The recent legal case delves into the crucial aspect of pre-deposit requirements in debt recovery appeals. The court’s analysis emphasizes the importance of ensuring debtors meet their obligations, in line with statutory provisions. This summary provides a comprehensive insight into the legal intricacies surrounding pre-deposit conditions in debt recovery proceedings.
Facts
- Both matters relating to the same issue considered together in this common order.
- DRT ordered recovery certificate on 15.03.2018.
- Respondents No.1 and 2 did not make the deposit as directed by the Court.
- Appellant challenging the High Court order allowing appeal without pre-deposit.
- Respondents ordered to deposit Rs.20 Crores by this Court.
- Amount of Rs.152,81,07,159/- deposited by respondent No.3.
- DRAT noted balance debt due as Rs.68,18,92,841/- after considering the deposit.
- Respondent No.3 availed financial assistance from respondent No.6-IFCI Ltd.
- Respondents No.1 to 3 defaulted in repayment, auctioned by respondent No.6-IFCI Ltd.
- Appellant assigned unpaid debt and non-performing asset in their favor.
- Settlement agreement between parties for repayment not adhered to by respondents No.1 to 3.
- Appellant filed recovery proceedings in DRT for the outstanding amount.
- NHAI acquired part of mortgaged property, deposited compensation amount before DRT.
- DRAT directed respondents No.1 and 2 to deposit fifty per cent of the amount.
- DRT limited decretal amount to Rs.145 Crores with future interest at 9% per annum.
- Appellant and respondents No.1 to 3 appealed the DRT order to DRAT.
- Current proceeding limited to the issue of pre-deposit for appeal before DRAT.
- Respondents No.1 and 2 approached the High Court of Delhi in WP(C) No.7530 of 2019
- High Court noted that the Bank had recovered the sum of Rs.152,81,07,159/-
- High Court permitted respondents No.1 and 2 to prosecute the appeal without pre-deposit
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Analysis
- The High Court concluded that the pre-deposit requirement under sub-section (1) of Section 18 of the Act is mandatory.
- The Appellate Tribunal can reduce the amount of deposit required, but not below twenty-five percent of the debt due.
- Waiving the entire pre-deposit would be against the statutory provisions and not sustainable in law.
- The DRAT’s order of pre-deposit of fifty percent was based on the fact that the debt due had not been fully realized, as per the order dated 27.02.2019.
- The order of the High Court insisting on pre-deposit was upheld, stating it as a condition precedent for appealing under Section 18(1) of the Act.
- An appeal from a person who owes a debt to a bank or financial institution cannot be entertained by the Appellate Tribunal unless 50% of the debt amount determined by the Tribunal is deposited.
- The proviso allows the Appellate Tribunal to reduce the deposit amount, but it cannot be less than 25% of the total debt due.
- The provision aims to ensure that debtors do not avoid paying their debts by filing appeals.
- Section 18(1) of the Act provides a statutory right to appeal for a person aggrieved by an order of the Debts Recovery Tribunal under Section 17.
- The right to appeal under Section 18(1) is subject to a condition mentioned in the second proviso.
- This condition relates to the requirement of making a pre-deposit to avail the remedy of appeal.
- A total waiver of pre-deposit would be against statutory provisions.
- Considering that payment of a major portion is made through compensation appropriation and the remaining properties are available by mortgage, a pre-deposit of twenty-five percent of the due amount is deemed appropriate.
- The pre-deposit amount is twenty-five percent of Rs. 68,18,92,841.
- The order passed by the DRAT on IA No.511 of 2018 is modified accordingly.
- The debt due quantified here is limited to the pre-deposit aspect, leaving all other contentions open to be argued in pending appeals.
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Decision
- The interim direction to deposit Rs.20 Crores as ordered on 22.11.2019 is deemed irrelevant now.
- No need to proceed with the Contempt Petition by the appellant due to the subsequent final order in the appeal.
- Order dated 16.07.2019 by the High Court of Delhi in WP(C) No.7530 of 2019 is set aside.
- Order dated 27.02.2019 by the DRAT, Delhi on IA No.511 of 2018 in Appeal No.311 of 2018 is modified.
- Respondents No 1 and 2 allowed to deposit 25% of Rs.68,18,92,841 to pursue Appeal No.311 of 2018 within 8 weeks.
- If the deposit is not made within 8 weeks, the appeal will not subsist in the eye of the law.
- The appeal is partially allowed without any costs.
- Contempt Petition No.569 of 2020 is closed as unnecessary.
- Pending applications shall proceed when the entire compensation amount is deposited and a major portion of the debt due is discharged.
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Case Title: KOTAK MAHINDRA BANK PVT. LIMITED Vs. AMBUJ A. KASLIWAL (2021 INSC 90)
Case Number: C.A. No.-000538-000538 / 2021
