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2025 Supreme(Online)(DRAT) 91
DEBT RECOVERY APPELLATE TRIBUNAL
MR. JUSTICE ANIL KUMAR SRIVASTAVA, CJ
T and R Auto Private Limited – Appellant
Versus
KOTAK MAHINDRA BANK LIMITED – Respondent
637/2024
Mr. Nemani Srinivas with Mr. Tirthankar Das, Learned Counsel for Appellants; Mr. Mayank Shah, Learned Counsel for Respondents
The DRT can accept a memo for ancillary relief without a separate application if the grievance is adequately disclosed, affirming the principle of judicial discretion in procedural matters.
Headnote:(A) Recovery of Debts and Bankruptcy Act, 1993 - Sections relevant to attachment of property - The Appellant challenged the order of the DRT directing the defendants to furnish security for the claim amount pending the original application. The DRT found a prima facie case in favor of the secured creditor and the balance of convenience favored attachment of the property. (Paras 3, 11)
(B) Procedure - The court held that a memo filed for ancillary relief does not require a separate application if the basis of grievance is sufficiently disclosed. The DRT's acceptance of the memo was deemed appropriate. (Paras 9, 10)
Facts of the case:
The secured creditor filed an original application for a claim amount of Rs. 4,60,27,721/-. The defendants contended that the property was already mortgaged with another bank, asserting a first charge. The DRT ordered the defendants to provide security or face attachment of the property. (Paras 2, 3)
Findings of Court:
The DRT found that the secured creditor had established a prima facie case and that the balance of convenience favored the creditor, leading to the order for security. (Paras 3, 11)
Issues: The main issues included whether the DRT erred in accepting a memo for attachment without a formal application and the validity of the first charge claimed by another bank. (Paras 6, 9)
Ratio Decidendi: The court ruled that the DRT acted within its powers in allowing the memo for attachment as an ancillary relief, emphasizing that not every prayer requires a separate application if the grievance is adequately disclosed. (Paras 9, 10)
Result: Appeal is dismissed. The impugned order is confirmed.
THE APPELLATE TRIBUNAL :
Instant appeal has been preferred by the Appellant, who is the defendant in the original proceedings before the Learned DRT, against an order dated 15.05.2024 passed by Learned DRT-2 Hyderabad in I.A. No. 2214 of 2023 in O.A. No. 687 of 2021 (Kotak Mahindra Bank Limited versus T R Auto Private Limited and others).
2. As per pleadings of the parties, it appears that an O.A. No. 687 of 2021 was filed by the secured creditor i.e. Respondent herein before the Learned DRT for issuing a certificate to an amount of Rs. 4,60,27,721/- as on 30th November, 2021. Pending O.A., an I.A. No. 2214 of 2023 was filed by the Respondent/ Secured Creditor directing the defendant Nos. 2 to 4 in the O.A. to furnish security to the extent of O.A. claim amount and in default to pass an order for attachment of the property. After filing of this Application opposition was filed by the defendant No. 2 wherein a plea is taken that the property sought to be attached is already mortgaged with the Axis Bank Hyderabad for the loans availed by Respondent No. 2 and 4. As such first charge over the property is that of Axis Bank only. Thereafter, a memo is filed by the Learned Counsel for the secured creditor praying for attachment of the schedule property with a direction to the Sub-Registrar to note the attachment of the property by way of second charge. Opposition to the memo was filed by the defendants stating that relief could not be sought on the basis of a memo, rather an appropriate application along with the Court fee has to be filed by the secured creditor.
3. Learned DRT disposed of the I.A. No. 2214 of 2023 holding that the value of the debt and securities can never be exactly equal excepting rare circumstances. Since the amount due to the Bank has yet not been crystalized, accordingly, prima facie case is made out in favour of the Bank. Balance of convenience is also in favour of the Bank. Accordingly, defendant Nos.2 and 4 were directed to deposit sufficient security to the extent of O.A. claim of Rs.4,60,27,721/- within 15 days, failing which property described in the petition shall stand attached subject to 1st charge by the Axis Bank.
4. Feeling aggrieved, defendant preferred the Appeal.
5. I have heard the Learned Counsel for the parties and perused the record.
6. Learned Counsel for the Appellant would submit that the Learned DRT erred in entertaining the memo filed by Learned Counsel without filing an appropriate application supported by an affidavit and also erred in passing the impugned order. It is further submitted that the sub- Registrar is made a party in the I.A. while he was not a party in the O.A. proceedings. It was categorically stated in the petition to the I.A. by the defendants that the property sought to be attached is already mortgaged with the Axis Bank Hyderabad. So, no question of disposing of the same arises and 1st charge over the property is of Axis Bank. Learned Counsel for the Appellant’s main contention is regarding the procedure followed by the DRT in accepting the memo filed by Learned Counsel for the secured creditor for a prayer to attach the property and to direct the sub-Registrar to note the attachment by way of 2nd charge.
7. Learned Counsel has placed reliance upon judgment in Syed Yousuf Ali versus Mohd. Yousuf and Others 2016 SCC OnLine Hyd 37 which was relied upon in the case of Abdul Rashid Sahib versus Ramachandran and another , 2022 SCC OnLine Mad 2623 in a C.R.P. (NPD) No. 1 of 2022 and CMP No. 23 of 2022 dated 27.05.2022.
8. Per contra, Learned Counsel for the Respondent secured creditor would submit that the Learned DRT has passed the impugned order in accordance with law. I.A. was filed for a direction to the Respondent Nos. 2 and 4 to furnish the security and in default to pass an order for attachment of the property. Opposition to the same was filed by the defendant wherein it was disclosed that the property is already mortgaged with the Axis Bank with the first charge over it.
