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2016 (5) TMI 821 - HC - Indian LawsWaiver of complete pre-deposit - required to deposit 50% of entire amount of loan determined by DRT - tribunal did not waive the entire prerequisite statutory amount under section 21 of the Recovery of Debts Due to Bank and Financial Institutions Act, 1993 - Held that - the respondent could not show any statutory provision or any judicial pronouncement on the point enumerating the circumstances under which the entire amount can be waived and under which the amount can be reduced. Whereas, in the case of ITC Limited vs. CC (Appeals) and CE 2003 (10) TMI 70 - HIGH COURT OF JUDICATURE AT ALLAHABAD this court has touched this aspect of the matter, may be under the different statute, but the principles laid down by the Division Bench are near to the truth in the context of the present case too as in the present case there is provision for complete waiver provided the Appellate Tribunal is satisfied, whereas in the Central Excise Act there is no provision for complete waiver. Therefore, the petitioners case stands on better footing looking into the provision to section 21 of DRRBFI Act, 1993, and, in the Appellate Tribunal has erred in not considering that aspect of the matter including prima facie, merit of the case while passing the impugned order, therefore, the same cannot be sustained in the eye of law. - Decided in favour of petitioner
Issues Involved:
1. Whether the Debt Recovery Appellate Tribunal (DRAT) erred in not waiving the entire prerequisite statutory amount under Section 21 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (DRRBFI Act, 1993). 2. Whether the Appellate Tribunal properly considered the prima facie merits of the case while deciding the waiver application. 3. Interpretation and application of Section 21 of the DRRBFI Act, 1993, Section 35-F of the Central Excise Act, 1944, and Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Act, 2002). Detailed Analysis: 1. Error in Not Waiving the Entire Prerequisite Statutory Amount: The petitioners challenged the order dated 22.1.2016 of the DRAT, which required them to deposit 50% of the loan amount as determined by the Debt Recovery Tribunal (DRT). The petitioners argued that the DRAT erred in not waiving the entire statutory deposit under Section 21 of the DRRBFI Act, 1993, citing financial hardship and closure of their business. The petitioners emphasized that their firm, involved in exporting woollen carpets, faced severe financial difficulties and non-cooperation from the bank, which led to the closure of their business. 2. Consideration of Prima Facie Merits: The petitioners contended that the Appellate Tribunal failed to consider the prima facie merits of their case while deciding the waiver application. They argued that the Tribunal should have taken into account the merits, including the bank's acceptance of a settlement proposal and the payment of Rs. 4,50,000/- towards the settlement. The petitioners relied on judgments from ITC Limited vs. CC (Appeals) and CE and Pole-ADS Advertising (P) Ltd. vs. State of U.P., which emphasized the importance of considering the prima facie merits in waiver applications. 3. Interpretation and Application of Relevant Sections: The court examined the provisions of Section 21 of the DRRBFI Act, 1993, Section 35-F of the Central Excise Act, 1944, and Section 18 of the Act, 2002. Section 21 of the DRRBFI Act mandates a 75% deposit of the debt amount for an appeal to be entertained, with a proviso allowing the Tribunal to waive or reduce this amount. Section 35-F of the Central Excise Act allows for the waiver of the deposit in cases of undue hardship, while Section 18 of the Act, 2002, requires a 50% deposit, which can be reduced to 25% by the Tribunal. The court noted that the DRRBFI Act provides the Tribunal with the power to completely waive the deposit, unlike the Central Excise Act and the Act, 2002. The court highlighted that the Appellate Tribunal must exercise caution and consider the object and spirit of the proviso when deciding on a waiver application. The court referred to the Division Bench decision in ITC Limited, which underscored the need to consider the prima facie merits of the case and the undue hardship faced by the appellant. Conclusion: The court concluded that the DRAT erred in not considering the prima facie merits of the petitioners' case while deciding the waiver application. The court quashed the impugned order dated 22.1.2016 and directed the Tribunal to pass a fresh order after hearing the parties. The court also ordered that no coercive action should be taken against the petitioners until the waiver application is disposed of by the Appellate Tribunal.
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