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IN THE HIGH COURT OF BOMBAY
Shah A.P. Kamdar S.U., JJ.
Kidland others .... Petitioners.
Versus
Indusland Bank Limited.... Respondent.
Writ Petition Nos. 3766 3767 of 2004, decided on 29-9-2004.
Advocates appeared :
K.R. Dhanuka i/b. V.M. Talreja, for petitioners.
Prakash Shinde i/b. Dhruv Asso., for respondent.
Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - Section 21 - Order of pre-deposit. - Order of DRA Tribunal to deposit 40% of decretal amount as pre-deposit under Section 21 of RDB Act, 1993 not illegal. - Apart from the aforesaid contention pertaining to the provision of Section 21, the counsel for the petitioner contended that even on merits, the petitioner should be given a chance to defend the appeal without pre-deposit. It is the case of the petitioner that negotiations between the parties are in progress and a proposal for settlement is for lesser amount than what is directed by the D.R.A.T. to deposit and therefore this Court should entertain the writ petitions and set aside the order passed by the D.R.A.T. It has been also contended that the petitioner has a good case on merits and therefore also there should be no deposit order for prosecuting the appeal before the Tribunal. Court has perused the order passed by the Chairperson of the Appellate Tribunal. Court has also perused the record of the case and Court found that the finding given by the Tribunal on merits that no case whatsoever is made out is justified and even in support of contention of financial hardships there is no averment in the application giving details thereof. The Tribunal has given the findings as under :
"However, even a cursory glance through the impugned judgment and order would reveal that the appellants do not appear to have prima facie case in their favour. As far as financial constraints of the appellant’s are concerned, there is not a single convincing averment to support their plea. No supporting documents are annexed to substantiate what they have stated in their application for waiver of deposit. It is simpliciter stated that the appellants have a good case on merits and in the interest of justice, waiver of pre-deposit amount be kindly granted."
In the aforesaid circumstances, Court found no merit in the present writ petitions. Court however extend the time to deposit the said amount of 40% by further period of two months and if such amount as directed by the Tribunal under the impugned order is so deposited then the petitioner will be entitled to prosecute both said appeals on merits. Court also make it clear that Court has not gone into the merits of the case and the same is left to the Tribunal to decide as and when occasion arises. In the meantime, in view of the fact that Court has extended the time for a period of eight weeks, the respondent-Bank shall not execute the decree till expiry of the said period. Court dispose of the present writ petitions with the aforesaid directions with no order as to costs.
Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - Section 21 - Appeal against order of DRAT. - Appeal against order of DRAT without pre-deposit of decretal amount under Section 21 of Act, not maintainable.
2. A short point of law which has been raised by the learned Counsel appearing for the petitioners is that the provisions of section 21 of the Act in so far as it provides for pre-deposit is ultra vires, arbitrary and the same is liable to be struck down. In support of the aforesaid contention, learned Counsel for the petitioners has relied upon the judgment of the Hon'ble Supreme Court of India in the case of (Mardia Chemicals Ltd. and others v. Union of India)1, reported in 2004(4) Bom.C.R. (S.C.)530. It has been contended by relying on the aforesaid judgment that the Hon'ble Supreme Court has struck down similar provisions under section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. It is therefore contended that having regard to the aforesaid judgment of the Supreme Court of India in Mardia Chemicals Ltd. (supra) 2004(4) Bom.C.R. (S.C.)530 provisions of section 21 of the Act which also provides for pre-deposit should be struck down.
3. Similar arguments were advanced before us by the petitioner in W.P. No. 5065 of 2004 by contending that the pre-deposit provided under section 154(2-A) of the Maharashtra Co-operative Societies Act, 1960 is ultra vires and arbitrary. The petitioner in that case also placed reliance on the aforesaid judgment of Mardia Chemicals Ltd. (supra) 2004(4) Bom.C.R. (S.C.)530. We have by our judgment in Writ Petition No. 5065 of 2004 in the case of (Smt. Kaushalya Sampat v. The Vasant Sahakari Bank Ltd.)2, reported in 2004(6) Bom.C.R. 651, decided on 22nd July, 2004 upheld the constitutional validity of the said sub-section (2-A) of section 154 of the Maharashtra Co-operative Societies Act, 1960 which also provides for pre-deposit of 50% amount of the recovery certificate issued under section 101 of the Maharashtra Co-operative Societies Act, 1960. While considering the validity of the aforesaid provision, we have held that the judgment of the Supreme Court of India in the case of Mardia Chemicals Ltd. does not apply in cases where the pre-deposit is prescribed at the appellate stage of the proceedings. In para 8 of the aforesaid judgment, we have held as under :
"8. The reliance placed by the learned Counsel in the case of Mardia Chemicals Ltd. others v. Union of India others (supra) is in our view, misconceived for the simple reason that the proceedings under section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 are not proceedings in the nature of appeal and/or revision but are original initiation of the proceedings. The Supreme Court while considering the said section 17 of the said Act has itself in paragraph 60 of the judgment held as under :
"60. The requirement of pre-deposit of any amount at the first instance of proceedings is not to be found in any of the decisions cited on behalf of the respondent. All these cases relate to appeals. The amount of deposit of 75% of the demand at the initial proceeding itself sounds unreasonable and oppressive more particularly when the secured assets/the management thereof along with the right to transfer such interest has been taken over by the secured creditor or in some cases property is also sold. Requirement of deposit of such a heavy amount on the basis of a one-sided claim alone, cannot be said to be a reaso
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