Izabel F Nunes vs Union Bank Of India

Ashok Menon, Chairperson

The Misc. Application is filed under Sec. 21 of the Recovery of Debts Due to Banks & Financial Institution Act, 1993 (‘RDDB&FI Act’, for short) for waiver of mandatory pre-deposit for entertaining the appeal.

The Appellant is the fourth defendant in Original Application (O.A.) No. 72 of 2005 on the files of the Debts Recovery Tribunal-II, Mumbai (D.R.T.), and is in appeal against the judgment of the D.R.T. dated 02.12.2009 decreeing the claim of the original applicant Bank. A sum of ₹44,18,575.86 was directed to be paid by the defendants together with interest @14% per annum with effect from 31.03.2004 till the date of filing of the O.A. and thereafter, interest @6% per annum till realisation. Interest was also directed to be paid on ₹12.05 lakhs @14% per annum with effect from 01.04.2004 till 16.04.2007, the date on which the sale proceeds of the first defendant company were appropriated towards the loan. That apart, a sum of ₹2,70,998/-was also directed to be paid towards term loan together with interest @14% per annum with effect from 01.10.2001 till the date of filing of the O.A. and thereafter @6% per annum till realisation. It was also decreed that a claim to the extent of ₹25 lakhs together with interest is to be realised from the sale of the property mortgaged by the fourth defendant. A recovery certificate was issued in favour of the Bank. The Appellant is aggrieved because her residential house is being proceeded against for realisation of debt.

Sec. 21 of the RDDB & FI Act mandates a deposit of 75% of the debt due from the Appellant as determined by the D.R.T. for entertaining the appeal. The Misc. Application is filed seeking a total waiver of the mandatory pre-deposit for reasons explained in the application.

The Applicant states that she is an octogenarian without any substantial source of income. She was a school teacher who retired in the year 2002 and is drawing a pension of ₹9,259/- per month. Her husband is a retired railway employee aged eighty seven and has a pension of ₹7,602/-. Documents have been produced to substantiate these facts. The Appellant states that she is under financial strain and is, therefore, unable to deposit any amount.

It is contended that the Appellant has a very strong prima facie case in appeal. The first defendant company was initially started as a private company with the second defendant as its director. She is the daughter-in-law of the Appellant. The company was later made a public limited company. It is the first defendant company which had availed the loan from the original applicant Bank through the second defendant and the third defendant as directors. Mortgages were created in favour of the Bank with regard to the office premises of the company and the residential house of the fourth defendant/Appellant. Letters of guarantee were allegedly executed by the guarantors. The Appellant’s deceased son who was the husband of the second defendant had also stood as guarantor.

On defaulting repayment of the debt, the bank initiated measures under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’ for short) and also filed the O.A. for the realisation of debt under the provisions of the RDDB & FI Act. Defendants Nos. 2 & 3 contested the O.A. by filing a common written statement. The Appellant as the fourth defendant filed a written statement denying the liability and also contended that she has not executed any documents in favour of the Bank. It is contended that she has nothing to do with the company or its affairs. A plea of limitation is also taken. The Appellant had also filed S.A. No. 35 of 2007 against the Bank challenging the Sarfaesi measures initiated by the Bank against her property. The O.A. as well as the S.A. were allowed by a common judgment. The Appellant is aggrieved because the O.A. was allowed and is, therefore, in appeal.

The  Appellant  had  denied  her  signature  on  most  of  the documents  relied  upon  by  the  Bank.  An  expert  opinion  was obtained. Opinions regarding some of the signatures were inconclusive while some of the disputed signatures were confirmed as that of the Appellant.

The defence set by the Appellant regarding not having to do with anything with the affairs of the company does not appear to be readily acceptable. The Ld. Presiding Officer has in the impugned judgment gone into the details of the contentions raised by the Appellant and came to the conclusion that she had executed a simple mortgage with regard to her property in favour of the Bank and therefore, her property remains a charge for the realisation of debt. On a cursory reading of the judgement, there appears no infirmity worth noticing.

Since the appeal challenges the findings of D.R.T., I do not intend to delve deep into the rival contentions for the moment. Prima facie, the Appellant does not appear to have a strong case. However, the Appellant has succeeded in establishing that she does have sufficient means to pay the mandatory pre-deposit. This Tribunal is empowered to grant a total waiver of the deposit as per the pre-amended RDB Act. Considering the fact that the prima facie case has not been sufficiently established, I am not inclined to grant a total waiver.

The Counsel appearing for the Respondent submits that as of date a sum of more than ₹75 lakhs is due and outstanding. The Appellant is, therefore, directed to deposit a sum of ₹10 lakhs as pre-deposit in two equal instalments for entertaining the appeal. The first instalment of ₹5 lakhs shall be paid within three weeks from today, on or before, 06.06.2023. The second instalment shall be payable within three weeks therefrom, on or before 27.06.2023. In default of the payment of any instalments on time, the appeal shall stand dismissed without any further reference of the Tribunal.

The amount shall be deposited in the form of a Demand Draft with the Registrar of this Tribunal.

As and when the said amounts are deposited, they shall be invested in term deposits in the name of Registrar, DRAT, Mumbai, with any nationalised bank, initially for 13 months, and thereafter to be renewed periodically.

With these observations, the M.A. is disposed of. The Respondent is at liberty to file a reply in the Appeal with an advance copy to the other side.

Post on 07.06.2023 for reporting compliance concerning the payment of 1st instalment.