The High Court of Karnataka has rejected the petitions filed by Capt. G.R. Gopinath questioning the rejection of his appeal by the Debts Recovery Appellate Tribunal (DRAT), Chennai, which had held him liable to pay, as guarantor, the loan amount of ₹155.06 crore borrowed by Deccan Cargo and Express Logistics Pvt. Ltd. The company was operating under the brand name ‘Deccan 360’ before being ordered to wind up in 2013.
A Division Bench comprising Chief Justice Dinesh Maheshwari and Justice Krishna S. Dixit delivered the verdict.
On November 30, 2016, the DRAT directed Capt. Gopinath and his company Deccan Emerging Business Ventures Ltd. to pre-deposit ₹50 crore, which was approximated as 25% of the loan amount determined by the Debts Recovery Tribunal (DRT). This was in terms of Section 21 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993, for entertaining the appeal against the decree passed by the DRT in May that year.
The DRAT, on January 6, 2017, dismissed the appeal as the plaintiff failed to deposit the amount. It also rejected their plea for more time to make the pre-deposit, citing a petition filed in the High Court and personal financial hardship.
‘Ring of doubt’
On Capt. Gopinath’s statement in his application before the DRAT narrating his financial crunch and inability to easily sell his agricultural lands, the Bench observed: “This was apparently an evasive stand; the material particulars as to the nature and extent of agricultural lands, the details of their identification, and the particulars of the DRT case in which the State Bank of India has obtained injunction, have not been furnished. The very text of this paragraph gives rise to a thick ring of doubt as to the bona fide of the petitioners.”
It was contended before the High Court that the DRAT should not have insisted on a pre-deposit as per Section 21 of the Act, which was amended in 2016 — after the recovery proceedings had commenced. It was claimed on Capt. Gopinath’s behalf that the DRAT should have granted complete waiver of pre-deposit, as per the pre-amendment provision.
However, the court held that the amendment operated with retrospective effect. It also pointed out that the pre-amendment provision of the Act did not provide absolute and unconditional right to appeal without making pre-deposit. That provision had only given the discretion to waive or limit pre-deposit, the Bench said, also pointing out that the DRAT’s power to waive pre-deposit was restricted to 25% in the amended provision.
