Case Note & Summary
The petitioners, Ashish Mines & Minerals and others, were borrowers who had availed credit facilities from the Central Bank of India in 1985, including a cash credit facility of Rs.30,00,000, an overdraft facility of Rs.15,00,000, and a term loan of Rs.9,50,000. They executed a promissory note and other documents. The bank filed a recovery suit before the Debts Recovery Tribunal (DRT), which passed a recovery certificate against the petitioners. The petitioners appealed to the Debts Recovery Appellate Tribunal (DRAT) under Section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The DRAT, by order dated August 12, 2005, directed the petitioners to deposit 50% of the debt amount of Rs.1,38,61,800.72 within eight weeks as a condition for hearing the appeal, under Section 21 of the Act. The petitioners challenged this order by way of a writ petition before the Bombay High Court, arguing that the pre-deposit condition was harsh and that they were unable to comply. The High Court, after hearing both sides, held that Section 21 of the Act mandates a minimum deposit of 75% of the debt amount before an appeal can be entertained, and the Tribunal has discretion to reduce it only in exceptional circumstances. The court found that the DRAT's order requiring 50% deposit was within its discretion and not perverse. The High Court also noted that the petitioners had an alternative remedy of appeal against the interlocutory order, and therefore declined to interfere under Article 226 of the Constitution. The writ petition was dismissed.
Headnote
A) Banking Law - Pre-deposit for Appeal - Section 21 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - Mandatory Deposit - The Appellate Tribunal directed the petitioners to deposit 50% of the debt amount as a condition for hearing the appeal. The High Court held that Section 21 mandates a minimum deposit of 75% of the debt amount, and the Tribunal has discretion to reduce it only in exceptional circumstances. The order requiring 50% deposit was not interfered with as it was within the Tribunal's discretion. (Paras 1-10)
B) Constitutional Law - Writ Jurisdiction - Interference with Interlocutory Orders - Article 226 of the Constitution of India - The High Court declined to interfere with the Appellate Tribunal's order directing pre-deposit, as the petitioners had an alternative remedy of appeal and the order was not perverse or without jurisdiction. (Paras 1-10)
Issue of Consideration
Whether the Debts Recovery Appellate Tribunal was justified in directing the petitioners to deposit 50% of the debt amount as a condition for hearing their appeal, and whether the High Court should interfere with such an interlocutory order under Article 226 of the Constitution.
Final Decision
The High Court dismissed the writ petition, holding that the order of the Debts Recovery Appellate Tribunal directing the petitioners to deposit 50% of the debt amount was within its discretion under Section 21 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, and that no interference was warranted under Article 226 of the Constitution.
Law Points
- Section 21 of the Recovery of Debts Due to Banks and Financial Institutions Act
- 1993
- mandatory pre-deposit
- waiver of pre-deposit only in exceptional circumstances
- discretion of Appellate Tribunal
- maintainability of writ petition against interlocutory order
Case Details
2005 LawText (BOM) (08) 182
Writ Petition No. 1986 of 2005
Dalveer Bhandari, C.J., S.J. Vazifdar, J.
Mr. M.U. Pandey for the Petitioners, Mr. N.P. Shah instructed by M/s. Little & Co. for Respondent No. 1
Ashish Mines & Minerals and others
Central Bank of India and others
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Nature of Litigation
Writ petition challenging an interlocutory order of the Debts Recovery Appellate Tribunal directing pre-deposit of 50% of the debt amount as a condition for hearing the appeal.
Remedy Sought
The petitioners sought quashing of the order dated August 12, 2005 passed by the Debts Recovery Appellate Tribunal in Misc. Application No. 489 of 2004 in Appeal No. 182 of 2004, which directed them to deposit 50% of Rs.1,38,61,800.72 within eight weeks.
Filing Reason
The petitioners were aggrieved by the condition of pre-deposit imposed by the Appellate Tribunal, which they claimed was harsh and beyond their financial capacity.
Previous Decisions
The Debts Recovery Tribunal had passed a recovery certificate against the petitioners. The petitioners appealed to the Debts Recovery Appellate Tribunal, which passed the impugned order directing pre-deposit.
Issues
Whether the Debts Recovery Appellate Tribunal was justified in directing the petitioners to deposit 50% of the debt amount as a condition for hearing the appeal under Section 21 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.
Whether the High Court should interfere with such an interlocutory order under Article 226 of the Constitution of India.
Submissions/Arguments
The petitioners argued that the pre-deposit condition was harsh and that they were unable to comply with it, and that the Tribunal should have waived or reduced the deposit further.
The respondent bank argued that Section 21 of the Act mandates a minimum deposit of 75% of the debt amount, and the Tribunal's order requiring 50% was within its discretion and should not be interfered with.
Ratio Decidendi
Section 21 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 mandates that no appeal shall be entertained unless the appellant has deposited 75% of the debt amount, but the Appellate Tribunal has discretion to reduce this amount in exceptional circumstances. The High Court will not interfere with such discretionary orders under Article 226 unless they are perverse or without jurisdiction.
Judgment Excerpts
The petitioners are aggrieved by the order passed in Misc. Application No. 489 of 2004 in Appeal No. 182 of 2004, by which the petitioners have been directed to deposit 50% of Rs.1,38,61,800.72 within eight weeks with the Registrar of the Debts Recovery Appellate Tribunal.
Section 21 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 mandates that no appeal shall be entertained unless the appellant has deposited 75% of the debt amount, but the Appellate Tribunal has discretion to reduce this amount in exceptional circumstances.
Procedural History
The Central Bank of India filed a recovery suit before the Debts Recovery Tribunal, which passed a recovery certificate against the petitioners. The petitioners appealed to the Debts Recovery Appellate Tribunal under Section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The Appellate Tribunal, by order dated August 12, 2005, directed the petitioners to deposit 50% of the debt amount as a condition for hearing the appeal. The petitioners challenged this order by filing a writ petition before the Bombay High Court.
Acts & Sections
- Recovery of Debts Due to Banks and Financial Institutions Act, 1993: 20, 21
- Constitution of India: 226
