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IN THE HIGH COURT OF CALCUTTA
Sanjib Banerjee, J.
Arabinda Saha and others - Petitioners
Versus
The Authorised Officer, Central Bank of India and another - Respondents
S.D.C.O. 2639 of 2012 With CAN 11138 of 2014
Decided On : 28-11-2014
For the Petitioner:Mr. Sukrit Mukherjee and Mr. S.R. Kankaria, Advocates
For the Respondent-Bank:Biswambhar Jha, Advocate
The pre-deposit requirement under Section 18(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 applies to both final and interlocutory orders passed by the Debts Recovery Tribunal under Section 17 of the Act. The Appellate Tribunal has the discretion to reduce the pre-deposit from 50% to 25% of the amount claimed by the secured creditor or determined by the Debts Recovery Tribunal, whichever is less. The assessment of the quantum of pre-deposit should be based on the amount claimed by the secured creditor, irrespective of any case run to the contrary by the appellant.
Headnote:
SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002 - SECTION 18 - INTERPRETATION - APPLICABILITY OF PRE-DEPOSIT REQUIREMENT TO INTERLOCUTORY ORDERS - DISCRETION OF APPELLATE TRIBUNAL TO REDUCE PRE-DEPOSIT - RELEVANCE OF AMOUNT CLAIMED BY SECURED CREDITOR - ASSESSMENT OF HARDSHIP OR INCONVENIENCE OF APPELLANT.
Fact of the Case:
The petitioners obtained credit facilities from the opposite party bank. Following the bank's demand for repayment and steps taken under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the mortgaged property or hypothecated goods have been sold and some further amount repaid by the petitioners to the bank. The petitioners contended that the order of the Debts Recovery Tribunal of November 14, 2011 cannot be read to imply that the sum of Rs. 55 lakh as claimed by the bank was due and it would be evident from the drift of the discussion in the Debts Recovery Tribunal order that only a small amount of money remained due. They asserted that the Appellate Tribunal erred in requiring a sum of about Rs. 8 lakh to be deposited as condition precedent for the appeal being taken up on merits.
Finding of the Court:
The court held that the second and third provisos to Section 18(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, which mandate a pre-deposit as a condition precedent to the receipt of an appeal, apply to both final and interlocutory orders passed by the Debts Recovery Tribunal under Section 17 of the Act. The court further held that the Appellate Tribunal has the discretion to reduce the pre-deposit from 50% to 25% of the amount claimed by the secured creditor or determined by the Debts Recovery Tribunal, whichever is less, and that the assessment of the quantum of pre-deposit should be based on the amount claimed by the secured creditor, irrespective of any case run to the contrary by the appellant.
Issues: 1. Whether the pre-deposit requirement under Section 18(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 applies to interlocutory orders passed by the Debts Recovery Tribunal under Section 17 of the Act? 2. Whether the Appellate Tribunal has the discretion to reduce the pre-deposit from 50% to 25% of the amount claimed by the secured creditor or determined by the Debts Recovery Tribunal, whichever is less? 3. Whether the assessment of the quantum of pre-deposit should be based on the amount claimed by the secured creditor, irrespective of any case run to the contrary by the appellant?
Ratio Decidendi: 1. The language of Section 18(1) of the Act is clear and unambiguous and does not distinguish between final and interlocutory orders. Therefore, the pre-deposit requirement applies to both types of orders. 2. The third proviso to Section 18(1) of the Act expressly empowers the Appellate Tribunal to reduce the pre-deposit from 50% to 25% of the amount claimed by the secured creditor or determined by the Debts Recovery Tribunal, whichever is less. 3. The purpose of the pre-deposit requirement is to ensure that frivolous appeals are not filed. Therefore, the assessment of the quantum of pre-deposit should be based on the amount claimed by the secured creditor, irrespective of any case run to the contrary by the appellant.
Final Decision: The court dismissed the petition challenging the order of the Appellate Tribunal requiring the petitioners to deposit 30% of the amount claimed by the secured creditor as a condition precedent to the appeal being taken up on merits.
Sanjib Banerjee, J.
The ambiguous language in which some statutes are drafted these days not only leaves room for conflicting interpretations but it may, at times, be an impediment to arresting the mischief which was sought to be achieved by the enactment.
2. Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 in its first limb uses the expression "by any order", which implies that every order passed by the Debts Recovery Tribunal under Section 17 of the said Act would be appellable, provided the appellant can demonstrate that he is a person aggrieved by such order. However, the second proviso to Section 18(1) of the said Act mandates that a pre-deposit be made as a condition precedent to the receipt of the appeal and the third proviso gives the Appellate Tribunal the discretion to reduce the pre-deposit from 50 per cent of the amount claimed by the secured creditor or determined by the Debts Recovery Tribunal, whichever is less, to 25 per cent of such amount. It is necessary to notice the entirety of Section 18 of the said Act :
"18. Appeal to Appellate Tribunal. –
(1) Any person aggrieved, by any order made by the Debts Recovery Tribunal under section 17, may prefer an appeal along with such fee, as may be prescribed to an Appellate Tribunal within thirty days from the date of receipt of the order of Debts Recovery Tribunal.
Provided that different fees may be prescribed for filing an appeal by the borrower or by the person other than the borrower.
Provided further that no appeal shall be entertained unless the borrower has deposited with the Appellate Tribunal fifty per cent of the amount of debt due from him, as claimed by the secured creditors or determined by the Debts Recovery Tribunal, whichever is less:
Provided also that the Appellate Tribunal may, for the reasons to be recorded in writing, reduce the amount to not less than twenty-five per cent of debt referred to in the second proviso.
(2) Save as otherwise provided in this Act, the Appellate Tribunal shall, as far as may be, dispose of the appeal in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and rules made thereunder."
3. It cannot be said that the second and third provisos operate only in respect of the final orders passed by the Debts Recovery Tribunal under Section 17 of the Act and would not apply to interlocutory orders carried in appeal. The wording of the provisos precludes such interpretation. Yet, there are interlocutory orders of considerable significance that involve complex legal issues, and a bona fide appeal may be carried therefrom by any person aggrieved thereby without such person aggrieved being conclusively identified as the borrower within the meaning of the word in the said Act, or when the amount claimed from such person has not yet been determined by the Debts Recovery Tribunal and it is demonstrated that a substantial part of the claim has been discharged by payment or realised from the sale of one or more of the secured assets.
4. The petitioners herein obtained credit facilities from the opposite party bank. Following the bank's demand for repayment and steps taken under the said Act of 2002, the mortgaged property or hypothecated goods have been sold and some further amount repaid by the petitioners to the bank. From the order of the Debts Recovery Tribunal passed on November 14, 2011, it cannot be gauged as to what may be the sum due from the petitioners to the bank, as would appear from the last two pages of such order. The question as to what would be the exact amount due from the petitioners to the bank, after adjusting the sale proceeds and taking into account the money repaid, did not fall for consideration in course of the order of the Tribunal dated November 14, 2011. The Tribunal noticed that the bank had claimed a sum in excess of Rs. 55 lakh from the petitioners herein; but the Tribunal was of the o
