Karnataka High Court
Mrs Meena Vijay vs The Authorized Officer on 17 January, 2025
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W.P. No.39266/2018
C/W W.P. No.11741/2021
W.P. No.15424/2021
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 17TH DAY OF JANUARY, 2025
PRESENT
THE HON'BLE MRS. JUSTICE ANU SIVARAMAN
AND
THE HON'BLE MR. JUSTICE VIJAYKUMAR A. PATIL
WRIT PETITION NO.39266/2018 (GM-DRT)
C/W
WRIT PETITION NO.11741/2021 (GM-DRT)
WRIT PETITION NO.15424/2021 (GM-DRT)
IN W.P. No.39266/2018:
BETWEEN:
1. MRS. MEENA VIJAY
W/O LATE K. VIJAY
AGED ABOUT 68 YEARS
Digitally signed by R/AT PAI TOWERS
ARSHIFA BAHAR
KHANAM BEEINAGUDDA, UDUPI-576101.
Location: HIGH
COURT OF
KARNATAKA ALSO R/AT. NO.9/5-2
FIRST FLOOR (OUT HOUSE)
6TH CROSS, 2ND 'A' MAIN
GOVINDARAJA NAGAR
VIJAYNAGAR, BANGALORE-40.
2. M/S. EMVEE COMFORTS AND TRAVELS LTD
OFFICE AT R/AT. PAI TOWERS
BEEINAGUDDA, UDUPI-576101
REP. BY ITS MANAGING DIRECTOR
MRS. MEENA VIJAY.
...PETITIONERS
(BY SRI. D. SESHADRI NAIDU, SR. ADV., FOR
SRI. PRAKASH M.H. ADV.,)
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AND:
THE AUTHORIZED OFFICER
CANARA BANK
OFFICE AT NO.38 AND 39
5TH CROSS ROAD, MALLESHWARAM
BANGALORE-560003
REP. BY ITS SENIOR MANAGER.
...RESPONDENT
(BY SRI. DHANANJAY VIDYAPATI JOSHI, SR. ADV., FOR
SRI. VIKRAM UNNI RAJAGOPAL, ADV.,)
---
THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF
THE CONSTITUTION OF INDIA, PRAYING TO CALL FOR
RECORDS IN RA 65/2008 ON THE FILE OF HON'BLE DEBT
RECOVERY APPELLATE TRIBUNAL, CHENNAI ARISING OUT OF
O.A.335/2003 OF THE RECOVERY TRIBUNAL, BANGALORE.
ISSUE A WRIT OR ORDER IN THE NATURE OF CERTIORARI
THEREBY QUASHING THE JUDGMENT AND ORDER DATED
11.07.2018 PASSED BY THE HON'BLE DEBT RECOVERY
APPELLATE TRIBUNAL, CHENNAI IN RA 65/2008 ARISING OUT
OF O.A.NO.335/2003 PASSED BY THE DEBT RECOVERY
TRIBUNAL, BANGALORE DIRECTING THE PETITIONERS TO PAY
50% OF THE O.A. AMOUNT WITHOUT INTEREST AS PER
ANNEXURE 'A'.
IN W.P. NO.11741/2021:
BETWEEN:
EMVEE COMFORTS AND TRAVELS LIMITED
REP. BY MRS. MEENA VIJAY
W/O LATE KARUNAKARA VIJAY
AGED ABOUT 70 YEARS
R/O NO.9/5-2, 1ST FLOOR
OUT HOUSE, 6TH CROSS
SECOND A MAIN
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GOVINDARAJANAGAR
BANGALORE-560040.
...PETITIONER
(BY SRI. D. SESHADRI NAIDU, SR. ADV., FOR
SRI. PRAKASH M.H. ADV.,)
AND:
CANARA BANK
MALLESHWARAM BRANCH
BANGALORE-560006.
...RESPONDENT
(BY SRI. DHANANJAY VIDYAPATI JOSHI, SR. ADV., FOR
SRI. VIKRAM UNNI RAJAGOPAL, ADV.,)
---
THIS W.P. IS FILED UNDER ARTICLE 226 AND 227 OF
THE CONSTITUTION OF INDIA, PRAYING TO CALL FOR THE
ENTIRE RECORDS IN APPEAL NO.R.A.114/2013 FROM DEBT
RECOVERY APPELLATE TRIBUNAL CHENNAI. CALL FOR
ENTIRE RECORD IN O.A. NO.279/2003 FROM DEBT
RECOVERY TRIBUNAL BANGALORE. PASS A WRIT OF
CERTIORARI OR ANY ORDER OF WRIT IN THE NATURE OF
CERTIORARI QUASHING THE IMPUGNED ORDER PASSED
BY HON'BLE DEBT RECOVERY APPELLATE TRIBUNAL
CHENNAI IN THE APPEAL RA.NO.114/2013 (FOUND AT
ANNEXURE -A SUPRA) DATED 19/03/2020 & ETC.
IN W.P. NO.15424/2021:
BETWEEN:
MRS. MEENA VIJAY
NO.9/5-2, FIRST FLOOR
OUTHOUSE, 6TH CROSS
GOVINDRAJANAGAR
BANGALORE-560040
MOB 8618209165.
...PETITIONER
(BY SRI. D. SESHADRI NAIDU, SR. ADV., FOR
SRI. PRAKASH M.H. ADV.,)
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AND:
CANARA BANK
MALLESHWARAM BRANCH
BANGALORE-560003
(HEREINAFTER REFERRED AS THE BANK).
...RESPONDENT
(BY SRI. DHANANJAY VIDYAPATI JOSHI, SR. ADV., FOR
SRI. VIKRAM UNNI RAJAGOPAL, ADV.,)
---
THIS W.P. IS FILED UNDER ARTICLE 226 AND 227 OF
THE CONSTITUTION OF INDIA, PRAYING TO CALL FOR THE
ENTIRE RECORDS FROM THE DRAT CHENNAI RELATING TO
AIR-889/2015. CALL FOR THE ENTIRE RECORDS FROM
THE DEBT RECOVERY TRIBUNAL BANGALORE IN OA NO.
279/2003. PASS A WRIT OF CERTIORARI OR ANY OTHER
ORDER IN THE NATURE OF WRIT OF CERTIORARI
QUASHING THE IMPUGNED ORDER PASSED BY THE DRAT
IN THE APPEAL IN AIR-889/2015 DATED 23.04.2019
(FOUND AT ANNEXURE-1 SUPRA) & ETC.,
THESE WRIT PETITIONS HAVING BEEN HEARD AND
RESERVED ON 08.01.2025, COMING ON FOR
PRONOUNCEMENT OF ORDER, THIS DAY VIJAYKUMAR A.
PATIL J., MADE THE FOLLOWING:
CORAM: HON'BLE MRS. JUSTICE ANU SIVARAMAN
and
HON'BLE MR. JUSTICE VIJAYKUMAR A. PATIL
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W.P. No.39266/2018
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CAV ORDER
(PER: HON'BLE MR. JUSTICE VIJAYKUMAR A. PATIL)
W.P.No.11741/2021 is filed by Emvee Comforts and
Travels Limited challenging the order dated 19.03.2020
passed in R.A.No.114/2013 (arising out of
O.A.No.279/2003 on the file of the Debts Recovery
Tribunal, Bengaluru) by the Debts Recovery Appellate
Tribunal, Chennai.
W.P.No.39266/2018 is filed by Mrs. Meena Vijay and
another challenging the order dated 11.07.2018 passed in
R.A.No.65/2008 (arising out of O.A.No.335/2003 on the
file of the Debts Recovery Tribunal, Bengaluru) by the
Debts Recovery Appellate Tribunal, Chennai.
W.P.No.15424/2021 is filed by Mrs. Meena Vijay
challenging the order dated 23.04.2019 passed in
A.I.R.No.889/2015 (arising out of O.A.No.279/2003 on the
file of the Debts Recovery Tribunal, Bengaluru) by the
Debts Recovery Appellate Tribunal, Chennai.
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2. The parties are referred to as per their rankings
before the Debts Recovery Tribunal (hereinafter referred
to as 'the DRT').
3. The applicant - Canara Bank filed
O.A.No.279/2003 seeking relief of recovery certificate
against the defendants for recovery of a sum of
Rs.1,59,57,631/- along with interest and O.A.No.335/2003
seeking relief of recovery certificate against the
defendants for recovery of a sum of Rs.2,09,70,434/-
along with interest. The defendant No.5 filed written
statement in both the applications before the DRT by
denying the averments made in the application. It is
averred that there is no transaction of debtor and creditor
between the defendant Nos.5 and 6 and the applicant and
they have not borrowed any money or stood as surety for
the alleged claim and there is no privity of contract with
the applicant - Bank. Hence, there is no debt or liability
against the defendant as well as defendant No.6 -
Company and they cannot be held responsible for payment
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of claim of the applicant-Bank. They sought for dismissal
of the application.
4. In O.A.No.279/2003, the applicant - Bank
examined one witness and got marked Exs.A1 to A20 and
in O.A.No.335/2003, examined one witness and got
marked Exs.A1, A3 to A19. The defendant No.5 did not
adduce any evidence in O.A.No.279/2003.
5. The DRT in O.A.No.279/2003 held that the
applicant - Bank is unable to prove the case against
defendant Nos.1 and 6 and allowed the application against
defendant Nos.2, 4 and 5 by directing jointly and severally
to pay a sum of Rs.1,59,57,631/-. In O.A.No.335/2003,
the DRT held that the defendant Nos.2 and 4 are jointly
and severally liable to pay a sum of Rs.2,09,70,434/-
along with interest. The applicant preferred
R.A.Nos.114/2013 and 65/2008 challenging both the
orders of the DRT before the DRAT and the defendant No.5
challenged the order of the DRT in O.A.No.279/2003
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before the DRAT in A.I.R.No.889/2015. The Debts
Recovery Appellate Tribunal (hereinafter referred to as 'the
DRAT'), by the impugned orders dated 11.07.2018 and
19.03.2020 allowed the appeals filed by the applicant-
Canara Bank and by the impugned order dated
23.04.2019 dismissed the appeal filed by the defendant
No.5 in A.I.R.No.889/2015. Being aggrieved, the
defendant No.6 filed W.P.No.11741/2021, defendant Nos.5
and 6 filed W.P.No.39266/2018 and defendant No.5 filed
W.P.No.15424/2021.
6. Sri.D.Seshadri Naidu, learned Senior counsel
appearing for the defendant Nos.5 and 6 submits that the
DRT in O.A.No.279/2003 has come to the conclusion that
no case is made out against the petitioner - defendant
No.6 and in O.A.No.335/2003, the DRT dismissed the
application of the Bank against the petitioner - defendant
Nos.5 and 6. However, the DRAT without considering any
of the aspects has allowed the applications filed by the
Bank by holding defendant Nos.5 and 6 liable. It is
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submitted that there is no privity of contract between the
defendant Nos.5, 6 and the applicant - Bank. Hence, the
question of proceeding against the answering defendants
would not arise. In support of the said contention, he
placed reliance on the decision of the Hon'ble Supreme
Court in the case of M.C.CHACKO Vs. STATE BANK OF
TRAVANCORE, TRIVANDRUM1. It is further submitted
that the depositors were not made parties to the
proceedings before the DRT. Hence, the application ought
to have been rejected by the DRAT. It is also submitted
that there is no pleading that the defendant Nos.5 and 6
have played fraud and received the money from defendant
No.2. Hence, the order of the DRAT is required to be
interfered in the present proceedings. It is contended that
the criminal proceedings initiated has resulted in acquittal
of the accused and the finding recorded by the Sessions
Court in Spl. C.C.No.245/2002 c/w Spl.C.C.No.84/2008
clearly demonstrates that the officials of the applicant -
Bank were negligent and the Investigating Officer has not
1
(1969) 2 SCC 343
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recorded the statements of the depositors nor they have
been examined before the Court. The finding of the
Sessions Court further demonstrates that the defendant
Nos.5 and 6 have not played any role in the entire
transaction. Hence, the finding of the DRAT is contrary to
the material available on record which requires to be
interfered. It is further contended that the petitioner-
defendant No.5 in W.P.No.15424/2021 has challenged the
order of the DRAT dated 23.04.2019 wherein it has
dismissed the appeal for non-deposit of 50% of the
statutory amount. It is also contended that the defendant
No.5 has no role in the entire transaction and she has lost
her husband-defendant No.3 during the pendency of the
proceedings.
7. Learned Senior Counsel appearing for the
petitioner refers to Tannan's Banking Law and submits
that the entire transaction amounts to conversion and in
the case of conversion, the remedy to the Banker is to
proceed against the defendant No.2 and not against the
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defendant Nos.5 and 6, assuming that they have received
the amount wrongfully also, it cannot be termed as debt.
Hence, he seeks to allow the writ petitions filed by the
defendant Nos.5 and 6.
8. Per contra, Sri.Dhananjay Vidyapati Joshi,
learned Senior counsel for the respondent supports the
impugned orders of the DRAT and submits that the DRAT
has recorded the clear finding based on the evidence
available before it that the defendant Nos.5 and 6 are
equally liable to pay the money to the applicant - Bank as
they are the beneficiaries of the entire transaction even in
the absence of any contract between the Bank and the
defendant Nos.5 and 6. It is submitted that the DRAT has
also taken note of the fact that there is negligence on the
part of the officials of the Bank. Hence, 50% liability is
saddled on the defendants and the said finding of the
DRAT is accepted by the Bank. Hence, the finding of the
DRAT does not call for any interference. It is further
submitted that the DRAT has rightly interpreted the word
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'debt' as defined in Section 2(g) of the Recovery of Debts
and Bankruptcy Act, 1993 (hereinafter referred to as 'the
Act') and directed the defendants to pay 50% of the
amount. It is also submitted that the DRAT has recorded
the finding that the money involved is public money and
on account of the negligence, fraud and mischief, the
amount is paid to the defendant No.6. Hence, the
defendants are liable to pay the amount. It is contended
that the finding of the Sessions Court has no bearing on
the issue involved before the DRAT and the finding cannot
be looked into as the standard of proof required in the
present proceedings and proof required in criminal
proceedings are different. In support of his contentions,
he has placed reliance on the decision of the Hon'ble
Supreme Court in the case of EUREKA FORBES LTD. Vs.
ALLAHABAD BANK2 and the decision of the Bombay High
Court in the case of AMIT H. JHAVERI AND ANOTHER
2
(2010) 6 SCC 193
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Vs. BANK OF BARODA, MUMBAI AND OTHERS3. He
seeks to dismissal the writ petitions.
9. We have heard the arguments of the learned
Senior counsels appearing for the parties and meticulously
perused the material available on record including the
Tribunal records. The only point that arise for
consideration in these petitions is:
"Whether the impugned orders of the
DRAT calls for any interference in these
writ petitions?"
10. Before considering the issue involved in these
petitions, it would be necessary to refer to the relevant
facts.
(a) The applicant - Canara Bank filed
O.A.No.279/2003 seeking relief of recovery certificate
against the defendants for recovery of a sum of
Rs.1,59,57,631/- in favour of the applicant along with
3
(2011) 1 Mh.L.J.(DB) 55
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interest at 16% p.a. compounded quarterly from the date
of filing of the application till realisation and
O.A.No.335/2003 seeking relief of recovery certificate
against the defendants for recovery of a sum of
Rs.2,09,70,434/- in favour of the applicant along with
interest at 16% p.a. compounded quarterly from the date
of filing of the application till realisation.
(b) The applicant - Canara Bank averred that on
08.05.1999 it received a remittance of U.S. $3,70,000
from Rabo Bank Asia Ltd. through Chase Manhatten Bank,
New York on the basis of the an account opening form,
ostensibly signed by Sri.Prakash N. Punjabi and Sri.Tej
Narsingdas Navalrai, the applicant opened foreign currency
non-resident kamadhenu deposit account for a period of
one year for the amount of the said remittance. The said
deposit account was authorised to be opened by the
defendant No.1. It is further averred that on 08.05.1999
the defendant No.2 came to the Bank and presented the
power of attorney apparently executed by the said
depositors authorising him to open and operate the bank
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account, sign cheques, withdraw amount and to raise loan
etc. The defendant No.2 presented non-resident ordinary
savings bank account opening form claiming that it is
signed by the aforesaid depositors and based on such
form, non-resident ordinary savings bank account was
opened in the name of said depositors.
(c) It is also averred that the defendant No.2
presented a letter addressed to the Bank apparently
signed by the above referred depositors stating that they
need a loan of Rs.1,16,50,000/- against their deposit for
personal commitment and they have deputed their GPA
holder - defendant No.2 for completing the loan process.
(d) It is contended that the defendant No.2
submitted loan application and based on the GPA,
executed demand promissory note for Rs.1,16,50,000/- in
favour of the Bank and based on those documents, the
applicant - Canara Bank sanctioned and disbursed loan of
Rs.1,16,50,000/- on the security of the above deposit and
amount was credited to non-resident ordinary savings
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bank account of the above said depositors opened by the
defendant No.2.
(e) The defendant No.2 issued two Cheques in favour
of the defendant No.6 for Rs.1.1 Crore and Rs.6,43,900/-,
respectively. Thus, withdrew the whole amount from the
said non-resident ordinary savings bank account. The
amount in the fixed deposit was due to mature on
06.05.2000 which was provided as security to the loan and
on maturity, the amount was adjusted towards the loan
and remaining balance amount of U.S. $80,538.46 was
remitted to the State Bank of India, Hong Kong on
21.06.2000 for the credit of the depositor's account. The
SBI, Hong Kong Branch sent a message to the applicant
stating that they do not have any instructions from the
depositors with regard to the said amount.
(f) It is further contended that the said depositors
complained to the Banking Ombudsmen in Karnataka
seeking payment of US $3,88,854.51 being maturity value
of the deposit with interest. It is also contended that they
have not executed any power of attorney nor authorised
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anyone to receive any loan. The Banking Ombudsmen on
hearing the parties passed an award directing the
applicant - Bank to restore the amount to the depositors.
Pursuant to the award of the Banking Ombudsmen, the
applicant - Bank debited a sum of Rs.1,53,83,910/- to
Sundry Assets - Sundry Debenture account and renewed
the deposit as directed by the Banking Ombudsmen.
(g) It is contended that FIR was lodged with the CBI
against the defendant No.1 and others alleging that their
fraudulent acts caused wrongful loss to the applicant -
Bank. The investigating agency filed charge sheet against
the defendant Nos.1, 3 to 6 and others. The criminal
proceedings initiated against certain defendants resulted in
acquittal by the Sessions Court in Spl.C.C.No.245/2002
c/w Spl.C.C.No.84/2008. The applicant-Bank initiated
proceedings before the DRT Bangalore.
(h) The defendant No.5 filed written statement in
both the applications before the DRT denying the
averments made in the application. It is averred that
there is no transaction of debtor and creditor between the
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defendant No.5 and the applicant and she has not
borrowed any money or stood as surety for the alleged
claim and there is no privity of contract with the applicant
- Bank. Hence, there is no debt or liability against the
defendants as well as defendant No.6 - Company. It is
further averred that the Managing Director of the
defendant No.6 - Company is no more and other Directors
of the Company are not made parties to the application.
Hence, the application is liable to be rejected. It is denied
that the defendant Nos.5 and 6 have no connection with
the alleged transaction or the alleged fraud said to have
been committed in respect of the said account of the said
depositors. It is also averred that the defendant No.2 was
acting on behalf of the said two depositors in connection
with certain business venture with the defendant No.6-
Company. So the defendant No.6 was a bona fide person
to deal with the transaction. Hence, defendant Nos.5 and
6 cannot be held responsible for payment of claim of the
applicant-Bank. She sought for dismissal of the
application.
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11. Keeping in mind the aforesaid facts, we need to
consider the contention advanced by the learned Senior
Counsel for the defendant Nos.5 and 6 that there is no
privity of contract between the applicant-Bank and the
defendant Nos.5 and 6 and the DRAT has erred in
reversing the orders of the DRT by saddling 50% of
liability on the defendants. To consider the said
contention, it would be relevant to refer Section 2(g) of
the Act which reads as under:
2(g) "debt" means any liability (inclusive of
interest) which is claimed as due from any
person by a bank or a financial institution or by a
consortium of banks or financial institutions
during the course of any business activity
undertaken by the bank or the financial
institution or the consortium under any law for
the time being in force, in cash or otherwise,
whether secured or unsecured, or assigned, or
whether payable under a decree or order of any
civil court or any arbitration award or otherwise
or under a mortgage and subsisting on, and
legally recoverable on, the date of the
application and includes any liability towards
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debt securities which remains unpaid in full or
part after notice of ninety days served upon the
borrower by the debenture trustee or any other
authority in whose favour security interest is
created for the benefit of holders of debt
securities or;
12. The Hon'ble Supreme Court in the case of
Eureka Forbes Ltd. referred supra at paragraphs 47 to
52 held as under:
47. The next question of law, that we are
called upon to consider, is the ambit and scope of
the provisions of Section 2(g) of the Recovery Act,
on which the entire case of the parties hinges. We
have already noticed that the appellant has
argued with great vehemence that, there was no
privity of contract and they were not covered
under the definition of "debt", and as such,
recovery proceedings could not be initiated, much
less, recovery could be effected from them under
the provisions of the Act.
48. Section 2(g) of the Recovery Act reads as
under:
"2. (g) 'debt' means any liability (inclusive of
interest) which is claimed as due from any person
by a bank or a financial institution or by a
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consortium of banks or financial institutions during
the course of any business activity undertaken by
the bank or the financial institution or the
consortium under any law for the time being in
force, in cash or otherwise, whether secured or
unsecured, or assigned, or whether payable under
a decree or order of any civil court or any
arbitration award or otherwise or under a
mortgage and subsisting on, and legally
recoverable on, the date of the application;"
49. The Recovery Act of 1993 was enacted
primarily for the reasons that the banks and
financial institutions should be able to recover
their dues without unnecessary delay, so as to
avoid any adverse consequences in relation to the
public funds. The Statement of Objects and
Reasons of this Act clearly states that banks and
financial institutions at present, experience
considerable difficulties in recovering loans and
enforcements of securities charged with them.
The existing procedure for recovery of dues of the
Bank and the financial institutions block significant
portion of their funds in unproductive assets, the
value of which deteriorates with the passage of
time. Introduction of similar procedure was
suggested by the Tiwari Committee. The Act
provided for the establishment of the Tribunals
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and Appellate Tribunals and modes for expeditious
recovery of dues to the banks and financial
institutions.
50. In this background, let us read the
language of Section 2(g) of the Recovery Act. The
plain reading of the section suggests that the
legislature has used a general expression in
contradistinction to specific, restricted or limited
expression. This obviously means that, the
legislature intended to give wider meaning to the
provisions. Larger area of jurisdiction was
intended to be covered under this provision so as
to ensure attainment of the legislative object i.e.
expeditious recovery and providing provisions for
taking such measures which would prevent the
wastage of securities available with the banks and
financial institutions.
51. We may notice some of the general
expressions used by the framers of law in this
provision:
(a) any liability;
(b) claim as due from any person;
(c) during the course of any business
activity undertaken by the bank;
(d) where secured or unsecured;
(e) and lastly legally recoverable.
52. All the above expressions used in the
definition clause clearly suggest that, the
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expression "debt" has to be given general and
wider meaning; just to illustrate, the word "any
liability" as opposed to the word "determined
liability" or "definite liability" or "any person" in
contrast to "from the debtor". The expression
"any person" shows that the framers do not wish
to restrict the same in its ambit or application.
The legislature has not intended to restrict to the
relationship of a creditor or debtor alone. General
terms, therefore, have been used by the
legislature to give the provision a wider and liberal
meaning. These are generic or general terms.
Therefore, it will be difficult for the Court, even on
cumulative reading of the provision, to hold that
the expression should be given a narrower or
restricted meaning. What will be more in
consonance with the purpose and object of the Act
is to give this expression a general meaning on its
plain language rather than apply unnecessary
emphasis or narrow the scope and interpretation
of these provisions, as they are likely to frustrate
the very object of the Act.
13. The Hon'ble Supreme Court has considered the
scope and ambit of Section 2(g) of the Act and held that
the expression 'debt' has to be given general and wider
meaning and legislature has not intended to restrict the
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relationship of creditor or debtor alone. Similar view is
taken by the Bombay High Court in the case of AMIT H.
JHAVERI AND ANOTHER referred supra. The said
decision of the Bombay High Court was challenged before
the Hon'ble Supreme Court which came to be dismissed.
Similar view is taken by the Delhi High Court in M/s.
J.U.MANSUKHANI & CO. AND ANOTHER referred
supra.
14. In view of the clear opinion of the Hon'ble
Supreme Court and the other High Courts on the issue,
the contention of the defendant Nos.5 and 6-petitioners
that there is no privity of contract between the defendant
Nos.5 and 6 and the Bank has no merit and is accordingly
rejected. The decision relied by the learned Senior
Counsel for the defendant Nos.5 and 6 in the case of
M.C.CHACKO referred supra, has no application to the
facts and circumstances of the case in view of the specific
definition of 'debt' under the Act.
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15. The second contention advanced by the
defendant Nos.5 and 6 that the depositors were not made
parties to the proceedings before the DRT and DRAT is
also required to be rejected. The definition of 'debt' and
its interpretation by the Hon'ble Supreme Court and other
High Courts makes it clear that any legally recoverable
debt is a debt within the ambit of the Act. Hence, the
applicant-Bank is within their rights to file an application to
recover the money from the defendants. The material
available on record indicates that the depositors have
approached the Banking Ombudsmen and the said
Ombudsmen has passed the decree against the applicant-
Bank directing it to make good the deposit amount. The
material further makes it clear that the defendant Nos.5
and 6 who are the present petitioners have received the
money on the same day from the applicant - Bank. In
addition, the defendant Nos.5 and 6 have failed to adduce
any evidence before the DRT to prove that the transaction
between them and the defendant No.2 is a bona fide one.
In the absence of such evidence, the defendant Nos.5 and
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6 cannot deny their liability. The contention of the
defendant Nos.5 and 6 that they have not played any
fraud in receiving the money from the defendant No.2 is
only a bald statement. The material available on record
prima facie indicates that the defendant Nos.5 and 6 have
admittedly received money from the defendant No.2 and
the said money was disbursed in their favour on the said
day. In our considered view, the pleading and evidence
indicate the prima facie involvement of defendant Nos.5
and 6 in the entire transaction which is sufficient for the
applicant-Bank to proceed against them. The judgment of
acquittal by the Sessions Court in Spl.C.C.No.245/2002
c/w Spl.C.C.No.84/2008 has no bearing on the issue
involved in these proceedings. The standard of proof
required in the criminal proceedings is all together
different than the proceedings before the DRT and DRAT.
The standard of proof required before the DRT and DRAT
is based on preponderance of probabilities and in criminal
proceedings the prosecution is required to prove the case
beyond all reasonable doubt. If the benefit of doubt is
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given to the accused, it would not automatically exonerate
the defendant Nos.5 and 6 from their liability. Hence,
contrary contentions advanced by the learned Senior
counsel for the defendant Nos.5 and 6 has no merit and is
accordingly rejected.
16. The further contention of the learned Senior
Counsel that the defendant No.5 could not deposit the
statutory amount of 50% before the DRAT because of her
poverty. The DRAT has refused to consider her case on
merits. The issue with regard to deposit of statutory
amount before the DRAT is no more res integra. The
Hon'ble Supreme Court in the case of NARAYAN
CHANDRA GHOSH Vs. UCO BANK AND OTHERS4 held
that the condition of pre-deposit being mandatory, a
complete waiver of deposit by the applicant with the
Appellate Authority is beyond the provisions of the Act and
at the best, the Appellate Tribunal by recording reasons
reduced the amount of deposit of 50% to an amount not
4
(2011) 4 SCC 548
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less than 25% of the debt. In the instant case, admittedly
the defendant No.5 has not deposited the statutory
amount. The DRAT has rejected the application of the
defendant No.5 on 20.03.2019. The defendant No.5 had
filed an application to modify the order dated 20.03.2019.
The said application came to be rejected on 23.04.2019.
The defendant No.5 has assailed the order dated
23.04.2019 wherein the application for modification of the
order dated 20.03.2019 was rejected and there is no
challenge to the order dated 20.03.2019. In view of the
settled position of law, the writ petition filed by the
defendant No.5 in W.P.No.15424/2021 is liable to be
rejected.
17. The learned Senior counsel for the defendant
Nos.5 and 6 contended that the entire transaction in these
proceedings amounts to conversion of amount. In support
of the said contention, he refers to Chapter 22 of Tannan's
Banking Law Vol. 2 of 8th Edition. The said contention has
no bearing on the lis involved between the parties. The
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issue in the present proceedings is with regard to the debt
and recovery of the said debt by the Bank against the
defendant. The Hon'ble Supreme Court in the aforesaid
decision has clearly held that debt includes the legally
recoverable amount by the Bank. Hence, for the
aforementioned reasons, we are of the considered view
that the concept of conversion of amount has no
application to the case on hand.
18. The DRAT, on appreciation of the pleadings and
evidence available on record exercise both equity and legal
jurisdiction and has modified the orders of the DRT by
fastening 50% liability on the defendants Nos.5 and 6
also. We do not find any perversity or error in the
aforesaid finding of the DRAT calling for interference under
Article 227 of the Constitution of India.
19. For the aforementioned reasons, we proceed to
pass the following:
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ORDER
(1) Writ petitions are rejected.
(2) Registry shall transmit back the original records
of the DRT and the DRAT, respectively.
No order as to costs.
Sd/-
(ANU SIVARAMAN)
JUDGE
Sd/-
(VIJAYKUMAR A. PATIL)
JUDGE
RV
