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Kerala Financial Corporation and Another V/S Union Bank of India.

    URA-24 and 25 of 2001

    Decided On, 22 February 2002

    At, Debt Recovery Appellate Tribunal At Chennai

    By, THE HONORABLE JUSTICE: A. SUBBULAKSHMY. (CHAIRMAN)

   




Judgment Text


1. The Petitioners Kerala State Industrial Development Corporation Ltd. and Kerala Financial Corporation 5th and 6th defendants in the Tribunal below have filed these Petitions under Section 21 of the Recovery of Debts Due to Banks and Financial Institutions (RDDB&FI) Act, 1993 (the Act) for waiver of mandatory deposit of the 75% of the decreed amount.

2. These petitioners contend that they advanced loans to the 1st defendant in the application and the title deeds which relate to immovable property of the 1st defendant were deposited with the petitioners creating joint equitable mortgage and the plant A Schedule property were jointly mortgaged by the said company under the pari passu inter se arrangement between the financial institutions and accordingly it was agreed between the pe

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itioners appellants and the, respondent institutions that the mortgaged properties shall be distributed in proportion or in the ratio of 80:60:28 between the petitioners and the Union Bank of India-plaintiff in the Application (1st respondent-Bank).3. The 1st respondent Bank (the Union of Bank of India) Advanced further loans by enhancing the credit limits to an extent of Rs. 71,50,000/- (Rupees seventy-one lakhs and fifty thousand only). The petitioners state that all further loans advanced to the company by the respondent Bank were sanctioned without the knowledge and consent of the petitioners and the petitioner corporation never consented for creation of pari passu charge over the schedule properties other than for the term loan of Rs. 28,00,000/- (Rupees twenty lakhs only) originally advanced by the 1 st respondent Bank and the respondent Bank cannot claim charge in respect of the loans advanced subsequently without the consent of the other institutions having charge under pari passu agreement.4. The petitioners further contend that the learned Presiding Officer, Debt Recovery Tribunal had erroneously ordered in favour of the applicant Bank to have charge over the properties at the ratio of 80:60:71.5 instead of at the ratio of 80:60:28 and the respondent Bank cannot have charge over the mortgaged properties in respect of the loan advanced released subsequently and the petitioners appellants are not the borrower and no recovery certificate was issued or mortgage decree was passed as against the petitioners and the petitioners Corporations' interest has been adversely affected by virtue of order passed with respect to the ratio of charge over mortgaged properties and as the petitioner is neither a borrower nor recovery certificate has been issued the petitioner need not deposit the 75% of the decreed amount to file the appeal and the mandatory provisions of Section 21 of the Act do not apply to the facts and circumstances of the case and so he is entitled to the waiver of mandatory deposit of 75% of the decreed amount.5. The respondent Bank has filed the counter contending that the respondent Bank agreed to grant the financial assistance on the request of 1st respondent for Rs. 28,00,000/- (Rupees twenty-eight lakhs only) and this amount was secured by charge mortgage of the land and building, plant and machinery and all other assets of the company present and future and this charge was to rank pari passu with the charge in favour of petitioners appellants for the term loan of Rs. 80,00,000/- (Rupees eighty lakhs only) in favour of the 5th respondent and Rs. 60,00,000/- (Rupees sixty lakhs only) in favour of the 6th respondent and the charge in favour of 5th and 6th respondent was created and it was registered with the Registrar of Companies and as per the agreement the DRT has correctly come to the conclusion that the charge over the A Schedule property among the appellants and the 5th and 6th respondent should be in the ratio of 80:60:71.1 and no prima facie case was made out by the appellants and the appellants have not made out a case for admission of these appeals and the appeals have to be rejected and the balance of convenience is in favour of the Bank.6. Heard the Counsels for both sides and considered their arguments.7. The Counsel for the petitioners appellants submitted that the appellants are aggrieved at the order of the learned Presiding Officer, DRT, Ernakulam, passing the decree for realisation of decree amount at the rate of 80:60:71.5 and the correct ratio must be at the rate of 80:60:28 and in this aspect the order passed by the learned Presiding Officer, DRT, Ernakulam is liable to be interfered with and as he is aggrieved by the order passed by the DRT, Ernakulam he is entitled to file appeal under Section 20 of the RDDB&FI Act. He further submitted that since the petitioners appellants are neither a borrower nor any recovery certificate has been issued as against these petitioners appellants, the mandatory provisions of Section 21 of the Act do not apply to the appellants and they are entitled for waiver of the mandatory deposit as contemplated under Section 21 of the Act.8. On the other hand the learned Counsel for the respondent Bank submitted that the learned Presiding Officer, DRT, Ernakulam has passed the order based on the pari passu agreement and the ratio has also been arrived at on the basis of the agreement and the order passed by the learned Presiding Officer, DRT, Ernakulam, does not suffer from any infirmity and the appellant who was also a financier is not entitled to maintain this appeal and as the appeal itself is not maintainable and the appeal as well as the petitions filed by the appellant have to be rejected.9. Section 20 of the Act roads as follows :"Save as provided in Sub-section (2), any person aggrieved by an order made, or deemed to have been made, by a Tribunal under this Act, may prefer an appeal to a appellate Tribunal having jurisdiction in the matter."10. Section 20 clearly states that any person aggrieved by an order by a Tribunal under this Act may prefer the appeal to the appellate Tribunal. The appellant petitioner is aggrieved by the order of the DRT on the ground that the DRT has passed the order fixing the ratio at the rate of 80:60:71:71.5. The petitioner appellant contends that the ratio must be 28 instead of 71.5. According to him the ratio should be 80:60:28 and the appellant petitioner is much aggrieved on the order of the DRT fixing the ratio in the decree. From the contentions raised by the appellant it is evident that the appellant is aggrieved over the ratio fixed by the DRT at the rate of 60:80:71.5 and on that the appellant wants to prefer the appeal.11. Any person aggrieved by an order of the Tribunal can prefer an appeal as per Section 20 of the Act. The appellant is aggrieved by the order of the DRT on the ratio fixed by the learned Presiding Officer, DRT, Ernakulam, so, the appellant is the aggrieved party on the order passed by the DRT, and the appellant is entitled to prefer the appeal on the order passed by the DRT and the appeal is maintainable.12. With regard to the waiver of the mandatory deposit of the 75% of the decree amount as contemplated under Section 21 of the Act as rightly pointed by the Counsel for the appellant petitioner, the appellant is neither a borrower nor recovery certificate has been issued as against him. Section 21 of the Act contemplates that where an appeal is preferred by any person from whom the amount of debt is due to a Bank or a financial institution or a consortium of Banks or Financial Institutions, such appeal shall not be entertained without mandatory deposit of 75% of the decreed amount.13. The appellant is not a borrower and no recovery certificate has been issued as against this appellant. As such the mandatory provisions of Section 21 of the Act do not apply to the case of the appellants. So, the deposit of 75% of the amount as contemplated under Section 21 of the Act does not apply to the case of the appellant.14. Office is directed to take the appeal on file and register the appeal and post the appeal on 27.2.2002.
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