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Judgment
The appellants are defendants in the Original Application(O.A.) filed against them before the Tribunal below(DRT) under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act,1993('RDDBFI Act' in short) for recovery of its outstanding loan dues to the tune of crores of rupees extended to appellant no.1 herein by respondents constituting a a consortium of banks. The re-payment of the loan facilities sanctioned under different Heads was guaranteed by appellants 2 to 6. The DRT appears to have taken up the O.A. for the first time for preliminary consideration on 03.06.2019 when the borrower Company was represented by its counsel who had filed a caveat.
On 03.06.2019 the learned Presiding Officer of the DRT passed an order giving some directions to be complied with by the defendants in the O.A. The appellants felt aggrieved by some of the directions given in the impugned order and so they filed the present appeal.
The order of the DRT having some impugned directions reads as under:-
" It is a fresh OA filed on behalf of applicant banks.
Ld. Counsel for the defendant No.1 appeared and submits that he has filed a Caveat on behalf of defendant No.1.
By way of present Caveat filed vide Dy.No.7743 dated 21.05.2019 by the proposed Defendant/Caveator prayed that no order of stay or otherwise may be passed in the proposed OA, which may be filed by the proposed Applicant/non-caveator against the Caveator/proposed Defendants.
Ld. Counsel for Defendant No.1 submits that he has already preferred a caveator in the present matter; therefore, he submits that the applicants
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may be directed to provide complete set of paper book before hearing on admission in the present matter. He also submits that this Tribunal has no jurisdiction in the present OA as all the defendants resides in Mumbai, transactions took place in Mumbai, properties mortgaged are also not within the territorial jurisdiction of this Tribunal, therefore, he submits that the present OA may be dismissed on this ground alone. Further, he submits that there are various litigations pending between the parties and also with other litigants before various other Courts including the High Courts. Therefore, he submits that the prayer for attachment of property i.e. Atlanta Enclave Project, Survey No.67, Hissa No.2A to 3B/A, Village Sheel, Near DattaMandir, KalyanShilPhata Road, Mumbai Panvel Road, Mumbai (E) Thane-400612 would ultimately affect the order passed by the Hon'ble High Court. In these circumstances the present OA may be listed for hearing on the admission.
Ld. Counsel for the applicants of OA has strongly objected to the contention of defendant no.1 and submits that the caveat as such is filed subsequent to the filing of the OA, therefore, she submits that the defendant no.1 has no right to address on the admission of the OA. She also submits that the complete copy of OA has already been provided to the Ld. Counsel for defendant no.1 and also inspection of documents which is voluminous in nature was also allowed by her after the direction by this Tribunal in first instance, therefore, she submits that defendant no.1 has already provided sufficient assistance to address on the issue.
She submits that since the documents were executed at Hotel Red Fox, Delhi Airport, Asset No.16, Aerocity Hospitality District, IGI Airport, New Delhi-110037, therefore, this Tribunal has jurisdiction in the present OA. She also submits that since an amount of more than Rs.200.00 crores is involved in the present matter and the properties which are mortgaged with the applicant banks are insufficient to recover the dues, therefore, the attachment at this stage is necessary. She also submits that Ld. Counsel for defendant no.1 informed that defendants are going to dispose off the said property. This also makes a good case for admission of OA.
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Considered the contention of the parties. Since the defendant no.1 has already been allowed opportunity to address on OA, therefore, the issue of caveat is stand disposed off.
Since the documents are executed at Hotel Red Fox, Delhi Airport, Asset No.16, Aerocity Hospitality District, IGI Airort, New Delhi-110037, prima facie, I do not find any merit in the objection raised by the defendant No.1 pertaining to the jurisdiction and same is hereby rejected.
I have heard the arguments of Ld. Counsel for the applicant banks and defendant No.1 on notice of OA.
Registry is directed to issue Notice to the defendant No.2 to 6 to show cause within 30 days of the service Notice as to why the relief(s) prayed for should not be granted in favour of applicant bank. Notice shall be served by officials of applicant banks through Dasti service as well as through Registered Post/Speed Post in accordance with rules and procedure, upon all the defendants who shall also file Affidavit of Service in the Registry.
Registry is also directed to serve the copy of OA containing copy(s) of the documents filed along with the Application filed on behalf of applicant banks through Registered post. The applicant banks shall file the Affidavit of Service at least one week prior to the next date of hearing.
Written Statement be filed by the defendants within four weeks with directions to supply advance copy of the same to the Ld. counsel for applicant bank.
This OA has been supported with an affidavit. I have perused the OA, affidavit and the contents of documents executed by the defendants. Having considered the arguments of Ld. Counsel of the parties present and after perusal of the record, I am of the view that applicant banks have succeeded in establishing a prima facie case in their favour. The balance of convenience also lies in their favour and if ex parte interim order is not granted in favour of the applicant banks, they may suffer an irreparable loss which cannot be compensated in terms of the money.
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Looking into the facts & circumstances of this OA, prayer at Para 7(a) to 7(g) are allowed and defendants no. 1 to 6 are hereby restrained from selling, transferring or otherwise parting with the possession or creating third party interest with regard to the mortgaged properties till further order of this Tribunal.
So far as prayer 7(h) for attachment of property situated at Thane is concerned, Ld. Counsel for defendant No.1 has already informed that the defendants are going to dispose off the said property, therefore,
apprehension of Ld. Counsel for the applicant is genuine, further, the dues of the respondent FI is around Rs.200.00 crores, therefore, in these circumstances, I find that this is a good case for direction to the defendants not to further create any third party interest in the property situated in Thane till further directions of this Tribunal.
So far as prayer at 7(j) is allowed and defendant No.1 to 6 are hereby restrained from selling, disposing, transferring, alienating or creating any third party interest in the hypothecated stocks of goods, plants and machinery and moveable assets and properties present & future etc.
Further prayer at Para 7(m) of this OA is hereby allowed, and defendants are hereby directed to disclose the details of their personal and other movable and movable assets before this Tribunal.
In so far as, prayer at Para 7(q) is concerned, since an amount of more than Rs.200.00 crores is involved in the present matter therefore, the said prayer is also hereby allowed and defendant No.3 to 5 are hereby restrained from leaving the country without the permission of this Tribunal.
List this case before Ld. Registrar on 04.07.2019 for completion of pleadings, filing evidence and exhibition of documents and thereafter, before this Tribunal on 22.07.2019 for final arguments."
Appearing for the appellants-defendants their learned counsel Mr.HemantChaudhary had submitted orally as well as in his written submissions that the appellants are primarily challenging the legality of
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the direction given to the appellants-defendants that they will not leave the country without seeking prior permission of DRT. It was submitted that such a direction is in the teeth of a Division Bench judgmentdated 08.03.2017 of Hon'ble Delhi High Court in CWP No. 10765 "ICICI Bank Ltd. VsKapilPuri and Ors." In that case also DRT had passed a direction that the borrowers in that case will not leave the country without prior permission of the DRT. In appeal filed by the aggrieved borrower DRAT had set aside that direction of DRT. The ICICI Bank had approached the High Court by way of a writ petition challenging the order of DRAT. Dismissing that writ petition the High Court had held that DRT had no authority to restrain the borrower/guarantor from going abroad without the permission of DRT. Ms.EktaChaudhary, learned counsel for the Banks could not bring to my notice any judgment of the Hon'ble Delhi High Court, which is the jurisdictional High Court, taking a contrary view. She, however, strongly submitted that the appellants owe to the Bank hundreds of crores of rupees and in case they are permitted to leave the country and that too without putting any restrictions to ensure that they return back to the country to liquidate the Banks' dues there would be huge loss to the public exchequer since the Banks do not have enough securities in their hands from which dues of the banks could be fully recovered.
I am not impressed with the submissions of the learned counsel for the respondent-Banks that since crores of public money is to be recovered from the appellants the learned DRT was justified in directing the individual respondents-defendants not to leave the country without its prior permission.The learned DRT cannot ignore the binding
judgment of Hon'ble Delhi High Court in KapilPuri'scase(supra) wherein it has been clearly and categorically held that DRTs cannot restrict the right of movement of the borrowers/defaulters.
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This Tribunal can, however, appreciate the anxiety of the Banks that they have to recover hundreds of crores of loan money advanced to appellant no.1 Company as also the concern of the learned DRT that when the defendants before it have to pay the dues of the Banks from whom they had obtained financial assistance when the same was required for their businesses. It cannot be disputed that there may be cases where the defaulters leave the country with no intentions of returning back thereby putting the public money in jeopardy. But, to take care of that an eventuality the Banks and Financial Institutions have sufficient legal provisions in the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 at their command to be invoked so that if a defaulter of a bank flees from the country to evade the payment of loan money the same can be recovered even in his absence. However, unfortunately the experience of this Tribunal is that the Banks and Financial Institutions show least keenness in invoking those provisions of law.
Under Section 19 of the RDDBFI Act,1993 the Banks can seek an order for attachment before judgment of properties of the defendants in the O.A., appointment of receivers with direction to take over physical possession of the mortgaged properties etc.
The Banks can also seek a direction for furnishing of security by the borrowers/guarantors, which direction in the present case the respondent Banks have sought. They can always pursue that relief before the DRT.
This appeal is accordingly disposed of by setting aside the order of the DRT whereby the individual defendants have been directed to seek
DRT's prior permission if they have to travel abroad. The DRT had also made some observations in the impugned order regarding some other
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objections raised by the appellants. Those observations made on the first date itself obviously have to be treated as prima facie observations only and final view has to be formed by DRT after completion of pleadings etc. and if those objections have been raised in the written statements which must have been filed by now the DRT will pass appropriate orders uninfluenced by anything observed in the order dated 23.10.2019.
18.11 2019 Justice P.K.Bhasin
Chairperson
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