HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH AFR Court No. - 27 Case :- MISC. BENCH No. - 9623 of 2011 Petitioner :- M/S Gulshan Rai Jain Ii, Through Its Partners And Ors. Respondent :- Debts Recovery Appellate Tribunal Allahabad And Ors. Petitioner Counsel :- Prashant Kumar Respondent Counsel :- Prashant Srivastava ******** Hon'ble Devi Prasad Singh,J.
Hon'ble Dr. Satish Chandra,J.
Heard learned counsel for the petitioner and Sri Agesh Anand, learned counsel for the respondent-Bank of Baroda.
With the consent of parties' counsel, we proceed to decide the writ petition finally at the admission stage.
Present petition under Article 226 of the Constitution of India has been preferred against the impugned order dated 15.09.2011 contained as annexure nos. A-5 to the writ petition and the order passed by the appellate authority dated 23.03.2010.
The petitioner has taken commercial loan from the respondent-bank. On account of default of payment of dues, recovery proceeding was initiated against the petitioner, in consequence thereof, the petitioner has approached the Debts Recovery Tribunal. It has been submitted that while deciding the application, the Tribunal from time to time passed the interim orders directing the petitioner to pay the dues in question in installment. However, finally, by the impugned order, the Tribunal provided that in case the highest bid of secured assets comes to Rs.8.00 crores and above, then respondent-bank may proceed with the auction and sale of the property in question. The operative portion of the order passed by the Debts Recovery Tribunal is reproduced as under:
"That the respondent bank shall not sell the secured assets for a price of less than Rs.8.00 crores.
It is further clarified that respondent bank can conduct the sale of the secured assets if the highest bid comes for Rs.8.00 crores and above. If the applicants are having some buyer for more than the above mentioned sum he may be directed to participate in the auction. In case, the bid is less than that of Rs.8.00 crores, the respondent bank shall not to proceed in the matter.
Fix 09.04.10 before the Ld. Registrar for filing objection, if any by the respondent bank.
Let copies of this order be supplied to the parties immediately as per rules."
Feeling aggrieved, with the impugned order passed by the Tribunal, the petitioner has preferred an appeal under Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 before the appellate authority. The appellate authority had observed that the respondent-bank had taken symbolic possession and may proceed with the auction and sale subject to condition that in case the petitioner pay the entire dues, option is open to the petitioner. Operative portion of the order passed by the appellate authority is reproduced as under:
"However, this Tribunal has also directed the Bank to release the property, which is Plot No.40, Sector 14 Kausambi, District Ghaziabad. If the amount is deposited by the appellant by tomorrow as directed today, the, on production of receipt of such deposit, the Bank shall release the said property. So far as another property is concerned, the District Magistrate/Collector Ghaziabad shall assist the Bank to take physical possession of the property, description of which is Plot No.518, G.T. Road, Near Pawan Cinema, District Ghaziabad and as directed by this Tribunal by an order dated 05.05.2011, the appellant will not raise any objection with regard to auction of the second property. Shri Gulshan Rai, Sri Manoj Jain and Smt. Suman Jain will not create any obstacle to the Bank either to take physical possession or to proceed with the auction of the second property. However, it is open for the appellant to satisfy all the dues of the Bank before the auction takes place of the second property. Accordingly, the application for extension of time is disposed of.
In view of the orders passed by this Tribunal on 05.05.2011, 20.07.2011 and the order passed today, nothing survives to be adjudicated upon in the present appeal and accordingly, the appeal also stands disposed of."
Thus, it appears that instead of deciding the issue with regards to question involved therein, the original authority as well as the appellate authority has permitted the respondent-bank to proceed with the auction and sale of the property in question. However, the appellate authority had make it open to the petitioner-appellant to satisfy all the dues of the Bank before auction takes place of the second property.
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short Act) was enacted by the Parliament with intention to make it convenient for the bank and financial institutions to recover its dues without facing the technicalities, which they were facing before the civil court in the recovery suits under the Act, option has been given to the Bank or borrower to approach the Tribunal to ventilate their grievance. The provision contained in the Act are the substituted provisions in place of regular suits. Meaning thereby, whenever aggrieved party approach the Tribunal, constituted under the Act, then Tribunal may pass appropriate interim order to safeguard the rights of the parties and also proceed to decide the question raised by the parties in accordance to law expeditiously.
Section 13 of the Act empowers the Bank to take action and proceed with the auction and sale of the property and action taken thereon, shall be appealable under Section 17 of the Act before the Tribunal. The order passed by the Debts Recovery Tribunal is appealable to the Appellate Tribunal under Section 18 of the Act.
Section 17 deals with the procedure which should be followed by the Debts Recovery Tribunal while dealing with the petition filed before it by the aggrieved party, which includes financial institution as well as borrower. Sub-section (5) of Section 17 of the Act provides that an application made under sub-section (1) shall be dealt with by the Debts Recovery Tribunal as expeditiously as possible and disposed of within sixty days from the date of such application. In case, application is not disposed of within the period provided under sub-section (5) of Section 17, any party to the application may make an application, in such form as may be prescribed, to the Appellate Tribunal for directing the Debts Recovery Tribunal for expeditious disposal of the application pending before the Debts Recovery Tribunal. For convenience, Section 17 of the Act is reproduced as under:
"17. Right to Appeal (1)Any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorised officer under this Chapter,[may make an application along with such fee, as may be prescribed,] to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measure had been taken.
"Provided that different fees may be prescribed for making the application by the borrower and the person other than the borrower.
Explanation- For the removal of doubts, it is hereby declared that the communication of reasons to the borrower by the secured creditor for not having accepted his representation or objection or the likely action of the secured creditor at the stage of communication of reasons to the borrower shall not entitle the person ( including borrower) to make an application to the Debts Recovery Tribunal under this sub-section.] [(2) The Debts Recovery Tribunal shall consider whether any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor for enforcement of security are in accordance with the provisions of this Act and the rules made thereunder.
(3) If, the Debts Recovery Tribunal, after examining the facts and circumstances of the case and evidence produced by the parties, comes to the conclusion that any of the measures referred to in sub-section (4) of section 13, taken by the secured creditor are not in accordance with the provisions of this Act and the rules made thereunder, and require restoration of the management of the business of the borrower or restoration of possession of the secured assets to the borrower, it may by order, declare the recourse to any one or more measures referred to in sub-section (4) of section 13 taken by the secured creditors as invalid and restore the possession of the secured assets to the borrower or restore the management of the business to the borrower, as the case may be, and pass such order as it may consider appropriate and necessary in relation to any of the recourse taken by the secured creditor under sub-section (4) of section 13.
(4) If, the Debts Recovery Tribunal declares the recourse taken by a secured creditor under sub-section (4) of section 13, is in accordance with the provisions of this Act and the rules made thereunder, then, notwithstanding anything contained in any other law for the time being in force, the secured creditor shall be entitled to take recourse to one or more of the measures specified under sub-section (4) of section 13 to recover his secured debt.
(5) Any application made under sub-section (1) shall be dealt with by the Debts Recovery Tribunal as expeditiously as possible and disposed of within sixty days from the date of such application:
Provided that the Debts Recovery Tribunal may, from time to time, extend the said period for reasons to be recorded in writing, so, however, that the total period of pendency of the application with the Debts Recovery Tribunal, shall not exceed four months from the date of making such application made under sub-section (1).
(6) If the application is not disposed of by the Debts Recovery Tribunal within the period of four months as specified in sub-section (5), any party to the application may make an application, in such form as may be prescribed, to the Appellate Tribunal for directing the Debts Recovery Tribunal for expeditious disposal of the application pending before the Debts Recovery Tribunal and the Appellate Tribunal and the Appellate Tribunal may, on such application, make an order for expeditious disposal of the pending application by the Debts Recovery Tribunal.
(7) Save as otherwise provided in this Act, the Debts Recovery Tribunal shall, as far as may be, dispose of the application in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and the rules made thereunder.".] A plain reading of Section 17 of the Act, shows that it shall be obligatory on the part of the Debts Recovery Tribunal to decide the application filed before it under Section 17 of the Act as early as possible preferably say within sixty days.
Needless to say that in the present case, application was moved in the year 2010 and the Tribunal kept the matter pending only by passing interim orders from time to time to give liberty to the petitioner to pay the dues in question. The power conferred on the Tribunal under Section 17 of the Act, is not to keep the matter pending under the garb of the interim orders. In case any interim order is not complied with, then it was incumbent on the Tribunal to vacate the interim order and decide the appeal filed before it under Section 17 of the Act on merit with due opportunity of hearing to the parties.
Section 17 of the Act does not empower the Tribunal to keep the matter pending for indefinite period without adjudicating the same on merit. Sub-section (6) of Section 17 of the Act provides that power conferred on the Appellate Tribunal to issue direction to the Debts Recovery Tribunal to decide the appeal within the specified period.
In the present case, unfortunately the Appellate Tribunal also acted in a mechanical way and instead of directing the Debts Recovery Tribunal to decide the pending appeal filed under Section 17 of the Act on an early date, may be within a specified period, had disposed of the pending appeal filed under Section 18 of the Act permitting the respondents to proceed with the auction and sale with liberty to the appellant-petitioner to pay all the dues to the Bank before auction takes place. The Appellate Authority as well as the Appellate Tribunal have been failed to discharge their statutory duties conferred by Sections 17 & 18 of the Act.
Needless to mention that in case the appeal filed under Section 17 of the Act before the Debts Recovery Tribunal or in appeal before the Appellate Tribunal are not decided within the statutory period provided under the Act, then it shall frustrate the very object and purpose of the Act in question. The Presiding Officers of the Tribunal are directed to ensure that appeal filed before it are decided as far as possible within the statutory period provided under the Act and appeals are not kept pending only by safeguarding the interest of the parties by passing repeated interim orders from time to time. Ordinarily, the interim orders should be passed to secure the interest of the parties at the time of institution of the appeal before the Appellate Tribunal or the Debts Recovery Tribunal, as the case may be and thereafter, the Tribunal or the Appellate Tribunal must proceed to decide the issue before it on merit expeditiously within the statutory period, provided under the Act. Failure on the part of the Appellate Tribunal or the Debts Recovery Tribunal to decide the issue within the statutory period shows inaction or incompetency on the part of the Presiding Officer of the Tribunals.
In view of above, the appeal is allowed. The impugned order dated 15.09.2011 passed by the Appellate Tribunal, contained as Annexure no. 5 to the writ petition is set aside. The Debts Recovery Tribunal is directed to decide the appeal under Section 17 of the Act expeditiously say within a period of two months from the date of receipt of a certified copy of the present order, after providing due opportunity of hearing to the parties. For a period of two months, the further recovery proceedings shall remain suspended subject to condition the petitioner deposits an amount of Rs.1.00 crore within a period of one month from today.
Let a copy of this order be send to the Chairman, Debts Recovery Tribunal, who shall circulate the same to the Presiding Officers of the Appellate Tribunal as well as Debts Recovery Tribunal immediately for compliance.
Order Date :- 28.9.2011 VNP/-
Hon'ble Devi Prasad Singh,J.
Hon'ble Dr. Satish Chandra,J.
Allowed vide our order of date passed on separate sheets.
Order Date :- 28.9.2011 VNP/-