Dismissed

M/S. Madhura Industries v. the Authorised Officer/ the Chief Manager

Karnataka HC1 Jun 2018WP/11450/2018

Case brief

AI extract

What is this about?

The High Court dismissed writ petitions challenging an order dismissing an appeal before DRAT for non-compliance of pre-deposit requirements under the RDBFI Act, rejecting arguments regarding CGTMSE Scheme coverage.

What did the court decide?

The writ petitions are dismissed for failure to comply with the pre-deposit requirement under Section 21 of the RDBFI Act.

M/S. Madhura Industries Vs the Authorised… — Contract and Commercial Disputes | Karnataka HC (2018)

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W.P.No.11450/2018 & W.P.NOS. 16327-16330/2018

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 1^ST DAY OF JUNE, 2018

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PRESENT

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HON’BLE MR.JUSTICE DINESH MAHESHWARI, CHIEF JUSTICE

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AND

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HON’BLE MR.JUSTICE KRISHNA S DIXIT

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WRIT PETITION NO. 11450 OF 2018 AND WRIT PETITION NOS. 16327-16330 OF 2018 (GM-DRT)

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BETWEEN

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M/S MADHURA INDUSTRIES

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REPRESENTED BY ITS PROPRIETOR PROP: K.MADEGOWDA, MAJOR S/O LATE KEMPAIAH KADUKOTHANAHALLY, C.A.KERE HOBLI, MADDUR TALUK MANDYA DISTRICT

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MR. K. MADE GOWDA, MAJOR S/O LATE KEMPAIAH

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MR. K.M.MAHESH, MAJOR S/O K. MADE GOWDA

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MR. K.M.CHIDANANDA, MAJOR S/O K. MADE GOWDA

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MASTER K.M.ASHOK (MINOR) REPRESENTED BY HIS FATHER MR. K.MADE GOWDA NOW HAS ATTAINED MAJORITY

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ALL ARE RESIDING IN KADUKOTHANAHALLY, C.A.KERE

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W.P.No.11450/2018 & W.P.NOS. 16327-16330/2018

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HOBLI, MADDUR TALUK MANDYA DISTRICT

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.. PETITIONERS

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(BY: SRI.RAJENDRA M.A., ADVOCATE)

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AND

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THE AUTHORISED OFFICER/ THE CHIEF MANAGER STATE BANK OF INDIA REGIONAL OFFICE, V.V.ROAD MANDYA – 571 401

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THE GOVERNOR RESERVE BANK OF INDIA CENTRAL OFFICE BUILDING 18^TH FLOOR, SHAHID BHAGAT SINGH ROAD MUMBAI – 400 001

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THE DEVELOPMENT COMMISSIONER (MSME) MINISTRY OF MICRO, SMALL & MEDIUM ENTERPRISES, GOVERNMENT OF INDIA UDYOG BHAVAN, NEW DELHI – 110 011

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THE GENERAL MANAGER CREDIT GUARANTEE TRUST FOR MEDIUM AND SMALL ENTERPRISES NO.1002 AND 1003, NAMAN CENTRE 10^TH FLOOR, PLOT NO.C-31, “G” BLOCK BANDRA KURLA COMPLEX, BANDRA EAST MUMBAI – 400 051 .. RESPONDENTS

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THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH/SET ASIDE THE IMPUGNED ORDER DATED 08.08.2017 PASSED IN A.IR 465/2016 AT ANNEXURE-A BY THE DEBT RECOVERY APPELLATE TRIBUNAL, CHENNAI, WHICH ORDER IS AGAINST TO THE PRINCIPLES OF NATURAL JUSTICE AND

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W.P.No.11450/2018 & W.P.NOS. 16327-16330/2018

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NOT AS PER THE PROVISIONS OF THE RDDB AND FI ACT, 1993.

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THESE PETITIONS COMING ON FOR PRELIMINARY HEARING THIS DAY, THE CHIEF JUSTICE , MADE THE FOLLOWING:

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ORDER

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In the appeal preferred by the petitioners before the Debt Recovery Appellate Tribunal (‘DRAT’), as against the order passed by the Debt Recovery Tribunal (‘DRT’) holding them jointly and severally liable to pay to the respondent-Bank a sum of �67,42,170/- together with future interest at the rate of 15.50% p.a. compounded annually from 21.02.2012, the DRAT passed the following order on 11.07.2017 as regards pre-deposit:-

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“PROCEEDINGS DATED 11.07.2017

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Ld. Counsel Mr. M.A.Rajendra for Appellants present.

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Ld. Counsel Mr. K.Mohandas for Respondent Bank present.

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Heard on IA 443/2017 application for waiver.

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Appellants have challenged the order dated 29.2.2016 of DRT, Bangalore, passed in O.A.No.1433/2012 by which OA of the

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W.P.No.11450/2018 & W.P.NOS. 16327-16330/2018

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Respondent Bank has been allowed for recovery of a sum of Rs.67.42 lakhs.

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Ld. Counsel for Appellants submits that loan has been sanctioned under the CGTM Scheme, a sort of insurance, in which in case of contingencies and defaults, Bank may recover the amount from the provisions of the Scheme through Government. Ld. Counsel further submits that Appellants are held to be not the guarantors in this case in the strict sense, because they have not signed the Deed of Guarantee and do not owe personal guarantee of the loan. By way of collateral security, Respondent Bank has initiated recovery proceedings and has recovered substantial sum in the loan account and prayed for total waiver in this case. Ld. Counsel also submits that prior to the passing or the order, some amount has been received by the Bank.

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Ld. Counsel for the Respondent Bank submits that DRAT cannot entertain any Appeal without ensuring the pre-deposit of 50% of the debt amount, which cannot be reduced to less than 25% in any case, and rest of the issues are subject matter of final hearing when the entire evidence and facts will be appreciated and will be taken into consideration.

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Considering the aforesaid, I hereby direct the Appellants to make a pre-deposit of Rs.17,00,000/- (Rupees Seventeen lakhs only) with the Registrar of this Tribunal within four weeks from today.

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List for confirmation of pre-deposit of Rs.17 lakhs on 8.8.2017.”

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W.P.No.11450/2018 & W.P.NOS. 16327-16330/2018

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The requisite pre-deposit in terms of the order aforesaid having not been made, learned counsel appearing for the present petitioners fairly conceded before the DRAT on 08.08.2017 that the order had not been complied with. Consequently, the DRAT found no reason to proceed with the matter further and hence, the appeal was dismissed for want of pre-deposit with the short order dated 08.08.2017 that reads as under:

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“ORDER

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Ld. Counsel Mr.Sirvaraman for Appellant present. Ld. Counsel Mr. K.Mohandas for Respondent present.

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Appellant counsel fairly concedes that he has not complied with the orders on pre-deposit. DRAT cannot proceed further mint eh Appeal filed by any aggrieved person unless and until the Appellant complies with the formalities on predeposit. Hence appeal is dismissed for want of compliance on pre-deposit.”

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Seeking to question the order aforesaid, learned counsel for the petitioners has referred to the information said to have been obtained by the petitioners from the respondentBank, by way of an application dated 04.08.2014 under the

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W.P.No.11450/2018 & W.P.NOS. 16327-16330/2018

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Right to Information Act, particularly regarding question No.20

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thereof, that reads as under:

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“ 20) Have you covered or claimed the outstanding amounts from government, since the Loan account is covered CGTMSE Scheme.”

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The Bank had replied to the said question as under:

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“Point No.20.Yes”

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Learned counsel would submit that when the alleged outstanding amount was admittedly covered under CGTMSE Scheme and was admittedly claimed and recovered from the Government, the Bank should have specified the remaining outstanding amount, if any. Therefore, according to the learned counsel, the liability to the extent ordered by the DRAT shall not exist and hence, there was no requirement of any pre-deposit. We are not persuaded to entertain these petitions on the submissions so made.

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The aforesaid question No.20 in the application under the Right to Information Act, 2005 (Annexure-Q) had been in general terms seeking information only to the extent as to whether the outstanding amount was covered or claimed from

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W.P.No.11450/2018 & W.P.NOS. 16327-16330/2018

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the Government, for the loan amount being covered under CGTMSE Scheme. A few other queries who are also raised about the balance at the time of covering the loan amount under CGTMSE Scheme and the outstanding after appropriating the subsidy amount but, in the entire questionnaire, as submitted by way of the application dated 04.08.2014 (Annexure-Q) it is difficult to find any specific query as regards the amount, if any, received from the Government. Therefore, it cannot be concluded that no amount was due in the loan account in question. This apart, it is also noticed that the aforesaid information was sought for on 4.08.2014 and the information was supplied on 12.09.2014, whereas O.A. No.1433/2012 was decided by the DRT on 29.02.2016.

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It is not a matter of dispute that under the requirements of law, the condition of pre-deposit of amount of debt due on filing of appeal under Section 21 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, operates in the matter. The said provision reads as under:

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W.P.No.11450/2018 & W.P.NOS. 16327-16330/2018

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“Section 21: Deposit of amount of debt due, on filing appeal: Where an appeal is preferred by any person from whom the amount of financial debt is due to a bank or a financial institution or a consortium of banks of financial institutions, such appeal shall not be entertained by the Appellate Tribunal unless such person has deposited with the Appellate Tribunal fifty percent of the amount of debt so due from him as determined by the Tribunal under section 19:

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PROVIDED that the Appellate Tribunal may, for reasons to be recorded in writing, reduce the amount to be deposited by such amount which shall not be less than twenty-five per cent of the amount of such debt so due to be deposited under this section”.

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In view of the above, the condition pre-deposit of the due amount was required to be complied with by the petitioners; rather on the facts and circumstances, the DRAT appears to have been considerate in requiring the pre-deposit only to the tune of �17,00,000/-. When the petitioners have failed to comply with such requirement too, the DRAT had no option but to dismiss the appeal.

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Thus, there appears no error or illegality leading to failure of justice which may call for interference in the writ jurisdiction of this Court.

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W.P.No.11450/2018 & W.P.NOS. 16327-16330/2018

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Consequently, these writ petitions stand dismissed.

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Sd/CHIEF JUSTICE

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Sd/JUDGE

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Bsv

M/S. Madhura Industries v. the Authorised Officer/ the Chief Manager

Case brief

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What did the court decide?

M/S. Madhura Industries v. the Authorised Officer/ the Chief Manager

Case brief

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