M/S Rajesh Exports Limited Vs Canara Bank — Banking and Recovery | Karnataka HC (2025)

M/S Rajesh Exports Limited Vs Canara Bank — Banking and Recovery | Karnataka HC (2025)

What the court decided

AI extract

Outcome

Petition allowed in part: pre-deposit requirement relaxed to the extent of 70%; petitioner permitted to maintain its appeal (AIR No. 628/2024) by depositing 30% of the amount comprised in the DRT order within four weeks; DRAT, Chennai requested to accept that deposit as pre-condition; all contentions kept open; costs made easy.

Issue for consideration

Whether the petitioner, pleading financial constraints, is entitled to relaxation of the 50% pre-deposit of Rs. 3,54,39,078/- insisted upon by the Debt Recovery Appellate Tribunal as a sine qua non for maintaining its statutory appeal against the DRT order, given the discretion available to the Appellate Tribunal under Sec.21 of the 1993 Act.

Court's answer

Right of appeal is a Creature of Law and the Creator of such a right can condition it, as has happened by Sec.21 of the 1993 Act prescribing pre-deposit for maintaining an appeal against the DRT order; no challenge is laid to that statutory provision (position accepted as undisputed, with reference to Dr. Vijay Mallya v. State Bank of India, AIR 2019 Kar 23).

Ratio / Principle

Sec.21 of the 1993 Act vests discretion in the Appellate Tribunal to relax the requirement of pre-deposit upto 70%, in which event the appellant before the DRAT has to deposit only 30% as a pre-condition for maintaining the appeal.

Key takeaways

Discretion vested in the Appellate Tribunal must be exercised in accordance with rules of reason and justice, not arbitrarily, and the relaxation percentage is qua the amount comprised in the DRT order/decree or at least the one to which challenge is laid (per Lord Halsbury in Susannah v. Wakefield, (1891) AC 173).ratio¶¶36
On the facts and financial constraints pleaded, the petitioner is granted relaxation to the extent of 70% and permitted to maintain the appeal by depositing 30% of the amount comprised in the DRT order, within four weeks from the date of this order.ratio¶¶39

Detailed headnote1 paragraphs

Writ Petition (GM-DRT) under Articles 226 and 227 of the Constitution of India by M/s Rajesh Exports Limited against Canara Bank challenging the DRAT, Chennai order dated 10.12.2024 (IA No. 433/2024 (Waiver) in AIR No. 628/2024, arising out of O.A No. 387/2018 on the file of DRT-II, Bengaluru) directing a pre-deposit of 50% of Rs. 3,54,39,078/- (i.e., Rs. 1,77,19,539/-) within four weeks, failing which the appeal would stand rejected. HELD: (i) The right of appeal is a creature of law and the creator of such right can condition it; the pre-deposit condition flows from Sec. 21 of the Recovery of Debts and Bankruptcy Act, 1993, which provision is unchallenged (cf. Dr. Vijay Mallya v. State Bank of India, AIR 2019 Kar 23). (ii) Sec. 21 vests discretion in the Appellate Tribunal to relax the pre-deposit requirement upto 70%, the percentage being qua the amount comprised in the DRT order/decree, and such discretion must be exercised according to rules of reason and justice (Lord Halsbury, Susannah v. Wakefield, (1891) AC 173). (iii) Regard being had to the petitioner's financial constraints, relaxation was granted to the extent of 70%; the petitioner may maintain the appeal by depositing 30% of the amount comprised in the DRT order within four weeks, the DRAT being requested to accept the same; all contentions kept open; costs made easy. Petition allowed in part.

1 -

NC: 2025:KHC:91-DB WP No. 35759 of 2024

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 6^TH DAY OF JANUARY, 2025

PRESENT

THE HON'BLE MR JUSTICE KRISHNA S DIXIT

AND

THE HON'BLE MR JUSTICE G BASAVARAJA WRIT PETITION NO.35759 OF 2024 (GM-DRT)

BETWEEN:

M/S RAJESH EXPORTS LIMITED COMPANY REGISTERED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956, HAVING REGISTERED AT, NO.4, BATAVIA CHAMBERS, KUMARA KRUPA ROAD, KUMARA PARK EAST, BANGALORE - 560 001. REPRESENTED BY ITS CHAIRMAN, SRI RAJESH MEHTA.

…PETITIONER

(BY SRI. KIRAN S.JAVALI, SENIOR COUNSEL FOR SRI. RAGHU H.P., ADVOCATE)

Digitally signed by NANDINI D Location: High Court of Karnataka

AND:

CANARA BANK, (ERSTWHILE SYNDICATE BANK) LARGE CORPORATION BRANCH, DICKENSON ROAD, MANIPAL CENTER, 2^ND FLOOR, BANGALORE - 560 042, REPRESENTED BY ITS AGM, SRI. SUDHANSHU SUMAN.

…RESPONDENT

(BY SRI. C.K. NANDA KUMAR, SENIOR COUNSEL FOR SRI. HEMANTH RAO., ADVOCATE)

2 -

NC: 2025:KHC:91-DB WP No. 35759 of 2024

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO A WRIT OF CERTIORARI OR ANY OTHER WRIT OR DIRECTION SETTING ASIDE THE ORDER DATED 10.12.2024 PASSED ON IA No. 433/2024 (WAIVER) IN AIR No. 628/2024 (O.A No. 387/2018 ON THE FILE OF DRT-II, BENGALURU) BY THE DEBT RECOVERY APPELLATE TRIBUNAL (DRAT), CHENNAI DIRECTING THE PETITIONER TO DEPOSIT 50 PERCENT OF Rs. 3,54,39,078/- WHICH COMES TO Rs.1,77,19,539/- WITHIN FOUR WEEKS FROM TODAY (10/12/2024) i.e., ON OR BEFORE 07.01.2025, FAILING WHICH APPEAL WOULD STAND REJECTED, AS PER ANNEXURE-A; AND ETC.

THIS PETITION, COMING ON FOR PRELIMINARY HEARING - B GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR JUSTICE KRISHNA S DIXIT and HON'BLE MR JUSTICE G BASAVARAJA

ORAL ORDER

(PER: HON'BLE MR JUSTICE KRISHNA S DIXIT)

The short grievance of the petitioner, shorn of pleadings and scripted prayer, is as to the Debt Recovery Appellate Tribunal insisting upon pre-deposit of 50% of Rs.3,54,39,078/- as a sine qua non for maintaining the Appeal against the order of Debt Recovery Tribunal.

Sri Kiran S. Javali, learned Senior Advocate appearing for the petitioner submits that the right of

3 - NC: 2025:KHC:91-DB WP No. 35759 of 2024

appeal is conditioned by the requirement of payment of certain sum of money comprised in the Debt Recovery Tribunal Order, is true; however, the Appellate Tribunal has got discretion to relax such a condition upto 70%; this discretion having not been properly exercised, his clients are knocking at the doors of writ court. He also pleads financial constraints of his clients.

Sri C.K. Nanda Kumar, learned Senior Advocate appearing for the respondent-Bank per contra vehemently opposes the petition, contending that the right of appeal is a creature of law and that the Creator of such right can condition that right; in that event complying with the condition is a must for exercising such a right; no challenge is laid to the provision of law namely Sec.21 of The Recovery of Debts and Bankruptcy Act, 1993; that being the position petitioner cannot have a ‘free for all’ appeal. He also points out that while considering relaxation in respect of pre-deposit, what is to be kept in view is the amount comprised in the DRT order.

4 - NC: 2025:KHC:91-DB WP No. 35759 of 2024

Having heard the learned Counsel for the

parties and having perused the petition papers, we are inclined to grant a limited indulgence in the matter as under and for the following reasons:

4.1 There is no much dispute as to the legal position

that the right of appeal is a Creature of Law and that the Creator of such a right can condition it as has happened by virtue of Sec.21 of 1993 Act. This aspect of the matter has been elaborately discussed by a Co-ordinate Bench in which one of us (KSDJ) was a member vide DR.VIJAY MALLYA vs. STATE BANK OF INDIA, AIR 2019 KAR 23. No challenge is laid to the statutory provision prescribing the condition of making pre-deposit for maintaining the appeal against the DRT order.

4.2 The above being said, there is a fair agreement at the Bar that Sec.21 of the 1993 Act vests discretion in the Appellate Tribunal to relax the requirement of pre-deposit upto 70%, in which event the appellant before the DRAT has to deposit only 30% as a pre-condition for maintaining

5 - NC: 2025:KHC:91-DB WP No. 35759 of 2024

appeals of the kind. Mr. Nanda Kumar is right in telling us this percentage is qua the amount comprised in the DRT order/decree, or atleast the one to which challenge is laid. As any discretion, the Appellate Tribunal too has to exercise one in accordance with rules of reason & justice as Lord Halsbury in SUSANNAH vs. WAKEFIELD [(1891) AC 173] had observed:

"… when it is said that something is to be done within the discretion of the authorities that something is to be done according to the rules of reason and justice, not according to private opinion, according to law, and not humour. It is to be, not arbitrary, vague and fanciful, but legal and regular…".

4.3 Mr.Jawali has notified to us the financial constraints which his client has in making the pre-deposit of full amount and therefore he pleads for relaxation. Mr. Nanda Kumar opposes the same. However, regard being had to the facts & circumstances of this case, we are of

the considered opinion that the petitioner should be given relaxation to the extent of 70% and that he should be permitted to maintain the appeal by depositing 30% of the

6 -

NC: 2025:KHC:91-DB WP No. 35759 of 2024

amount comprised in the DRT order, within four weeks reckoned from this day. That would be doing justice to the petitioner; any other arrangement would run counter to.

In the above circumstances, this Petition is allowed in part. The Debt Recovery Appellate Tribunal is requested to accept 30% of the amount comprised in the DRT Order as a pre-condition for maintaining the statutory appeal in question. For making such a payment, the petitioner is granted a period of four weeks. All contentions of the parties are kept open.

Costs made easy.

Sd/(KRISHNA S DIXIT) JUDGE

Sd/(G BASAVARAJA) JUDGE

lnn

List No.: 1 Sl No.: 45