Debts Recovery Tribunal, Mumbai: In a case governing Bank of Maharashtra’s repeated non-compliance in Lilavati Foundation recovery proceedings, the Tribunal imposed costs on the salary of a Bank of Maharashtra officer and a symbolic cost of ₹1 on the Managing Director of the Bank after finding repeated non-compliance with its earlier directions requiring disclosure of information relevant to pending recovery proceedings. The Tribunal observed that the affidavit filed by the Bank was “not in line with the specific directions” previously issued and could not be treated as complete compliance.
Background
The matter arose in recovery proceeding, wherein the legal representatives (LRs) of certificate debtor (CD) 2 sought discharge from the recovery proceedings. Pursuant to the Bombay High Court’s direction to decide the discharge application within 2 weeks, the Bank of Maharashtra filed an affidavit claiming compliance with the Tribunal’s earlier directions.The certificate holder bank sought opening of the sealed envelope, contending that its contents were material to the discharge application. While the LRs did not oppose opening of the envelope, they maintained that they had inherited no assets from the deceased Certificate Debtor and that any liability, if at all, was limited to inherited assets. They further argued that no additional information was required as the Bank of Maharashtra had stated that CD 2 was neither a borrower nor a guarantor in relation to the credit facilities extended to Lilavati Foundation.
Analysis and Decision
The Tribunal ordered the sealed envelope to be opened in the presence of the parties and took the documents contained therein on record.
Upon examining the affidavit, the Tribunal noted that the Bank of Maharashtra had merely stated that none of the persons against whom the recovery certificate had been issued were reflected in its records as borrowers, guarantors, mortgagors, providers of security or credit support in relation to the credit facilities extended to Lilavati Foundation. The Bank also stated that it did not possess any declarations of assets and liabilities, personal guarantees, mortgage documents or similar records relating to such persons.
However, the Tribunal found that this affidavit failed to comply with the specific directions issued earlier. The directions had specifically required the Bank to disclose the complete particulars of assets declared by the guarantors at the time of sanction of the credit facilities, including movable and immovable properties, shareholding or financial interests in Lilavati Hospital or related entities, and to verify the authenticity of the communication dated 28 July 2025.
The Tribunal observed that the affidavit filed by Bank of Maharashtra is not in line with its directions and that it proceeded on an altogether different premise, namely that none of the CDs were borrowers or guarantors. It held that such an affidavit cannot be treated as full compliance with the specific directions issued by this Forum.
The Tribunal further held that although the Bank of Maharashtra was only a third party from whom limited information had been sought under the Recovery of Debts and Bankruptcy Act, 1993 it was expected to extend prompt assistance. However, the required compliance had remained pending for nearly two years despite repeated opportunities. Holding that the Bank had “failed to comply with its directions despite repeated opportunities,” the Tribunal imposed costs of ₹ 20,000 on the salary and allowances of the officer concerned, and a symbolic cost of ₹ 1 on the salary and allowances of the Managing Director of the Bank of Maharashtra.
The Tribunal directed the costs to be deposited with the DRT Bar Association and granted the Bank one final opportunity to furnish complete compliance within 3 days, observing that the information sought was material for deciding the discharge application. It further clarified that, in the event of any further non-compliance, the CH Bank would be at liberty to seek remedies in law, including initiation of contempt proceedings before the competent forum.
The Tribunal also took note of an account maintained by Splendour Gems Limited with SBM Bank (India) Limited. Observing that the company had remained inactive for several years, it held that the account transactions could be relevant to the recovery proceedings and directed SBM Bank to produce the complete account statement, KYC records, account opening documents, specimen signatures, board resolutions and other related records. The matter was adjourned for rejoinder arguments and compliance.
Accordingly, exercising powers under Rule 83 of the Second Schedule to the Income Tax Act, 1961 read with Section 29, Recovery of Debts and Bankruptcy Act, 1993, the Tribunal directed the Registry to issue notice to SBM Bank (India) Limited to file an affidavit producing the complete statement of account, KYC documents, account opening forms, specimen signatures, board resolutions, details of authorised signatories, and all documents submitted for opening and operating the account.
The matter was adjourned for rejoinder arguments on behalf of CH Bank and for compliance with the Tribunal’s directions.
[Recovery Proceeding No. 709 of 2004, Order dated 25-06-2026, Mumbai Debts Recovery Tribunal]
Advocates who appeared in this case:
For CH Bank: Zoeb Cutlerywala, Vikram Karnath, Advait Shukla and Prakhar Dixit, Advocates.
For Legal Representatives of CD 2: Rafiq Peermohiden and Vivek Dwivedi, Advocates.
For CD 6: Senior Advocate Nitin Thakkar with T. J. Tripathi, Advocate.
For Bank of Maharashtra: Sushila Vichare, Advocate.
