Madras High Court
M/S. Kotak Mahindra Bank Ltd vs A.Anand Prasad on 14 July, 2021
W.P.No.33319 of 2019 &
CRP No.73 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 14.07.2021
CORAM :
THE HON'BLE MR.SANJIB BANERJEE, CHIEF JUSTICE
AND
THE HON'BLE MR.JUSTICE SENTHILKUMAR RAMAMOORTHY
W.P.No.33319 of 2019 &
CRP No.73 of 2021
M/s. Kotak Mahindra Bank Ltd
rep. by its Vice President
Presently at Asset Reconstruction Division
5th Floor, Samson Tower
No.402L, Pantheon Road
Egmore, Chennai 600 008. .. Petitioner
Vs.
1. A.Anand Prasad
2. M/s. Ravishankar Industries Pvt. Ltd
rep. by the Provisional Liquidator
Corporate Bhavan, Second Floor
No.29, Rajaji Salai
Chennai 600 001.
3. The Registrar
Debt Recovery Appellate Tribunal
Chennai. .. Respondents
CRP No.73 of 2021
A.Anand Prasad .. Petitioner
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Page 1 of 11
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W.P.No.33319 of 2019 &
CRP No.73 of 2021
Vs.
1. Kotak Mahindra Bank Ltd
rep. by its Vice President
Dass India Tower, II Floor
No.3, II Line Beach, Parrys
Chennai 600 001.
Presently at
Asset Reconstruction Division
5th Floor, Samson Tower
No.402 L, Pantheon Road
Egmore
Chennai 600 008.
2. M/s. Ravishankar Industries Pvt. Ltd
rep. by the Provisional Liquidator
Corporate Bhavan, Second Floor
No.29, Rajaji Salai
Chennai 600 001. .. Respondents
Prayer: Writ Petition filed under Article 226 of the Constitution of India
for issuance of a Writ of Certiorarified Mandamus to call for the records
of the order dated 24.10.2019 passed in M.A.No.11 of 2019 on the file
of the third respondent and quash the portion of the order that if due
amount recovered from Andhra property and Mumbai property is found
not sufficient then Bank has a right to recover the balance money from
Adyar property and also allow the appeal filed by the petitioner to
quash the impugned order dated 29.05.2018 passed in A.P.No.07 of
2018 in M.A.Nos.44 & 45/2018 in DRC No.05/2013 on the file of the
Debts Recovery Tribunal-II, Chennai.
Civil Revision Petition filed under Article 227 of the Constitution
of India against the order passed by the Debt Recovery Appellate
Tribunal, Chennai in M.A.No.11 of 2019 against A.P.No.7 of 2018
against M.A.Nos.44 & 45 of 2018 in DRC No.5 of 2013 dated
24.10.2019.
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W.P.No.33319 of 2019 &
CRP No.73 of 2021
For Petitioner in Mr.E.Om Prakash, S.C.
WP & Respondent-1 : For Mr.P.Elaya Rajkumar
in CRP For M/s. Ramalingam & Associates
For Petitioner in
CRP & Respondent-1
in WP : Mr.Prahalad Bhat
ORDER
(Made by the Hon'ble Chief Justice)
The two petitions arise out of the same order of October 24,
2019 passed by the Debt Recovery Appellate Tribunal.
2. The matter before the appellate authority was a challenge by
the bank to an order dated May 29, 2018 passed by the Debts
Recovery Tribunal II, Chennai in certificate proceedings by which the
bank had been directed to exhaust the remedy of recovery of its dues
against the mortgaged property before it proceeded against the other
properties of the borrowers and guarantors.
3. According to the bank, the debt due to the bank in respect of
the transactions which form the subject-matter of the present
proceedings is in excess of Rs.50 crore. The bank proceeds to add that
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W.P.No.33319 of 2019 &
CRP No.73 of 2021
if the other transactions are taken into account, the bank's dues would
be in excess of Rs.450 crore. The banks says that the adjudication is
complete and the matters are at the post-certificate, recovery stage.
4. According to the bank, the appeal before the Appellate
Tribunal arose out of a rather strange application. The borrower was
Ravishankar Industries Private Limited which was apparently owned
and controlled by the family of Prasads with its two Directors at the
relevant point of time being brothers A.Manohar Prasad and
A.Ravishankar Prasad. The bank submits that while the debtor, the
guarantor and the other promoters contested the proceedings
instituted under Section 19 of the then Recovery of Debts due to
Banks and Financial Institutions Act, 1993 (since renamed The
Recovery of Debts and Bankruptcy Act), at the execution stage of the
matter, the mother of the two brother Directors purported to claim
some kind of family settlement in a vain attempt to thwart the bank's
endeavour to realise and recover its dues. The relevant applicant's
plea failed.
5. A grandson of the lady, who is also a son of A.Manohar
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W.P.No.33319 of 2019 &
CRP No.73 of 2021
Prasad, purported to pursue the matter by seeking to resurrect the
grandmother's application and it is in such connection that the order
dated May 29, 2018 came to be passed by the relevant Debts
Recovery Tribunal in A.P.No.07/2018 (M.A.Nos.44 & 45 of 2018) in
DRC No.05/2013. The Debts Recovery Tribunal observed that the bank
should recover its dues from the other properties before seeking to
proceed against the Adyar property in Chennai, which the grandmother
and, later, the grandson claimed to be the subject-matter of an
apparent oral family settlement.
6. The bank suggests that there is no law that requires a creditor
or a decree-holder to proceed against some of the assets of the debtor
or judgment-debtor and resort to other properties only if the earlier
properties do not satisfy the claim or the decretal debt. This was the
primary contention of the bank in its appeal before the appellate
authority.
7. The appellate authority noticed the bank's contention that the
Debts Recovery Tribunal had failed to appreciate that the other
properties were in Andhra Pradesh and Mumbai. The appellate
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W.P.No.33319 of 2019 &
CRP No.73 of 2021
authority also recorded the bank's submission that A.Manohar Prasad
had admitted on affidavit that he held 50% interest and title in the
Adyar property. The bank complained to the appellate authority that it
was with considerable difficulty and after carrying the matter to the
Supreme Court that the bank was able to obtain deposit of a sum of
Rs.25 crore when it pursued the Hyderabad property. According to the
bank, the Mumbai property was covered by notices issued by creditors
under the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002. The bank also questioned
the veracity and existence of any family settlement.
8. The order impugned dated October 24, 2019, however, made
a slight modification to the order of the Debts Recovery Tribunal II,
passed on May 29, 2018, by merely recognising that the bank had a
right to recover the amount due to it from the Adyar property, but the
manner in which relevant sentence is worded in paragraph 11 gives
credence to the bank’s submission that the appellate authority
permitted the bank to proceed against the Adyar property only after
exhausting its remedies against the other properties.
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W.P.No.33319 of 2019 &
CRP No.73 of 2021
9. Paragraph 11 of the order impugned may be seen in the
context:
“11. Accordingly, impugned order deserves to be
modified to the extent that the Appellant Bank has a right
of recovery of the balance due amount from Adyar
property also. Order of attachment passed by the Recovery
Officer is affirmed”.
11. The short argument of the bank is that there is no basis to
either the Debts Recovery Tribunal order of May 29, 2018 or the
quoted part of the impugned order of the appellate authority calling
upon the bank to recover its dues from the other properties before
seeking to proceed against the Adyar property.
12. There is sufficient basis to the bank’s submission that once
the Tribunal permitted the bank to proceed against the Adyar property,
the Tribunal could not have directed the order in which the bank could
proceed against the properties. A similar anomaly appears from the
appellate order impugned herein and as quoted above. No reason is
indicated as to why the recovery of the bank’s dues should be
fashioned in the manner as directed by the Tribunal or the appellate
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W.P.No.33319 of 2019 &
CRP No.73 of 2021
authority.
13. The case run by the son of A.Manohar Prasad is that since
the Adyar property belongs to the family, irrespective of A.Manohar
Prasad’s admission as to being the 50 per cent owner thereof, the
bank cannot proceed to recover its dues from the undivided share or
interest of a debtor in an immovable property particularly, if it is a
family dwelling house.
14. The question raised by the petitioner in C.R.P.No.73 of 2021
cannot be urged at this stage. Implicit in the order of Debts Recovery
Tribunal II passed on May 29, 2018 is the rejection of such contention
on the part of the said petitioner. Such petitioner did not carry an
appeal from the order dated May 29, 2018 and the limited scope of the
appeal carried by the bank was whether it was appropriate for the
Debts Recovery Tribunal to require the bank to exhaust its remedies
against the other assets before proceeding against the Adyar house.
15. In a sense, the order impugned has, in principle, maintained
the order passed by the Debts Recovery Tribunal II on May 29, 2018
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W.P.No.33319 of 2019 &
CRP No.73 of 2021
without indicating any reason despite such aspect of the matter being
squarely challenged by the appellant before the Debt Recovery
Appellate Tribunal.
16. Since there appears to be no basis in requiring the bank,
which has obtained a certificate in its favour, to proceed against some
assets of the borrowers or guarantors ahead of some other assets, the
order impugned dated October 24, 2019 is modified and the restriction
imposed by the Debts Recovery Tribunal II order of May 29, 2018 is
undone by leaving the bank free to proceed against all the properties
of the debtors, be they the guarantors or borrowers, in accordance
with law.
17. W.P.No.33319 of 2019 and CRP No.73 of 2021 are disposed
of without any order to costs. CMP No.551 of 2021 is closed.
(S.B., CJ.) (S.K.R., J.)
14.07.2021
Index : Yes/No
kpl
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https://www.mhc.tn.gov.in/judis/
W.P.No.33319 of 2019 &
CRP No.73 of 2021
To
The Registrar
Debt Recovery Appellate Tribunal
Chennai.
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https://www.mhc.tn.gov.in/judis/
W.P.No.33319 of 2019 &
CRP No.73 of 2021
THE HON'BLE CHIEF JUSTICE
AND
SENTHILKUMAR RAMAMOORTHY, J.
(kpl)
W.P.No.33319 of 2019 &
CRP No.73 of 2021
14.07.2021
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https://www.mhc.tn.gov.in/judis/
