P K JEGDEV Vs. INDIAN BANK

JUDGEMENT

(1.) Ext.P3 proceedings of the Debts Recovery Appellate Tribunal, Chennai is under challenge in this original petition.

(2.) The facts relevant for disposal of the case are the following: The petitioner is the grandson of one N.Sundareswaran, who was the Managing Partner of a firm called M/s.Sundareshwaran, which enjoyed credit facilities from Kollam branch of Indian Bank (the Bank). When the firm committed default in remitting the dues to the Bank, proceedings have been initiated by the Bank for realisation of the amounts due. While so, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the Act) came into force. When the Act came into force, the Bank initiated proceedings simultaneously against the mortgaged properties under the Act as well and in furtherance to the said proceedings, an item of property was sold to the second respondent on 24/07/2008. The petitioner who claims independent right over the said property challenged the sale in an application under Section 17 of the Act before Debts Recovery Tribunal, Ernakulam. The application preferred by the petitioner was dismissed by the Tribunal in terms of Ext.P1 order. Aggrieved by Ext.P1 order, the petitioner preferred an appeal under Section 18 of the Act before the Debts Recovery Appellate Tribunal, Chennai. The second proviso to sub-section (1) of Section 18 of the Act mandates the borrowers who prefer appeals challenging orders passed under Section 17 of the Act to deposit 50% of the amount of debt due from them, as claimed by the secured creditors or as determined by the Debts Recovery Tribunal, whichever is less, for the Appellate Tribunal to entertain their appeals under Section 18 of the Act. Further, Rule 13 of the Security Interest (Enforcement) Rules, 2002 (the Rules) prescribes different fee schedules for preferring appeals under Section 18 of the Act for borrowers as also third parties who have nothing to do with the debt. In terms of the said provision, the fee payable for the appeal under Section 18 of the Act for third parties, who have nothing to do with the debt, is Rs.1,250/- plus Rs.125/- for every Rs.1,00,000/- or part thereof in excess of Rs.10,00,000/-, subject to a maximum of Rs.50,000/-. Since the petitioner has nothing to do with the debt due to the Bank and since the debt due to the Bank, for the recovery of which proceedings under the Act have been initiated, is far in excess of Rs.10,00,000/-, the petitioner instituted the appeal without pre-deposit under sub-section (1) of Section 18 of the Act, paying a fee of Rs.50,000/-. The registry of the Appellate Tribunal, however, maintained the stand that the petitioner has to comply with the requirement of pre-deposit under sub-section (1) of Section 18 of the Act, so as to enable the Tribunal to entertain the appeal preferred by him. The registry also maintained that the petitioner is liable to pay a fee for the appeal as applicable to borrowers, for, he cannot be regarded as a third party. The petitioner did not agree with the stand taken by the registry. The matter was consequently placed before the Appellate Tribunal and the Appellate Tribunal, in terms of the impugned proceedings, accepted the stand of the registry and directed the petitioner to pay the deficit fee and comply with the requirement of predeposit under the second proviso to sub section (1) of Section 18 of the Act. The petitioner is aggrieved by the said proceedings of the Appellate Tribunal.

(3.) Heard the learned counsel for the petitioner, the learned Standing Counsel for the Bank as also the learned counsel for the second respondent.