R CHAMUNDEESWARI Vs. INDIAN OVERSEAS BANK

JUDGEMENT

(1.) FOR convenience, the Debt Recovery Tribunal and the Debt Recovery Appellate Tribunal are hereinafter referred to as "DRT" and "DRAT" respectively. Mrs.S. Pareealam, wife of Mr.A.K. Srikanth, is the petitioner in W.P.No,6149 of 2005. She is the Proprietrix of M/s. Verismo Impex. One Aishwaraya & Company has transferred a Letter of Credit No.10991 dated 8.11.2001. The applicant of such Letter of Credit is Supreme Impex Agency, Singapore and the beneficiary was Aishwaraya & Company. The petitioner also received another Letter of Credit from Supreme Impex vide L.C.No.LCDP 1910 issued by UCO Bank, Singapore. On the basis of these two Letters of Credit, she had approached theIndian Overseas Bank (in short "IOB") for a packing credit to a tune of Rs.50 lakhs. IOB had given credit to a tune of Rs.25 lakhs. In connection with the aforesaid transaction, IOB filed O.A.No,304 of 2003 before the DRT against M/s. Verismo Impex, represented by its Proprietrix and Mrs. Pareemalam and her husband A.K. Srikanth as borrowers and Dr. Shantha Ramakrishna, who was the guarantor. An ex-parte final order was passed by DRT on 31.5.2004 in such Original Application by allowing the claim of the bank. 1.1 The guarantor, who was Respondent No,4 in such Original Application, filed M.A.No,204 of 2004 for setting aside the ex-parte final order. She also filed M.A.No,203 of 2004 for condonation of delay in filing such application and M.A.No,207 of 2004 for stay of operation of the ex-parte final order. A common order was passed in such applications on 1.10.2004 by the DRT to the following effect:-

(2.) SUBSEQUENTLY, the interim order of stay in W.P.No,6149 of 2005 was made absolute, subject to condition of deposit of 50% of the amount. W.A.No,2109 of 2005 was filed against such order dated 10.8.2005, but such appeal was withdrawn with liberty to pursue the remedy available before the DRT / DRAT as apparent from order dated 21.12.2005. 2.1 In the meantime, M.A.No,52 of 2005 filed by the guarantor to review the order dated 1.10.2004, which was adjourned from to time, was taken up by the DRT and as per order dated 18.11.2005, the DRT, while refusing to review the condition relating to deposit of 25% of the claim amount, observed inter alia:-

(3.) IN this context, however, it has to be noted that in fact the DRT itself had passed an order setting aside the final order subject to condition of deposit of 50%. Such order was passed by coming to the conclusion that in the interest of justice it was necessary to give an opportunity to the respondents to contest the proceedings on merit. This order of the DRT was not challenged by the bank either by filing appeal before the DRAT or by filing petition under Article 226 / 227 of the Constitution of INdia before the High Court. IN other words, the conclusion of the DRT that it was necessary in the interest of justice to give opportunity to the Respondents 1 to 3 to contest the proceedings on merit had remained unchallenged and the propriety of the condition imposed was the only subject matter of challenge in the appeal which was filed by the respondents before the DRAT. The DRAT in its discretion and wisdom has modified such condition by reducing the amount to be deposited to Rs.15 lakhs. Such amount has also been accepted by the bank. While challenging such order of the DRAT reducing the amount to be deposited from Rs.25 lakhs to Rs.15 lakhs, it is not open to the bank to go behind the initial order passed by the DRT under which there was a direction to set aside the ex-parte final order. So far as the Bank is concerned, such order of the DRT setting aside the exparte decree had become final and only issue alive was regarding the legality of the condition which was the subject matter of appeal at the instance of the borrower. Under such circumstances, it would not be appropriate for us to go behind the initial order passed by the DRT, whereunder the ex-parte final order had been set aside, subject to condition.