TaxTMI 
TaxTMI 
2017 (3) TMI 1895
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....dent No.3 Company, including credit facilities in the form of working capital limits, comprising fund based and non-fund based limits aggregating to Rs.1100.00 million. Respondents 1 and 2 executed Deeds of Guarantee dated October 21, 2011 and October 29, 2012 containing inter-alia the following term: "2. The Guarantors further agree that unless the said Banks shall otherwise previously approve in writing the Guarantors shall not: ...... (v) Leave India for employment or business or for long term stay abroad so long as any amounts remain outstanding under the Facility together with interest and other dues and charges including prepayment charges as per the rules of the said Banks then in force. Whether the stay is long term or not shall be decided solely by the said Banks." 3. According to the petitioner, the respondents 1 and 3 also executed an Agreement to Mortgage dated October 29, 2012 whereby they agreed to mortgage their properties (5 in number) mentioned therein. However, it is a fact that they created a mortgage only in respect of three of them and failed to mortgage the remaining two properties. In terms of the Credit Facility Agreements, resp....
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....d 2 and set aside the impugned order of the learned Tribunal in O.A No. 125/2014 in so far as it restrained the respondents 1 and 2 from travelling abroad without the permission of the Tribunal. Submissions:- 5. Mr. Abhinav Vasisht, learned Senior Counsel for the petitioner Bank would submit that Section 19(25) of the Act of 1993 read with Rule 18 of the Debt Recovery Tribunal (Procedure) Rules, 1993 confers powers on the Tribunal to pass any such order to secure inter-alia the ends of justice. Section 22(1) of the Act of 1993 further provides that the Tribunal is not bound by the procedure laid down by the Code of Civil Procedure, 1908. Therefore, in adjudicating the disputes arising under the Act, the Tribunal, in exercise of the power under Sections 19(25) and 22(1) of the Act of 1993, can pass such orders as to secure the ends of justice and in doing so, the Tribunal is only bound to observe the Principles of Natural Justice and is not bound by CPC. He would rely upon the judgments in the case reported as (1999) 4 SCC 710 Industrial Credit and Investment Corporation of India Ltd vs. Grapco Industries Ltd and ors, (1999) 6 SCC 755 Allahabad Bank, Calcutta vs. Radha Krishna....
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....er that has been put on the powers of the Tribunal is that such orders should relate only to ensure the implementation of the provisions of the Act of 1993, particularly to protect the interest of the Banks/Financial Institutions to recover the dues. He would state that in the instant case, the debt/liability of the respondent No.3 is not disputed insofar as the acknowledgement of debt dated December 13, 2013 is concerned. He states it is further an admitted position that as per the Agreement dated October 29, 2012 respondents 1 and 3 had to create mortgage over five properties. However, mortgage was only created with respect to three of the said properties. He would state, in the light of the above stated position of law and facts, the interests of the petitioner are currently not protected or secured as there is not enough securities in its favour to recover its due and the Tribunal did possess the power to pass an order to restrain the respondents 1 and 2, who are the Guarantors under the Deeds of Guarantee dated October 21, 2011 and October 29, 2012 from travelling abroad without taking its permission, to secure the ends of justice. He would state, that the Madras High Court in....
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..../Executive action i.e the Passport Authority, and that too without following any procedure established by law. In the instant case, the power being exercised is by a Tribunal, it has been empowered under a statute to pass such an order. In other words, an order passed in exercise of this power cannot be said to be violating the fundamental rights of the respondents. In support of his submission, he would rely upon the case reported as 1966 (3) SCR 744 Naresh Shridhar Mirajkar and Ors v. State of Maharashtra and Ors. 11. Without prejudice, it is his contention that one of the distinguishing feature in the case in hand, is that the Deeds of Guarantee executed between respondents 1 and 2 and the petitioner contain a specific Covenant, whereby the said respondents have themselves agreed not to leave India for employment or business or for long term stay abroad so long as any amounts remain outstanding under the Working Capital Facility without the permission of the ICICI. He states that freedom to enter into a contract cannot be curtailed or curbed relying on fundamental rights under the Constitution against State action. This proposition of law has been laid down by the Supreme Cou....
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....ure established by law and without meeting the test of reasonableness, non-arbitrariness and exceptions carved out in Article 19(6) of the Constitution of India. According to him, the right to go abroad forms part of Article 21 in view of the judgment of the Supreme Court in Satwant Singh Sawhney v. D. Ramarathnam AIR 1967 SC 1836. He would also rely upon Maneka Gandhi v. Union of India & another 1978 (1) SCC 248, wherein the Supreme Court while approving and considering the Satwant Singh's case has unanimously upheld the aforesaid principles. In substance, it is his submission that Article 21 of the Constitution safeguards the right to go abroad against executive action which is not supported by law and law here means "enacted law" or "state law". Thus, no person can be deprived of his right to go abroad unless there is a law made by the State prescribing the procedure for so depriving him and the deprivation is effected strictly in accordance with such procedure. He states, sub-section (12), (13A), (17) and (18) of Section 19 of the Act of 1993 does not empower the Tribunal to issue any prohibitory order prohibiting the respondents Guarantors from leaving the country without ....
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....urnover and the profits. He would rely upon the following judgments in support of his contention:- (i) AIR 1967 SC 1836 Satwant Singh Sawhney v. D. Ramarathnam; (ii) 1978 (1) SCC 248 Maneka Gandhi v. Union of India & another; (iii) 2004 (6) SCC 186 Collector of Central Excise Calcutta vs. Alnoori Tobacco Products & Another; (iv) 2004 (72) DRJ 440 (Single Judge) A.S. Mittal v. PO, Debt Recovery Tribunal and ors; (v) 154 (2008) DLT 77 Sanjeev R. Apte v. IFCI Ltd; (vi) 163 (2009) DLT 369 (Division Bench) Gurbachan Singh Saluja v. Debt Recovery Tribunal & Ors; (vii) AIR 2011 Gujarat 81 (Division Bench) State Bank of India vs. Praful Chandra Patel; (viii) 2008 (3) SCC 674 Suresh Nanda v. Central Bureau of Investigation; (ix) AIR 2002 Karnataka 118 (Single Judge) ICICI Ltd Bangalore vs. Passport Officer, Bangalore & ors. 17. Having heard the learned counsel for the parties, the question, which arise for consideration is whether the Tribunal constituted under the Recovery of Debts Due to Banks & Financial Institutions Act, 1993 ("Act of 1993") has the power in terms of the provisions of the sai....
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....e order was made, the Tribunal may order the properties of the person guilty of such disobedience or breach to be attached and may also order such person to be detained in the civil prison for a term not exceeding three months, unless in the meantime the Tribunal directs his release. (18) Where it appears to the Tribunal to be just and convenient, the Tribunal may, by order (a) appoint a receiver of any property, wither before or after grant of certificate for recovery of debt; (b) remove any person from the possession or custody of the property; (c) commit the same to the possession, custody or management of the receiver; (d) confer upon the receiver all such powers, as to bringing and defending suits in the courts or filing and defending application before the Tribunal and for the realization, management, protection, preservation and improvement of the property, the collection of the rents and profits thereof, the application and disposal of such rents and profits, and the execution of documents as the owner himself has, or such of those powers as the Tribunal thinks fit; and (e) appoint a Commissioner for preparation of an inventory of the pro....
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....f the Defendant and his detention in prison; (c) appointing a receiver for the management of the movable or immovable properties of the Defendant. Under Rule 18 of the Debts Recovery Tribunal (Procedure) Rules, 1993, the Tribunal is empowered to make such orders or to give such directions as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure the ends of justice. 19. In support of his contention, Mr. Vashist had relied upon the judgments, being Industrial Credit & Investment Corporation of India Ltd. (supra), Allahabad Bank, Calcutta (supra) and Raj Narain Saxena (supra) and Rajendra Prasad Gupta (supra). 20. In Industrial Credit & Investment Corporation of India Ltd. (supra), the petitioner therein had filed an application under Section 19 of the Act of 1993 claiming dues of debt owed by the respondents therein. The Tribunal granted an ex-parte order of injunction restraining the respondents therein from transferring or alienating the property hypothecated to the ICICI Bank. The High Court set aside the order of the Tribunal, which order was challenged before the Supreme Court. The issue arose for considerati....
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....unal are mainly referred to in Sub-clause (1) of Section 22 of the Act which says that the Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure but shall be guided by principles of natural justice. As stated in Grapco by this Court, the Tribunal can exercise powers contained in the Code of Civil Procedure and can even go beyond the Code as long as it passes orders in conformity with principles of natural justice. We may add that Section 19(6) does not in any manner limit the generality of the powers of the Tribunal under Section 22(1). It merely states that certain types of injunction or stay orders may be passed by the Tribunal. It is to be noticed that Sub-clause (6) of Section 19 starts with the words - "The Tribunal may make an interim order..." The provision is an enabling provision and merely states that certain types of injunction or stay orders mentioned therein can be passed by the Tribunal but such an enumeration cannot, in our opinion, be deemed to be exhaustive nor restricting the Tribunal's powers only to those types of injunction or stay orders. The width and amplitude of the powers are to be gathered from Section 22(1) as stated i....
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....il Procedure, in these judgments also, the Court has inter-alia held that inherent power pre-supposes that any order that is not prohibited, is, within the competence of the Court. 25. Mr. Vasisht, who also relied upon the judgment in the case of Annai Jayabharathi (supra), the Kerala High Court held, if a power is given to arrest the judgment debtor and to detain him in prison for enforcing the realisation of a debt ordered to be paid in decree by issuance of a Certificate under Section 19(7) of the Act, it carries with it an incidental power to prevent a person from going abroad, as an interim measure, so as to give effect to the power of ordering arrest of the judgment debtor and his detention in prison conferred by Section 25(b) of the Act. Otherwise, the said provision becomes redundant and otiose. The Kerala High Court also held that Section 22(1) has to be read in the context that it relieves the DRT from the bondage of rigour of procedure laid down by the Code of Civil Procedure, leaving it to be guided by the Principles of Natural Justice, subject to other provisions of the Act and the Rules, and, vests the DRT with such wide powers to regulate its own procedure includi....
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....or to secure the ends of justice. Section 19(25) or Rule 18 cannot be held to be procedural law. 27. Section 22 deals with the procedure and powers of the Tribunal and the Appellate Tribunal. It relates to summoning and enforcing the attendance, requiring the discovery and production of documents, receiving evidence on affidavits, issuing commissions for the examination of witnesses or documents, reviewing its decisions, dismissing an application for default or deciding it ex-parte, setting aside any order of dismissal of any application for default or any order passed by it ex-parte, or any other matter which may be prescribed, but no provision has been made therein or by a separate notification issued by the Central Government empowering the Tribunal to deprive a person of his personal liberty to move abroad as guaranteed under Article 21 of the Constitution of India. In absence of any such 'enacted law' or "State law', we hold that the Tribunal had no jurisdiction to deprive the Defendants, the Respondents herein, of their right to go abroad. The learned Single Judge for the very same reason having set aside the order passed by the Tribunal, no interference ....
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....ning it to matters where the liability has not been determined. 6. In our view, the judgment of the learned Single Judge of this Court, which we hereby affirm and endorse, is categorical and denies the Tribunal such a right to impose any restriction on the passport of the petitioner. The applicability of the judgment of the learned Single Judge in A.S. Mittal's case was applicable to the exercise of the jurisdiction by the Tribunal and was not conditional as wrongly construed by the Tribunal. Accordingly, the order of the Tribunal, to the extent which imposes restriction on the travelling and passport of the petitioner is quashed and set aside." 30. That apart, a similar question arose before a Division Bench of this Court in Gurbachan Singh Saluja (supra), wherein the Division Bench relying upon the judgment of the Division Bench in Sanjeev R. Apte (supra) has disposed of the writ petition by noting the position of law as laid down by the Division Bench in Sanjeev R. Apte (supra) being clear. 31. The argument of Mr. Abhinav Vashist by placing reliance on the judgment of the Supreme Court in Naresh Shridhar Mirajkar and Ors. (supra) is concerned, the Supreme Cour....
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....is presence may be need at much later stage during the recovery proceedings as and when ordered if full amount is not recovered from the secured assets. To justify passing of such order by invoking the provisions of Section 19(25) of the RDDBFI Act or Rule 18 of the Rules to urge that these would be available to ensure recovery may lead to creating or recognizing a right or liability or obligation which is not provided for in the Statute." 33. Apart from the above, which answer"s the question whether the Tribunal can pass an order restraining a defaulting borrower/guarantor from travelling abroad, we note, in the case in hand, the Tribunal has set aside the impugned order on the following finding of fact:- "Before parting with the case, protest raised by the Counsel for the Bank may call for a notice when he says that if permitted to travel abroad, the appellants are not likely to return back. There is no material shown to me in support of this contention. More so, for prosecution of OA presence of the borrower or the guarantor before the Tribunal is not necessary. Facilities advanced by the Bank/Financial Institution are generally secured by the property(ies) which is/....