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The Karnataka HC dismissed Vijay Mallya’s plea that sought restoration of his appeal filed before the Debt Recovery Appellate Tribunal (DRAT), which dismissed his appeal on the ground that he was unable to deposit a sum of Rs 3,101 crore within prescribed time.
The bench, comprising of Chief Justice Dinesh Maheshwari and Justice Krishna S. Dixit, observed that the 2016 amendment to Section 21 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 which restricted the power of DRAT to waive the pre-deposit not below 25% of decreetal amount, is retrospective.
Background
The Debt Recovery Tribunal had held Mallya liable for the recovery of the said sum of Rs.6,203,35,03,879.42 with interest. In October, 2017, he filed an appeal before the DRAT which returned the memorandum along with some office objections. As he didn’t correct them, the appeal got dismissed for non-prosecution. Thereafter, he filed an application seeking restoration of appeal. He was then directed to deposit a sum of Rs 3,101 crore, on or before 25.04.2018 as a condition pertaining to entertaining the appeal as per the terms of Section 21 of the Act of 1993 which then got dismissed as he did not deposit the said amount.
2016 amendment retrospective
Senior Advocate KG Raghavan, appearing for Mallya, put forward the main contention that the 2016 amendment to Section 21 of the Act of 1993 is only prospective in operation and will not apply to the appeal in question that arose out of the proceedings originally instituted before the said amendment. By the 2016 amendment, the quantum of the amount of pre-deposit had been reduced to 50% instead of 75%; and the power of DRAT to waive was restricted to the extent of 25%.
The bench rejected this contention and held that the amendment is retrospective while explaining that the 2016 Amendment to the provisions of Section 21 of the Act of 1993, in substance, doesn’t relate to the right of appeal as such, but to the condition subject to which the said right becomes exercisable; ordinarily these conditions fall within the domain of the procedure, especially when the alteration of the said condition is not substantial, inasmuch as even after amendment, discretion is left with the DRAT to reduce the amount of pre-deposit, although not below 25% of the decreetal amount. Therefore, the law by which such conditions are varied cannot be construed to be substantive law but shall remain within the realm of procedural law.
It is not that prior to the 2016 amendment, the Act of 1993 had given to the appellant before the DRAT an absolute and unconditional right of appeal; the proviso to Section 21 of the Act of 1993 had vested the discretion in the DRAT to waive or limit the requirement of pre-deposit. The amendment has only restricted the discretion to reduce the requirement of predeposit not below 25% of the decreetal sum. Thus, admittedly, even after amendment, the substance of the proviso to Section 21 is retained and what is trimmed is the condition subject to which the right of appeal is to be exercised. The bench further added that the trimming of condition, in essence, relates to the law of procedure, which is normally retrospective in operation.
As regards the argument that his accounts were freezed by the UK court, the bench said that as on the date of passing of the order by the DRT, there was no Freezing Injunction Order by the Courts in U.K. This Freezing Order was first made only on 24.11.2017 i.e., about ten months after the DRT made its order. These facts prima facie discredit the petitioner’s version that he does not have any money to deposit.
It also noted the Supreme Court’s observation that Mallya clandestinely did not disclose his assets and that of the UK court’s finding that he bought Ferrari 246 GTS, which is worth Rs. 4,17,60,000 and entered into various agreements in the UK.
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