Bank of Maharashtra Vs Prajakta International Ltd. & Ors. (DRAT Mumbai)
There Is No a Scintilla of Evidence That the Payment Was Made Under Reserve; Hence Appeal Is Dismissed
We share the recent order of the Hon’ble DRAT, Mumbai. The appellant is Bank of Maharashtra (bank). The respondent is a partnership firm. It was exporting goods to Egypt. It sought pre-shipment and post-shipment finance from the Bank. It did not avail of any post shipment finance. A letter of credit was opened. The bank discounted the bill for exchange and retained 25% of the bill value as charges. The LC expired. The bank could not realise the funds from the issuing bank. The bank filed a suit for recovery from the respondent. The suit was later converted into original application and transferred to Hon’ble DRT. The Hon’ble DRT dismissed the application. Hence, appeal by the Bank before the Hon’ble DRAT.
The Hon’ble Debt Recovery Appellate Tribunal, Mumbai dismissed the appeal filed by the bank.
It held: (i) the appeal is maintainable as it is a “debt” in terms of section 2(g) of Recovery of Debts due to Banks and Financial Institutions Act as the definition is very wide;
(ii) the LC was genuine; it expired and no fault to be attributed to the respondent; the bank did not verify the documents before Discounting the bill;
