IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 05.12.2008 CORAM : THE HONOURABLE Mr.JUSTICE S.J.MUKHOPADHAYA AND THE HONOURABLE MR.JUSTICE V.DHANAPALAN W.P.NO.36713 of 2007 K.Muthusamy .. Petitioner -vs- 1. The Hon'ble Presiding Officer Debt Recovery Appellate Tribunal Chennai. 2. The Hon'ble Receiver (in the matter of Annai Moogambigai Roller Flour Mills) Mr.Jusstice K.Swamidurai (Retd) 3. M/s Karur Vysya Bank Limited Kodambakkam Branch, rep. By its authorised officer, Chennai 24. 4. Indra Muthuvel 5. S.Sankaran 6. S.Ramalingam 7. S.Narayanan 8. S.Selvaraj 9. S.Murugan 10.S.Paramasivan 11.S.Anandasaraswathy 12.M.Bagavathy 13.S.Muthulakshmi 14.V.Manikandan 15.S.Venkatachalam(Director) 16.K.Muthukrishnan 17.K.Muthu Selvakumar 18.V.Bhuvaneswari 19.K.Muthulakshmi 20.S.Indira 21.K.Shanmugasundaram 22.K.Murugan 23.M.Kalyanasundaram 24.M.Sathya 25.M.Kanthimathi 26.V.Anandhi 27.M.Sundari 28.C.Sankari 29.R.Vallidevi https://hcservices.ecourts.gov.in/hcservices/ 30.M.Sharmila 31.Master S.Muthukalyanasundaram(Minor) 32.Master S.Vallinayagam(Minor) 33.S.Ulagammal 34.M.Paramasivam 35.P.Kannan 36.P.Krishnamurthy 37.P.Durai (Director) 38.D.Anandhi 39.S.Anandhi 40.B.Muthulakshmi 41.S.Meena 42.S.Gomathiammai 43.S.Balasubramaniam (Director) 44.M.Shanmugasundari 45.P.Muthu Rajeswari 46.R.Lakshmi 47.G.Vasuki 48.R.Umashankari 49.N.Gomathi Nayagam 50.K.Subha 51.N.Sankaranarayanan 52.N.Arunachalathammal 53.Ve.Mandiram 54.C.Aruna 55.L.Chinnammal 56.S.Saraswathi 57.Aruna Theatres and Enterprises Private Limited, rep. By its Director, No.3, Ashok Pillar Road, (Udhayam Theatre Complex) Ashok Nagar, Chennai 1. 58. Annai Moogambigai Roller Flour Mills Limited, rep. By its Director No.6, Davidson Street, Chennai 1. ..Respondents The Writ Petition is filed under Section 226 of the Constitution of India praying for issuance of a writ of Certiorari to call for the records pertaining to the impugned order dated 23.11.2007 in MA.No.104 of 2007 (IA No.53 of 2007 in O.A.No.210 of 2007) on the file of the 1st respondent and quash the same as ex-facie erroneous, illegal and in excess of jurisdiction. For Petitioner : Mr.V.Ramakrishnan For Respondents :R1 - Tribunal Mr.K.S.Natarajan(R2) Mr.C.Uma Shankar(R57) Mr.N.Ramesh(R14 & 50) Mr.A.V.Radharkrishnan(R3) Mr.V.Gopalakrishnan(R5 to R8,R10) Mr.S.Thirvengadam(R17 to R20) Mr.A.K.Raghavelu(R51,52) https://hcservices.ecourts.gov.in/hcservices/ Mr.P.H.Arvind Pandian(R8,R16,R21,R34 and R42) Mr.S.Subbiah(R40,36,39,21,33,31,32 and 54) Mr.Pitchaiya(R44 to 46,48,58) O R D E R (Order of the Court was delivered by S.J.MUKHOPADHAYA,J) The petitioner claims to be the Ex-Director of Aruna Theatres Enterprises Private Limited, Chennai ('Company' for short). He also claimed to be the guarantor and shareholder of the Company. Respondent Karur Vysya Bank filed application under Section 19 of the Recovery of Debts due to Banks and Financial Institutions Institutions Act 1993, (hereinafter referred to as "the DRT Act") in O.A.No.178 of 2004 (re-numbered as O.A.No.210 of 2007) for recovery of Rs.12.53 crores. In the said case, Honourable Mr. Justice K.Swamidurai (retired) has been appointed as Receiver by the Tribunal. At the instance of one or other party including the shareholders certain orders were passed. An interlocutory application in I.A.No.53 of 2007 was filed by the petitioner for injunction against Receiver to pay the dividend to the shareholders. The Debt Recovery Tribunal III, Chennai, having rejected the prayer for interim relief, the petitioner moved an appeal before the Debt Recovery Appellate Tribunal, Chennai, but having not granted any relief therein, the present writ petition was preferred. 2. At the initial stage, one or other interim order was passed. But in the absence of any injunction, the Receiver, in the meantime paid dividend to the shareholders, who are respondents and appeared in this case. 3. The learned counsel for the petitioner raised one of the objection that the Receiver had no jurisdiction to pay dividend to the shareholders. But such a submission cannot be accepted in view of Section 19(18)(d) of the DRT Act 1993, which reads as follows:- "19(18) Where it appears to the Tribunal to be just and convenient, the Tribunal may, by order,- a)... ..... d)confer upon the receiver all such powers, as to bringing and defending suits in the Courts or filing and defending applications before the Tribunal and for the realization, management, protection, preservation and improvement of the property, the collection of the rents and profits thereof, the application and disposal of such rents and profits, and the execution of documents as the owner himself has, or such of those powers as the Tribunal thinks fit". 4. The other question raised was that there was no profit to pay the dividend. But, this Court under Article 226 cannot decide the question of fact which is dependent on account procedure to decide whether there was a profit or there was a loss. It is not disputed that the shareholders are entitled for dividend out of the profit of https://hcservices.ecourts.gov.in/hcservices/ Company if any. The amount which the shareholders are entitled to towards dividend cannot be treated to be asset of the company for adjustment under the DRT Act, 1993. 5. The learned counsel for the petitioner at this stage submitted that the petitioner should be allowed to raise the question of profit before the Tribunal and may show that there was no profit to pay the dividend to the shareholders. However, this submission was opposed by the learned counsel appearing for the shareholders and other respondents on the ground that the Tribunal had no jurisdiction to decide the question of profit or loss of the Company. 6. We have heard the learned counsel for the parties and already given finding with regard to the main questions raised by the petitioner. So far as the question whether there was profit or loss of the Company for providing dividend to the shareholders is left open for determination by the Court of competent jurisdiction/competent forum, subject to limitation, if any. It is for the petitioner to decide as to which form it may move for determination of the issue relating to profit or loss of the Company. 7. During the course of hearing, the learned counsel for the Bank submitted that the amount in terms of one time settlement has already been received. If such is the position, nothing subsist for persuasion in the original application. We left it open to the parties to bring the same to the notice of the Debt Recovery Tribunal for closure of the original application. 8. So far as the impugned order dated 23.11.2007 is concerned, in view of our observation, we are not inclined to interfere with the same and vacate the interim order that was passed in the present petition and left open to the shareholders to encash the dividend. But taking into consideration the fact that the petitioner has raised the question of law, we are inclined to delete the portion of the impugned order dated whereby the cost of Rs.50,000/- was imposed for payment of Rs.5,000/- each in favour of 10 shareholders. The writ petition stands disposed of with the above observations. But, there shall be no order as to costs. Sd/- Asst. Registrar. /true copy/ Sub Asst. Registrar. rg To 1. The Hon'ble Presiding Officer Debt Recovery Appellate Tribunal Chennai. https://hcservices.ecourts.gov.in/hcservices/ 2. The Hon'ble Receiver (in the matter of Annai Moogambigai Roller Flour Mills) Mr.Jusstice K.Swamidurai (Retd) 3. The authorised officer, M/s Karur Vysya Bank Limited Kodambakkam Branch, Chennai 24. 1 cc to Mr.P.H.Arvind Pandian,Advocate, SR.68815 1 cc to Mr.Satish Parasaran,Advocate, SR.68773 1 cc to Mr.K.S.Natarajan,Advocate, SR.68722 1 cc to Mr.A.V.Radharkrishnan,Advocate, SR.68655 1 cc to Mr.S.Subbiah,Advocate, SR.68608 1 cc to Mr.S.Thirvengadam,Advocate, SR.68607 1 cc to Mr.V.Ramakrishnan,Advocate, SR.68539 W.P.NO.36713 of 2007 NTK(CO) EM/12.12.08 https://hcservices.ecourts.gov.in/hcservices/