Allowed

State Bank of India v. Sri Ramani Resorts and Hotels Pv Ltd. & Ors.

DRAT23 Jan 2025MISC APPEAL/51/2018

Case brief

AI extract

What is this about?

The Debt Recovery Appellate Tribunal allowed appeals against the dismissal of interim applications by the appellant bank. The bench held that the lower tribunal erred in refusing to restrain respondents from alienating properties, surrendering passports, and disclosing assets, relying on Sections 19 of the RDB Act and the ICICI Bank judgment.

What did the court decide?

Appeals allowed; impugned orders dismissing interim applications set aside; applications for injunction, passport surrender, and asset declaration allowed before the DRT.

State Bank of India versus Sri Ramani Resorts and Hotels Pv… — Banking and Recovery | DRAT (2025)

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 23^rd of January, 2025

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PRESENT: Hon’ble Mr. Justice G. Chandrasekharan CHAIRPERSON

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M.A:49/2018

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(IA 61/2018 in OA 242/2017 on the file of DRT- II, Chennai)

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M.A:50/2018

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(IA 62/2018 in OA 242/2017 on the file of DRT- II, Chennai)

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AND

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M.A:51/2018

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(IA 63/2018 in OA 242/2017 on the file of DRT- II, Chennai)

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BETWEEN

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State Bank of Travancore, (Amalgamated as State Bank of India), Alwarpet Branch, No.4/1, Eldams Road, Balaviniyagar Building, Teynampet,

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Chennai – 600 018.

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…… Appellant in M.A:49/2018,M.A:50/2018 & M.A:51/2018

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AND

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Sri Ramani Resorts and Hotels Pvt. Limited.,

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Sri Ramani Residency , Represented by Managing Director, No.8/42, Maharaja Surya Road, Alwarpet, Chennai – 600 018.

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P.R. Shanmugam,

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S/o Mr. Shanmugampillai Palani, Door No. 16/7, 29^th Cross Street, Indira Nagar, Chennai 600 020.

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K. Ambujam Kalavathy, D/o T. Kolappan,

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Door No. 16/7, 29^th Cross Street, Indira Nagar, Chennai – 600 020

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…..Respondents in M.A:49/2018,M.A:50/2018 & M.A:51/2018

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Counsel for Appellant : Mr. K Chandrasekaran Counsel for Respondents : Mr. Gupta & Ravi

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COMMON ORDER

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1. These Appeals are filed challenging the orders passed by DRT-II, Chennai, in IA 61/2018, IA 62/2018 and IA63/2018 in OA 242/2017.

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2. IA 61/2018 was filed by the Appellant seeking an order of interim injunction restraining the Respondents 1 to 3 from alienating or transferring or creating any encumbrance over the Petition mentioned properties in favour 3^rd parties and consequently, direct the Sub Registrar, Sucheendrum Village, Agastiar Taluk, Nagercoil, K.K. District, not to effect any registration without the knowledge and information of the Appellant Bank, pending disposal of OA;

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IA 62/2018 was filed by the Appellant seeking a direction to Respondents 2 and 3 to forthwith surrender their passport to the Registrar of the Tribunal and restrain

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him from leaving the country without the written permission of the Tribunal, pending the hearing and final disposal of the Application; and

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IA 63/2018 was filed by the Appellant seeking direction to Respondents 1 to 3 to declare their personal assets by way of an affidavit on oath and hold and certify that individual properties of the Respondents 1 to 3 are liable for attachment; sale if the outstanding dues with interest thereon remain unpaid, and in the event of failure to disclose the personal assets on oath, to order for arrest of the Respondents 1 to 3 and their detention in civil prison, pending disposal of the OA.

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3. Learned Counsel for Appellant Bank submitted that Section 19 (4) of Recovery of Debts and Bankruptcy Act, 1993, (RDB Act, 1993) gives power to the Tribunal to direct the Defendant to disclose particulars of properties or assets other than properties and assets specified by the applicant

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under clauses (a) and (b) of sub-section (3A); and to restrain the Defendant from dealing with or disposing of such assets and properties disclosed under clause (c) of sub-section (3A) pending the hearing and disposal of the Application for attachment of properties; in case of non-compliance of any order made under clause (ii) of sub-section (4), the Presiding Officer may, by an order, direct that the person or officer who is in default, be detained in civil prison for a term not exceeding three months unless in the meantime the Presiding Officer directs his release: provided that the Presiding Officer shall not pass an order under this clause without giving an opportunity of being heard to such person or officer. Section 19 (25) of RDB Act, 1993, also empowers the Tribunal to make such orders and give such directions as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure the ends of justice.

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Learned Counsel for Appellant Bank further submitted

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that the Respondents 1 to 3 have got other properties which are not covered by the mortgage, and that they are trying to sell and encumber the said properties. To avoid that, Appellant Bank has filed the aforesaid Applications before the Tribunal for necessary orders. However, Learned Presiding Officer, DRT-II, Chennai, passed orders stating that the mortgaged property was registered with concerned Sub –Registrar Office, and thus, IA 61/2018 was dismissed. With regard to IA 62/2018, it was held that the personal properties of Respondents 2 and 3 were attached before judgement, therefore, the surrender of passport and direction for not to leave the country without the permission of the Tribunal is not necessary, and thus, IA 62/2018 was dismissed. For the reason that there are already mortgaged and hypothecated properties to secure the outstanding dues with the Bank, and the immovable properties of the Respondents 2 and 3 were attached before judgement in IA 64/2018, and the properties attached/mortgaged and hypothecated are more than sufficient to secure the claim in

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the OA, for all these reasons, IA 63/2018 was also dismissed. Challenging the dismissal of these Applications, these Appeals are filed.

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Learned Counsel for Appellant Bank relied on the judgement of Hon’ble High Court of Madras in the case of ICICI Bank Limited Vs. The Debts Recovery Appellate

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Tribunal & Ors., reported in AIR 2012 Madras 111 , for the proposition that measures like directing the borrower to surrender of passport and ordering the borrower/guarantor

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not to leave the country without the permission of the Tribunal is well within the powers conferred on the Tribunal under Section 19(25) of the RDB Act.

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6. There is no representation for Respondents, despite giving sufficient opportunity.

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7. As narrated above, Section 19(4) (ii) of the RDB Act,

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1993, empowers the Tribunal to d irect the Defendant to

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disclose particulars of properties or assets other than properties and assets specified by the applicant under clauses (a) and (b) of sub-section (3A). Section 19 (4) (iii) of RDB Act, 1993, empowers the Tribunal to restrain the Defendant from dealing with or disposing of such assets and properties disclosed under clause (c) of sub-section (3A) pending the hearing and disposal of the application for attachment of properties: Section 19 (5) (iii) of RDB Act, 1993, empowers the Presiding Officer to detain the person or officer who is in default, for non-compliance of any order made under clause (ii) of sub-section (4). Section 19 (25) of RDB Act, 1993, empowers the Tribunal to make such orders

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and give such directions as may be necessary or expedient to

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give effect to its orders or to prevent abuse of its process or to secure the ends of justice.

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8. From these provisions, it is made clear that the

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Tribunal is empowered to direct the Defendant to disclose particulars of properties or assets other than properties and

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assets specified by the Applicant under clauses (a) and (b) of sub-section (3A), and to restrain the Defendant from dealing with or disposing of such assets and properties disclosed under clause (c) of sub-section (3A) pending the hearing and disposal of the Application for attachment of properties.

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It is also seen in the judgement of ICICI Bank Ltd. Vs.

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The Debts Recovery Appellate Tribunal reported in AIR 2012 Madras 111 , that the power to surrender of passport is within the ambit of power in Section 19(25) of the RDB Act.

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Learned Counsel for Appellant Bank submitted that a huge amount is due from the Respondents. Unless the Respondents disclose p articulars of properties or assets other than properties and assets mortgaged, the Appellant would not be in a position to recover the huge debt due. Learned Presiding Officer, DRT-II, Chennai, dismissed IA 61/2018, IA 62/2018 and IA 63/2018 on the grounds that

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already mortgaged and hypothecated properties are secured with the Appellant Bank and personal properties of

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Respondents 2 and 3 were also attached, therefore, it is not necessary to order injunction; to surrender passport and to declare personal assets for attachment.

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The Appellant Bank is not able to realize the huge sums due and its claim, and that the Respondents own, other properties than the properties mortgaged/hypothecated with Appellant Bank, and in order to recover the huge debt due to Bank, it is just and necessary that there must be injunction restraining the Respondents 1 to 3 from alienating or transferring or creating any encumbrance over the Petition mentioned properties; the passport should be surrendered to

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the Tribunal to restrain them from leaving the country without the permission of the Tribunal and has to declare personal assets of Respondents 1 to 3, for attachment and sale.

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In this view of the matter, the orders passed by Learned Presiding Officer, DRT-II, Chennai, on 08.03.2018,

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dismissing the Applications in IA 61/2018, IA 62/2018 and IA 63/2018 in OA 242/2017 are liable to set aside.

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In the result, the Appeals in MA 49/2018, MA 50/2018 and MA 51/2018 are allowed. The orders passed by Learned Presiding Officer, DRT-II, Chennai, on 08.03.2018 is set aside. Consequently, Applications in IA 61/2018, IA 62/2018 and IA 63/2018 in OA 242/2017 before DRT-II, Chennai, are allowed. Both parties shall bear their own costs. All pending IAs, if any, stand closed.

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[Dictated to Athistamani, PS, in open court, transcribed by her, corrected and signed by me this 23^rd of January, 2025]

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[ Justice G. Chandrasekharan] CHAIRPERSON

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State Bank of India v. Sri Ramani Resorts and Hotels Pv Ltd. & Ors.

Case brief

What is this about?

What did the court decide?

State Bank of India v. Sri Ramani Resorts and Hotels Pv Ltd. & Ors.

Case brief

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