IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) MONDAY, THE NINETEENTH DAY OF JANUARY TWO THOUSAND AND NINE PRESENT THE HON'BLE MR JUSTICE V.ESWARAIAH AND THE HON'BLE MR JUSTICE VILAS V. AFZULPURKAR WRIT PETITION No: 5591 of 2008 BETWEEN: 1 P.V. Krishna Rao, S/o. Subba Rao, Director of M/s. Charminar Rims Private Limited. R/o. 5-D, Vishal Towers, Srinagr Colony, Hyderabad - 500 073. 2 Smt. Laxminarayanamma, W/o. Krishna Rao, R/o. 5-D, Vishal Towers, Srinagr Colony, Hyderabad - 500 073. ... PETITIONERS AND 1 State Bank of India, Jeedimetla Branch, Jeedimetla, Ranga Reddy District, Rep. by its Authorized Officer. 2 M/s. Chariminar Rims Private Limited, Rep. by its Managing Director K.S. Moorty, D-18, IDA, Jeedimetla, Ranga Reddy District. 3 K.S. Moorthy, S/o. Papa Rao, M/s. Charminar Rims Private Limited #10, Abids Shopping Centre, Chirag Ali Lane, Hyderabad-I. 4 K. Gopala Rao, S/o. Papa Rao, M/s. Charminar Rims Private Limited, H.NO. 1-10-247/A, Ashoknagar, Hyderabad. 5 A. Rajendra Prasad, M/s. Charminar Rims Private Limited #10, Abids Shopping Centre, Chirag Ali Lane, Hyderabad-I. 6 Debts Recovery Appellate Tribunal, 4th Floor, Indian Bank Building, Next to the Presidency club, 56, Ethirajsalai, Mount Road, Chennai, Rep. by Registrar. 7 Debts Recovery Tribunal, 5th Floor, Triveni Complex, Abids, Hyderabad, Rep. by Registrar. ...RESPONDENTS Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court may be pleased to issue an appropriate Writ, Order or Direction More particularly in the nature of MANDAMUS, directing the Debt recovery Appellate Tribunal, Chennai to waive the condition of Pre-deposit and to entertain and decide the Appeal filed by the petitioners in URA 27 of 2007 on merits, after setting aside the order of the Debts Recovery Appellate Tribunal, Chennai, in L.A.No. 373/2007 in URA No. 27/2007 dated 13-02-2008, and pass such other order or orders. Counsel for the Petitioners: MR.D.RANGANATHA KUMAR Counsel for the Respondents: MR.A.RAJASHEKAR REDDY (ASST SOLICITOR GEN) MR. DEEPAK BHATTACHARJEE The Court made the following: ORDER: (per Hon’ble Sri Justice Vilas V. Afzulpurkar) The petitioners are questioning the order dated 13.02.2008 of the Debts Recovery Appellate Tribunal – sixth respondent herein, which has passed a conditional order in the appeal preferred by the petitioners. 2. By the aforesaid impugned order, the sixth respondent had imposed a condition on the appellants/petitioners to deposit a sum of Rs.19,00,000/- in two installments each at Rs.9,50,000/- by 17-03-2008 & 17-04-2008, respectively, failing which the appeal would stand dismissed. The impugned order was passed under Section 21 of the Recovery of Debts due to the Banks and Financial Institutions Act, 1993 [Central Act 51 of 1993] (hereinafter referred to as ‘the Act, 51 of 1993’). 3. The petitioners question the said order, inter alia, on the ground that they have a substantial case in the appeal before the Appellate Tribunal inasmuch as the amount disbursed by the bank is hardly Rs.4,00,000/- and odd and subsequently interest over interest has been added and a claim for Rs.10 lakhs and odd was made by filing OA before the Debts Recovery Tribunal (DRT). The petitioners also alleged that several payments made by them to the bank during the period 1983-89 are not reflected in the accounts furnished by the bank before the Tribunal. It is also alleged that the bank has not accounted for the goods worth Rs.1 lakh, though the bank was custodian of the said stock of goods. The petitioners further contend that aggrieved by the decision of DRT the above appeal was preferred before the Appellate Tribunal and apart from the above grounds, it is also contended that the DRT has awarded interest over interest inasmuch as the amount of Rs.10 lakhs and odd, which is claimed by the bank, includes the interest already. Along with the appeal, petitioners moved an application under Section 21 of the Act 51 of 1993 requesting the Tribunal to exercise discretion to waive the condition of deposit of amount while entertaining the appeal. On the said application, the impugned order as mentioned above has been passed. Questioning the conditions imposed as highly onerous and unjustifiable, the present writ petition has been filed. 4. We have heard the learned counsel for the petitioners and the learned Standing Counsel appearing for the first respondent bank. Both the learned counsel, apart from contending in support of their respective cases, have placed several decisions before us. 5. Learned counsel for the petitioners relied upon the judgment of the Supreme Court in SANGFROID REMEDIES LTD. v. UNION OF INDIA[1] as well as judgment of Kerala High Court in JANARDHAN PILLAI v. INDIAN OVERSEAS BANK[2] and also the judgment of Bombay High Court in MOPAC PLAST PVT. LTD v. STATE BANK OF INDIA [3] . Whereas the learned counsel for the first respondent bank has relied upon the decision of the Punjab and Haryana Court in OM KANT AGGARWAL v. PUNJAB NATIONAL BANK [4] as well as another decision in SANT NIRANKARI MANDAL v. PUNJAB NATIONAL BANK [5] . The learned counsel also relied on a Division Bench judgment of this court in Dr. PINNA N.R. v. CANARA BANK [6] . 6. Section 21 of the Act 51 of 1993 is extracted hereunder: 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 seventy-five 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, waive or reduce the amount so deposited under this Section. The provisions under Section 21 of the Act 51 of 1993 clearly go to show that the discretion with respect to pre deposit of amount is entirely with the Appellate Tribunal. The condition of deposit of 75% of the amount for entertaining an appeal is therefore, not inflexible and in an appropriate case the Appellate Tribunal may, for reasons to be recoded in writing, entirely waive or reduce the amount to be deposited as a pre- condition for entertaining the appeal. The Legislative intent, therefore, is clear, inasmuch as depending upon the facts and circumstances of each case and on satisfaction by the Appellate Tribunal that the said discretion is necessary to be exercised in a given case, the amount required to be deposited may be reduced or entirely waived by the Appellate Tribunal itself. 7. Of all the decisions cited above, in particular the judgment first cited shows that similar power under the Central Excise Act with respect to the pre-deposit was exercised and onerous conditions, which were imposed, were interfered with by the Supreme Court and in fact, on the facts and circumstances, it was found that the appellant therein had substantial case before the Appellate Tribunal and ultimately, the conditions of deposit of amount was entirely waived in the aforesaid decision. Similarly, in the decision second cited the discretion of the Appellate Tribunal as mentioned above has been appreciated and applied and a pre-condition deposit was restricted to 60% of the amount in question in the appeal. The decision third cited is also on the similar lines. 8. In the Division Bench judgment of this Court sixth cited, the amount required to be deposited was only 1/10th of the amount in question and the said order passed by the Appellate Tribunal was questioned. This Court, however, noticed that the discretion exercised by the Appellate Tribunal in imposing the aforesaid condition was found to be justified and as such this Court did not interfere with the said discretion on the facts of that case. 9. The decision of the Punjab and Haryana High Court relied upon by the learned counsel for the first respondent is based on facts inasmuch as the said decision arose out of an application moved by the petitioner therein under Article 227 of the Constitution of India. The learned Single Judge had held that an application under Section 227 of the Constitution of India is not maintainable and ultimately a petition under Article 226 of the Constitution of India was held to be competent. The said decision, therefore, does not help the issue in question. Similarly, the other decision cited by the learned counsel for the first respondent relates to a case where 75% of the amount was directed to be deposited by the lower Appellate Tribunal under Section 21 of the Act 51 of 1993. On the facts of that particular case the said condition was found to be justified and was not interfered with. 10. On the facts of the present case, it is evident that the petitioners are questioning the claim of the bank before the Tribunal on three main grounds, as briefly indicated above, viz. that out of the total disbursed amount being only Rs.4,24,000/- the claim made in OA for more than Rs.10 lakhs is substantially addition of interest over interest and the DRT while decreeing the OA had awarded further interest thereon, which amounts to granting interest over interest. It is also alleged by the petitioners that the payments made by them during the period 1983-89 are not reflected in the accounts produced by the bank. The aforesaid two contentions, in our view, would sufficiently establish a prima facie case in favour of the petitioners and in the facts and circumstances of the case, we feel that condition of deposit of more than 75% of the amount as directed by the Tribunal is clearly onerous. Keeping the prima facie case in view, petitioners should be directed to deposit admitted disbursed amount in the facts and circumstances of this case. Thus the interest of justice will be served, if the petitioners are directed to deposit the principal amount of Rs.4,24,000/- which is rounded off to Rs.5,00,000/- as a condition precedent for entertaining the appeal by the Appellate Tribunal – sixth respondent herein. We are, therefore, inclined to modify the impugned order by substituting the pre-condition of deposit of Rs.5,00,000/- instead of Rs.19 lakhs as directed by the sixth respondent – Appellate Tribunal and further direct that if the said amount is deposited by the petitioners within a period of six (6) weeks from today, the appeal preferred by the petitioners shall be taken up and entertained by the Appellate Tribunal on proof of such deposit. It is needless to mention that in the event of default committed by the petitioners in depositing the amount as directed above the impugned order shall hold good. The writ petition is accordingly disposed of. There shall be no order as to costs. ______________ V. ESWARAIAH, J _____________________ VILAS V. AFZULPURKAR, J January 19, 2009 DSK/CBS [1] 1998 (103) ELT 5 [2] II (2003) BC 111 [3] II (2003) BC 64 [4] AIR 1999 PUNJAB AND HARYANA 80 [5] I (2005) BC 587 [6] 2009 (1) ALT 59