Disposed

Mstc Limited v. Standard Chartered Bank

DRAT5 Dec 2022MISC APPLICATION/56/2022

Case brief

AI extract

What is this about?

This Division, hearing an interim application requesting refund of a ₹90 crore deposit, held that it was premature to either release the funds to the applicant or forward them to the Recovery Officer while a writ petition challenging the dismissal of the main appeal was pending before the High Court. The matter was adjourned awaiting High Court orders.

What did the court decide?

None granted; application kept pending awaiting orders from the High Court on the Writ Petition.

Mstc Limited versus Standard Chartered Bank — 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. 56/2022 (Refund of Money) In

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(Appeal on Diary No. 146/2021- Disposed of)

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Between

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MSTC Ltd. … Appellant/s V/s.

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Standard Chartered Bank …Respondent/s

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Mr Rohit Gupta along with Mr Rajesh Nagori & Ms Anamika S. & Ms Nasrin S., i/b M/s. Indus Law, Advocate for Appellant.

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Mr Tushad Cooper, along with Ms Radhika Gupta & Mr Taha Mirza & Ms Rashika Bajpai & Ms Drishti Doshi, i/b M/s Khaitan & Co., Advocate for Respondent.

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The applicant namely MSTC Ltd. had preferred the abovementioned appeal challenging the order dated 16/09/2017 in I.A. No. 302 of 2017 in OA No. 43 of 2012 on the files of Debts Recovery Tribunal- I, Mumbai (DRT). The DRT had directed the Appellant to make a payment of ₹ 222,51,00,000/-based on an alleged admission in the balance sheets.

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In consideration of I.A. No. 49/2021, this Tribunal had directed a deposit of ₹ 90 crores under the provisions of Section 21 of the Recovery of Debts & Bankruptcy Act, 1993 (‘RDB Act’ for short) for entertaining the appeal. The said amount was deposited. There was a delay in filing the appeal and hence, the Appellant had filed I.A. No. 43 of 2021, seeking condonation of delay. Although it

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was contended on behalf of the Appellant that the issue of condonation of delay or to be decided before the issue of waiver is decided, this Tribunal after hearing the parties at length, was of the view that the waiver application, or to be heard and decided, first before the issue of condonation of delay was considered. Accordingly, vide order dated 22/06/2022 the Appellant was directed to deposit the aforesaid amount and the same has complied. 3. Thereafter, the application for condonation of delay was taken up for consideration, and vide order dated 09/11/2022, I.A. No. 43/2021, was dismissed, and in consequence, the appeal too was dismissed.

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It is submitted on behalf of the Appellant that the dismissal of IA No. 43/2021 for seeking condonation of delay leads to a refusal to entertain the Misc. Appeal and hence, the appeal is non-est. in the eyes of law. The money deposited by the Appellant as per the directions of the Tribunal is to be refunded and returned to the Appellant. Since the Misc. Appeal cannot be said to have been preferred and entertained in the eyes of law.

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The Appellant has preferred a Writ Petition No. (L) No. 34860/2022, challenging the order of this Tribunal dated 09/11/2022. In furtherance thereto, the Appellant undertakes to deposit the said amount of ₹ 90 crores before the Hon’ble High Court of Bombay in such proceedings.

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It is prayed that the pre-deposit amount of 90 crores together with the accrued interest may be refunded to the Appellant.

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The respondent has filed a reply stating that immediately after the dismissal of IA for No. 43/2021 for condonation of delay

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resulting in dismissal of the appeal, the respondent bank filed an application in the Recovery Proceedings No. 214/2017 pending before the Recovery Officer, DRT-I, seeking an attachment of ₹ 90 crores and obtain an order of attachment of the said amount. The respondent had also filed Misc. Application No. 57 of 2022 before this Tribunal seeking interim relief in respect of the applicant's request for a refund of the amount. No order has been passed by the Hon’ble High Court in the Writ Petition filed by the applicant with regard to the refund of the amount in deposit. On 11/11/2022. The respondent was given the liberty to go ahead and receive all bids but not to open the bids till 24/11/2022. It is submitted that the Ld. Recovery Officer has also communicated to the Registrar of this Tribunal, the proceedings of attachment for doing the needful.

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Heard the Ld. Counsel, Mr Rohit Gupta for the Appellant and the Ld. Senior Counsel, Mr Thushad Cooper, appearing for the respondent. Records perused. 9. It is understood that the Ld. Recovery Officer has already passed an order of attachment of the pre-deposit amount purportedly exercising jurisdiction under Section 28 (4) of the RDB Act, the Ld. Recovery Officer passed an order of attachment and has also communicated the same to this Tribunal. The learned counsel appearing for the Appellant, Mr Rohit Gupta, submits that under the provisions of Section 28 (4) of the RDB Act, the Recovery Officer is to apply to the Court in whose custody there is money belonging to the defendant, for payment to him. An order of attachment cannot be passed and then communicated for compliance, as is done in the instant case. Hence, it is submitted that

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the order of attachment is not good in law.

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Per contra, Mr Thushad Cooper submits that even if the order of Ld. Recovery Officer is erroneous as contended on behalf of the applicant, this Tribunal cannot ignore it. The only remedy available to the applicant is to challenge the same before the Presiding Officer, DRT under Section 30 of the RDB Act. Without having taken recourse to that remedy available to the applicant, they cannot be heard to submit that the order of the Ld. Recovery Officer is erroneous and not in accordance with the law.

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The Writ petition challenging the order of this Tribunal dismissing the appeal is coming up for consideration. The applicant is at liberty to seek relief from the Hon’ble High Court with regard to the deposited amount. It is contended for the applicant by Mr Rohit Gupta that the intention of getting a refund of the amount from this Tribunal is to deposited before the Hon’ble High Court of Bombay pending consideration of the Writ Petition. Hence, it is prayed that the amount may not be sent to the Recovery Officer for being appropriated towards an alleged debt.

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The order of the Ld. Recovery Officer cannot be interfered with by this Tribunal, unless there is a stay granted by the Presiding Officer, DRT. The Hon’ble High Court seized the Writ Petition and may also order to retain the amount. Under the circumstances, I find that it will be too early on the part of this Tribunal to forward the amount to the Recovery Officer for being appropriated towards the debt.

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I am therefore refraining from passing any order to release the amount to the applicant. The amount is also not be forwarded to the Recovery Officer, till an appropriate decision is taken in the application for interlocutory relief admittedly filed by the applicant in the Writ Petition pending before the Hon’ble High Court of Bombay with regard to the release of the pre-deposit amount or stay of the operation of the order of this Tribunal that stands challenged.

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The application for a refund shall therefore be kept pending awaiting the outcome of the interim orders that may be passed in the aforementioned Writ. I am made to understand that the Writ is likely to be taken up for consideration soon.

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Post on 28.12.2022 awaiting orders if any, in the Writ Petition.

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Chairperson

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psa-02

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Mstc Limited v. Standard Chartered Bank

Case brief

What is this about?

What did the court decide?

Mstc Limited v. Standard Chartered Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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