2019 (7) TMI 1912 - HC - Indian Laws

Requirement to submit the pre-deposit - recovery of amount due to on account of default in repayment of loans - case of petitioner is that the DRAT has not appreciated the fact that there was no occasion for the petitioners to be required to deposit any amount as a pre-condition under Section 21 of the Recovery of Debts and Bankruptcy Act - HELD THAT - The learned DRAT has not viewed the aspect of pre-deposit correctly in the present case. The amount of Rs. Rs. 152, 81, 07, 159/- was received by the respondent-bank during the pendency of the Original Application. The respondent-bank did not amend its Original Application to claim that it has adjusted the said amount and did not limit its claim for the balance amount. Consequently while adjudicating the Original Application the DRT has proceeded on the basis that the respondent-bank is bound by the settlement amount of Rs. 145 crores and is entitled to future interest thereon at the rate of 9% per annum from 5th July 2012 onwards till realization on the reducing balance after taking into account the amount of Rs. 152, 81, 07, 159/- received during the pendency of the Original Application. Merely because the amount of Rs. 152, 81, 07, 159/- was received by the respondent-bank before passing of the final judgment and not thereafter would make no difference while considering the aspect of pre-deposit that the debtor or the guarantor would have to deposit in terms of Section 21 of the aforesaid Act. The appeal preferred by the petitioners-appellants should be heard by the DRAT without insisting on any further deposit at this stage. The impugned orders dated 27.2.2019 and 9.4.2019 are therefore set aside - Appeal disposed off.

Summary

Issues involved:
1. Challenge to orders passed by the Debts Recovery Appellate Tribunal.
2. Interpretation of Section 21 of the Recovery of Debts and Bankruptcy Act.
3. Dispute over pre-deposit requirement.
4. Settlement agreement between parties.
5. Adjustment of amounts received during the pendency of the Original Application.
6. Appeal and cross-appeal filed by the parties.
7. Rights of the respondent-bank and other creditors.
8. Directions to the Debts Recovery Appellate Tribunal.

Issue 1: Challenge to orders passed by the Debts Recovery Appellate Tribunal:
The petitioners contested the orders dated 27.2.2019 and 9.4.2019 issued by the Debts Recovery Appellate Tribunal (DRAT) concerning a waiver request for a pre-deposit of 50% of the debt determined by the Debt Recovery Tribunal (DRT). The petitioners, guarantors for credit facilities provided by Kotak Mahindra Bank Pvt. Ltd. to the principal borrower, challenged these orders in their writ petition before the High Court.

Issue 2: Interpretation of Section 21 of the Recovery of Debts and Bankruptcy Act:
The primary contention raised by the petitioners was the incorrect application of Section 21 of the Recovery of Debts and Bankruptcy Act. The petitioners argued that there was no legal basis for them to deposit any amount as a pre-condition under this section, emphasizing that the recovery certificate itself covered the specified amount with interest.

Issue 3: Dispute over pre-deposit requirement:
The High Court analyzed the arguments presented by both parties regarding the necessity of a pre-deposit and the interpretation of the recovery certificate issued by the DRT. The court considered the amounts already received by the respondent-bank during the pendency of the Original Application and assessed whether further deposits were warranted under the law.

Issue 4: Settlement agreement between parties:
The judgment highlighted a settlement agreement between the parties, where the respondent-bank agreed to receive a specific amount under certain terms and conditions. The court examined the terms of this settlement and its implications on the ongoing recovery proceedings.

Issue 5: Adjustment of amounts received during the pendency of the Original Application:
The court scrutinized the actions of the respondent-bank in receiving a substantial amount during the pendency of the Original Application and assessed the impact of this receipt on the overall recovery process and the obligations of the petitioners and guarantors.

Issue 6: Appeal and cross-appeal filed by the parties:
The judgment noted that both the respondent-bank and the principal debtor had filed appeals and cross-appeals before the DRAT, indicating ongoing legal disputes related to the recovery proceedings.

Issue 7: Rights of the respondent-bank and other creditors:
The court discussed the interests of the respondent-bank and other creditors, particularly YES Bank, in the mortgaged properties involved in the case. It acknowledged the pending appeals and cross-appeals related to these properties and the need for a comprehensive resolution.

Issue 8: Directions to the Debts Recovery Appellate Tribunal:
Ultimately, the High Court set aside the impugned orders and directed the DRAT to hear all appeals and cross-appeals promptly, without requiring any further deposit at that stage. The court scheduled a specific date for the parties to appear before the DRAT and urged for expedited consideration of the pending matters within the next three months.

This detailed analysis of the judgment provides a comprehensive understanding of the legal issues, arguments presented by the parties, and the court's decision in each aspect of the case.