Sanjeev Sikka And Anr. vs Reserve Bank Of India And Ors.
2018 Latest Caselaw 362 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                                   Decided on: 15 .01.2018


+      W.P.(C) 312/2018, CM APPL. 1314/2018 (Stay) and CM APPL.
       1315/2018 (exemption)

       SANJEEV SIKKA AND ANR.                                 ..... Petitioners
                          Through: Mr Vivek Kohli, Ms Prerna Kohli and
                          Mr Sunil Tyagi, Advs.

                                versus

       RESERVE BANK OF INDIA AND ORS.                      ..... Respondent

Through: Mr H.S. Parihar and Mr K.S. Parihar, Advs for R-1.

Mr Sanjeev Sagar, Adv for R-2.

CORAM:

HON'BLE MR. JUSTICE SIDDHARTH MRIDUL HON'BLE MS. JUSTICE DEEPA SHARMA

HON'BLE MS. JUSTICE DEEPA SHARMA

1. In this writ petition, the petitioners have challenged the order dated

08.01.2018 of learned Debt Recovery Appellate Tribunal (hereinafter

referred to as „DRAT‟), Delhi dismissing their Misc. Appeal No. 498/2017,

for failure to make the pre-deposit of minimum amount of 25% of the

amount of debt in question.

2. The brief facts of the case are that the petitioners took loan from the

respondent No. 2/Bank under a Loan Agreement and mortgaged the property

W.P (C) 312/2018 Page 1 bearing no. B-550, New Friends Colony, New Delhi on 11.01.2007. The

petitioners, on 29.06.2013 received notice under Section 13 (2) of the

Securitisation and Reconstruction of Financial Assets and Enforcement of

Security Interest Act, 2002 (SARFAESI Act), for an amount of Rs.

9,48,93,933/- only. On 10.09.2013, a notice under Section 13 (4) of the

SARFAESI Act was issued by the Bank calling upon the petitioners to

handover the peaceful symbolic possession of the said property on or after

20.09.2013 for recovery of the outstanding amount. On 19.09.2013 and

21.09.2013, petitioner No. 1 wrote letters for One Time Settlement, to the

Bank. On 28.10.2013, petitioner No. 2 also wrote a letter to the respondent

No. 2/Bank giving proposal of Rs. 6,25,00,000/- for settlement of the loan

amount only. This proposal, however, was rejected by respondent No. 2 on

05.11.2013. On 07.11.2013, the petitioners sent a formal request letter for

One Time Settlement for Rs. 7,00,00,000/-. On 28.01.2014, the Possession

Notice was issued to the petitioners by the Court Receiver appointed at the

behest of respondent No. 2. On 03.02.2014, the petitioners filed the

Securitization Application No. 19/2014 before the Debts Recovery Tribunal

- 1 (hereinafter referred to as "DRT"), New Delhi for setting aside the

Possession Notice dated 28.01.2014. Vide order dated 10.02.2014, the

W.P (C) 312/2018 Page 2 DRT-1 granted interim protection to the petitioners qua the said property

and directed the petitioners to file an affidavit cum undertaking to hand over

the possession of the property as and when demand is raised by respondent

No. 2 within seven days, after the sale. During the pendency of S.A. No.

19/2014, when the matter was listed for final hearing, respondent No. 2 filed

two interim applications bearing Nos. 262/2017 and 1668/2017 praying for

the modification of the interim order, thereby directing the petitioners to

vacate the said property immediately and to allow the respondent No. 2 to

take physical possession of the said property.

3. Learned DRT-1 vide its order dated 23.10.2017 continued the interim

protection granted vide its order dated 10.02.2014 subject to the petitioners

depositing 50% of the amount mentioned in the Demand Notice under

section 13 (2) of the SARFAESI Act within 30 days from the date of the

said order, failing which the respondent No. 2/ Bank shall take possession of

the mortgaged property.

4. Against the said order dated 23.10.2017, the petitioners preferred the

appeal bearing Misc. Appeal No. 498/2017 before DRAT. On 29.12.2017,

petitioners received a Possession Notice issued by Court Receiver appointed

vide order dated 11.12.2017 by learned Chief Metropolitan Magistrate, at

W.P (C) 312/2018 Page 3 the behest of respondent No. 2. The petitioners filed an application bearing

I.A No. 15/2018 before the learned DRAT seeking stay of the said

Possession Notice and extension of date for handing over possession of the

said property, after 15 days from the date of conclusion of CBSE

Examination of the children of petitioner No. 1 i.e. by the end of April 2018.

The said I.A. was dismissed vide the impugned order dated 08.01.2018 on

the ground that the petitioners refused to pre-deposit 25% of the total

amount in question.

5. We have heard the arguments of the learned counsel for the

petitioners and have given thoughtful consideration.

6. In this writ petition, the challenge is to the order dated 08.01.2018

which was passed in I.A No. 15/2018, moved by the petitioners in their

pending appeal no. 498/2017 against an order dated 23.10.2017 passed by

DRT-1, directing the petitioners to deposit 50% of the amount mentioned in

the Demand Notice issued under Section 13 (2) of SARFEASI Act.

7. It is apparent that the learned DRT-1, on an earlier occasion in the

challenge by the petitioners to a Possession Notice dated 28.01.2014 of the

mortgaged property, directed the petitioners to give an undertaking to vacate

the premises within seven days from the date of Demand or Possession by

W.P (C) 312/2018 Page 4 the respondents. The petitioners did not honour their undertaking and did

not vacate premises. The respondents filed applications bearing Nos.

262/2017 and 1668/2017 for modification of the earlier order dated

10.02.2014 and the learned DRT-1, modified the order to the extent that

while maintaining the stay against dispossession, it directed the petitioners

to deposit 50% of the amount mentioned as due in the demand notice issued

under Section 13(2) of SARFEASI Act. This order was challenged by the

petitioners in Appeal No. 498/2017 before DRAT. Under Section 18 of the

SARFAESI Act, the appeal against the order of DRT, lies before DRAT.

Second Proviso of the said provision which is reproduced as under, for the

sake of convenience, clearly debars the entertainment of an appeal by the

Appellate Tribunal except on deposit of 50% of the amount of debt due.

This amount, however, can be reduced to 25% by the Appellate Tribunal for

the reasons to be recorded. Section 18 of SARFAESI Act reads as under:-

"18. Appeal to Appellate Tribunal.--

(1) Any person aggrieved, by any order made by the Debts Recovery Tribunal under section 17, may prefer an appeal along with such fee, as may be prescribed to an Appellate Tribunal within thirty 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:

W.P (C) 312/2018 Page 5 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."

8. Under this provision, the Appellate Tribunal is permitted to hear the

appeal against an order of DRT only upon deposit of 50% or 25% of the

debt amount as directed. Admittedly, the petitioners have not complied with

the directions of the learned DRAT and failed to deposit the amount of 25%

which is a sine qua non for hearing of an appeal against the order of DRT.

The Supreme Court in Narayana Chandra Ghosh vs. UCO Bank and Ors.

reported at (2011) 4 SCC 548 held as under:-

"8. Section 18(1) of the Act confers a statutory right on a person aggrieved by any order made by the Debts Recovery Tribunal under Section 17 of the Act to prefer an appeal to the Appellate Tribunal. However, the right conferred under Section 18(1) is subject to the condition laid down in the second proviso thereto. The second proviso postulates 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.

However, under the third proviso to the sub-section, the Appellate Tribunal has the power to reduce the amount, for the reasons to be recorded in writing, to not less than twenty-five per cent of the debt, referred to in the second proviso. Thus, there is an absolute bar to entertainment of an appeal under Section 18 of the Act unless the condition precedent, as stipulated, is fulfilled. Unless the borrower

W.P (C) 312/2018 Page 6 makes, with the Appellate Tribunal, a pre-deposit of fifty per cent of the debt due from him or determined, an appeal under the said provision cannot be entertained by the Appellate Tribunal. The language of the said proviso is clear and admits of no ambiguity. It is well-settled that when a Statute confers a right of appeal, while granting the right, the Legislature can impose conditions for the exercise of such right, so long as the conditions are not so onerous as to amount to unreasonable restrictions, rendering the right almost illusory. Bearing in mind the object of the Act, the conditions hedged in the said proviso cannot be said to be onerous. Thus, we hold that the requirement of pre-deposit under sub-section (1) of Section 18 of the Act is mandatory and there is no reason whatsoever for not giving full effect to the provisions contained in Section 18 of the Act. In that view of the matter, no court, much less the Appellate Tribunal, a creature of the Act itself, can refuse to give full effect to the provisions of the Statute. We have no hesitation in holding that deposit under the second proviso to Section 18(1) of the Act being a condition precedent for preferring an appeal under the said Section, the Appellate Tribunal had erred in law in entertaining the appeal without directing the appellant to comply with the said mandatory requirement."

In view of the settled proposition of law, we are of the opinion that the

impugned order of learned DRAT is in consonance with the powers

conferred upon it by Section 18 of the SARFAESI Act. We find no infirmity

in the impugned order.

9. It is not out of place to note that on the last date when the petition was

heard, the petitioners sought an opportunity to submit an undertaking before

this Court indicating the date on which they shall vacate the subject property

and hand over the possession without demur. The petitioners apparently

filed the said undertaking before this Court. Learned counsel for the

W.P (C) 312/2018 Page 7 respondents, to whom the advance copy of it was admittedly supplied, has

submitted that the said undertaking is not acceptable to the respondents for

two reasons. Firstly, that the plea of the petitioners to give them 15 days

time after the completion of board exams of the children, was considered

and time was granted by DRT-1 vide its order dated 10.02.2014, subject to

deposit of 50% of the debt amount and the petitioners have failed to comply

with the said directions of learned DRT-1 passed vide its order dated

23.10.2017, rather they challenged the said directions before DRAT in Misc.

Appeal No. 498/2017, which was dismissed and the said dismissal order is

impugned before this Court, and that the petitioners cannot seek the same

relief unconditionally without first complying with the directions given to

them by the Court of competent jurisdiction. Secondly, it is submitted that

the petitioners‟ conduct is not trustworthy. They are playing smart which is

apparent from the fact that while the impugned order is challenged by both

the petitioners, this undertaking is filed only by one of the petitioners and

Mr. Rajeev Sikka, has not filed any undertaking. Since the said undertaking,

for the reasons as submitted, is not acceptable to respondent No. 2, the Court

cannot accept the said undertaking, more so when the same issue i.e. giving

them further time for vacation unconditionally was also raised in the appeal

W.P (C) 312/2018 Page 8 before the DRAT by the petitioners, which was dismissed for non-

compliance of directions issued under Section 18 of SARFAESI Act. Their

remedy was before DRAT which they have failed to avail. The petitioners

cannot bypass an equally efficacious remedy which was available to them

before DRAT.

10. No grounds to interfere with the impugned order are made out. The

petition along with the pending applications, is dismissed.

DEEPA SHARMA (JUDGE)

SIDDHARTH MRIDUL (JUDGE) JANUARY 15, 2018 ss

W.P (C) 312/2018 Page 9