VBC 1 wp8089.11-11.10 IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE WRIT PETITION NO.8089 OF 2011 M/s.Horizon Flora (India) Ltd. & Ors. ..Petitioners versus Dena Bank & Anr. ..Respondents. ..... Mr.Soli Cooper, Senior Advocate with Mr.Bipin Joshi for the Petitioners. Mr.V.P. Shintre for Respondent No.1. Mr.Cyrus Ardeshir with Mr.Vinod Kothari i/b. Apex Law Partners for Respondent No.2. ..... CORAM : DR.D.Y.CHANDRACHUD & A. A. SAYED, JJ. October 11, 2011. P.C. : The First Respondent has instituted an application before the Debts Recovery Tribunal (DRT) of Pune for recovery of its outstanding dues in the amount of Rs.16.09 crores with interest. During the pendency of the application, the First Petitioner was ordered to be wound up by an order of the Company Court which was confirmed in appeal. The Petitioners filed a Special Leave Petition before the Supreme Court. The DRT by an order dated 23 June 2011 directed the First Respondent to reconstruct its accounts in the following terms : VBC 2 wp8089.11-11.10 “38. From the above discussion, it is clear that liability of defendant Nos.1 to 5 can only be arrived at by restructuring the account. The applicants are therefore, directed to reconstruct the account in the following manner- 1) In the Cash Credit Account, interest shall be levied at the agreed rate or the rate prescribed by The Reserve Bank of India with ½ yearly rests and from 1.10.2003 on wards @7.75% per annum with ½ yearly rest. 2) In Term Loan account the FCDL facility should carry interest @2.60% per annum from 04.12.2000 to 12.4.2003 and thereafter @ agreed rate or the rate prescribed by The Reserve Bank of India with ½ yearly rests. 3) In FITL facility the rate of interest shall be @ agreed rate or the rate prescribed by The Reserve Bank of India with ½ yearly rests and from 01.10.2003 @11% per annum with ½ yearly rests. 4) The bank shall not charge processing charges to all the accounts.” In that view of the matter, when the proceedings came up before the Supreme Court, the Special Leave Petition was allowed and the order of winding up was set aside with the following directions: “By consent, the matter is taken up for hearing. Leave granted. Heard learned counsel on both sides. In the present case,the Debts Recovery Tribunal[‘DRT’, for short] has passed an order on 23rd June, 2011. This VBC 3 wp8089.11-11.10 order is passed after the impugned order was passed on 27th October, 2010.by the Bombay High Court ordering winding up of the Company. That order of the Division Bench was passed on the basis of the Accounts, which then existed. Since then, by order dated 23rd June, 2011, the DRT has ordered Dena Bank to reconstruct its Accounts. That reconstruction has been done by Dena Bank. However, we are informed that four weeks’ time has been given by the DRT vide order dated 14th July, 2011, to the appellant to object to the reconstruction of Accounts. In the above circumstances, at this stage, we cannot allow the Company to be wound up till the Accounts stand finally reconstructed. We make it clear that once the DRT accepts/decides the reconstruction of Accounts, the order of DRT will be placed once again before the Company Court in Company Petition No.189 of 2008. The Company Court will then decide whether the Company should be wound up or not on the basis of the reconstructed Accounts and, while doing so, it will take into account the order passed by DRT. However, it is made clear that, against the decree which may be passed by the DRT on reconstruction of the Accounts, the appellant has a right to prefer an appeal, subject to the deposit of decretal amount. For the afore-stated reasons, the impugned order passed by the Division Bench is hereby set aside and this civil appeal is, accordingly, allowed.” As the observations of the Supreme Court would indicate, pursuant to the directions of the DRT in its order dated 23 June 2011, the First Respondent has carried out reconstruction of the accounts. VBC 4 wp8089.11-11.10 Thereupon, the Petitioners are entitled to submit their objections to the reconstruction of the accounts before the DRT. The Supreme Court has made it clear that once the DRT accepts or, as the case may be, decides upon the reconstruction of the accounts, and a final decree is passed by the Tribunal, the Petitioners would have the remedy of a substantive appeal before the Debts Recovery Appellate Tribunal (DRAT). 2. The Petitioners moved the DRAT against the order of the Tribunal dated 23 June 2011, directing reconstruction of the accounts. The appeal was dismissed by the DRAT by its order dated 16 September 2011 with the observation that the order of the Tribunal was only a step towards the resolution of the disputes and that it does not prejudice the interest or rights of the Petitioners. 3. Counsel appearing on behalf of the Petitioners submits that the order of the Tribunal does, as a matter of fact, contain an adjudication of their rights and consequently an appeal before the DRAT was maintainable. VBC 5 wp8089.11-11.10 4. The Tribunal has directed a reconstruction of the accounts at this stage. This direction is in aid of the final resolution of the controversy before the Tribunal which is still to take place. In terms of the directions of the Supreme Court, and as ordered by the Tribunal itself, the Petitioners would have an opportunity to place their objections before the Tribunal in regard to the reconstructed accounts. The Tribunal undoubtedly would have to hear the Petitioners before it passes a final judgment and order on the Original Application. In the event that the Petitioners are aggrieved by the final order of the Tribunal, an appellate remedy would then be available under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. We are not inclined at the present stage either to consider the merits of the objections which the Petitioners have to the observations contained in the order of the Tribunal or to express any opinion thereon. In the event that a final decree is passed by the Tribunal, the discipline of the Act requires that pre-deposit is made in appeal against the order, subject to the power of the Tribunal to waive the deposit on grounds relevant and germane. Any adjudication at this stage VBC 6 wp8089.11-11.10 would obviate that process which we are not inclined to undertake. The order of the Tribunal makes it abundantly clear in the opening words of paragraph 38 of the order that it is only after the reconstructed accounts are submitted to the Tribunal that the liability of Original Defendant Nos.1 to 5 could be arrived at. 4. We accordingly dispose of this petition by directing that (i) The objections of the Petitioners to the reconstructed accounts shall be considered by the Tribunal; and (ii) The Tribunal shall hear all the parties before it concludes the proceedings on the Original Application and passes a final order. No order as to costs. ( Dr.D.Y.Chandrachud, J.) ( A. A. Sayed, J.)