Gujarat High Court
Reliable Polyesters Private Ltd vs Authorised Officer Bank Of Baroda on 4 January, 2023
Author: Aravind Kumar
Bench: Aravind Kumar, Ashutosh J. Shastri
NEUTRAL CITATION
C/LPA/1002/2022 JUDGMENT DATED: 04/01/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/LETTERS PATENT APPEAL NO. 1002 of 2022
In R/SPECIAL CIVIL APPLICATION NO. 10802 of 2022
With
CIVIL APPLICATION (FOR INTERIM RELIEF) NO. 1 of 2022
In R/LETTERS PATENT APPEAL NO. 1002 of 2022
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RELIABLE POLYESTERS PRIVATE LTD.
Versus
AUTHORISED OFFICER BANK OF BARODA
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Appearance:
MR ADITYA A GUPTA(7875) for Appellants No. 1,10,11,12,2,3,4,5,6,7,8,9
MR BHASKAR SHARMA(9209) for the Respondent(s) No. 1
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CORAM:HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND
KUMAR
and
HONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI
Date : 04/01/2023
ORAL JUDGMENT
(PER : HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR)
1. The short point that arises for consideration in this appeal is :
"What constitutes 50% of the amount as prescribed under second proviso to sub- section (1) of Section 18 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short "SARFAESI Act")?"
2. Petitioners were sanctioned certain credit facilities by the respondent - Bank of Baroda (hereinafter referred to as "Secured Creditor") on 31.09.2019. Said Page 1 of 19 Downloaded on : Sun Sep 17 20:26:33 IST 2023 NEUTRAL CITATION C/LPA/1002/2022 JUDGMENT DATED: 04/01/2023 undefined loan account having been classified on 08.03.2020 as a 'Non Performing Asset' - NPA resulted in a notice under Section 13(2) of SARFAESI Act being issued to petitioners by the secured creditor on 10.07.2020 (Annexure-P) calling upon appellants to pay Rs.6,20,41,349/-. The said notice is said to have been replied by the debtor.
3. The secured creditor initiated proceedings for taking symbolic possession of the secured asset and also filed an application under Section 14 of the SARFAESI Act before the jurisdictional Magistrate. The secured creditor has filed an application under Section 19 of the Recovery of Debts and Bankruptcy Act, 1993 (for short "RDB Act") in O.A. No.463 of 2020 on 30.07.2020 for recovery of Rs.6,29,98,547.04ps.
4. Pursuant to the notice issued under Section 13(2) of the SARFAESI Act, notice under Section 13(4) read with Rule 8(1) of Security of Interest (Enforcement) Rules, 2002 also came to be issued on 24.09.2020. Challenging the said measures taken by the respondent - Page 2 of 19 Downloaded on : Sun Sep 17 20:26:33 IST 2023
NEUTRAL CITATION C/LPA/1002/2022 JUDGMENT DATED: 04/01/2023 undefined secured creditor, petitioners filed an application under Section 17 before the jurisdictional Tribunal in S.A.No.435 of 2020. The Tribunal by order dated 27.01.2022 rejected the prayer for interim injunction sought for by the appellants from preventing the measures taken by the secured creditor against petitioners. On account of Chairperson of Debt Recovery Appellate Tribunal, Mumbai, lying vacant, petitioners approached this Court in Special Civil Application No.2907 of 2022 for grant of interim relief which was granted to petitioners on 11.03.2022 to be in operation for seven days after the learned Chairperson of Debt Recovery Appellate Tribunal assumes charge. On 21.03.2022, the Chairperson of Debt Recovery Appellate Tribunal, Mumbai was appointed and as such order passed by the Tribunal dated 27.01.2022 was challenged in appeal before DRAT by the petitioners by filing an appeal under Section 18 of SARFAESI Act namely Miscellaneous Appeal No.14 of 2022. Along with said application, an interlocutory application was filed for Page 3 of 19 Downloaded on : Sun Sep 17 20:26:33 IST 2023 NEUTRAL CITATION C/LPA/1002/2022 JUDGMENT DATED: 04/01/2023 undefined waiver of pre-deposit in I.A. No.40 of 2022. Said application came to be resisted to by the secured creditor and DRAT by order dated 01.06.2022 called upon the appellants to pre-deposit a sum of Rs.2.50 Crores for entertaining the appeal. After accepting the statement made by the learned counsel for the secured creditor namely the bank that an amount of Rs.7,75,64,475.67ps. is the amount due, Tribunal directed payment of the said amount to be made by debtor in installments as indicated in paragraph-14 of the order dated 01.06.2022. It reads as under : -
"14. Considering the entire facts and circumstances of the case, the arguments advanced, and the attending circumstances, I find that for the Appeal to be entertained, the Appellants shall deposit a sum of Rs.2.50 Crores as pre-deposit. The Respondent Bank is direcred to deposit a sum of Rs.57 Lakhs, lying with them as 'No Lien Account', in this Tribunal towards the part payment of the pre- deposit, on or before 08.06.2022 and the balance amount of Rs.1.93 Crores shall be deposited in two equal tranches by the Appellants. The first tranche of Rs.96.50 Lakhs shall be deposited on or before 15.06.2022 and the balance tranche of Rs.96.50 Lakhs shall be deposited on or before 06.07.2022. Default in payment of any of the tranches would result in the Appeal being dismissed."Page 4 of 19 Downloaded on : Sun Sep 17 20:26:33 IST 2023
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5. Being aggrieved by the aforesaid order, the appellants herein approached the learned Single Judge in Special Civil Application No.10802 of 2022 which has since been dismissed vide order dated 29.06.2022 and as such, appellants are before this Court.
6. We have heard the arguments of Mr.Aditya Gupta, learned counsel appearing for the appellants and Mr.Bhaskar Sharma, learned counsel appearing for the respondent.
7. It is the contention of Mr.Aditya Gupta, learned counsel appearing for the appellants that learned Single Judge erred in construing the words in second proviso to sub-section (1) of Section 18 of the SARFAESI Act in an erroneous manner and by drawing the attention of the Court to the said provision, he would contend that said provision clearly mandates that appeal would not be entertained unless the borrower has deposited with the Appellate Tribunal 50% of the amount of debt due from him, as claimed by the secured creditor in the application Page 5 of 19 Downloaded on : Sun Sep 17 20:26:33 IST 2023 NEUTRAL CITATION C/LPA/1002/2022 JUDGMENT DATED: 04/01/2023 undefined or in the application filed under Section 19 before the DRT or in the alternative the amount claimed in the notice issued under Section 13(2) of the Act or the amount if it had been determined by the Debts Recovery Tribunal. In the event of there being a claim before the DRT by the secured creditor and the said claim is adjudicated and determined then in such an eventuality the appellant if intending to challenge the said order before the appellate tribunal is required to deposit 50% of the said amount namely whichever the amount is less either as claimed by the secured creditor or as determined by the tribunal. Non-consideration of this aspect according to him has resulted in great prejudice to the appellants. He would also contend that tribunal has placed heavy reliance on the definition clause of the 'debt' which itself clearly indicates that debt would mean to include the amount as claimed in the application or the amount due on the date of application and not any other amount. Hence, relying upon the following judgments, he would pray for appeal being allowed : Page 6 of 19 Downloaded on : Sun Sep 17 20:26:33 IST 2023
NEUTRAL CITATION C/LPA/1002/2022 JUDGMENT DATED: 04/01/2023 undefined (1) Narayan Chandra Ghosh vs. UCO Bank - 2011 4 SCC 548.
(2) Poonam Manshani vs. J & K Bank Ltd.
and another - 2010 114 DRJ 81 (DB).
(3) Prudent ARC Limited vs. Sidha Neelkanth Paper Industries - 2020 SCC Online Del 1641.
(4) Sivakuma Textiles vs. DRAT - 2011 SCC Online Mad. 2508.
(5) Mekala Raj vs. Presiding Officer, DRT, Chennai - 2017 SCC Online Mad. 16033.
(6) Shri Mohan Products vs. State Bank of India - 2020 SCC Online Chh.
2302.
(7) R. Dhanalakshmi vs. Union Bank of India - 2019 SCC Online Ker. 23185.
(8) Pritesh Meghaji Penthani vs. Union of India - 2-14 SCC Online Guj. 9175.
8. Per contra, Shri Bhaskar Sharma, learned counsel appearing for the secured creditor would support the impugned order and would contend that expression used in the second proviso to sub-section (1) of Section 18 has to be read ejusdem generis namely as it is and Page 7 of 19 Downloaded on : Sun Sep 17 20:26:33 IST 2023 NEUTRAL CITATION C/LPA/1002/2022 JUDGMENT DATED: 04/01/2023 undefined without adding or subtracting any words. By giving its plain meaning it would indicate that debt due would mean and include the amount payable by the debtor to the secured creditor which would also include the accrued interest or future interest and as such, by relying upon the following judgments, he prays for affirming the order of the learned Single Judge and prays for dismissal of the appeal :
(1) Union Bank of India vs. Rajat Infrastructure Private Limited and others - AIR 2020 SC 1172.
(2) Order dated 25.10.2021 passed by this Court in Special Civil Application No.13420 of 2021 being Newton Engineering and Chemicals Ltd. vs. DRAT, Mumbai.
9. Having heard the learned advocates appearing for the parties and on perusal of the records, we are of the considered view that it would be apt and necessary to extract the provision which has been pressed into service by both the learned advocates, which has been relied upon by the tribunal and which has bearing on Page 8 of 19 Downloaded on : Sun Sep 17 20:26:33 IST 2023 NEUTRAL CITATION C/LPA/1002/2022 JUDGMENT DATED: 04/01/2023 undefined adjudication of rival contentions raised namely Section 18 of the SARFAESI Act. It reads thus :
"18. Appeal to Appellate Tribunal.-- (1) Any person aggrieved, by any order made by the Debts Recovery Tribunal [under section 17, may prefer an appeal along with such fee, as may be prescribed] to an Appellate Tribunal within thirty days from the date of receipt of the order of Debts Recovery Tribunal.
[Provided that different fees may be prescribed for filing an appeal by the borrower or by the person other than the borrower:] [Provided further that no appeal shall be entertained unless the borrower has deposited with the Appellate Tribunal fifty per cent. of the amount of debt due from him, as claimed by the secured creditors or determined by the Debts Recovery Tribunal, whichever is less:
Provided also that the Appellate Tribunal may, for the reasons to be recorded in writing, reduce the amount to not less than twenty-five per cent. of debt referred to in the second proviso.] (2) Save as otherwise provided in this Act, the Appellate Tribunal shall, as far as may be, dispose of the appeal in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) and rules made thereunder."Page 9 of 19 Downloaded on : Sun Sep 17 20:26:33 IST 2023
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10. A plain reading of the above provision would indicate that any person aggrieved, by any order made by Debt Recovery Tribunal under Section 17, can prefer an appeal along with prescribed fee to the appellate tribunal within thirty (30) days from the date of receipt of the order of DRT. First proviso indicate that different fees may be prescribed for filing an appeal by the borrower or by the person other than the borrower. Second proviso to sub-section (1) of Section 18 would indicate no appeal would be entertained by the appellate tribunal unless the borrower has deposited with the appellate tribunal 50% of the amount of debt due from him, as claimed by the secured creditor or as has been determined by the Debts Recovery Tribunal, whichever is less. By virtue of third proviso to sub-section (1) of Section 19, appellate tribunal would be empowered to reduce the amount of pre-deposit as prescribed in second proviso and such reduction cannot be less than 25% of debt referred to in the second proviso.
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11. When the words of a statute are clear, plain or unambiguous namely they are reasonably susceptible to only one meaning, the Courts would be bound to give effect to that meaning irrespective of the consequences. The rule as stated by the Hon'ble Chief Justice Tindal in Sussex Peerage's case is in the following form :
"If the words of the statute are in themselves precise and unambiguous, then no more can be necessary than to expound those words in their natural and ordinary sense. The words themselves do alone in such cases best declare the intent of the lawgiver."
12. In case of London Brick Co. Ltd. Vs. Robinson reported in (1943) 1 All ER 23, it has been held :
"The results of the construction are then not a matter for the court, even though they may be strange or surprising, unreasonable or unjust or oppressive."
13. The Hon'ble Apex Court in Kanailal Sur vs. Paramnidhi Sadhu Khan reported in AIR 1957 SC 907, has observed to the following effect : Page 11 of 19 Downloaded on : Sun Sep 17 20:26:33 IST 2023
NEUTRAL CITATION C/LPA/1002/2022 JUDGMENT DATED: 04/01/2023 undefined "Hardship or inconvenience cannot alter the meaning of the language employed by the Legislature if such meaning is clear on the face of the statute or the rules."
14. Keeping these principles in mind, when we turn our attention to the second proviso to sub-section (1) of Section 18 of the SARFAESI Act, it would clearly indicate that a person aggrieved by an order of the tribunal were to prefer an appeal, such person would be required to deposit 50% of the amount of 'debt' due from him, as claimed by the secured creditor. In the instant case, the point of dispute is that the secured creditor is contending that debtor would be required to pay the amount due as on the date of filing of the appeal. Whereas the debtor is contending that amount that was due as on the date of filing of the application before DRT and if no such application is filed, the amount claimed in the notice issued under Section 13(2) by the secured creditor. The words and expression employed in the second proviso "amount of debt due from him, as claimed by the secured creditor" would clearly mean it is Page 12 of 19 Downloaded on : Sun Sep 17 20:26:33 IST 2023 NEUTRAL CITATION C/LPA/1002/2022 JUDGMENT DATED: 04/01/2023 undefined pre-determination of the application or pre-adjudication of the dispute. It must necessarily relate back to the claim made by the secured creditor in the notice issued under Section 13(2) or the amount claimed in the application filed under Section 19 of the DRT Act. Any other meaning attributed and if sought to be given would not only render the proviso otios but also nugatory and it amount to doing violence to the provision. The very purpose and intent of the legislation would stand defeated. If the Legislature had restricted the words by using the words "the amount of debt due from borrower", without including any further words or expression "as claimed by the secured creditor", then situation would have been entirely different. That apart, there is a further expression in the said proviso which is to the effect "or determined by the Debts Recovery Tribunal, whichever is less". Thus, it cannot be gainsaid either by the appellate tribunal or by the secured creditor by contending that in all eventualities it is only the amount which is due from the debtor which is required to be deposited i.e. 50%. Page 13 of 19 Downloaded on : Sun Sep 17 20:26:33 IST 2023
NEUTRAL CITATION C/LPA/1002/2022 JUDGMENT DATED: 04/01/2023 undefined There may be a situation where the amount has been claimed by the secured creditor by filing an application before the tribunal and such application has been adjudicated and DRT would have determined the amount payable by the debtor. In the eventuality of tribunal determining amount lesser than what has been claimed by the secured creditor, then in such eventuality, if the debtor were to prefer an appeal, the debtor will have to deposit 50% of the amount so determined by the tribunal. In such circumstances, neither the tribunal nor the secured creditor can contend that even though there is a determination by the tribunal namely lesser amount has been ordered to be paid than what was claimed by the secured creditor, then also the debtor would be required to pay 50% of the amount claimed in the application or in the notice issued under Section 13(2). This interpretation if put-forward would amount to doing violence to the provision. That apart, when both the expressions namely "debt due from him (borrower), as claimed by the secured creditors" or "determined by the Debt Page 14 of 19 Downloaded on : Sun Sep 17 20:26:33 IST 2023 NEUTRAL CITATION C/LPA/1002/2022 JUDGMENT DATED: 04/01/2023 undefined Recovery Tribunal, whichever is less", read conjunctively, we are of the view that doctrine of noscitur a sociis would surface or said doctrine would be applicable namely the words in a statute will have to be understood by taking into consideration the words accompanying said provision. The authoritative principles of law laid down by the Hon'ble Apex Court in the case of The State of Bombay and others vs. The Hospital Mazdoor Sabha and others reported in AIR 1960 SC 610, can be quoted with benefit and it reads :
"9. It is, however, contended that, in construing the definition, we must adopt the rule of construction noscuntur a sociis. This rule, according to Maxwell, means that, when two or more words which are susceptible of analogous meaning are coupled together they are understood to be used in their cognate sense. They take is it were their colour from each other, that is, the more general is restricted to a sense analogous to a less general. The same rule is thus interpreted in "Words and Phrases" (Vol. XIV, P. 207):
"Associated words take their meaning from one another under the doctrine of noscuntur a sociis, the philosophy of which is that the meaning of a doubtful word may be ascertained by reference to the meaning of words associated with it; such doctrine is Page 15 of 19 Downloaded on : Sun Sep 17 20:26:33 IST 2023 NEUTRAL CITATION C/LPA/1002/2022 JUDGMENT DATED: 04/01/2023 undefined broader than the maxim Ejusdem Generis."
In fact the latter I maxim "is only an illustration or specific application of the broader maxim noscuntur a sociis ". The argument is that certain essential features or attributes are invariably associated with the words " business and trade " as understood in the popular and conventional sense, and it is the colour of these attributes which is taken by the other words used in the definition though their normal import may be much wider. We are not impressed by this argument. It must be borne in mind that noscuntur a sociis is merely a rule of construction and it cannot prevail in cases where it is clear that the wider words have been deliberately used in order to make the scope of the defined word correspondingly wider. 1 is only where the intention of the Legislature i associating wider words with words of narrow significance is doubtful, or otherwise not clear that the present rule of construction can be useful applied. It can also be applied where the meaning of the words of wider import is doubtful; but, where the object of the Legislature in using wider words i clear and free of ambiguity, the rule of construction in question cannot be pressed into service. As has been observed by Earl of Halsbury, L. C., in The Corporation of Glasgow v. Glasgow Tramway an Omnibus Co. Ltd. (1), in dealing with the wider word used in s. 6 of Valuation of Lands (Scotland) Act, 1854 "the words 'free from all expenses whatever in connection with the said tramways' appear to me to be so wide in their application that I should have thought it impossible to qualify or cut them down by Page 16 of 19 Downloaded on : Sun Sep 17 20:26:33 IST 2023 NEUTRAL CITATION C/LPA/1002/2022 JUDGMENT DATED: 04/01/2023 undefined their being associated with other words on the (1) (1898) A.C 63, at p. 634. principle of their being ejusdem generis with the previous words enumerated".
If the object and scope of the statute are considered there would be no difficulty in holding that the relevant words of wide import have been deliberately used by the Legislature in defining "industry" in s.2(j). The object of the Act was to make provision for the investigation and settlement of industrial disputes, and the extent and scope of its provisions would be realised if we bear in mind the definition of "industrial dispute" given by s.2(k), of "wages by s.2(rr), "workman" by s.2(s), and of "employer by s.2(g). Besides, the definition of public utility service prescribed by s.2(m) is very significant. One has merely to glance at the six categories of public utility service mentioned by s.2(m) to realise that the rule of construction on which the appellant relies is inapplicable in interpreting the definition prescribed by s.2(j)."
15. Thus, we are unable to subscribe to the view expressed by the learned Single Judge whereunder it has been held that the amount as quantified by the secured creditor is the amount due and payable by the debtor.
16. Now turning our attention to the facts on hand, it would clearly indicate that in the notice issued under Page 17 of 19 Downloaded on : Sun Sep 17 20:26:33 IST 2023 NEUTRAL CITATION C/LPA/1002/2022 JUDGMENT DATED: 04/01/2023 undefined Section 13(2) a sum of Rs.6,20,41,349/- has been claimed and in the application filed under Section 19 of the DRT Act before the tribunal in O.A. No.463 of 2022, a sum of Rs.6,29,98,547.04ps. has been claimed. In view of the fact that appellate tribunal has directed the appellant to deposit Rs.2.50 Crores by construing the amount due as Rs.7,75,64,475.67ps., we are of the view that finding recorded by the Appellate Tribunal is an erroneous finding, hence, the order of the tribunal dated 01.06.2022 requires to be quashed by setting aside the order of the learned Single Judge and consequently allow Special Civil Application No.10802 of 2022.
For the reasons aforestated, we proceed to pass the following ORDER
(i) Appeal is allowed.
(ii) Order dated 29.06.2022 passed in Special Civil Application No.10802 of 2022 is set aside and Special Civil Page 18 of 19 Downloaded on : Sun Sep 17 20:26:33 IST 2023 NEUTRAL CITATION C/LPA/1002/2022 JUDGMENT DATED: 04/01/2023 undefined Application No.10802 of 2022 is hereby allowed in part and order dated 01.06.2022 passed by the Debt Recovery Appellate Tribunal, Mumbai, is hereby set aside and matter is remitted back to the Debt Recovery Appellate Tribunal, Mumbai to pass suitable orders, keeping in mind the observations made hereinabove.
(iii) All pending application/s stands consigned to records.
(ARAVIND KUMAR, CJ) (ASHUTOSH J. SHASTRI, J) GAURAV J THAKER Page 19 of 19 Downloaded on : Sun Sep 17 20:26:33 IST 2023