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CS Professional · Insolvency and Bankruptcy - Law and Practice · Debt Recovery and Securitization

Lotus Steels Ltd appeals to the Tribunal against a Recovery Officer's order under section 30. It argues that, as with appeals under section 21, the Tribunal can reduce the deposit to 25 per cent for recorded reasons. The debt determined is Rs 8 crore. Based on the text of the Act provided, what is the position?

Lotus must deposit Rs 4 crore, which is fifty per cent of Rs 8 crore. The power to reduce the deposit to twenty-five per cent is in the proviso to section 21 only. Section 30A contains no such proviso, so there is no reduction.

  1. ASection 30A contains no proviso permitting reduction; the full 50 per cent, Rs 4 crore, is requiredCorrect
  2. BThe Tribunal may reduce the deposit to Rs 2 crore by recording reasons
  3. CThe Tribunal may waive the deposit if Lotus is a consortium member
  4. DThe deposit is 75 per cent, i.e. Rs 6 crore, because the debt exceeds Rs 5 crore

Explanation

The reduction proviso appears only in section 21, which concerns appeals to the Appellate Tribunal. Section 30A, as given, states only the fifty per cent requirement with no proviso. So Rs 4 crore must be deposited. Rs 2 crore wrongly imports the section 21 proviso.

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