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2023 DIGILAW 40 (GUJ)

ADARSH KHANDSARI UDHYOG v. DEBT RECOVERY TRIBUNAL-II, AHMEDABAD

2023-01-05

SANDEEP N.BHATT, SONIA GOKANI

body2023
ORDER : 1. The petitioner is before this Court seeking to quash the final order dated 22.11.2022 passed in Securitization Application No. 114 of 2013. The main grievance on the part of the petitioner is that after the said application was reserved for judgment and pronouncment on 01.11.2022, the Bank had produced certain documents on 18.11.2022 vide a pursis and without affording any opportunity of hearing to the applicant. The order came to be passed by the Debt Recovery Tribunal-II, Ahmedabad in the said application. This has aggrieved the applicant-petitioner and is before this Court seeking following reliefs: “16........... (A) That the Hon’ble Tribunal be pleased to issue appropriate writ, order or direction quashing and setting aside order dated 22.11.2022 passed dismissing Securitisation Application No. 114 of 2013 (At Annexure A) by Respondent No. 1 and direct Respondent No. 1 to rehear the Securitisation Application No. 114 of 2013. (B) That pending the hearing and final disposal of this application, the Hon’ble Tribunal be pleased to stay the implementation and execution of final order dated 22.11.2022 (Annexure A) passed in Securitisation Application No. 114 of 2013. (C) For ad-interim reliefs in terms of Para (B). (D) For such other and further reliefs as the Hon’ble Tribunal may deem fit and proper in the facts and circumstances of the case.” 2. Brief facts leading to the present petition are as follow: 2.1 The petitioner is a partnership firm represented through its partners and the respondent No. 1 is the Tribunal established under the Recovery of Debts and Bankruptcy Act, 1993. The respondent No. 2 is the Banking Company duly incorporated under the provision of the Companies Act, 1956. The applicant No. 2 and one Shrimati Shantosh Jain were the partners of the firm. The applicant No. 2 also used to be the Director of the company named Adarsh Ginning Pvt. Ltd. 2.3 The respondent Bank sanctioned Cash Credit Limit of Rs. 3 Crore to Adarsh Ginning Pvt. Ltd. and applicant No. 1 had mortgaged certain immovable properties with the Bank as security and applicant No. 2 had provided personal guarantee for the limits sanctioned. 3 Crore to Adarsh Ginning Pvt. Ltd. and applicant No. 1 had mortgaged certain immovable properties with the Bank as security and applicant No. 2 had provided personal guarantee for the limits sanctioned. On account of the default committed by the borrower in the repayment of loan, the respondent-Bank issued the demand notice on 30.07.2013 under Section 13(2) of the Securitization And Reconstruction Of Financial Assets And Enforcement Of Security Interest Act, 2002 (‘the SARFAESI Act’ hereinafter) demanding the sum of Rs. 2,99,17,365/-. 2.4 The Bank also filed an application under Section 14 of the SARFAESI Act to take physical possession of the properties in question. The District Magistrate, Gir Somnath passed an order on 28.09.2015 for taking physical possession of the properties and the Bank took possession of the mortgaged properties and issued the possession notice on 01.10.2013. 2.5 The sale by way of auction vide auction sale notice dated 09.09.2016 took place and it was held on 15.10.2016. The respondent Bank issued the certificate of sale on 17.11.2016 in favour of the respondent auction purchasers and aggrieved by these measures, the petitioner preferred the Securitization Application No. 114 of 2013. 2.6 Both the sides had completed the pleadings and thereafter the matter was reserved for judgment scheduled on 01.11.2022. It appears that on that day the matter could not be finally decided and pronounced. Thereafter, it continued to be at the stage of pronouncement. It is not in dispute that the arguments had been concluded and both the sides were permitted to tender written submissions till 05.11.2022. The matter was listed for pronouncement on 11.11.2022 thereafter and it had been further deferred for judgment on 18.11.2022 due to paucity of time. 2.7 On 18.11.2022, when the matter was listed for pronouncement of judgment, the learned advocate for the respondent Bank served a copy of pursis on 18.11.2022 and a compilation consisting of about 68 pages were tendered. There was no application filed seeking any leave of the Tribunal to produce the documents however, they were sent on WhatsApp to the learned advocate for the petitioner. The grievance is also made that the matter was mentioned without informing the learned advocate for the petitioner in advance. The matter thereafter was adjourned to 22.11.2022. There was no application filed seeking any leave of the Tribunal to produce the documents however, they were sent on WhatsApp to the learned advocate for the petitioner. The grievance is also made that the matter was mentioned without informing the learned advocate for the petitioner in advance. The matter thereafter was adjourned to 22.11.2022. 2.8 The grievance on the part of the petitioner is that it was served with the pursis and documents on 18.11.2022 at the stage when the matter was on the pronouncement of the judgment. He clearly had no opportunity to deal with the documents. The petitioner out of caution had preferred the pursis objecting to the documents being placed on record in such a manner and requested the Tribunal not to consider the documents. However, no order was passed by the respondent No. 1 deciding the objections lodged on 21.11.2022. 2.9 On 22.11.2022, the Tribunal passed the final order in the matter and dismissed the application. It is the grievance of the petitioner that without deciding the objections of 21.11.2022, this decision had been rendered. 2.11 Moreover, the interim relief which was in operation from 12.03.2019 also was vacated. 2.12 Since this action on the part of the respondent Bank of tendering the documents vide pursis was not acceptable, considering the stage at which the matter was pending, a serious objection has been raised. Again, non-consideration of the objections by way of a pursis tendered by the petitioner is also another grievance which has driven the petitioner to this Court. 2.13 It is urged that the fair opportunity of hearing needs to be granted to the petitioner. The application was preferred seeking to recall the order dated 22.11.2022 under Section 19(25) of the Recovery of Debt Dues to Bank and Financial Institution Act, 1993 and Rule 18 of the Debt Recovery Tribunal (Procedural Rules) 1993 on 25.11.2022 and had made a request to grant fair opportunity of hearing to the applicant-petitioner. It was numbered as Diary No. 2247 of 2022 on 28.11.2022. 2.14 The applicant cured the defects as was informed and had preferred an application for urgent circulation on 01.12.2022 expressing the urgency, however, the matter was updated to be listed on 15.12.2022 as a fresh matter. It was numbered as Diary No. 2247 of 2022 on 28.11.2022. 2.14 The applicant cured the defects as was informed and had preferred an application for urgent circulation on 01.12.2022 expressing the urgency, however, the matter was updated to be listed on 15.12.2022 as a fresh matter. The preponement was sought on 06.12.2022, however, the information was given by the Registry that the application for recall was not maintainable and the appeal would need to be filed and the matter was then updated for the removal of defects. 2.15 On issuance of the notice, other side appeared and resisted this petition vehemently. 3. Affidavit-in-reply is filed by the respondent No. 3-the Trustee of the respondent No. 3 Trust inter-alia contending that the present petition is not maintainable in view of the clear statutory provision of Section 18 of the SARFAESI Act which provides for an appeal before the Appellate Tribunal against the order passed by the respondent No. 1 under Section 17 of the SARFAESI Act. According to the respondent, the conduct of the petitioner also would not make it conducive for it to continue with the present petition. 3.1 The respondent No. 3 is a duly registered Trust under the Gujarat Public Trust Act on 08.10.1979 it had been registered and is running the Charitable Hospital in the name and style of Everest Multiplicity and Mehta Bhanu and Gardi General Hospital. Several doctors are rendering their services at a very nominal rate to provide medical aid to the patients residing in the area. 3.2 On the donations and funding of the citizens, the trust runs. It is desirous to construct medical facilities over the plots is question. More than five years have passed and the Trust is running from pillar to the post to put an end to the vexatious litigations initiated by the petitioner to meet with the goals and objects of the Trust. However, it has been lamented that it has been trapped in the net of litigations thrown by the petitioner. More than five years have passed and the Trust is running from pillar to the post to put an end to the vexatious litigations initiated by the petitioner to meet with the goals and objects of the Trust. However, it has been lamented that it has been trapped in the net of litigations thrown by the petitioner. 3.3 It is also contended that the petitioner firm had moved another application No. 245 of 2016 before the respondent No. 1 under the provision of Section 17(1) of the SARFAESI Act claiming the very relief as prayed for in the present application being Securitization Application No. 114 of 2013, which has been dismissed due to want of prosecution by the respondent No. 1 on 25.04.2018 and the petitioner has not bothered to restore the said application. This, according to the respondent, is an intentional and mala-fide practice for extorting the auction purchasers and the same need to be viewed stringently. 3.4 The chronology of events also have been narrated in the affidavit-in-reply to urge that once the respondent No. 2 Bank has issued the sale certificate in respect of the plot in question in favour of the respondent Nos. 3 and 4 before five years, they are not to be subjected to any challenge. Mutation of revenue entries of the sale deeds before the concerned revenue authorities the petitioner is also not entitled to challenge, however, the same had been challenged and the petitioner has failed since concerned revenue authorities has rejected the objections of the petitioner for mutating the names in the revenue record. 3.5 The auction purchasers since have not been able to test the fruits of the auction proceedings despite the payment of more than Rs. 2 Crore, it is requested to this Court to expedite the matter and sought to rely upon the copies of the sale deeds executed in favour of the respondent Nos. 3 and 4. 3.6 It is further urged that on the part of the Trust it is quite hazardous as the present petition is the 3rd round of litigation after two Securitization applications. 3 and 4. 3.6 It is further urged that on the part of the Trust it is quite hazardous as the present petition is the 3rd round of litigation after two Securitization applications. 3.7 It is further contended quite emphatically that what is required to be demonstrated by the petitioner is the prejudiced caused in respect of any breach of principle of natural justice and mere bare allegations in this regard would not suffice to exercise the jurisdiction under Articles 226 and 227 of the Constitution of India. As such there are no new documents produced by the Bank and therefore, it cannot be alleged that no opportunity of hearing had been given. 3.8 It is further urged that the petitioner did object to the production of documents of the Bank on 18.11.2022 by filing a pursis. The petitioner’s advocate was in fact heard on the said objection even during the pendency of the present petition, it had failed to pray for expeditious hearing of the recall application. It is therefore, urged to dismissed it in limine. 4.1 The affidavit-in-reply by the respondent No. 2 State Bank of India is filed through the Chief Manager of the Bank. It is the say of the respondent-Bank that the two orders dated 09.12.2022 and 15.12.2022 are not brought to the notice of the Court. The DRT has declined to register the recall application being Diary No. 2247 of 2022. The Registrar, in fact, has given an opportunity to the petitioner as can be read from the order, which the petitioner has not availed and it is also suppressed this aspect before this Court. 4.2 On 15.12.2022, the matter was listed for removal of defects, however, the applicant did not remain present and therefore, the matter was declined to be registered. 5. Affidavit-in-rejoinder is filed by the partner of the petitioner firm denying all contentions raised by other respondent. According to the petitioner, there are certain false information to misguide the Court. All other allegations with regard to the vexatious nature of litigations etc. are bereft of any basic details. The allegations are of gross violation of principle of natural justice and the prejudice is therefore apparent on the face of the record and also inherent. 6. Affidavit is separately also filed in response to the affidavit-in-reply on behalf of the respondent No. 2 which may not be necessary to be dilated. 7. are bereft of any basic details. The allegations are of gross violation of principle of natural justice and the prejudice is therefore apparent on the face of the record and also inherent. 6. Affidavit is separately also filed in response to the affidavit-in-reply on behalf of the respondent No. 2 which may not be necessary to be dilated. 7. We have heard the learned advocate, Ms. Amrita Patel, who has made her fervently submission by urging that when there is a gross violation of principle of natural justice, the Court needs to intervene. She has also further pointed out the availability of the appeal and alternative remedy would not bar preferring of the writ petition in as much as the petitioner could establish how the basic principles of natural justice have been violated. 7.1 She has also further argued that it is the right of the petitioner to address the Court on the freshly tendered documents even if, they are claimed to be of the other siblings as there are different legal entities and hence, some of the partners or the directors if are belonging to the same family that per se cannot be the reason for the Court to presume anything in relation to the documents. She also has not disputed that there is an availability of the alternative remedy, however, according to her, that should not deter the parties to come forward under Article 226 of the Constitution of India. 8. Learned senior advocate, Mr. Anshin Desai assisted by the learned advocate, Mr. Vishal Mehta has vociferously argued this matter by urging this Court the litigation is frivolous, it is stretched more than five years and thereby denying the respondent-auction purchasers the fruits of money invested. It is a Bank certificate, which was needed which also had been issued in favour of the auction purchaser. He has urged that not only there had been a suppression on the part of the petitioner, it has chosen to ride on two horses by approaching this Court when an application for recall was already pending. All these aspects have not been disclosed and therefore, also he has urged that the Court must dismiss this petition. 9. Both the sides have relied various decisions to substantiate their pleadings and the oral version. All these aspects have not been disclosed and therefore, also he has urged that the Court must dismiss this petition. 9. Both the sides have relied various decisions to substantiate their pleadings and the oral version. 9.1 Learned advocate, Ms.Amrita Patel has relied on the following decisions: (i) Standard Chartered Bank vs. Radnik Exports, (2012) SCC Online DRAT 66 (ii) Asit Kumar Kar vs. State of West Bengal and Others, (2009) 2 SCC 703 (iii) Anita Gard and Others vs. State Bank of India, (2021) SCC Online Del. 4311 (iv) Bagai Construction through its Proprietor Lalit Bagai vs. Gupta Building Material Store, (2013) 14 SCC 1 (v) J.M. Baxi and Co. Gujarat vs. Commissioner of Customs, New Kandla and Another, (2001) 9 SCC 275 9.2 Learned senior advocate, Mr. Desai has relied on the following decisions: (i) Securities and Exchange Board of India vs. Akshya Infrastructure Private Limited, (2014) 11 SCC 112 (ii) Authorized Officer, State Bank of Travancore and Another vs. Mathew K.C. (2018) 3 SCC 85 (iii) ICICI Bank Limited and Others vs. Umakanta Mohapatra and Others, (2019) 13 SCC 497 (iv) State of U.P. vs. Mohammad Nooh, AIR 1958 SC 86 (v) Chairman State Bank of India vs. M.J. James, (2022) 2 SCC 301 10. We have chosen to request the one of the empenalled advocates of the Bank to be here to address the cause. Accordingly, Mr. C.Z. Shankhla, learned advocate had waived the service of notice for respondent No. 2. He has also argued that the details of the documents furnished by the Bank had been also given to the learned advocate for the applicant and the documents had been shared through WhatsApp. Again, the request for rejection to entertain the application of the petitioner is an appealable order. The Registry there has powers to so do it relying on the Rules 5(3), 5(4) and 5(5) of Debt Recovery Tribunal Procedural Rules, 1993 11. Having thus heard the learned advocates on both the sides and also having perused the material on the record, we, at the outset, are required to consider whether the maintainability of this petition is an issue which deserves consideration at the outset. Having thus heard the learned advocates on both the sides and also having perused the material on the record, we, at the outset, are required to consider whether the maintainability of this petition is an issue which deserves consideration at the outset. Being conscious of the fact that there are not fetters to exercise of powers under Article 226 of the Constitution of India once the Court finds the breach of principle of natural justice, the Court needs to examine also the facts of the instant case as otherwise on the ground of the principle of natural justice. At the time of issuance of notice, the petitioner had made out a prima-facie case. 12. It is a clear case that aggrieved by the action of the respondent-Bank and the auction purchasers having purchased it through the auction sale the immovable properties belonging to the petitioner, the Securitization Application No. 114 of 2013 had been preferred. The matter had been heard at length and then it was directed to be listed for pronouncement on 11.11.2022. The parties were permitted to tender their written submissions by 05.11.2022. On 11.11.2022, as the Tribunal could not pronounce and the matter was posted on 18.11.2022. On 18.11.2022, the matter was listed at Serial No. 22 when the learned advocate for the Bank had served the soft copy of the pursis on 18.11.2022 and also compilation consisting of 68 pages on WhatsApp to the learned advocate for the petitioner. These documents also are forming the part of the record of this Court as the same had been produced at Annexure-G which is dated 18.11.2022, the papers produced are at follow: S. No. Particulars Page No. 1. Status Report of SCA 3111/2018 1 2. Copy of Order dated 22.02.2018 in SCA 3111/2018 2-3 3. Copy of order dated 17.09.2019 in RP 497 of 2016 4 4. Copy of compromise Letter dated 15.10.2022 given by the Adarsh Ginning Pvt. Ltd. 5 5. Copy of the notice u/s. 13(2) with acknowledgment and possession notice 6-32 6. Copy of the Valuation Report, Sale Notice with proof of service 33-68 13. Copy of order dated 17.09.2019 in RP 497 of 2016 4 4. Copy of compromise Letter dated 15.10.2022 given by the Adarsh Ginning Pvt. Ltd. 5 5. Copy of the notice u/s. 13(2) with acknowledgment and possession notice 6-32 6. Copy of the Valuation Report, Sale Notice with proof of service 33-68 13. A copy of the order dated 22.02.2018 in Special Civil Application No. 3111 of 2018 preferred by Adarsh Ginning Pvt. Ltd and two others as also the compromise letter dated 15.10.2022 given by the Adarsh Ginning Pvt. Ltd. the notice under Section 13(2) with acknowledgment and possession notice and the copy of the valuation report, civil notice and the proof of service, in all there are 68 documents. 14. We could notice that after once the documents were permitted to be taken on record, the petitioner had made a request on 21.11.2022 to permit by way of a pursis objecting to the documents being placed on the record and requesting the Tribunal not to consider those documents, there is no order on this objection. The fact remains that the pronouncement was made on 21.11.2022. The petitioner, thereafter, had moved an application under Section 19(25) of the Recovery of the Debt due to the Bank and Financial Institution Act and Rule 18 of the Debt Recovery Rules, the Diary No. 2247 of 2022 was given on 28.11.2022. The defects, according to the petitioner, had been removed and it preferred an application for urgent circulation on 01.12.2022 citing the reasons for urgency however, that was updated to be listed on 15.12.2022 as the fresh matter. Therefore, it preferred an application on 06.12.2022 for prepondment of the listing of the matter. It appears that the Registry had held that application for recall was not maintainable and cannot be filed and appeal need to be filed. Accordingly, it had dismissed the said application preferred by the applicant. 15. The present petition has been filed on 09.12.2022 and it had come up for hearing on 15.12.2022 and due to paucity of time it was then posted on 16.12.2022. On 16.12.2022 this Court posted the matter on 21.12.2022 as the learned advocate, Mr. Vishal Mehta appeared for respondent with the leave of the Court. 16. 15. The present petition has been filed on 09.12.2022 and it had come up for hearing on 15.12.2022 and due to paucity of time it was then posted on 16.12.2022. On 16.12.2022 this Court posted the matter on 21.12.2022 as the learned advocate, Mr. Vishal Mehta appeared for respondent with the leave of the Court. 16. The petitioner, according to us, had already availed the remedy by preferring an application before the Tribunal seeking the recall of the matter on the ground that it was not given an opportunity of hearing instead of pursuing the same, it had chosen to also approach this Court on 09.12.2022 without waiting for the outcome of that. 17. We could notice that the Registry, on the ground that the review which was necessary and not the recall even if, under the mistaken belief had chosen to reject the same. The remedy of the petitioner in such a case to prefer an appeal against the order of the Registrar under Sub-Rule (4) within 15 days of passing of the order to the Presiding Officer concerned, as the Registry under Rule 5 has the right to decline to register the application if, the concerned applicant failed to rectify the defect within the time allowed in sub-rule (3) that is what has been done in the instant case. 18. We have found this approach of not coming out with a complete facts before the Court. When approaching this Court for equitable relief, it was expected by the petitioner to disclose all these aspects more particularly, when the matter was taken up for hearing on 16.12.2022, the outcome before the Registry of the Tribunal was already available on the internet on 15.12.2022. It is having already chosen the remedy was also not highlighted and hence, even without holding against the petitioner in this regard, we find that there is an efficacious remedy available for the petitioner to approach. It had already chosen to so do it and yet without exhausting the same, it prefer to come before this Court. 19. Once having moved the Tribunal objecting to the consideration of 68 pages during the pendency of the matter for pronouncement of the judgment, it was not difficult for the petitioner to approach the court concerned for recall. It had already chosen to so do it and yet without exhausting the same, it prefer to come before this Court. 19. Once having moved the Tribunal objecting to the consideration of 68 pages during the pendency of the matter for pronouncement of the judgment, it was not difficult for the petitioner to approach the court concerned for recall. Insistence on the part of the Registry to go for the review instead of the recall if was objectionable to the petitioner, it already has a remedy as mentioned. Without disclosing all these aspects when it had approached this Court on the ground of the obligations on the part of the authority concerned to meet with the principles of natural justice, the Court had examined at length even at the outset before the Court adjudicated upon this, the opportunity was given to the petitioner to seek the recourse of efficacious alternative remedy, which it has chosen not to insist on the ground of principle of natural justice. 20. Learned advocate Ms. Amrita Patel seeks to withdraw this petition to enable her to challenge the order before the appropriate forum. 20.1 On instruction, she says that she would like to prefer an appeal against the order of the Registrar under Sub-Rule 4 of Rule 5 of the Debts Recovery Tribunal (Procedure) Rules, 1993. Notice will be discharged. 21. Without entering into the merits, such permission is granted. 22. This petition is disposed of as withdrawn.