Narayan Chandra Ghosh vs Uco Bank & Ors

Narayan Chandra Ghosh vs Uco Bank & Ors. on 18 March, 2011

Bench: D.K. Jain, H.L. Dattu

Held: Section 18(1) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 confers a statutory right on a person aggrieved by any order made by the Debts Recovery Tribunal under Section 17 of the Act to prefer an appeal to the Appellate Tribunal.

 However, the right conferred under Section 18(1) is subject to the condition laid down in the second proviso thereto. 

The second proviso postulates that no appeal shall be entertained unless the borrower has deposited with the Appellate Tribunal fifty per cent of the amount of debt due from him, as claimed by the secured creditors or determined by the Debts Recovery Tribunal, whichever is less. 

However, under the third proviso to the sub-section, the Appellate Tribunal has the power to reduce the amount, for the reasons to be recorded in writing, to not less than twenty-five per cent of the debt, referred to in the second proviso. 

Thus, there is an absolute bar to entertainment of an appeal under Section 18 of the Act unless the condition precedent, as stipulated, is fulfilled. Unless the borrower makes, with the Appellate Tribunal, a pre-deposit of fifty per cent of the debt due from him or determined, an appeal under the said provision cannot be entertained by the Appellate Tribunal. The language of the said proviso is clear and admits of no ambiguity.

 It is well-settled that when a statute confers a right of appeal, while granting the right, the Legislature can impose conditions for the exercise of such right, so long as the conditions are not so onerous as to amount to unreasonable restrictions, rendering the right almost illusory. Bearing in mind the object of the Act, the conditions hedged in the said proviso cannot be said to be onerous. 

Thus, the requirement of pre-deposit under sub-section (1) of Section 18 of the Act is mandatory and there is no reason whatsoever for not giving full effect to the provisions contained in Section 18 of the Act. 

In that view of the matter, no court, much less the Appellate Tribunal, a creature of the Act itself, can refuse to give full effect to the provisions of the Statute. 

The deposit under the second proviso to Section 18 (1) of the Act being a condition precedent for preferring an appeal under the said section, the Appellate Tribunal had erred in law in entertaining the appeal without directing the appellant to comply with the said mandatory requirement. [Para 8] [1030-C-H; 1031-A-C]

2. The argument that as the amount of debt due had not been determined by the Debts Recovery Tribunal, appeal could be entertained by the Appellate Tribunal without insisting on pre-deposit, is equally fallacious. 

Under the second proviso to sub-section(1) of Section 18 of the Act, the amount of fifty per cent, which is required to be deposited by the borrower, is computed either with reference to the debt due from him as claimed by the secured creditors or as determined by the Debts Recovery Tribunal, whichever is less. Obviously, where the amount of debt is yet to be determined by the Debts Recovery Tribunal, the borrower, while preferring appeal, would be liable to deposit fifty per cent of the debt due from him as claimed by the secured creditors. 

Therefore, the condition of pre- deposit being mandatory, a complete waiver of deposit by the appellant was beyond the provisions of the Act, as is evident from the second and third proviso to the said Section. At best, the Appellate Tribunal could have, after recording the reasons, reduced the amount of deposit of fifty per cent to an amount not less than twenty five per cent of the debt referred to in the second proviso. 

The order of the Appellate Tribunal, entertaining appellant's appeal without insisting on pre-deposit was clearly unsustainable and, therefore, the decision of the High Court in setting aside the same cannot be flawed. In the notice issued to the appellant under Section 13(2) of the Act, the debts due from the appellant as on 25th September, 2006 was Rs. 52,42,474/-. Since in the instant case, the Debts Recovery Tribunal had not determined the debt due, the appellant is directed to deposit with the Appellate Tribunal an amount of Rs. 15 lakhs within a period of four weeks.

Thereafter, his appeal shall be entertained and decided on merits. In case of failure of the appellant to make the said deposit within the time granted, his appeal before the Appellate Tribunal would stand dismissed and it would be open to the respondent bank to take further steps in the matter in accordance with law. [Paras 9,10, 11] [1031- D-H; 1032-A-D]

CIVIL APPELLATE JURISIDICTION : Civil Appeal No. 2681 of 2011.

From the Judgment & Order dated 7.12.2010 of the High Court at Calcutta in C.O.No. 3608 of 2009.

Ranjan Mukherjee, S. Bhowmick, S.C. Ghosh for the Appellant.

Partha Sil for the Respondents.