Dismissed

M/S Mirania Brothers and Ors. v. Indusind Bank Limited

DRAT11 Mar 2025

Case brief

AI extract

What is this about?

The Appellate Tribunal dismissed an appeal against a DRT order that closed the appellant's right to file a written statement. The Tribunal held that Section 19(5)(i) of the RDB Act is mandatory, and since the appellant failed to file within the statutory limit of 45 days, no further relief could be granted.

What did the court decide?

The demand for file of written statement is dismissed; appeal itself is dismissed.

M/S Mirania Brothers and Ors. versus Indusind Bank Limited — Banking and Recovery | DRAT (2025)

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA Misc. Appl. Dy No. 152 of 2025

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THE HON’BLE JUSTICE SHRI ANIL KUMAR SRIVASTAVA, CHAIRPERSON

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Order No. 04

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11.03.2025

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M/S MIRANIA BROTHERS having registered office at SWARUP BHAWAN 59 SEVOKE ROAD, PO SILIGURI PS SILIGURI 734001.

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2.SRI ANAND KUMAR AGARWALA residing at SWARUP BHAWAN, 59, SEVOKE ROAD, P.O P.S- SILIGURI, DARJEELING 734001

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3.MRS REKHA AGARWALA residing at SWARUP BHAWAN, 59, SEVOKE ROAD, P.O P.S- SILIGURI, DARJEELING 734001

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4.VIVEK MIRANIA residing at SWARUP BHAWAN, 59, SEVOKE ROAD, P.O P.S- SILIGURI, DARJEELING 734001

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... Appellant

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--Vs--

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INDUSIND BANK LIMITED having office at Golden plaza, GROUND FLOOR BURDWAN ROAD Branch, Siliguri – 734001.

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2.BRANCH MANAGER, INDUSIND BANK LIMITED residing at GOLDEN PLAZA, GROUND FLOOR, BURDWAN ROAD, P.O P.S- SILIGURI, DARJEELING 734001.

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... Respondents

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For Appellant : Ms. Tapati Sarkar, l d. adv.

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For Respondent : Mr. Dipankar Das, ld. adv. on virtual mode.

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THE APPELLATE TRIBUNAL :

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I.A. 100 of 2025 is filed u/s 5 Limitation Act for condonation

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of 20 days delay. It is submitted that delay is not intentional. I find from record that delay is not intentional rather procedural in nature. Accordingly, I.A. 100 of 2025 is allowed. Delay in preferring the appeal is condoned.

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I.A. 101 of 2025 is filed by the appellant for waiver from

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making pre-deposit u/s 21 of Recovery of Debts and Bankruptcy Act, 1993 (hereinafter referred to as Act). O.A. filed by the bank

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is still pending. Debt due has not been determined. Accordingly, pre-deposit is not required to be deposited as per provision of the Act. I.A. 101 of 2025 stands disposed of.

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Admit the appeal by providing regular appeal number.

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Heard learned counsel for the parties and perused the records.

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Instant appeal has arisen against the order dated 02.12.2024 passed by learned DRT-Siliguri in O.A. 278 of 2022 whereby right to file written statement was closed. Learned counsel for appellant would submit that there was an order for service of paper-book to the defendant, appellant herein, which was not served to the appellant. Hence, appellant could not file written statement. However, record shows that sufficient time was granted by the learned DRT to file written statement.

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Before proceeding to decide the instant case I find it appropriate to reproduce the provision of Section 19(5)(i) of the Act as under :

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“19(5) (i) 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 writtenstatement 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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Hence, the question for determination is as to whether the provision of section 19(5)(i) of the Act is mandatory or directory in nature?

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In Para 7 of the judgement in M/s Crest Steel & Power Pvt. Ltd. & Ors. Vs. Punjab National Bank & Ors. [2018 SCC OnLine MP 1339] following observation made by the Hon’ble Madhya Pradesh High Court:

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“On the other hand, learned counsel for the Bank referred to Three Judge Bench judgment of the Supreme Court reported as New India Assurance Company Limited Vs. Hilli Multipurpose Cold Storage Private Limited, (2015) 16 SCC 22 (for short 'Hilli I'), wherein the judgment in Kailash's case (supra) was found to be not correct view as the earlier Three Judges Bench judgment in the case reported as Dr. J.J. Merchant and others Vs. Shrinath Chaturvedi, 2002 (6) SCC 635 was not noticed by the Bench.”

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Hence, the respondent cannot take any advantage of Nanhku case (supra).

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9. In view of the observation of the Hon’ble Division Bench of Madhya Pradesh High Court, it is to be seen as to whether the provisions of Section of 19(5)(i) of the Act are mandatory or directory in nature?

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10. In Para 8 of Crest Steel (supra) Hon’ble Division Bench of Madhya Pradesh High Court has placed reliance on Central Bank of India Vs. State of Kerala [(2009) 4 SCC 94] wherein it was held that :

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“92. An analysis of the abovenoted provisions makes it clear that the primary object of the DRT Act was to facilitate creation of special machinery for speedy recovery of the dues of banks and financial institutions. This is the reason why the DRT Act not only provides for establishment of the Tribunals and the Appellate Tribunals with the jurisdiction, powers and authority to make summary adjudication of applications made by banks or financial institutions and specifies the modes of recovery of the amount determined by the Tribunal or the Appellate Tribunal but also bars the

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jurisdiction of all courts except the Supreme Court and the High Courts in relation to the matters specified in Section 17. The Tribunals and the Appellate Tribunals have also been freed from the shackles of procedure contained in the Code of Civil Procedure. To put it differently, the DRT Act has not only brought into existence special procedural mechanism for speedy recovery of the dues of banks and financial institutions, but also made provision for ensuring that defaulting borrowers are not able to invoke the jurisdiction of civil courts for frustrating the proceedings initiated by the banks and financial institutions.

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The enactment of the Securitisation Act can be treated as one of the most radical legislative measures taken by the Government for ensuring that dues of secured creditors including banks, financial institutions are recovered from the defaulting borrowers without any obstruction. For the first time, the secured creditors have been empowered to take measures for recovery of their dues without the intervention of the courts or tribunals."

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Further, reliance is placed upon the judgement of Hon’ble

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Apex Court in Pegasus Assets Reconstruction (P) Ltd. Vs. Haryana Concast Ltd. [(2016) 4 SCC 47] wherein it is held that

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“21. The RDB Act is of 1993 i.e. later to the Companies Act. Its avowed object is to provide for the establishment of tribunals for expeditious adjudication and recovery of debts due to banks and financial institutions and for matters connected therewith or incidental thereto. This Act creates a special machinery for speedy recovery of dues of banks and financial institutions which, by an amendment of 2004 now includes a registered securitisation company or reconstruction company envisaged under the SARFAESI Act. Section 18 bars the jurisdiction of ordinary courts or authority in respect of matters falling within the jurisdiction of the Tribunal as specified in Section 17. An Appellate Tribunal is provided under Section 20. The power of the Tribunal extends to determining the debt due as well as its realisation. Section 34 confers overriding effect upon this Act over any other law in force."

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It was also held in Para 13 of the judgement in M/s Crest

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Steel (supra) that

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“13- A reading of the Act would show that it is a complete Code providing for a Forum for adjudication of claim of the secured creditors and also to the procedure to be followed by the Adjudicating Authorities under the Act. It also mandates to ensure that there is expeditious disposal of the claim of the secured creditors, as huge public money is locked up on account of defaults of borrowers. Sub-section (4) of Section 19 of the Act provides for a show cause within thirty days of service of summons as to why relief prayed for should not be granted. In terms of subsection (5), the defendant has to file written statement of his defence within a period of thirty days, including claim for set-off under sub-section (6) or a counterclaim under sub-section (8). The first proviso contemplates that the Presiding Officer in exceptional cases and in special circumstances can extend the period for filing of written statement, but not exceeding 15 days. In other words, the time prescribed for filing of written statement is normally thirty days, but can be extended in certain circumstances by another fifteen days. The argument of petitioners is that such provisions are directory relying upon Kailash's case.”

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It was further held that in Crest Steel (supra) it was held that provisions of Order VIII Rule 1 CPC is not mandatory but directory in nature.

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In New India Assurance Co. Ltd. Vs. Hilli Multipurpose Cold Storage Pvt. Ltd ., [(2015) 16 SCC 20] case it was held that in no case period beyond 45 days can be granted to the opposite party for filing its version of the case. In J.J. Merchant & Ors. Vs. Shrinath Chaturvedi [2002 (6) SCC 635] issue relates to the applicability of the provision in Section 13 of the Consumer Protection Act, 1986 regarding failing to file reply to the complaint were in issue wherein it was held that in Para 15 and 17 are as under :

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“15. Under this Rule also, there is a legislative mandate that written statement of defence is to be filed within 30 days. However, if there is a failure to file such written statement within stipulated time, the court can at the most extend further period of 60 days and no more. Under the Act, the legislative intent is not to give 90 days of time but only maximum 45 days for filing the version by the opposite party. Therefore, the aforesaid mandate is required to be strictly adhered to.”

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“17. In view of the aforesaid provisions, the Commission can certainly refer to Order VII Rule 14 which provides that where a plaintiff sues upon a document or relies upon document in his possession or power in support of his claim, he shall enter such documents in a list, and shall produce it in the Court when the plaint is presented by him and shall, at the same time deliver the document and a copy thereof, to be filed with the plaint. It appears that this mandatory requirement is not followed and thereafter, there is complaint of delay in disposal. Similarly, in case of written statement under Order VIII Rule I-A, defendant is required to produce the documents relied upon by him when written submission is presented. The Commission can always insist on production of all documents relied upon by the parties along with the complaint and the defence version.”

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Further, the same judgement was relied upon by the Hon’ble Apex Court in the case of Hilli Multipurpose (supra) wherein Para

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16 Hon’ble Apex Court has held that :

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“16 - In the aforestated circumstances, we have now to consider whether in a case under the provisions of the Act, where a complaint has been filed and the opposite

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party has not filed its version to the case within 30 days or within extended period of 45 days, which at the most could have been granted by the District Forum, the version given by the opposite party can be accepted.”

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In Para 24 of the judgement of Hon’ble Apex Court the Three Judges Bench decision in J. J. Merchant case (supra) was followed wherein it was held in Para 13 that :

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“13 - The question arose in the case of Dr. J.J. Merchant (supra) whether the Forum can grant time beyond 45 days to the opposite party for filing its version. After considering the aforestated section in the light of the object with which the Act has been enacted, a three-Judge Bench of this Court came to the conclusion that in no case period beyond 45 days can be granted to the opposite party for filing its version of the case.”

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Further, it was held that judgement delivered in J.J. Merchant case (supra) followed the field and therefore, we are agreed the view that the District Forum can grant a further period of 15 days to the opposite party for filing of version or reply and not beyond that. Ultimately, in Para 29 of the judgement it was held that law laid down by the Three Judges Bench of Hon’ble Apex Court J.J.Merchant case (supra) should prevail.

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In Crest Steel (supra) at Para 11 Hon’ble Madhya Pradesh High Court has held as under :

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“11- The experience of more than 20 years to speed up recovery of public dues, the Act was amended while enacting The Insolvency and Bankruptcy Code, 2016 published on 28th of May, 2016. The Act was also amended by another Central Act No.44 of 2016 "The Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016." The later Act has inter-alia amended Section 19 of the Act. The amended Act (Section 31B) gives priority to the dues of the secured creditors over all other debts and Government dues including revenues, taxes, cesses and rates due to the Central Government, State Government or Local Authority. 12- With this back ground, the relevant provisions of Act need to be extracted before the arguments raised by learned counsel for the parties are dealt with. The provisions read as under:-

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(5) (i) 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

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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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(24) The application made to the Tribunal under sub-section (1) or sub-section (2) shall be dealt with by it as expeditiously as possible and every effort shall be made by it to complete the proceedings in two hearings, and to dispose of the application finally within one hundred and eighty days from the date of receipt of the application.”

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On the basis of the discussion made above we are of the considered view that the written statement was required to be filed within 30 days and in exceptional cases or in special circumstances be extended by the DRT by another 15 days. In the present case written statement was not filed either in 30 days or in extended 15 days. Provisions of the Act have to be assigned meaning thereby keeping in view the objective of the Act rather that to frustrate the object. Accordingly, I am of the considered opinion that defendant/respondent have no right to file written statement.

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Section 19(5) of the Act provides that defendant shall within 30 days from the date of summons, present written statement of defence, which could be extended 15 days in exceptional case or in special circumstances to be recorded in writing. Order dated 05.01.2024 shows that service was effected upon the defendant. In the present, case admittedly service of summons was effected on the defendant, appellant herein, and appellant through his learned counsel first put appearance before the learned DRT on 24.01.2024. Hence, appellant was required to submit written

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statement within 30 days from the date of service of summon. It is submitted that paper book was not served upon the appellant. Had it been brought to the notice of the learned DRT, it would be recorded in the order of DRT. Record shows that appellant did not put appearance before the DRT on various dates. Hence, time granted by the DRT for filing written statement was expired. But no plea was raised by the appellant that the order of serving paper book has not been complied. Had it been so, then appellant could have taken the benefit of Section 19(5) of the Act for extension of time for 15 days. It appears that appellant himself choosesnot to appear before the learned DRT and after giving sufficient time learned DRT closed the right to file written statement vide order dated 02.12.2024.

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In view of the above, I do not find any illegality or infirmity in the impugned order passed by the learned DRT on 02.12.2024. Appeal is liable to be dismissed.

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O R D E R

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Appeal is dismissed. Costs easy.

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File be consigned to record room.

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Copy of the order be supplied to the appellant and the respondents and a copy be also forwarded to the concerned DRT.

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Copy of the judgement/Final Order be uploaded in the Tribunal’s website. Order dictated, signed and pronounced by me in the open Court on this the 11^th day of March, 2024.

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(Anil Kumar Srivastava, J)

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Chairperson

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Dated : 11.03.2025/pkb

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M/S Mirania Brothers and Ors. v. Indusind Bank Limited

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M/S Mirania Brothers and Ors. v. Indusind Bank Limited

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