Skip to content


New India Assurance Co. Ltd. Vs. Union Bank of India - Court Judgment

LegalCrystal Citation
CourtDRAT Kolkata
Decided On
Judge
Reported inI(2007)BC40
AppellantNew India Assurance Co. Ltd.
RespondentUnion Bank of India
Excerpt:
.....of debt due to the bank is not hung on the balance of determination but actually determined by the tribunal on merits". it is only in this perspective that the ex parte order in question comes into sharp focus for the limited purpose of determination of the requirement of pre-deposit of 75% of the amount of debt due before the appeal can be entertained. the setting aside of an ex parte decree ordinarily entails only the limited merits of the matter separate from the main issue or the application for true determination of the debt due, such as whether the ex parte decree was passed without proper service on the defendants or the non-appearance of the defendants on the particular day of hearing of the main application, which the defendant might later on adequately explain and succeed in.....
Judgment:
1. The matter relates to an application under Section 21 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, which shall be referred to hereinafter as "the RDDBFI Act" for short.

2. The applicant-appellant, the New India Assurance Co. Ltd. has assailed the impugned order of the D.R.T. dated 3rd February, 2005 which had refused to set aside the ex parte order. It had nothing to do as such with the merits of the main case with regard to the determination of debt. It has been submitted by the learned Advocate for the applicant that Section 21 of the RDDBFI Act applies to those appeals where order is made determining the debt either under Section 19 of the RDDBFI Act or under Rule 12(5) directing the defendant to pay the amount determined. It has been further submitted that it was an application simplicitor for setting aside the ex parte order and the instant appeal has been filed only by challenging the impugned order and, therefore, there is no need to comply with the provision of Section 21 of the RDDBFI Act.

3. In support of his submission the learned Counsel for applicant has cited two important judgments of the D.R.A.T., Delhi. The one is Kailash Chand Nagpal v. Corporation Bank II (2004) BC 1 : 2004(1) Bank C.L.R. 416 (DRAT, Del.), The other is Motia Rani v. Punjab National Bank I (2004) BC 170 (DRAT) : 2004(1) Bank C.L.R. 352 (DRAT, Del.).

4. The respondent-Bank has filed reply/objection to the application under Section 21 of the RDDBFI Act. The gist of the submission of the learned Advocate for the respondent-Bank is that the applicant/appellant is one of the certificate debtors and there is no legal provision for exemption of the mandatory pre-deposit under Section 21 of the RDDBFI Act by the certificate debtor/appellant by simply saying that the certificate debtor/appellant being a Government owned unit is exempted from paying the pre-deposit under Section 21 of the Act. It is submitted that, at any rate, being a certificate debtor by preferring an appeal as an aggrieved person, the pre-deposit has to be made before the appeal itself can be entertained.

5. Let us see what Section 21 of the RDDBFI Act, 1993, contains and how it ought to be read for the precise purpose for the application or non-application of this particular Section 21 of the RDDBFI Act in the context of the matter at hand.

Section 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 seventy-five 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.

6. In this context, we must have a look at Sub-section (1) of Section 20 of the RDDBFI Act, 1993 which reads: ...any person aggrieved by an order made, or deemed to have been made by a Tribunal, may prefer an appeal to the Appellate Tribunal.

7. Now to my mind "any person aggrieved" as envisaged under Sub-section (1) of Section 20 is a sort of a general term qualifying the "persons" who can file an appeal in the scope of this section under the Act but does not necessarily qualify or relate all kinds of orders that are appealed against, though that "grievance" by the person or persons most necessarily be there, in all matters or all kinds of appeal.

8. Now, in terms of Section 21 of the RDDBFI Act when we examine the sentence beginning with, "where an appeal is preferred by any person from whom the amount of debt is due to a Bank, etc." we think, we should read into it "from whom the amount of debt due to the Bank is not hung on the balance of determination but actually determined by the Tribunal on merits". It is only in this perspective that the ex parte order in question comes into sharp focus for the limited purpose of determination of the requirement of pre-deposit of 75% of the amount of debt due before the appeal can be entertained. The setting aside of an ex parte decree ordinarily entails only the limited merits of the matter separate from the main issue or the application for true determination of the debt due, such as whether the ex parte decree was passed without proper service on the defendants or the non-appearance of the defendants on the particular day of hearing of the main application, which the defendant might later on adequately explain and succeed in getting the ex parte order or decree set aside and then having contested the application on merits, thereby leading to the real determination of the debts due and, may be, also thereby succeed in proving that no debt was at all due to him or them. So, in my opinion, in this matter of appeal for setting aside an ex parte decree, Section 21 of the RDDBFI Act is not truly applicable to fasten the applicant/appellant with the liability of pre-deposit as envisaged under Section 21 of the RDDBFI Act.

9. In this view of the matter, the two decisions of the D.R.A.T., Delhi as cited above in Kailash Chanel Nagpal v. Corporation Bank, (supra) and Motia Rani v. Punjab National Bank, (supra), squarely fit in. I am inclined to refer to the observation and line of decision as laid down at para 21 of the judgment passed by the DRAT, Delhi in Motia Rani.

10. The learned Counsel for the respondent-Bank contends that since the amount due from the appellants has been determined by the Tribunal, and even in an appeal against the order declining to set aside the ex parte final order, the appellants/defendants have to comply with this provision. But, the learned Counsel for the appellants relies upon the decision of this Tribunal in Almania Foods v. Catholic Syrian Bank I (2004) BC 130 (DRAT) : Miscellaneous Application No. 292 of 2002 in Miscellaneous Appeal 256 of 2001, decided on 26th June, 2002 in support of his contention that in an appeal of this sort there is no need to comply with the provisions of Section 21 of the RDDBFI Act. This Tribunal, after elaborately discussing the matter, held that an application to set aside the ex parte final order does not challenge the merits of the final order, and while considering such an application the Tribunal does not go into the merits of the application for recovery, but only considers whether the ex parte decree was passed without service on defendants, or whether on the date when the ex parte decree was passed, the defendants were absent for some justified reasons, and, therefore, in the appeal also the merits of the application for recovery or the merits of the determination of the debt arc not in consideration. This Tribunal held that Section 21 applies to those appeals where the order determining the debt either under Section 19(2) of the Act or under Rule 12(5) of the Rules directing the defendants to pay the amount has been challenged. Ultimately, this Tribunal held it that the provisions of Section 21 of the Act arc not attracted to the appeal of that sort. This decision supports contention of the learned Counsel for the appellants/defendants and, therefore, this objection by the respondent-Bank cannot be accepted.

11. Thus, in view of what has been stated above, I am to conclude and hold that Section 21 of the RDDBFI Act, 1993, is not applicable and the applicant/appellant is not required to make any pre--deposit under Section 21 of the Act.

The respondent-Bank is directed to file affidavit-in-opposition to the memorandum of appeal within four weeks from date, reply thereto, by the appellant within three weeks thereafter.

Liberty to mention, upon notice to the other side, after the exchange of affidavits is over.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //