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DEBTS RECOVERY APPELLATE TRIBUNAL, CHENNAI
M.V. VISHWANATH, CHAIRPERSON
R.A. 6 of 2001
Decided on 7.8.2001
DR. GEETHA P. SHANBAGH AND ANR.
versus
CANARA BANK
Counsel for the Parties :
For the Appellants :Mr. B.K. Manjunath, Advocate. For the Respondent:Mr. T.N. Raghavendra Rao, Advocate.
Personal liability of defendants under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 is limited to the assets in their hands.
Headnote:
Liability - Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - The court set aside the order holding the 9th defendant and co-appellant 8th defendant personally liable, stating that they shall be liable only insofar as the assets of G.G.M. Prabhu are in their hands. The court directed the DRT to issue a modified recovery order and refund the amount deposited by the 9th defendant with interest.
Fact of the Case:
The Canara Bank filed a suit for realization of amounts from mortgaged properties and a personal decree against all defendants, including the 9th defendant. The court allowed the application and passed a personal decree against the 9th defendant, who was not a borrower, guarantor, or director of the company, but was made a party as an LR of G.G.M. Prabhu.
Finding of the Court:
The court set aside the order holding the 9th defendant and co-appellant 8th defendant personally liable, stating that they shall be liable only insofar as the assets of G.G.M. Prabhu are in their hands. The court directed the DRT to issue a modified recovery order and refund the amount deposited by the 9th defendant with interest.
Issues: The main issue was the personal liability of the 9th defendant and co-appellant 8th defendant in the recovery proceedings initiated by the Canara Bank.
Ratio Decidendi: The court held that the 9th defendant and co-appellant 8th defendant shall be liable only insofar as the assets of G.G.M. Prabhu are in their hands, and they shall not claim any interest in the mortgaged property during recovery proceedings.
Final Decision: The court set aside the order holding the 9th defendant and co-appellant 8th defendant personally liable, and directed the DRT to issue a modified recovery order and refund the amount deposited by the 9th defendant with interest.
M.B. Vishwanath, Chairperson - This appeal has been filed by the appellant 9th defendant challenging the order dated 31.7.2000 passed by the Learned Presiding Officer, Debt Recovery Tribunal (DRT), Bangalore, in O.A. 301/1996 insofar as it relates to the liability of the appellant.
2. The order dated 31.7.2000 has been passed by the learned Presiding Officer under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions (RDDB&FI) Act, 1993 (the Act).
3. The Canara Bank, 1st respondent in this appeal filed Civil Suit O.S. 4965/1990 before the City Civil Judge, Bangalore, which came to be transferred to the DRT, Bangalore in view of the change in law and was numbered O.A. 301/1996.
4. In the Original Application which arose out of the suit filed by the Canara Bank the Bank prayed for realisation of the amounts from the properties mortgaged and they also prayed for personal decree against all the defendants including the 9th defendant.
5. By the order dated 31.7.2000 the learned Presiding Officer allowed the application under Section 19 as prayed for. In other words he has passed a personal decree against the 9th defendant Dr. Geetha P. Shanbagh.
6. As per the case of the Bank the 1st defendant is Company and defendants 2 to 7 are the Director and guarantors.
7. Defendant No. 9, it is clear from the facts of the case, is neither a borrower nor a guarantor nor a Director of the 1st defendant Company.
8. The appellant 9th defendant has been made a party only on the ground that she is an LR of one G.G.M. Prabhu.
9. It is not necessary to go into the legal status of other defendants except the legal status of the appellant 9th defendant.
10. M/s. Karnataka Water Development Co. Pvt. Ltd. is the 1st defendant Company (D-l). G.G.M. Prabhu since deceased was also one of the Directors of the said Company. This G.G.M. Prabhu and other Directors borrowed money as principal debtors on behalf of the 1st defendant Company.
11. After the death of G.G.M. Prabhu the present 9th defendant has been brought on record as one of the LRs of G.G.M. Prabhu.
12. In fact the learned Presiding Officer by his order dated 29.2.2000 on IAs II and III has clearly held in Para 3 that "obviously there will be no personal decree against the 9th defendant and she has to pay if she has inherited any property." He further says that it is a question of evidence as to whether she has inherited any property from the deceased G.G.M. Prabhu. Having given above the definite finding that the 9th defendant appellant is only an LR and not personally liable it is unfortunate that the learned Presiding Officer has passed the order under Section 19 mechanically without clarifying that the 9th defendant would be liable insofar as the assets of G.G.M. Prabhu were in her hands. He has passed the order under Section 19 in effect holding that she is also personally liable. This order, to say the least, is perverse.
13. It is seen from records that one Smt. Usha Prabhu, another daughter of late G.G.M. Prabhu has filed IA praying the she should be impleaded as a co-appellant. This Usha Prabhu is neither a borrower nor a guarantor nor a Director. The case of this lady is similar to the case of appellant 9th defendant (D- 9). In the interests of justice the IA filed by her to get herself impleaded as an appellant is also allowed and she shall be the 2nd appellant.
14. Order 41, Rule 4, CPC, insofar as it is relevant for our present purpose, says that where there are more defendants than one in a suit and the decree appealed from proceeds on any ground common to all the defendants any one of the defendants may appeal from the whole decree and thereupon the Court may reverse or vary the decree in favour of these defendants, as the case may be. In view of this clear provision and the definite stand of the 8th defendant I do not want to drive her to a separate appeal. I grant relief to D-8 also in the present appeal.
15. For the aforesaid reasons I pass the follo
