Gujarat High Court
Shree Hari Oil Industries Throu ... vs Indian Bank on 18 August, 2023
Bench: Nikhil S. Kariel
NEUTRAL CITATION
C/SCA/8152/2023 JUDGMENT DATED: 18/08/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 8152 of 2023
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE NIKHIL S. KARIEL
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ? NO
2 To be referred to the Reporter or not ?
YES
3 Whether their Lordships wish to see the fair copy
of the judgment ? NO
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution NO
of India or any order made thereunder ?
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SHREE HARI OIL INDUSTRIES THROU PARTNER KIRITKUMAR
JIVRAJBHAI PANARA
Versus
INDIAN BANK
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Appearance:
MR DHAVAL DAVE, SR. ADV. with MR VIRENDRA M GOHIL(3244) for the
Petitioner(s) No. 1
Ms. HIMANI KINI(7489) for the Respondent(s) No. 1,2,3
MR ASIM PANDYA, SR. ADV. with PRERAK P OZA(8279) for the
Respondent(s) No. 4,5,6,7,8,9
VINAY D BAIRAGRA(8360) for the Respondent(s) No. 1,2,3
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CORAM:HONOURABLE MR. JUSTICE NIKHIL S. KARIEL
Date : 18/08/2023
ORAL JUDGMENT
1. Heard learned senor advocate Mr. Dhaval Dave
appearing with learned advocate Mr. Virendra Gohil on behalf
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of the petitioner, learned advocate Mr. Vinay Bairagar
appearing for learned advocate Ms. Himani Kini for
respondent nos. 1, 2 and 3 and learned senior advocate Mr.
Asim Pandya appearing with learned advocate Mr. Prerak Oza
on behalf of respondent nos. 4 to 9.
2. By way of this petition, the petitioner has prayed for the
following reliefs:-
"(A) Your Lordship may be pleased to admit and allow
this petition;
(B) This Hon'ble Court may be pleased to issue Writ
of Certiorari or Writ in Nature of Certiorari or any
other appropriate Writ, order or direction by
quashing and setting aside the order dated
21/04/2023 passed in S.A.No.155 of 2020 by the
Hon'ble Presiding Officer D.R.T.-II Ahmedabad,at
Annexure-A to this petition in the interest of justice;
(C) This Hon'ble Court may be pleased to issue Writ
of Mandamus or Writ in Nature of Mandamus or any
other appropriate Writ, order or direction by
directing the Respondent no.1 Bank to immediately
execute and register Sale deed in favor of the
petitioner in respect of property being Survey no. 24
P-3/P-2 Rajpar Road Morbi at Khanpar Taluka Morbi
District Morbi admeasuring about 8094 sq.mtr. in the
interest of justice;
(D) Pending admission, hearing and final disposal of
this petition, Hon'ble Court may be pleased to stay
the implementation, execution and operation of order
dated 21/04/2023 passed in S.A.No.155 of 2020 by
the Hon'ble Presiding Officer D.R.T.-II Ahmedabad at
Annexure-A to this petition in the interest of justice;
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(E) Pending admission, hearing and final disposal of
this petition, Hon'ble Court may be pleased to stay
further proceedings of IA no. 1370 of 2022 and SA
No. 155 of 2020 in the interest of justice;
(F) This Hon'ble Court may be pleased to direct the
Respondent no.1 Bank to refund the TDS amount of
1.00% of Sale Consideration amounting to
Rs.1,56,410/- which is already deposited by the
Petitioner. This amount was inadvertently paid to the
Bank and which had remained to be deducted from
the Sale Consideration at the same was otherwise
fully paid being a sum of Rs.1,56,41,000/-.
(G) This Hon'ble Court may be pleased to direct the
Respondents to award exemplary costs to the
petitioner;
(H) This Hon'ble Court may be pleased to pass such
other and further orders as may be considered fit and
proper in the interest of justice."
2.1. At this stage, it would be apposite to note that the
petitioner, in addition to challenging an order dated
21.04.2023 passed in Securitisation Application No. 155 of
2020 by the learned Debt Recovery Tribunal, had also sought
a prayer against the respondent no.1 - bank to execute a
registered sale deed in favour of the present applicant. Such
prayer being in the context of the submission that the
applicant was the successful auction purchaser of a property
belonging to the private respondents herein, of which, the
possession had been taken of and auction had been conducted
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by the respondent bank under the provisions of the
Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (hereinafter
referred to as 'the Securitisation Act').
2.2. It would appear that the respondent bank vide their
reply dated 17.06.2023 have submitted that the registered
sale deed of the auctioned property purchased by the
petitioner has been executed and registered with the office of
the Sub-Registrar, Morbi. Thus, it would appear that the said
prayer would no longer be required to be considered.
3. At this stage, it requires to be observed that from a
perusal of the prayers, since it would be evident that the
present petition is in the nature of challenging an interim
order passed by the learned DRT, the present petition could
have been disposed of by directing the petitioner either to
approach the statutory appellate forum against the said order
or learned DRT could have been directed to decide the
securitisation application as expeditiously as possible, yet,
since it appears that the petitioner, having approached this
Court by filing the present petition and having been granted
at-interim relief, has misused the same and hence, the present
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petition would have to be dealt with appropriately, than as
noted herein above.
4. Insofar as the facts leading to filing of this petition,
considering the prayers, the petition would revolve around a
very limited set of facts which would be briefly narrated
herein below. Furthermore, it is required to be mentioned that
such an introduction to the facts is required more particularly
in context of the petition as well as the submissions of the
learned counsels which were both extensive but, completely
unrequired and probably with a view to prejudice the Court.
4.1. As far as relevant facts are concerned, it would appear
that the respondent bank had conducted auction of a property
bearing property at Survey No.24P-3/P-2, situated at Rajpar
Road, Khanpar, Taluka District Morbi. The said property
admeasuring around 8094 sq.mtrs. was belonging to one M/s.
Shrinathji Cotton and Oil Industries - respondent no.4 herein
and whereas, the same had been mortgaged with the
respondent no.1 bank for availing financial facilities.
4.2. Since the loan had not been repaid and the loan account
had been declared as NPA, measures under the Securitisation
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Act had been initiated, resulting in possession of the property
having been taken over and the same being sold by way of
auction dated 23.02.2022. It would appear that the present
petitioner being the highest bidder, for an amount of Rs.
1,56,41,000/- against reserved price of Rs. 1,30,41,000/- had
received sale intimation and sale confirmation letter from the
bank on the date of auction itself and whereas, the petitioner
had deposited the sale amount as per the terms and
conditions of the bank.
4.3. It would appear that, thereafter, the petitioner had
requested the bank to complete the process of execution of
sale deed and registration thereof and whereas it appears that
later on, the auction process had been stalled on account of
the order of status-quo being granted by the learned DRT. It
would appear that in the meanwhile, the petitioner had
approached this Court by preferring Special Civil Application
No. 13531 of 2022 inter alia praying for a direction to the
bank to issue sale certificate etc. It appears that certain
interim orders had been passed by the learned Coordinate
Bench of this Court, more particularly, noticing certain
discrepancies and whereas in the considered opinion of this
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Court, more particularly as stated herein above, since such
orders may not have any bearing on the present issue, the
same are not being dealt with here. Suffice it to state that
ultimately, vide order dated 14.03.2023, a learned Coordinate
Bench of this Court had disposed of the said petition being
SCA No. 13531/2022 insofar as observing that since the sale
certificate is issued in favour of the petitioner, the said
grievance would not survive. Certain other observations and
directions have been issued by the learned Coordinate Bench
vide the said order and whereas, in the considered opinion of
this Court, the same may not have any bearing as far as the
present issue is concerned.
4.4. It would appear that after disposal of the writ petition,
since the respondent bank did not take appropriate steps for
registering the sale deed, an application had been preferred
before the DRT inter alia for direction against the respondent
bank. Certain other prayers had also been sought for more
particularly as regards an earlier order of the learned
Tribunal as well as seeking compensation from the officers of
the bank and with regard to refund of TDS amount as prayed
for being one of the prayers in the present petition etc.
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4.5. It would appear that the main securitisation application
preferred by respondent nos. 4 to 9 against the measures
under the Securitisation Act taken by the bank had been listed
on 21.04.2023 i.e. the day on which the order impugned was
passed and (on the very date) the auction purchaser i.e. the
petitioner was joined in the main securitisation application.
An Interim Application No. 1370/2022 was also taken
cognizance of and whereas, the present petitioner appears to
have been given liberty to file reply to the said interim
application which was as per the order itself qua the auction
conducted on 23.02.2022 i.e. the auction in question.
4.6. It would further appear that upon a request made by the
applicants therein i.e. the respondent nos. 4 to 9 herein, more
particularly, informing the learned Tribunal that since the
possession of the property was handed over to the auction
purchaser and sale certificate had already been issued, to
avoid multiplicity of proceedings, the auction purchaser may
be directed not to further alienate the property in question.
The said request had been opposed by the learned advocate
for the petitioner submitting that the petitioner having paid
the amount of consideration as per the auction, he could not
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be restrained from enjoying or alienating the property and
whereas, statement of learned advocate that an application
would be filed for seeking a direction against the respondent
bank to execute the sale deed was also recorded. It appears
that it is in the said context that the interim application,
referred to herein above, was filed by the petitioner on the
very day.
4.7. Be that as it may, the learned Tribunal had in the
impugned order dated 21.04.2023 observed that in order to
avoid multiplicity of proceedings, more particularly in the
interest of justice, the auction purchaser i.e. the petitioner
herein was directed not to alienate the property till the next
date of hearing. Most importantly it would appear that the
learned Tribunal had kept the matter for hearing on Interim
Application No. 1370/2022 as well as for final hearing on the
10.05.2023 i.e. approximately after a period of three weeks.
The petitioner being aggrieved by the said order has
approached this Court by filing the present petition.
4.8. It would appear that a learned Coordinate Bench of this
Court vide a detailed order dated 02.05.2023 had directed to
issue notice upon the respondents and had also granted ad-
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interim relief in terms of paragraph no. 16(b) and 16(e). It
would appear that later, vide order dated 03.05.2023, the
learned Coordinate Bench had modified the order dated
02.05.2023 more particularly since on account of some
inadvertence instead of granting interim relief in terms of
prayer (d) and (e), it was mentioned as granting prayers (b)
and (e) and whereas, the interim relief was modified to be
read as granted in terms of paragraph nos. 16(d) and (e).
4.9. Prayer 16(d) was in the nature of staying
implementation, execution and operation of the order dated
21.04.2023 passed by the learned DRT in SA No.155/2020
referred to herein above and prayer 16(e) was in the nature of
staying further proceedings of IA No. 1370/2022 and SA
No.155/2020. Thus, in addition to staying the impugned
interim order, the entire proceedings of securitisation
application had also been stayed.
5. The present petition had been extensively heard by this
Court on 20.07.2023 and whereas since this Court was of the
prima facie opinion that while appropriate directions could be
issued to the learned DRT to finally dispose of the
securitisation application, till such time the petitioner would
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not deal with the property in question. It would also be
apposite to state that a prima facie consensus also appears to
have been arrived at between the learned advocates as
regards the same and whereas, the matter had been
adjourned to 21.07.2023 more particularly for the purpose of
learned senior advocate for the petitioner to take appropriate
instructions from the petitioner in that regard.
5.1. On 21.07.2023, a shocking aspect had been brought to
the notice of this Court inasmuch as it would appear that after
the ad-interim relief had been granted by the learned
Coordinate Bench of this Court vide order dated 02.05.2023
as modified vide order dated 03.05.2023, the petitioner had
mortgaged the property with the Bank of India. Since this
Court was of the prima facie opinion that such alienating of
the property was noting but an attempt to overreach the
process of the Court, for which appropriate action requires to
be taken against the petitioner and whereas, an opportunity
was granted to the petitioner to intimate whether the
petitioner would be inclined to restore the status-quo ante as
prevailing prior to the date of mortgage.
5.2. It would appear that vide an additional affidavit dated
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25.07.2023, the petitioner has informed the Court that the
petitioner was the lawful purchaser for valuable consideration
of the auctioned property. It is also intimated that while the
sale deed had been executed after the ad-interim relief
granted by this Court as referred to herein above and whereas
the petitioner had after execution of the sale deed decided to
avail a loan from the Bank of India to purchase plant and
machinery and to meet the working capital for requirement to
run the factory and whereas an application had been
submitted to the Bank of India and the said bank having
positively considered the same, the loan sought for had been
granted and as a requirement of availment of loan, the
property had been mortgaged in favour of Bank of India on
19.07.2023. Thus, the contention of the petitioner by way of
the additional affidavit being that the petitioner had become
owner of the property and whereas there is not a whisper
about whether the petitioner would restore status-quo ante or
why it would not be possible for the petitioner to do the same.
6. Be that as it may, this Court had heard the petition
thereafter and whereas learned Counsel for the petitioner had
called upon to explain why the present petition should be
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entertained in view of the availability of an alternative
efficacious remedy and why appropriate directions under the
Contempt of Courts Act should not be issued against the
petitioner more particularly for having misused an interim
order of this Court.
6.1. Learned senior advocate Mr. Dave on behalf of the
petitioner would submit that the order impugned i.e. dated
21.04.2023 requires to be set aside by this Court more
particularly since the same is an unreasoned order, passed
without any specific application in that regard and passed
without giving adequate opportunity to the petitioner. Learned
senior advocate would further submit that since ad-interim
relief granted by this Court dated 02.05.2023 and modified
vide order dated 03.05.2023 staying order dated 21.04.2023
passed by the learned DRT whereby the petitioner was
restrained from alienating the property, therefore, the
petitioner was well within his rights to mortgage the property
in question. Learned senior advocate would submit that the
proceedings under Securitisation Act initiated by the financial
creditors would lose its efficacy if the auction under the
Securitisation Act were interfered with by the Tribunal in
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such a summary manner.
6.2. Thus, learned senior advocate would submit that the
petition may not be rejected on the ground of availability of an
alternative remedy whereas no action requires to be taken
against the petitioner more particularly since the petitioner
was acting well within the law.
7. This petition is vehemently resisted by learned senior
advocate Mr.Asim Pandya appearing with learned advocate
Mr. Prerak Oza on behalf of the respondent - borrowers.
7.1. Learned senior advocate would submit that having
regard to the provisions of the Securitisation Act, the present
petition itself is not maintainable more particularly since the
petitioner has an alternative, efficacious remedy against an
order passed by the learned DRT. Learned senior advocate
would further submit that as such, no error has been
committed by the learned DRT since the securitisation
application preferred by the applicant was questioning the
measures taken by the bank under the Securitisation Act and
whereas pending such an application, the respondent -
auction purchaser was directed not to alienate the property
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since such alienation would result in third party rights being
created which would unnecessarily lead to multiplicity of
litigation.
7.2. Learned senior advocate would further submit that as
such, the learned Tribunal had kept the securitisation
application for final hearing on 10.05.2023 i.e. approximately
three weeks after the date of the impugned order and
whereas ideally the applicant ought to have participated in
conducting of the final hearing which would have cleared the
entire issue.
7.3. Insofar as the misuse of the ad-interim relief is
concerned, learned senior advocate would submit that the
same is a serious issue which requires appropriate
interference by this Court. Learned senior advocate would
further submit that as it is, it would appear that except for
this Court proposing a formula whereby the securitisation
application could be directed to be heard within a specific
period of time and till such time the auctioned property would
not be alienated by the petitioner and whereas, the time had
been sought for to take instructions on the said aspect and it
was intimated to the Court that the property had been
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mortgaged in the interregnum, the petitioner did not of his
own voluntarily intimate this Court about his actions. Learned
senior advocate would submit that the present was the exact
situation which was attempted to be prevented by the interim
order dated 21.04.2023 impugned in the present petition.
7.4. Learned senior advocate would submit that the aspect of
whether the measures taken by the bank under the
Securitisation Act were legal or not, is now pending
consideration of the learned Tribunal in the securitisation
application preferred by the respondents. It is submitted that
in a situation where the submissions made by the borrowers
find favour with the learned Tribunal, the measures taken
could be set aside by the learned DRT including the auction
and whereas at such time, the question would be as to the
status of the Bank of India from whom the petitioner has
availed of a loan mortgaging the very property. Learned senior
advocate would submit that while in such a scenario, if the
petitioner was to repay the amount of mortgage, then it would
not be a difficult situation, but, considering the hastiness with
which the loan had been obtained during the tenure of the ad-
interim relief, if the petitioner defaults in the said loan, then
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the borrowers would have to continue litigating with the Bank
of India for the property in question.
7.5. Learned senior advocate would further submit that
insofar as the ad-interim relief is concerned, the same is
always subject to further orders or the final order that may be
passed by the Court concerned. Learned senior advocate
would submit that an ad-interim relief could not be construed
as a final relief and the parties ought not to change their
positions on the basis of ad-interim relief. Learned senior
advocate would further submit that staying of the order of the
learned DRT granting status-quo by itself ipso facto would not
entitle the petitioner to have alienated the said property.
7.6. Learned senior advocate would submit that such an
action on the part of the petitioner of alienating the property
more particularly without even either taking permission or
intimating to this Court about the same, is nothing but an
action on the part of the petitioner of overreaching the
process of the Court more particularly without any
adjudication on merits.
7.7. Learned senior advocate would submit that the
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reference to the earlier proceedings in the petition and in the
oral submissions have no relevance to the present facts more
particularly since the present proceedings and such reference
appears to be with a view to prejudice the Court.
7.8. Thus submitting, learned senior advocate would request
this Court to reject the present petition on the ground of
availability of alternative remedy and further would request
that this Court may direct the petitioner to restore status-quo
ante, failing which, appropriate proceedings may be directed
to be initiated against the petitioner.
8. Learned advocate Mr. Vinay Bairagar appearing for
learned advocate Ms. Himani Kini for the respondent bank
would submit that while numerous allegations have been
leveled against the bank by the petitioner, the bank has acted
strictly in accordance with law. It is submitted that insofar as
the reference to the earlier writ petition is concerned, the
same may not be of any consequence in the present scenario.
Learned advocate would also submit that as far as the aspect
of execution and registration of sale deed is concerned, the
petitioner had taken a slot for registration on 08.04.2023
unilaterally without any coordination with the officers of the
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bank more particularly the said date being a non-working
Saturday and whereas on the very next slot i.e. on 12.05.2023
the sale deed had been executed by the bank in favour of the
petitioner.
8.1. Learned advocate would further submit that as far as the
bank is concerned, the prayer against the bank being
satisfied, therefore, no further submissions are required to be
made on behalf of the respondent bank.
9. Heard learned counsels for the respective parties and
perused the documents on record.
9.1. At the outset, since the question has been raised about
entertainability of the petition on the ground of alternative
remedy, this Court deems it appropriate to address the same.
As per the scheme of the Securitisation Act, the financial
creditor i.e. the secured creditor who has given money as loan
to borrower, is empowered to take steps / measures under the
Act in case of default by the borrower. The measures which
could be taken by the secured creditor is stated at Section
13(4) of the Securitisation Act which includes taking over
possession and assignment or sale of the secured asset.
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Section 17 entitles any person including the borrower to
question the measures under Section 13(4) of the
Securitisation Act before the jurisdictional DRT within a
specified time period. Section 18 entitles any person
aggrieved by any order made by the learned DRT under
Section 17 to prefer an appeal to the Appellate Tribunal
within a particular period of time. The right to prefer an
appeal is circumscribed by requirement to prefer the same
within a period of 30 days and also by requiring the appellant
to make pre-deposit as per the Act itself. Thus, as far as an
order passed by the learned DRT is concerned, the same could
be challenged by the petitioner under Section 18 before the
learned Appellate Tribunal. Thus, it would appear that the
petitioner has an alternative remedy in form of an appeal to a
statutory appellate authority against the order dated
21.04.2023 passed by the learned Tribunal.
9.2. Insofar as entertaining a petition inspite of availability of
an alternative remedy, while a petition under Article 226 of
the Constitution of India would be maintainable inspite of
availability of alternative remedy, yet, whether the same is
required to be entertained, would be subject to exceptions to
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the self-imposed restraint of not entertaining petitions on face
of availability of alternative remedy. The exceptions to the rule
being well recognized that is where the writ petition is
preferred for enforcement of any fundamental right, where
there has been a violation of the principles of natural justice,
where the proceedings are wholly without jurisdiction or
where the vires of a legislation is challenged. As far as the
exceptions referred to herein above, the only submission
which could be corelatable to the exceptions was the
submission with regard to the petitioner not having been
afforded adequate opportunity by the Tribunal before passing
of the order in question.
9.3. In the considered opinion of this Court, the said
submission could not be countenanced either on facts or on
law. A perusal of the order dated 21.04.2023 itself reveals that
against request made by the learned counsel appearing for
the borrowers, learned Tribunal had heard the learned
counsel appearing for the petitioner and whereas, it is only
thereafter that the learned Tribunal had passed the interim
order. Thus, while it appears that the learned advocate
appearing for the petitioner had been heard, it also appears
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that adequate reasons had also been provided by the learned
DRT. Again, what would be relevant to note is that the main
application had been listed for further consideration after
three weeks and whereas, the order being an interim order, it
was always open for the petitioner to have requested the
learned DRT to have modified or revoked the said order.
Under such circumstances, it would not appear that the order
had been passed in violation of principles of natural justice
which would enable the petition to be entertained by this
Court inspite of existence of an alternative remedy. Thus, in
the considered opinion of this Court, the present petition is
required to be disposed of as not being entertained since the
petitioner has an efficacious alternative remedy and whereas,
there is nothing submitted to this Court whereby the order
impugned would fall in any of the exceptions to the self
imposed restraint in face of availability of alternative remedy.
9.4. The above observations of this Court are following the
law laid down by the Hon'ble Apex Court most recently
explained in case of South Indian Bank Limited vs. Naveen
Mathew Philip, reported in 2023 SCC OnLine SC 435
wherein, the Hon'ble Apex Court had inter alia reiterated the
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principles with regard to entertaining a petition under Article
226 of the Constitution of India inspite of availability of an
alternative remedy and also considering the said proposition
from the view point of the SARFAESI Act, more particularly
reiterating the law laid down with regard to not interfering in
SARFAESI matters by the Hon'ble Supreme Court itself.
10. Having stated that the present petition would not be
entertained by this Court, the next question which requires
consideration is whether this Court requires to take any
action against the petitioner and whereas how would this
Court balance the equities more particularly in view of the
borrower having created a mortgage on the property by prima
facie misusing an ad-interim order of this Court.
10.1. At this stage, before discussing on this issue any further,
this Court seeks to rely upon observation of a learned
Coordinate Bench of this Court in case of Sujal Leasing and
Finance Limited vs. Pathal Ganga Tube Well [Appeal
from Order No. 503/1997; Dt. 10.02.1998], referred to by
both, learned senior advocate for the petitioner as well as
learned senior advocate for the borrowers. Paragraph no.5 of
the said decision being relevant for the present purpose is
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reproduced herein below for benefit:-
"5. The chain of events that has taken place as
disclosed in the Order under appeal leaves no room
for any other conclusion then that the appellant-
Defendant has acted in a manner to over reach the
decision of the Court in the matter subjudice before it
and to infractuate whole proceedings by his own act.
It is not a case where defendant has exercised his
right under the Contract, before filing of the suit nor
it is a case where he has exercised such right before
notice of application has been served upon him. The
fact that law does not favour ad-interim ex-parte
order and requires that orders are made in the
presence of the parties does implicitly call restraint
from the parties after they are apprised of respective
case and the materials, inviting attention of the Court
on application for interim relief to desist from
indulging into any such activities which results into
proceedings getting infructuous and erodes the
confidence of the people in the basic efficacy of the
Institution of Court as an effective tool of
administration of justice."
10.2. From the observations of the learned Coordinate Bench,
it would be apparent that even grant of an interim relief
implicitly calls for restraint from parties not to indulge in any
activities which would amount to overreach the decision of the
Court and which would also amount to infructuate the
proceedings and thereby eroding the confidence of the people
in the efficacy of the institutions of the Court.
10.3. This Court also seeks to place reliance on the
observations of the Hon'ble Apex Court in case of M/s. Style
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(Dress Land) vs. Union Territory, Chandigarh and
Another, reported in (1999) 7 SCC 89. Paragraph No. 15 of
the said decision being relevant for the present purpose is
quoted herein below for benefit:-
"15. Regarding awarding of the interest by the
High Court for the period of stay it is argued that as
in Sahib Singh's case no such direction was issued,
the appellants could not be burdened with the
liability of paying the interest and that at the rate of
18% per annum was excessive and exorbitant. It is
settled principle of law that as and when a party
applies and obtains a stay from the Court of law, it is
always at the risk and responsibility of the party
applying. Mere passing of an order of stay cannot be
presumed to be the conferment of any additional
right upon the litigating party. This Court in Shree
Chamundi Mopeds Ltd. Vs. Church of South India
Trust Assn. [1992(3) SCC 1] held that the said
portion of order by the court mean only that such
order would not be operative from the date of its
passing. The order would not mean that the order
stayed had been wiped out from existence. The order
of stay granted pending disposal of a case comes to
an end with the dismissal of substantive proceeding
and it is the duty of the Court in such cases to put the
parties in the same position they would have been
but for the interim orders of the Court. Again in
Kanoria Chemicals and Industries Ltd. & Ors. Vs. U.P.
State Electricity Board & Ors. [1997 (5) SCC 772] the
Court held that the grant of stay had not the effect of
relieving the litigants of their obligation to pay late
payment with interest on the amount withheld by
them when the writ petition was dismissed ultimately.
Holding otherwise would be against public policy and
the interests of justice. In case law Kashyap Zip
Industries vs. Union of India [1993 (64) ELT 161],
interest was awarded to Revenue for the duration of
stay under court's order, since the petitioners therein
were found to have the benefit of keeping back the
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payment of duty under orders of the Court."
[Emphasis by this Court]
10.4. From the above observation, it would be abundantly
clear that grant of a stay could not in any manner be
construed to mean that the original order impugned has been
wiped out from existence. That grant of interim relief is
always at the risk and responsibility of the parties aplying to
the same.
11. Corelatating the above observations with the facts of this
case, it would appear that while the order of the learned DRT
impugned dated 21.04.2023 had been stayed, it could not be
presumed that such order dated 21.04.2023 was no longer in
existence and whereas, the petitioner was not free to alienate
the property in a manner in which he chooses.
11.1. At this stage, it would also be apposite to refer to the
scheme of the Securitisation Act more particularly Section
17(3) of the Act which inter alia empowers the learned DRT to
set aside any of the measures taken by the secured creditor
under Section 13(4) upon coming to a conclusion that the
same was not in accordance with the provisions of the Act.
Learned DRT is also empowered to direct restoration of
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possession and to further declare any measures taken by the
secured creditor as invalid and to pass such other direction as
considered appropriate and necessary in relation to any of the
recourse taken by the secured creditor under Section 13(4) of
the Act. In the considered opinion of this Court, Section 17(3)
empowers the learned DRT to undo any actions which has
been taken by the secured creditor under Section 13(4)
including the proceeding of auctioning a property. It would
thus appear that while the respondent nos. 4 to 9 i.e. the
borrowers had challenged the measures under the
Securitisation Act taken by the respondent no.1 bank before
the learned DRT and whereas during the pendency of such
securitisation application, the bank had conducted auction of
the property where the petitioner was the successful
purchaser and whereas all such proceedings would be subject
to the final outcome of the securitisation application preferred
by the borrower.
11.2. Now, taking into consideration the extent of power
under Section 17(3) of the Securitisation Act and also
considering the fact that the securitisation application
preferred by the borrower under Section 17 of the
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Securitisation Act challenging the measures under Section
13(4) taken by the respondent no.1 bank was pending
consideration of the learned Tribunal, therefore, it would
appear that the petitioner as auction purchaser would be
entitled to the ownership rights over the property in question
yet, the same would be subject to the final outcome of the
securitisation application preferred by the borrower. It would
also be apposite to observe here that having regard to the
scheme of the Securitisation Act, more particularly, having
regard to the extent of power available under Section 17(3) of
the Act, the auction purchaser would be deemed to be aware
about the legal position that any auction under such Act would
be subject to final outcome of a litigation initiated by the
borrower challenging the action of the secured creditor
including the action of auctioning the property.
11.3. In the considered opinion of this Court, in an auction
under the Securitisation Act, the auction purchaser is not
entitled to claim an absolute right till the proceedings
questioning the measures taken by the bank are pending
consideration of the competent forum. Furthermore, having
regard to the scheme of the Act, even after the sale certificate
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being issued in favour of the auction purchaser and the sale
deed has been registered in favour of the auction purchaser,
the same would be subject to the final decision to challenge
against the measures under the Securitisation Act and
whereas, in case the auction purchaser deals with the
property in question, the same would be subject to the final
orders passed by the competent forum in a challenge as
stated herein above.
11.4. At this stage, this Court in this regard seeks to refer to
the observations of the Hon'ble Division Bench of this Court in
case of Punjab National Bank vs. M/s. Mithilanchal
Industries Pvt. Ltd. and Others [Letters Patent Appeal
No. 159-160/2020, Dt. 17.08.2020]. Paragraph nos. 33 and
34 being relevant for the present purpose are reproduced
herein below for benefit:-
"33. At first we proceed to deal with the scheme as
envisaged in Section 17 of the SARFAESI Act. Under
subsection (1) of Section 17 any person aggrieved by
any of the measures referred to in sub-section (4) of
Section 13 taken by the secured creditor can prefer
an appeal (application) to the Debts Recovery
Tribunal within 45 days from the date on which such
measures had been taken. Under subsection (2) of
Section 17, the Tribunal is bound to consider whether
any of the measures referred to under sub-section (4)
of Section 13 taken by the secured creditors are in
accordance with the provisions of the Act. Under
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subsection (3) of Section 17, after examining the
facts and circumstances of the case, and evidence
produced by the parties, if the Tribunal comes to the
conclusion that any of the measures referred to in
sub-section (4) of Section 13 taken by the secured
creditor are not in accordance with the provisions of
the Act and the rules, and require restoration of the
management of the business or restoration of
possession of the secured assets to the borrower, it
may declare such action as invalid and restore
possession of the secured assets to the borrower or
restore the management of the business to the
borrower, as the case may be. As a necessary
corollary, sub-section (4) of Section 17 provides that
if the Tribunal declares that the recourse taken by
the secured creditor under sub-section (4) of Section
13 was in accordance with the provisions of the Act
and the rules made thereunder, then,
notwithstanding anything contained in the Act or any
other law for the time being in force, the secured
creditor shall be entitled to take recourse to one or
more of the measures specified under sub-section (4)
of Section 13 to recover his secured debt.
34. On a plain reading of Section 17, it is seen that
the Tribunal has wide powers to restore possession in
favour of the borrower, if such action taken under
sub-section (4) of Section 13 is declared invalid. Even
where the property is sold or dealt with, pending
hearing of the application under Section 17, the
Tribunal is not rendered powerless to restore
possession in favour of the borrower, if such action
taken under sub-section (4) of Section 13 is declared
invalid. In such an eventuality, sub-section (3) of
Section 17 gives ample powers to the Tribunal to
direct restoration of the possession or restoration of
management, as the case may be or to pass such
other order, as it may consider proper and necessary
in relation to any of the recourse taken by the
secured creditor under sub-section (4) of Section 13."
11.5. A perusal of the law laid down by this Court makes it
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abundantly clear that Section 17 confers wide power on the
Tribunal to ensure that if in a challenge by the borrower
against any action taken under Section 13(4) is declared
invalid, then the Tribunal is empowered to direct restoration
of possession or restoration of management or pass any order
as it may consider proper and necessary in such relation. The
Hon'ble Division Bench has also observed that even if the
property is sold or dealt with pending hearing of the
application under Section 17, then the Tribunal is not
rendered powerless.
11.6. At this stage, this Court clarifies that having come to a
conclusion that the petition does not require to be
entertained, yet, the above observations more particularly
with regard to the power available with the learned Tribunal
under Section 17 of the Securitisation Act has been discussed,
more particularly in connection with the submission made by
learned senior advocate for the petitioner that having given
valuable consideration for the property which the petitioner
had purchased in auction, the petitioner was the lawful
purchaser and could deal with the property.
12. Insofar as the aspect with regard to overreaching the
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process of the Court, it would appear that the decision to deal
with the property was a deliberate decision, not influenced by
factors which were beyond the control of the petitioner. A
perusal of the additional affidavit filed by the petitioner
reveals that after the sale had been registered in favour of the
petitioner, more particularly after the ad-interim relief had
been granted by this Court vide order dated 02.05.2023
modified vide order dated 03.05.2023, the petitioner had
decided to put the property to use. The petitioner therefore
had decided to avail loan from the Bank of India to purchase
plant and machinery and also to meet the working capital
required to run the factory. For such purpose, the loan had
been applied and whereas upon the loan being sanctioned,
mortgage had been created in favour of the Bank of India on
19.07.2023 by deposit of title deeds with the Bank.
12.1. The above narration clearly indicates that the petitioner
was not hard pressed in the sense that he had availed of some
loan to purchase the property through auction and for
repayment of the said loan, the petitioner had mortgaged the
subject property with the Bank. The sequence of events
clearly show that after ad-interim relief had been granted vide
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orders dated 02.05.2023 and 03.05.2023 and upon a
registered sale deed being entered into, the petitioner had
decided to put the property to beneficial use. While in normal
circumstances no fault could have been found with the
petitioner, yet, an extraordinary circumstance prevailed in the
instance case in as much as in the present petition whereby
the validity of the order dated 21.04.2023 passed by the
learned DRT was pending final adjudication. While, the said
order was stayed by this Court vide orders dated 02.05.2023
and 03.05.2023, the same could not be construed as giving a
blanket permission to the petitioner to deal with the property
in any manner he desired.
12.2. In the considered opinion of this Court, grant of ad-
interim relief implicitly envisages that the person who is
beneficiary of the ad-interim relief would not take any
precepitative action so as to either;
i. change the position of the subject matter in issue to the
detriment of the respondents,
ii. would not take any steps to overreach the judicial
process, or
iii. in case the petitioner desire to take any steps which
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might have the tendency as no.(i) or (ii) herein above,
then as a prudent person who has taken recourse to the
legal process, the petitioner would also be required to
move an appropriate application before the Court
concerned for permission to take any such steps.
12.3. The petitioner having not taken any steps as above
and not even having informed his learned senior advocate
about the intention of the petitioner to deal with the
property, clearly reflects the intent of the present petitioner
to overreach the process of law.
12.4. At this stage, it would be pertinent to note that the
petitioner had preferred an affidavit-in-rejoinder which had
been affirmed by the petitioner on 18.07.2023. The said
affidavit also does not appear to even passingly mention that
the petitioner intend to deal with the subject property during
the pendency of the present petition. It would also require to
be mentioned here that while the petitioner had preferred
additional affidavit on 25.07.2023, more particularly whereby
the details of the loan availed from the Bank of India and the
mortgage created with the Bank of India on 19.07.2023 is
mentioned, yet, there are no documents as regards the loan in
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question annexed with the affidavit showing that on the date
before a substantial hearing has taken place before this Court
on 20.07.2023 i.e. on 19.07.2023, the property had been
mortgaged with the Bank of India.
13. All the above aspects lead to an inescapable conclusion
that the petitioner having been the successful bidder in the
auction wanted to deal with the property to the detriment of
the present petition as well as to the detriment of the
securitisation application preferred by the borrowers before
the learned DRT. It could also be observed that the petitioner
had alienated the property, more particularly, to overreach the
process of this Court initiated by the petitioner himself vide
the present petition. In this view of the matter, this Court is of
the opinion that appropriate action requires to be taken
against the petitioner and whereas, the petitioner also is
required to be directed to restore status-quo ante prevailing
before the date of the ad-interim order i.e. 02.05.2023 and
03.05.2023.
14. At this stage, this Court also seeks to rely upon the
observation of the Full Bench of the High Court of Patna in
case of The King vs. Parmanand and Others, reported in
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AIR 1949 PAT 222. Observation of the High Court at
paragraph no.23, which reads as 'it is a cardinal principle that
when a matter is pending for decision before a Court of justice
nothing should be done which might disturb the free course of
justice and this Court will discountenance any attempt on the
part of any executive official, however, high he may be, to
prejudice the merits of a case and to usurp the functions of
the Court which has got seisin of the case.' are relied upon by
this Court. [Emphasis by this Court]
14.1. In the instant case, it would appear that the decision on
the part of the petitioner to avail loan mortgaging the
property by taking disadvantage of ad-interim relief granted
by this Court even when the matter was pending before this
Court, was a clear attempt to disturb the free course of justice
and the same would not be countenanced.
14.2. Furthermore, since this Court is of the considered
opinion that the petitioner has overreached the due process of
law and has misused the interim order of this Court, hence,
the petitioner is required to be saddled with appropriate
costs.
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15. In view of the above discussion, observations and
conclusions, the following directions are passed by this
Court:-
(i) The present petition is rejected as not entertained, more
particularly, in view of the alternative remedy available to the
petitioner under Section 18 of the Securitisation Act to
approach the learned Debt Recovery Appellate Tribunal
against the impugned order dated 21.04.2023 passed by the
learned DRT.
(ii) Considering that the learned Tribunal had kept the
matter for final hearing, it would also be open for the
petitioner to, in the alternative to the above, request the
learned DRT to dispose of the application at the earliest and
whereas, in case such application is received, the learned
Tribunal shall endeavor to decide the main securitisation
application within a period of sixty (60) days from the date of
receipt of such application.
(iii) The petitioner is directed to restore the status-quo ante
as regards the subject auctioned property prevailing prior to
the orders dated 02.05.2023 and 03.05.2023 within a period
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of four weeks from today.
(iv) In case the petitioner does not comply with the above
direction i.e. direction no.(iii), then it would be open for the
respondents including private respondents to take appropriate
steps in accordance with law including taking steps under the
Contempt of Courts Act, 1982.
(v) It is clarified that the learned DRT and the learned DRAT
as the case may be, shall hear the petitioner on the question
of finally deciding the securitisation application or challenge
to order dated 21.04.2023 by the learned DRAT only after the
petitioner submits compliance of direction no.(iii) as above.
(vi) The petitioner is also directed to deposit cost of Rs.
50,000/- (Rupees Fifty Thousand Only) to be payable to the
Gujarat High Court Legal Services Authority. The same shall
be done within a period of two weeks from the date of receipt
of this order.
(NIKHIL S. KARIEL,J)
Bhoomi
