Karnataka High Court
M/S. Sri. Lakshmi Malleabgles Pvt Ltd vs The Manager on 2 July, 2019
Bench: L.Narayana Swamy, R Devdas
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 2nd DAY OF JULY, 2019
PRESENT
THE HON'BLE MR. JUSTICE L.NARAYANA SWAMY
AND
THE HON'BLE MR. JUSTICE R. DEVDAS
WRIT PETITION NO.21759/2019 (GM-DRT)
BETWEEN:
M/S. SRI LAKSHMI MALLEABGLES PVT., LTD.,
A PRIVATE COMPANY REGISTERED
UNDER THE COMPANIES ACT, 1956,
REP. BY ITS MANAGING DIRECTOR
SRI M.R.RAJATH
S/O LATE M.R.RAMACHANDRA,
AGED ABOUT 44 YEARS,
HAVING REGISTER OFFICE AT
NO.144, SY NO.52,
AZIZ SAIT INDUSTRIAL TOWN,
NAYANDAHALLI,
BANGALORE-560 039.
AND ALSO AT
#43, 5TH CROSS,
R.M.V. EXTENSION,
BANGALORE 560 080.
...PETITIONER
(BY SRI NATARAJA H.T., ADVOCATE)
AND:
1. THE MANAGER
UNION BANK OF INDIA,
2
ASSET RECOVERY BRANCH,
NO.583/584, 2ND FLOOR,
POOJA COMPLEX,
AVENUE ROAD,
BANGALORE-560 002.
2. M/S R.A.POWERGEN ENGINEERS PVT., LTD.,
A PRIVATE LIMITED COMPANY
REGISTERED UNDER THE
COMPANIES ACT-1956, HAVING
OFICE AT NO.53, 3RD FLOOR,
SHREE CHAMBERS,
SUBBARAMA CHETTY ROAD,
NETTAKALAPPA CIRCLE,
BASAVANAGUDI,
BANGALORE-560 004.
REP. BY ITS DIRECTOR
SRI S.N.SUYAMEENDRA.
3. SRI RAMAKRISHNA
S/O LATE K.R.GANESH MURTHY,
AGED ABOUT 56 YELARS,
R/AT NO.142, 3RD MAIN,
4TH CROSS, CHIKKALLASANDRA,
BANGALORE-560 061.
4. SRI S.N.SUYAMEENDRA
S/O MR.SUSHEELANDRA CHAR,
AGED ABOUT 46 YEARS,
5. SMT. S.N.VANISHREE
W/O SRI S.N.SUYAMEENDRA,
AGE IN MAJOR,
BOTH ARE R/AT NO.349, 2ND B CROSS,
1ST PHASE, GIRI NAGAR,
BANGALORE-560 085.
...RESPONDENTS
(BY SMT. SHWETHA RAVISHANKAR, ADV., FOR R1
NOTICE TO R2 TO R5 IS D/W V/O DT:26.06.2019)
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THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO
QUASH THE IMPUGNED ORDER DATED 22.04.2019,
PASSED IN A.I.R. NO.(SA)77/2019 BY THE DEBT
RECOVERY APPELLATE TRIBUNAL, CHENNAI ON
I.A.NO.246/2019, (ANNX-G) (DIRECTING THE PETITIONER
TO PRE DEPOSIT A SUM OF RS.3 CRORES WITHIN A
PERIOD OF 4 WEEKS FROM THE DATE OF THE ORDER
AND IN THE EVENT OF FAILURE IN COMPLYING WITH THE
ORDER ON PRE DEPOSIT THE APPEAL SHALL STAND
DISMISSED AUTHOMATICALLY) AND ALLOW THE WAIVER
APPLICATION OF THE PETITIONER i.e., I.A.NO.246/2019.
THIS WRIT PETITON COMING ON FOR PRELIMINARY
HEARING IN 'B' GROUP THIS DAY, DEVDAS, J., MADE THE
FOLLOWING:
ORDER
The petitioner-Company is before this Court assailing the impugned order dated 22.04.2019 passed by the Debt Recovery Appellate Tribunal, Chennai, on I.A.No.246/2019 in AIR No.(SA)77/2019.
2. Learned counsel for the petitioner-Company submits that the petitioner-Company was the previous owner of the property that is mortgaged by respondent Nos.2 to 5 and vide sale deeds dated 30.09.2014, the petitioner-Company sold the property to respondent Nos.2 to 5 herein.
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3. It is the contention of petitioner-Company that under the sale deeds dated 30.09.2014, respondent Nos.2 to 5 who are the purchasers were due to pay the balance sale consideration to the petitioner-Company. When respondent No.1-Bank initiated proceedings under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (for short 'SARFAESI Act') against respondent Nos.2 to 5, the petitioner-Company filed an application before the Debt Recovery Appellate Tribunal (for short the 'DRAT'). The application filed by the petitioner- Company came to be dismissed. Therefore, the petitioner-Company approached the DRAT. The Appellate Tribunal, while hearing I.A.No.246/2019 regarding waiver of pre-deposit, was of the opinion that the petitioner-Company is liable to pre-deposit 25% of the amount under Section 18 of the SARFAESI Act. 5 Being aggrieved, the petitioner-Company is before this Court.
4. Learned counsel for the petitioner-Company relies upon two decisions. First is a decision of the Co- ordinate Bench of this Court in the case of Karnataka Industrial Areas Development Board, Bengaluru, Vs., UCO Bank, Bengaluru and Another reported in 2019(2) KCCR 1447(DB) and another is a judgment of the Division Bench of Delhi High Court in the case of Indiabulls Housing Finance Limited Vs., Vaibhav Jhawar and Others in W.P.(C) 4237/2018, which was disposed of on 12.12.2018.
5. Learned counsel draws the attention of this Court to the discussion in the decision of Indiabulls Housing Finance Limited, wherein Section 18 and the definition of the term 'borrower' as found under Section 2(f) of the SARFAESI Act has been elaborately discussed. Similarly in case of Karnataka Industrial 6 Areas Development Board (supra), a similar provision under Section 21 of the Recovery of Debts and Bankruptcy Act, 1993, fell for consideration.
6. Learned counsel for respondent No.1-Bank would submit that the petition has become infructuous in view of the fact that respondent No.1-Bank has auctioned the mortgaged property and third party rights have been created.
7. We have heard the learned counsels and perused the writ papers.
8. A plain reading of Section 18 of the SARFAESI Act and the definition of the term 'borrower' as found in Section 2(f) of the SARFAESI Act would clearly indicate that the term borrower includes a guarantor as well, but not a person other than the borrower/guarantor. The only interpretation that could be given to second proviso to Section 18(1) shall be that 7 if a person other than borrower/guarantor files an appeal before the Arbitral Tribunal, then the stipulation of the pre-deposit of 50% (or 25%), as the case may be, of the amount of debt due from him as claimed by the secured creditors or determined by the DRT shall not be insisted upon.
9. It has been held that having regard to the said position of law, there is no ambiguity in the provision of Section 18 of the SARFAESI Act. The provision of Section 18 of the SARFAESI Act, are determinative of the fact that the legislature intended that it is only the 'borrower and guarantor', who should be under obligation to make the pre-deposit. The same is clear on a literal and grammatical meaning of the words "borrower" and "any person aggrieved" as found in Sections 18 and 2(f) of the SARFAESI Act. We are in respectful agreement with the opinion in the case of Indiabulls and KIADB (supra).
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10. In the present case, it is clear that the petitioner-Company is not a borrower or guarantor. In that view of the matter, we proceed to allow the writ petition and set aside the impugned order passed by the DRAT.
11. In view of the above discussion, having held that the petitioner-Company should not be insisted to make pre-deposit, the DRAT to proceed on merits of the matter without insisting on pre-deposit. At this juncture, learned counsel for the petitioner submits that since the direction given by the Appellate Tribunal was not complied by the petitioner-Company, the appeal stood dismissed. Therefore, the appeal in AIR.No.(SA) 77/2019 stands revived and the Appellate Tribunal is directed to hear the matter on merits. Liberty is reserved to the petitioner-Company to make such application as it deems fit, to seek appropriate interim 9 orders. If such an application is made, it is for the DRAT to pass appropriate order in accordance with law.
The petition stands allowed, accordingly.
SD/-
JUDGE SD/-
JUDGE PB