JITENDRA GIRDHARILAL MEHTA vs INDIAN BANK (ALLAHABAD BANK) on 31 October 2023

1. By way of the present Application, the Applicant has prayed to waive the pre-deposit of

50% of the amount due to the Bank to entertain the present Appeal as per Section 30A of the Recovery of Debts and Bankruptcy Act, 1993 (for short “the Act 1993).

2. Ld. Counsel for the Applicant has submitted that the Applicant is neither the borrower, guarantor nor mortgagor for the facilities granted by the Respondent No.1 and no personal debts due to the Bank is pending even after demise of Sarojben Mehta therefore, the Applicant will not fall in the category of the borrower/a person against whom any debt is due to the Bank as provided under Section 30 A of the Act, 1993, thus, the Applicant is not liable to deposit any amount to entertain the present Appeal.

3. He also submitted that even otherwise, in case this Tribunal comes to the conclusion that the Applicant is required to deposit the fifty percent of the debt due then as per the provision of Section 50 of the CPC, the Applicant is liable to the extent of the inheritance of the deceased. He submitted that there are four legal heirs of the deceased Saraojben Mehta i.e. the Applicant, Respondent No.8 & 9 and one married daughter Mrs. Kirti Vakharia, thus, the Applicant is liable to deposit upto the ¼ of the total value of the property in question.

4. On the other hand, Ld. Counsel for the Respondent No.1 has strongly objected on the present application and submitted that the Applicant being a legal heir duly fall in the category of the borrower and thus, the Applicant is liable to comply with the condition of pre- deposit as provided under Section 30A of the Act, 1993. He also stated that Hon’ble Supreme Court has already decided that the provision of Section 30A of the Act, 1993 is mandatory therefore, he contends that this Tribunal has no power to waive the pre-deposit condition as provided under Section 30A of the Act, 1993.

5. He further submitted that in so far as prayer of the Applicant that the amount may be first determine as provided under Section 50 of the CPC and thereafter, the Applicant shall deposit the amount however, such prayer is not part of the application and thus, the prayer which is not part of the application is not maintainable and therefore, he prayed that the present IA may be dismissed.

6. Ld. Counsel for the Respondent No.14, 16 and Auction Purchasers also objected to the present IA.

7. Heard both sides and perused the record.

8. Before proceeds further for convenience Section 30A of the Act, 1993 is extracted herein below: “30A. Where an appeal is preferred against any order of the Recovery Officer, under section 30, by any person from whom the amount of debt is due to a bank or financial institution or consortium of banks or financial institutions, such appeal shall not be entertained by the Tribunal unless such person has deposited with the Tribunal fifty per cent. of the amount of debt due as determined by the Tribunal” (emphasis provided)

9. Thus, in terms of Section 30A of the Act, 1993, for entertaining an Appeal, the person against whom any amount of debt due, has to deposit 50% of the amount of debt due.

10. By way of the present waiver application, the Applicant has mainly raised the objection that Applicant is neither the borrower, guarantor nor mortgagor for the facilities granted by the Respondent No.1 and no personal debts due to the Respondent No.1 is pending even after demise of Sarojben Mehta therefore, the Applicant will not fall within the category of the borrower/a person against whom any debt is due to the Bank as provided under Section 30 A of the Act, 1993 thus, the Applicant is not liable to deposit any amount to entertain the present Appeal.

11. Since, admittedly the Applicant is claiming his right on the property in question being legal heir of one of the borrower i.e. deceased Sarojben Mehta and this is also an admitted fact that the property in question is a mortgaged property with the bank in the impugned account thus, the contention of the Applicant that the Applicant is not connected with the debt due in the impugned account is not sustainable.

12. In the case of Sh. Rajan Gupta Vs. Bank of India and Anr. (Writ Petition Civil No.1508/2007) while considering an issue pertaining to the demand notice under Section 13(2) to the legal heirs, Hon’ble Delhi High Court has inter alia held that: “………By virtue of the above provision, a secured creditor has been empowered to require a "borrower", by a notice in writing, to discharge in full his liabilities to the secured creditor within 60 days from the date of notice, failing which the secured creditor shall be entitled to exercise all or any of the rights under Sub-section (4) of Section 13 of the said Act. The question that arises is what is meant by the word "borrower" appearing in the above provision. Section 2(f) defines "borrower" in the following manner:

2. Definitions. - (1) In this Act, unless the context otherwise requires,- xxxx xxxx xxxx xxxx xxxx

(f) "borrower" means any person who has been granted financial assistance by any bank or financial institution or who has given any guarantee or created any mortgage or pledge as security for the financial assistance granted by any bank or financial institution and includes a person who becomes borrower of a securitisation company or reconstruction company consequent upon acquisition by it of any rights or interest of any bank or financial institution in relation to such financial assistance; xxxx xxxx xxxx xxxx xxxx

9. It is apparent that the definition comprises of two parts. The first part follows the word "means" and the second part follows the words "and includes". Insofar as the first part is concerned, the word "borrower" has reference to:

(1) any person who has been granted financial assistance by any bank or financial institution; or (2) any person who has given any guarantee; or (3) any person who has created any mortgage or pledge as security for the financial assistance granted by any bank or financial institution. The second part of the definition is an inclusive definition and brings within the ambit of the word "borrower", a person who becomes a borrower of a securitisation company or reconstruction company consequent upon acquisition by it of any rights or interests of any bank or financial institution in relation to such financial assistance.” (emphasis provided)

13. Hon’ble High Court Delhi further elaborated the definition of the “borrower” which include the legal heirs and held that:-

“17. Now, the word "borrower" as used in Section 13(2) of the said Act is further qualified by the words "who is under a liability to a secured creditor under a security agreement". "Security agreement" has been defined in Section 2(zb) of the said Act as under:

2. Definitions. - (1) In this Act, unless the context otherwise requires,- xxxx xxxx xxxx xxxx xxxx (zb) "security agreement" means an agreement, instrument or any other document or arrangement under which security interest is created in favor of the secured creditor including the creation of mortgage by deposit of title deeds with the secured creditor. xxxx xxxx xxxx xxxx xxxx Clearly, security agreement includes the creation of mortgage by deposit of title deeds with the secured creditor. Therefore, there is no difficulty in holding that had Smt. Parvati Devi been alive, she would fall within the expression "borrower, who is under a liability to a secured creditor under the security agreement". The question that has been posed in this petition is whether upon her death, her legal heirs would also be covered by the same expression?

18. Section 2(2) of the said Act reads as under:

(2) Words and expressions used and not defined in this Act but defined in the Indian Contract Act, 1872 (9 of 1872) or the Transfer of Property Act, 1882 (4 of 1882) or the Companies Act, 1956 (1 of 1956) or the Securities and Exchange Board of India Act, 1992 (15 of 1992) shall have the same meanings respectively assigned to them in those Acts. Section 2(f) speaks of mortgages. The expressions "mortgage", "mortgagor" and "mortgagee" etc. have been defined in Section 58 of the Transfer of Property Act, 1882. Accordingly, by virtue of Section 2(2) of the said Act, these words would have the same meanings under the said Act. Furthermore, Section 59A of the Transfer of Property Act, 1882, as pointed out by the learned Counsel for the respondent, clearly stipulates that unless otherwise expressly provided, references to "mortgagors" and "mortgagees" shall be deemed to include references to persons deriving title from them respectively. Therefore, the meaning assigned to the word "mortgagor" under the Transfer of Property Act, 1882 refers to not only the "mortgagor", but includes references to persons deriving title from them. The same meaning has to be given under the said Act in view of the clear provisions of Section 2(2)

thereof. The position, therefore, with regard to the equitable mortgage created by Smt. Parvati Devi is that her heirs/legal representatives would also be deemed to be mortgagors. That being the position, the petitioners would fall within the meaning of the word "borrower" as defined in Section 2(f) of the said Act.” (emphasis added)

14. Thus, in view of the above judgment, if the deceased person created a mortgage, the legal heir of the deceased person would also be deemed to be mortgagors and the same would also fall within the meaning of the borrower.

15. The Hon’ble Apex Court in the matter of M/s Transcore Vs Union of India (2008) 1 SCC 125 has held that the provisions of the SARFAESI Act, 2002 and the Act of 1993 are complementary to each other.

16. The second contention of the Applicant is that as per Section 50 of the CPC, the Applicant is liable to the extent of the inheritance of the deceased and also there are four legal heirs of the deceased Saraojben i.e. the Applicant, Respondent No.8 & 9 and one married daughter Mrs. Kirti Vakharia, thus, the Applicant is liable to deposit upto the ¼ of the total value of the property in question/the bid amount.

17. However, the said contention of the Applicant is also not sustainable. Firstly, as rightly stated by Ld. Counsel for the Respondent No.1 that the Applicant did not prayed in the present application that the amount may be adjudicated which may be deposited by the Applicant. Secondly in case the plea of the Applicant is taken that the amount be adjudicated, the said plea is also not maintainable as this Tribunal in the final order in OA No.183/2004 has already adjudicated the total debt dues.

18. Even otherwise, on considering the best case of the Applicant that the Applicant has inherited only the present property from the deceased borrower then the Applicant is required to deposit the fifty percent of the amount as received by the Bank for entertaining the Appeal in question however, the Applicant admittedly failed to deposit the same.

19. In view of the above, there is no merit in the application for waiver, even otherwise the Act, 1993 do not provide any provision for waiver of pre-deposit, therefore, the present application is hereby dismissed and in consequences the appeal is also hereby dismissed. File be closed and consigned to the record room. Copy of this order be sent to the Ld. Recovery Officer for intimation. P.O. DRT-I