Bombay High Court

M/S.Sterlite Technologies Ltd vs Union Of India & Ors on 22 December, 2011

Bench: Dr. D.Y. Chandrachud, A.A. Sayed

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           IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                            O. O. C. J.




                                                                                     
                   WRIT PETITION (L) NO.2758  OF 2011




                                                             
                                    

    M/s.Sterlite Technologies Ltd.                       ...Petitioner.
                            Vs.




                                                            
    Union of India & Ors.                                ...Respondents.
                                    ....
    Mr.R.A.Dada,   Senior  Advocate   with  Mr.Madhur   R.Baya      for   the 
    Petitioner.




                                                
    Mr.Rajiv Chavan with Mr.L.T.Satelkar  for Respondent No.1.
    Mr.Dinyar   Madon,   Senior   Advocate   with   Mr.Umesh   Shetty   and 
                                 
    Mr.Vikash Kumar i/b. Mr.A.T.Agarwal for Respondent No.3.
    Mr.Rajesh Talekar i/b. K.Ashar &Co. for Respondent No.8.
                                    .....
                                
                                    CORAM : .D.Y.CHANDRACHUD AND
                                                     A.A.SAYED, JJ.

December 22, 2011.

ORAL JUDGMENT (PER DR.D.Y.CHANDRACHUD, J.) :

These proceedings under Article 226 of the Constitution

are directed against an order of the Debts Recovery Appellate

Tribunal (DRAT) dated 22 November 2011 on an application for

waiver of deposit under the provisions of Section 21 of the

Recovery of Debts Due to Banks and Financial Institutions Act,

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1993. By the order impugned, the DRAT has declined to grant any

waiver of deposit and has required the Petitioner to deposit 75% of

the decretal amount under the substantive provisions of Section 21.

2. The Debts Recovery Tribunal (DRT) has decreed the

claim of the Fourth Respondent by its order dated 28 October 2010

in the following terms :

"a) The Applicant Bank ig is entitled to a Recovery Certificate against the Defendant No.1 for a sum of :

i) a sum of Japanese Yen 219,993,455 with further

interest @ 6% p.a. simple from 07.09.2001 till realization;

ii) a sum of Rs.21,46,886.61 with further interest @

8% simple from the date of the application till realization in respect of payment of insurance

charges;

iii)a sum of Rs.64,98,073.48 with further interest @

8% simple from the date of the application till realization in respect of payment of warehousing and clearing charges;

iv) a sum of Rs.2,34,20,907.03 in respect of legal

charges with further interest @ 8% p.a. simple from the date of the application till realization with costs, which also includes advocate's fees prevailing in the State;

b) It is further declared that in case of default by Defendant No.1, the Applicant Bank is at liberty to sell the movable properties mentioned in Exhibit-M and distribute

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the sale proceeds among the Applicant Bank and Defendant Nos.2 to 6."

The Petitioner has filed an appeal in which an application for

waiver of deposit was made. The DRAT while directing a deposit

of 75% of the decretal amount, furnished only the following

reasons in its order:

"In this case the appellant has sought total waiver of 75% of the decretal amount mainly on the ground that the

judgment and order passed by the DRT is prima facie bad in the eyes of law. He has not sought waiver on account of financial hardship or on account of any other similar hardship. The learned counsel for the appellant at this

stage wants a finding on the impugned judgment before the appeal is entertained and heard on merit. All the

grounds raised by the learned Counsel for the appellant relate to the merit of the appeal. At this stage i.e. before entertaining the appeal, it will not be proper to make any comment on the impugned judgment and order passed

by the Tribunal. After considering the entire facts and circumstances of the case, I am of the view that the appellant has failed to make out any case for waiver. The application for waiver is therefore rejected."

3. Learned Counsel appearing on behalf of the Petitioner

submits that under the proviso to Section 21 of the Recovery of

Debts Due to Banks and Financial Institutions Act, 1993, the

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Appellate Tribunal is empowered for reasons to be recorded in

writing to waive or reduce the amount to be deposited under the

Section. In the present case, the Petitioner did not seek a waiver

on the ground of financial hardship, but principally on the ground

that the judgment and order passed by the Tribunal is prima facie

incorrect. The Appellate Tribunal has completely failed to

consider whether a prima facie case has been made out and since

no case was advanced on the ground of financial hardship, directed

a full deposit representing 75% of the decretal amount. This, it is

urged, amounts to a failure to exercise the jurisdiction and is

amenable to the writ jurisdiction of this Court.

4. On the other hand, Counsel appearing on behalf of the

Fourth Respondent submitted that the Appellant has suffered a

decree and according to first principles, is required to deposit the

full decretal amount. The Petitioner having failed to make out a

case of financial hardship, no error can be found in requiring the

Petitioner to deposit 75% which is the mandate of Section 21.

5. The rival submissions now fall for consideration.

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6. Section 21 provides that where an appeal is preferred by

any person from whom an amount of debt is due to a Bank or a

financial institution or a consortium, the appeal shall not be

entertained by the Appellate Tribunal unless such person has

deposited with the Appellate Tribunal seventy five per cent of the

amount of debt so due from him as determined by the Tribunal

under Section 19. Under the proviso to Section 21, the Appellate

Tribunal may, for reasons to be recorded in writing, waive or

reduce the amount to be deposited under the section. The

mandate of the statute is that ordinarily an Appellant before the

Appellate Tribunal must deposit 75% of the amount of the debt

due as determined by the Tribunal under Section 19. Parliament,

however, has in its wisdom conferred a wholesome power upon the

Appellate Tribunal to reduce the amount to be deposited under the

section. The exercise of that power is a judicial power which is

further structured by the requirement that reasons have to be

recorded in writing for reducing the amount to be deposited to less

than 75% of the debt as determined by the Tribunal. The

Appellate Tribunal has proceeded in the present case on an

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erroneous conception as to its own jurisdiction. The Learned

Chairperson has observed that at this stage it is not possible to

make any comment on the impugned judgment and order of the

Tribunal. Now, at the stage when it considers an application for

dispensing with the condition of deposit, the Appellate Tribunal is

not expected to render a final finding on the merits of the

contentions urged in regard to the judgment of the Tribunal. That

has to await the final determination of the appeal. But, it is a well

settled principle of law that even at that stage, the question as to

whether a prima facie case has been made out has to be evaluated

by the Appellate Tribunal. For the limited purpose of considering

whether a dispensation should be granted, the Appellate Tribunal

has necessarily to evaluate as to whether a prima facie case is made

out and the reasons which are to be formulated have to be confined

only to that determination. If the proposition which has been laid

down by the DRAT were to be accepted as good law that would

mean that a litigant who does not plead financial hardship is

disabled from urging that the requirement of pre-deposit should be

reduced or waived within the parameters laid down by the statute.

    That  is  not reflective  of   the legal  position.     In considering  as  to 





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whether a waiver should be granted, both the elements of a prima

facie case and the question of financial hardship would have to be

considered by the Appellate Tribunal. Where as in the present

case, the Appellant does not plead financial hardship that is a

relevant consideration which has to be taken into consideration

and placed in the balance by the Appellate Tribunal. But that is

not dispositive of the jurisdiction of the Appellate Tribunal. The

Appellate Tribunal in its appellate jurisdiction is required to

evaluate as to whether a prima facie case has been made out for

the grant of waiver. Hence, with respect, we are unable to

subscribe to the position as set out in paragraph 20 of the judgment

of the DRAT quoted above.