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2007(1) Bankmann 491
DEBTS RECOVERY APPELLATE TRIBUNAL, MUMBAI
S.S. Parkar, Chairperson
Vision Organics Ltd. & Ors. — Appellants
versus
Bank of Baroda — Respondent
Misc. Appeal No. 107 of 2005
Decided on 27-9-2006
Counsel for the Parties:
For the Appellant Nos. 1 to 3 :Mr. R. K. Golani, Advocate.
For the Appellant No. 2 in person:Mr. J.H. Shah, Advocate.
For the Respondent Bank:Mr. Mihir Mody, Advocate.
Headnote:(i) Recovery of Debts Due to Banks and Financial Institutions Act, 1993—Section 20—Appeal—Disposal of three interim applications by DRT by common order—Appeal against—Appellants ought to have filed three separate appeals against the common order—Another anomaly—Appeal is filed by 3 appellants i.e. the company and two directors who are also guarantors, through a common Advocate—Yet the appellant No. 2 argued the appeal in person—Advocate argued the matter on behalf of Appellant No.s 1 and 3 who are none other than the borrower company of which Appellant No. 2 was a director and guarantor and wife of appellant No. 2—This seems to have been done probably with a view to fill up lacunas left by one another—However, still appeal allowed by DRAT and appellant No. 2 heard in person. (Para 1)
(ii) Recovery of Debts Due to Banks and Financial Institutions Act, 1993—Section 20—Appeal—Disposal of interim applications—DRT allowed respondent Bank’s application seeking inspection of secured properties—Challenged—Bank had been granted inspection in the year 2001 also—There was no necessity of granting second application—Held, bank entitled for inspection as provided in Hypothecation deed as well as undertaking given by appellants—There is a gap of 5 years since the time last inspection was made by Bank in the year 2001—It was not unreasonable for Bank to demand of inspection again and for DRT to grant the same. (Para 4)
(iii) Recovery of Debts Due to Banks and Financial Institutions Act, 1993—Section 20—Banking Regulation Act, 1949—Section 35—DRT rejected appellants’ application for verification of the N.P.A. accounts maintained by respondent bank for five years preceding 27-11-2003—Challenged—Held, appellants cannot be given inspection of all the N.P.A. accounts maintained by respondent Bank of different borrowers—They will be entitled to have an inspection of their own account maintained by respondent Bank—Directions issued to DRT to permit restricted inspection to appellants by putting time limit. (Para 5)
(iv) Recovery of Debts Due to Banks and Financial Institutions Act, 1993—Section 20—Appellant No. 2 argued repeatedly that respondent Bank committed fraud by converting their N.P.A. account into performing account in violation of RBI guidelines—Held, it is too early to say that fraud has been committed by respondent Bank—If there were false and bogus entries in the accounts, the same would be dealt with by Presiding Officer of DRT at the time of final hearing—Application rightly rejected by DRT. (Paras 7 & 8)
Brief Facts of the Case:
A)Respondent Bank filed O.A. before DRT, Ahmedabad for recovery of debts due to appellants . During the course of hearing DRT disposed off three interim applications. One by respondent Bank which was allowed and two of appellants which came to be rejected.
B)Aggrieved by this, appellants have come up in appeal before Debt Recovery Appellate Tribunal.
C)Appeal disposed off.
Result: Appeal disposed off.
S.S. Parkar, Chairperson—This combined appeal has been filed in respect of the common Order dated 1st March, 2005 passed by the Presiding Officer, D.R.T., Ahmedabad disposing of three applications, one filed by the respondent Bank and two applications filed by the appellants. Normally the appellants ought to have filed three separate appeals against the common Order which has disposed of three separate applications. Another anomaly in this appeal is that this appeal is filed by the three appellants i.e. the company and two directors who are also the guarantors through a common Advocate. Yet the appellant No. 2 argued the appeal in person and the Advocate for the appellants argued the matter on behalf of the appellant Nos. 1 and 3 stating that the appellant No. 2 had separated from the other two appellants who are none other than the borrower company of which he was a director and also the guarantor and the appellant No. 3 who is the wife of appellant No. 2. This seems to have been done probably with a view to fill up the lacunas left by one or another. Still this was allowed by me and I heard the appellant No. 2 in person also.
2. The applications which were disposed of by the impugned Order are as follows:
The first application is the re-application at Exhibit A-20 filed by the respondent Bank seeking inspection of the secured properties i.e. machinery, charged to the Bank, which was granted by the impugned Order. The second application is Exhibit R-17 filed by the appellants/original defendants for releasing the defendant’s property from the charge which was created on it and for the return of all the documents in respect thereof. The third application is Exhibit R-24 seeking verification of the N.P.A. accounts maintained by the respondent Bank for five years preceding 27th November, 2003. Surprisingly the learned Advocate appearing for the appellants argues that the impugned Order is in respect of five applications as he wants to include the earlier application Exhibit A-15 which was filed by the Bank for the same purpose and for the same reliefs as claimed in the application Exhibit A-20 which was granted but could not be enforced and therefore the application Exhibit A-20 was filed for the same reliefs. He also wants to include Exhibit A-22 which is a reply of the appellants filed to the application Exhibit
A-20.
3. As regards the application filed by the respondent Bank for inspection and inventory of the secured property is concerned, the same was granted by the impugned Order. That Order is challenged mainly on the ground that the earlier application filed by the Bank for the same reliefs at Exhibit A-15 was granted pursuant to which the respondent Bank had taken inspection of the secured goods and made inventory thereof in the year 2001 and therefore there was no necessity of granting the second application and allow the Bank to make inventory of the secured property again. Secondly, it was argued that only because of suspicion the application for inventory ought not to have been granted. It is also argued that the appellants are based in Baroda and the unit or plant is at Silvasa and therefore they will have to unnecessarily bear expenses for the same. Lastly, it is argued that the inspection and the inventory can be given only after the inspection of the N.P.A. accounts is given to the appellants by the Bank.
4. As regards the inspection the learned Advocate appearing for the respondent Bank brought to my notice certain clauses of the hypothecation deed dated 15th September, 1999. In para 8.1 of the said deed there is a provision for the Bank to take inspection in respect of the secured goods, if required. Apart from this clause there is also a corresponding undertaking given in para 8 of the said agreement to give periodical inspection of the secured property. There is no denial on behalf of the appellants as regards entitlement for inspection as provided in the hypothecation deed as well as in the underta
