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2015 DIGILAW 261 (GUJ)

SBS Organics Pvt. Ltd v. Axis Bank Ltd.

2015-03-05

RAJESH H.SHUKLA

body2015
JUDGMENT : Rajesh H. Shukla, J. The present petition is filed by the Petitioner under Articles 226 and 227 of the Constitution of India as well as under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "the Securitization Act") for the prayer inter alia that appropriate writ, order or direction may be issued for quashing and setting aside the order passed by the learned Chairperson, Debts Recovery Appellate Tribunal, Mumbai (hereinafter referred to as "the DRAT, Mumbai") dated 29.4.2014 on an application for withdrawal of pre-deposit under Section 18(1) of the Securitization Act, on the grounds stated in the memo of petition. 2. Heard learned Counsel Shri Prashant Pandit appearing with learned Advocate Mrs. Nisha M. Parikh and learned Advocate Mr. Siddhartha Samal for the Petitioner and learned Senior Counsel Shri S.N. Soparkar appearing with learned Advocate Ms. Nalini S. Lodha for the Respondent Bank. 3. Learned Counsel Shri Prashant Pandit referred to the background of the facts and submitted that as is evident from the record, the petitioner is a borrower and in December 2010, Securitization Application No. 152 of 2010 (hereinafter referred to as "the SA 152/2010") was preferred before the Debts Recovery Tribunal, Ahmedabad (hereinafter referred to as "the DRT, Ahmedabad") and interim relief was granted. However, after bipartite hearing, the interim relief came to be vacated vide order dated 20.1.2011. Therefore, the petitioner preferred an Appeal before the DRAT, Mumbai as per the provisions of Section 18 of the Securitization Act. Learned Counsel Shri Pandit has referred to the provisions of Section 18 of the Securitization Act and submitted that it provides the remedy to an aggrieved person to prefer Appeal and therefore the Appeal was preferred. He submitted that as per the provisions 25% amount is required to be deposited to avail the statutory remedy of appeal and the petitioner was required to deposit Rs.50,00,000/- (Rupees Fifty lacs) before the DRAT, Mumbai. However, in the meanwhile, SA 152/2010 came to be disposed of finally by the DRT, Ahmedabad vide judgment and order dated 9.4.2014 holding that the sale by private treaty was not valid. Therefore, as it was decided in favour of the petitioner, the appeal before the DRAT, Mumbai would not survive and therefore he sought permission to withdraw. However, in the meanwhile, SA 152/2010 came to be disposed of finally by the DRT, Ahmedabad vide judgment and order dated 9.4.2014 holding that the sale by private treaty was not valid. Therefore, as it was decided in favour of the petitioner, the appeal before the DRAT, Mumbai would not survive and therefore he sought permission to withdraw. However, while passing the impugned order on Miscellaneous Appeal No. 41 of 2011, the DRAT, Mumbai permitted the withdrawal of the Appeal. However, it was observed: "From perusal it appears that the S.A. has been allowed by the DRT and the private sale conducted by the bank has been set aside. Under such circumstances, the appellant is entitled to withdraw the present appeal since his S.A. has been allowed. Hence he is permitted to withdraw the appeal. So far as the question of return of the amount deposited by the petitioner before the DRT is only as per section 18 of the SARFAESI Act to fulfill the statutory condition. Since the appeal is allowed the question of withdrawal is automatic one as pointed out by the judgment of the Hon'ble Gujarat High Court, 2009 Law Suit (Guj) 271 dated 24/04/2009, it has been held that in such case the deposit amount can be returned to the petitioner. The petitioner is entitled to withdraw the amount subject to the disposal of the appeal." 4. Learned Counsel Shri Prashant Pandit submitted that though the DRAT, Mumbai observed that in light of the judgment of the Hon'ble Division Bench of the High Court of Gujarat reported in AIR 2009 Gujarat 98 – Babu Ganesh Singh Deepnarayan v. Union of India & Anr., the amount which has been deposited as a pre-condition for filing appeal should have been refunded. However, he has observed that it will be subject to the disposal of the appeal. Learned Counsel Shri Pandit submitted that in fact on that date no appeal was even pending as it is clearly stated that the Bank was in the process of preferring an appeal against the order passed by the DRT, Ahmedabad in SA 152/2010. He therefore submitted that the order may be quashed and set aside in light of the statutory provisions as well as the observations made by the Hon'ble Division Bench of the High Court of Gujarat in a judgment in case of Babu Ganesh Singh Deepnarayan (supra). 5. He therefore submitted that the order may be quashed and set aside in light of the statutory provisions as well as the observations made by the Hon'ble Division Bench of the High Court of Gujarat in a judgment in case of Babu Ganesh Singh Deepnarayan (supra). 5. Learned Senior Counsel Shri S.N.Soparkar appearing with learned Advocate Ms. Nalini S. Lodha for the Respondent Bank has referred to the papers and tried to submit that the huge amount is outstanding for which the Bank is entitled to proceed and recover the amount. In fact he submitted that much larger amount is due and payable and therefore it may not be permitted to be refunded. He has also submitted that this court in exercise of discretionary jurisdiction under Article 226 may not interfere with the impugned order. 6. In view of this rival submissions, it is required to be considered whether the present petition deserves to be allowed. 7. As could be seen from the background of the facts as narrated herein above as well as the impugned order, on the one hand the DRAT, Mumbai has clearly recorded referring to the provisions of Section 18 read with the pronouncement of the Hon'ble Division Bench of the High Court in a judgment in case of Babu Ganesh Singh Deepnarayan (supra) that such an amount which has been deposited as precondition for filing the right of statutory appeal has to be refunded. However, the observation made that: "The petitioner is entitled to withdraw the amount subject to disposal of the Appeal." cannot be sustained. 8. The submission made by learned Senior Counsel Shri S.N.Soparkar that the huge amount is outstanding and therefore it may not be refunded, is misconceived. The Bank may have appropriate recourse in accordance with law including the Securitisation Act. 9. The submission made by learned Senior Counsel Shri S.N.Soparkar with regard to the scope of judicial review under Article 226 has not impressed inasmuch as the court cannot permit the abuse of the statutory power. In the facts of the case, the amount which has been deposited for availing the statutory remedy as a precondition has to be refunded and the same cannot be permitted to be claimed by the Respondent Bank. It may have its own recourse in accordance with law including the statutory provisions of the Securitization Act. In the facts of the case, the amount which has been deposited for availing the statutory remedy as a precondition has to be refunded and the same cannot be permitted to be claimed by the Respondent Bank. It may have its own recourse in accordance with law including the statutory provisions of the Securitization Act. Therefore, for recovery, they can take the necessary steps as may be advised in accordance with law., but the amount which is deposited is lying with the institution like DRT holding it in a trust and cannot be permitted to be recovered straightway by the Respondent Bank making claim over such an amount which is deposited by the litigant to avail the statutory remedy. Therefore, the discretionary jurisdiction under Article 226 has to be exercised to prevent any miscarriage of justice or abuse of power by the Respondent Bank. 10. Therefore, considering the statutory provision of Section 18 of the Securitisation Act and the judgment of the Hon'ble Division Bench of the High Court of Gujarat in case of Babu Ganesh Singh Deepnarayan (supra), it is evident that if the amount is deposited as a pre-condition for availing the statutory remedy of appeal and the appeal is disposed of, the same has to be refunded as the institution would hold it as in the trust and therefore it cannot be a matter for claim by the Bank. Therefore the order passed by the DRAT, Mumbai making the withdrawal of the amount or refund of the amount conditional that it is subject to disposal of the appeal that may be filed by the Bank cannot be sustained and the impugned order deserves to be quashed and set aside and is hereby quashed and set aside. The amount of Rs.50,00,000/- (Rupees Fifty lacs) deposited by the petitioner before the DRAT, Mumbai is permitted to be withdrawn forthwith. Rule is made absolute. No order as to costs. Further Order: After the order was dictated, learned Senior Counsel Shri S.N. Soparkar requested for stay of the operation of this order for two weeks in order to enable the Respondent Bank to have appropriate recourse as may be available. However, considering the facts and circumstances, the request is refused.