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SUPREME COURT OF INDIA
S.A. BOBDE, CJI., A.S. BOPANNA, V. RAMASUBRAMANIAN, JJ.
KOTAK MAHINDRA BANK PVT. LIMITED - APPELLANT
VERSUS
AMBUJ A. KASLIWAL & ORS. - RESPONDENTS
CIVIL APPEAL NO. 538 OF 2021 (Arising out of SLP (CIVIL) No.21555 of 2019) WITH CONT.PET.(C)No.569 of 2020 in SLP(C) No. 21555 of 2019
Decided on : 16-02-2021
Recovery of Debts and Bankruptcy Act, 1993 – Section 21 – Appeal – Waiver of pre-deposit – Permissibility – Pendulum of discretion to waive pre-deposit is allowed to swing between fifty per cent and twenty five per cent of debt due and not below twenty five per cent, much less not towards total waiver – When further amount is due and payable in discharge of decree/recovery certificate issued by DRT in favour of appellant/Bank, High Court does not have power to waive pre-deposit in its entirety, nor can it exercise discretion which is against mandatory requirement of statutory provision as contained in Section 21 – In all cases fifty per cent of decretal amount i.e. the debt due is to be deposited before DRAT as a mandatory requirement, but in appropriate cases for reasons to be recorded deposit of at least twenty five per cent of debt due would be permissible, but not entire waiver – Any waiver of pre-deposit to entire extent would be against statutory provisions and not sustainable in law – When prima facie it was taken note by DRAT that further amount was due and pre-deposit was ordered, without finding fault with such conclusion High Court was not justified in setting aside orders passed by DRAT – Order of High Court set aside – Respondents permitted to deposit twenty five per cent of due amount and prosecute Appeal. [Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 – Section 18] (Paras 10, 13, 14, 17 and 20)
Facts of the case:
Appellant is before this Court assailing order dated 16.07.2019 passed in W.P.(C) No.7530 of 2019 whereby High Court of Delhi has permitted respondents No. 1 and 2 herein to prosecute appeal before the Debts Recovery Appellate Tribunal (DRAT) without pre-deposit of a portion of the debt determined to be due, as provided under Section 21 of Recovery of Debts and Bankruptcy Act, 1993 (RDBA Act). The appellant/Bank claiming to be aggrieved by the said order is before this Court in the instant appeal. Short issue for consideration is with regard to the correctness or otherwise of the order passed by the DRAT and the High Court of Delhi in the matter relating to pre-deposit of the debt due, in an appeal before the DRAT.
Findings of Court:
When prima facie it was taken note by DRAT that further amount was due and the pre-deposit was ordered, without finding fault with such conclusion High Court was not justified in setting aside the orders passed by the DRAT.
Result : Appeal allowed in part.
Key Points: - Pre-deposit waiver is strictly governed by statutory provisions; complete waiver is not permissible (!) (!) (!) . - The deposit can be reduced to not less than twenty-five per cent of the debt due, at the discretion of the Appellate Tribunal with recorded reasons (!) (!) . - When further amount is due and payable under a decree or recovery certificate, the High Court cannot waive pre-deposit entirely (!) . - The pendency of compensation receipt before decree does not automatically discharge the debt or eliminate pre-deposit requirement (!) (!) . - For the instant case, twenty-five per cent of the determined debt amount is directed to be deposited within eight weeks (!) (!) .
JUDGMENT :
A.S. Bopanna, J.
Leave granted.
2. The appellant is before this Court assailing the order dated 16.07.2019 passed in W.P.(C) No.7530 of 2019 whereby the High Court of Delhi has permitted the respondents No. 1 and 2 herein to prosecute the appeal before the Debts Recovery Appellate Tribunal (‘DRAT’ for short) without pre-deposit of a portion of the debt determined to be due, as provided under Section 21 of the Recovery of Debts and Bankruptcy Act, 1993 (‘RDBA Act’ for short). The appellant/Bank claiming to be aggrieved by the said order is before this Court in the instant appeal.
3. This Court while taking note of the matter at the first instance, had through the order dated 22.11.2019 directed the respondents No.1 and 2 to deposit an amount of Rs.20 Crores before the Registry of this Court within a period of 8 weeks. In the said order it was indicated that the further proceedings in the appeal before the DRAT shall remain stayed till the next date of hearing or till the date of deposit of the said amount by the respondents No.1 and 2, whichever is earlier. The deposit as directed by this Court has not been made by the respondents No.1 and 2. The appellant/Bank, therefore, alleging that there is disobedience of the order passed by this Court has filed the accompanying Contempt Petition seeking action against respondents 1 and 2. In that background, since both these matters pertain to the same issue, they are taken up together, considered and disposed of by this common order.
4. The brief facts leading to the present proceedings is that the respondent No.3, namely, Hindon River Mills Ltd. had availed financial assistance from the respondent No.6-IFCI Ltd. The respondents No.1 and 2 had offered their personal guarantee in respect of the said financial assistance. The respondents No.1 to 3 had defaulted in repayment of the dues and the account having been classified as nonperforming asset was thereafter auctioned by respondent No.6-IFCI Ltd. wherein the appellant herein was the successful bidder and accordingly, the unpaid debt and nonperforming asset was assigned in their favour. The assignment as made was assailed by the respondents No. 1 to 3 before the High Court in WP(C) No.14999 of 2006 which came to be dismissed and the SLP(C) No. 35004 of 2011 filed was taken note by this Court and in the said proceedings the settlement which was entered into between the parties was recorded and disposed of. As per the settlement, the respondents No. 1 to 3 had agreed to repay the sum of Rs.145 Crores with interest at 15% per annum subject to the same being repaid on or before 31.07.2012. The respondents No. 1 to 3 are stated to have not adhered to the terms of settlement and the repayment was not made. The appellant Bank, therefore, instituted recovery proceedings by filing an application before the Debts Recovery Tribunal (‘DRT’ for short), New Delhi in O.A. No.281 of 2015. In the said proceedings the appellant Bank claimed that the respondents No. 1 to 3 would be liable to pay the entire outstanding since the benefit of the settlement wherein the outstanding amount was frozen had not been availed within the time frame. Accordingly, the sum of Rs. 572,18,77,112/-(Rupees Five Hundred Seventy Two Crores Eighteen Lakhs Seventy Seven Thousand and One Hundred Twelve), which was due as on 31.12.2014 along with interest and other charges was claimed before the DRT.
5. When this was the position, during the pendency of O.A.No.281 of 2015 before the DRT the respondent No.7/National Highways Authority of India (‘NHAI’ for short), acquired a portion of the mortgaged property belonging to respondent No.3 and deposited the compensation amount of Rs.62,31,87,312/-(Rupees Sixty Two Crores Thirty One Lakhs Eighty Seven Thousand and Three Hundred Twelve), before the DRT. The compensation was thereafter enhanced by the District Magistrate (Arbitrator) Ghaziabad and a further sum of Rs.72,96,12,827/-(Rupees Seventy Two Crores Ninety Six Lakhs Twelve T
Appeal – Any waiver of pre-deposit to entire extent would be against statutory provisions and not sustainable in law.
Pre-deposit under Section 18 of the SARFAESI Act is a mandatory requirement for maintaining an appeal before the Appellate Tribunal, and it cannot be completely waived even in the face of financial h....
A writ petition under Article 226 is not maintainable when an effective statutory remedy exists under the Securitisation Act, especially in recovery related matters.
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