Case Note & Summary
The petitioner, Gammon India Limited, filed a writ petition under Article 226 of the Constitution of India challenging an order dated 28th September 2005 passed by the Debt Recovery Appellate Tribunal (DRAT). The dispute arose from 42 bank guarantees issued by Andhra Bank (respondent no.3) between 1976 and 1980 in favor of the State of Andhra Pradesh on behalf of the petitioner for works connected with the Sri Sailam Hydro Electric Project, with an aggregate value of Rs.73,90,320/-. The bank invoked the guarantees and demanded payment from the petitioner. The petitioner failed to pay, leading the bank to file an application before the Debt Recovery Tribunal (DRT) for recovery of the amount. The DRT allowed the application and directed the petitioner to pay the amount. The petitioner appealed to the DRAT, which dismissed the appeal and upheld the DRT's order. Aggrieved, the petitioner approached the High Court. The legal issues centered on whether the DRT had jurisdiction to entertain the bank's claim for recovery under the bank guarantees and whether the DRAT's order was sustainable. The petitioner argued that the DRT lacked jurisdiction as the claim was not a debt under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The respondent bank contended that the guarantees were debts and the DRT had jurisdiction. The court analyzed the provisions of the Act and held that the DRT had jurisdiction to entertain the application. The court found no error in the DRAT's order and dismissed the writ petition, upholding the orders of the DRT and DRAT.
Headnote
A) Banking Law - Jurisdiction of Debt Recovery Tribunal - Recovery of Debts Due to Banks and Financial Institutions Act, 1993, Sections 17, 19 - The Debt Recovery Tribunal has jurisdiction to entertain applications for recovery of amounts due under bank guarantees, as the same constitute debts due to a bank. The court upheld the order of the Debt Recovery Appellate Tribunal which confirmed the order of the Debt Recovery Tribunal directing the petitioner to pay the amount due under the bank guarantees. (Paras 1-10) B) Constitutional Law - Writ of Certiorari - Article 226 of Constitution of India - The High Court, while exercising writ jurisdiction, does not act as an appellate court and will not interfere with findings of fact unless they are perverse or based on no evidence. The court found no infirmity in the impugned order and dismissed the petition. (Paras 1-10)
Issue of Consideration
Whether the Debt Recovery Appellate Tribunal was correct in upholding the order of the Debt Recovery Tribunal directing the petitioner to pay the amount due under the bank guarantees.
Final Decision
The High Court dismissed the writ petition, upholding the orders of the Debt Recovery Tribunal and the Debt Recovery Appellate Tribunal.
Law Points
- Jurisdiction of Debt Recovery Tribunal
- Bank Guarantee
- Recovery of Debts Due to Banks and Financial Institutions Act
- 1993
- Writ of Certiorari
- Article 226 of Constitution of India
