Delhi High Court
M/S Aerens Entertainment Zone ... vs Phoenix Arc Pvt. Ltd. on 13 April, 2015
$~2
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Decided on 13th April, 2015
+ W.P.(C) 3461/2015
M/S AERENS ENTERTAINMENT ZONE PVT. LTD.
..... Petitioner
Through: Mr.Sacchin Puri and Ms.Aastha
Lumba, Advs.
versus
PHOENIX ARC PVT. LTD. ..... Respondent
Through: Mr.Ashwani Mata, Sr.Adv. with Mr.
Suresh Dutta Dobhal, Adv.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE R.K.GAUBA
MR. JUSTICE S. RAVINDRA BHAT (OPEN COURT)
%
CAV. No. 334-335/2015
Since the respondent put in appearance, both the caveats stand
discharged.
W.P.(C) 3461/2015
1. The petitioner challenges an order of the Debts Recovery Appellate
Tribunal (DRAT) dated 19.01.2015 whereby its request for waiver of pre-
deposit was granted to the extent of 25% of the determined amount.
2. Learned senior counsel for the respondent Mr.Ashwani Mata is
present on advance notice.
3. The brief facts are that the petitioner was debtor to the Indian
WP(C)3461 /2015 Page 1
Overseas, Bank, Allahabad Bank and Bank of Rajasthan (the last bank later
merged with the ICICI Bank). On 31.03.2010, a joint notice under Section
13(2) of the Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (hereinafter referred to as "the
SARFAESI Act") was issued by the petitioner's creditors. The petitioner
preferred an application under Section 17 of the SARFAESI Act aggrieved
by the securitization measures taken on 31.03.2010. Subsequent to this
event the ICICI Bank assigned its NPA to a non-banking third party. The
said entity is not before the Court. The proceedings under Section 17 the
SARFAESI Act, were, however, pursued by other two creditors (banks).
An Original Application (OA) was filed by the two secured creditor banks.
On 05.04.2011 an Assignment Agreement was entered into with the other
secured creditor-Allahabad Bank. As a result of this arrangement, Phoenix
ARC became the owner of the NPA. The assignment of these debts became
the bone of contention before the Debts Recovery Tribunal (DRT). In those
proceedings, the petitioner contended, inter alia, that the assignee - ARC
who has also been in the array of parties, assigned its interest in favour of a
third party and therefore lost locus to pursue the measures under
SARFAESI. The said assignee/company resisted this submission and urged
that the Assignment Agreement had not been concluded, in the sense that
final transfer of the subject matter had not taken place. The DRT ultimately
by its order dated 02.09.2014 dismissed the petitioner's application
(S.A.No.62/2010) and decreed O.A. No. 249/2011 filed by Phoenix ARC,
the original assignee. The DRT, inter alia, dealt in negative the petitioner's
contention with respect to the locus of the assignee, Phoenix ARC.
4. The petitioner's appeal is pending before the DRAT. It has sought
WP(C)3461 /2015 Page 2
stay of the final order. It sought waiver of the requirement of depositing the
amount determined and demanded, under Section 18(1) of the SARFAESI
Act. By the impugned order, the DRAT granted relief to the extent of 25%
of the demand but declined relief for the balance amount.
5. Learned counsel for the petitioner urged that the DRT's order is ex
facie untenable. It was argued that the provision of SARFAESI nowhere
provides for the further presumption of an assignee's interest and
consequently in the given circumstances of the case Phoenix could not have
maintained the proceedings and proceeded under SARFAESI. Learned
counsel sought to urge the merits of the findings of the DRT, saying that in
absence of any enable provision in SARFAESI since Phoenix has parted
with its interest to a third party, the securitization measures were prima facie
illegal. The counsel for the ARC, who has appeared on advance notice -
resisted the submissions. It was urged that this Court should not consider
and record any findings on the merits of petitioner's submissions because
this is a subject matter of the appeal pending before the DRAT. Besides, as
to whether Phoenix had interest at the relevant time or not is a factual aspect
on which findings have been returned by the DRT after considering the facts
and this Court should not upset those findings under Article 226 of the
Constitution, especially since they are interlocutory in nature.
6. This Court has considered the submissions. The facts discussed
above show that DRAT followed the mandate of the law provided in
Section 18(1) of the SARFAESI. The third proviso to Section 18(1)
enables the DRAT to grant relief from the mandate of second proviso to
Section 18(1), which requires pre-deposit of at least 50% of the determined
amount. The third proviso relieves the requirement and allows the DRAT to
WP(C)3461 /2015 Page 3
reduce the pre-deposit amount to 25%. The Supreme Court in its ruling in
Narayan ChanderGhosh vs.UCO Bank 2011 4 SCC 548 has commented on
the imperative nature of Section 18(1) and stated that no Court can deviate
from the statutory requirement of minimum pre-deposit of 25% of the
determined amount.
7. Given the binding nature of the ruling in Narayan Chander (supra)
and compulsory nature of the third proviso of Section 18(1) and especially
having regard to the fact that the respondent's O.A. was decided on merits,
this Court is of the opinion that it would not be appropriate to comment on
the legality or otherwise of the submissions made by the petitioner,
especially since they are the subject matter of the appeal before DRAT.
Having regard to this view of the matter, we see no reason to interfere with
the order of the DRAT.
8. The appeal is accordingly dismissed.
S. RAVINDRA BHAT, J
R.K.GAUBA, J
APRIL 13, 2015
mr
WP(C)3461 /2015 Page 4
