U.P.Financial Coporation vs Canara Bank and Others

Shishir Kumar, J.

Heard learned counsel for petitioner and Sri Siddharth, learned counsel for respondents.

Petitioner being a financial Corporation has filed the present writ petition challenging the order passed by Appellate Tribunal dated 24.9.2008 by which appeal has been admitted on the condition that petitioner will deposit Rs.30,00,000/ in terms of Section 21 of the Recovery of Debts Due to Banks and Financial institutions Act, 1993.

The main argument of petitioner submitted before this Court is that petitioner being a financial institution has also advanced certain loan to private respondents. Certain amount is also to be recovered from respondent Nos. 2 to 7, therefore, in view of Section 21 of the Act, petitioner cannot be said to be that some amount of debt is due against him. For perusal, Section 21 is being quoted below:

"21. Deposit of amount of debt due, on filing appeal 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 by the Appellate Tribunal unless such person has deposited with the Appellate Tribunal seventyfive percent of the amount of debt so due from him as determined by the Tribunal under Section 19:

Provided that the Appellate Tribunal may, for reasons to be recorded in writing, waive or reduce the amount to be deposited under this section."

In such situation, learned counsel for petitioner submits that as no recovery is against petitioner, only the question to be considered by the Appellate Tribunal is regarding first charge and second charge, therefore, condition regarding deposit of 75% of the amount as provided under Section 21 of the Act is not applicable in the case of petitioner while filing the appeal. Further, it has been submitted that it is an appeal against an interlocutory order, therefore, this condition put by Tribunal in the order impugned cannot be laid.

On the other hand, Sri Siddharth, learned counsel for respondents has submitted that petitioner as well as respondent No.1 have given loan to respondents Nos. 2 to 7 and they have to recover the amount from the respondent Nos. 2 to 7. Now it is to be decided regarding first and second charge of the amount of sale consideration.

I have heard learned counsel for petitioner and learned counsel for respondents and have perused the record.

From perusal of Section 21, it clearly goes to show that intention of legislature is while filing the appeal, if certain amount is due which is to be recovered from the person concerned filed an appeal, has to deposit 75% of the amount. But in the present case, admittedly, petitioner is one of the financial institution, who has advanced loan to respondent Nos. 2 to 7 and he has also to recovered certain amount from them, as such, contention of petitioner to this effect that Section 21 will not be applicable in such circumstances, appears to be correct.

In view of aforesaid fact, the order passed by Appellate Tribunal is modified to the extent that the condition put by Appellate Tribunal regarding deposit of Rs.30,00,000/ is hereby set aside and the appeal filed by petitioner will be decided on merits after affording opportunity to parties without putting the aforesaid condition in the order impugned.

With these observations the writ petition is disposed of.

No order as to costs.