Dev Spinners Ltd. And Ors. vs Corporation Bank And Ors.

S.N.H. Zaidi, J

The instant application has been filed by the appellants under Section 22(2)(e) of the RDDBFI Act for the review of order dated 29.6.2011 passed by this Tribunal on the waiver application (I.A. 418/2011). The relevant facts, in brief, are that O.A. No. 98/2010 (Old No. 379/2002), filed by the Bank was allowed by the DRT, vide order dated 25.3.2011, and the defendants were directed to pay Rs. 4,43,58,964.14 along with pendente lite and future interest @ 12% per annum and partly allowing the counter-claim of the defendants, directed for the adjustment of Rs. 69,49,618/-. The defendants filed an appeal against that order along with an application (I.A. No. 418/2011) for waiver of the deposit of amount required under Section 21 of the RDDBFI Act for the entertainment of the appeal. This Tribunal disposed of that application by directing the appellants to deposit 50% of Rs. 4,47,58,964.14 minus the amount of Rs. 69,49,618/- within the given time, by order dated 29.6.2011. The instant application has been filed by the appellants for the review of the said order.

I have heard Mr. Pallav Saxena, the learned Counsel for the appellants, Ms. Ananya Dutta Majumdar, the learned Counsel for the 1st respondent Bank and Mr. R.P. Aggarwal, the learned Counsel for IFCI Ltd., the respondent No. 4.

It has been contended by Mr. Saxena that while disposing of the waiver application, this Tribunal did not return any finding in respect of the financial hardship faced by the appellants as averred in paragraph 5 of that application in depositing the amount envisaged under Section 21 of the RDDBFI Act, though corroborative documents (page Nos. 250 to 291 of the appeal paper book) were produced in support thereof. It has also been argued that this Tribunal had also not given any finding on the plea of the appellants that Section 21 would have no application where the debtor/defendant had made a counter-claim in the OA.

Ms. Majumdar, however, submitted that the waiver application was disposed of by this Tribunal after duly considering all the pleas raised by the appellant applicants and the relevant documents filed by the parties. Pointing out to paragraphs 7 and 12 of the order, she has contended that this Tribunal had considered the pleas relating to the counter-claim also.

I have gone through the order sought to be reviewed, in the light of the submissions of the parties' Counsel. So far as this plea is concerned that Section 21 of the RDDBFI Act has no application where the debtor/defendant had raised a counter-claim, the said section reads as under:

Deposit of amount of debt due, on filing appeal--Where an appeal is preferred by any person from whom the amount of debt is due to a Bank or a financial institution or a consortium of Banks or financial institutions, such appeal shall not be entertained by the Appellate Tribunal unless such person has deposited with the Appellate Tribunal seventy-five per cent, of the amount of debt so due from him as determined by the Tribunal under Section 19:

Provided that the Appellate Tribunal may, for reasons to be recorded in writing, waive or reduce the amount to be deposited under this section.

A perusal of the section shows that if the appeal has been filed by a person against whom an amount of debt is due to a Bank, the appeal shall not be entertained unless such person has deposited 75% of the amount of debt so due from him, as determined by the DRT. Its applicability is thus not restricted to an appeal filed against the order passed in an O.A. wherein no counter-claim was made, but it applies to every appeal preferred against the order determining the amount of debt due against the appellant, irrespective of the fact whether or not counter-claim was made in the OA. In the instant case, the Tribunal below besides determining the amount of debt due against the appellants has also partly allowed the counter-claim of the defendant/appellant. This Tribunal, while disposing of the waiver application, has directed the appellants to deposit 50% of the principal amount of debt determined by the DRT as due on the appellants after subtracting the allowed amount of counter claim. The said order has, however, wrongly mentioned the amount of the principal sum as Rs. 4,47,58,964.14 instead of Rs. 4,43,58,964.14. This appears to be a typographical error, which needs to be rectified.

So far as the plea that this Tribunal did not give any finding qua the financial hardship allegedly faced by the appellant/applicants, as averred in paragraph 5 of the waiver application, is concerned, the appellants had stated in the said paragraph that they were financially ruined due to the negligence of the Bank officials in not insuring their stocks, plant, machinery and building, which were gutted in fire. It was also stated that as appellant No. 1 became a sick company, it was constrained to lodge a reference under the Sick Industrial Companies (Miscellaneous Provisions) Act, 1985. Mr. Saxena has contended that due to inadvertence and oversight the findings on the above plea could not be returned and as such the order requiring the appellants to deposit the amount being unreasoned and violative of the principles of natural justice. A perusal of the order dated 29.6.2011, however, shows that this Tribunal had considered the contentions of the parties qua the circumstances of the non-insurance of the stocks and after considering the documents of the parties came to a prima facie view that it was the duty of the appellants to arrange for the insurance policy. This Tribunal had also considered the circumstance that in the OA filed by the Bank in 2002, the written statement was filed by the defendants/appellants in 2004, whereas the fire had broken out in 2008, on the basis of which counter claim was made. The cause of action for the counter claim had, thus, arisen during the pendency of the O.A. much after the defendants had delivered their defence. It is correct to say that no specific observation qua the financial condition of the appellants/applicants has been made by this Tribunal in the order dated 29.6.2011, but it is not acceptable that this Tribunal had not considered the averments made in paragraph 5 of the waiver application or the documents filed by the appellant/applicants while making the said order. The order has a specific mention of considering the documents filed by the applicants. It appears that on considering the appellants' alleged financial condition/hardship, the amount of deposit has been reduced from 75% to 50%. It is, thus, not acceptable that this Tribunal had passed the order without considering the financial hardship faced by the appellant/applicants.

In view of above, the order sought to be reviewed cannot be said to be suffering with any violation of the principles of natural justice or with any material error apparent on the face of record, except a typographical mistake in mentioning the principal amount of the debt due on the appellants. The order dated 29.6.2011 is, therefore, modified to the extent that the appellants shall deposit 50% of the amount of Rs. 4,43,58,964.14 determined as due on the appellants instead of Rs. 4,47,58,964.14 with the subtraction of Rs. 69,49,618/- as already directed. The said order does not call for any other intervention in exercise of the power under Section 22(2)(e) of the RDDBFI Act. The application stands disposed of accordingly.

Appellants to deposit the above amount with the Bank without prejudice to their rights within four weeks from today, failing, which the appeal shall not be entertained and shall be dismissed.

List the matter on 25.2.2013 or further orders. Copy of this order be furnished to the parties as per law.