Disposed

M/s. K.K.S. Ltd. (formerly known as K. Sera Sera Prodn. Ltd.) v. Standard Chartered Bank and Ors.

DRAT27 Apr 2022MISC APPLICATION/298/2016

Case brief

AI extract

What is this about?

The Appellate Tribunal declined to grant a total waiver of the mandatory pre-deposit under Section 21 of the RDDB&FI Act. The Appellant's claim regarding novation was found unsustainable prima facie. The Tribunal directed a 75% deposit in instalments with a stay on enforcement upon compliance.

What did the court decide?

Trajected Appellant to deposit 75% of the decree amount in two instalments; stayed further proceedings subject to payment; refused total waiver of pre-deposit.

M/s. K.K.S. Ltd. (formerly known as K. Sera Sera Prodn… — Company and Corporate | DRAT (2022)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT : MUMBAI Present : Mr. Justice Ashok Menon, Chairperson

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M.A. No. 298/2016

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In Appeal No. 93/2016

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Between

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M/s KKS Ltd. (Formerly known as … Appellant/s M/s K Sera Production Ltd.) V/s.

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Standard Chartered Bank & Ors. …Respondent/s

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Mr. H.A. Naronha, Advocate for Appellant.

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Ms. Pooja Muni, i/b M/s. Bilawala & Co., Advocate for Respondent No.1.

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-: Order dated : 27/04/2022 :-

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This is an application filed for a waiver of pre-deposit u/s 21 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, (hereinafter referred to as the RDDB&FI Act). The order of DRT-I Mumbai, dated 30.12.2015 in O.A. No. 62 of 2008 stands challenged in Appeal. Original Application filed by Standard Chartered Bank was allowed and the Defendant Nos. 1 to 5 therein, were jointly and severally directed to pay to the Applicant Bank a sum of Rs.1,81,17,774.72 with subsequent simple interest @ 12% per annum from the date of filing O.A. till realization. The Appellant is the original 2^nd Defendant.

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The Appellant has raised various contentions in challenging the Appeal. The main contention is that the 1^st Defendant which was the original borrower had subsequently entered into the renewed agreement pertaining to the loan, as result of which there is novation of contract and Appellant being only a guarantor, he is

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not bound by the novation of agreement. That apart, it is also stated that Appellant is in penury. There has been several proceedings against him and the Commissioner of Customs (Export) has issued a letter for recovery of a sum of Rs.15,33,67,556/- from him and his Bank’s Accounts have been frozen as result of the recovery which is initiated. He has also filed Additional Affidavit and Further Affidavit indicating that during the last many years he has not paid any Income Tax, as is evident from his Income Tax Returns for all these years which are produced. This would suggest that he is a person without any income and, therefore, he seeks total waiver of the mandatory amount required to be deposited under section 21 of the RDDB&FI Act as it stood prior to the amendment and reads as under :-

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“21. Deposit of amount of debt due, on filing appeal :- Where an appeal is preferred by any person from whom the amount of debt is due to a bank or a financial institution or a consortium of banks or financial institutions, such appeal shall not be entertained by the Appellate Tribunal unless such person has deposited with the Appellate Tribunal seventy-five per cent. of the amount of debt so due from him as determined by the Tribunal under section 19:

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PROVIDED that the Appellate Tribunal may, for reasons to be recorded in writing, waive or reduce the amount to be deposited under this section.”

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As per the aforesaid provision, Appellant has to deposit 75% of the amount which has been decreed against him. Appellant states that considering his impecunious state he may be granted total waiver, which this Tribunal is empowered to do considering the circumstance of this case.

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Ld. Counsel appearing for the Respondent Bank has vehemently opposed the application for waiver of pre-deposit and

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has stated that the Appellant is not entitled to any indulgence and the contentions raised in the Appeal challenging the impugned order are all unsustainable and is only with the intention to somehow protract the proceedings and prevent the creditor from proceeding to realization of the decreed debt.

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After having heard the ld. Counsel appearing for either sides at length and also after perusing the documents, impugned order and the Affidavits filed by Appellant, I come to the conclusion that prima facie contention of the Appellant regarding novation of the agreement does not appear to be sustainable and acceptable at the first instance. Since prima facie case is an important aspect for the claim to sustain waiver of pre-deposit, and the Appellant having failed to convince this Tribunal to any extent in that regards, even if Appellant wants to further convince this Tribunal and persuade to upset the impugned order, he can be given an opportunity, but not without compliance of the statutory provision u/s 21 of the RDDB&FI Act.

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The contention that the Appellant has no source and means to deposit the amount required to be deposited is not something which can be entertained, the main purpose behind this statutory provision is to prevent unnecessary Appeals with untenable contentions being raised and thereby protracting the realization of the debt due to the decree holder.

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Under the circumstances, waiver cannot be granted and the Appellant is directed to deposit a sum of 75% of decreed amount (Rs.1,81,17,774.72) which comes to Rs.1,35,88,330/- in two equal instalments of Rs.67,94,165/- each. The first instalment of Rs.67,94,165/- shall be paid on or before 13.05.2022 and the balance amount shall be paid on or before 28.05.2022. Default in

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payment of the first instalment would entail in the Appeal being dismissed.

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In case the first instalment is paid within the time stipulated, there shall be a stay on further proceedings with regard to the subject property.

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The above amount shall be deposited in the form of a Demand Draft with the Registrar of this Tribunal. Failure to deposit the above referred amount would result in an automatic dismissal of the Appeal.

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As and when the said amounts are deposited, it shall be invested in term deposits in the name of Registrar, DRAT, Mumbai, with any nationalized bank, initially for a period of 13 months and thereafter it will be renewed periodically.

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Post on 17.05.2022 for reporting compliance with regard to payment of the first instalment.

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Sd/Chairperson

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dpj/mks

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M/s. K.K.S. Ltd. (formerly known as K. Sera Sera Prodn. Ltd.) v. Standard Chartered Bank and Ors.

Case brief

What is this about?

What did the court decide?

M/s. K.K.S. Ltd. (formerly known as K. Sera Sera Prodn. Ltd.) v. Standard Chartered Bank and Ors.

Case brief

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What did the court decide?

What the court decided

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Issues for consideration

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