M/S Sai Enterprises And 2 Others vs Debts Recovery Appellate And ...
2023 Latest Caselaw 7731 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

Court No. - 6							         AFR		
 

 
Case :- WRIT - C No. - 7439 of 2023
 

 
Petitioner :- M/S Sai Enterprises And 2 Others
 
Respondent :- Debts Recovery Appellate And Another
 
Counsel for Petitioner :- Sanjay Kumar Gupta
 
Counsel for Respondent :- Pashupati Nath Tripathi
 

 
Hon'ble Pankaj Bhatia,J.

1. The present petition has been filed by the petitioner challenging the order dated 03.01.2023 whereby the restoration application filed by the petitioner has been rejected on the ground of limitation.

2. The facts in brief are that the proceedings were initiated by the respondent Bank against the petitioner before the Debts Recovery Tribunal, Patna which was decided against the petitioner. Against the order of DRT, Patna, the petitioner preferred an Appeal before the Debts Recovery Appellate Tribunal, Allahabad, however, the petitioner had not made any deposit along with the appeal as is required under Section 21 of The Recovery of Debts and Bankruptcy Act, 1993.

3. From the documents as on record, it appears that the petitioner was granted time to make the deposit, however, he has not deposited which led to the dismissal of the appeal. Subsequently, when the petitioner arranged the funds, he moved an application for deposit of an amount of Rs.20,00,000/- and sought recall of the order dated 21.01.2020 whereby the appeal was dismissed for want of pre-deposit and prayed that the said order be recalled and decided on merit. The said recall application has been dismissed by means of the impugned order dated 03.01.2023 mainly on the ground that the restoration application has been filed after expiry of two and a half years and the same is highly belated.

4. The contention of the Counsel for the petitioner Shri Sanjay Kumar Gupta, is that under the Act in question, there is a provision of filing of an appeal as contained under Section 21 of the RDB Act. 1993. He argues that condition specified in Section 21 is only for entertaining the Appeal and the provisions of said does not provide any power to the DRAT to direct the pre-deposit and in any case, even if, no deposit is made, as specified in Section 21, the appeal cannot be dismissed. The only effect of Section 21 of the RDB Act, 1993 is that the appeal would not be entertained unless the deposit as required is made. Before discussing the said controversy, it is necessary to reproduce the said Section 21 of the RDB Act, which is as under:

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

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."

5. On a plain reading of Section 21, it is clear that it provides for a statutory appeal, with a rider that the appeal can not be entertained, if the deposit, as specified, subject to the exercise of powers under the proviso, is not made.

6. The phrase "shall not be entertained", came up for consideration in various judgments of Supreme Court as the said expression is used in many statutes. The Supreme Court in the Judgment of Ananthesh Bhakta vs. Nayana S Bhakta (2017) 5 SCC 185 considered the meaning of the said expression and laid as under.

"20. There is one another aspect of the matter which is sufficient to uphold the order of the District Judge. Section 8(2) uses the phrase "shall not be entertained". Thus, what is prohibited is the entertainment of the application unless it is accompanied by the original arbitration agreement or a duly certified copy thereof.

21. The word "entertained" has specific meaning in P. Ramanatha Aiyar's Advanced Law Lexicon. The word "entertained" has been defined as:

"Entertain.--(1) To bear in mind or consider; esp., to give judicial consideration to (the court then entertained motions for continuance). (2) To amuse or please. (3) To receive (a person) as a guest or provide hospitality to (a person).

The expression "entertain" means to "admit a thing for consideration" and when a suit or proceeding is not thrown out in limine but the court receives it for consideration and disposal according to law it must be regarded as entertaining the suit or proceeding, no matter whatever the ultimate decision might be."

22. The Black's Law Dictionary also defines this word "entertain" as follows:

"entertain, vb. (1) To bear in mind or consider; esp., to give judicial consideration to ."

23. In Hindusthan Commercial Bank Ltd. v. Punnu Sahu [Hindusthan Commercial Bank Ltd. v. Punnu Sahu, (1971) 3 SCC 124] , the word "entertained" came for consideration as occurring in Order 21 Rule 90 proviso of the Civil Procedure Code. Para 2 of the judgment notices the amended proviso which was to the following effect: (SCC p. 125)

"2. The amended proviso with which we are concerned in this appeal reads thus:

''Provided that no application to set aside a sale shall be entertained--

(a) upon any ground which could have been taken by the applicant on or before the date on which the sale proclamation was drawn up; and

(b) unless the applicant deposits such amount not exceeding twelve-and-half per cent of the sum realised by the sale or furnishes such security as the court may, in its discretion, fix except when the court for reasons to be recorded dispenses with the requirements of this clause:

Provided further that no sale shall be set aside on the ground of irregularity or fraud unless upon the facts proved the court is satisfied, that the applicant has sustained substantial injury by reason of such irregularity or fraud.'"

24. The contention of the appellant in Punnu Sahu case [Hindusthan Commercial Bank Ltd. v. Punnu Sahu, (1971) 3 SCC 124] was that the word "entertain" refers to initiation of the proceedings and not to the stage when the court takes up the application for consideration. The High Court had rejected the said contention. The above view of the High Court was approved by this Court in para 4 of the judgment. Following was stated: (SCC pp. 125-26)

"4. Before the High Court it was contended on behalf of the appellant and that contention was repeated in this Court, that clause (b) of the proviso did not govern the present proceedings as the application in question had been filed several months before that clause was added to the proviso. It is the contention of the appellant that the expression "entertain" found in the proviso refers to the initiation of the proceedings and not to the stage when the Court takes up the application for consideration. This contention was rejected by the High Court relying on the decision of that Court in Kundan Lal v. Jagan Nath Sharma [Kundan Lal v. Jagan Nath Sharma, 1962 SCC OnLine All 38 : AIR 1962 All 547] . The same view had been taken by the said High Court in Dhoom Chand Jain v. Chaman Lal Gupta [Dhoom Chand Jain v. Chaman Lal Gupta, 1962 SCC OnLine All 29 : AIR 1962 All 543] and Haji Rahim Bux and Sons v. Firm Samiullah and Sons [Haji Rahim Bux and Sons v. Firm Samiullah and Sons, 1962 SCC OnLine All 156 : AIR 1963 All 320] and again in Mahavir Singh v. Gauri Shankar [Mahavir Singhv. Gauri Shankar, 1963 SCC OnLine All 221 : AIR 1964 All 289]. These decisions have interpreted the expression "entertain" as meaning "adjudicate upon" or "proceed to consider on merits". This view of the High Court has been accepted as correct by this Court in Lakshmiratan Engg. Works Ltd. v. CST[Lakshmiratan Engg. Works Ltd. v. CST, AIR 1968 SC 488] . We are bound by that decision and as such we are unable to accept the contention of the appellant that clause (b) of the proviso did not apply to the present proceedings."

25. Another relevant judgment is Martin and Harris Ltd. v. Addl. District Judge [Martin and Harris Ltd. v. Addl. District Judge, (1998) 1 SCC 732] . In the above case Section 21(1) proviso of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 (13 of 1972) word "entertain" came for consideration. The proviso to Section 21(1) was to the following effect: (SCC p. 741, para 8)

"8. ... ''Provided that where the building was in the occupation of a tenant since before its purchase by the landlord, such purchase being made after the commencement of this Act, no application shall be entertained on the grounds, mentioned in clause (a) unless a period of three years has elapsed since the date of such purchase and the landlord has given a notice in that behalf to the tenant not less than six months before such application, and such notice may be given even before the expiration of the aforesaid period of three years:'

26. In the above case, the application under Section 21(1) was filed by the landlord before expiry of period of three years from the date of purchase. It was held by this Court that word "entertained" as employed in the first proviso under Section 21(1) could not mean "institution" of such proceedings. In paras 9 and 10, following was laid down: (Martin and Harris case [Martin and Harris Ltd. v. Addl. District Judge, (1998) 1 SCC 732] , SCC pp. 744-46)

"9. Even that apart there is an internal indication in the first proviso to Section 21(1) that the legislature has made a clear distinction between "entertaining" of an application for possession under Section 21(1)(a) of the Act and "filing" of such application. So far as the filing of such application is concerned it is clearly indicated by the legislature that such application cannot be filed before expiry of six months from the date on which notice is given by the landlord to the tenant seeking eviction under Section 21(1)(a) of the Act. The words, "the landlord has given a notice in that behalf to the tenant not less than six months before such application", would naturally mean that before filing of such application or moving of such application before the prescribed authority notice must have preceded by at least six months. Similar terminology is not employed by the legislature in the very same proviso so far as three years' period for entertaining such application on the grounds mentioned in clause (a) of Section 21(1) a stage must be reached when the court applied its judicial mind and takes up the case for decision on merits concerning the grounds for possession mentioned in clause (a) of Section 21(1) of the Act. Consequently on the very scheme of this Act it cannot be said that the word "entertain" as employed by the legislature in the first proviso to Section 21(1) of the Act would mean "institution" of such proceedings before the prescribed authority or would at least mean taking cognizance of such an application by the prescribed authority by issuing summons for appearance to the defendant-tenant. It must be held that on the contrary the term "entertain" would only show that by the time the application for possession on the grounds mentioned in clause (a) of Section 21(1) is taken up by the prescribed authority for consideration on merits, at least minimum three years' period should have elapsed since the date of purchase of the premises by the landlord.

10. ... The learned Senior Counsel, Shri Rao, for the appellant then invited our attention to two decisions of this Court in Lakshmiratan Engg. Works Ltd. v. CST [Lakshmiratan Engg. Works Ltd. v. CST, AIR 1968 SC 488] and Hindusthan Commercial Bank Ltd. v. Punnu Sahu [Hindusthan Commercial Bank Ltd. v.Punnu Sahu, (1971) 3 SCC 124]. In Lakshmiratan Engg. [Lakshmiratan Engg. Works Ltd. v. CST, AIR 1968 SC 488] this Court was concerned with the meaning of the word "entertain" mentioned in the proviso to Section 9 of the U.P. Sales Tax Act, 1948. Hidayatullah, J., speaking for the Court observed in the light of the statutory scheme of Section 9 of the said Act that the direction to the Court in the proviso to Section 9 was to the effect that the Court shall not proceed to admit to consideration an appeal which is not accompanied by satisfactory proof of the payment of the admitted tax. In Hindusthan Commercial Bank [Hindusthan Commercial Bank Ltd. v. Punnu Sahu, (1971) 3 SCC 124] the term "entertain" as found in the proviso to Order 21 Rule 90 of the Code of Civil Procedure (CPC) fell for consideration of the Court. Hegde, J., speaking for a Bench of two learned Judges of this Court in this connection observed that the term "entertain" in the said provision means "to adjudicate upon" or "to proceed to consider on merits" and did not mean "initiation of proceeding". The aforesaid decisions, in our view, clearly show that when the question of entertaining an application for giving relief to a party arises and when such application is based on any grounds on which such application has to be considered, the provision regarding "entertaining such application" on any of these grounds would necessarily mean the consideration of the application on the merits of the grounds on which it is base. In the present case, therefore, it must be held that when the legislature has provided that no application under Section 21(1)(a) of the Act shall be entertained by the prescribed authority on grounds mentioned in clause (a) of Section 21(1) of the Act before expiry of three years from date of purchase of property by the landlord it must necessarily mean consideration by the prescribed authority of the grounds mentioned in clause (a) of Section 21(1) of the Act on merits."

27. In the present case as noted above, the original retirement deed and partnership deed were filed by the defendants on 12th May and it is only after filing of the original deeds that the court proceeded to decide the application IA No. IV.

28. Section 8(2) has to be interpreted to mean that the court shall not consider any application filed by the party under Section 8(1) unless it is accompanied by the original arbitration agreement or duly certified copy thereof. The filing of the application without such original or certified copy, but bringing original arbitration agreement on record at the time when the court is considering the application shall not entail rejection of the application under Section 8(2).

29. In the present case it is relevant to note that the retirement deed and partnership deed have also been relied upon by the plaintiffs. Hence, the argument of the plaintiffs that the defendants' application IA No. IV was not accompanied by the original deeds, hence, liable to be rejected, cannot be accepted. We are thus of the view that the appellants' submission that the application of the defendants under Section 8 was liable to be rejected, cannot be accepted."

7. Thus what transpires from the plain reading of Section 21, the phrase "shall not be entertained" used therein and the law as explained by Supreme Court and as recorded above it is clear that the Tribunal is barred from adjudicating/deciding/applying its mind to the the appeal and the petitioner/ appellant would not be entitled to any benefit which accrue in terms of the Act only on the ground of filing of appeal as the appeal technically has not even been entertained, if the deposit is not made.

8. The interesting question that arises is whether the appeal can be dismissed only on the ground that the same is without the mandatory pre-deposit? From the law with regards to bar of entertainment of appeal as explained above, it is clear that what cannot be entertained cannot be dismissed either. The only benefit of filing an appeal without the mandatory deposit under Section 21 will be that the appellant would be entitled to the benefit of limitation and nothing more and the Bank or the Financial Institution would be at liberty to initiate and prosecute recovery proceedings against the borrower.

9. In the present case the DRAT has erred in law rejecting the application only on the ground of inordinate delay. From the order, it is clear that the appeal is dismissed for want of pre-deposit which action of the Tribunal itself is bad, as for want of pre-deposit, the appeal technically could not be entertained and thus could not be dismissed either.

10. The Counsel for the respondent Bank, Sri P.N. Tripathi argues that the petitioner has not paid the dues and is adopting dilatory tactic and when steps were taken to recover the dues of the Bank, he made the application after depositing the amount as stated above.

11. In view of the said rival submission, coupled with the fact that the issue raised in the present writ petition pertains to the interpretation of Section 21 of the RDB Act, 1993, I am not inclined to keep the matter pending, as such, the order impugned dated 03.01.2023 is set aside with directions to the Appellate Tribunal to hear and decide the appeal on merit, in accordance with law, with all expedition, preferably within a period of four months from the date of production of certified copy of this order.

12. It is provided that no unnecessary adjournment shall be granted to either of the parties.

13. The amount of Rs.20,00,000/- in the form of demand draft(prepared but not accepted by DRAT ) shall be deposited within two weeks from today.

14. It will also be open to the petitioner to approach the respondent Bank for any settlement in accordance with law, if so advised.

16. The writ petition is allowed.

Order Date :- 17.03.2023			  		      (Pankaj Bhatia,J)
 
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