Case Note & Summary
The case involves a writ petition filed by M/s. Inteltek Automation Pvt. Ltd. and two others against Indusind Bank Ltd. and another, challenging an order of the Debts Recovery Tribunal (DRT) at Pune. The bank had filed an Original Application for recovery of Rs.2.12 crores plus interest. The bank moved an application under Rule 12(5) of the Debts Recovery Tribunal (Procedure) Rules, 1993, claiming that the petitioners' balancesheet for the year ending 31 March 2005 showed an admitted liability of Rs.1.58 crores. The DRT directed the petitioners to deposit Rs.1.58 crores within one month, failing which an interim recovery certificate would be issued. The Appellate Tribunal confirmed this order. The petitioners argued that the balancesheet entry was not an admission because the auditor's notes clearly stated there was a dispute over interest and principal. The High Court examined the auditor's notes, which stated: 'There is dispute between the company and its bankers Indusind Bank Ltd over the issue of charging of interest and payment to bankers of interest and principal on Term Loan Rs. 1.50 crores.' The court held that the DRT erred in reading the balancesheet entry in isolation. The notes indicated a dispute, and therefore there was no unequivocal admission of liability. The court applied the principle that only a plain admission can justify an order akin to a decree under Order XII Rule 6 of the Code of Civil Procedure, 1908. Consequently, the court quashed the orders of the DRT and the Appellate Tribunal and allowed the writ petition.
Headnote
A) Debt Recovery - Admission of Liability - Rule 12(5) Debts Recovery Tribunal (Procedure) Rules, 1993 - The court considered whether a balancesheet entry showing an outstanding amount, when qualified by auditor's notes indicating a dispute over interest and principal, amounts to an unequivocal admission of liability. The court held that the entry cannot be read in isolation; the notes clearly show a dispute, and therefore no order for deposit or interim recovery certificate could be passed. (Paras 1-5) B) Civil Procedure - Admission - Order XII Rule 6 Code of Civil Procedure, 1908 - The court applied the principle that only a plain and unequivocal admission can form the basis for a decree or order. Since the balancesheet entry was qualified by auditor's notes disputing the liability, there was no clear admission. (Para 3-5)
Issue of Consideration
Whether an entry in a balancesheet, when accompanied by auditor's notes indicating a dispute, constitutes an admission of liability under Rule 12(5) of the Debts Recovery Tribunal (Procedure) Rules, 1993, warranting an order for deposit or issuance of an interim recovery certificate.
Final Decision
The High Court allowed the writ petition, quashing the orders of the Debts Recovery Tribunal dated 23 April 2010 and the Appellate Tribunal. The court held that the balancesheet entry, when read with the auditor's notes, did not constitute an unequivocal admission of liability, and therefore no order for deposit or interim recovery certificate could be passed under Rule 12(5).
Law Points
- Admission must be unequivocal
- Balancesheet entry not conclusive admission if qualified by auditor's notes
- Order XII Rule 6 CPC principles apply to Rule 12(5) DRT Rules
