Partly allowed

M/S Chetana Rural Development Society v. Bank of India

Karnataka HC27 Nov 2019WP/36911/2017

Case brief

AI extract

What is this about?

This High Court, by Special Leave, dismissed the writ petition questioning the DRAT's order directing pre-deposit for appeal. The Court observed the loan transfer did not absolve liability lacking a tripartite agreement but granted liberty to apply for restoration upon deposit.

What did the court decide?

Pre-deposit order dismissed; liberty granted to file application for restoration of appeal and seek hearing on merits along with pre-deposit.

M/S Chetana Rural Development Society Vs Bank of India — Banking and Recovery | Karnataka HC (2019)

¶1

¶2

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

¶3

DATED THIS THE 27^TH DAY OF NOVEMBER, 2019

¶4

PRESENT

¶5

THE HON’BLE MR. JUSTICE ARAVIND KUMAR

¶6

AND

¶7

THE HON’BLE MR. JUSTICE SURAJ GOVINDARAJ

¶8

W.P. NO.36911/2017 (GM-DRT)

¶9

BETWEEN:

¶10

1 . M/S CHETANA RURAL DEVELOPMENT SOCIETY REPRESENTED BY ITS DIRECTOR NO.1662/6, 9^TH CROSS, TEACHERS COLONY, VIDYANAGAR DAVANGERE - 577 001.

¶11

2 . SRI. SHIVAPRASAD T.R S/O T. RAJASHEKAR AGED ABOUT 40 YEARS RESIDING AT SHIVA NILAYA RAMALINGESHWARA LAYOUT H.K. ROAD, SHIRALKOPPA SHIMOGA DISTRICT – 577 428.

¶12

3 . SRI. T. RAJASHEKAR S/O N.T. ISHWARAPPA AGED ABOUT 69 YEARS RESIDING AT SHIVA NILAYA RAMALINGESHWARA LAYOUT H.K. ROAD, SHIRALKOPPA SHIMOGA DISTRICT – 577 428.

¶13

4 . SRI. T.R. GURUPRASAD S/O MR. T. RAJASHEKAR RESIDING AT H.K. ROAD SHIRALKOPPA SHIMOGA DISTRICT - 577 428.

¶14

5 . SMT. SUNITHA GANGADHAR

¶15

¶16

W/O GANGADHAR RESIDINGAAT OPP: GOVT, HIGH SCHOOL, SUNNADAKOPPA SHIKARIPURA TALUK SHIMOGA DISTRICT – 577 427. 6 . SMT. ARPITHA D/O MAHENDRANATH PATIL RESIDING AT LALITHA NIVAS NO.2036/3, OPP: MAGANUR BASAPPA SCHOOL, VIDYANAGAR DAVANAGERE DISTRICT - 577 001.

¶17

...PETITIONERS

¶18

(BY SRI. S. RAJASHEKAR, ADVOCATE)

¶19

AND: 1 . BANK OF INDIA DAVANAGERE BRANCH NO.731/3 SHARADA COMPLEX P.B.NO.88, MANDIPET DAVANAGERE - 577 001 REP. BY MANAGER. 2 . M/S GRAMINA MAHITHI PARISHANTH (R) REPRESENTED BY ITS SECRETARY NO.794, 1^ST FLOOR, MAIN ROAD VIDYANAGAR, DAVANAGERE - 573 201. 3 . SRI. PRASHANTH S/O T. SHIVAJI RAO AGED: MAJOR RESIDING AT SHOBHA TALKIES ROAD, HASSAN – 573 201. 4 . SRI. A. ISHWAR RAO S/O A. KONEYOJI RAO RESIDING AT BADEGER ROAD OPP: KALIKAMBA TEMPLE CHANNAGIRI, DAVANAGERE DISTRICT – 573 213. 5 . SRI. RAVI S/O BASAVARAJAPPA AGED MAJOR RESIDING AT NEAR CHENNESHWARAM BOREWELL, OPP: BUS STAND NYAYAMATHI ROAD, HONNALI

¶20

¶21

TLAUK, SHIMOGA DISTRICT - 577 217.

¶22

6 . SRI. J.D. SHIVANANDA S/O D.H. DHARANAPPA AGED: MAJOR R.S. FOOTWEAR, DAVANAGERE ROAD, JAGALUR, DAVANAGERE DISTRICT - 577 527.

¶23

7 . SRI. RAGHAVENDRA S/O GUDDAPPA AGED: MAJOR SRI. BALAJI COMPUTERS, HOSPET ROAD, HARAPPANAHALLI DAVANAGERE DISTRICT - 583 131.

¶24

…RESPONDENTS

¶25

(BY SRI. M. MOHAMED IBRAHIM, ADVOCATE FOR R-1; SERVICE OF NOTICE FOR R-2 IS D/W V/C/O DTD 27.11.2019; SERVICE OF NOTICE FOR R-3 TO R-7 IS D/W V/C/O DATED:17.08.2017)

¶26

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED:19.07.2017 PASSED ON IA NO.1144/2017 IN AIR 257/2016 ON THE FILE OF THE DEBTS RECOVERY APPELLATE TRIBUNAL AT CHENNAI VIDE ANNEXURE-A.

¶27

THIS PETITION COMING ON FOR ORDERS THIS DAY, ARAVIND KUMAR J, MADE THE FOLLOWING:

¶28

O R D E R

¶29

Heard Sri. S.Rajashekar, learned counsel appearing

¶30

for petitioners and Sri.M.Mohammed Ibrahim, learned

¶31

counsel appearing for respondent No.1. Vide order dated 17.08.2017 notice to respondent Nos.3 to 7 has been dispensed with. Notice to respondent No.2 is awaited. However, having regard to the fact that respondent No.2,

¶32

¶33

who was defendant No.12 in O.A.No.411/2019 had been placed exparte before tribunal, notice to respondent No.2 stands dispensed by exercise of our power vested under Order 41 Rule 14 Proviso (Karnataka Amendment) and also on the ground that no tripartite agreement between petitioners, first respondent-Bank and second respondent herein was there.

¶34

Petitioners had borrowed loan from first

¶35

respondent and liability of petitioners was said to have been taken over by second respondent. On account of said loan account having become a non performing asset, first respondent filed an application under Section 19 of Recovery of Debts Due to Banks and Financial Institutions Act, 1993, in O.A.No.411/2019, which came to be allowed by order dated 14.03.2016 whereunder liability of defendants therein was held to be joint and severally.

¶36

Petitioners, who were defendant Nos.1 to 5 and 10 before tribunal filed an appeal before DRAT which came to be numbered as AIR 257/2016. Since there was delay in filing said appeal, regular appeal was not accepted. At the

¶37

¶38

time of consideration of prayer for waiver of pre-deposit, appellate tribunal ordered and directed the appellants therein namely, writ petitioners herein to make a predeposit of Rs.18 Lakhs and first installment of Rs.9 Lakhs was ordered to be paid within four (4) weeks from 19.07.2017 and balance Rs.9 Lakhs within four (4) weeks thereafter. Being aggrieved by same, petitioners are before this Court.

¶39

Having heard learned Advocates appearing for

¶40

parties we notice that though Sri.S.Rajashekar, learned counsel appearing for petitioners would be correct in contending that there was an agreement between petitioners and second respondent herein, whereunder loan borrowed by petitioners from first respondent was taken over by second respondent, yet, it did not absolve their joint and several liability as it did not crystallize into tripartite agreement being entered into by them along with first respondent–bank. In other words, first respondentbank in principle having accepted the transfer of loan account by addressing a communication dated

¶41

¶42

17.09.2008-Annexure –K to second respondent, it had called upon second respondent to complete the formalities and assume responsibilities of taking over the loan. However, petitioners have not been able to demonstrate or place on record any material to prove that loan has been taken over by second respondent after entering into an agreement with first respondent-Bank and thereby absolving petitioners from joint and several liability. As such we do not find any infirmity in the order passed by the appellate tribunal directing petitioners to deposit a sum of Rs.18 Lakhs as pre-deposit for entertaining the appeal under Section 21 of RDDB Act. However, we grant liberty to petitioners to file an application enclosing therewith the amount ordered by the tribunal and seek for restoration of appeal for being heard and disposed of on merits.

¶43

Sri.Mohammed Ibrahim, learned counsel

¶44

appearing for first respondent-bank would also submit that in the event pre-deposit as ordered by the appellate tribunal is deposited, appeal can be heard by the appellate tribunal on merits. Placing said submissions of learned

¶45

¶46

Advocates appearing for parties, we dispose of this writ petition accordingly.

¶47

It is made clear that in the event of petitioners filing an application within an outer limit of eight (8) weeks from today along with pre-deposit as ordered by the appellate tribunal, appeal shall be considered on merits and in accordance with law same be disposed of by the appellate tribunal which would necessarily be after hearing respondents in the said appeal also.

¶48

SD/JUDGE

¶49

SD/JUDGE

¶50

M/S Chetana Rural Development Society v. Bank of India

Case brief

What is this about?

What did the court decide?

M/S Chetana Rural Development Society v. Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Sri K Sunder Babu Vs M/S Phoenix Arc Private Limited

M/S Rvns Exim (P) Ltd. Vs Indian Bank

Sri. Paramesh Vs Sri. Bagadi Gautham

Sri K R Prabhakar Vs Sri Anilkumar

Pr Commissioner of Vs M/S Sunquest Information

Shri. Ramakrishna Reddy Vs the Commissioner of Central Tax