ARIHANT PHARMA                                        PETITIONERS
(Advocate Sri.M.G.Kumar, Law Firm)
AND ANOTHER                                                RESPONDENTS

(Advocate Sri.M.R.Shashidhara for R-2 &3)
(Advocate Smt.A.r.Sharadamba, Additional Government Advocate for R-1)
(Advocate Sri.V.R.Kulkarni for R-4)

This Writ Petition is filed under Articles 226 and 227 of the Constitution of India, praying to quash the order in Annexure-C2, dated 17.07.2007, passed by the Debts Recovery Tribunal at Bangalore, in ASA No. 143/06, declare that Rule -13 of the Security Interest Rules, 2002 has retrospective effect and is applicable to the Petitioner’s appeal ASA No. 143/06, pending before Respondent No.1 and quash the orders Annexure-D1,dated 03.04.2007 passed by the Debts Recovery Tribunal at Bangalore, dated IA.No.797/07, in ASA No.143/06.

This petition having been herd and reserved on 12.06.09 and coming on for pronouncement of orders this day, the Court delivered the following:-

Heard the Counsel for the parties.

2. The facts of the case, as urged in the petition, are as follows:-

The Petitioner is a partnership firm engaged in wholesale business of pharmaceutical and medical supplies. In the course of its business it had secured a cash credit loan of Rs. 1.25 crore, from M/s. Canara Bank on the security of its stock-in -trade and immovable property at No. 47, Chikbazar Road, Shivajinagar, Bangalore. This premises was being used by the Petitioner both for the partners residence and business of the firm.

The petitioner had defaulted in servicing the loan and the bank had issued a notice under Section 13(2) of the securitization and Reconstruction of Financial Assets and Enforcement of Securing Interest Act 2002 (Hereinafter, referred to as the “Securitization Act”, for brevity). By virtue of this notice the business came to a stand still, and the debt grew larger. The Bank took possession of both movables and the immovable property of the petitioner. The immovable property was brought to sale by the bank and was sold at on auction, on 20.04.2006, for Rs. 53.30 lakh. The Petitioner contends that the property was valued at much more and that the Bank has sold the property for a difference, in undue haste and in order to benefit a third-party. Aggrieved by the action of the Bank – the Petitioner is said to have filed an appeal under Section 17 of the securitization Act, as on 27.04.2006. As on that date the Court fee payable filed under the Securitization Act was the court-fee prescribed for appeals under the Recovery of Debts due to Banks and Financial Institutions Act (Hereinafter referred to as the “DRT Act”, for brevity). This situation   was by virtue of the Central Government having temporarily fixed the court-fee for filing appeals under clause 3 of the Securitization and Reconstruction of Financial Assets and enforcement of the Security Interest (Removal of Difficulties) Order, 2004, and it was provided that Rule 7 of the Debts Recovery Tribunal (Procedure) Rules, 1993, shall, mutatis mutandis, apply to appeals under the Securitization Act.

This above position was questioned and was pending consideration by the Supreme Court as on the date that the Petitioner filed the above appeal. As the court fee payable was directly in question in the matter pending before the apex Court, the Petitioner’s appeal was admitted by the DRT on the condition that the Court-fee on the appeal shall be payable depending on the result of the appeal before the apex Court. The appeal before the Supreme Court was disposed of and the same is reported in M/s. Trancore v. Union of India: AIR 2007 SC 712 – it was held that the Court-fee shall be payable under the DRT Rules, on appeals filed under the securitization Act, until the Central Government prescribes the court-fee under appropriate Rules, this decision was pronounced on 29.11.2006.

By a notification in the Gazette of India date 02.02.2007, The Central Government amended the Security interest (Enforcement) Rules, 2002 and introduced Rule 13 thereunder- by virtue of which the court-fees payable for applications and appeals under Sections 17 and 18 of the securitization Act were prescribed. Accordingly the fee payable was Rs. 5,000/- plus Rs. 250/- for every Rs. 1 lakh or part thereof in excess of Rs. 10 lakh, subject to a maximum of Rs. 1 lakh. The court-fee payable was about 0.25% of the amount due as compared to the court -fee payable under the DRT Act which is about 1% of the amount due.

The Petitioner seeking to avail  the benefit of the Security  Interest Rules 2002, as amended, tendered the Court-fees  payable on  the appeal at Rs. 23,000/-. The Registry of the DRT however, raised objection and demanded a court-fee of Rs.1,38,000/- on the footing that the court-fee ought to be paid under Rule 7 of the DRT Rules. The Petitioner’s claim to pay court-fees under the Securing Interest Rules was negatived by an order dated 17.07.2007 of the Tribunal and the Petitioner was directed to pay the deficit on 27.07.2007.

The Petitioner thereupon sought to sue as an indigent person and filed an application under order XXXIII Rule 1 and 2 of the Code of Civil Procedure, 1908, the tribunal however, dismissed the application by an order dated 03.04.2007. It is in this background that the Petitioner is before this Court.

3. The counsel for the Petitioner contends that the fee payable under the DRT Rules by virtue of Clause 3 of the Securitization Order 2004 was only temporary and it ceased to apply with Rule 13 of the Securing Interest Rules 2002 coming into force.

It is contended that the result of Rule 13 being introduced is that the quantum of fees payable by the appellants, who are invariable the borrowers, being considerably lesser than under the Debts Recovery Tribunal Rules and this benefit cannot be denied to the petitioner.

It is contended that the said Rule 13 ought to be given retrospective effect in respect of appeals pending as on the date of coming into force of the Rule and in cases such as that of the Petitioner where payment of Court-fees was deferred under the circumstance as stated above.

It is contended that notwithstanding that there is no express provision under the Securitization  Act to apply the provisions of Order XXXIII Code of Civil Procedure, 1908 the Tribunal was bound to entertain the application of the  petitioner seeking to sue as an indigent person in the light of the ruling of the Supreme Court  in the case of A.A. Haja Muniuddin  vs. Indian Railways, (1992) 4 SCC 736, where it was held , in respect of proceedings under the Railway Claims Tribunal Act and Rules, that even in the absence of a provision  enabling a person to sue as an indigent person- the Act or Rules did not preclude the Tribunal from following  that procedure if the ends of justice so  require.

Reliance is placed on the decision in Sham Lal L. Dogarmal vs. Om Prakash, AIR 1955  Punjab 223 to contend that when there is a change in the law as to court-fees, between the date of the suit and the date on which an appeal arising from that suit is filed, the law in force at the latter date would govern the court-fee payable on the appeal.

4. The Counsel for the respondents seek to resist the Petition. However, respondents 2 to 4 cannot claim to be aggrieved if the petitioner should ultimately be granted any relief, hence the objections raised by them to the Petition are irrelevant. The additional Government Advocate seeks to contend that even though no pleadings are filed by the State – it is to be noticed  that the Securing Interest (Enforcement) Amendment Rules. 2007 have come into force effectively from the date of their publication in the Gazette, namely, 02.02.2007 and can apply only to appeals on and from that date and cannot be pressed into service in respect of an appeal filed well prior to that date and would seek dismissal  of the petition .

5. In the above circumstances, the imposition of liability to pay court-fees being a fiscal legislation it would be governed by the normal presumption that it is not retrospective, unless otherwise provided expressly or by necessary implication. The above Rule, however, applies to substantive provisions and does not apply to machinery or procedural provisions which are generally retrospective and apply even to pending. But even a procedural provision, as far as possible, will not be construed to open up liability which had become barred.

In the instant case as on the date of the petitioner filing the appeal, the petitioner had the benefit of a reprieve in view of the issue of court-fee pending before the Supreme Court and the petitioner had undertaken to pay the same depending on the result in the matter before the Apex Court. Ultimately, when the petitioner did indeed pay the court-fees – the Security Interest (Enforcement) amendment Rules, 2007 had come into effect and Court-fees was paid in accordance with the same. The demand for payment of deficit fee by the registry of the DRT and the order by the Tribunal to pay the same on the footing that the court-fee payable when the appeal was lodged was relevant and that the security Interest Rules prescribing a lesser court-fee was inapplicable, is an enormous interpretation to the detriment of the petitioner.

For if the petitioner had paid the court-fees under the DRT Rules when presenting the appeal, it would certainly not be open to the petitioner to claim  the refund of the excess Court-fee, he would have paid in relation to the lesser court-fee prescribed under the Security Interest Rules.

But when the petitioner had not paid the court-fee on account of the circumstances aforesaid and did have the benefit of the Security Interest Rules prescribing a lesser court-fee on the date that the actual payment is made, the petitioner cannot be denied that advantage. This principle is well established in the working of fiscal legislation. Further it cannot be said that the Rules are given any retrospective effect as the court-fee is paid on a matter pending prior to the amendment of the Rules. On the other hand court-fee is paid for the first time when the amendment to the Rules had come into operation.

Having regard to the fact that the petitioner has already paid court-fees  in accordance with the Security Interest  Rules – the order on the application seeking to sue as an indigent person does not require to be considered in the light of this order.

Hence, the writ petition is allowed.  Annexure-C2 is quashed. The petitioner is required to pay court-fee in the appeal in ASA 143/2006, before the DRT only in accordance with the Security Interest Rules 2002 as amended in 2007.