DHARAM PAUL SETH Vs. CENTRAL BANK OF INDIA
LAWS(DR)-2007-12-8
DEBTS RECOVERY APPELLATE TRIBUNAL
Decided on December 04,2007

Appellant
VERSUS
Respondents

JUDGEMENT

M.C. Jain, J. (Chairperson) - (1.) THE appellants were directors of the respondent No. 2 -Company (The Fine Spinning & Weaving Mills Pvt. Ltd.). They, through this appeal, have challenged the order dated 11.9.2003 passed by the Tribunal below, issuing Recovery Certificate in favour of the respondent No. 1 -Bank (Central Bank of India) in accordance with the decree passed by Sub -Judge First Class, Amritsar in Suit No. 96/1980 - Central Bank of India v. The Fine Spinning & Weaving Mills Pvt. Ltd. and Ors.
(2.) THE facts may be stated shortly: The respondent No. 2 -Company availed of various credit facilities from the respondent No. 1 -Bank. However, financial discipline was not maintained and default was committed in repayment. The appellants as also the respondent No. 3 were the directors of the borrower respondent No. 2 -Company, who had furnished personal guarantees to secure the loans/advances granted to the respondent No. 2 -Company by the respondent No. 1 -Bank. Civil Suit 96/1980 for recovery of Rs. 25 lakh and odd was filed by the respondent No. 1 -Bank against the borrower Company, including the appellants and the other director -respondent No. 3. Judgment and decree were passed in that Suit by Sub -Judge, First Class, Amritsar on 13.11.1987. Pursuant to the decree, the Bank filed Execution Petition No. 25/1988 against judgment -debtors (JDs). After the execution proceedings were initiated by the Bank, the borrower Company was ordered to be wound up by the Hon'ble Bombay High Court by order dated 28.6.1990. The appellants then filed an application before the Executing Court under Section 446 of the Indian Companies Act that the Company had been ordered to be wound up and all the assets vested in the Official Liquidator. On 9.12.1993, the Executing Court passed an order that the execution proceedings could not be stayed against the JD Nos. 2 to 5 as they were jointly and severally liable to pay the decretal amount and that the execution proceedings, however, could not be continued against the JD No. 1 -Company in view of the provisions contained in Section 446 of the Companies Act as the Company was under winding up order and liquidator had also been appointed.
(3.) THE RDDBFI Act came to be passed in 1993 and the execution proceedings were transferred to the Recovery Officer, Jaipur. On 14.10.1998, the Recovery Officer, Jaipur passed an order to the effect that he had no jurisdiction to execute the decree in question as no Recovery Certificate had been issued in that behalf. The respondent No. 1 -Bank then filed an application (No. 185/2001) under Section 19 of the RDDBFI Act before the Tribunal below praying for issuance of Recovery Certificate on the basis of the decree in question. On constitution of DRT at Chandigarh, the case was transferred to it from DRT, Jaipur. The appellants appeared there and put forth their defence against the application filed by the Bank after the notice had been issued through publication in 'The Tribune' newspaper. After hearing both the parties and considering their contentions, the Tribunal below allowed the application and passed the impugned order issuing Recovery Certificate.;


Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.