While deciding B Rajarajeshwari v The Presiding officer & Ors, it has been held by Madras High Court that under Section 26 of the RDDBFI Act, 1993, the
Presiding Officer of DRT has been vested with the power to withdraw or cancel a
Recovery Certificate after its issuance, either on application by the defendant
or suo moto, to rectify any errors in the same including arithmetic or clerical
errors.
The
Appellant in this Writ Petition had originally availed credit facilities from
Tamil Nadu Mercantile Bank. Owing to non repayment of the dues the account was
classified as NPA and the Bank had initiated recovery proceedings under
SARFAESI Act. Under the SARFAESI appeals filed by the Appellant before the DRT
Madurai conditional injunctions were issued wherein under the Appellant was
directed to deposit Rs.16 Lakhs, which she had complied with.
The
Bank had filed an Original Application before the DRT-II Chennai for recovery
of the loan dues and DRT had issued a Recovery Certificate for the entire loan
dues claimed by the Bank. While issuing this Final Order and the Recovery
Certificate, the deposits made by the Appellant as per the orders of DRT
Madurai in the SARFAESI Applications were not taken into consideration and
orders were issued for the entire suit amount.
Aggrieved
by this decision the Appellant had preferred an application before the DRT II
Chennai for withdrawal of the Recovery Certificate on the ground that the deposits
made by her have not been taken into consideration. The Tribunal rejected her
application on the ground that once the Recovery Certificate has been issued it
cannot be recalled. The present Writ was filed against this Order.
While
deciding the matter, the Hon’ble High Court made an in depth analysis of
Section 26[1] of the Recovery of Debts due
to Banks and Financial Institutions Act, 1993. The High Court held that Section
26 was incorporated by the legislature for giving an opportunity to the
defendant to approach the Presiding Officer to rectify any mistakes, including
any clerical or
arithmetic mistake, crept in while issuing a recovery certificate, which had
escaped the notice of the Presiding Officer. The Court also examined the
prospects as to whether the powers
conferred upon the Presiding Officer under the Section was limited only to the
rectification of clerical or arithmetic errors or whether this was only
illustrative.
While answering this question the
Court pointed out that in Section 26 (2) of the Act the word "or" is
used twice - "withdraw the certificate or correct any clerical or
arithmetical mistake". While issuing a Recovery Certificate there could be
a clerical error and there is also a possibility of an arithmetical error.
Court held that if the section is read as a whole, there is no reason to read
the word "or" as "and", that only on the happening of both,
a recovery certificate could be corrected by the Presiding Officer. It was held
that even though it has not been specifically mentioned under S. 26 (2) the
circumstances under which a recovery certificate could be withdrawn, a bare
reading of Section 26(2) of the Recovery of Debts Due to Bank and Financial
Institutions Act, 1993, makes it clear that power is conferred on the presiding
officer to withdraw a certificate or correct any clerical or arithmetical error.
Court pointed out that clauses 3 and
4 of Section 27[2]
of the Act were also providing for the amendment or withdrawal of the Recovery
Certificate by the Presiding officer in instances where the outstanding demand
is reduced or amended in appeal, on an application made by the defendant.
From the language of both these
sections and from the ratios put forth by other Courts in similar matters the
High Court held that the Act is unambiguously conferring powers upon the Presiding
Officer to withdraw or cancel the Recovery Certificate either Suo Moto or on
application by a Party and is not limited to correct or rectify the arithmetical
or clerical error.
[1] Section 26.
Validity of certificate and amendment thereof:
(1) It shall not
be open to the defendant to dispute before the Recovery Officer the correctness
of the amount specified in the certificate, and no objection to the certificate
on any other ground shall also be entertained by the Recovery Officer.
(2)
Notwithstanding the issue of a certificate to a Recovery Officer, the Presiding
Officer shall have power to withdraw the certificate or correct any clerical or
arithmetical mistake in the certificate by sending intimation to the Recovery
Officer.
(3) The
Presiding Officer shall intimate to the Recovery Officer any order withdrawing
or cancelling a certificate or any correction made by him under sub-section
(2).
[2] 27. (1) Notwithstanding that a certificate has been
issued to the Recovery Officer for the recovery of any amount, the Presiding
Officer may grant time for the payment of the amount, and thereupon the
Recovery Officer shall stay the proceedings until the expiry of the time so
granted.
(2) Where a certificate for the recovery of amount
has been issued, the Presiding Officer shall keep the Recovery Officer informed
of any amount paid or time granted for payment, subsequent to the issue of such
certificate to the Recovery Officer.
(3) Where the order giving rise
to a demand of amount for recovery of debt has been modified in appeal, and, as
a consequence thereof the demand is reduced, the Presiding Officer shall stay
the recovery of such part of the amount of the certificate as pertains to the
said reduction for the period for which the appeal remains pending.
(4) Where a certificate for the
recovery of debt has been received by the Recovery Officer and subsequently the
amount of the outstanding demands is reduced 1[or enhanced] as a result of an
appeal, the Presiding Officer shall, when the order which was the subject
matter of such appeal has become final and conclusive, amend the certificate or
withdraw it, as the ease may be.
