Allowed

Dr S Venkatesh Babu v. City Union Bank Limited

DRAT13 Oct 2022

Case brief

AI extract

What is this about?

The Debt Recovery Appellate Tribunal allowed the appellants' application for a refund of money deposited as a pre-condition for filing an appeal under Section 18 of the SARFAESI Act. The Tribunal held that such a deposit is not a secured asset and must be returned, citing the Supreme Court's ruling in Axis Bank v. SBS Organics.

What did the court decide?

Refund of the money deposited as a pre-condition for the appeal.

Dr S Venkatesh Babu versus City Union Bank Limited — Banking and Recovery | DRAT (2022)

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IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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IA 328/2022 In A.IR:54/2021

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Dr.S.Venkatesh Babu & Anr V/S A.O.,City Union Bank Ltd & Anr

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13/10/2022

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This Application is filed by Petitioners/Appellants seeking refund of money that is deposited as per orders of Hon’ble High Court of Madras Madurai Bench.

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This Tribunal directed Petitioners/Appellants to deposit Rs.1.20 Crores, against which Petitioners/Appellants approached Madurai Bench of Hon’ble High Court of Madras, and Hon’ble High Court granted permission to pay said amount in two instaments, out of which, only first instalment is paid by Petitioners/Appellants, and thereafter, due to non-payment of second instalement, Appeal is rejected.

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Now, Petitioners/Appellants filed this Application stating that, as Appeal is rejected, they are entitled for refund of money.

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Respondent Bank filed Counter objecting for the relief on the ground that huge amount of Rs.5 Crores and odd, is due to Respondent from Petitioners/Appellants.

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Objection of Respondent is not tenable in view of judgement of Hon’ble Supreme Court in AXIS BANK Vs SBS ORGANICS PRIVATE LIMITED AND ANR., in Civil Appeal No. 4379 OF 2016 (Arising out of SLP (C) No. 13861/2015) . As per said judgement, only on certain conditions, amount can be withheld. Relevant para of the judgement is as follows :-

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“The Appeal under Section 18 of the Act is permissible only against the order passed by the DRT under Section 17 of the Act. Under Section 17, the scope of enquiry is limited to the steps taken under Section 13(4) against the secured assets. The partial deposit before the DRAT as a pre-condition for considering the appeal on merits in terms of Section 18 of the Act, is not a secured asset. It is not a secured debt either, since the borrower or the aggrieved person has not created any security interest on such pre- deposit in favour of the secured creditor. If that be so, on disposal of the appeal, either on merits or on withdrawal, or on being rendered infructuous, in case, the appellant makes a prayer for refund of the pre- deposit, the same has to be allowed and the predeposit has to be returned to the appellant, unless the Appellate Tribunal, on the request of the secured creditor but with the consent of the depositors, had already appropriated the pre-deposit towards the liability of the borrower, or with the consent, had adjusted the amount towards the dues, or if there be any attachment on the pre-deposit in any proceedings under Section 13(10) of the Act read with Rule 11 of The Security Interest (Enforcement) Rules, 2002, or if there be any

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attachment in any other proceedings known to law. We are also unable to agree with the contention that the Bank has a lien on the pre-deposit made under Section 18 of the SARFAESI Act in terms of Section 171 of The Indian Contract Act, 1872. Section 171 of The Indian Contract Act, 1872 on general lien, is in a different context.”

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Here, Petitioners/Appellants have not given any consent for adjustment. There is no attachment either under Section 13 (10) of SARFAESI Act, 2002 or under any other proceedings. Therefore, Petitioners/Appellants are entitled for refund of money deposited in compliance of Hon’ble High Court Order.

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Considering the reasons stated in the Affidavit, IA 328/2022 is allowed, as prayed for.

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Sd/Chairperson

Dr S Venkatesh Babu v. City Union Bank Limited

Case brief

What is this about?

What did the court decide?

Dr S Venkatesh Babu v. City Union Bank Limited

Case brief

What is this about?

What did the court decide?

What the court decided

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