Dismissed

State Bank of India v. John Abraham

DRAT30 May 2022MISC APPEAL/24/2021

Case brief

AI extract

What is this about?

The Debt Recovery Appellate Tribunal dismissed the Bank's appealing against an order that vacated an interim injunction restraining a guarantor's wife from transferring funds in a joint account. The Tribunal held that the injunction should not have been passed against the wife as she was a third party not covered by the specific statutory provisions invoked by the Bank.

What did the court decide?

The appeal and connected IA are dismissed; the order vacating the interim injunction against Respondent No. 2 is upheld.

State Bank of India versus John Abraham — Contract and Commercial Disputes | DRAT (2022)

¶1

MA 24/2021

¶2

IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

¶3

Dated the 30^th of May, 2022

¶4

PRESENT: Hon’ble Mr. Justice S. Ravi Kumar

¶5

CHAIRPERSON

¶6

MA 24/2021

¶7

[IA-2400/2015 in OA-407/2015 on the file of DRT-I, Ernakulam]

¶8

Between

¶9

State Bank of India, ARM Branch, MG Road,

¶10

Ernakulam, Cochin-11 Represented by its Manager.

¶11

……Appellant

¶12

And

¶13

Mr. P. John Abraham,

¶14

Puthupparambil,

¶15

Moolavattom P.O.,

¶16

Kottayam – 686 012.

¶17

Overseas Address:

¶18

Saudi Aramco Box 255,

¶19

Abqaiq,

¶20

Soudi Arabia – 31311

¶21

Dr. Gracy Abraham, W/o P. John Abraham, Puthupparambil House, Moolavattom P.O.,

¶22

Kottayam – 686 012.

MA 24/2021

Overseas Address;

Saudi Aramco Box 255 Abqaiq, Saudi Arabia - 31311

¶27

….. Respondents Counsel for Appellant Bank : Mr. M.L. Ganesh Counsel for Respondent : Mr. Kuriakose Varghese, Mr. George Nalapat and Mr. Gautam Venkatesh for M/s. KNMP Law

¶28

O R D E R

¶29

This Appeal is preferred against the impugned Order dated 8^th of April, 2021 in IA 1534/2016 in OA-407/2015 on the file of DRTI, Ernakulam.

¶30

Brief facts relevant for the purpose of this Appeal are as follows:-

¶31

Appellant Bank herein filed OA-407/2015 against 1^st Respondent herein and five (5) others, for recovery of Rs.5,12,47,398/- together with future interest. In said OA, Appellant herein filed IA 2400/2015 seeking temporary prohibitory injunction restraining Respondents to withdraw the amount shown

¶32

in the Schedule attached to the Application pending disposal of OA.

¶33

¶34

MA 24/2021

¶35

IA 2400/2015 is filed on 14.09.2015 and Tribunal below passed ex parte Order on 16.09.2015 on said Application. Respondent herein filed IA 1534/2016 to vacate Order dated 16.099.2015 and Tribunal below on a consideration of material paper on record and contentions of both parties, allowed the Application of Respondent No.2 herein and Interim Order passed on 16.09.2015 is vacated.

¶36

Aggrieved by the said Order, Bank i.e. Appellant herein preferred present Appeal and in the Appeal, Appellant filed IA 401/2021 to suspend operation of Order dated 08.04.2021 in IA 2400/2015 in OA 407/2015.

¶37

My Predecessor in office vide Order dated 01.07.2021 granted stay of operation of Order dated 08.04.2021 in IA 2400/2015 in OA 407/2015 and said Interim Order is extended from time to time.

¶38

Heard Learned Counsel for both sides.

¶39

Learned Advocate for Appellant before commencing arguments submitted as the operation of impugned Order is already suspended

¶40

¶41

MA 24/2021

¶42

by continuing the same direction may be given to Tribunal below to dispose of the main OA within time frame so that rights of parties can be determined finally on the ground that this Interim Order is almost in force since last six years. He further submitted that 1^st Respondent herein is one of the guarantors to the loan advanced to M/s. Great Building Shoping Private Limited (1^st Respondent in OA 407/2015). He submitted Respondent herein is no other than wife of 1^st Respondent and the Bank made a request to the Tribunal below to restrain Respondents from withdrawing money from their joint account as the property given as security for the loan amount is now is not sufficient to make claim of Bank.

¶43

He submitted Respondent No.2 contended that her terminal benefits as deposited in the joint account as the Respondents are making arragnemtns to transfer the amount lying in their deposits with intent to defeat and delay the execution of Decree that may be passed. Learned Advocate further submitted though it is a joint account though Respondent No. 1 Bank is the owner of funds and contentions of the Respondent No.2 i.e. funds are her terminal benefits cannot be accepted. He further submitted certificate

¶44

¶45

MA 24/2021

¶46

produced by Respondent No.2 in support of her contention creates suspicious , therefore, same cannot be taken into consideration. He further submitted that Bank has right of General Lien under Section 172 of the Indian Contract Act, 1872, therefore, Tribunal below rightly granted Order on 16.09.2015, but subsequently vacated without any valid grounds. It is submitted, for these reasons Order of Tribunal below is …. Set aside if direction is given to Tribunal below for disposal of OA in stipulated time, the Bank will cooperate for its disposal.

¶47

On the other hand, Learned Advocate for Respondent submitted, in normal circumstance, he should not have opposed suggestion of early disposal of OA, but here the Respondent No.2 is no way connected with OA is made to suffer on account of Interim Order. He further submitted Tribunal below through Order dated 16.09.2015 passed an Injunction Order against 3^rd party which is not provided under statute. He submitted that his wife after knowing about the Order dated 16.09.2015 filed IA 1534/2016 to vacate ex parte Order dated 16.09.2015 and Tribunal below by considering the judgemenr of Hon’ble Supreme Court in Hanumathi

¶48

¶49

MA 24/2021

¶50

Vs. …National … reported in 2004 SCC page 498 allowed the Application of Respondent No.2 herein and there are no grounds to interfere with Order of Tribunal below dated 08.04.2021. He further submitted that Tribunal below rightly vacated Order dated 16.09.2015, but in spite of that till now Respondent No.2 could not utilize her money when she particularly required it for education of her daughter. He submitted a well reasoned order is passed on 08.04.2021 and there are no grounds to interfere with such a reasoned order.

¶51

As already referred to above, in pending OA Bank filed IA 2400/2015 seeking a temporary prohibitory injunction restraining Respondents from withdrawing amount shown Schedule attached to the Petition.

¶52

Admittedly, the said relief claimed against the two

¶53

Respondents and out of two Respondents, only one Respondent is party to the OA and other Respondent is 3^rd party. One of the grievances of the Respondent No.2 is that Order dated 16.09.2015 is passed against 3^rd party without any provision. Therefore, it may

¶54

¶55

MA 24/2021

¶56

be necessary to look into the provisions invoked by the Bank in seeking such reliefs. IA 2400/2015 is filed under Section 19 (12), (13), (25) of Recovery of Debts and Bankruptcy Act, 1993 (hereinafter called as RDB Act) read with Rule 18 of Debts Recovery Tribunal (Procedure) Rules, 1993 and Order 39 Rule 1 of CPC.

¶57

In order to appreciate the objection of Respondent No.2, it may be relevant to examine the above referred to provisions. One of

¶58

the contentions of Advocate for Respondent No.2 is Order 29 Rule 1 of CPC cannot be applied in view of specific provision in the RDB Act to the effect that Tribunals are not bound by provisions of CPC only certain provisions of CPC are applicable. Section 22 of RDB Act envisages procedures and provisions of Tribunals and Appellate Tribunals wherein it has been clarified that Tribunals and Appellate Tribunals shall not be bound by procedure laid down in Code of Civil Procedure and shall be guided by principles of natural justice and the provisions which are indicated in Sub-section 2, does not find a place of Order 29 Rule 1 of CPC. So, as rightly pointed out by Advocate for Respondent No.2, Order 39 Rule 1 of CPC cannot

¶59

¶60

MA 24/2021

¶61

be made applicable, but unfortunately Order dated 16.09.2015 is passed only by including Order 30 Rule 1 of CPC.

¶62

11. The other provision relied on by the Appellant is Section 19 (12) & (25) of RDB Act, 1993. Sub-section 12 of Section 19 is no more in statute book as it was deleted with effect from 04.11.2016, but admittedly this OA and IA 2400/2015 and so also IA 1534/2016 are filed prior to 04.11.2016, therefore, it may be necessary to look into Sub-section 12 as it was then to verify whether the relief claimed by Bank falls under its purview.

¶63

12. Sub-section 12 of Section 19 of RDB Act, 1993, prior to its deletion reads as follows:

¶64

“The Tribunal may make an interim order (whether by way of injunction or stay or attachment) against the defendant to debar him from transferring, alienating or otherwise dealing with, or disposing of, any property and assets belonging to him without the prior permission of the Tribunal”.

¶65

¶66

MA 24/2021

¶67

So, under the above Rule, Tribunal is vested with power to pass Interim Order restraining the Defendant from transferring, alienating or otherwise, dealing with or disposing of any property belonging to him. So, this provision empowers the Tribunal to restrain the Defendant by way of Interim Order. So, this provision can be invoked only against the Respondent No.1, but, not against Respondent No.2, who is not a Defendant in the OA.

¶68

Sub-section (13) of Section 19 is for attachment of property and this provision reads as follows:-

¶69

13) (A) Where, at any stage of the proceedings,²⁰ [the Tribunal on an application made by the applicant along with particulars of property to be attached and estimated value thereof, or otherwise is satisfied], that the defendant, with intent to obstruct or delay or frustrate the execution of any order for the recovery of debt that may be passed against him,--

¶70

(i) is about to dispose of the whole or any part of his property; or

¶71

(ii) is about to remove the whole or any part of his property from the local limits of the jurisdiction of the Tribunal; or

¶72

¶73

MA 24/2021

¶74

(iii) is likely to cause any damage or mischief to the property or affect its value by misuse or creating third party interest, the Tribunal may direct the defendant, within a time to be fixed by it, either to furnish security, in such sum as may be specified in the order, to produce and place at the disposal of the Tribunal, when required, the said property or the value of the same, or such portion thereof as may be sufficient to satisfy the certificate for the recovery of the debt, or to appear and show cause why he should not furnish security.

¶75

(B) Where the defendant fails to show cause why he should not furnish security, or fails to furnish the security required, within the time fixed by the Tribunal, the Tribunal may order the attachment of the whole or such portion of the properties claimed by the applicant as the properties secured in his favour or otherwise owned by the defendant as appears sufficient to satisfy any certificate for the recovery of debt.

¶76

From a reading of above provision, it is also clear that this remedy against the Defendant only. But in fact, though Sub-section 13 is quoted, the conditions required for obtaining such order are not fulfilled by Appellant Bank and their IA 2400/2015.

¶77

¶78

MA 24/2021

¶79

14. The other Sub-Section quoted is Section 19(25). This provision is in respect of powers of the Tribunal to make such orders to give effect to its orders or prevent abuse of its process. It is like a general power akin to Section 151 of CPC. Normally general power has to be availed when no specific remedy is provided. But here, Section 19 itself provides specific remedy for attachment or protecting the interest of Secured Creditors. By way of amendments, in the year 2016, certain additional remedies are provided for secured creditors which are shown in Sub-Section 3 (A), 3(B) and Sub-section 4 of the main Section 19.

¶80

15. According to this provisions, where the estimated values of the security given for the loan are not sufficient, satisfy the debt claimed in the OA, the secured creditors can seek a direction from Tribunal to the Defendants to disclose particulars of other properties or assets owned by them and Tribunal can issue show cause notice to such Defendants to comply with such requirements.

¶81

¶82

MA 24/2021

¶83

16. Though it is a provision subsequent to filing of OA, the Bank

¶84

has not taken any step to avail remedy provided under newly incorporated provisions.

¶85

In view of my foregoing observations and discussions, I am of the considered view that both the Appeals are devoid of merits and Learned Presiding Officer came to a right conclusion and there are absolutely no grounds to interfere with such a well reasoned order of Tribunal below.

¶86

¶87

MA 24/2021

¶88

For above reasons, both the Appeals MA 23/2019 and MA

¶89

24/2019 are dismissed without any order as to costs. All pending

¶90

IAs, if any, stand closed.

¶91

[Dictated to Athistamani, PS transcribed by her, corrected, signed and pronounced by me in open court, this 30th of May, 2022]

¶92

Sd/- [ Justice S. Ravi Kumar] CHAIRPERSON

¶93

State Bank of India v. John Abraham

Case brief

What is this about?

What did the court decide?

State Bank of India v. John Abraham

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

All orders in this case

Similar cases

Corporation Bank versus M/s Yojaka India Pvt. Ltd.

The South Indian Concerns Ltd. versus Canara Bank

State Bank of India versus K Nagalakshmi

Smt.R.Parimala versus Kotak Mahindra Bank Ltd. & Anr.

R.B.S.Manian & Anr. versus a.O., Phoenix Arc Private Ltd. & Ors.

M S St Marys Kalmane Arekal Estates versus State Bank of India and Ors.