Dismissed

Multiple Educational and Manpower Dev. Trust & Ors. v. Kotak Mahindra Bank Limited

DRAT10 Apr 2024REGULAR APPEAL/34/2022

Case brief

AI extract

What is this about?

Appeal filed against DRT-III Kolkata's order appointing Advocates as Joint Receivers to record accounts and financial details of Educational Institution trust. Appellants alleged evidence destruction. Tribunal held order was legal under RDB Act to secure recovery.

What did the court decide?

Appeal dismissed; impugned order dated 16.10.2020 confirmed.

Multiple Educational and Manpower Dev. Trust & Ors. versus… — Banking and Recovery | DRAT (2024)

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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THE HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA CHAIRPERSON

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Appeal No. 34 of 2022

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(Arising out of O.A. 189 of 2019 in DRT-III, Kolkata)

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Order No. 21 10.4.2024

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Multiple Educational & Manpower Development Trust & 9 Others … Appellants -VsKotak Mahindra Bank Limited … Respondent

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Mr. Soham Bandopadhyay with Ms. Priyanka Kundu, Learned Counsel for Appellants

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Mr. Sarathi Dasgupta with Mr. Pratik Ghose, Mr. Avishek Roy Chowdhury, Counsel for Respondent Bank

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THE APPELLATE TRIBUNAL :

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Instant appeal has arisen against order dated 16.10.2020, passed by DRT-III, Kolkata, disposing of I.A. 1098 of 2019 and I.A. 618 of 2019 whereby Learned Tribunal appointed Mr. Saptarshi Banerjee and Ms. Anindita Das, Learned Advocates as Joint Receivers.

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Feeling aggrieved the Respondents, who are Defendants/Opposite Parties before the Learned DRT, preferred the appeal.

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I have heard the Learned Counsel for the parties and perused the record.

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It appears that O.A. 189 of 2019, under Section 19 of the Recovery of Debts Due To Banks And Financial Institutions Act, (hereinafter referred to as the Act) was filed by the Respondent Bank for recovery of an amount of Rs.10,40,88,199.00 from the Borrowers and Guarantors. Respondents No. 2, 3 and 4 are Guarantors of Respondent No. 1 while Respondents No. 2 to 6 are Trustees and Respondents No. 1, 7 and 9 are a group of Trusts and Respondent No. 8 is a Company registered under the Companies Act. After filing the O.A., I.A. 1098 of 2019 was filed for appointment of Receiver to administer and maintain the account of the Respondents No. 1, 7 and 9 with further prayer for appointment of Chartered Accountant firm to assist the Receivers in unearthing siphoning of funds and conduct forensic audit.

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Impugned order was passed by the Learned DRT appointing two Learned Advocates as Joint Receivers with a direction that they will visit, after convening a meeting with Respondents 1, 7 and 9, their premises where accounts are maintained. Head of the Management of Respondents No. 1, 7 and 9 and principal trustees dealing with accounts are directed to cooperate with the Receivers and to assist them in taking details of accounts, income, expenditure, etc., right from 2014-2015 and other documents related to accounts, as required by the Learned Receivers. Learned Receivers were further directed to submit the report.

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At the very outset Learned Counsel for the Appellant submits that this portion of the order has already been complied with and the Respondents have already complied the direction issued by the Learned DRT. However, there is a challenge in this order regarding second part of the order wherein appointment of Chartered Accountant Firm is to be considered by the Learned DRT. At this stage, it would be pertinent to note that, as submitted by the Learned Counsel for the Appellant, no Chartered Accountant has yet been appointed by the Learned DRT and the Learned DRT has kept it open as to whether the Chartered Accountant would be appointed or not. So this portion of the impugned order needs not to be dealt with. As far as first part of the order is concerned, although that has been complied with but since there is a challenge to the order it is being dealt with.

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As far as powers of Learned DRT to appoint Receiver or pass interim orders are concerned, Section 19 (4) read with sub-section 18 of the Recovery of Debts And Bankruptcy Act, 1993 reads as under:

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“19. (4) 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 and assets other than properties and assets specified by the Applicant under clauses (a) and (b) of the subsection 3A; and

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(iii) to retain the Defendant from dealing with or disposing of such assets and property disclosed under clause (c) of sub-section (3A)

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pending the hearing and disposal of the application for attachment of properties.”

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“(18) Where it appears to the Tribunal to be just and convenient , the Tribunal may, by order –

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(a) Appoint a receiver of any property, whether before or after grant of certificate for recovery of debt;

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(b) Remove any person from the possession or custody of the property;

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(c) commit the same to the possession, custody or management of the receiver;

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(d) confer upon the receiver all such powers, as to bringing and defending suits in the courts or filing and defending applications before the Tribunal and for the realization, management, protection, preservation and improvement of the property, the collection of the rents and profits thereof, the application and disposal of such rents and profits, and the execution of documents as the owner himself has, or such of those powers as the Tribunal thinks fit; and

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(e) appoint a Commissioner for preparation of an inventory of the properties of the Defendant or for the sale thereof.”

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A bare perusal of the provision would show that Learned DRT has jurisdiction to issue interim orders, interim directions not to alienate the property and to appoint Receivers under the Act. As far as question of satisfaction of the Tribunal is concerned, under sub section 18 of Section 19 of the Act provides that where it appears to the Tribunal to be just and convenient, Learned DRT can appoint Receiver. Learned Counsel for the Appellant would submit that Appellant herein have already filed their written statement but evidence is yet to be led by the parties. An effort has been made to destroy the evidence to be led by the Appellant by appointment of Receivers by the Learned DRT.

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Per contra, Learned Counsel for the Respondent would submit that appointment of Receivers was for a particular purpose which has been completed. Further the reason for appointing Receiver was not for taking over any account rather there was a direction for taking details of accounts, income, expenditure and other documents related to accounts.

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Undoubtedly, proceedings under Section 19 of the Act are pending adjudication before the Learned DRT in order to secure the amount, if any, found due in favour of Respondent Bank. Details of accounts, income, expenditure, other documents related to accounts, etc., were directed to be taken by the Receivers. I do not find any illegality in the impugned order wherein Learned DRT has recorded a categorical finding on the issue that it is satisfied with the grounds for appointment of Receivers. The purpose of appointment of Receivers was neither to take over the Institution, which is an Educational Institution, not to take over the accounts of the Institution rather just to record the income, expenditure, etc., as directed by the Learned Tribunal.

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In view of the discussion made above, I am of the considered view that there is no illegality in the impugned order dated 16.10.2020 passed by DRT-III, Kolkata. Appeal lacks merit and is liable to be dismissed.

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O R D E R E D

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Appeal is dismissed. Impugned order dated 16.10.2020 is confirmed.

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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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File be consigned to Record room.

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

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