MR. DAVID D SOUZA vs CANARA BANK

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 28TH DAY OF JANUARY, 2020

PRESENT

THE HON’BLE MR. JUSTICE ARAVIND KUMAR

AND

THE HON’BLE MR. JUSTICE E.S. INDIRESH

WRIT PETITION NO.21246 OF 2017 (GM-DRT)

Between:

Mr. David D’Souza S/o late John Francis D’Souza Aged about 51 years

Mr. Prudence Chittiappa d/o late John Francis D’Souza aged about 63 years

Petitioners No.1 and 2 are r/at No.19, Marwill Hall Rest House Road Bengaluru – 560 001 …Petitioners

(by Sri Manmohan P N, Advocate)

And:

Canara Bank a Body Corporate constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 Having its Head Office at No.112

2 J.C. Road, Bangalore – 560 002 and among other branches

a. A Branch at Lavelle Road Bengaluru Represented by its Senior Manager

b. Branch at Nanjangud Mysore District 570 001 Represented by its Principal Officer and Senior Manager

State Bank of Mysuru An Associate of State Bank of India Having its Head Office at K G Road Bengaluru and inter alia a branch at Nanjangud Mysuru District 570 001 Represented by its Principal Officer and Manager

Vijaya Bank A Body Corporate constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 Having its head office at No.112, JC Road Bengaluru 560 002 And among other Branches A Branch at Residency Road Bengaluru Represented by its Principal Officer and Senior Manager

The Vysya Bank A Registered Banking Company Having its registered office at Avenue Road Bengaluru – 560 002 and among other branches

3 a Branch at Main Branch D. Devaraj Urs Road Mysuru 570 001 represented by its Principal Officer and Senior Manager …Respondents (respondents served and unrepresented)

This Writ petition is filed under Articles 226 and 227 of the Constitution of India praying to set aside the order dated 04.04.2017 passed on IA 179 of 2017 in A.IR 539/2014 by the Debts Recovery Appellate Tribunal at Chennai at Annexure-G and consequently allow IA.179 of 2017 filed by the petitioners; and etc.

This Writ Petition coming on for preliminary hearing in ‘B’ Group, this day, ARAVIND KUMAR J., passed the following:

O R D E R

Petitioners are seeking for setting aside the order dated 04th April, 2017 Annexure-G passed on IA.179 of 2017 in A.IR 539/2014 by the Debt Recovery Appellate Tribunal at Chennai (hereinafter referred to as ‘DRAT’). Perusal of said order would indicate that petitioners herein had filed the application in the appeal filed before the DRAT seeking waiver of deposit to be made under Section 21 of Recovery of Debts Due to Bank and Financial Institutions, Act, 1993 which has been subsequently amended as Recovery of Debts and Bankruptcy Act 1993 (for

4 short hereinafter to referred to as ‘the Act’) contending inter alia that the petitioners are in financial distress and are not in a position to deposit the amount, and as such, their substantive right, viz. statutory right vested to file an appeal cannot not be taken away. The DRAT by the impugned order allowed the application in part and directed the petitioners herein to deposit 25 per cent of the debt amount by observing that pre-deposit amount cannot be reduced to less than 25 per cent in the light of proviso to Section 21 of the Act imposing a bar.

It is the contention of Shri Manmohan, learned counsel appearing for the petitioners that on the date the application for waiver was filed, proviso to Section 21 of the Act had not been amended, and it is only by Act 44 of the 2016, which came into effect from 01st September 2016, the words “25 per cent” came to be substituted in place of “waive or reduce the amount”, and as such, the DRAT ought to have examined the application in the teeth of unamended provision. Hence, he seeks for setting aside the impugned order. He would also rely upon the judgment of the Apex Court in the case of K. RAVEENDRANATHAN NAIR AND

5 ANOTHER v. COMMISSIONER OF INCOME TAX AND OTHERS reported in (2017)9 SCC 355 in support of his contention. Hence, he prays to for allowing the writ petition.

Respondents are served and unrepresented. Hence, we have taken up this Writ petition for final disposal, particularly, in the background of impugned order having been passed in the year 2017 and subsequently appeal having been dismissed for non-compliance of the impugned order. It is no doubt true in the instant case the application for waiver of pre-deposit was filed on 06th October, 2014. On the date the application was filed, the extant substantive law governing the pre-deposit can be traced to proviso to Section 21 of Act, 1993 and it reads” “Provided that the Appellate Tribunal may, for reasons to be recorded in writing, waive or reduce the amount to be deposited under this Section.” 4. Undisputedly, said application was not disposed of and it was pending for consideration since appellant had not rectified the objections raised on appeal memorandum. When the application was taken up for consideration, i.e. during the year

6 2017, proviso to Section 21 of the Act was amended and expression “waive or reduce the amount” as was found in the then existing proviso came to be substituted by Act 44 of 2016 whereunder said expression came to be deleted and in its place words “reduce the amount to be deposited by such amount shall not be less than 25 per cent of the amount of such debt so due” came to be substituted. It is the date on which the application came to be considered would be the relevant date to apply the extant provision. Hence, we do not agree with the proposition sought to be put-forth by the learned counsel appearing for the petitioner. Even otherwise under the then existing provision, viz. proviso to Section 21 of the Act (unamended), Tribunal had power to waive or reduce the amount. In the instant case, Tribunal, no doubt, has said that it cannot reduce the pre- deposit less than 25 per cent, as such we have also examined the claim of the petitioner on merits and find that what has been ordered by the DRAT to be deposited by way of pre-deposit, viz. 25 per cent of the determined debt amount due to the secured creditor, is just and proper.

That apart for reasons more than one, contention raised by the petitioner cannot be accepted. Firstly, the secured creditor for recovery of amount due to the Bank has initiated proceedings thirty years back i.e. by filing a suit in OS No.76 of 1999 and having obtained a decree, is still grouping in dark for recovering said amount. Secondly, petitioners herein were brought on record in the aforesaid suit by order dated 13th October, 2004 and on the suit being transferred to the jurisdictional Debt Recovery Tribunal, it is only the first petitioner, who had been arrayed as defendant No.8(a) along with three others, had contested the matter. It is now stated that second petitioner is none other than the defendant No.8(e) before the Debt Recovery Tribunal who had also contested the matter before the DRAT. They had adopted the written statement which had been filed by their father. It is only defendants No.8(b) and 8(e) who had filed the written statement before Tribunal. In fact, the Tribunal has noticed that the said defendants have not adduced any evidence nor produced any documents in support of contentions raised in the written statement or rebut the claim of the applicant-Bank. It is to be

8 further noticed that defendants No.8(a) to 8(c) did not enter the witness box to prove their contentions. It is for these reasons the Tribunal has arrived at a conclusion that the documents tendered by the plaintiff-applicant Bank deserves to be accepted. 6. It is the abovesaid finding which was challenged by the petitioners herein before the DRAT by filing the appeal and at the time when the appeal was presented what was required to be deposited along with the appeal was 75 per cent under Section 21 of the Act. Petitioner sought for waiver of pre- deposit. No doubt, proviso to Section 21 of the Act enabled the DRAT to waive or reduce the amount to be deposited under Section 21 of the Act. Even if the claim of the petitioners are considered for waiver of the deposit by virtue of the present writ petition having been filed under Articles 226 and 227 of the Constitution of India, we find that order which came to be passed by the Tribunal under Section 19 of the Act by issuance of recovery certificate was for a sum of Rs.3,53,29,005.33 and as such order for deposit of 25 per cent of the debt due to the Bank including the interest, is just, proper and reasonable and

9 as such question of remitting the matter back to DRAT for examining the claim of the petitioners afresh would only be a exercise in futility. 7. It could also been seen from the impugned order that the application in question whereunder the waiver was sought has been numbered as IA.179 of 2013 and said application is said to have been filed along with the appeal, was not accepted as an application and it was treated as an application only in the year 2017, and as such, even if the contention raised by the learned counsel appearing for the petitioner that unamended proviso of Section 21, would be applicable to the claim of the petitioners would not come to their rescue. 8. Insofar as judgment relied upon by the learned counsel appearing for the petitioners is concerned, it would clearly indicate that in the said judgment the Apex Court had the occasion to examine the provision of clause (b) of sub-section (2) of Section 260-A of the Income Tax Act which was omitted with effect from 01st June, 1989 and corresponding law or Kerala Court Fees and Suit Valuation Act, 1959, i.e. Section 52 was

10 applied with effect from 26th October, 2002 in fee as prescribed in sub-item (c) of Item (iii) of Article 3 of Schedule-II was made applicable. The Apex Court, in the said background held that the High Court was not correct in arriving at a conclusion that the writ petition was liable to be dismissed on the ground that the vested right of appeal conferred under Section 260-A of the Income Tax Act, insofar as payment of Court fee is concerned, is taken away by necessary implication. In other words, the provisions of Section 52(a) of the 1959 Act inserted by the Amendment Act of 2003, in that sense, was held to have retrospective operation thereby effecting the earlier assessment also. Hence, it was held that it would be difficult to accept the said logic given by the High Court. Here in the instant case, no doubt, the right of appeal is given under Section 21 of the Act. In that, under Section 21 of the Act, the appellant was required to deposit 75 per cent along with the appeal or in the alternative seek for waiver of reduction. Thus, waiver by DRAT could be in full or as it deems fit in the facts and circumstances that may have obtained. However, in the instant case, when DRAT took the application for consideration in the year 2017 the amount to

11 Act having come into force the same was rightly applied and held that 25 per cent of the debt due as determined by the Tribunal ought to be deposited. As such, we are of the considered view that the principles enunciated by the Apex Court in K. RAVEENDRANATHAN NAIR (supra) would not come to be rescue of the petitioner in the instant case.

For the myriad reasons aforestated, we are of the considered view that there is no merit in this petition. Petition stands dismissed.

SD/- JUDGE

lnn

MR. DAVID D SOUZA vs. CANARA BANK