The Debts Recovery Appellate Tribunal dismissed an appeal filed by the legal representatives of a deceased debtor. The Court rejected the argument that liability was extinguished due to lack of proven estate inheritance, holding that the liability is restricted to the extent of such estate.
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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr Justice Ashok Menon, Chairperson Appeal No. 161/2009
Between
Vimal Jagdishprasad Agarwal & Ors. … Appellant/s V/s. Central Bank of India …Respondent/s Mr N. R. Parikh, Advocate for Appellants.
This is an appeal filed under Sec. 20 of Recovery of Debts Due to Banks and Financial Institution, 1993 ( ‘RDDB &FI Act’ for short) challenging the final order passed by the Debts Recovery Tribunal No.1, Ahmedabad (D.R.T.) in Transfer Application No. 159 of 1996 (originally filed as Summary Suit No. 2099 of 1985, City Civil Court, Ahmedabad). The Appellants are aggrieved by the judgment of the Ld. Presiding Officer dated 29.04.2009 directing Defendants Nos. 1 & 2 to jointly and severally pay to the Applicant, the Central Bank of India a sum of ₹4,23,31,409.32 together with simple interest at the rate of 4% p.a. with effect from 29.04.1987 till realisation. The liability of additional Defendants Nos. 1.1 to 1.3, the legal representatives of the deceased Defendant No.1 is restricted to the extent of the estate they inherited. A Recovery Certificate was also issued following the judgment. The Defendants Nos. 1.1 to 1.3 are aggrieved and hence, in the appeal.
1
The Original Applicant Bank had sanctioned multiple credit facilities to the third Defendant company of which Defendants Nos. 1 & 2 were directors. The Hon’ble High Court of Gujarat ordered the company to be wound up. There were documents of hypothecation of movables, machinery and pledge of goods belonging to the company. Defendants Nos. 1 & 2 had executed personal guarantees on 13.06.1984. The company was involved in the manufacture of textiles. It became a sick industry and vested in the State of Gujarat under the provisions of the Gujarat Closed Textiles Undertaking (Nationalisation) Act, 1986. Defendants Nos. 1 and 2 were called upon to pay the dues as personal guarantors vide notice dated 01.09.1985. They sent a reply denying their liabilities and hence, the Bank filed the Civil Suit.
2
consequent to that the application for bringing legal representatives on record was filed. Consequent to the appearance of the legal representatives they did not raise any plea regarding abatement. Hence, the objection on that ground is not sustainable.
The O.A. was allowed against the Appellants only to the extent of the estate of the deceased first Defendant inherited by them. The D.R.T. is not obliged to conduct an enquiry as to whether the legal representatives have inherited any estate of the deceased Defendant. The Appellants contend that they have not inherited any estate of the deceased Defendant. If that be so, they may not be under any obligation to pay the decree debt. It is only at the time of execution that the Certificate Holder Bank is under obligation to find out the details regarding the estate inherited by the Appellants. No interference to the impugned judgment is, therefore, called for in this appeal.
In the result, the appeal is dismissed.
mks-1
Sd/Chairperson
4
3 issues framed by the court
Whether legal representatives of a deceased mortgagor are liable to pay the decree debt absent proof of inheritance by the appellate court.
Whether the limitation period for filing an application against legal representatives commenced only upon disclosure of the date of death.
Whether the Debt Recovery Tribunal was required to enquire into the existence of the deceased's estate before passing a judgment against legal representatives.
2 provisions across 1 enactments
Vimal Jagdishprasad Agarwal & Ors.
Central Bank of India
Ashok Menon
As recorded by the court registry
4 orders share this CNR
Judgements on the same questions, provisions and authorities, from every court
