Dev Spinners Ltd. And Ors. vs Industrial Investment Bank Of India Ltd. And Ors.

S.N.H. Zaidi, J

The instant application has been filed by the appellant under the proviso to Section 21 of the RDDBFI Act seeking waiver of the deposit of amount for the entertainment of the accompanying appeal. Respondent No. 1 has opposed the application by filing the reply dated 3.8.2011.

I have heard Mr. Pallav Saxena, learned Counsel for the appellant/applicants Mr. R.P. Aggarwal, learned Counsel for respondent No. 1 and Mr. A.B. Dial, learned Senior Advocate the respondent No. 2, which has been arrayed as proforma respondent.

Mr. Saxena, while pointing out that by the impugned final order dated 25.3.2011 the O.A. filed by respondent No. 1 was partly decreed by the Tribunal below against the defendants/appellants jointly and severally for the recover of Rs. 3 30 crores together with pendente lite and future interest, had submitted that in the intervening right of 9/10.9.2008 the stock, plant, machinery and building of the appellant company were gutted in fire but since the same were not insured due to the negligence of the officials of respondent No. 3 Bank the appellants were financially ruined and the appellant No. 1 became a sick company and it was constrained to lodge a reference under Section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985. He further contended that the appellants were victimized as the officials of the respondents did not permit them to take the benefit of the amnesty schemes of the Reserve Bank of India announced from time-to-time and as such the appellants are in an extremely poor financial state unable to deposit 75% of the determined amount of the debt in compliance of the provisions of Section 21 of the RDDBFI Act for the entertainment of the appeal, Mr. Saxena also pointed out to the Auditor's Report and the Income Tax Returns of the Directors of the appellant company in support of his contentions. It is also argued that the appellants had a strong case on merit.

Though Mr. Aggarwal did not dispute to the occurrence of the incident of fire in the applicants' factory and destruction of a substantive part of the security in it, yet he denied that the appellants are in a poor financial state and have no means to make the required deposit as per the provisions of Section 21 of the RDDBFI Act He also contended that the appellants had not filed any affidavit disclosing details of their assets or the copies of their Bank statements or the annexure of the Income Tax Returns (ITR) of appellant Nos. 2, 4 and 5 Mr. Aggarwal pointed out that in another similar Appeal (No. 273/2011) Dev Spinners Ltd. & Ors. v. Corporation Bank & Ors., this Tribunal, while disposing of the waiver application, had directed the appellants to deposit 50% of the principal amount for the entertainment of the appeal.

I have considered the submissions of the parties' Counsel and perused the record. It also argued on behalf of the appellants that it was the duty of the respondent Bank to arrange for the insurance policy of the hypothecated/mortgaged assets as due to failure of the Bank to pay the insurance premium the appellants could not claim the insurance, but this Tribunal, vide order dated 29.6.2011 passed on the waiver application in Appeal No. 273/2011, had taken a prima facie view that the duty to arrange for the insurance policy was cast upon the appellants. The Auditor's Report, however, shows that the appellants did suffer financial losses due to file and the ITRs of appellant Nos. 2, 4 and 5 show that the incomes of these appellants during the Assessment Years 2009-10 and 2010-11 were not more than Rs. 3 to 4 lacs.

Keeping in view of the above circumstances of the case. I am of the view that it is not a fit case for complete waiver of the deposit to be made under Section 21 of the RDDBFI Act However, looking to the poor financial condition of the appellants as alleged, the requirement of deposit may be reduced to 50%. The appellants are accordingly directed to deposit 50% of the principal amount of Rs. 3.30 crores within six weeks with the Registrar of this Tribunal. The amount shall be invested by the Registrar with any Nationalised Bank giving highest rate of interest to the FDR initially for a period of one year. Application stands disposed of accordingly. Needless to mention that in case of default, the appeal shall not be entertained and be dismissed. List after six weeks on 27.6.2013 for overseeing the compliance of this order.

Copy of this order be furnished to the parties as per law.