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2018 (11) TMI 985 - HC - Indian LawsWaiver of condition of deposit - Section 21 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 - Held that - The pre-amendment provisions of Section 21 of the Act 1993 required the appellant to deposit 75% of the decreetal sum which the DRAT had the discretion to waive or reduce, depending upon the facts and circumstances of the individual case. The said Section came to be amended by substitution of certain expressions by Act 44 of 2016 w.e.f. 01.09.2016. By such amendment, the quantum of the amount of pre-deposit has been reduced to 50% in place of 75%; and the power of DRAT to waive has been restricted to the extent of 25% - the contention of the petitioner that the amendment is prospective in effect, is not acceptable. In the present case, the amendment has only trimmed the requirements of pre-deposit and waiver and else, the substratum of Section 21 is retained. In fact, in the principal provision, where earlier the requirement was of deposit to the extent of 75%, has been reduced to that of 50% and correlated with that, the power of the Appellate Tribunal to waive the condition of pre-deposit has been restricted to 25%. The amendment in question, for its nature and for the reasons indicated above, in our view, is required to be taken as retrospective in operation and applicable to all appeals to be filed before the DRAT. The Writ Petitions being devoid of merits, are dismissed.
Issues Involved:
1. Requirement of pre-deposit under Section 21 of The Recovery of Debts due to Banks and Financial Institutions Act, 1993. 2. Retrospective application of the 2016 Amendment to Section 21 of the Act. 3. Financial capability of the petitioners to comply with the pre-deposit condition. 4. Discretion of DRAT in waiving or reducing the pre-deposit amount. Issue-wise Detailed Analysis: 1. Requirement of Pre-deposit under Section 21: The petitioners proposed to appeal against the Debt Recovery Tribunal (DRT) order dated 31.05.2016, which required a pre-deposit as per Section 21 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993. They sought a waiver of this condition via I.A.No.313/2016. The Debt Recovery Appellate Tribunal (DRAT) directed a deposit of ?50 Crores, observing that the debt amount was ?155.06 Crores and the pre-deposit could be reduced to 25% of the debt amount. The DRAT emphasized the necessity of this pre-deposit to entertain the appeal on merits. 2. Retrospective Application of the 2016 Amendment: The petitioners argued that the 2016 Amendment to Section 21, which reduced the pre-deposit requirement from 75% to 50% and limited the waiver discretion to 25%, should not apply retrospectively. They contended that their right to appeal, a substantive right, accrued when the original proceedings commenced before the amendment. The court, however, held that the amendment was procedural, not substantive, and thus retrospective. The court cited several precedents, including the Supreme Court's ruling in Shiv Shakti Coop. Housing Society v. Swaraj Developers, which stated that procedural changes apply retrospectively unless specified otherwise. 3. Financial Capability of the Petitioners: The petitioners claimed financial hardship and inability to comply with the pre-deposit condition. They provided material to support their claim but failed to furnish specific details about their agricultural properties and other assets. The court found the petitioners' submissions evasive and lacking in material particulars, which cast doubt on their bona fides. 4. Discretion of DRAT in Waiving or Reducing the Pre-deposit Amount: The DRAT exercised its discretion to set the pre-deposit at ?50 Crores, less than 25% of the debt amount. The court noted that the amendment did not eliminate the discretion to waive or reduce the pre-deposit but restricted it to no less than 25% of the decreetal amount. The court found that the DRAT's decision was within its discretionary powers and aligned with the amended provisions of Section 21. Conclusion: The court concluded that the writ petitions lacked substance and deserved dismissal. It upheld the DRAT's orders, emphasizing the retrospective application of the 2016 Amendment and the procedural nature of the pre-deposit requirement. The court also noted the petitioners' failure to provide sufficient details about their financial status, which undermined their claim for waiver. Consequently, the petitions were dismissed for lack of merit.
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