Ruchitha Chaturvedi vs Union Of India
2022 Latest Caselaw 5865 AP

      HON'BLE SRI JUSTICE U.DURGA PRASAD RAO
                        AND
     HON'BLE SRI JUSTICE B.V.L.N. CHAKRAVARTHI

                  Writ Petition No.24723 of 2022

Order: (Per Hon'ble Sri Justice U. Durga Prasad Rao)

      The petitioners seek writ of mandamus declaring the order

dated 29.07.2022 passed by the Debts Recovery Tribunal (DRT),

Visakhapatnam directing the petitioners to pay the entire notice

amount under Section 13(2) of the SARFAESI Act, 2002 in

instalments and contemplating to impose penalty of Rs.25,00,000/-

in case the petitioners failed to pay any one of the instalments as

illegal, arbitrary and to pass such other order as it is being fit under

the circumstances of the case.


2.    The 2nd respondent filed counter and opposed the writ

petition. Inter alia the 2nd respondent contended that the learned

Magistrate extended the time to execute the warrant by the

Advocate Commissioner till 30.06.2022 and therefore, the

W.P.No.13553/2022 is not maintainable and the respondent Bank

is legally entitled to proceed with the auction. The Bank has taken

actual possession of two properties out of the six properties

mortgaged to the Bank and in respect of remaining four properties

it took symbolic possession. It is also contended that on the Memo

filed by the petitioners only, the impugned order was passed.

3. Heard the learned Senior Counsel for the petitioners, Sri

Raghu and the learned Standing Counsel for the respondent-bank,

Sri Satya Narayana Murthy.

4. The point for consideration is whether there are merits in this

writ petition to allow?

5. Point: Referring the impugned order dated 29.07.2022

passed by the presiding officer Debt Recovery Tribunal,

Visakhapatnam, the learned Senior Counsel would submit that,

while permitting the petitioners to pay the debt amount in tranches,

the tribunal has imposed a condition that on failure of petitioners to

pay any one installment, the tribunal will impose costs of

Rs.25,00,000/- to be payable to the respondent-bank. He would

submit that generally in the event of failure of the auction, the

incidental expenditure incurred by the bank will be necessarily

tacked to the loan account of the concerned borrowers and in that

view, the bank will not get loss, by virtue of stay order and hence

the tribunal ought not to have imposed above condition. He thus

prayed to set aside the said condition imposed by the tribunal.

6. Supporting the impugned order, learned Standing Counsel,

Sri Satya Narayana Murthy would argue that by making huge

efforts, the bank brought assets of the petitioners to sale and at that

juncture, to scuttle its efforts, the petitioners filed SA No.312/2022

before the DRT, Visakhapatnam, only on the previous date of

auction sale and sought for stay of the auction and to show their

bonifides, the petitioners themselves filed a memo undertaking to

pay amounts by installments if stay were to be granted.

Considering the said memo only, the tribunal has granted the stay

of the auction.

The learned Standing Counsel would submit that the

imposition of the costs by a Court or Tribunal is well within the

discretion of the said authority conferred by law and in this case,

the proposal of the DRT to impose costs of Rs.25,00,000/- though

appears to be harsh, still legally within its jurisdiction. As such,

this Court may not exercise its plenary jurisdiction under Article

226 to interfere with the said order. It is brought to our notice that

the DRT posted SA No.312 of 2022 to 14.09.2022.

7. As can be seen from the writ petition averments, the 3rd

respondent company availed various credit facilities from the 2 nd

respondent bank, for which the petitioners stood as guarantors by

offering their movable properties as collateral security. The 2 nd

respondent issued notice dated 22.07.2020 under Section 13(2) of

the SARFAESI Act, 2002 to the 3rd respondent, but allegedly no

notice was issued to the petitioners. In the said notice, the

properties offered as collateral security by the petitioners are

shown as items 2 to 6.

      (a)    While        so,     the     2nd     respondent        Bank   filed

Crl.M.P.No.70/2021         before       the     Chief   Judicial     Magistrate,

Rajamahendravaram           for     appointment         of     an     Advocate

Commissioner for taking possession of the subject properties.

Against the order therein the present petitioners filed

W.P.No.13553/2022, wherein this Court granted status quo order

dated 06.05.2022 observing that if the time granted for return of the

warrant was not extended by the learned Magistrate, status quo

shall be maintained. The petitioners' contention in the said writ

petition is that time specified in the warrant was not extended. The

writ petition was reserved for judgment on 23.06.2022 and the

same is pending as on today. Meanwhile, the 2nd respondent issued

Sale Notice dated 19.06.2022 for auction of the properties on

30.07.2022 which is legally not tenable in view of the status quo

order. Hence, the petitioners therein and the borrower company

filed S.A.No.312/2022 before the DRT, Visakhapatnam

questioning the auction notice. In the said S.A., the petitioners

were forced to file a memo admitting to pay the amounts and the

Tribunal passed an order recording that the petitioners shall deposit

a sum of Rs.2.00 Cr. as a part of the 25% of the notice amount on

or before 15.08.2022 and the remaining part of the 25% on or

before 31.08.2022 and the balance of 75% of the notice amount on

or before 30.11.2022. On that condition, the DRT, Visakhapatnam

granted stay of all further proceedings including the proposed sale

dated 30.07.2022. However, a rider was placed in the order that if

the applicant fails to pay the amounts as per Memo, the bank will

proceed further as per Rules and if the applicant fails to make any

one of the payments to be made as per Memo, the Tribunal will

impose cost of Rs.25.00 lakhs which will be paid to the respondent

Bank. Challenging the condition imposed by the Tribunal that in

case of failure of the petitioners in paying any one of the

instalments mentioned in the Memo, costs of Rs.25.00 lakhs would

be imposed as irrational, the present writ petition is filed.

8. We gave our anxious consideration to the above respective

submissions of both the learned counsel. Admittedly, the auction

was scheduled to be held on 30.07.2022 and few days before, the

petitioners filed S.A.No.312/2022 and also filed I.A.No.1163/2022

seeking stay of all further proceedings including the proposed e-

auction to be held on 30.07.2022. It is a further admitted fact that

the petitioners themselves filed Memo dated 29.07.2022 in

I.A.No.1163/2022, a copy of which is filed along with counter by

the 2nd respondent Bank. In the said Memo, the petitioners have

undertaken to deposit 25% of the notice amount i.e., Rs.2.00 Cr. on

or before 15.08.2022 and the balance amount in 25% on or before

31.08.2022. Be that it may, a perusal of the impugned order of the

DRT, Visakhapatnam shows as if the petitioners agreed to pay

remaining balance of 75% of notice amount to the respondent Bank

on or before 30.11.2022. Considering the said undertaking, it

appears, the lower Tribunal passed the impugned order imposing

the default clauses to the effect that in case of non-payment of the

amounts as per the Memo, the bank will proceed further as per

Rules and further, on non-payment of any one of the instalments

mentioned in Memo, the Tribunal will impose cost of Rs.25.00

lakhs to be payable to the respondent Bank. It appears the

petitioners have not so far paid the first instalment as promised in

the Memo. The S.A. is said to be posted to 14.09.2022. It is not

known what order is going to be passed by the Tribunal on

14.09.2022. It is also not brought to our notice whether petitioners

filed any petition before the lower Tribunal seeking extension of

time for payment. In these circumstances, the writ petition before

us is primarily a prematured one and secondly, in our considered

view, this Court cannot usurp the jurisdiction of the Tribunal in the

matter of imposing conditions and default clauses. We find no

jurisdictional error in the impugned order. Further, as already

noticed, so far costs are not imposed and the matter is still pending

before the DRT and posted to 14.09.2022.

9. In these circumstances, this Writ Petition is dismissed with a

liberty to the petitioners to approach the DRT, Visakhapatnam and

seek for suitable relief in respect of the impugned order passed by

the DRT. No costs.

_________________________ U.DURGA PRASAD RAO, J

____________________________ B.V.L.N.CHAKRAVARTHI, J

05.09.2022 MVA