Bombay High Court
Idbi Bank Ltd vs Aditya Logistics (I) Pvt. Ltd. And ... on 1 July, 2017
Bench: B.R. Gavai
1-WP-12780-15-Jt.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 12780 OF 2015
IDBI Bank Ltd ...Petitioner
Versus
1. Aditya Logistics (I) Pvt. Ltd. & Ors.
2. Aditya Petroproducts
3. Mr. VRB Krishnamurthy
4. Smt. K. Thenmozhi ...Respondents
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Ms. Rajani Iyer, Senior Counsel, Ms. Maneesha Patel, for the
Petitioner.
Mr. VRB Krishnamurthy, Respondent-in-person present.
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CORAM : B.R. GAVAI AND
RIYAZ I. CHAGLA, JJ.
DATE : 1 July 2017
JUDGMENT : (Per B.R. GAVAI, J)
1. Rule is made returnable forthwith.
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2. Heard by consent.
3. Our judicial conscience shocks at the manner in
which the learned Debts Recovery Appellate Tribunal
(hereinafter referred to as "DRAT" in short) has exercised the
jurisdiction under Section 18 of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 (hereinafter referred to as "SARFAESI Act" in
short). The present litigation has a chequered history. This is a
third round of litigation before this Court.
4. Respondent No. 1 has obtained cash credit facilities,
bank guarantees as well as term loan aggregating to Rs. 1450
Lakhs from the Petitioner Bank. On Petitioner Bank sanctioning
aforesaid facilities, the necessary hypothetication documents
were entered into in respect of the property, which is the subject
matter of the Petition. It appears that from time to time, the
Board of Directors of Respondent No.1 had passed Resolution
dated 25 May 2010 to extend the charge of the Petitioner on the
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said property. It is the case of the Petitioner that on Respondent
No. 1 defaulting to make the payment of the dues, the account
of Respondent No. 1 came to be declared as Non-performing
Assets (for short "NPA"). On 5 November 2012 a notice under
Section 13(2) of the SARFAESI Act came to be issued to the
Respondent No. 1. It appears that thereafter, there were certain
negotiations between the Petitioner and Respondents for one
time settlement. However, it appears that the same has failed. It
is the contention of the Petitioner that the Respondents gave
peaceful possession of the said property on 21 May 2013.
However, it is seriously disputed by the Respondents contending
therein that the Petitioner forcibly took possession of the
property. It appears that the Respondents have also filed a
complaint before the learned District Magistrate on 12 October
2014 against the Bank which came to be closed on 19 January
2015.
5. It appears that the first Writ Petition came to be filed
by the Respondents herein before this Court being Writ Petition
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No. 8631 of 2014. The Court vide order dated 29 September
2014 passed an ad-interim order directing therein that the
auction process shall be subject to the outcome of the said
Petition. However, it appears that when the Court heard both
the sides on 13 October 2014, the Court found that the
Petitioner had an alternate remedy of approaching the learned
Debts Recovery Tribunal (for short "D.R.T.") and therefore,
disposed of the Petition relegating the Petitioner to the alternate
remedy available to him in law. In pursuance of the alternate
remedy, the Respondents moved an application before the
D.R.T. on 17 October 2014 under the provisions of Section 17 of
SARFAESI Act being S.A. No. 505 of 2014. Along with the main
application, an application for ad-interim relief was also filed.
The same came to be rejected by learned D.R.T. Being aggrieved
thereby, the Respondents preferred an Appeal before the
learned D.R.A.T. Learned D.R.A.T. in the said Appeal directed
an amount of Rs. 4.00 Crores to be deposited as a condition
precedent for entertaining the said Appeal.
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6. Being aggrieved by the order passed by learned
D.R.A.T. of depositing the amount, the Petitioner approached
this Court by way of Writ Petition No. 742 of 2015 [Writ
Petition (L) No. 111 of 2015]. In the said Petition initially an
ad-interim order was granted by this Court. The said Petition
came up before the Division Bench on 27 January 2015 on
which date, the Court continued the ad-interim relief granted
earlier and directed certain Affidavits to be filed by the
Respondent Bank. The Petition was finally heard and disposed
of by this Court on 18 March 2015. The Court was of the view
that since the main Application under Section 17 of SARFAESI
Act was pending before the learned D.R.T., it would be
appropriate that the learned D.R.T. decides the main application
expeditiously on merits and in accordance with law. The
Division Bench, therefore, vide order dated 18 March 2015
directed the learned D.R.T. to decide the application within a
period of 12 weeks. Certain grievances of the Petitioner therein
(the Respondents herein) were directed to be raised by the
Petitioner therein before the learned D.R.T., which was directed
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to be considered by the learned D.R.T. In pursuance to the
directions issued by this Court, the learned D.R.T. by an
elaborate order dated 18 June 2015 running into 62 pages,
dismissed the application filed by the present Respondents.
Being aggrieved thereby the Respondents preferred an Appeal
under the provision of Section 18 of the SARFAESI Act before
the learned D.R.A.T. along with which an application for
complete waiver came to be filed by the Respondents. By the
impugned order, the learned Tribunal has closed the said
application and directed that the said application would be
considered only at the stage of final hearing of the Appeal.
Being aggrieved by the action of entertaining an Appeal without
following the mandatory provisions of Section 18 of the
SARFAESI Act, the Petitioner has approached this Court.
7. Smt. Iyer, the learned Senior Counsel on behalf of
the Petitioner, submits that the provisions of Section 18 of the
SARFAESI Act are mandatory in nature. She submits that the
rule of deposit of 50 percent of the amount as demanded by the
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bank or determined under Section 17 by the D.R.T., whichever
is lower and in exceptional cases, deposit of 25 percent is a pre-
condition for entertaining an Appeal. She submits that the
approach of the learned Appellate Tribunal in entertaining an
Appeal without directing the Respondents to deposit a single
penny defeats the statutory provisions as envisaged under
Section 18 of the SARFAESI Act.
8. Shri. Krishnamurthy, who is Respondent No. 3 and
the sole proprietor of Respondent No. 2 and Director of
Respondent No. 1, has been granted permission by the Registrar
of this Court to appear in person, after finding that he is capable
of representing his case personally. Since he is the party
appearing in person, we have heard him at length and given him
hearing for almost twenty minutes.
9. It is the main contention of Shri. Krishnamurthy that
the act of the bank is high handed. It is submitted by him that
the bank has forcibly taken possession of the assets without
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there being an order from the District Magistrate. He submits
that even the date on which the account of the Petitioner was
declared as NPA is vague. He has taken us through the various
documents to contend that the Bank has not acted in a fair and
just manner. He submits that the Bank has acted in such a
manner which affects the fundamental rights of a citizen and as
such, the order passed by the learned Tribunal which grants the
Respondents complete waiver from depositing 50 percent
amount as pre-condition while entertaining the Appeal warrants
no interference.
10. Section 18 of the SARFAESI Act reads thus :-
"Appeal to Appellate Tribunal -
(1) Any person aggrieved, by any order made
by the Debts Recovery Tribunal [under section 17,
may prefer an appeal alongwith such fee, as may be
prescribed] to the Appellate Tribunal within thirty
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days from the date of receipt of the order of Debts
Recovery Tribunal:
[Provided that different fees may be
prescribed for filing an appeal by the borrower or by
the person other than the borrower:]
[Provided further that no appeal shall be
entertained unless the borrower has deposited with
the Appellate Tribunal fifty per cent, of the amount
of debt due from him, as claimed by the secured
creditors or determined by the Debts Recovery
Tribunal, whichever is less:
Provided also that the Appellate Tribunal
may, for the reasons to be recorded in writing,
reduce the amount to not less than twenty-five per
cent, of debt referred to in the second proviso.]"
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11. Under Sub-section (1) of Section 18, right is
available to a person aggrieved by an order made by learned
D.R.T. under Section 17 of the SARFAESI Act to Appeal to the
Appellate Tribunal within 30 days from the date of the receipt of
the order. The second proviso to Subsection (1) mandates that
no Appeal shall be entertained unless the borrower has
deposited with the Appellate Tribunal, 50 percent of the amount
of debt due from him as claimed by the secured creditor or
determined by the D.R.T. which ever is less. Third proviso
bestows discretion upon the Appellate Tribunal to reduce an
amount of deposit which shall not be less than 25 percent of the
debt referred to second proviso for the reasons recorded in
writing.
12. It could thus, be clearly seen that the
legislative intent is clear. The statute mandates that normally no
Appeal shall be entertained by the learned Appellate Tribunal
unless a borrower has deposited 50 percent of the amount of
debt due from him as claimed by the secured creditors or
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determined by the Recovery Tribunal, which ever is less. No
doubt, that the third proviso bestows the discretion with the
Tribunal to reduce the said amount to 25 percent, however, for
the reasons to be recorded in writing. It could thus, be clearly
seen that the statute provides that for entertaining an Appeal,
deposit of 50 percent of amount, as claimed by the creditor or as
determined by D.R.T. whichever is less as provided in second
proviso is mandatory, which can be reduced to 25 percent by
the learned Tribunal for the reasons to be recorded in writing.
13. In other words, in no case the Appeal could be
entertained by the learned Tribunal unless 25 percent of amount
is deposited and that too, when the Appellant makes out a
special case and the learned Tribunal records the reason for
reducing the amount from 50 percent to 25 percent.
14. The order passed by the learned Tribunal
makes an interesting reading. The learned Tribunal in the
impugned order refers to the order passed by the Division Bench
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of this Court in Writ Petition No. 742 of 2015 dated 18 March
2015. The learned Tribunal observes that it had passed an order
on 31 October 2014 directing the Appellants to deposit a sum of
Rs. 4.00 Crores within six weeks. Against the said order, the
Appellant had preferred the Writ Petition before this Court and
the Division Bench of this Court vide order dated 18 March
2015 had directed the D.R.T. to dispose of the application on
merits. The learned Tribunal makes further reference to the
observations made by the Division Bench in the order dated 18
March 2015. The learned Tribunal further goes on observing, at
paragraph 9 that its earlier order directing the Appellant to
deposit Rs. 4.00 Crores was not confirmed by the High Court
and the matter was remitted back to the learned D.R.T. with the
directions. The learned Tribunal further observed that under
such circumstances, it was of the view that the application needs
to be closed.
15. With great respect to the learned Tribunal,
there is no such direction in the order of this Court dated 18
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March 2015. In any case, even this Court while exercising the
jurisdiction under Article 226 of the Constitution of India,
cannot direct any authority including a statutory tribunal to act
contrary to the statutory provisions. With great respect, such a
power can be exercised only by the Hon'ble Supreme Court and
that too, while exercising its powers under Article 142 of the
Constitution of India.
16. We have no hesitation in saying that the
learned Tribunal has grossly and patently erred in passing the
order contrary to the mandate of Section 18 of the SARFAESI
Act. We further find that the interpretation as placed by learned
Tribunal of the order of this Court dated 18 March 2015 in Writ
Petition No. 742 of 2015 is also wholly erroneous. The Court
vide the said order has directed that since the main application
was pending before learned D.R.T., it was appropriate that the
said application was decided on merits. After the order was
passed by this Court, the matter has undergone scrutiny by the
learned D.R.T. and the learned D.R.T. by an elaborate order has
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rejected the contentions raised by the Respondents. The Appeal
before the learned D.R.A.T. arises after the full-fledged hearing
was given to the parties by learned D.R.T.
17. In that view of the matter, while entertaining
an Appeal under Section 18, the learned Tribunal by no stretch
of imagination could have given a go by to the mandatory
provisions under Section 18 of the SARFAESI Act.
18. In that view of the matter, we find that the
order passed by the learned D.R.A.T. is not sustainable in law.
The Writ Petition deserves to be allowed. Accordingly, we pass
the following order :-
(i) The Writ Petition is allowed.
(ii) The impugned order dated 4 November 2015 is
quashed and set aside.
(iii) The matter is remanded back to learned Debts
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Recovery Appellate Tribunal to consider afresh, the
application filed by the Respondents for waiver in
the light of the discussions, made by us hereinabove.
(iv) Needless to state that taking into consideration, the
long pendency of the matter, the learned Debts
Recovery Appellate Tribunal would decide the said
application within a period of four weeks from
today.
[RIYAZ I. CHAGLA J.] [B.R. GAVAI, J.]
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