TaxTMI 
TaxTMI 
2019 (12) TMI 221
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....etherlands B.V. acquired 69.5% shareholding in Bush Foods Overseas Pvt. Ltd. (Bush Foods) Respondent No.2, whose promoter was Mr. Virkaran Awasty (Respondent No.3). It is stated that as part of the transaction, the Petitioner furnished a corporate guarantee in favour of a consortium of nine banks to the extent of 70% of the credit limit extended by the said banks to Bush Foods. It is stated that Bush Foods is currently under winding up and that a Provisional Liquidator has been appointed by this Court in Company Petition 267 of 2014. The consortium banks invoked the corporate guarantee furnished by the Petitioner which it duly honoured by making a total payment of Rs. 442.64 crores and US Dollars 8.142 million to the consortium banks. 3. The case of the Petitioner is that the consortium banks were complicit in the fraud played by Bush Foods and had fraudulently procured the aforementioned corporate guaranteed from the Petitioner, knowing fully well the precarious financial conditions of Bush Foods. The Petitioner filed CS (OS) (COMM) No. 9 of 2018 in this Court seeking inter alia refund of the sums paid by it to the consortium bank members. An interim order dated 14th September 2....
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....porate guarantee. 6. By an order dated 6th May, 2019 the DRT held that ING Vysya Bank was entitled to recover total sum of Rs. 118.85 crores. It held the Petitioner to be liable for 70% of the said amount, after taking into account a sum of Rs. 35.93 crores already paid by the Petitioner in relation to the loans of EXIM Bank and DBS Bank. 7. Aggrieved by the above order, the Petitioner filed before the DRAT Appeal No.333 of 2019 along with the aforementioned application IA No.764 of 2019 for waiver of the pre-deposit. By the impugned order dated 7th August 2019, the DRAT declined to grant a waiver of the pre-deposit and directed the Petitioner to deposit 50% of the amount decreed by the DRT by the order dated 6th May, 2019. However, the Petitioner was given 4 weeks‟ time for making the pre-deposit in accordance with law. It was further directed by the DRAT that in case such deposit was made, it would be kept in fixed deposit for a period which should fetch the maximum rate of interest. Notice was issued in the appeal, subject to the Petitioner complying with the direction regarding pre-deposit. 8. Mr. N.K. Kaul, learned Senior Counsel appearing for the Petitioner, submi....
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.... with the DRAT by the Appellant of 50% of the amount due from such Appellant as determined by the DRT under Section 19 of the RDB Act. The proviso to Section 21 permits the DRAT to reduce the amount of pre-deposit up to 25% of the amount of such debt but not beyond that. In other words, the discretion of the DRAT is only to reduce the amount of pre-deposit from 50% of the amount of debt to 25% of the amount of debt, but not to waive the requirement of pre-deposit. 13. It should be noticed that appeals to the DRAT can be preferred not only against order of the DRT under Section 19 of the RDB Act but also against the orders of the DRT under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI Act). The appeal to the DRAT from an order under the SARFAESI Act is in terms of Section 18 of the SARFAESI Act which reads as under: "18. Appeal to Appellate Tribunal (1) Any person aggrieved, by any order made by the Debts Recovery Tribunal under section 17, may prefer an appeal along with such fee, as may be prescribed to an Appellate Tribunal within thirty days from the date of receipt of the order of Debts....
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....ry Tribunal, whichever is less. However, under the third proviso to the sub-section, the Appellate Tribunal has the power to reduce the amount, for the reasons to be recorded in writing, to not less than twenty-five per cent of the debt, referred to in the second proviso. Thus, there is an absolute bar to entertainment of an appeal under Section 18 of the Act unless the condition precedent, as stipulated, is fulfilled. Unless the borrower makes, with the Appellate Tribunal, a pre-deposit of fifty per cent of the debt due from him or determined, an appeal under the said provision cannot be entertained by the Appellate Tribunal. The language of the said proviso is clear and admits of no ambiguity. It is well-settled that when a Statute confers a right of appeal, while granting the right, the Legislature can impose conditions for the exercise of such right, so long as the conditions are not so onerous as to amount to unreasonable restrictions, rendering the right almost illusory. Bearing in mind the object of the Act, the conditions hedged in the said proviso cannot be said to be onerous. Thus, we hold that the requirement of pre-deposit under sub-section (1) of Section 18 of the Act ....
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....(supra), the DB of this Court was dealing with a challenge to an order of the DRAT which rejected an application by the Petitioner for waiver of pre-deposit in terms of Section 18 of the SARFAESI Act. This Court noticed the aforementioned judgment of the Supreme Court in Narayan Chandra Ghose (supra), but distinguished it since it was of the view that the Petitioner before it did not owe any amount whatsoever and that its dues had already been realised by the bank. Therefore, it was held that the judgment of the Supreme Court was not applicable. This is further made explicit in para 17 of the said Judgment which reads as under: "17. It is a conceded case of the respondents that none of the eventualities exist as the amount due to the Bank has been recovered. The application has been opposed by the respondents and decided by the DRAT primarily on an apprehension that since, the petitioner has challenged the auction, the same may be set aside. In other words, the sale remains in a nebulous stage and the sale will achieve finality/confirmed only when the legal proceedings come to an end." 18. This Court, therefore, proceeded entirely on the basis that no amount was due from the P....
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....ensing with the deposit of duty demanded or penalty levied under the first proviso, the Commissioner (Appeals) shall, where it is possible to do so, decide such application within thirty days from the date of its filing." 22. Thus, unlike Section 21 of the RDB Act, the first proviso to Section 35F of the CE Act requires the Commissioner (Appeals) or the CESTAT to consider if the deposit of duty demanded or penalty levied "would cause undue hardship to such person‟ and gives the power to the Commissioner (Appeals) or the CESTAT "to dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interest of the revenue.‟ This discretionary power to waive the deposit is missing in Section 21 of the RDB Act. The decision in Benara Valves Ltd. v. Commissioner of Central Excise (supra) in fact interprets the expressions "undue hardship to such person‟ and to "safeguard the interest of the revenue‟ and points out that "the rival stands have to be examined in detail with the reference to the material on record and that the Tribunal while dealing with the application has to consider materials to be placed by the asses....