ORDER :

The learned counsel for the petitioner seeks to dispense with service of notice on respondent No.2.

2. Notice on respondent No.2 is dispensed with.

3. The Karnataka Industrial Areas Development Board, the petitioner, has challenged the legality of the order dated 03.10.2018, passed by the Debt Recovery Appellate Tribunal (‘DRAT’ for short), whereby the Learned Tribunal has directed the petitioner to deposit 50% of the debt amount, i.e., Rs.1.60 crores with the Registrar of the Tribunal as pre-deposit for hearing the appeal filed by the petitioner.

4. The learned counsel for the petitioner submits that the learned Tribunal has directed the petitioner to make a pre-deposit of Rs.1.60 crores with the Registrar of the Tribunal within a period of four weeks, in accordance with Section 21 of the Recovery of Debts and Bankruptcy Act,1993 (‘The Act’ for short). However, under the said provision, the said liability is imposed only upon the person from whom the amount is due to the bank and financial institution. Since the petitioner is not a person from whom any amount is owed to the bank, the said liability cannot be imposed upon the petitioner. Therefore, the impugned order is legally unsustainable. In order to buttress this plea, the learned counsel has relied upon the judgment of this Court in (W.P.No.19445/2018 decided on 26.10.2018). The learned counsel for the petitioner submits that the time granted to the petitioner for making pre-deposit, is already over.

5. On the other hand, the learned counsel for the Bank, submits that the relief claimed by the petitioner before the learned Tribunal has already been granted by the Recovery Officer. Therefore, there is no need to go into the legal issue, ‘Whether the liability of pre-deposit could be imposed upon the petitioner, or not?’

6. Heard the learned counsel for the parties.

7. The position being taken by the learned counsel for the Bank, is unsustainable. For, the legal issue ‘Whether the learned Tribunal is justified in imposing the liability of pre-deposit upon the petitioner, or not, by its impugned order?’ needs to be settled.

8. Section 21 of the Act reads as under:

‘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 (fifty-percent) 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, (reduce the amount to be deposited by such amount which shall not be less than twenty-five percent, of the amount of such debt so due) to be deposited under this section.’ (Emphasis added)

9. A bare perusal of the said Provision clearly reveals that the liability to make a pre-deposit is limited to “any person from whom the amount of debt is due to a bank or a financial institution”. Therefore, the said liability cannot be imposed upon those who do not owe any amount to be paid to a bank. Since, the petitioner, in the present case, does not owe any debt to be paid to the bank, the learned Tribunal is unjustified in imposing the liability of pre-deposit upon the petitioner.

10. Since Section 21 of the Act is limited to a particular class of persons, the learned Tribunal is unjustified in interpreting and implementing Section 21 of the Act as though the liability to pay the pre-deposit is imposed upon person approaching the Appellate Tribunal for filing an appeal.

11. Further, Section 20 of the Act bestows the right to file an appeal any order made, or deemed to have been made by the learned Debt Recovery Tribunal. However, under Section 21 of the Act, the liability to submit a pre-deposit is not imposed upon every person filing an appeal before the learned Tribunal.

12. For the reasons stated above, th