Dismissed

Ms Satadal Cold Storeage Pvt. Ltd. And Ors. v. State Bank of India

DRAT19 Sept 2022

Case brief

AI extract

What is this about?

The court held that the amended Section 19(5) of the RDBFI Act applies when service of summons occurs after the amendment, regardless of the OA filing date. It rejected arguments for retrospective application, affirming the mandatory 45-day combined period for filing a written statement.

What did the court decide?

Confirmation of the Debts Recovery Tribunal's order of 14.07.2022 dismissing the right to file a written statement; liberty to file evidence was granted.

Ms Satadal Cold Storeage Pvt. Ltd. And Ors. versus State Bank… — Banking and Recovery | DRAT (2022)

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Appeal Dy. No. 403 of 2022-DRAT-Kolkata

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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(Appeal Dy. No. 403 of 2022)

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(Arising out of O.A. 165 of 2016 in DRT-2, Kolkata)

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THE HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA CHAIRPERSON

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M/s Satadal Cold Storage Pvt. Ltd., an existing company within the meaning of the Companies Act, 1956, having its registered office at Village-Kharikasuli, P.O. Gopalsole, P.S. Bishnupur, District-Paschim Medinipur, Pin-721242.

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Haladhar Mallick, son of late Hrishikesh Mallick, residing at M.M. Nagar, near Police Line and P.O.- Medinipur, DistrictPaschim Medinipur, Pin-721101.

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…Appellants

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-Versus-

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State Bank of India, a body corporate constituted under the State Bank of India Act, having its Corporate Office at State Bank Bhawan at Madam Cama Road, Mumbai 400002 and also i9ts local Head OfficeNo. 1 Strand Road, Kolkata 700001 also its office at Stressed Assets Management Branch,(18192)-II at Jeevandeep Building, 1, Middleton Street, Jeevan Deep BLDG (12st floor, City, P.s. Shakespeare Sarani, Pin-7000071.

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	… Resp	ondent
Counsel for the Appellants	Mr. S. Nag, Counsel	Learned
Counsel for Respondent	Mr. P.K. Mu learned Counsel Respondent	kherjee, for the
JUDGMENT :	19.09 2022
THE APPELLATE TRIBUNAL :

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Instant Appeal has arisen against an order dated 14.07.2022 passed by Learned DRT-2 Kolkata in O.A. No. 165 of 2016 State Bank of India versus M/s Satadal Cold Storage Pvt. Ltd. and others. With the consent of the Learned Counsel for the parties, Appeal is finally heard on merits at the stage of admission.

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Appeal No. 403 of 2022-DRAT-Kolkata

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2. As per the pleadings, Respondent Bank has filed O.A. No. 165 of 2016 State Bank of India versus Satadal Cold Storage Pvt. Ltd. in February, 2016. At that point of time, copies of Application were not served upon the Appellants. O.A. Application was dismissed in default. A Miscellaneous Application No. 19 of 2019 was filed for restoration of the O.A. which was allowed on 31^st March, 2022 by the Ld. DRT-2 Kolkata. Directions were issued to issue notices to the Appellant and the matter was listed before the Registry on 13.04.2022. On 13^th April 2022, orders were passed for service of the copy of O.A. on the Appellants. Copy was served on the Appellants on 20^th April, 2022. The matter was placed before the Presiding Officer on 14^th July, 2022. Written statement could not be prepared as the record was lying in the cold Storage. Respondent Bank had taken the possession of the cold storage on 15^th January, 2019. On 14^th July, 2022, Learned Counsel for the Appellant prayed for time to file the written statement which was declined by the Ld. Presiding Officer. Hence, the present Appeal is preferred.

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3. Learned Counsel for the Appellant submitted that the Ld. Presiding Officer DRT-2 Kolkata has erred in holding that the stipulated time as per the Act has expired, accordingly right to file the written statement was closed. Learned Counsel further argued that the O.A. was filed in February, 2016 wherein the unamended section 19 (5) of Recovery of Debts due to Banks and Financial Institutions Act (hereinafter referred to as the Act) would apply. Hence, Appellant was entitled for extensions to file the written statement. Per contra, Learned Counsel for the Respondent Bank submits that although the O.A. was filed in February, 2016, notices were issued to the Appellant in 2022. Hence, amended provisions of Section 19(5) would be applicable. It is further submitted that the Appellant has not taken any such ground in the memo of Appeal. However, even then when the specific period is provided under the Act, the Appellant who was the defendant in O.A. was bound to follow the provisions.

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Appeal No. 403 of 2022-DRAT-Kolkata 4. O.A. No. 165 of 2016 was filed in February, 2016. Order dated 31.03.2022 passed by the Ld. DRT-2 Kolkata in M.A. No. 19 of 2019 arising out of O.A. No. 165 of 2016 is as under:-

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“Vakalatnama has been filed along with NOC and taken on record. On perusal of record, it appears that the O.A. has been dismissed for non prosecution. This Tribunal is of the opinion that the MA is liable to be allowed as public money is involved. Accordingly, the MA/19 of 2019 is allowed. For issuance of notice upon the respondent/ defendants, this Tribunal is of the opinion that the Bank shall complete their pleadings within two months from the date of this order. Directed to complete service of notice upon the defendants and file Affidavit of service before the Registry.”

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Section 19 (5) of the Recovery of Debts due to Banks and Financial Institutions Act 1993 (hereinafter referred to as the Act) before amendment reads as under:

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“The defendant shall, within a period of thirty days from the date of service of summons, present a written statement of this (sic) defence:

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Provided that where the defendant fails to file the written statement within the said period of thirty days, the Presiding Officer may, in exceptional cases and in special circumstances to be recorded in writing, allow not more than two extensions to the defendant to file the written statement.”

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This provision was amended by Act No. 44 of 2016 dated 16.08.2016 with effect from 04.11.2016 which reads as under:

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“The defendant shall within a period of thirty days from the date of service of summons, present a written statement of his defence including claim for set-off under sub-section (6) or a counter-claim under sub-section (8), if any, and such written statement shall be accompanied with original documents or true copies thereof with the leave of the Tribunal, relied on by the defendant in his defence:

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Provided that where the defendant fails to file the written statement within the said period of thirty days, the Presiding Officer may, in exceptional cases and in special circumstances to be recorded in writing, extend the said period by such further period not exceeding fifteen days to file the written statement of his defence.”

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5. On the basis of the aforesaid provisions, now it is to be looked into as to whether the Appellant is entitled for time to file the written statement. In the recent judgment of the Hon’ble Supreme Court of India in Civil Appeal No. 4978 of 2022 arising out of S.L.P. (C) No.

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Appeal No. 403 of 2022-DRAT-Kolkata 16767 of 2018 M/s Bhagwan Das B. Ramchandani Vs. British Airways decided on 29^th July, 2022. It was held that-

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“46. Where a period of Limitation is prescribed in a special law, by virtue of Section 29 of the Limitation Act, such period will apply as if it was provided in the Schedule of the Limitation Act. Consequently, the provisions of Sections 4 to 24 will apply for the purpose of computation of period of limitation. This provision is subject to a bright exception that the Limitation Act will not apply if it is “expressly excluded” by the Special Act, Section 29 of the Limitation Act to the extent that is necessary is as under:-

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“29. Savings

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(1)…………

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(2) Where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period prescribed by the Schedule, the provisions of section 3 shall apply as if such period were the period prescribed by the Schedule and for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law, the provisions contained in sections 4 to 24 ( inclusive) shall apply only in so far as, and to the extent to which, they are not expressly excluded by such special or local law."

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“47. The statutory requirement of express exclusion is considered by this Court in a number of decisions. Express empowerment is not to be understood in a pedantic manner. Express empowerment is to be gathered from the provisions of the statute. In Shanmugam v. Commissioner for Registration, the Privy Counsel held that

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“It is argued that the Act does not contain the “express provision” required by the Interpretation Ordinance make it applicable. Their Lordships do not agree. Upon the meaning of the words "express provision” Counsel relied upon in re Meredith and stated that it must be provision the applicability of which did not arise by inference. He argued that there was no "express provision" as no reference had been made to pending proceedings. Their Lordships are of the view that it correct to state that express provision is provision the applicability of which does not arise by inference. The applicability, however, of the provision under discussion to the present case does not arise by inference; it arises directly from the language used. The Fact that the language used is wide and comprehensive and covers many points other than the one immediately under discussion does not make it possible to say that its application can arise by inference only. To be "express provision" with regard to something it is not necessary that that thing should be specially mentioned; it is sufficient that it is directly covered by the language however broad the language may be which covers it so long as the applicability arises directly from the language used and not by inference therefrom. The argument fails."

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Appeal No. 403 of 2022-DRAT-Kolkata

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“48. In Hukumdev Narain Yadav -vs- Lalit Narain Mishra, the Court held as under: -

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“17. ……..Even assuming that where a period of limitation has not been fixed for election petitions in the Schedule to the Limitation Act which is different from that fixed under Section 81 of the Act, Section 29(2) would be attracted, and what we have to determine is whether the provisions of this Section are expressly excluded in the case of an election petition. It is contended before us that the words "expressly excluded" would mean that there must be an express reference made in the special or local law to the specific provisions of the Limitation Act of which the operation is to be excluded. As usual the meaning given in the Dictionary has been relied upon, but what we have to see is whether the scheme of the special law, that is in this case the Act, and the nature of the remedy provided therein are such that the Legislature intended it to be a complete code by itself which alone should govern the several matters provided by it. If on an examination of the relevant provisions it is clear that the provisions of the Limitation Act are necessarily excluded, then the benefits conferred therein cannot be called in aid to supplement the provisions of the Act. In our view, even in a case where the special law does not exclude the provisions of Sections 4 to 24 of the Limitation Act by an express reference, it would nonetheless be open to the Court to examine whether and to what extent the nature of those provisions or the nature of the subject-matter and scheme of the special law exclude their operation."

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6. No doubt O.A. was filed in February, 2016. But the notices were not issued to the defendants. In the meantime, O.A. was dismissed in default by the parties. Thereafter O.A. was restored in MA No. 19 of 19 vide order dated 31.03.2022 passed by the Ld. DRT. In the said order, it is specifically mentioned that for issuance of notice upon the Respondent/ defendants, this Tribunal is of the opinion that the Bank shall complete their pleadings within two months from the date of this order. Further direction was issued to complete service of notice upon the defendants and file affidavit of service before the Registry. It means that the order for issuance of notices was issued on 31.03.2022. Definitely 31.03.2022 was a date which was subsequent to amendment of Section 19 (5) of the Act.

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7. At this stage, Learned Counsel for the Appellant submits that the amendment would be treated as prospective in nature. It could

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Appeal No. 403 of 2022-DRAT-Kolkata

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not be treated retrospectively. He has placed reliance upon a judgment of the Hon’ble Apex Court in KS Paripoornan versus State of Kerala and others (1994) 5 SCC 593 wherein a Constitution Bench of the Hon’ble Supreme Court has held that-

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“statute dealing with substantive rights differs from a statute which relates to procedure or evidence or is declaratory in nature inasmuch as while a statute dealing with substantive rights is prima facie prospective unless it is expressly or by necessary implication made to have retrospective effect, a statute concerned mainly with matters of procedure or evidence or which is declaratory in nature has to be construed as retrospective unless there is a clear indication that such was not the intention of the legislature.”

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“84. Now, in considering the expression of intent in the repealing enactment in the present case, it is apparent that there is no express language indicating that all pending cases would stand transferred to the fora created by the 2019 Act by applying its newly prescribed pecuniary limits. In deducing whether there is a contrary intent, the legislative scheme and procedural history may provide a relevant insight into the intention of the legislature.”

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“86. In this backdrop, something specific in terms of statutory language - either express words or words indicative of a necessary intendment would have been required for mandating the transfer of pending cases. One can imagine the serious hardship that would be caused to the consumers, if cases which have been already instituted before NCDRC were required to be transferred to SCDRCs as a result of the alteration of pecuniary limits by the 2019 Act. A consumer who has engaged legal counsel at the headquarters of NCDRC would have to undertake a fresh round of legal representation before SCDRC incurring expense and engendering uncertainty in obtaining access to justice. Likewise, where complaints have been instituted before SCDRC, a transfer of proceedings would require consumers to obtain legal representation before the District Commission if cases were to be transferred. Such a course of action would have a detrimental impact on the rights of consumers. Many consumers may not have the wherewithal or the resources to undertake a fresh burden of finding legal counsel to represent them in the new forum to which their cases would stand transferred.”

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8. Reliance has also placed upon para 84 & 86 of Neena Aneja and anr versus Jai Prasakash Associates Ltd. (2022) Volume 2 SCC 161. Reliance is further placed upon State Bank of Punjab and others Versus Bhajan Kaur and others (2008) 12 SCC 112 the state of Punjab 2008 Volume 12 S.C.C. 112 wherein it was held that-

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Appeal No. 403 of 2022-DRAT-Kolkata “a statue is presumed to be prospective. unless held to be retrospective either expressly or by necessary implication. A substantive law is presumed to be prospective. It is one of the facets of the Rule of Law.”

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9. In the present case, facts of the case reflects that there is no question of retrospectivity of the amending Act rather the orders for issuance of notices were passed on 31.03.2022 when the amended provision of Section 19 (5) were in force. I do not find any force in the submissions of the Learned Counsel for the Appellants that since the O.A. was filed in 2016, hence unamended provision of Section 19 (5) would be applicable. Learned Counsel for the Appellants failed to show me any order passed by Ld. DRT for issuance of notices prior to 04.11.2016, the date when the amendment in Section 19 (5) came into force. Merely filing of O.A. did not cast all duty or obligation upon the defendant for filing of the written statement. Section 19 (4) of the Act prior to amendment reads as under:

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“On receipt of the application under sub-section (1) or subsection (2) the Tribunal shall issue summons requiring the defendant to show cause with thirty days of the service of summons as to why the relief prayed for should not be granted.”

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Section 19 (4) after amendment with effect from 04.11.2016 reads as under:

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“ On receipt of application under sub-section (1) or sub-section (2), the Tribunal shall issue summons with following directions to the defendant-

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(i) To show cause within thirty days of the service of summons as to why relief prayed for should not be granted.

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(ii) Direct the defendant to disclose particulars of properties or assets other than properties and assets specified by the applicant under clauses (a) and (b) of sub-section (3A); and

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(iii) To restrain the defendant from dealing with or disposing of such assets and properties disclosed under clause (C)

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Appeal No. 403 of 2022-DRAT-Kolkata sub-section (3A) pending the hearing and disposal of the application for attachment of properties.

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10. Both the unamended as well as amended provisions show that on receipt of the application in said section (1) or Sub Section (2) of Section 19 of the Act, Tribunal has to issue summons requiring the defendant to show cause why the relief prayed for should not be granted. In both the unamended as well as amended Sections, period of 30 days was given for showing the cause by the defendant. Hence, unless and until Tribunal issues summons to the defendant, he cannot take advantage of any provision of law under the Act. Hence, I do not find any force in the submissions made by the Learned Counsel for the Appellants that the old provisions of Section 19(5) of the Act would apply. Admittedly, the Appellant had not filed the written statement within time as provided under Section 19 (5) of the Act. Proviso No. 1 attached to the Section 5 (1) provides that the defendant should file the written statement within 30 days from the date of service. This time can be extended by 15 days by the Presiding officer in exceptional cases and in special circumstances to be recorded in writing. It means that initial period of 30 days and extended period of 15 days is a mandatory provision under the Act. No discretion is left with the Presiding officer to further extend the period of limitation for filing the written statement as has been held by the Hon’ble Apex Court in the case of M/s Bhagawan Das B. Ramchandani Vs. British Airways (supra), the period cannot be expressly extended by the Court, it is a period of limitation prescribed under the Act by virtue of Section 29 of the Limitation Act. Such period will apply as if it was provided in the schedule of the Limitation Act. Hence, the period of 30 days extendably by 15 days is mandatory but the Appellant has not filed the written statement within this period. Accordingly, the Learned DRT has rightly closed the right to file the written statement

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Appeal No. 403 of 2022-DRAT-Kolkata

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by the Appellant. However, liberty was granted to file the evidence by the Appellant.

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On the basis of the discussions made above, I am of the view that the Appeal lacks merit and is liable to be dismissed.

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O R D E R

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Appeal is dismissed. Order passed by Ld DRT-2 Kolkata dated

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