Delhi High Court
M/S Uday Estates Pvt. Ltd. vs Asset Reconstruction Company ... on 11 July, 2018
$~1.
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ WRIT PETITION (CIVIL) No. 5470/2018
Date of decision: 11th July, 2018
M/S UDAY ESTATES PVT. LTD. ..... Petitioner
Through Mr. Ashwini Kumar Mata, Sr. Advocate
with Mr. Sanjay Sharma, Advocate.
versus
ASSET RECONSTRUCTION COMPANY (INDIA) LIMITED
(ARCIL) ..... Respondent
Through Mr. Ateev Mathur & Ms. Jagriti Ahuja,
Advocates.
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
HON'BLE MR. JUSTICE CHANDER SHEKHAR
SANJIV KHANNA, J. (ORAL):
Present writ petition by M/s Uday Estates Private Limited impugns
orders dated 29th September, 2017 and 29th January, 2018 of the Debt
Recovery Appellate Tribunal ('Appellate Tribunal'). Other prayers made,
include the prayer that Appeal No. 318/2016 filed by petitioner should be
heard and decided by the Appellate Tribunal on merits or in alternative the
question of law raised should be decided by the High Court. Further prayer
is to direct the respondent i.e. Asset Reconstruction Company (India)
W.P. (C) No. 5470/2018 Page 1 of 6
Limited ('ARCIL') not to take possession of the property bearing 'De Aqua'
at Plot No. 1, Shastri Park District Centre, Delhi.
2. By order dated 29th September, 2017, Appellate Tribunal had rejected
the application of the petitioner for waiver of condition of pre-deposit of
50% of the amount of debt due as claimed by the secured creditor or
determined by the Debt Recovery Tribunal, whichever was less. By order
dated 29th January, 2018, appeal filed by the petitioner was dismissed by the
Appellate Tribunal for failure to make pre-deposit.
3. Primary contention of the petitioner is that the respondent could not
have invoked provisions of Securitization and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002 ('SARFAESI Act').
On 13th March, 2013, the respondent had paid Rs.81.60 Crores to Bank of
Baroda, albeit under the One Time Settlement ('OTS') Scheme. Hence, the
respondent was not and cannot be treated as a secured creditor under the
SARFAESI Act. Findings of the Debt Recovery Tribunal ('DRT') in the
order dated 29th April, 2016 that the respondent was a secured creditor were
challenged before the Appellate Tribunal.
4. Respondent's submit that the petitioner having invoked jurisdiction of
the Appellate Tribunal vide Appeal No. 318 of 2016, must make pre-deposit
as per second proviso to Section 18(1) of the SARFAESI Act. DRT vide
order dated 29th September, 2017 has held that the respondent was a secured
creditor entitled to invoke and take recourse to SARFAESI Act. Petitioner,
the debtor, despite opportunities had failed to make payment/pre-deposit and
comply with the statutory terms.
W.P. (C) No. 5470/2018 Page 2 of 6
5. Petitioner had earlier filed Writ Petition (C) No. 4573/2013 before
this High Court raising the plea that the respondent was not a secured
creditor within the meaning of SARFAESI Act and hence could not have
invoked provisions of SARFAESI Act. It is stated at the Bar that the writ
petition was withdrawn with liberty to approach the DRT.
6. Factum that the respondent had paid Rs.81.60 Crores to Bank of
Baroda on 13th March, 2013 and the petitioner's obligation and liability to
pay Rs.81.60 Crores with applicable interest to the respondent is undisputed.
7. Contention raised by the petitioner relates to the legal effect of the
transaction and assignment deed etc. executed by the Bank of Baroda in
favour of the respondent. DRT vide order dated 29th April, 2016 had
examined the legal effect and opined that the respondent was a secured
creditor, who had rightly invoked the SARFAESI Act. Accordingly,
securitization application filed by the petitioner was dismissed.
8. This Order dated 29th April, 2016 by the DRT had directed the
petitioner to pay the dues owed within nine months by three quarterly
installments. Payment could be made by the petitioner from their own
resources or by sale of secured asset by getting a better buyer to the
satisfaction of the respondent. In case of a single default in payment of
installments, the respondent was at liberty to proceed against the petitioner
in accordance with law.
9. Aforesaid findings and directions given in the order dated 29th April,
2016 by the DRT, were challenged in the appeal preferred by the petitioner
before the Appellate Tribunal.
W.P. (C) No. 5470/2018 Page 3 of 6
10. Petitioner having invoked statutory and then the appellate remedy was
required to comply with the statute. Accordingly, the petitioner was required
to make the pre-deposit to abide by the statutory mandate of Section 18(1) of
the SARFAESI Act. Appellate Tribunal as an appellate forum has the power
to examine findings given by the DRT including right of the creditor to
invoke securitization proceedings. A tribunal and authority conferred with
the power to act under the statute has jurisdiction to satisfy itself on whether
power has been excised in accordance with and conditions of exercise of the
power exist. Thus, to this extent, the impugned orders passed are in
accordance with the statute i.e. SARFAESI Act.
11. The next issue is whether the High Court should exercise its
discretion to interfere under Article 226 and 227 of the Constitution. It is
correct that the question of jurisdiction can be raised in a writ petition.
Similarly, the High Court can exercise discretion and in a case of this nature
impose reasonable terms even when they examine question of jurisdiction of
the tribunal under a special enactment. On being questioned, whether the
petitioner has made payment(s) to the respondent on or after 13th March,
2013, it is stated that the petitioner had paid an amount of Rs.15 Crores
when the matter was pending before the DRT. No payment thereafter has
been made. Obligation to pay Rs. 81.61 Crores with interest (less Rs.15
Crores already paid) is undisputed. In this factual background, counsel for
the respondent states that amount of Rs.130 crores is due and payable by the
petitioner to the respondent. Learned Senior Advocate for the petitioner
states and accepts that about Rs.100 Crores is payable.
W.P. (C) No. 5470/2018 Page 4 of 6
12. Account of the petitioner was classified as a non-performing asset in
March 2013. The petitioner had earlier given an undertaking before the DRT
pursuant to which an interim stay order was passed. On breach of the
undertaking, interim stay was vacated vide order dated 27th March, 2013.
Feeling aggrieved the petitioner had approached the tribunal which had
granted the petitioner one month's time. The petitioner again defaulted, and
on 29th May, 2014, the stay was vacated. The petitioner had thereupon
approached the High Court and was granted conditional stay subject to
payment of balance amount. Once again the petitioner defaulted.
13. DRT vide order dated 29th April, 2016 had granted time to the
petitioner make payment in installments spread over nine months. Order
dated 28.8.2017 in W.P.(C) No.7554/2017 passed by another Division
Bench records petitioner's un-willingness to pay/deposit at least 25% of
Rs.110 Crores.
14. Given the aforesaid factual background, we asked whether the
petitioner is in a position to make payment of about Rs.50 crores in
installments.
15. Learned Senior Advocate for the petitioner, on instructions, states that
the petitioner is not in a position to make any payment.
16. In view of the statement made expressing inability to make any
payment, we are not inclined to issue notice in the writ petition as the factum
that debt is due is undisputed. Immovable property is the only asset of the
petitioner from which recovery can be made. Facts of the case do not justify
indulgence as enough time and opportunities have been granted.
W.P. (C) No. 5470/2018 Page 5 of 6
17. Writ petition is dismissed, without any order as to costs.
SANJIV KHANNA, J.
CHANDER SHEKHAR, J.
JULY 11, 2018
VKR/NA
