Allowed

M/S Star Goat Farm and Others v. Idbi Bank Limited and Another

Bombay HC11 Mar 2014WP/1324/2013

Case brief

AI extract

What is this about?

Writ petition filed by borrowers to quash a DR Tribunal order granting a recovery certificate to IDBI Bank. Court held Section 31-A applicability requires pre-2000 Amendment decree; since decree was post-Amendment, application was illegal. Order quashed.

What did the court decide?

Order of Debt Recovery Tribunal passed in Miscellaneous Application No.48/2011 dated 17.10.2012 quashed and set aside. Rule made absolute.

M/S Star Goat Farm and Others Vs Idbi Bank… — Contract and Commercial Disputes | Bombay HC (2014)

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 WP 1324/13

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

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BENCH AT AURANGABAD

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 WRIT PETITION NO.1324/2013

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1]M/s Star Goat Farm,
Prop.Mr.Khwaja Saifullah s/o
Khwaja Samiullah,
age 31 yrs., occu.business,
Plot No.5, Ahbad Colony,
Ravindra Nagar, Damdi Mahal,
Kat Kat Gate Road, Aurangabad.

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2]Mr.Khwaja Samiullah s/o Khwaja
Rahamatullah, age 68 yrs.,
occu.Pensioner, Plot No.5,
Ahbad Colony, Ravindra Nagar,
Damdi Mahal, Kat Kat Gate Road,
Aurangaabad.

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3]Mr.Khwaja Sohail s/o Khwaja
Samiullah, age 35 yrs.,
occu.business, Plot No.5,
Ahbad Colony, Ravindra Nagar,
Damdi Mahal, Kat Kat Gate Road,
Aurangabad.
...Petitioners..
(Org.defendants)

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Versus

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1]IDBI Bank Ltd.,
a banking company incorporated
and registered under the
Companies Act, 1956 (1 of 1956)
and also a banking company under
Section 5(c) of the Banking
Regulation Act, 1949 (10 of 1949)
having its registered office at
IDBI Tower, WTC Complex,
Cuffe Parade, Mumbai 400 005 and
amongst other places one of its

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 WP 1324/13

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Samarth Nagar Branch,
"IMA Hall", Adalat Road,
Adalat Road, Samarth Nagar,
Aurangabad, through its Branch
Head Mr.Prabhakar s/o
Laxmanrao Patil.

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2]Mr.Abdul Nayeem Khan s/o Abdul
Kareem Khan, age 45 yrs.,
occu.business,
a] Mujiza Poly Clinic, Roshan Gate
Aurangabad.

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b] Flat No.B-3, 1st Floor,
Fazilpura, Aurangabad.

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...Respondents...

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 .....

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Shri A.G. Talhar, Advocate for petitioners.
Shri S.S. Deve, Advocate for respondent no.1.

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As per Court's order dated 12.7.2013, petition is
dismissed as against respondent no.2.

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 .....

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CORAM: R.M. BORDE &
 A.M. BADAR, JJ.
DATE: 11.03.2014

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ORAL JUDGMENT (Per R.M. Borde, J.) :

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1] Heard learned counsel for the parties.

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2]Rule. Rule made returnable forthwith and the

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petition is taken up for final hearing at admission stage
with the consent of learned counsel for the parties.

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3]The petitioners are praying for quashment of the

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order passed by the Debt Recovery Tribunal at Aurangabad

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 WP 1324/13

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in Miscellaneous Application No.48/2011 decided on
17.10.2012. The respondent no.1 - bank tendered the said
Miscellaneous Application u/s 31-A of the Recovery of
Debts Due to Banks and Financial Institutions Act, 1993
praying for issuance of a recovery certificate for an
amount of Rs.12,25,698=50 in favour of the bank and
against the petitioners herein in terms of the decree
passed by the Civil Court in Special Civil Suit No.
268/2006 decided on 1.4.2011 along with interest at 9%
p.a. with monthly rests from the date of presentation of
Miscellaneous Application till realization of the amount.

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4]It is not disputed that the petitioners have
borrowed certain sum from the respondent no.1 - bank and
as the petitioners were in default in repayment of the
debt, the Special Civil Suit No.268/2006 came to be
instituted by the respondent no.1 - bank claiming
recovery of an amount of Rs.8,88,159=50 on 18.8.2006.
The 4th Joint Civil Judge, Senior Division, Aurangabad,
decreed the suit presented by the respondent no.1 - bank
by the judgment and decree dated 1.4.2011.

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5] The petitioners contend that they have repaid
three equal yearly installments out of four installments

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 WP 1324/13

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directed by the Civil Court to the respondent no.1 -

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bank. In spite of there being decree passed by the Civil

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Court in 2011, the respondent no.1 - bank proceeded to

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tender an application u/s 31-A of the Act of 1993 praying
for issuance of recovery certificate and on consideration
of the contentions raised by the respondent no.1 - bank,

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the Debt Recovery Tribunal was pleased to grant the
request of the respondent no.1 - bank and directed
issuance of certificate as claimed.

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6]Learned counsel for the petitioners invites our

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attention to Section 31-A of the Act, which reads thus:

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"31-A. Power of Tribunal to issue certificate of
recovery in case of decree or order :

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(1) Where a decree or order was passed by any
Court before the commencement of the Recovery of
Debts Due to Banks and Financial Institutions
(Amendment) Act, 2000 and has not yet been
executed, then, the decree-holder may apply to the
Tribunal to pass an order for recovery of the
amount.

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(2)On receipt of an application under sub-section
(1), the Tribunal may issue a certificate for
recovery to a Recovery Officer.

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(3)On receipt of a certificate under sub-section
(2), the Recovery Officer shall proceed to recover
the amount as if it was a certificate in respect
of a debt recoverable under this Act.

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 WP 1324/13

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7]On consideration of the provision quoted above, it

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is evident that the Tribunal is empowered to issue
certificate of recovery in the event of compliance of two
conditions. Firstly, the decree or order shall have to
be passed by the Court before the commencement of the
Recovery of Debts Due to Banks and Financial Institutions
(Amendment) Act, 2000 and secondly such a decree or order
shall remain un-executed. Only in the event of
satisfaction of both the requirements, it is permissible
for the financial institution to approach the Tribunal
and claim a certificate, as contemplated by Section 31-A
of the Act of 1993. In the instant matter, it has not
been disputed that the Special Civil Suit No.268/2006
came to be presented by the respondent no.1 - bank on
18.8.2006 after enforcement of the Amendment Act of
2000and the decree has also been passed by the Civil

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Court on 1.4.2011 much after enforcement of the

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provisions of the Amendment Act of 2000. The application
tendered by the respondent no.1 - bank ought not to have

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been entertained by the Debt Recovery Tribunal since the
conditions prescribed under the relevant provision have
not been satisfied, the issuance of certificate by the

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 WP 1324/13

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Debt Recovery Tribunal in favour of the respondent no.1 -
bank and against the petitioners is an illegality. The
application tendered by the bank does not satisfy the
requirements laid down under the provisions of Section
31-A of the Act of 1993 and as such ought not to have
been entertained.

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8]Learned counsel appearing for the respondent no.1
contends that the order passed by the Tribunal is
appellable and as such the writ petition ought not be
entertained.

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9]It is not disputed before us that there is no
Presiding Officer holding the charge of the Debt Recovery
Appellate Tribunal at present. Even otherwise,

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considering the illegality of the proceedings, we do not
deem it necessary to relegate the petitioners to avail
the alternative remedy as canvassed by the respondent no.

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1. A note has also to be taken of the fact that the
petitioners have deposited three installments as directed
by the Civil Court in the decree passed in the year 2011.

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In this view of the matter, the writ petition deserves to

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be allowed and the same is accordingly allowed. The

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order passed by the Debt Recovery Tribunal in

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 WP 1324/13
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Miscellaneous Application No.48/2011 on 17.10.2012 is
quashed and set aside. Rule is accordingly made

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absolute. There shall be no order as to costs.

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ndk/c1131434

M/S Star Goat Farm and Others v. Idbi Bank Limited and Another

Case brief

What is this about?

What did the court decide?

M/S Star Goat Farm and Others v. Idbi Bank Limited and Another

Case brief

What is this about?

What did the court decide?

What the court decided

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