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2005 DIGILAW 326 (ORI)

KRIPAL SPRINGS (INDIA) LTD. v. ANDHRA BANK

2005-05-16

A.K.SAMANTARAY, B.P.DAS

body2005
JUDGMENT : 1. Heard Mr. R.K. Rath, learned Counsel for the Petitioners and Mr. C.A. Rao, learned Counsel for opposite parties Nos. 1 and 2. In this writ petition the Petitioners challenge the provisions of Sections 13 and 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 for short "the Act 2002"), as well as the notice dated July 2, 2003, issued u/s 13(2) of the said Act, annexure 11 to the writ petition. 3. During the course of hearing, Mr. Rath learned Counsel for the Petitioners brought to our notice that in the meanwhile, the opposite party bank has filed O.A. No. 24 of 2004 before the Debts Recovery Tribunal, Cuttack, for recovery of the very amount, for which the impugned notice u/s 13(2) of the Act has been issued to the Petitioners. By our order dated July 27, 2004, this Court indicated that the provisions of the Act, 2002 have been upheld in Mardia Chemicals Ltd. Vs. Union of India (UOI) and Others Etc. Etc., with a rider that an appeal will be available against the decision taken by the bank u/s 13(4) of the Act, 2002 before the appellate authority within the time prescribed by law. But the matter was kept alive to examine whether proceeding under the Act, 2002 will be valid and available if the bank has also filed its claim before the DRT for the very same amount for which notice u/s 13(2) of the Act has been served as per law. 4. During the course of proceeding, Mr. Rath, learned Counsel for the Petitioners submitted that the bank is now proceeding under the Securitisation Act, 2002, as well as has filed its claim before the Debts Recovery Tribunal for the very amount, for which the notice u/s 13(2) of the Act has been served on the borrower. The Petitioners were given liberty to file an affidavit/amendment petition incorporating the facts relating to filing of O.A. No. 24 of 2004. Mr. Rath further submitted that in the meanwhile, the provisions of the Act, 2002 have undergone a change by way of amendment. The amending provision does not allow parallel proceedings one under the Act, 2002, and other before the Debts Recovery Tribunal to continue at the same time for the same amount. 5. Mr. Rath further submitted that in the meanwhile, the provisions of the Act, 2002 have undergone a change by way of amendment. The amending provision does not allow parallel proceedings one under the Act, 2002, and other before the Debts Recovery Tribunal to continue at the same time for the same amount. 5. A counter-affidavit has already been filed and there is no dispute regarding the fact that there are two proceedings, To the affidavit dated August 8, 2004, filed by the Petitioners disclosing the fact that the DRT proceeding has already been initiated against them for the same loan, a reply was filed by the bank justifying its action to proceed before the DRT for the very same amount claimed in the impugned notice u/s 13(2) of the Act, 2002 on the ground that the Supreme Court while dealing with the case of Mardia Chemicals Ltd. Vs. Union of India (UOI) and Others Etc. Etc., upheld the constitutional validity of the Act except of Sub-section (2) of Section 17 thereof, which was declared ultra vires of Article 14 of the Constitution of India. Therefore, according to the affidavit, Section 37 of the Act is deemed to be the valid provision of law. 6. All these aspects become academic in view of the amendment of the Act, 2002, wherein in Section 19 of the DRT Act, after Sub-section (1) the following proviso have been inserted : Provided that the bank or financial institution may, with the permission of the Debts Recovery Tribunal, on an application made by it, withdraw the application, whether made before or after the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Ordinance, 2004, for the purpose of taking action under the Securi-tisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002), if no such action had been taken earlier under that Act : Provided further that any application made under the first proviso for seeking permission from the Debts Recovery Tribunal to withdraw the application made under Sub-section (1) shall be dealt with by it as expeditiously as possible and disposed of within thirty days from the date of such application : Provided also that in case the Debts Recovery Tribunal refuses to grant permission for withdrawal of the application filed under this sub-section, it shall pass such orders after recording the reasons therefore. 7. 7. So it is clear that parallel proceedings under the DRT Act and Act, 2002, cannot continue. If the bank prefers to go for an action under the Act, 2002, it has to file an application to withdraw the proceedings under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. 8. This being the position, as admittedly there are parallel proceedings, we direct the bank to take a decision within a period of one month from today as to whether it has to proceed under the DRT Act or the Act, 2002. Till a decision is taken, both the proceedings u/s 13(2) of the Act, 2002, as well as in OA No. 24 of 2004 shall remain stayed. 9. The writ petition is disposed of accordingly.