The burden of proof shifts from secured creditor to borrower once a statement of accounts is provided, necessitating the borrower to disprove the validity of debits.

ORDER:(Per Hon’ble Justice Moushumi Bhattacharya)

1. The Writ Petition arises out of an order passed by the Debt Recovery Appellate Tribunal, Kolkata (‘DRAT’), on 04.08.2025, in Miscellaneous Appeal No.43 of 2025 filed by the petitioners, who were the appellants before the DRAT.

2. The Appeal was filed by the petitioners from an order dated 03.04.2025, passed by the Debts Recovery Tribunal-II, Hyderabad (‘DRT-II’) in I.A.No.359 of 2025 in O.A.No.1792 of 2017. The I.A. before the DRT-II was filed by the writ petitioners. The O.A.No.1792 of 2017 was filed by the respondent No.4/Canara Bank against the petitioners/borrowers. Pending O.A., ARCIL was assigned the debt from the respondent No.4/Canara Bank based on which ARCIL filed a substitution application. Thereafter, the O.A. was transferred from DRT-I, Hyderabad to DRT-II, Hyderabad and was renumbered as O.A.No.1792 of 2017.

3. The factual background to the Writ Petition is stated in the following paragraphs.

4. The respondent No.4/Canara Bank filed the O.A.No.125 of 2014 before the DRT-I, Hyderabad (renumbered as O.A.No.1792 of 2017) in relation to an amount of Rs.55,25,57,889.42 ps. and also for the recovery of a sum of Rs.6,98,84,431.17 ps. whereby an ex parte decree was passed. The writ petitioners (defendants in O.A.No.1792 of 2017) filed I.A.No.359 of 2025, seeking a direction on the Bank to produce a complete and accurate statement of accounts reflecting the contractual rate of interest without compounding. By the order dated 03.04.2025, the DRT dismissed the application on the ground that the defendants’ I.A. was not maintainable and was only filed to protract the litigation. The order also states that ARCIL had already filed the statement of accounts which had been marked as Exs.A79 and A80 on 25.04.2018, and that the defendants/writ petitioners chose not to lead evidence.

5. The petitioners challenged the order dated 03.04.2025 before the DRAT. The DRAT referred to Central Bank of India v. Ravindra and Ors., [12002 (1) SCC 367] and held that although the burden initially lies upon the secured creditor to place an interest calculation, the burden shifts on the opposite party to disprove the case of the secured creditor. The DRAT also held that the secured creditor had already complied with the decision of the Supreme Court in Central Bank of India (supra) by bringing the statement of accounts on record as per statutory provisions. The DRAT accordingly proceeded to dismiss the Miscellaneous Appeal and directed the DRT to expedite the matter, since the O.A. had been pending since 2014.

6. The Writ Petition has been filed from the order passed by the DRAT on 04.08.2025 by which the petitioners/defendants’ Miscellaneous Appeal challenging the order of the DRT dated 03.04.2025 was dismissed.

7. We have considered the submissions of learned counsel appearing on behalf of the petitioners and learned Senior Counsel appearing on behalf of the respondent No.3/ARCIL.

8. In Central Bank of India (supra), the Supreme Court directed Banks/secured creditors to file a statement of account in the Court showing details and giving particulars of debit entries relating to the interest, including the period for which the interest has been charged. It was further held that if the borrower raises a dispute with regard to the permissibility of debits, the onus would shift on the borrower to show why the amount of debit balance cannot be accepted and adjudged. The Supreme Court was of the view that the aforesaid practice would expedite the disposal of suits filed by banking institutions under The Recovery of Debts and Bankruptcy Act, 1993 .

9. Admittedly, the respondent No.3/ARCIL (plainti