Partly allowed

Ms Ninth Star Adhesive Tapes Pvt. Ltd. v. Union Bank of India

DRAT29 Sept 2023REGULAR APPEAL/80/2022

Case brief

AI extract

What is this about?

In an appeal against a DRAT order, the court held that since appellants deposited the principal sum with the DRT Registrar but it remained uncredited to the bank, the recovery certificate must be modified. The bank is entitled to future interest at 9%, and appellants get the deposited amount with accrued interest refunded.

What did the court decide?

The recovery certificate was modified to accrue interest at 9% per annum simple; appellants are entitled to refund of deposited amount with accrued interest.

Ms Ninth Star Adhesive Tapes Pvt. Ltd. versus Union Bank of India — Arbitration | DRAT (2023)

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Appeal No. 80 of 2022-DRAT-Kolkata

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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Appeal No. 80 of 2022

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(Arising out of O.A. 10 of 2007 in DRT-1, Hyderabad)

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THE HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA CHAIRPERSON

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M/s. Ninth Star Adhesive Tapes Private Limited, 5-9-30/6-8/1/D, 4^th Floor, Mor Chambers, Basheerbagh, Hyderabad – 500 029;

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Sri Korra Balaji, son of Sri K.R. Murthy, 16-1-9, Saidabad, Hyderabad – 500 059.

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… Appellants

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-Versus-

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Union Bank of India, Abids Road Branch, 5-9-210/1, Parvati Tej Sadan, Chirag Ali Lane, Opposite APSFC, Abids, Hyderabad – 500 001, Telengana;

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Sri M.V.S. Prasad, Son of Sri M.L.V. Prasad, Flat No. 108, D Block, First Floor, Priya Enclave, Secunderabad.

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… Respondents

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Counsel for the Appellants … Mr. Nemani Srinivas Counsel for Respondent Bank … Mr. Soudip Pal Choudhuri Ms. Saswati Sikder JUDGMENT : 29^th September, 2023

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THE APPELLATE TRIBUNAL :

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The instant appeal has arisen against a judgment and order dated 12^th November, 2018 passed by Learned DRT-1, Hyderabad in O.A. 10 of 2007 (Andhra Bank -vs- M/s. Ninth Star Adhesive Tapes Private Limited & Others). 2. As per the pleadings of the parties an O.A. was filed by the Respondent against the Appellants for recovery of an amount of Rs.11,26,494.62 with interest at the rate of 17.25% with monthly rests which was contested by the Respondents and was allowed by the impugned order wherein the Learned DRT issued the recovery certificate for

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Appeal No. 80 of 2022-DRAT-Kolkata recovery of Rs.11,26,494.62 with cost against Defendants No. 1 and 2 and ex parte against Defendant No. 3 who was held jointly and severally liable for making payment of interest at the rate of 12% per annum simple. Pendente lite and future interest was also granted. 3. Feeling aggrieved Respondents preferred the instant appeal.

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Heard the Learned Counsel for the parties and perused the record.

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4. Main contention of the Learned Counsel for Appellant is that an amount of Rs.11,80,338.00 was deposited by the Appellants on 18^th June, 2008. Now no amount is due. This amount was deposited as FDR with the Registrar, DRT, Hyderabad. Date of maturity was 18^th September, 2023 and the maturity amount was Rs.32,71,988.00.

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5. It appears that the amount of Rs.11,80,338.00 was already deposited by the Appellant with the Registrar of the DRT on 18^th June, 2008 while the impugned order was passed on 12^th November, 2018. Learned DRT has not taken into consideration the fact that this amount has already been deposited by the Appellants with the Registrar of the DRT. However, the amount was not credited in the accounts of the Respondent Bank. The Respondent Bank has filed an O.A. under Section 19 of the Recovery of Debts And Bankruptcy Act, 1993 for issuance of certificate to an extent of Rs.11,26,404.62 which was also allowed by the Learned DRT with 12% simple interest. As far as credit of the amount, already deposited by the Appellants, is

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Appeal No. 80 of 2022-DRAT-Kolkata concerned no doubt they are entitled for the maturity value of the deposit made by them but at the same time, since the amount was not credited with the Bank, Bank is also entitled for pendent lite and future interest.

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6. As far as question of pendent lite and future interest is concerned, it has been held by the Constitution Bench of the Hon’ble Apex Court has interpreted Section 34 of the C.P.C. in the Central Bank of India -vs- Ravindra & Others [(2002) 1 SCC 367] which reads as under :

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“ 34. Interest.-(1) Where and in so far as a decree is for the payment of money, the Court may, in the decree, order interest at such rate as the Court deems reasonable to be paid on the principal sum adjudged, from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, with further interest at such rate not exceeding six per cent per annum as the Court deems reasonable on such principal sum], from the date of the decree to the date of payment, or to such earlier date as the Court thinks fit:

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[Provided that where the liability in relation to the sum so adjudged had arisen out of a commercial transaction, the rate of such further interest may exceed six per cent per annum, but shall not exceed the contractual rate of interest or where there is no contractual rate, the rate at which moneys are lent or advanced by nationalised banks in relation to commercial transactions.”

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It was further held that the used of the word ‘may’ in Section 34 confers discretion on the Court to award or not to award interest or to award interest at such rate as it deems fit. Such interest, so far as future interest is concerned, may commence from the date of the decree and may be made to stop running either with payment or with such earlier date as the court thinks fit. It was held in paragraph 55 Sub-para (8) that :

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Appeal No. 80 of 2022-DRAT-Kolkata “(8) Award of interest pendente lite and post-decree is discretionary with the court as it is essentially governed by Section 34 CPC dehors the contract between the parties. In a given case if the court finds that in the principal sum adjudged on the date of the suit the component of interest is disproportionate with the component of the principal sum actually advanced the court may exercise its discretion in awarding interest pendente lite and post-decree interest at a lower rate or may even decline awarding such interest. The discretion shall be exercised fairly, judiciously and for reasons and not in an arbitrary or fanciful manner.”

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Discretion vested with the Court has to be exercised fairly judicially and for reasons.

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7. There is a valid ground for reducing the interest rate from 12% simple interest because Appellants have already deposited the amount with the Registrar, DRT but the amount was not credited with the Bank hence the Bank is entitled to pendent lite and future interest. 8. Accordingly, appeal is liable to be allowed to an extent that the Respondent Bank is entitled for recovery of Rs.11,26,404.62 with pendent lite and future interest at the rate of 9% per annum simple from the date of filing of the O.A. till the date of actual realization. Appellants would be entitled for refund of the amount with interest deposited with the Registrar, DRT, Hyderabad. Accordingly, the order passed by the Learned DRT, Hyderabad stands modified.

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O R D E R

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Appeal is allowed and the impugned judgment and order dated 12^th November, 2018 passed by Learned DRT-1, Hyderabad in O.A. 10 of 2007 (Andhra Bank -vs- M/s. Ninth Star Adhesive Tapes Private Limited & Others), is modified

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Appeal No. 80 of 2022-DRAT-Kolkata to the extent that the Respondent would be entitled for recovery of Rs.11,26,404.62 with interest at the rate of 9% (nine) simple from the date of filing of the O.A. till final realization of the claim amount from Defendant No. 3. Rest of the findings of the judgment of the Learned DRT is confirmed.

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Appellant would be entitled for refund of the amount of Rs.11,80,338.00 with accrued interest deposited with the Registrar, DRT, Hyderabad.

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No order as to costs.

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File be consigned to Record room.

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Copy of the order be supplied to Appellant and the Respondents and a copy be also forwarded to the concerned DRT.

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Order dictated, signed, dated and pronounced in open Court.

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(Anil Kumar Srivastava,J) Chairperson