Dismissed

Tropical Coatings International Private Limited And Others v. Central Bank of India

DRAT1 Aug 2025REGULAR APPEAL/13/2025

Case brief

AI extract

What is this about?

An appeal filed by borrowers against the Debts Recovery Tribunal's dismissal of a motion challenging a consent decree. The Appellate Tribunal held that the appellants failed to show sufficient cause for a 521-day delay, as they had full knowledge of the proceedings and acted upon the settlement terms.

What did the court decide?

The appeal filed by the appellants was dismissed, and the impugned order of the Debts Recovery Tribunal allowing the bank's application was confirmed.

Tropical Coatings International Private Limited And Others… — Banking and Recovery | DRAT (2025)

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REPORTABLE/NON REPORTABLE

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL: KOLKATA

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Appeal No. 13 of 2025

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(Arising out of MA. No. 4/2024 in O.A. No. 1028 of 2019 in DRT, Visakhapatnam)

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HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA CHAIRPERSON

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1. M/s. Tropical Coatings International Private Limited, represented by its Managing Director M.Ravindranath son of Late Uma Maheswara Rao, MIG-228, Sai Puja Enclave, Flat No.201, Mahavadhara Vud Colony, Visakhapatnam-530018

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1. M. Ravindranath, son of Late Maheswari Rao, MIG-228 Sai Puja Enclave, Flat No.201, Mahavadhara Vud Colony, Visakhapatnam530018

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1. M.V.S.Janardhana Rao, son of Late Uma Maheswari Rao, Sravani Enclave, Annapurna Theatre Lane, Kurmannapalem, Gajuwaka, Visakhapatnam

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1. M. Syamalatha, wife of Maganti Ravindranath, MIG-228 Sai Puja Enclave, Flat No.201, Mahavadhara Vud Colony, Visakhapatnam18

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….Appellants

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-VsCentral Bank of India, Main Branch, Seethammapeta, Visakhapatnam

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………….Respondent

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Counsel for the Appellants Mr. Ambadipudi Satyanarayana, Ld. Senior Advocate, Mr. Nemani Srinivas Counsel for the Respondent Mr. Shiv Mangal Singh JUDGMENT : 1^st August, 2025 THE APPELLATE TRIBUNAL:

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Instant Appeal has arisen against the order dt.8.8.2024 passed by the Ld. DRT Visakhapatnam in MA. No. 4 of 2024 in OA. No. 1028 of 2019 (M/s. Tropical Coatings International Private Limited and others versus Central Bank of India).

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2. As per the pleadings of the parties, the OA.No.1028/2019 was filed by the Central Bank of India for issue of Recovery Certificate for Rs.13,31,67,724/- with pendent lite and future interest. Pending OA, parties arrived at a settlement under OTS. Appellants offer for Rs.6 crores dt.11.12.2019 was accepted by the bank vide letter dt.3.1.2020 and an amount of Rs.1.01 crores was deposited by the applicant and the balance

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amount of Rs.4.99 crores was required to be deposited by 31.3.2020 to close the account. Thereafter the joint memo dt.18.2.2020 was executed. For disposal of the OA in terms of settlement between the parties an IA.389 of 2019 was filed by the bank to pass a consent decree. The balance amount of Rs.4.99 crores could not be deposited by the appellants due to intervention of Enforcement Directorate. Time was extended till November 2020 to make the deposit. In the last week of August 2023, demand notice dt.17.8.2023 was served upon the appellants which was issued by Recovery Officer in RP.No.226 of 2023 pursuant to the judgement passed by the DRT, Visakhapatnam. A Recovery Certificate for an amount of Rs.13,81,69,823/- with pendente lite and future interest @14.35% compounded monthly rests was issued.

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3. Thereafter MA.4/2024 was filed by the appellant for recalling the order dt.28.3.2022 passed in OA.1028/2019 with an application to condone the delay of 521 days on the ground that no notice in IA.389/2020 was served upon the appellants. The appellants came to know about it after issuance of demand notice dt.17.8.2023 and the impugned judgment was passed behind the back of the appellant.

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4. MA.4/2024 was dismissed by the Ld. DRT, Visakhapatnam on 8.8.2024 refusing to condone the delay of 521 days. Writ Petition No.17872 of 2024 was filed by the appellants before the Hon’ble High Court, which was disposed of on 19.8.2024 with an observation to approach the Hon’ble DRAT. 5. It is submitted that MA.16/2022 was filed by the bank on 25.5.2022 for amendment in the order which was allowed without notice to the appellants. Principles of natural justice was not followed by the DRT. 6. Ld. DRT dismissed the MA.4/2024 on the ground that the order passed on 28.2.2022 was not exparte order rather, it was consent decree hence the reasons or grounds for condonation of delay are not acceptable and that the delay is not properly explained, consequently MA.4/2024 was dismissed.

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7. Feeling aggrieved by the impugned order, appellant preferred the Appeal.

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8. I have heard the Ld.Counsel for the Appellant - Mr. A.B.Satyanarayana, Senior Advocate and the Ld. Counsel for the respondent - Mr.Shiv Mangal Singh.

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9. As far as the facts of the matter are concerned, an OA.No.1028/2019 was filed by the respondent bank for issue of Certificate for Rs.13,31,67,724/-. Pending the OA, One Time Settlement proposal was approved by the bank on 3.1.2020 for an amount of Rs.6 crores where the

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upfront amount of Rs.1.01 crore was deposited. Remaining Rs.4.99 crore was to be deposited on or before 31.3.2020. In case of default in payment, sanction would automatically be cancelled. Further, it was agreed that if the compromise amount is not paid within stipulated period, entire concessions shall stand withdrawn and it shall be treated as if there was no compromise settlement in the account and in that case suit shall be proceeded further. It so appears that a joint memo was prepared and filed by the bank as well as defendants - 1) M/s. Tropical Coatings International Private Limited represented by its Managing Director, Maganti Ravindranath & Director, MVS Janardhana Rao 2) Maganti Ravindranath 3) MVS Janardhana Rao 4) Mrs.Maganti Syamalatha which was duly signed by the authorized representative of the bank and the defendants.

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10. Thereafter, IA.389/2019 was filed by the bank under Order 19 Rule 1 CPC detailing OTS with a prayer for passing a consent decree in terms of compromise as agreed between both parties. Thereafter it so happens that the matter was placed before the Ld.DRT, Visakhapatnam and summons were directed to be issued to D-1, 2 and 4. On 28.3.2022, Ld. DRT, Visakhapatnam passed the following order:-

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“Joint petition dt.18.2.2020 moved by the Ld.Counsel for petitioner/applicant. Heard Ld.Counsel of applicant and Ld.Counsel for OP, perused the record.

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As per joint compromise petition both parties have compromised the case as per the terms and conditions of the joint petition dt.18.2.2020. After perusal of joint petition I find that this compromise petition is in order. Accordingly this compromise petition is hereby allowed. Joint petition will be part of this order. Accordingly OA.1028/19 along with IA.389/20 is hereby disposed of. Let decree be passed accordingly.”

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11. The detailed order was also passed by the Ld.DRT, Visakhapatnam on the basis of IA which was subsequently amended in MA.16/22 on 3.8.2022 and consequent thereto Recovery Certificate was issued. When the demand notice was received by the appellants, they filed MA to set aside the order dt.28.3.2022 recording old joint compromise dt.18.2.2020 with an application for condonation of delay 521 days.

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12. Ld.Counsel for appellant would submit that the compromise petition was not verified by the Ld.DRT and there was direction for issuance of notice on D-1, D-2 and D-4 but the same were not served upon them. Even on the date fixed and date of the impugned judgment none was present for defendants rather Counsel for D-5 was present. The Ld.Counsel further

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submits that the subsequent MA.16/22 was also allowed without any notice to the appellants and no opportunity was given to the appellants.

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13. Ld.Counsel further submits that there was an unequal bargain in the compromise as the appellants were at the receiving end. Reliance is placed upon Superintendence Company of India (P) vs Krishan Murgai AIR 1980 SUPREME COURT 1717. It is further submits that the principles as required under Order 23 Rule 3 CPC regarding verification of compromise not followed. Reliance is placed upon Navratan Lal Sharma Vs Radha Mohan Sharma & ors decided on 12.12.2024 in Civil Appeal No.14328/2024 @SLP (Civil) No.27723 of 2024 . Placing reliance upon the judgement, it is further submitted that the appellant was within its jurisdiction to challenge the compromise decree before the Ld. DRT, Visakhapatnam.

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14. Per contra, Ld. Counsel for the respondent submits that the delay in filing the MA could not be condoned as no sufficient cause could be shown by the appellants. It is further submitted that it was not an exparte decree and the appellants having full knowledge of the proceedings of OA and they did not appear before the DRT and not moved the MA within time.

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15. Impugned decree was passed by the Ld.DRT on 28.3.2022 which was based upon the OTS dt.3.1.2020. As far as issue of pendency of OA is concerned, it was well within the knowledge of the appellants herein who have filed a joint memo which bears the signatures of the appellants which was categorically mentioned in the memo dt.15.2.2020 that the applicant bank and the defendants have agreed to allow OA.1028/2019 to pass orders/Recovery Certificate in favour of applicant bank in the above OA. Apart from other terms, it clearly reveals that the appellants were having full knowledge of the pendency of OA on the date of signing of this memo dt.15.2.2020. This memo was prepared on the basis of the OTS accepted by the bank on 3.1.2020 wherein the settled amount was Rs.6 crores and the upfront amount Rs.1.01 crores. This fact further finds support from the fact that the upfront amount of Rs.1.01 crore was duly deposited by the appellants. It means that they were fully agreeable for the OTS by the bank. On the basis of same OTS, joint memo was prepared and IA.389/2019 was filed by the bank wherein the impugned judgment was passed by the Ld.DRT, Visakhapatnam.

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16. Now, the appellants filed an application under section 5 of Limitation Act read with section 19(25) of Recovery of Debts and Bankruptcy Act for condonation of delay of 521 days in filing the petition to set aside the order

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dt.28.2.2022. I have gone through the application filed under section 5 of Limitation Act wherein at para 5 and 6 it is admitted that:-

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“5. At that time I approached the Respondent bank officials and informed them that I settle the matter through OTS. Even before the bank officials called me for OTS, they have already filed this OA.1028/2019 and I appeared in the said case.

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6. Thereafter, the bank officials agreed and accepted for the OTS for Rs.6.00 crores and directed me to sell one property i.e., Schedule-III of the O.A. and deposit the amount into the bank and accordingly I sold the said property and deposited the entire sale consideration of Rs.1.01 crores into the bank, which was received by the bank and the bank prepared one OTS and asked me and other Directors and my wife to sign the same and demanded me withdraw the S.A.227/2018 pending on the file of this Hon’ble Tribunal.”

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17. Thereafter even in the preparation of and filing the memo before the Tribunal during February 2020, it was admitted by the appellants in para 11 and 12 that:-

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“11. In view of OTS being sanctioned I have filed a Memo before the Hon’ble Tribunal during February, 2020 that in view of the settlement the bank will withdraw O.A.1028/2019 and I have filed the Memo withdrawing SA.227/2018.

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12. I submit that the Hon’ble Tribunal passed orders in S.A.No.227/2018 dismissing the same on 24.9.2021. Against the said orders which are in violation in the provisions of SARFAESI Act. I filed writ petition WP.No.22646/2021 before the Hon’ble High Court of A.P. Amaravathi and the same was disposed off by the Hon’ble High Court allowing the writ petition and setting aside the orders dated 24.9.2021 in S.A.227/2018 and directed the Hon’ble Tribunal to pass orders afresh on the not press memo either dismissing the SA or decide the validity of e-auction sale of item No.1 of the schedule property.”

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18. The only ground taken by the appellants in the petition in para-18 is that unfortunately due to lack of knowledge on recording the old compromise memo and the matter is pending before the Hon’ble High Court where the respondent bank did not inform the decision of OA.1028/2019, so he was not having any knowledge about the impugned order.

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19. As far as condonation of delay in filing the application is concerned, it has been held by the Hon’ble Apex Court in a recent judgment in the matter of Sheo Raj Singh (Deceased) through Legal Representatives & Others -vs- Union of India & Another [(2023) 10 SCC 531] has held in paragraphs 30 and 32 as under:

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“30. X x x condonation of delay being a discretionary power available to courts, exercise of discretion must necessarily depend upon the sufficiency of the cause shown and the degree of acceptability of the explanation, the length of delay being

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immaterial.”

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“32. x x x At this stage, we cannot but lament that it is only excuses, and not explanations, that are more often accepted for condonation of long delays to safeguard public interest from those hidden forces whose sole agenda is to ensure that a meritorious claim does not reach the higher courts for adjudication.”

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20. The Hon’ble Apex Court in State (NCT of Delhi) -vs- Ahmed Jaan [(2008) 14 SCC 582], held that proof of sufficient cause is a condition precedent. In para 10 it is held that-

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“There is no general principle saving the party from all mistakes of its Counsel could be laid. The expression ‘sufficient cause’ must receive a liberal construction so as to advance substantial justice and generally delays in preferring the appeals are required to be condoned in the interest of justice where no gross negligence or deliberate inaction or lack of bona fides is imputable to the party seeking condonation of delay.”

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21. The Hon’ble Apex Court in S. Ganesharaju (Dead) through LRs -vs- Narasamma (Dead) through LRs [(2013) 11 SCC 341]

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in para 12 it was held that-

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“Unless the Respondents are able to show mala fides in not approaching the Court within the period of limitation, generally as a normal rule, delay should be condoned. The trend of the Courts while dealing with the matter with regard to condonation of delay has tilted more towards condoning delay and directing the parties to contest the matter on merits, meaning thereby that such technicalities have been given a go-by.”

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It was further held in para 14 that :

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“Since sufficient cause has not been defined, thus, the Courts are left to exercise a discretion to come to the conclusion whether

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circumstances exist establishing sufficient cause. The only guiding principle to be seen is whether a party has acted with reasonable diligence and had not been negligent and callous in prosecution of the matter.”

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22. It has been held by the Hon’ble Apex Court that in an application under Section 5 of the Limitation Act sufficient cause has be to shown for condonation of delay. There is difference between excuse and sufficient cause, as has been held by the Hon’ble Apex Court.

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23. The Hon’ble Apex Court in Pathapati Subba Reddy (Died)

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-vs- The Special Deputy Collector (LA) [2024 LiveLaw (SC) 288] has referred to Collector, Land Acquisition, Anantnag and Others

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-vs- Katiji & Others [(1987) 2 SCC 107] wherein it was held that :

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“x x x x ordinarily a litigant does not stand to benefit by

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lodging an appeal late; it is not necessary to explain every day's delay in filing the appeal; and since sometimes refusal to condone delay may result in throwing out a meritorious matter, it is necessary in the interest of justice that cause of substantial justice should be allowed to prevail upon technical considerations and if the delay is not deliberate, it ought to be condoned. Notwithstanding the above, howsoever, liberal approach is adopted in condoning the delay, existence of 'sufficient cause' for not filing the appeal in time, is a condition precedent for exercising the discretionary power to condone the delay. The phrases liberal approach', justice-oriented approach' and cause for the advancement of 'substantial justice' cannot be employed to defeat the law of limitation so as to allow stale matters or as a matter of fact dead matters to be revived and reopened by taking aid of Section 5 of the Limitation Act.”

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24. It is further held that it must be borne in mind, while construing ‘sufficient cause’ in deciding application under Section 5 of the Limitation Act, that on the expiry of the period of limitation prescribed for filing an appeal, substantive right in favour of the decree-holder accrues and this right ought not to be lightly disturbed.

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25. Hon’ble Apex Court has also referred to Basawaraj and Another -vs- Special Land Acquisition Officer (2013) 14 SCC 81 wherein it was held in paragraph 23 that:

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“The discretion to condone the delay has to be exercised judiciously based upon the facts and circumstances of each case. The expression 'sufficient cause' as occurring in Section 5 of the Limitation Act cannot be liberally interpreted if negligence, inaction or lack of bona fide is writ large. It was also observed

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that even though limitation may harshly affect rights of the parties but it has to be applied with all its rigour as prescribed under the statute as the courts have no choice but to apply the law as it stands and they have no power to condone the delay on equitable grounds.”

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26. Hon’ble Apex Court also placed reliance on paragraphs 12 and 15 of the Basawaraj (supra) which reads as under :

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"12. It is a settled legal proposition that law of limitation may harshly affect a particular party but it has to be applied with all its rigour when the statute so prescribes. The Court has no power to extend the period per of limitation on equitable grounds. "A result flowing from a statutory provision is never an evil. A Court has no power to ignore that provision to relieve what it considers a distress resulting from its operation. The statutory provision may cause hardship or inconvenience to a particular party but the court has no choice but to enforce it

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giving full effect to the same. The legal maxim dura lex sed lex which means "the law is hard but it is the law", stands attracted in such a situation. It has consistently been held that, "inconvenience is not" a decisive factor to be considered while interpreting a statute."

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“15. The law on the issue can be summarised to the effect that where a case has been presented in the court beyond limitation, the applicant has to explain the court as to what was the "sufficient cause" which means an adequate and enough reason which prevented him to approach the court within limitation. In case a party is found to be negligent, or for want of bona fide on his part in the facts and circumstances of the case, or found to have not acted diligently or remained inactive, therecannot be a justified ground to condone the delay. No court could be justified in condoning such an inordinate delay byimposing any condition whatsoever. The application is to be decided only within the parameters laid down by this Court in regard to the condonation of delay. In case there was no sufficient cause to prevent a litigant to approach the court on time condoning the delay without any justification, putting any condition whatsoever, amounts to passing an order in violation of the statutory provisions and it tantamounts to showing utter disregard to the legislature."(emphasis supplied).”

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27. In paragraph 26 of the Pathapati Subba Reddy (supra) Hon’ble Apex Court held that-

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“26. On a harmonious consideration of the provisions of the law, as aforesaid, and the law laid down by this Court, it is evident that:

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a. Law of limitation is based upon public policy that there should be an end to litigation by forfeiting the right to remedy rather than the right itself;

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b. A right or the remedy that has not been exercised or availed of for a long time must come to an end or cease to exist after a fixed period of time;

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c. The provisions of the Limitation Act have to be construed differently, such as Section 3 has to be construed in a strict sense whereas Section 5 has to be construed liberally;

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d. In order to advance substantial justice, though liberal approach, justice-oriented approach or cause of substantial justice may be kept in mind but the same cannot be used to defeat the substantial law of limitation contained in

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Section 3 of the Limitation Act;

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e. Courts are empowered to exercise discretion to condone the delay if sufficient cause had been explained, but that exercise of power is discretionary in nature and may not be exercised even if sufficient cause is established for various factors such as, where there is inordinate delay, negligence and want of due diligence;

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f. Merely some persons obtained relief in similar matter, it does not mean that others are also entitled to the same benefit if the court is not satisfied with the cause shown for the delay in filing the appeal;

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g. Merits of the case are not required to be considered in condoning the delay; and condoning the delay for the reason that the conditions have been imposed, tantamounts to disregarding the statutory provision.

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h. Delay condonation application has to be decided on the

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parameters laid down for condoning the delay and condoning the delay for the reason that the conditions have been imposed, tantamount to disregarding the statutory provision.”

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28. It was further held that if sufficient cause is not shown, delay cannot be condoned. Further condonation of delay merely for the reason that the claimants have been deprived of the interest for the delay while holding that they had made out a case for condoning the delay is not a correct approach.

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29. It is not in dispute that the appellants herein are having full knowledge of pendency of OA.1028/2019. It is also not in dispute that they signed the joint compromise memo. It is also not in dispute that the compromise memo was signed on the basis of OTS proposal accepted by the bank. It is also not in dispute after signing the joint compromise memo the appellant did not care to pursue the OA. Even it is accepted for the sake of arguments that inadvertently notices were directed to be issued by the DRT in the pending IA for recording the joint compromise memo, such notices are not required, as the appellants are having full knowledge of pending OA. The appellants are required to show the ‘sufficient cause’ for condonation of delay and they themselves acted upon the compromise memo arrived in between the parties and deposited Rs.1.01 crores thereafter they did not chose to pursue the pending OA. Accordingly, I am of the considered opinion that the appellants have failed to show any sufficient cause for condonation of delay in filing the petition to set aside the judgment/order passed on 28.3.2022. 30. The decisions relied upon by the Ld. Counsel for the appellants are not applicable to the present facts and circumstances of the case. 31. As far as question of validity and legality of the impugned order dt.28.3.2022 is concerned, it was passed on the basis of joint memo but that judgment attains finality as the application filed under section 5 Limitation Act could not be accepted as no ‘sufficient cause’ could be shown by the appellants. Accordingly, the application under section 5 Limitation Act was rightly dismissed by the Ld. DRT, Visakhapatnam, consequently the MA was also liable to be dismissed. Appeal lacks merit and is liable to be dismissed.

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O R D E R

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Appeal is dismissed. Impugned judgment and order dated 08.08.2024 passed by the Ld. DRT, Visakhapatnam in MA. No. 04 of 2024 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 Judgment/ Final Order be uploaded in the Tribunal’s Website.

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