Dismissed

T and R Auto Private Limited v. Kotak Mahindra Bank Limited

DRAT10 Mar 2025MISC APPEAL/50/2024

Case brief

AI extract

What is this about?

The DRAT dismissed the appeal filed by the defendant against an order directing them to deposit security or face attachment of property. The Tribunal held the lower court did not err in treating a filed memo as valid ancillary relief for a second charge despite the property's existing first charge with another bank.

What did the court decide?

The appeal was dismissed. The impugned order directing appellants to deposit security and attaching property was confirmed.

T and R Auto Private Limited versus Kotak Mahindra Bank Limited — Banking and Recovery | DRAT (2025)

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Reportable/Non-Reportable

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Misc. Appeal No.50 of 2024 -DRAT-Kolkata

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT

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KOLKATA

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HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA CHAIRPERSON

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Misc. Appeal No. 50 of 2024 (Arising out of I.A. 2214 of 2023 in O.A. No. 687 of 2021 in DRTII, Hyderabad)

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M/s. T & R Auto Private Ltd., Rep by its Managing Director Ram Kumar Reddy Satty, R/o. H. No. 160 (44/45), Patney Plaza, S.P. Road, Secunderabad – 500003, Telangana.

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Sri Ram Kumar Reddy Satty, S/o. Late Sri Rami Reddy, aged 65 years, Occ: Business, R/o. D. No. 8-2-684/11/9, Plot No. 9, Bhavani Enclave, Road No. 12, Banjara Hills, Hyderabad -500034.

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.…Appellant

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-Versus-

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Kotak Mahindra Bank Ltd., Represented by its Constituted Attorney Sri H. Ramesh Kumar, Dy. Vice President Legal & Authorised Signatory having its Branch office at Legal Department, 6-3-1109/1, 2^nd Floor, Nava Bharat Chambers, Raj Bhavan Road, Somajiguda, Hyderabad – 500082.

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….Respondents

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Satty Sriram Reddy, son of S. Ram Kumar Reddy D. No. 8-2684/11/9, Plot No. 9, Bhavani Enclave, Road No. 12, Banjara Hills, Hyderabad -5000034.

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Smt. Padmalatha Reddy Satty, wife of S. Ram Kumar Reddy, D. No. 8-2-684/11/9, Plot No. 9, Bhavani Enclave, Road No. 12, Banjara Hills, Hyderabad – 500034.

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…….Proforma Respondents

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Counsel for Appellants

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Mr. Nemani Srinivas with Mr. Tirthankar Das, Learned Counsel

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Misc. Appeal No. 50 of 2024-DRAT-Kolkata

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Counsel for Respondents Mr. Mayank Shah, Learned

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Counsel

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JUDGMENT : 10^th March, 2025

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THE APPELLATE TRIBUNAL :

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Instant appeal has been preferred by the Appellant, who is the defendant in the original proceedings before the Learned DRT, against an order dated 15.05.2024 passed by Learned DRT-2 Hyderabad in I.A. No. 2214 of 2023 in O.A. No. 687 of 2021 (Kotak Mahindra Bank Limited versus T R Auto Private Limited and others). 2. As per pleadings of the parties, it appears that an O.A. No. 687 of 2021 was filed by the secured creditor i.e. Respondent herein before the Learned DRT for issuing a certificate to an amount of Rs. 4,60,27,721/- as on 30^th November, 2021. Pending O.A., an I.A. No. 2214 of 2023 was filed by the Respondent/ Secured Creditor directing the defendant Nos. 2 to 4 in the O.A. to furnish security to the extent of O.A. claim amount and in default to pass an order for attachment of the property. After filing of this Application opposition was filed by the defendant No. 2 wherein a plea is taken that the property sought to be attached is already mortgaged with the Axis Bank Hyderabad for the loans availed by Respondent No. 2 and 4. As such first charge over the property is that of Axis Bank

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Misc. Appeal No. 50 of 2024-DRAT-Kolkata only. Thereafter, a memo is filed by the Learned Counsel for the secured creditor praying for attachment of the schedule property with a direction to the Sub-Registrar to note the attachment of the property by way of second charge. Opposition to the memo was filed by the defendants stating that relief could not be sought on the basis of a memo, rather an appropriate application along with the Court fee has to be filed by the secured creditor. 3. Learned DRT disposed of the I.A. No. 2214 of 2023 holding that the value of the debt and securities can never be exactly equal excepting rare circumstances. Since the amount due to the Bank has yet not been crystalized, accordingly, prima facie case is made out in favour of the Bank. Balance of convenience is also in favour of the Bank. Accordingly, defendant Nos.2 and 4 were directed to deposit sufficient security to the extent of O.A. claim of Rs.4,60,27,721/- within 15 days, failing which property described in the petition shall stand attached subject to 1^st charge by the Axis Bank.

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4. Feeling aggrieved, defendant preferred the Appeal. 5. I have heard the Learned Counsel for the parties and perused the record. 6. Learned Counsel for the Appellant would submit that the Learned DRT erred in entertaining the memo filed by Learned Counsel without filing an appropriate application supported by an affidavit and also erred in passing the impugned order. It is further submitted that the subRegistrar is made a party in the I.A. while he was not a

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Misc. Appeal No. 50 of 2024-DRAT-Kolkata party in the O.A. proceedings. It was categorically stated in the petition to the I.A. by the defendants that the property sought to be attached is already mortgaged with the Axis Bank Hyderabad. So, no question of disposing of the same arises and 1^st charge over the property is of Axis Bank. Learned Counsel for the Appellant’s main contention is regarding the procedure followed by the DRT in accepting the memo filed by Learned Counsel for the secured creditor for a prayer to attach the property and to direct the subRegistrar to note the attachment by way of 2^nd charge. 7. Learned Counsel has placed reliance upon judgment in Syed Yousuf Ali versus Mohd. Yousuf and Others 2016 SCC OnLine Hyd 37 which was relied upon in the case of Abdul Rashid Sahib versus Ramachandran and another, 2022 SCC OnLine Mad 2623 in a C.R.P. (NPD) No. 1 of 2022 and CMP No. 23 of 2022 dated 27.05.2022. 8. Per contra, Learned Counsel for the Respondent secured creditor would submit that the Learned DRT has passed the impugned order in accordance with law. I.A. was filed for a direction to the Respondent Nos. 2 and 4 to furnish the security and in default to pass an order for attachment of the property. Opposition to the same was filed by the defendant wherein it was disclosed that the property is already mortgaged with the Axis Bank with the first charge over it. Thereafter, as an ancillary relief, a memo was filed for attachment of the same with communication to the Sub- Registrar and to note the

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Misc. Appeal No. 50 of 2024-DRAT-Kolkata attachment of the property by way of 2^nd charge. Learned Counsel has placed reliance upon the judgment of Hon’ble Apex Court in the case of Zahira Habibullah Sheikh and Ors. Versus State of Gujarat and others (2004) 5 SCC 353.

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9. Admittedly O.A. was filed by the Bank against the defendants wherein as per the impugned order, the O.A. was proceeding exparte against defendant No. 3 and 4 and the right of Defendant No. 1 and 2 for filing written statement was also forfeited. I.A. was filed for a relief of direction to defendant Nos. 2 and 4 to furnish the security to the extent of O.A. claim amount and in default to pass an order of attachment. It is also not in dispute that reply to the same was filed by the defendant No. 2 wherein it is disclosed that the proposed property to be attached is already mortgaged with the Axis Bank Hyderabad which has the first charge over it. Since I.A. was already filed and pending and a memo was filed by the Learned Counsel for the secured creditor to an effect that attachment of the property be made with an intimation to the Sub-Registrar for endorsement of attachment by way of 2^nd charge. This memo was filed in continuation of the earlier application for an ancillary relief. It has been held by the Hon’ble Apex Court in the case of Zahira Habibullah Sheikh and Ors. Versus State of Gujarat and others (supra) that-

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“ every prayer need not always be by a separate Application unless such prayer is the only relief sought or that the proceedings filed had no other claim, by way of relief. If the basis of grievance has been sufficiently disclosed openly and the relief sought is among others

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Misc. Appeal No. 50 of 2024-DRAT-Kolkata specified as incidental or ancillary to main relief and the Court had the power to grant it, the fact that there is no formal or specific application which if at all may be relevant for purposes of determining the Court fee to be paid only, does not in any way undermine the powers of the Court to accord relief, so long as the request in this regard has been indisputably made and was also responded to by the parties before the Court.”

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10. Case law relied upon by the Learned Counsel for the Appellant would not apply in this case in view of the law laid down by the Hon’ble Apex Court in Zahira Habibullah Sheikh and Ors. Versus State of Gujarat and others (supra).

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11. In the present case also, main relief was already claimed by the secured creditor by way of filing the I.A. wherein in the objections filed by the defendant it was disclosed that the specified property is already mortgaged and first charge is created in favour of the Axis Bank, then an ancillary relief was sought by way of filing a memo for recording the attachment by the Sub-Registrar by way of 2^nd charge over the specified properties which was rightly allowed by the Learned DRT. Learned DRT rightly arrived at a finding that the prima facie case is made out by the secured creditor and the balance of convenience is also in favour of the secured creditor. It would not be out of place to record that defendant Nos. 2 and 4 have not complied the order dated 15.05.2024. Hence, that order was made absolute by the DRT vide order dated 28.06.2024.

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12. On the basis of discussion made above, I am of the considered view that no illegality or irregularity has been

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Misc. Appeal No. 50 of 2024-DRAT-Kolkata committed by the Learned DRT in passing the impugned order. Appeal lacks merit and is liable to be dismissed.

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ORDER

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Appeal is dismissed. Impugned judgement and order dated 15^th May, 2024 passed by Learned DRT II Hyderabad in I.A. No. 2214 of 2023 in O.A. No. 687 of 2021 (Kotak Mahindra Bank Limited versus T R Auto Private Limited and others) is confirmed.

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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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Copy of the Judgment/ Final Order be uploaded in the Tribunal’s Website.

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Order signed and pronounced by me in the open Court on this the 10^th day of March, 2025.

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(Anil Kumar Srivastava,J) Chairperson