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Kotak Mahindra Bank Pvt Ltd Vs Ambuj A Kasliwal And Ors: Total Waiver Of Pre Deposit Rule In Filing Appeals Before The Debt Recovery Appellate Tribunal Is Not Permissible

R.S.Agrawal ,
  13 April 2021       Share Bookmark

Court :
Supreme Court of India
Brief :
Through the judgment of the case – Kotak Mahindra Bank Pvt. Ltd. v. Ambuj A. Kasliwal and Others , delivered on February 16, 2021, a 3 -judge bench of the Supreme Court consisting of the Chief Justice Sharad A. Bobde, Justice A.S.Bopanna and Justice V. Ramasubramanian, has made it clear that total waiver of pre-deposit rule in filing appeals before the Debt Recovery Appellate Tribunal (DRAT) is not permissible.
Citation :
Kotak Mahindra Bank Pvt. Ltd. v. Ambuj A. Kasliwal and Others , delivered on February 16, 2021

Through the judgment of the case – Kotak Mahindra Bank Pvt. Ltd. v. Ambuj A. Kasliwal and Others , delivered on February 16, 2021, a 3 -judge bench of the Supreme Court consisting of the Chief Justice Sharad A. Bobde, Justice A.S.Bopanna and Justice V. Ramasubramanian, has made it clear that total waiver of pre-deposit rule in filing appeals before the Debt Recovery Appellate Tribunal (DRAT) is not permissible.

The short issue before the Supreme Court for consideration was with regard to the correctness or otherwise of the order passed by the DRAT and the Delhi HC, in the matter relating to pre-deposit before the DRAT.

The pre-deposit rule injuncts the Appellate Tribunal from entertaining an appeal by a person from whom the amount of debt is due to the Bank, unless such person has deposited with the DRAT fifty pc of the amount of debt so due from him as determined by the Tribunal under section 19 of the Act. The proviso to said section, however, grants discretion to the DRAT to reduce the amount to be deposited, for reasons to be recorded in writing, but such reduction shall not be less than 25 pc of the amount of such debt which is due.

Hence, the pendulum of discretion to waive pre-deposit is allowed to swing between 50 pc and 25 pc of the debt due and not below 25 pc, much less not towards total waiver. It is in that background, keeping in perspective the said proviso, the DRAT had in this case ordered deposit of 50 pc of the amount. The respondents 1 and 2 see while seeking waiver of pre-deposit, have essentially projected the case to indicate that the recovery certificate ordered by the DRT is for the sum of Rs 145 crores with interest at 9 pc per annum and the amount realized by the Bank from the compensation amount payable to respondent No. 3 is itself a sum of Rs 152, 81, 07,159 and as such there is no debt due.

According to the SC, the HC had proceeded at a tangent while adverting to the aspect of recovery made towards the loan amount from the land acquisition compensation payable to respondent- 3..The conclusion appears to be that the receipt of the compensation amount even though was before passing of the decree, would wipe out the amount decree of Rs 145 crores with interest at 9 pc per annum Though it was not expressly stated so.

Per contra, the DRAT by its order of February27, 2019 while directing the pre-deposit of 50 pc of the amount had taken note of the fact that if the decretal amount as ordered by the DRT is taken into consideration and the amount received by the Bank towards the compensation amount is credited, the balance of the decretal amount payable by the respondents 1 to 3 would work out to Rs 68, 18, 92,841/-.It is in that view , the DRAT has ordered pre-deposit of the 50 pc of the said amount which still remains to be a debt due.

On that aspect, though the ultimate correctness of the actual amount due is a matter for calculation to be made in the execution proceedings, for the present, for the purpose of pre-deposit if the decree/ recovery certificate issued by the DRT is taken into consideration, the position is clear that even if the amount of compensation is appropriated, either before or after the decree, there would still be outstanding amount payable, which would be the subject matter of the appeal in DRAT, apart from the fact that the appellant-Bank in their appeal is claiming the entire amount which has fallen due since the terms of settlement were not adhered to.

The Supreme Court is of the view that a total waiver would be against the statutory provisions. However, in this case taking note that though the issue relating to the actual amount due is to be considered by the DRAT, keeping in view the fact the DRT has taken into consideration the earlier settlement and has accordingly decreed the claim to that extent and towards such decree since payment of a major portion is made, though by appropriation of the compensation amount and admittedly since the remaining properties belonging to the respondent -3 are available by way of mortgage and the respondents 1 and 2 are personal guarantors , the Court deemed it appropriate that in the peculiar facts and circumstances of this case to permit the pre-deposit of 25 pc of the amount taken note by the DRAT, that is, 25 pc of Rs 68.18, 92, 841/- . To that extent, the order passed by the DRAT is liable to be modified.

Therespondent-3, the Hindon River Mills Ltd. had availed financial assistance from the respondent-IFCI Ltd. The respondents 1 and 2 had offered their personal guarantee in respect of the said financial assistance. The respondents 1 to 3 had defaulted in re-payment of the dues and the account having been classified as non-performing asset was thereafter auctioned by the respondent- IFCI Ltd wherein the appellant herein was the successful bidder and accordingly, the unpaid debt-non-performing asset was assigned in their favour.

This assignment as made was challenged by the Respondents 1 to 3 before the HC in a writ petition which was dismissed and as a result a SLP was filed and in the said proceedings the settlement, which was entered into between the parties was recorded and disposed of. The respondents 1 to 3 are stated to have not adhered to the terms of the settlement and there-payment was not made.

The appellant-Bank, therefore, instituted recovery proceedings by filing an application before the DRT, New Delhi. Therein, the Bank had claimed Rs 572,18,77,112, which was due to it, as on December 31, 2014 along with interest and other charges. In the meanwhile a portion of the mortgaged property was acquired from the respondent- Hindon River Mills by the National Highway Authority and its compensation amounting to Rs 152, 81, 07,159/- was deposited on behalf of the Mill and that was credited to the account of the Mill. In this background, the DRT considered the claim application and ordered issue of recovery certificate.

Through its order, the DRT limited the decretal amount to Rs 145 crores with future interest. At 9 pc per annum till realization.

In the result, the Supreme Court partly allowed the Bank’s appeal setting aside the impugned order passed by the Delhi High Court on July 16, 2019. Further, the SC modified the order passed by the DRAT, Delhi, on February 27, 2019 and permitted the respondents 1 and 2 to deposit 25 pc of Rs 68,18,92,841/- by way of pre-deposit and prosecute its appeal , subject to such deposit being made within 8 weeks , failing which the appeal shall not subsist in the eye of law.

 
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