M/S Timpack Pvt. Ltd vs Punjab National Bank
2012 Latest Caselaw 5852 Del

 19.
*      IN THE HIGH COURT OF DELHI AT NEW DELHI

+      W.P.(C) 6197/2012

       M/S TIMPACK PVT. LTD.                                    ..... Petitioner
                     Through:              Mr. Jose Chiramal, Adv.

                                    versus

       PUNJAB NATIONAL BANK               ..... Respondent
                    Through: None.
       CORAM:
       HON'BLE THE CHIEF JUSTICE
       HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

                                 ORDER

% 28.09.2012

1. The petition, besides impugning the order dated 29th August, 2012 of

the Debt Recovery Tribunal (DRT) - I, New Delhi in S.A. No.127/2012

preferred by the petitioner, also seeks a declaration that the requirement in

the second and third proviso to Section 18(1) of the Securitisation and

Reconstruction of Financial Assets and Enforcement of Security Interest

Act, 2002 (SARFAESI) Act, 2002 of deposit, for the appeal to be

entertained by the Debt Recovery Appellate Tribunal (DRAT) is ultra vires

Article 14 of the Constitution of India.

2. The aforesaid S.A No.127/2012 before the DRT-I, New Delhi has

been preferred by the petitioner under Section 17 of the SARFAESI Act

impugning the measures taken by the respondent Bank/its authorized

officers under Section 13(4) of the SARFAESI Act; the petitioner during

pendency of the said proceeding before the DRT, also sought interim stay of

the measures initiated by the respondent Bank under Section 13(4) of the

Act. DRT, vide impugned order dated 29 th August, 2012 on the said

application of the petitioner for interim relief, has restrained the respondent

Bank from proceedings further under the SARFAESI Act subject to the

petitioner depositing a sum of Rs.2.5 crores within one month and a sum of

Rs.50 lacs per month till further orders with the respondent Bank. The

proceedings have been adjourned by the DRT to 1 st October, 2012 for

completion of pleadings etc.

3. The petitioner is aggrieved from the conditions aforesaid imposed by

the DRT of deposit of Rs.2.5 crores and further amount of Rs.50 lacs per

month with the respondent Bank, for grant of interim relief.

4. The case set-up by the petitioner is that though the remedy of appeal

to the DRAT is available to the petitioner against the order dated 29 th

August, 2012 supra of DRT but the petitioner is prevented from invoking the

said right of appeal owing to the onerous condition of pre-deposit of 50% of

the amount of debt due as claimed by the secured creditors or determined by

the DRT, whichever is less, reduceable by the DRT in the exercise of its

discretion to 25%, contained in the second and third proviso aforesaid of

Section 18 of the Act. The argument of the counsel for petitioner is that the

Supreme Court in Mardia Chemicals Ltd. Vs. UOI (2004) 4 SCC 311 struck

down provision for pre-deposit of 75% earlier contained in Section 17 of the

Act; that the legislature has however introduced a similar condition in

Section 18 of the Act and which is liable to be struck down for the same

reasons which prevailed with the Supreme Court in striking down the

provision for pre-deposit in Section 17 of the Act.

5. We have extensively heard the counsel for the petitioner.

6. We may notice that the DRT in its order dated 29th August, 2012,

imposed the conditions aforesaid for grant of interim relief, recording the

submission of the counsel for the petitioner before the DRT that the legally

recoverable amount was Rs.5,50,15,854.04 and not Rs.23,36,48,368/- as on

31st March, 2011 as demanded by the respondent Bank and the contention

of the petitioner that its OTS proposal for about Rs.7 crores had been

rejected without logic and reason. The DRT further noted the contention of

the counsel for the respondent Bank that the petitioner having admitted

liability in the sum of Rs.5,50,15,854.04, is not entitled to any interim relief

without depositing the said amount; the respondent Bank had also drawn

attention to the balance sheet of the petitioner Company as on 31 st March,

2009 showing Rs.13 crores due to the respondent Bank. It was in these

circumstances that the DRT, noticing that the petitioner had not disputed the

liability and had disputed the quantum only, has granted a chance to the

petitioner to prove its bona fide by making payment of Rs.2.5 cores within

one month and of Rs.50 lacs per month.

7. Upon being confronted with the aforesaid, the counsel for the

petitioner contends that the DRT has wrongly recorded that the petitioner

had admitted liability in the sum of Rs.5,50,15,854.04.

8. We are however of the view that if the petitioner has any grievance as

to such findings of DRT, the same have to be considered by the DRAT and

this Court would not be justified in exercise of the writ jurisdiction to go

into that question at this stage. Moreover the aforesaid is only an interim

arrangement and the payment directed of Rs.50 lacs per month is also not

for a indefinite amount and is only until further orders, thereby making it

clear that DRT can entertain further plea from the petitioner to modify the

said condition. As the matter is still pending before the DRT, it cannot be

said that the petitioner has no fora for such modification. The Supreme

Court in Thansingh Nathmal Vs. A.Mazid, Supdt. of Taxes, (1964) SCR

654, Titaghur Paper Mills Co. Ltd. Vs. State of Orissa (1983) 2 SCC 433,

Assistant Collector of Central Excise, Chandan Nagar, West Bengal Vs.

Dunlop India Ltd., (1985) 1 SCC 260 and in recent decision in City and

Industrial Development Corporation Vs. Dosu Aardeshir Bhiwandiwala

(2009) 1 SCC 168 has held that the High Court will not be justified in

entertaining a petition under Article 226 as such orders will have adverse

impact on the rights of the Banks and other financial institutions to recover

their dues.

9. As far as the challenge by the petitioner to the second and third

provisos of Section 18 of the SARFAESI Act is concerned, we are of the

opinion that the challenge thereto by the petitioner is on mere apprehension

i.e. that in the event of the petitioner preferring any appeal it would be

required to make a deposit. A challenge to the provision of an Act cannot be

entertained on mere assumption. The petitioner till now has not approached

the DRAT and the cause of action if any to the petitioner will accrue only

after the petitioner approaches the DRAT and any order as apprehended by

the petitioner requiring the petitioner to make a deposit is made.

10. In view of the above, we are not inclined to entertain the writ petition.

Accordingly, this writ petition is dismissed. We make it clear that the order

in this writ petition will not come in the way of the writ petitioner to either

approach the DRT for modification of the second condition of the order or to

challenge the same by way of appeal before the DRAT. The challenge to the

vires of Section 18 is left open for the present.

No costs.

CHIEF JUSTICE

RAJIV SAHAI ENDLAW, J SEPTEMBER 28, 2012 pp