Ambuj A Kasliwal & Anr vs Kotak Mahindra Bank Pvt Ltd & Ors

Vipin Sanghi, J

Issue notice. Counsels for the respondents no.1, 2, 4,5 and 6 accept notice. The other respondents are proforma respondents and in view of the

order that we propose to pass, we do not consider it necessary to issue notice to them. We have heard learned Senior counsels for the parties

represented, and proceed to dispose of the writ petition at this stage.

The petitioners have assailed the orders dated 27.2.2019 and 9.4.2019 passed by the Debts Recovery Appellate Tribunal in Appeal No. 311/2018

arising out of OA No.281/2018. By the first order dated 27.2.2019, the learned DRAT while dealing with I.A No.511/2018 preferred by the petitioners

for grant of waiver to the appellants/petitioners from making pre-deposit of 50% of the debt determined by the DRT, directed the petitioners/appellants

to make pre-deposit of 50% of the amount of 68,18,92,841/-. By the second order, the application preferred by the appellants/petitioners i.e I.A No.

361/2019-whereby the petitioner sought review/recall of the first order, was rejected.

The petitioners are the guarantors in respect of credit facilities advanced by the Respondent No.1-Kotak Mahindra Bank Pvt. Ltd. & Ors. to the

principal borrower M/s Hindon River Mills Limited. The respondent no.1 preferred the aforesaid Original Application to recover the amount due to it

on account of default in repayment of loans. It appears that at some stage, a settlement was arrived at between the parties, and in terms of the

settlement, the respondent-bank agreed to receive Rs.145 crores on certain terms and conditions. Though, it is contended on behalf of the respondent-

bank that the terms and conditions were not adhered to by the principal borrower, the DRT has, vide its judgment dated 15.3.2018 allowed the Original

Application and directed as follows:-

“56. In the above facts and circumstances of the present case, where the repo rate of interest of the RBI is 6% per annum and the bank are

granting loans at the rate in between 8 to 9 percent per annum for priority sector, I am of the considered opinion that interest @ 9% per annum is quite

reasonable, just and proper in the facts and circumstances of the present case. Accordingly, it is directed that the defendants no.1 to 3, jointly and

severally, will have to pay the Settlement Amount of Rs.145 crores with future interest @ 9% per annum from the date of settlement i.e 5th July, 2012

till realization on reducing balance after taking the amount paid i.e Rs.152,81,07,159/- during the pendency of the present O.A, recoverable from the

mortgaged property. As the applicant bank has realized a sum of Rs.152,81,07,159/- by appropriating the compensation amount deposited by

defendants no.7 & 8 on the principle of pari-passu charge defendant no.5 Yes Bank, assignee of the debt assigned by defendant no.4 EXIM Bank,

will have to appropriate to recover its debt when the mortgaged property is sold in proportionate to the debts of the applicant bank and defendant no.5

Yes Bank and thereafter if any amount remains, the same will go to the applicant bank. The applicant bank is directed to file the revised statement of

account before the Recovery Officer, DRT-II, Delhi. The Recovery Certificate be issued forthwith and be sent to Recovery Officer, Debts Recovery

Tribunal-II, Delhi. The Registry of this Tribunal is further directed to issue the free copy of this judgment and send the same to the both parties.

Parties are directed to appear before the learned Recovery Officer, DRT-II Delhi on 18th May, 2018. The present O.A is accordingly disposed of.

File be consigned to records.â€​

From the above extract, it would be seen that the respondent-bank during the pendency of the Original Application received an amount of

Rs.152,81,07,159/-, which was the compensation amount deposited by the NHAI and ADM, Ghaziabad, on account of acquisition of land belonging to

the principal borrower. Thus, it appears from the operative part of the directions issued by the Tribunal, that it issued a certificate in favour of the

respondent- bank for the settlement amount of Rs. 145 crores with future interest at the rate of 9% per annum from the date of settlement i.e 5th July

2012 till the realization on reducing balance, after taking the amount paid i.e Rs.152,81,07,159/- into account.

The submission of Mr. Nayyar, learned senior counsel for the petitioners 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. The

submission of Mr. Nayyar is that the recovery certificate itself is in respect of Rs.145 crores with interest. He has tendered in Court the certificate

issued by the DRT to support his submission. He submits that merely on account of the fact that adjustment has been directed of the amount

recovered by the respondent-bank of Rs.152,81,07,159/-, it does not follow that the recovery certificate is for the balance amount, on the premise that

the amount claimed by the respondent-bank is Rs.221 crores (approximately 145 crores with interest at 9% per annum from 5th July 2012 onwards).

In support of his submission, Mr. Nayyar has sought to place reliance on the decision of the Division Bench of this Court in the case of Shrishti

Arogyadham Pvt. Ltd. Vs. Punjab National Bank & Ors. WP(C) 12299/2018 decided on 27.11.2018. The Division Bench was dealing with the writ

petition arising out of an order passed by the DRAT. In that case, an order had been passed by the DRT on an application under Section 17 of the

SARFAESI Act against the petitioner, which the petitioners had assailed before the DRAT. The Division Bench accepted the contention of the

petitioner that the amount realized on auction of the property, was entitled to adjustment in favour of the debtor, and consequently, there was no

question of requiring the petitioners to make any further deposit in terms of Section 21 of the aforesaid Act.

Mr. Nayyar further submits that earlier in intra parties appeal i.e appeal no. 508/2016, the respondent-bank had itself consented to hearing of the

appeal without insisting on any further deposit in view of the fact that land acquisition compensation to the tune of Rs.62,31,87,312/- had been received

by it. In this regard, a copy of the order dated 3.3.2017 passed by the DRAT is tendered before us.

On the other hand, Mr. Ganju, learned Senior counsel appearing for Respondent No.1 submits that on reading of para 56 of the judgment passed by

the DRT in the Original Application, it would be seen that the decretal amount is the balance amount recoverable by the respondent-bank which

translates to Rs.68 crores is taken note of by the DRT. He submits that the respondent-bank is also aggrieved by the said judgment passed by the

DRT, and has preferred an appeal which is pending consideration.

Mr. Makkar, learned Senior counsel, who appears on behalf of the principal debtor, submits that the said respondent has also preferred a cross-

appeal before the DRAT from the judgment of the DRT.

Having heard learned senior counsels for the parties, we are of the considered view that 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.

Aforesaid being the position, 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.

We are also informed that there are other valuable properties lying mortgaged, wherein the respondent-bank has interest alongwith other creditors,

namely, YES Bank. No doubt, the DRAT has restricted the right of the respondent-bank in respect of the recovery of further amount on sale of the

other mortgaged property, if the need therefor arises. However, the respondent-bank has already preferred an appeal which is pending consideration

before the DRAT. We are, therefore, of the view that 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. We request the DRAT to

hear all the appeals and cross-appeals at the earliest and preferably within the next three months. Parties shall appear before the DRAT on 5.8.2019,

the date already fixed, when the other appeals are listed arising out of the judgment of the Tribunal.