhi in O.A. No. 1221/ 95, Catholic Syrian Bank v. Almania Foods and Ors., whereby the appellants' application for setting aside ex-pane final order dated 16.6.97 in the said O.A. has been rejected.
4. Learned Counsel for the appellants submitted that due to some misconception of the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, this application was moved but on in depth scrutiny of the provisions of the said Act, it was felt that the provisions of Section 21 of the Act do not have application on an appeal filed against the impugned order by which an application analogous to Order IX Rule 13, CPC for setting aside ex-parte decree, on grounds, has been rejected. On the other hand, the contention of the learned Counsel for the respondent Bank is that the provisions of Section 21 are very clear and there could be no doubt that if the amount of debt so due from the appellant has been determined by the Tribunal, the appeal shall not be entertained by the Appellate Tribunal unless such appellant has deposited with the Appellate Tribunal 759% of the amount of debt so determined.
5. Therefore, the sole question for determination in this application is whether in an appeal filed against an order whereby the application of the appellant for setting aside the ex-pane decree under Order IX Rule 13 of CPC has been dismissed, the provisions of Section 21 of the said Act would be applicable or not.
6.1 have heard learned Counsels for the parties.
7. Section 21 of Recovery of Debts Due to Banks and Financial Institutions Act, 1993 is extracted 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 financial 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."
8. Learned Counsel for the applicants/appellants contended that though on bare reading of the aforesaid provisions, in the first impression, it may be said that where the debt due against the appellant has been determined by the Tribunal, any appeal filed by the appellant shall not be entertained by the Appellate Tribunal unless such appellant has deposited with the Appellate Tribunal 75% of the amount of debt so due from him as determined by the Tribunal, but that may not be an absolute rule and according to him in certain situations, interpretation of the provisions of Section 21 may be different.
9. I now proceed to consider the issue in question.
10. Sub-section (1) of Section 20 of the Act which relates to appeal to the Appellate Tribunal is extracted as follows :
"20(1). Save as provided in Sub-section (2), any person aggrieved by an order made, or deemed to have been made, by a Tribunal under this Act, may prefer an appeal to an Appellate Tribunal having jurisdiction in the matter."
11. The above provision says that any person aggrieved by an order made or deemed to have been made by a Tribunal under the Act may prefer an appeal to an Appellate Tribunal having jurisdiction in the matter.
12. What are the orders made or deemed to be made under the Act? I may illustrate some of the orders. If the provisions of the whole Act are scanned, the following are some of the provisions of the Act in which orders may be made by the Tribunal :
1. Under Sub-section (11) of Section 19 where the Tribunal may exclude the counter-claim set up by the defendant upon an application made by the applicant Bank.
2. Under Sub-section (12) of Section 19 where the Tribunal may pass an order by injunction or stay or attachment against the defendant to debar him from transferring, alienanns or otherwise dealing with, or disposing of any property and assets belonging to him without the prior permission of the Tribunal.
3. Under Sub-section (13) of Section 19 where the Tribunal may by order 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 as to why he should not furnish security, and where the defendant fails to show cause, the Tribunal may order the attachment of whole or such portions of the property claimed by the applicant Bank as the property secured in its favour.
4. In the case of disobedience of an order made by the Tribunal under Sub-section (12), (13) or (18) of Section 19 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. The Tribunal may also by order appoint a Receiver of any property, remove any person from the possession or custody of the property, commit the same to the possession, custody or management of the Receiver, confer upon the Receiver certain powers. The Tribunal may also by order appoint a Commissioner for preparation of an inventory of the properties of the defendant or for the sale thereof.
5. Under Sub-section (19) of Section 19 where a certificate of recovery has been issued against the company, the Tribunal may order the sale proceeds of such company to be distributed amongst its secured creditors in accordance with the provisions of Section 529-A of the Companies Act, 1956 and to pay the surplus, if any, to the company.
6. Under Sub-section (20) of Section 19 the Tribunal may pass such interim or final order including the order for payment of pendents lite and future interest on the application of the lender Bank.
7. Under Sub-section (25) of Section 19 where the Tribunal makes such orders and gives such directions as may be necessary and expedient to give effects to its order or to prevent abuse of its process or to secure the ends of justice.
8. Under Rule 12(5) of the Rules made under the Act, directing the defendant to pay the amount as has been admitted by the defendant to be due.
9. Under Sub-section (2) of Section 22 :
(i) the Tribunal may make order requiring the discovery and production of documents or may reject an application of the defendant for discovery and production of documents.
(ii) the Tribunal may make order dismissing an application for default or deciding it ex-parte.
(iii) the Tribunal may make order setting aside any order of dismissal of any application in default or any order passed by it ex-parte.
(iv) the Tribunal may reject an application of the Bank for restoration of the recovery application and likewise reject an application of the defendant for setting aside ex-parte decree.
10. Under Sub-section (1) of Section 22, the Tribunal has been mandated to be guided by the principles of natural justice. Therefore, if any party is aggrieved by an order of the Tribunal being allegedly violative of the principles of natural justice, appeal may be preferred against that order.
11. Tribunal may make an order to proceed ex-parte against defendant and if an application analogous to an application under Order IX Rule 7 of the Code of Civil Procedure is made for setting aside that order, the Tribunal may by order reject that application or allow the same. In either case, the aggrieved party whether it be Bank or defendant may file an appeal against that order before the Appellate Tribunal.
12. Under Rule 5-A of the Rules made under the Act, the Tribunal may make an order reviewing its decision or may make an order rejecting the application for review.
13. The above are illustrations of some of the orders made or deemed to be made under the Act against which appeal may be preferred. The moot question is whether the provisions of Section 21 of Recovery of Debts Due to Banks and Financial Institutions Act, 1993 would be attracted in appeals against all the aforesaid kinds of orders. If a scrutiny is made of the aforesaid illustrated orders, they may be grouped in three categories. Category-I would cover those orders made by the Tribunal while the recovery application is still pending before the Tribunal. Category-II would be of those orders by which the Tribunal determines the debt so due from the defendant [under Sub-section (20) of Section 19 or under Rule 12(5) of the Rules made under the Act]. Category-Ill would be of those orders which are made by the Tribunal after the final orders under Sub-section (20) of Section 19 are made by the Tribunal. 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.
14. The rest of the orders which have been illustrated above would go in Category-I or Category-II.
15. 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-Ill, a question can be raised whether the provisions of Section 21 of the Act are attracted or not. But there 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.
2. Rejecting the application of the defendants for setting aside the ex-pane decree."
16. The controversy relating to item 1 is also restricted to appeal against order rejecting the review application of the defendants where the orders sought to be reviewed have determined the debts due against the appellants.
17. Now I proceed to give my view about the issue in question.
18. From the scheme of the 'Act', it is very clear that when a final order passed by the Tribunal, in which debts have been determined against the defendants, is sought to be reviewed by the defendants or any one of them, there is no provision in the 'Act' requiring such defendants/defendant to deposit 75% of the debts determined by the Tribunal. Similarly, there is no provision in the 'Act' requiring defendants or any one 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, as they are not appeals. 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-pane final order, as the case may be, is rejected and if against that order of rejection the defendants/defendant file appeal before the Appellate Tribunal, contention is made by the Banks and Financial Institutions that the Appellate Tribunal shall require the appellant to deposit 75% of the debt so determined before the appeal is entertained. 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 or Financial Institutions.
19. The provisions of Section 21 appear to have been enacted with the purpose that no frivolous appeals are filed and while admitting the appeal, interest of the Banks/Financial Institutions is taken care of in view of the prime objective of the 'Act' for expeditious recovery of the dues of the Banks and Financial Institutions. In my view, Section 21 of the 'Act' applies only in those appeals by the judgment-debtors where the order by which debt has been determined by the Tribunal against the appellant is under challenge. That means that where the appeal does not challenge the determination of debts against the appellant and the impugned order is other than the one by which debts have been determined, the provisions of Section 21 of the 'Act' shall not come into operation.
20. If the Legislature intended to provide for deposit of 75% of the debt determined by the Tribunal in every kind of appeal, whether the appeal is challenging the determination of debt or not, it would definitely have provided that the review application moved by the defendant seeking for review of the final order under which debt has been determined would be entertained only after 75% of the debt determined by the Tribunal has been deposited. Similarly, the Legislature would also have provided in the 'Act' that any application for setting aside the ex-parte final order moved by a defendant shall also require deposit of 75% of debts so determined. But that is not so.
21. In the kinds of appeals, which are being considered for determination of the issue in question, the question involved for determination is not the debt determined but it is entirely different from that. Review of an order made by the Tribunal is permissible where there is some mistake or error apparent on the fact of the record. Review does not mean re-hearing of the matter on merits. Likewise, application seeking setting aside of an ex-parte decree does not challenge the merits of the final order and while considering such application, the Tribunal does not go into the merits of the application for recovery. It only considers whether the ex-parte decree was made without service on the defendants/defendant or whether on the date when ex-parte decree was passed, the defendants/defendant were absent with justified reasons. If the Tribunal finds that the grounds taken by the defendants/defendant for setting aside the ex-parte decree are not sufficient or justified, it may reject the application for setting aside ex-parte decree. Feeling aggrieved with that order, the defendants/defendant may file appeal before the Appellate Tribunal and in appeal also the only question to be considered would be whether the ex-parte decree had been passed without service on the appellants/ appellant or whether the absence of the appellants/appellant before the Tribunal resulting in ex-parte decree was for some justified reasons. Therefore, in appeal, as well, the merits of the application for recovery or the merits of the determination of debt by the Tribunal is not in consideration.
22. When that is the situation, I do not see that while admitting such appeal, the Appellate Tribunal should show the provisions of Section 21 of the 'Act' to the appellants. In my considered view, Section 21 applies only in those appeals where orders determining the debt either under Section 19(2) of the 'Act' or by an interim order under Rule 12(5) of Rules made under the 'Act' directing the defendant to pay the amount as has been admitted by him to be due have been challenged.
23. In view of the above discussion, I am of the view that the appeal in hand does not attract the provisions of Section 21 of the 'Act'. The application is accordingly disposed off. List the appeal for hearing on 11.9.2002.
Copy of this order be sent to the parties and may be given Dasti if so requested.