ORDER:

(Per the Hon’ble the Chief Justice Alok Aradhe)

Mr. A.Krishnam Raju, learned counsel for the petitioner.

2. This writ petition is directed against the order dated 08.12.2014 passed by the Debts Recovery Appellate Tribunal at Kolkata by which the appeal filed by the petitioner under Section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as, “the 1993 Act”), has been disposed of.

3. In order to appreciate the challenge of the petitioner to the impugned order, relevant facts need mention which are stated infra.

4. The petitioner bank (hereinafter referred to as, “the bank”), through its Moula Ali Branch, Hyderabad, extended financial assistance to M/s. Water Development Society, a society registered under the Andhra Pradesh (Telangana Area) Public Societies Registration Act, 1350 Fasli (hereinafter referred to as, “the Society’). The Society availed of credit limits from the bank and created charges in respect of immovable properties as a security for the loan availed by it. The Society failed to repay the amount of loan to the bank. Thereupon, the bank filed O.S.No.81 of 1993 before the learned Additional Subordinate Judge, Ranga Reddy District at Saroornagar. On constitution of the Debts Recovery Tribunal, the suit was transferred to the Debts Recovery Tribunal, Bangalore, and it was registered as O.A.No.406 of 1996. By an order dated 11.07.1997, the Debts Recovery Tribunal, Bangalore, allowed the same and the bank was held entitled to recover a sum of Rs.3,92,96,550.85 ps. along with current and future interest from the date of the suit till the date of realization of the amount. In addition, the bank was further held entitled to recovery of an amount of Rs.8,93,935/-.

5. The bank thereafter initiated proceedings under Section 25 of the 1993 Act for recovery of the aforesaid amount. In the aforesaid proceedings, one property belonging to the Society was sold for an amount of Rs.5,36,50,000/- whereas another property was sold for an amount of Rs.1,90,00,000/-. The bank received an amount of Rs.6,21,96,000/-, which was realised by way of sale of immovable properties belonging to the Society.

6. The Regional Provident Fund Commissioner filed a claim petition, namely Claim Petition No.1 of 2000, in O.A.No.406 of 1996 before the Recovery Officer, inter alia, on the ground that the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as, “the 1952 Act”), applies to the Society as it is an establishment within the meaning of the 1952 Act. It was averred in the said petition that the Society failed to pay the provident fund contribution for the period from March 1991 to December 1992 and is also liable to pay damages of about Rs.17.00 lakhs and interest under Section 14B of the 1952 Act.

7. The Recovery Officer, by an order dated 11.01.2001, dismissed the petition filed by the Regional Provident Fund Commissioner. Against the order passed by the Recovery Officer, the Regional Provident Fund Commissioner preferred an appeal before the Debts Recovery Tribunal, Hyderabad. The Debts Recovery Tribunal, by an order dated 26.09.2008, inter alia, held that Section 11 of the 1952 Act creates a right/statutory charge in favour of the claimant and the bank cannot claim priority even in respect of their debt, which is secured by the mortgage. The Debts Recovery Tribunal placed reliance on a Full Bench decision of the Madras High Court in UTI Bank v. Deputy Commissioner of Central Excise1. Accordingly, the appeal was allowed and the bank was directed to pay an amount of Rs.29,71,810/- along with future interest @ 16% per annum compounded monthly from 17.01.2000 till the date of payment.

8. The bank thereupon challenged the aforesaid order in an appeal before the Debts Recovery Appellate Tribunal at

1 (2007) 135 Comp Cas 329 (FB)

Kolkata. The Debts Recovery Appellate Tribunal, by an order dated 08.12.2014, modified the order passed by the De