2002 (10) TMI 688 - HC - Companies Law

Summary

Issues:
Challenge to order passed by Debts Recovery Appellate Tribunal on grounds of breach of natural justice and waiver of pre-deposit under section 21 of the Act.

Analysis:
The writ petition challenged an order passed by the Debts Recovery Appellate Tribunal, which confirmed an order by the Presiding Officer of the Debts Recovery Tribunal. The petitioner contended that the order was passed without proper notice or opportunity to be heard, violating principles of natural justice. The Appellate Tribunal rejected the request for waiver of pre-deposit, citing the aim of expeditious adjudication. However, the petitioner argued that this reasoning did not address the breach of natural justice issue raised. The Tribunal is empowered to pass interim orders under section 19(20) of the Act, but such orders require an application from the respondent Bank and a fair hearing for the defendant. In this case, the order for recovery certificate was issued without compliance with these provisions, leading to a breach of established procedure and principles of natural justice.

The Appellate Tribunal's reliance on the petitioner's balance sheet to assume admission of the claim was contested. The petitioner argued that the mere provision in the balance sheet did not constitute admission of the claim. The court decided to set aside the orders of both Tribunals, emphasizing the breach of natural justice in the proceedings. The parties were directed to return to the Tribunal for a fresh consideration of any interim relief application. The respondent Bank was given the opportunity to file a formal application regarding the admission of the claim, to be considered in accordance with the law. Ultimately, the rule was made absolute in favor of the petitioner, with no order as to costs.

This judgment highlights the importance of procedural fairness and adherence to statutory provisions in debt recovery proceedings. It underscores the necessity of providing notice and a fair opportunity to be heard before issuing significant orders, emphasizing the principles of natural justice in legal proceedings.