2002 (11) TMI 676 - HC - Companies Law

Summary

Issues:
- Failure of the Debts Recovery Appellate Tribunal to exercise discretion under section 21 of the 1993 Act.

Analysis:
The judgment in question revolves around the central issue of whether the Debts Recovery Appellate Tribunal failed to exercise its discretion under section 21 of the 1993 Act. The case involved appellants who stood as guarantors for loans advanced by a bank to various companies, leading to default and subsequent recovery proceedings. The crux of the matter was the application made by the appellants under section 21 for a waiver of pre-deposit, which was decided by the Tribunal. The Tribunal ordered the deposit of a substantial amount due from the appellants, which they failed to comply with, leading to an appeal. The appellants contended that the Tribunal should have exercised its discretion and quashed the order for deposit. However, the Court emphasized that the Act aims to secure public funds and expedite debt recovery proceedings, highlighting the importance of pre-deposit requirements under section 21.

The Court delved into the legislative intent behind the Act, emphasizing the need to prevent parties from retaining funds indefinitely to the detriment of others. Section 21 mandates a pre-deposit before entertaining an appeal, with a provision for the Tribunal to waive or reduce the amount based on valid reasons. The discretion granted to the Tribunal must be exercised judiciously, with reasons recorded in writing. In the present case, the Tribunal, after considering relevant factors, concluded that the appellants had evaded payment for an extended period in collusion with bank officers. Despite this, the Tribunal did not outright reject the waiver petition, granting partial relief by allowing appeals upon deposit of 60% of the decretal amount. The Court found the exercise of discretion by the Tribunal to be reasonable and supported by pertinent reasons, upholding the impugned order.

Furthermore, the Court addressed the appellants' argument regarding providing adequate security to the bank, asserting that the delay in payment since 1990 was against public interest. Despite the presence of securities, the bank had not recovered any amount, indicating a pattern of avoidance by the appellants. The Court concurred with the single Judge's decision of not interfering with the Tribunal's order, highlighting the public interest aspect and the appellants' methods to evade payment. Ultimately, the Court dismissed the appeal, noting the lack of merit and refraining from awarding costs due to the absence of notice to the respondents.