Bhupendra vs State Bank Of Hyderabad And Ors.

P.K. Bhasin, J

This order will decide whether the appellant is required to make any deposit with this Tribunal as a condition precedent for the entertainment of his appeal as required under Section 21 of the Recovery of Dues to Banks and Financial Institutions Act, 1993 ('RDDBFI Act' in short). The appellant had placed an order upon respondent No. 3 herein, who was doing his business in the name of Gopal International, for supply of 200 MT of garlic and for payment of the price of the same he had requested respondent No. 2 Central Bank of India ('CBI' in short) to issue a letter of credit which it issued in favour of the respondent No. 3. The respondent No. 3 however did not supply the material to the appellant and so to restrain his Bank (CBI) from making any payment to respondent No. 1 herein, State Bank of Hyderabad ('SBH' in short), through which Bank respondent No. 3 was to get his payment by 5.1.2003, the appellant had filed a suit for injunction in which he got an order of status quo an 1.1.2003 and so CBI did not make payment under the LC in question to SBH. It appears that the Civil Court vacated the status quo order on 19.4.2005 and the appeal filed against that order by the appellant was also dismissed by the High court and the Hon'ble Supreme Court also dismissed the appellant's SLP on 28.11.2005.

Since CBI did not make any payment to SBH even after the order of the Hon'ble Supreme court. SBH filed a petition under Section 19 of RDDBFI Act against the CBI, appellant and the respondent No. 3 (O.A. No. 47/2006) before DRT-I, Delhi for issuance of a recovery certificate for the money due to it under the LC in question which it had already paid to respondent No. 3. That O.A. was filed against CBI, respondent No. 3 and the appellant claiming that all were liable jointly and severally to pay money due to it under LC. The O.A. was contested by the CBI as well as the appellant herein but they did not succeed and the DRT issued a recovery certificate against all the defendants of the O.A. as had been prayed for by SBH. However, since during the pendency of the O.A. CBI had made the payment of principal amount as per the LC to SBH the DRT had confined the recovery certificate only to the extent of interest @ 11% p.a. on that amount from the date when the payment under the LC had become payable till 28.3.2006 when CBI had made the payment to SBH. CBI was however directed to first make the payment of interest to SBH with a further direction that it could recovery that amount from the appellant herein.

The appellant felt aggrieved by the direction of the DRT giving liberty to CBI to recover the interest amount from him after making payment to SBH and so he has filed the present appeal.

Counsel for the appellant had submitted that since there was no privity of contract between the appellant and SBH he could not made liable for payment of any interest for the delay in payment of the LC amount to SBH by CBI and consequently the appellant is not supposed to make any pre-deposit as provided under Section 21 of the RDDBFI Act. However, I am of the view that the DRT having held that the CBI could recover the money on account of interest for the delayed payment from the appellant he becomes liable for compliance of the condition of pre-deposit since his liability has been fixed towards SBH. Now, whether or not to appellant could be held liable for the delay in payment of LC amount by his Bank to SBH because of the status quo order of the Civil Court will be a matter for consideration when his appeal is entertained and the appeal can be entertained only upon his complying with the requirement of pre-deposit of the amount determined by the DRT to be recoverable from him. Considering all the facts and circumstances, I am however of the view that the appellant is entitled to some relief as far as condition of pre-deposit is concerned. Accordingly the appellant is directed to make a deposit of 25% of the amount determined by the DRT to be recoverable from him with the Registry of this Tribunal in the form of a Bank Draft in the name of Registrar of DRAT, Delhi within two weeks so that his appeal is entertained in case the deposit is made the money shall be kept in a fixed deposit in a nationalised Bank for a period of six months to begin with and it can be renewed for same term in case the appeal is not disposed of within that period.