Punjab-Haryana High Court
M/S Skan Cables And Wires Pvt. Ltd. And ... vs Authorized Officer Punjab National ... on 3 April, 2024
Author: Lisa Gill
Bench: Lisa Gill
Neutral Citation No:=2024:PHHC:044606-DB
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CWP-1744-2016 (O&M)
2024:PHHC:044606-DB
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
CWP-1744-2016 (O&M)
Date of Decision: April 03, 2024
M/s Skan Cables and Wires Limited and another ..... Petitioners
Versus
The Authorised Officer, Punjab National Bank and others
..... Respondents
CORAM:- HON'BLE MRS. JUSTICE LISA GILL
HON'BLE MS. JUSTICE AMARJOT BHATTI
Present: Mr. Manish Jain, Advocate for the petitioners (through VC).
Mr. Arvind Rajotia, Advocate for respondent No. 1.
Mr. Kanwar Abhay Singh, Advocate for
Mr. Govind Rana, Advocate for respondent No. 3.
****
LISA GILL, J.
1. Prayer in this writ petition is for setting aside order dated
03.12.2015 (Annexure P1) passed by learned Debts Recovery Appellate
Tribunal.
2. Availing of financial facility from respondent No. 1 by petitioner
No. 1, subsequent financial indiscipline on its part and initiation of proceedings
under Securitization and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 (for short - 'SARFAESI Act') are a matter of record.
SA-76-2013 filed by petitioners' impugning sale of property in auction
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conducted on 07.03.2013 was dismissed by learned DRT-I vide order dated
12.03.2015. Appeal was preferred by petitioners against order dated 12.03.2015.
IA-300-2015 was filed by petitioners seeking waiver of amount to be paid as pre-
deposit on the ground that bank has already realized the sum through auction in
excess of 25% of notice amount. Petitioners' contended that bank sold properties
at Gurugram and Kundli for a sum of Rs.4.50 crores and 1.45 crores
respectively, therefore, amount of nearly 40% of notice amount (Rs.15.23 crores)
stood realized. Learned DRAT dismissed application vide impugned order dated
03.12.2015 while holding that appellants cannot escape the requirement of pre-
deposit of atleast 25% of notice amount, which is the minimum amount to
maintain appeal. Aggrieved therefrom, present writ petition has been filed.
3. Heard, learned counsel for parties.
4. Argument raised on behalf of petitioners is again that in view of
amount having been received by respondent - Bank after auction of property,
waiver of amount of pre-deposit should be directed. It is pertinent to note that
pre-deposit of 50% of decretal amount i.e. debt due is a mandatory requirement
in terms of Section 18 of SARFAESI Act for entertainment of appeal. Gainful
reference in this respect can be made to judgment of Hon'ble the Supreme Court
in decision dated 16.02.2021 in Civil Appeal No. 538 of 2021 (Kotak
Mahindra Bank Pvt. Limited versus Ambuj A. Kasliwal and others). It has
been correctly held by learned DRAT that once petitioners have challenged
auction sale, they cannot seek adjustment of amount deposited by auction
purchaser towards their requirement of pre-deposit. It is a matter of record that
one of the auction purchaser had sought permission to withdraw the amount
which he had deposited. It is further to be noted that petitioners had also not
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taken the option offered to them for deposit of amount in question in case,
auction sale in favour of respondent No. 2 is set aside. Observation of learned
DRAT in this respect reads as under:-
" Counsel for the appellants was given option to give an
undertaking to the effect that in case the auction sale in favour of
respondent No. 2 is ultimately set aside, he would be prepared to
deposit this amount, but the counsel has not chosen to accept this
option. It would not be fair, thus, to take into consideration this
amount realized from the auction sale of the property towards the
pre-deposit to be made by the appellants once the sale itself is
under challenge. It would have been a different matter if the
appellants had come forward not to challenge the said auction but
to protect their any other property. In that eventuality, this amount
realized may have been open to the considered towards the pre-
deposit required to be made by the appellants."
5. Hon'ble the Supreme Court in M/s Sidha Neelkanth Paper
Industries Private Limited & another versus Prudent ARC Limited &
Others (CA No. 8969 of 2022 decided on 05.01.2023) held as under:-
"13. As per Section 2(ha) of the SARFAESI Act, "debt" shall
have the same meaning assigned to it in clause (g) of Section 2 of
the Act 1993. As per section 2(g) of the Act 1993, "debt" means
any liability inclusive of interest which is claimed as due from
any person....., by a bank or a financial institution during the
course of any business activity undertaken by the bank or the
financial institution, in cash or otherwise, whether secured or
unsecured, or assigned, or whether payable under a decree or
order of any civil court or any arbitration award or otherwise or
under a mortgage and subsisting on, and legally recoverable on
the date of the application. That the "debt" means any liability
inclusive of interest.
As per Section 18 of the SARFAESI Act, any person
aggrieved, by any order made by the DRT under section 17, may
prefer an appeal within thirty days to an appellate Tribunal
(DRAT) from the date of receipt of the order of DRT. Second
proviso to section 18 provides that no appeal shall be entertained
unless the "borrower" has deposited with the Appellate Tribunal
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fifty percent of the amount of "debt due" from him, as claimed by
the secured creditors or determined by the DRT, whichever is less
and only and only then, an appeal under Section 18 of the
SARFAESI Act is permissible against the order passed by the
DRT under Section 17 of the SARFAESI Act. Under Section 17,
the scope of enquiry is limited to the steps taken under Section
13(4) against the secured assets. Therefore, whatever amount is
mentioned in the notice under Section 13(2) of the SARFAESI
Act, in case steps taken under Section 13(2)/13(4) against the
secured assets are under challenge before the DRT will be the
'debt due' within the meaning of proviso to Section 18 of the
SARFAESI Act. In case of challenge to the sale of the secured
assets, the amount mentioned in the sale certificate will have to be
considered while determining the amount of pre-deposit under
Section 18 of the SARFAESI Act. However, in a case where both
are under challenge, namely, steps taken under Section 13(4)
against the secured assets and also the auction sale of the secured
assets, in that case, the "debt due" shall mean any liability
(inclusive of interest) which is claimed as due from any person,
whichever is higher.
14. As observed hereinabove and as per the second proviso to
Section 18 of the SARFAESI Act, it is the "borrower" who has
preferred an appeal before the Appellate Tribunal and the
"borrower" who shall have to deposit 50% of the amount of
"debt due" from him. If the words used in the second proviso to
Section 18 of the SARFAESI Act are "borrower has to deposit",
it is not appreciable how the amount deposited by the auction
purchaser on purchase of secured assets can be adjusted and/or
appropriated towards the amount of pre-deposit, to be deposited
by the borrower. It is the "borrower" who has to deposit the 50%
of the amount of "debt due" from him. At the same time, if the
borrower wants to appropriate and/or adjust the amount realised
from sale of the secured assets deposited by the auction
purchaser, the borrower has to accept the auction sale. In other
words, the borrower can take the benefit of the amount received
by the creditor in an auction sale only if he unequivocally accepts
the sale. In a case where the borrower also challenges the auction
sale and does not accept the same and also challenges the steps
taken under Section 13(2)/13(4) of the SARFAESI Act with
respect to secured assets, the borrower has to deposit 50% of the
amount claimed by the secured creditor along with interest as per
section 2(g) of the Act 1993 and as per section 2(g), "debt" means
any liability inclusive of interest which is claimed as due from
any person.
xxx xxx xxx
17. xxx xxx xxx
It is observed and held that the borrower has to deposit 50% of
the amount of "debt due" as claimed by the bank/financial
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institution/assignee along with interest as claimed in the notice
under Section 13(2) of the SARFAESI Act and the borrower is
not entitled to claim adjustment/appropriation of the amount
realised by selling the secured properties and deposited by the
auction purchaser when the auction sale is also under challenge."
6. Keeping in view facts and circumstances as above, learned counsel
for petitioners is unable to point out any ground which calls for interference by
this Court. No illegality or infirmity has been pointed out in impugned order
dated 03.12.2015.
7. Writ petition is, accordingly, dismissed with no order as to costs.
(LISA GILL)
JUDGE
(AMARJOT BHATTI)
April 03, 2024 JUDGE
rts
Whether speaking/reasoned: Yes/No
Whether reportable: Yes/No
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