Allowed

Ifci Ltd. v. The Cannanore Spinning and Weaving Mills Ltd.

DRAT12 May 2023REGULAR APPEAL/184/2018

Case brief

AI extract

What is this about?

The Tribunal allowed the appeal filed by IFCI Ltd., setting aside the lower Tribunal order. It held that the DRT must issue a Recovery Certificate based on the Supreme Court restored decree, holding legal representatives liable against the estate of deceased judgment debtors.

What did the court decide?

Appeal allowed with costs. Impugned order set aside. Tribunal directed to issue Recovery Certificate in conformity with the decree.

Ifci Ltd. versus The Cannanore Spinning and… — Pension and Retirement Benefits | DRAT (2023)

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RA 184/2018

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IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 12^th of May, 2023

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

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CHAIRPERSON

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RA 184/2018

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[OA No.267/2003 on the file of DRT-I, Chennai]

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Between

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IFCI Ltd., (Formerly The Industrial Finance Corporation, of India Ltd.),

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Rep. by its Deputy General Manager (Law), Continental Chambers,

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142, Mahatma Gandhi Road,

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Chennai – 600 034.

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Vs.

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1 The Cannanore Spinning and Weaving Mills Ltd., Rep. by its Managing Director, Cannanore,

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Kerala State.

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Haridas Gordhandas (Deceased),

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Camp Bazar,

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Cannanore.

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T.K. Vijayan,

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Kakkat Ward,

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Cannanore.

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RA 184/2018

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P.K. Prem Dev, Kakkat Ward, Cannanore.

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P.M. Swarnamma, Kakkat Ward, Cannanore.

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Arun Kumar Dattani (Deceased), Camp Bazar, Cannanore.

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The Commissioner of Payments, Core 14, N.T.C. Premises, Scope Complex, No. 11, Lodhi Road, New Delhi.

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Satish Chandra Dattani, Serenade, Thavakkara, Kannur, Kerala.

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Smt. Reshmi, 100, Amman, Cantonment, Kannur, Kerala.

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Ms. Nimisha, 100, Amman, Cantonment, Kannur, Kerala.

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(Respondents 1 to 7 are given up)

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Counsel for Appellant : Sr. Advocate Mr. P.L. Narayanan Counsel for R8 to R10 : Mr. R, Subramanian

RA 184/2018

ORDER

This Appeal is against the Order dated 31.01.2017 of DRT-I, Chennai, in OA 267/2003.

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Brief facts leading to this Appeal are as follows:-

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Appellant herein filed Application under Section 31A of Recovery of Debts and Bankruptcy Act, 1993 (hereinafter called RDB Act, 1993) before Tribunal below, for issue of Recovery Certificate to a Decree passed in CS No. 321/1976 of Hon’ble High Court of Judicature at Madras.

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Defendants 8 to 10 resisted said Application contending that Application is not maintainable and Defendants 2 and 6 in Original Suit executed only personal guarantee, and as both of them died, guarantee had lapsed, and Tribunal has no jurisdiction to implead Defendants 8 to 10 in OA, and contended that, OA is liable to be dismissed against them.

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RA 184/2018

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Tribunal below, on a consideration of contentions and rival contentions of both parties, issued Recovery Certificate against Defendants 1, 3, 4 and 5, and dismissed claim against Defendants 8 to 10. Aggrieved by said Order, Appellant Institution preferred present Appeal.

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Appellant and Respondents 8 to 10 filed their respective

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Written Arguments and reiterated the same at the time of oral submissions.

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Learned Advocate for Appellant submitted that Appellant filed CS No. 321/1976 before Hon’ble High Court of Judicature at Madras, and a Decree is passed in favour of Appellant in the said Suit. He submitted, 1^st Defendant filed OSA 200/1984, to set aside Decree passed in CS No. 321/1976 and that OSA was allowed, against which, Appellant filed Civil Appeal No.3239/1995 before Hon’ble Supreme Court, challenging Order dated 08.01.1994 in OSA 200/1984 of Hon’ble High Court of Madras. Said Civil Appeal

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RA 184/2018

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is allowed by Hon’ble Supreme Court on 12.04.2002, and restored Decree in CS No. 321/1976. Defendant No.2 died on 06.09.1990 and Defendant No.6 died on 20.05.2010 during pendency of OSA 200/1984. But, Counsel, who filed OSA 200/1984, did not disclose the same to Hon’ble High Court, and Legal Heirs (LRs) were not impleaded. He further submitted, therefore, OSA 200/1984 is abated in so far as Defendant No.2 and Defendant No.6 are concerned, and original Decree granted against them in CS No. 321/1976 has become final against them. He submitted, it is settled law that when a Judgement Debtor dies after Decree, LRs are bound to the extent of their interest in the estate of deceased Judgement Debtor, which they have inherited. This principle is applicable to Civil Court or Tribunal, and under this principle, LRs of deceased Defendants 2 and 6, who are Defendants 8 to 10, (Respondents 8 to 10 herein) are liable to the extent of estate of deceased Defendants 2 and 6 that they inherited. He further submitted no enquiry is contemplated under Section 31A of RDB Act, 1993, and only in the Application filed under Section 19 of RDB Act, 1993,

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RA 184/2018

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adjudication of rights of parties is permitted. He further submitted when rights of parties are already settled and Decree is passed by competent Court, role of DRT under Section 31A of RDB Act, 1993, is a ministerial act to issue Recovery Certificate. He further submitted Tribunal below failed to draw difference between Application under Section 19 of RDB Act, 1993 and Application under Section 31A of RDB Act, 1993, and adjudicated contentions of LRs of deceased Defendants 2 and 6, and Order of Tribunal below would amount to defeating the right of Appellants, which is granted to it, by competent Court in CS No. 321/1976. He further submitted, for these reasons, Order of Tribunal below to the extent of disallowing Recovery Certificate against Defendants 8 to 10, is liable to be set aside.

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On the other hand, Advocate for Respondents 8 to 10, while supporting Order of Tribunal below, submitted that, lower Tribunal elaborately considered both factually and legally, and has come to a right conclusion. It is submitted, Defendants 2 and 6 gave only personal guarantee, and

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RA 184/2018

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therefore, on their death, guarantee lapsed, and the cause of action does not survive to LRs of deceased Defendants 2 and

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6, under principle of Actio Personalis Moritus . It is further contended that Decree has been passed against a dead person, therefore, said Decree is a nullity and unenforceable.

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It is further submitted the claim, if any, is barred by limitation as against Defendants 8 to 10, and on that ground also, Appellant cannot have any claim, and prayed for dismissal of the Appeal.

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I have perused material papers including impugned Order dated 31.01.2017.

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Before going into the controversy, it may be necessary to examine Section 31A of RDB Act, 1993, for better appreciation. Said Section reads as follows:-

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RA 184/2018

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“ [31A. Power of Tribunal to issue certificate of recovery in case of decree or order. —

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(1) Where a decree or order was passed by any court before the commencement of the Recovery of Debts Due to Banks and Financial Institutions (Amendment) Act, 2000 (1 of 2000) and has not yet been executed, then, the decree-holder may apply to the Tribunal to pass an order for recovery of the amount.

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(2) On receipt of an application under subsection (1), the Tribunal may issue a certificate for recovery to a Recovery Officer.

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(3) On receipt of a certificate under sub-section (2), the Recovery Officer shall proceed to recover the amount as if it was a certificate in respect of a debt recoverable under this Act.]”

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From a reading of above, power is provided to DRT for issue

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of Recovery Certificate in case of Decree or Order passed prior to commencement of RDB Act, 1993, if that Decree has not

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RA 184/2018

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yet been executed at the time of filing of Application. Here, as

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seen from record, Appellant herein filed CS No. 321/1976 against six Defendants for recovery of Rs.92,72,620.32p with interest. Said Suit is decreed after deducting money paid subsequent to Suit. As per said judgement dated 20.01.1983, a Decree for a sum of Rs.30,45,524.38p is passed in favour of Appellant. Said Decree is amended as per Order dated 06.07.1984 by reducing the amount from Rs.30,45,524.38p to Rs.22,65,893.67p. This Decree has attained its finality on 12.04.2002, on which date Hon’ble Supreme Court disposed of Civil Appeal No. 3239/1995. Appellant approached DRT for issue of Recovery Certificate since by that date, RDB Act, 1993 came into force. Defendants resisted Application mainly on the ground that Defendants 2 and 6, gave personal guarantee, and on death of those persons, cause of action does not survive, therefore, Appellant cannot have any claim against LRs of deceased Defendants 2 and 6, who are Defendants 8 to 10 in OA. Tribunal below accepted said objection.

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RA 184/2018

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As rightly pointed out by Learned Senior Advocate for

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Appellant by the date of passing of Decree in CS No. 321/1976, both Defendants 2 and 6 were alive, in fact, it is a contested Decree. Subsequent proceedings namely OSA and Civil Appeal before Hon’ble Supreme Court, are only continuation of CS No. 321/1976, therefore, objection of Respondents that Decree is passed against dead persons, is unfounded, but unfortunately Tribunal below carried away with said submission. As seen from judgement in CS No. 321/1976, Defendants 2 and 6 together with Defendants 4 and 5 filed separate Written Statement. It is not in dispute that Defendant No.2 died in the year 1990 and Defendant No.6 died in the year 2010. Decree in CS No. 321/1976 is

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passed in the year 1983 and same is amended in the year 1984. At both point of time, Defendants 2 and 6 were alive, therefore, arguments of Respondents that Decree is passed against dead persons, cannot be accepted at any stretch of imagination. Further, abatement is for a claim, but not for a

Decree.

RA 184/2018

Here in the Written Arguments, much is stated about liability of Defendants 8 to 10, and even judgements are cited, but, when the scope of Application under Section 31A of RDB Act, 1993, is very limited, all these contentions are not tenable, particularly, when Decree in CS No. 321/1976 is upheld by Hon’ble Supreme Court.

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One of the objections of Respondents is that Application is time barred. As already referred to above, the lis attained its finality in the year 2002, so, from that year, Appellant will have 12 years period for executing the Decree. This Application under Section 31A of RDB Act, 1993, is filed in the year 2003, therefore, objection with regard to limitation has no legs to stand.

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Another objection of Advocate for Respondents 8 to 10 herein is that, Tribunal below has no power to implead LRs of deceased Defendants 2 and 6. In OA, Appellant herein filed IA 85/2016 to implead Defendants 8 to 10 as LRs of deceased

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RA 184/2018

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Defendants 2 and 6, and that Application, after service on LRs, is allowed on 29.11.2016, and that Order is not challenged by Respondents 8 to 10 herein, and that Order has become final, therefore, it is not open to Respondents 8 to 10 now to raise such an objection.

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In RDB Act, 1993, there is no specific provision with regard to a situation where Judgement Debtor dies before Decree is fully satisfied, but, under Section 22 of RDB Act, 1993, it is mentioned that Tribunals shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908, but they shall have powers as are vested in a Civil Court under the Code of Civil Procedure, 1908, for summoning; for discovery; for receiving evidence; for issuing commissions; for reviewing decisions; for dismissing an application for default; for setting aside any order of dismissal of any application for default or any order passed by it ex parte and for any other matter which may be prescribed. Section 50 of CPC deals with a situation where

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RA 184/2018

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a Judgement Debtor dies before Decree has been fully satisfied. According to this Section, Decree holder may make a request to execute the same against LRs of deceased, and said Section restricts that the Decree holder has right to proceed against the property of deceased, which has come into the hands of LRs, and which are not been disposed of. So, as rightly pointed out by Learned Senior Advocate for Appellant, right of Appellant is only to proceed against the estate of deceased Defendants which is in the hands of Defendants 8 to 10, but, not personally against them.

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On a scrutiny of material, I am of the considered view that, Learned Presiding Officer committed error in passing impugned Order without noticing that his Order would amount to interfering with Decree passed in CS No. 321/1976, which is confirmed by Hon’ble Supreme Court. Therefore, Order of Tribunal below dated 31.01.2017, cannot be sustained, and same is liable to be set aside.

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RA 184/2018

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In the result :- Appeal R A 184/2018 is allowed with costs.

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Impugned Order dated 31.01.2017 is set aside, and Tribunal below shall issue Recovery Certificate in accordance with law, which shall be in conformity with Decree in CS No. 321/1976 as amended on 06.07.1984. All pending IAs, if any, stand closed.

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[Dictated to Athistamani, PS transcribed by her, corrected, signed and pronounced by me in open court, this 12th of May, 2023]

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CHAIRPERSON

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Ifci Ltd. v. The Cannanore Spinning and Weaving Mills Ltd.

Case brief

What is this about?

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Ifci Ltd. v. The Cannanore Spinning and Weaving Mills Ltd.

Case brief

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