Partly allowed

L. Madhusudan Rao v. Icici Bank Limited and Ors.

Delhi HC1 Nov 2019W.P.(C)/11583/2019

Case brief

AI extract

What is this about?

The High Court set aside a DRAT order that added a blanket ban on foreign travel to a stay order, holding it exceeded statutory powers under the RDDBFI Act and contradicted the precedent in ICICI Bank v. Kapil Puri.

What did the court decide?

The phrase 'till the pronouncement of orders. Respondent No.1 shall not leave the country' in the DRAT order was set aside. The earlier DRT orders remain operational pending the DRAT's final judgment.

L. Madhusudan Rao Vs Icici Bank Limited and Ors. — Banking and Recovery | Delhi HC (2019)

¶1

Signature Not Verified Signed By:RAM DATT Signing Date:16.10.2024 15:53 Certify that the digital and physical file have been compared and the digital data is as per the physical file an d no page is missing.

¶2

WP(C) No. 11581/2019 & CM Appl.No. 47575/2019 (interim direction^ WP(0 No. 11583/2019 & CM Add1.No. 47579/2019 fstav^

¶3

Notice. Mr. R.P. Agrawal, learned counsel for the contesting Respondent No.l ICICI Bank Limited accepts notice and waives his right to file a reply to this petition. He has insisted that he will argue the petition as it is on merits. Accordingly, he has been heard at length at this stage itself. With his consent, the writ petitions are being finally disposed of.

¶4

It may be noted that the remaining Respondents are all proforma parties, unaffected by the limited scope of the present petitions.

¶5

The limited scope of both these writ petitions is the legality of one sentence in the impugned order passed by the Debt Recovery Appellate Tribunal ('DRAT') on 29^^ October 2019, in which while reserving orders in the main appeals i.e. MA Nos. 396 and 399/2019, preferred by ICICI Bank Limited against the order of the Debt Recovery Tribunal-I, Delhi ('DRT') dated 20* July, 2019 in OA No.904/2018 and OA No. 1463/2018, the DRAT directed that:

¶6

"Till the pronouncement of the order. Respondent No.l shall not leave the country".

¶7

The Petitioner before this Court was Respondent No.l before the DRAT.

¶8

It must be noted at this stage that the order dated 20* July, 2019 of the DRT in both the above OAs required the Petitioner herein to "now onwards" give intimation to the DRT, "7 days before while travelling abroad with advance copy to the Applicant of OA". Further, the Petitioner was "directed

¶9

W.P. (C) 11581/2019 & 11583/2019

¶10

Page 2 of 6

¶11

¶12

to remain available before this Tribunal as and when he is required, for the said purpose is hereby directed to furnish an undertaking."

¶13

The said order was passed in the lA filed in each of the OAs by the present Petitioner before the DRT seeking to vacate/modify its earlier orders dated 21^^ August 2018 and 9^^ January 2019, restraining him from travelling abroad without obtaining the prior permission of the DRT. Before the DRT in the said lA it was submitted on behalf of the present Petitioner that the power of the DRT under Section 19 (25) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDBFI Act) (now known as the Recovery of Debts and Bankruptcy Act, 1993) is a limited one. Reliance was placed on the judgment dated 8 March, 2017 passed by this Court in I W.P.(C) No. 10765/2015 (ICICI Bank Limited v. Kapil Puri), where in identical circumstances this Court upheld the order of the DRAT, which had allowed the appeals of the Respondents therein questioning the orders of the DRT that they should inform the DRT and seek its permission prior to travelling abroad.

¶14

This Court in ICICI Bank Limited v. Kapil Puri (supra) noted that while the deed of guarantee executed by the Respondents in that case did contain a clause which required them to take prior permission of the ICICI Bank Limited in the event of travelling abroad for employment or business or a long term stay, such a clause did not empower "the DRT to direct, that Respondents No. 1 and 2 would seek its permission." This Court was of the view that in purported invocation of its power under Section 19 (25) of the RDDBFI Act, such an order could not have been passed by the DRT.

¶15

W.P. (C) 11581/2019 & 11583/2019

¶16

Page 3 of 6

¶17

In the present case, the DRT in its order dated 20^^ July, 2019 took note of the above judgment in Kapil Puri and modified its earlier orders dated 21®^ August, 2018 and 9^*^ January, 2019 and directed that the Petitioner herein will give a 7 days' advance to the DRT prior to travelling abroad with an advance copy to ICICI Bank Limited and also to furnish an undertaking that he will remain present as and when required by the DRT.

¶18

It appears that during the pendency of the appeals before the DRAT not order was passed by it staying the aforementioned two orders dated 20^'' July, 2019 of the DRT.

¶19

Mr. Sandeep Sethi, learned Senior counsel for the Petitioner drew attention to clause 7 (v) of the deed of guarantee executed by the present Petitioner which is identical in wording to the clause in the deed of guarantee in the Kapil Puri case. The said clause states that the guarantors shall not:

¶20

"Leave India for employment or business or for long term stay abroad so long as any amounts remain outstanding under the Facility together with interest and other dues and charges including prepayment charges as per the rules of the said Banks then in force. Whether the stay is long term or not shall be decided solely by the said Banks."

¶21

Mr. Aggarwal, learned counsel for the ICICI Bank Limited on a query by this Court admitted that ICICI Bank Limited had accepted the decision in Kapil Puri (supra) and did not choose to challenge it. The judgment has held the field, as far as this High Court is concerned, since March, 2017. He

¶22

W.P. (C) 11581/2019 & 11583/2019

¶23

Page 4 of 6

¶24

tried to persuade this Court that it should doubt the correctness of the said judgment and refer the matter to a larger Bench.

¶25

Having examined the said judgment in KapU Puri carefully and noting the fact that even the ICICI Bank Limited has not chosen to challenge it till date, this Court is not persuaded to accept the above plea. Indeed, the wording of the above clause in the deed of guarantee is unambiguous. There is no question of the DRT, or for that matter the DRAT, bound as they are in their respective functioning by the provisions of RDDBFI Act to exercise powers in terms of the said clause in the guarantee to restrain the Petitioner from travelling abroad. In the circumstances, the Court fails to understand the DRAT adding the above line to the order by which it reserved judgment in the two appeals filed by ICICI Bank Limited imposing a blanket ban on the Petitioner herein from leaving the country. This appears to be far beyond even the clause in the deed of guarantee executed by the Petitioner.

¶26

Following the judgment of this Court in Kapil Puri (supra), this Court has no hesitation in holding that the DRAT could not have issued such a blanket order restraining the Petitioner from leaving the country, particularly when it was called upon to decide the correctness of the order dated 20^*^ July, 2019 of the DRT in the appeals pending before it and without any interim order earlier having been passed by it staying the orders in appeal before it.

¶27

Accordingly, the portion of the impugned order which reads "till the pronouncement of orders. Respondent No.l shall not leave the country" is

¶28

W.P. (C) 11581/2019 11583/2019

¶29

Page 5 of6

¶30

hereby set aside.

¶31

It must be recalled here that the appeals before the DRAT were by the ICICI Bank Limited. On his part, the Petitioner herein appears to have accepted the orders dated 20^^ July 2019 of the DRT. It is accordingly clarified that as a result of this order, the DRT's orders dated 20'^ July, 2019 will continue to remain operational till such time the DRAT pronounces its judgment in the appeals pending before it against the said orders.

¶32