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2014 DIGILAW 26 (UTT)

SAHARA INDUSTRIES v. STATE BANK OF INDIA

2014-02-12

B.S.VERMA, SERVESH KUMAR GUPTA

body2014
JUDGMENT 1. This appeal is directed against the Judgment and Order dated 25.11.2013, passed by learned Single Judge in Writ Petition No. 1841 of 2013, M/s Sahara Industries, Patrampur Road Jaspur and others vs. State Bank of India. 2. The learned counsel, appearing on behalf of the appellant has contended that in absence of permission from Debt Recovery Tribunal (in short DRT) Lucknow, as mentioned in the Recovery of Debt Due to Bank and Financial Institutions Act, 51 of 1993 (In short RDB Act). The respondent bank cannot proceed for auction without withdrawal of the application moved before the D.R.T. The learned counsel drew the attention of this Court to the proviso to Sub-section (1) of Section 19 of R.D.B. Act and also placed reliance on the judgment of Patna High Court in the case of M/s Purnea Cold Storage vs. State Bank of India reported in AIR 2013 Patna 1 as well as paragraph nos. 50 & 51 of Hon’ble Apex Court in the case of M/s Transcore vs. Union of India reported in AIR 2007 SCC, 712. 3. Paragraph nos. 50 and 51 of M/s Transcore vs. Union of India reported in AIR 2007 SCC, 712 are quoted as under for facility: 50. The object behind introducing the first proviso and the third proviso to Section 19(1) of the DRT Act is to align the provisions of DRT Act, the NPA Act and Order XXIII, CPC. Let us assume for the sake of argument, that an O.A. is filed in the DRT for recovery of an amount on a term loan, on credit facility and on hypothecation account. After filing of O.A., on account of non-disposal of the O.A. by the tribunal due to heavy backlog, the bank finds that one of the three accounts has become sub-standard/loss, in such a case the bank can invoke the NPA Act with or without the permission of the DRT. One cannot lose sight of the fact that even an application for withdrawal/leave takes time for its disposal. As stated above, with inflation in the economy, value of the pledged property/asset depreciate on day-to-day basis. If the borrower does not provide additional asset and the value of the asset pledged keeps on falling then to that extent the account becomes non-performing. As stated above, with inflation in the economy, value of the pledged property/asset depreciate on day-to-day basis. If the borrower does not provide additional asset and the value of the asset pledged keeps on falling then to that extent the account becomes non-performing. Therefore, the bank/FI is required to move under NPA Act expeditiously by taking one of the measures by Section 13(4) of the NPA Act. Moreover, Order XXIII, CPC is an exception to the common law principle of non-suit, hence the proviso to Section 19(1) became a necessity. 51. For the above reasons, we hold that withdrawal of the O.A. pending before the DRT under the DRT Act is not a pre-condition for taking recourse to NPA Act. It is for the bank / FI to exercise its discretion as cases in which it may apply for leave and in cases where they may not apply for leave to withdraw. We do not wish to spell out those circumstances because the said first proviso to Section 19(1) is an enabling provision, which provision may deal with myriad circumstances which we do not wish to spell out herein. (ii) On point No.2 on question of possession: 4. The learned Senior Counsel, appearing on behalf of the respondent contended that if in case proceeding has to be initiated subsequently after filing the application before D.R.T. under the SARFAESI Act, 2002 then permission is required. In case at hand, the proceeding under SARFAESI was initiated prior to application filed before D.R.T. Thereafter, the respondent Bank has submitted an application before the D.R.T. on the ground that the proceedings are staled. 5. The learned Single Judge after discussion and after considering both the judgments relied by the learned counsel for the appellant has held that in Section 19, permission is not required under R.D.B. Act from D.R.T. since proceeding for recovery under SARFAESI Act has already been initiated. We have also perused the proviso to Section 19(1) of the RDB Act in the light of the proviso also. We are of the view if the proceeding has to be initiated under SARFAESI Act after filing of application before D.R.T. then only permission is required. 6. In case at hand, the application was pending before D.R.T. at the time of filing of the application before D.R.T., therefore, the judgment cited is of no help to the appellants. We are of the view if the proceeding has to be initiated under SARFAESI Act after filing of application before D.R.T. then only permission is required. 6. In case at hand, the application was pending before D.R.T. at the time of filing of the application before D.R.T., therefore, the judgment cited is of no help to the appellants. We found no error of law or illegality in the impugned judgment passed by the learned Single Judge. 7. The appeal lacks merit and is dismissed.