Case Note & Summary
The petitioners, Amit H. Jhaveri and M/s. Brader Incorporated, filed a writ petition challenging the order of the Debts Recovery Appellate Tribunal, Mumbai, which dismissed their appeal against the order of the Debt Recovery Tribunal, Mumbai. The respondent No.1, Bank of Baroda, had instituted a suit (Suit No.194 of 1997) against the petitioners for recovery of an amount. The suit was transferred to the Debt Recovery Tribunal after the enactment of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The Debt Recovery Tribunal allowed the bank's application and ordered recovery of Rs.8,09,58,000/- with interest at 18% per annum from 27-12-1993. This order was later reviewed, and the amount was modified to Rs.11,20,14,000/- with the same interest. The petitioners appealed to the Appellate Tribunal, contending that they had not signed any documents and no documents were executed between them and the bank, making the proceedings not maintainable. The Appellate Tribunal rejected this contention and dismissed the appeal. The High Court, in the present writ petition, considered the issue of jurisdiction of the Debt Recovery Tribunal. The court held that the liability of a guarantor arises from the contract of guarantee, and the Tribunal has jurisdiction to entertain applications for recovery of debts due to banks, including from guarantors, regardless of whether the guarantor signed the loan documents. The court found no merit in the petition and dismissed it, confirming the orders of the lower tribunals.
Headnote
A) Banking Law - Debt Recovery - Jurisdiction of Debt Recovery Tribunal - Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - The court considered whether the Debt Recovery Tribunal has jurisdiction over a claim against a guarantor who did not sign any documents with the bank. The court held that the liability of a guarantor arises from the contract of guarantee, and the Tribunal has jurisdiction to entertain applications for recovery of debts due to banks, including from guarantors, regardless of whether the guarantor signed the loan documents. The court dismissed the writ petition, upholding the orders of the Debt Recovery Tribunal and the Appellate Tribunal. (Paras 1-4)
Issue of Consideration
Whether the Debt Recovery Tribunal has jurisdiction to entertain an application against a guarantor who did not sign any documents with the bank, and whether the appeal against the order of the Debt Recovery Appellate Tribunal is maintainable.
Final Decision
The High Court dismissed the writ petition, upholding the orders of the Debt Recovery Tribunal and the Debts Recovery Appellate Tribunal.
Law Points
- Jurisdiction of Debt Recovery Tribunal
- Maintainability of application under Recovery of Debts Due to Banks and Financial Institutions Act
- 1993
- Liability of guarantor
- Interpretation of Section 19 of the Act
Case Details
2010 LawText (BOM) (10) 43
WRIT PETITION NO.983 OF 2010 WITH CIVIL APPLICATION NO.2380 OF 2010
P.B. Majmudar, Anoop V. Mohta
Mr. S.U. Kamdar, Senior Advocate i/by Mr. Devanshu P. Desai for petitioners; Mr. D.D. Madon, Senior Advocate with Mr. Simil Purohit i/by Juris Parmar Chambers for respondent No.1; Mr. K.R. Chaudhari for respondent No.2; Mr. A.I. Patel, AGP for respondent No.5 in CA No.2380 of 2010
Amit H. Jhaveri and M/s. Brader Incorporated
Bank of Baroda, Income Tax Department, The Chair Person, Debt Recovery Tribunal, Mumbai, Union of India
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Nature of Litigation
Writ petition challenging order of Debts Recovery Appellate Tribunal dismissing appeal against Debt Recovery Tribunal order for recovery of debt.
Remedy Sought
Petitioners sought to quash the order of the Debts Recovery Appellate Tribunal and the Debt Recovery Tribunal.
Filing Reason
Petitioners contended that they had not signed any documents and no documents were executed between them and the bank, making the proceedings before the Tribunal not maintainable.
Previous Decisions
Debt Recovery Tribunal allowed bank's application and ordered recovery of Rs.8,09,58,000/- with interest, later modified to Rs.11,20,14,000/-. Appellate Tribunal dismissed appeal.
Issues
Whether the Debt Recovery Tribunal has jurisdiction to entertain an application against a guarantor who did not sign any documents with the bank.
Whether the appeal against the order of the Debt Recovery Appellate Tribunal is maintainable.
Submissions/Arguments
Petitioners argued that since they did not sign any documents and no documents were executed between them and the bank, the proceedings before the Tribunal were not maintainable.
Respondent Bank argued that the liability of a guarantor arises from the contract of guarantee, and the Tribunal has jurisdiction.
Ratio Decidendi
The liability of a guarantor arises from the contract of guarantee, and the Debt Recovery Tribunal has jurisdiction to entertain applications for recovery of debts due to banks, including from guarantors, regardless of whether the guarantor signed the loan documents.
Judgment Excerpts
The Appellate Tribunal by its judgment and order dated 12012010 dismissed the appeal filed by the petitioners and confirmed the order passed by the Debt Recovery Tribunal, Mumbai.
The contention of the petitioners before the Appellate Tribunal was that since the petitioners has not signed any documents and no documents were executed between the petitioners and respondent Bank, the proceedings before the Tribunal were not maintainable.
Procedural History
Suit No.194 of 1997 filed by Bank of Baroda against petitioners in Bombay High Court, transferred to Debt Recovery Tribunal after enactment of Recovery of Debts Due to Banks and Financial Institutions Act, 1993. Debt Recovery Tribunal allowed application on 27-03-2006, later modified on review. Petitioners appealed to Debts Recovery Appellate Tribunal, which dismissed appeal on 12-01-2010. Petitioners then filed writ petition in High Court.
Acts & Sections
- Recovery of Debts Due to Banks and Financial Institutions Act, 1993: Section 19
