Gujarat High Court
Surat vs Shetrunjay on 24 June, 2010
Author: Anant S. Dave
Bench: Anant S. Dave
Gujarat High Court Case Information System
Print
SCA/4555/2009 37/ 37 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL
CIVIL APPLICATION No. 4555 of 2009
With
SPECIAL
CIVIL APPLICATION No. 4633 of 2009
For
Approval and Signature:
HONOURABLE
MR.JUSTICE ANANT S.
DAVE
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1
Whether
Reporters of Local Papers may be allowed to see the judgment ?
2
To
be referred to the Reporter or not ?
3
Whether
their Lordships wish to see the fair copy of the judgment ?
4
Whether
this case involves a substantial question of law as to the
interpretation of the constitution of India, 1950 or any order
made thereunder ?
5
Whether
it is to be circulated to the civil judge ?
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SURAT
NAGRIK SAHAKARI BANK LTD - Petitioner(s)
Versus
SHETRUNJAY
COOPERATIVE HOUSING SOCIETY LTD & 4 - Respondent(s)
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Appearance
:
SCA
No.4555 of 2009
MR
MIHIR JOSHI Senior Advocate with MR BK DAMANI for Petitioner(s) :
1,
MR MIHIR THAKORE Senior Advocate with MR BM MANGUKIYA for
Respondent(s) : 1,
MR SI NANAVATI Senior Advocate with MRS VD
NANAVATI for Respondent(s) : 5, SCA
No.4033 of 2009
MR SI NANAVATI Senior
Advocate with MRS VD NANAVATI for Petitioner(s) : 1,
MR NITIN G
THAKKAR Senior Advocate with MR BM MANGUKIYA for Respondent(s) :
1,
MR MIHIR JOSHI Senior Advocate with MR BK DAMANI for
Respondent(s) : 5,
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CORAM
:
HONOURABLE
MR.JUSTICE ANANT S. DAVE
Date
: 24/06/2010
COMMON
CAV JUDGMENT
1. These petitions are filed under Article 226 and 227 of the Constitution of India. In Special Civil Application No.4555 of 2009 the petitioner made following prayers :-
"(A) to allow and admit this petition.
(B) to quash and set aside the order passed by Debt Recovery Appellate Tribunal on 30.03.2009 passed below MA No.60 of 2009 in Appeal no.19 of 2009 AND be pleased to direct the respondent no.1 to deposit 50% of the amount of debt due from him, as claimed by the petitioner.
(C) Pending hearing and final disposal of the present petition, to stay the implementation, execution and operation of the order passed by Debt Recovery Appellate Tribunal on 30.03.2009 passed below MA No.60 of 2009 in Appeal no.19 of 2009 AND the proceedings pending before the Debt Recovery Appellate Tribunal below MA No.60 of 2009 in Appeal no.19 of 2009.
(D) to grant such other and further relief's as may be deemed fit, just and expeditious be passed in favour of the petitioner".
In Special Civil Application No.4633 of 2009 the petitioner has made the following prayers :-
"(A) to admit and allow this petition;
(B) to quash and set aside the order dated 30.3.2009 passed by the Debts Recovery Appellate Tribunal, Mumbai below Misc. Application No.60 of 2009 in Appeal No.19 of 2009, at Annexure-"A" to this petition;
OR to vacate forthwith the interim order of status quo granted by DRT, Ahmedabad in Application No.79 of 2007, which is continued by learned DRAT at Mumbai in Misc. Application No.60 of 2009 in Appeal No.19 of 2009 and further be pleased to modify and/or set aside the impugned order dated 30.3.2009, at Annexure-"A", to that extent;
(C) to permit the petitioner to develop the land bearing Block Nos.226, 227 and 229 situated in Village Chekhla, Taluka Sanand, District Ahmedabad, purchased by the petitioner in the auction sale held by respondent No.5;
(D) Pending hearing and final disposal of the present petition, this Hon'ble Court may be pleased to stay the implementation, execution and operation of the order passed by the Debts Recovery appellate Tribunal on 30.03.2009 passed below Misc. Application No.60 of 2009 in Appeal No.19 of 2009;
(E) Ex-parte / ad-interim relief in terms of para 17(D), be granted in favour of the petitioner;
(F) to grant such other and further relief/s as deemed fit, just and proper in favour of the petitioner".
That in both the above writ petitions, contentions of facts as well as of law are almost identical and similar, barring a few submissions raised by learned counsel for the petitioner of Special Civil Application No.4633 of 2009, which may be considered at a later stage.
2. For the sake of convenience, the petitioner No.1 in Special Civil Application No.4555 of 2009 is referred to as the `bank', the respondent No.1 as `Society', respondent No.2 as `Company', respondent No.3 as `Chairman of the company', respondent No.4 as `Director of the Company' and respondent No.5 as `purchaser of the property in question'.
3. The facts giving rise to filing Special Civil Application No.4555 of 2009 are as under.
3.1. From the record of the case it appears that the petitioner bank had entered into a transaction in the nature of purchase of securities viz. Government Bonds etc. with respondent No.2 - Home Trade Ltd. and in spite of purchasing securities, the delivery of the securities was not given to the petitioner bank and towards the dues of the petitioner bank viz. 16,84,40,658.33, two cheques were issued, one for Rs.7,85,47,058/- dated 14.06.2002 and another for Rs.8,98,93,600/- dated 21.06.2002 and it was stated that if the cheques were deposited on the due date, the said amount would be realized. The above cheques were dishonoured, and therefore, complaint under the provision of Negotiable Instruments Act and a criminal complaint were filed. It is the case of the petitioner that on behalf of the respondent No.2 company, respondent No.1-society had executed a deed of guarantee and also deed for depositing title deeds of the said property. However, execution of deed and depositing title deeds is disputed by respondent No.1-society by submitting that the respondent No.1 is not a borrower as defined under Section 2(f) of the Act and there is no financial assistance as defined under Section 2(k) of the Act.
3.2. It is the case of the petitioner that the respondent No.2 company obtained above financial assistance from the petitioner bank and respondent No.1 society created equitable mortgage by deposit of title deed and the deed of guarantee of the property of respondent No.1-society being Block No.226, 227 and 229 situated at Village Chekhla, Taluka Sanand, District Ahmedabad. That after mortgage of the said property, the bank herein made an application to the Mamlatdar, Sanand to post entry of the said property in the revenue records. However, objections were raised by the respondent No.1 for the same. The society filed a criminal complaint against various persons, including the bank and the company before the Judicial Magistrate, First Class, Sanand, Ahmedabad and it is contended that the bank in collusion with the company and its directors forged and fabricated the documents in respect of the property of the said society and thereafter forged documents have been mortgaged with the bank. The company did not repay money to the bank, and therefore, the bank preferred Summary Suit No.26 of 2003 before the Civil Court at Surat and the society filed application for grant of leave to defend. The suit was decreed in favour of the bank against the company on 04.12.2004.
3.3. Since no money could be recovered from the company, the bank issued notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short "Act, 2002") on 01.06.2004, but no reply was received even after issuance of the notice. Therefore, on 17.08.2004 the bank sent a notice under Section 13(4) of the Act, 2002 for taking over the possession of the assets. That physical possession of the property was taken over by the company on 12.09.2004. That on 22.03.2006 public notice was issued by the bank in daily newspaper for selling the property.
3.4. The society preferred Civil Suit No.2176 of 2006 along with Exh.6/7 before the Civil Court, Ahmedabad for declaration of documents of memorandum of deposit of title deeds and deed of guarantee dated 08.05.2002 executed by the society as null and void and to be cancelled accordingly. In the above suit, application under Exh.55 was filed by the bank to reject the suit summarily on the ground of suppression of material facts, limitation and territorial jurisdiction. On 06.09.2007 the City Civil Court, Ahmedabad passed order below Exh.6/7 and Exh.55 and dismissed all applications. That the society filed Special Civil Application No.25890 of 2007 and upon request made by learned counsel for the petitioner-society to withdraw the petition with a view to avail alternative remedy by approaching DRT, the said petition was permitted to be withdrawn vide order dated 11.10.2007. At the same time, the bank also preferred Special Civil Application No.30195 of 2007 before this Court against the order passed by the City Civil Court, Ahmedabad below Exh.55 and this Court by an order dated 30.07.2008 issued Rule and stayed further proceedings of Civil Suit No.2176 of 2006 pending before the City Civil Court, Ahmedabad. The society thereafter preferred Appeal from Order No.16 of 2008 challenging the order dated 06.09.2007 passed by the City Civil Court dismissing notice of motion and in view of delay civil application for condonation of delay was also preferred. However, on 16.01.2008, the said Appeal from Order was disposed of since the appeal had become infructuous. On 18.10.2007 Appeal No.70 of 2007 was preferred by the Society before the DRT, Ahmedabad with a relief against the bank not to dispose of, alienate, transfer or create any third party right on the property and not to implement decision of the bank communicated to the society vide letter dated 01.10.2007 and also restraining the bank from proceeding further under provisions of the Act, 2002. Initially, no relief was granted by the DRT.
3.5. On 26.12.2007, the bank entered into transaction of sale with new purchaser and the said property was sold by the bank for Rs.6.75 crores. On 31.12.2007, the society, being aggrieved by the said sale deed, preferred Appeal No.79 of 2007 before the DRT, Ahmedabad praying that the bank may not transfer, alienate or create any third party right over the said property and that the new purchaser be restrained from creating any further encumbrance on the said property. On 01.01.2008, when both the appeals viz. Appeal No.70 of 2007 and 79 of 2007 came up for hearing, the DRT, Ahmedabad granted ex-parte relief in favour of the society to the extent that new purchaser may not create any third party right till the next date of hearing. Since DRT-I, Ahmedabad had no jurisdiction in view of execution of documents, the application preferred by the new purchaser to transfer the case from DRT-I to DRT-II came to be rejected on 22.05.2008. That being aggrieved and dissatisfied by the above order, new purchaser preferred Misc. Appeal No.234 of 2008 which came to be allowed and proceedings were transferred from DRT-I to DRT-II, Ahmedabad. On 02.12.2008 Appeal No.79 of 2007 came to be dismissed by DRT-II, Ahmedabad and according to the petitioner original ex-parte order continued for a period of 4 weeks from 02.12.2008.
3.6. The society preferred an application for extension of the order dated 02.12.2008 passed by the DRT-I, which was allowed and further period of 15 days time was granted and accordingly stay continued till 19.01.2009. That Appeal No.19 of 2009 was filed with M.A. No.60/2009 for waiver of deposit before the DRAT, Mumbai and it was fixed for hearing on the next date i.e. on 30.01.2009 and accordingly order under Section 18 of the Act, 2002 was passed by the DRAT on 30.03.2009 by which pre-deposit was waived by continuing interim relief granted earlier. Hence, the present petition.
3.7. The above facts pleaded by the petitioner are disputed by respondent. It was submitted by the respondent No.1 that though since 1997 office of respondent society, situated at Suyog Complex, Near Kamla Kamdhenu Hall, Drive-in Road, was shifted to 7th floor, Centre Point, Panchvati, Ahmedabad, but all the communications were addressed by the petitioner bank at the old address and the petitioner bank has taken undue advantage of such situation. The respondent No.1 has stated by communication addressed from the bank to respondent No.2 and in reply given by the company it is revealed that the bank and the respondent No.2 had entered into various transactions of securities along with contract notes and the letter shows transactions to be only of adjustment by sale and purchase without any delivery of securities to the bank and in spite of repeated reminders by the bank, the respondent No.2 failed to deliver 8.07% Government of India Bonds for Rs.15 crores and even subsequently issued cheques of Rs.7 crores and Rs.8 crores respectively, no amount was realized by the bank. By the time, scam of Home Trade was unearthed in around April, 2002. It is stated that documents viz. guarantee and memorandum of title deeds signed by Mr. R.K.Shah were never deposited and in fact in the criminal complaint filed by the society, it is specifically pleaded that they had never deposited title deeds with the bank and title deeds were with Home Trade as they were interested in purchasing the bank. Even the signature of Mr. R.K.Shah was disputed and reference is made for opinion of hand writing experts and even in the FIR filed by the petitioner bank being CR No.I 274 of 2002 for non-clearance of post dated cheques, no mention is made to the purported deed of guarantee and memorandum of title deeds. It is further stated that objections in RTS proceedings were rightly raised by the society and in Summary Suit No.26 of 2003 instituted by the petitioner at Surat, wrong addresses were given. Therefore, on 15.10.2003 fresh address of respondent No.1 (defendant No.2) was given as Vasupujya Krupa Society, Surendra Mangaldas Road, Near Bank of India, Nehrunagar, Ambawadi, Ahmedabad in the above suit. Even subsequently another address of respondent was also given at 45, Ankini Flat, Bhagyodaya Cooperative Housing Society Ltd., Satellite Road, Ahmedabad in the above suit. Thus, by 10.03.2004 the petitioner was aware about correct address of the respondent society.
3.8. In spite of the above facts, on 10.06.2004 notices under Section 13(2) were issued by incorrect address and no such notice was received by the petitioner and same was the case for issuance of notice under Section 13(4) on 17.08.2004. Though it is claimed that possession of assets was taken over by drawing proper panchnama, but no such procedure as laid down under law was followed. Since the proceedings of Summary Suit No.26 of 2003 were pending and since defendants were granted unconditional leave to defend, once again on 08.01.2005 notice under Section 13(2) was issued by UPC and not by R.P.A.D. , as required under Rule 3(2) of Security Interest Rules, 2005 and it was sent at old address.
3.9. That the respondent society filed Civil Suit No.2176 of 2006 before the City Civil Court, Ahmedabad seeking declaration that memorandum of title deeds and guarantee are bad. However, upon filing an application under Exh.55 by the petitioner under Order 7 Rule 11 of Code of Civil Procedure with a request to reject the plaint on the ground of jurisdiction and limitation which came to be decided on 06.09.2007 by common order by which Exh.6/7 along with Exh.55 came to be rejected, but it was observed by the City Civil Court that the petitioner had no right to invoke provisions of Section 13(4) of Act, 2002.
3.10. Since the subsequent proceedings as narrated by the petitioner, there is no substantial dispute raised by respondent except with grant of interim relief in Appeal No.79 of 2007 preferred before the DRT and further proceedings. According to respondent No.1 the correct events after 18.10.2007 are as under :-
3.11. On 18.10.2007 this Court issued notice in Appeal from Order filed by respondent No.1. and respondent No.1 preferred Application No.70 of 2007 under Section 17 of Act, 2002. On 23.10.2007 notice was issued and matter was kept on 25.10.2007 for hearing and thereafter matter was adjourned in November-December, 2007. On 26.10.2007 sale of property took place in favour of respondent No.5 for Rs.6.75 crores by the petitioner bank by private negotiation and not by auction. This has happened despite pendency of proceedings before DRT. On 31.12.2007 respondent No.1 preferred Appeal No.79 of 2007 challenging a measure taken under Section 13(4) of Act, 2002 and on 01.01.2008 in Appeal No.79 of 2007 notice was issued making it returnable on 17.01.2008 and interim relief was granted restraining purchaser from creating further third party rights. Interim relief was extended from time to time. The respondent No.1 sought an adjournment of Appeal No.70 of 2007 for joining defendant No.5 and restraining him from creating further rights and the respondent No.5 filed application to transfer the proceedings to DRT-II in place of DRT-I as DRT-I had no jurisdiction to hear and decide the matter. Appeal from Order was disposed of by this Court on 16.01.2008 as having become infructuous since the property was sold and sale was challenged by filing Appeal No.79 of 2007 before the DRT under Section 17 of the Act, 2002. Thereafter, on 22.05.2008 DRT-II dismissed the application preferred by respondent No.5 herein and granted the order of status quo till final disposal of the main proceedings. On 25.06.2008 DRAT, Mumbai transferred Appeal No.234 of 2008 to DRAT-II setting aside the order of DRT dated 22.05.2008 and on 11.07.2008 respondent No.5 filed an application Exh.R/20 for vacating interim relief dated 01.01.2008.
4. The DRT instead of hearing Exh.R/20 dismissed the main Appeal No.79 of 2007 by an order dated 02.12.2008 mainly on the ground of limitation and the Tribunal granted four weeks time to respondent No.1 staying the operation and implementation of the order till 02.01.2009, which was extended from time to time. The DRT extended interim relief against the purchaser, the respondent No.5, from time to time since DRAT had no Presiding Officer. Thereafter the appellant preferred Appeal No.19 of 2009 before the DRAT praying for interim relief in the memo of appeal. The appellant had also field application for interim relief in addition to the interim relief prayed for in the memo of appeal. The appellant had also filed application for waiver of deposit. The Tribunal after hearing the parties, granted interim order continuing the interim relief granted by the DRT. On 30.03.2009 the DRAT heard application for waiver of deposit and disposed of the said application granting the waiver under Section 18 and continuing the interim order till further orders. The application was adjourned to 15.06.2009 for admission and hearing of application for confirmation of interim relief. The Tribunal came to a prima facie conclusion that the appellant - respondent No.1 is neither a borrower nor a guarantor nor has he created a mortgage and accordingly held that the 2nd and 3rd proviso to Section 18 of the Act, 2002 are not applicable.
5. Mr. Mihir Joshi, learned Senior Counsel, appearing with Mr.Damani, learned counsel for the petitioner submitted that the DRAT has overlooked the fact that the respondent society had executed a Memorandum of Equitable Mortgage by deposit of title deeds on 08.05.2002 in favour of the petitioner bank as well as a deed of guarantee undertaking repayment of the amount due and payable to the petitioner bank by one Home Trade Ltd.
5.1. Learned Senior Counsel then submitted that without assigning any reasons the DRAT appears to have accepted the purported findings of the City Civil Court, Ahmedabad recorded in the order date 06.09.2007 in Civil Suit No.2176 of 2006 filed by the respondent society against the petitioner. He further submitted that the DRAT has erred in relying on the said observations, which had no precedential value and which were without jurisdiction and the same were mere observations made while refusing relief in favour of the society.
5.2. Learned counsel further submitted that in absence of any determination by the Debt Recovery Tribunal and pending the appeals of the respondent society, the DRAT could not and ought not have expressed any opinion on this issue which would amount to prejudging the matter. Section 18 of the Act, 2002 indicates that in the absence of determination of the issue, the provision would apply on the basis of the claim as made by the bank / financial institution without further determination at that stage. He further submitted that demand is made against the respondent society as guarantor of the liability of Home Trade Ltd., and therefore, as a borrower under the Act, 2002, the DRAT ought to have applied proviso to Section 18 and directed pre-deposit subject to discretion, if any, by recording reasons to the extent of 25% of the amount due.
5.3. Learned Counsel further submitted that the DRAT ought to have considered that the respondent society is not a third party to the transaction and is interlinked with Home Trade Ltd. and the role of the respondent society requires closer scrutiny and its conduct of initiating multiple litigations against the petitioner bank also establishes its intention of delaying the proceedings of recovery.
5.4. Learned Counsel then submitted that the term `financial assistance' as defined in Section 2(k) of the Act includes the advance granted by the bank and in the present case the petitioner bank had given advance of Rs.16.84 crores to Home Trade Ltd. for purchase of securities. The word `advance' has been defined to mean inter alia to furnish on credit or before goods are delivered or work done, to pay money before it is due, to furnish money for a specific purpose understood between the parties and in the instant case `advance' and consequently `financial assistance' granted to Home Trade Ltd., the repayment of which has been guaranteed by the respondent society and the said respondent is therefore a `borrower' as defined in the Act.
5.5. Learned counsel then submitted that it would be a matter of evidence whether the parties including Home Trade Ltd. and the respondent society had agreed to consider the payment made by the petitioner bank as a `credit facility' upon the failure of Home Trade Ltd. to deliver the securities. This is supported by the fact that the said company assured repayment of the sum and not delivery of securities and such repayment was guaranteed by the respondent society. In fact, Home Trade Ltd. thereafter gave two cheques of the amount of Rs.16.84 crores to the petitioner bank, which were however dishonoured. It is further submitted that the subsequent facts would indicate that the payment was considered to be a `credit facility' given to Home Trade Ltd. and therefore also `financial assistance', making the respondent society a `borrower' under the Act, 2002.
5.6. Learned Senior Counsel then submitted that the DRAT ought to have given a purposive construction to Section 18 of the Act. Unlike the first proviso to Section 18, the second proviso does not make any distinction between an appeal of the borrower and an appeal by any person other than the borrower. This would indicate that every appeal would require a pre-deposit by the borrower. In case of an appeal by a person claiming to be a non-borrower, such pre-deposit would have to be made by him on behalf of the borrower. This would cause no prejudice since if the appeal succeeds, the amount would be returned to him and if it fails the amount would be adjusted against the dues of the bank / financial institution, leaving an option with such third party to recover the sum from the borrower by filing a suit and this would also avoid frivolous and vexatious appeals by persons claiming to be third parties, attempting only to obstruct and delay the recovery proceedings.
5.7. Learned Senior Advocate for the petitioner lastly submitted that the contention of the respondent society that the order of the DRT dated 02.12.2008 dismissing the Appeal filed by the respondent society as being barred by limitation, would be ex- facie invalid in view of the decision of the Apex Court in the case of Authorised Officer, Indian Overseas Bank v. M/s.Ashok Saw Mills [(2009)8 SCC 366] is incorrect since the right to challenge various actions taken after the stage of measures under Section 13(4) of the Act, would not entitle the aggrieved party to raise contentions which could have been and ought to have been taken at the relevant time and a challenge to subsequent action on the basis of such grounds would still be time barred. He submitted that under the guise of challenging a subsequent action, a party would not be entitled to indirectly challenge an earlier measure on the grounds available at that very point of time itself.
6. Mr.Mihir Thakore and Mr.Nitin Thakkar, learned Senior Counsel, appearing with Mr.Mangukiya, learned advocate for the respondent No.1 submitted that the respondent No.1 is neither a guarantor nor a borrower as defined in Section 2(f) of the Act, 2002 and the bank has not granted financial assistance as defined under Section 2(k) of the Act, 2002.
He further submitted that as the transaction between petitioner and respondent No.2 was for purchase and sale of Government Bonds by the bank, it cannot be said that any loan was advanced or any credit facility is provided as defined under Section 2(k) of the Act, 2002. He further submitted that the respondent No.1 has disputed having executed any guarantee or deposited any title deeds, and therefore, the respondent No.1 is not a borrower as defined in 2nd and 3rd proviso to Section 18 of the Act, 2002.
6.1. Learned counsel for respondent No.1 further submitted that there is no question of pre-deposit at final hearing and even when the Act has no applicability, the party will suffer a decree for inability to deposit and would not be able to argue on merits before the DRAT. He further submitted that the order of DRT is completely wrong and contrary to the decision of the Apex Court in the case of Ashok Saw Mill (supra). The Application No.77 of 2008 filed within 6 days of sale was rejected not on merits, but being time barred and holding that the application can be filed against the 1st action and not against every actions under Section 13(4) of the Act, which in the respectful submission of leaned counsel for the respondent No.1, is contrary to the law laid down by the Apex Court.
6.2. According to learned counsel for the respondent, reliance placed by DRAT on findings of the common order dated 06.09.2007 passed by the City Civil Court below Exh.6/7 and 55 in Civil Suit No.2176 of 2006, are very much germane and relevant to decide the issue involved in this petition since the respondent No.1 is neither borrower nor anyway entered into any transaction with the petitioner bank, action under the provisions of the Act, 2002 could not be taken, and therefore, the order passed by DRAT waiving pre-deposit, as required under Section 18 of the Act cannot be said to be without jurisdiction or illegal per se warranting interference by this Court in exercise of powers under Articles 226 and 227 of the Constitution of India.
6.3. It is next contended that Section 18 of the Act, 2002 provides for an appeal to appellate Tribunal and subsection (1) of Section 18 entails right upon any person aggrieved by any order made by DRT under Section 17 may prefer appeal along with stay, as may be prescribed to Appellate Tribunal within 30 days from the date of receipt of the order of DRT. That first and second un-numbered provisos to sub-section (1) of Section 18 were inserted by Act of 20 of 2004 with effect from 21.06.2002 and 11.11.2004 after the decision of Mardia Chemicals delivered by the Apex Court. That first un-numbered proviso prescribes different fees for filing an appeal by the borrower or by person other than the borrower. However, second un-numbered proviso states that no appeal shall be entertained unless the borrower has deposited with the Appellate Tribunal 50% of the amount of debt dues from him, as claimed by the secured creditor or determined by the Debts Recovery Tribunal, whichever is less and third un-numbered proviso empowers the Appellate Tribunal for the reasons to be recorded in writing to reduce the amount of deposit to not less than 25% of debt recovered in the second proviso. Therefore, according to Mr.Mihir Thakore, learned Senior Counsel appearing for the respondent No.1, two different situations for different kinds of appellants under provisions are provided. That second un-numbered proviso will be applicable in case of a borrower and not to the persons other than borrower. When the respondent No.1 is neither borrower nor entered into any contract with petitioner bank and not deposited any memorandum of titles of the property in question, the Tribunal was right in placing reliance on the prima facie observations of dispensing with the deposit, as envisaged under Section 18 of the Act, which does not require any interference by this Court.
7. Having heard learned counsels appearing for the parties at length and on perusal of the record of the case, including impugned decision, this Court exercising powers under Articles 226 and 227 of the Constitution of India primarily concerned with provisions of Section 18 of the Act, 2002 and powers conferred upon the Appellate Tribunal "DRAT" in this case with regard to entertaining appeal preferred by any person aggrieved by an order made by the DRT under Section 17 of the Act.
8. In the facts of this case, DRAT, Mumbai has passed order dated 30.03.2009 below M.A. No.60 of 2009 i.e. application for waiver of the deposit under Section 18 of the Act, 2002 in Appeal No.19 of 2009 preferred by the appellant-respondent No.1 herein against the order dated 02.12.2008 passed in Appeal No.79 of 2007 by DRT-II, Ahmedabad rejecting the above appeal solely on the ground that it was barred by limitation.
9. Therefore, the question to be considered in the above backdrop of the facts and contentions on law raised by learned counsels for the parties is whether in the facts and circumstances of the case, the DRAT, Mumbai was justified in allowing the application for waiver of deposit in exercise of powers under Section 18 of the Act, 2002 by prima facie considering that the appellant society-respondent No.1 herein is neither the borrower nor guarantor nor has created any mortgage by referring to para 10 of the judgment and order dated 06.09.2007 passed by the City Civil Court, Ahmedabad while deciding application Exh.55 which is under challenge in Special Civil Application No.30195 of 2007 filed by the petitioner herein and while issuing rule further proceedings of the Civil Suit No.2176 of 2006 pending before the City Civil Court, Ahmedabad came to be stayed.
10. It is further not in dispute that Appeal No.70 of 2007 preferred by the respondent No.1 herein on 18.10.2007 against a measure taken under Section 13(4) of the Act, 2002 is pending before the the DRT. However, during the pendency of the above Appeal No.70 of 2007, property in question was sold by the petitioner bank in favour of respondent No.5 on 26.10.2007 and thereafter the above action was challenged by filing Appeal No.79 of 2007 on 31.12.2007. That both the above Appeals came up for hearing on 01.01.2008 and in Appeal No.79 of 2007 while issuing notice interim relief was granted restraining purchaser viz. respondent No.5 herein from creating any further third party rights and that interim relief came to be extended from time to time.
11. Thereafter, the proceedings pending in the High Court came to be withdrawn and transfer application came to be allowed by DRAT, Mumbai and finally DRT, Ahmedabad dismissed Appeal No.79 of 2007 as barred by limitation against which appeal No.19 of 2009 was preferred before the DRAT, Mumbai under Section 18 of the Act, 2002. The above facts are reiterated in nutshell for the purpose of deciding the above issue.
12. At the outset, this Court is not entering into an arena of subject matter of Appeal No.70 of 2007 pending before the DRT, Ahmedabad or even merit and legality of the order dated 02.12.2008 passed in Appeal No.79 of 2007 by DRT, Ahmedabad, which is the subject matter of Appeal No.19 of 2009 pending before the DRAT, Mumbai.
13. Therefore, to decide the issue involved in this petition, certain provisions of the Act, 2002 as amended in the 2004 by Act, 30 of 2004 with effect from 11.11.2004 are to be considered. Various provisions of the Act, 2002 fell into consideration of the Apex Court in cases of (i) Mardia Chemicals v. Union of India, (2004)4 SCC 311; (ii) Tanscore v. Union of India, (2008)1 SCC 125; and (iii) Authorized Officer, Indian Overseas Bank v. M/s.Ashok Saw Mills [2009(8) SCC 366. That the Constitutional validity and legality of the above Act came to be upheld by the Apex Court in the case of Mardia Chemicals (supra) barring the then existing provisions of Section 17(1) and (2) of the Act that requirement of pre-deposit of 75% of amount claim by secured creditor under Section 17(2) of the Act, 2002 was held onerous and remedy of appeal as illusory and nugatory.
14. That for the interpretation of three unnumbered provisos (for the sake of convenience to be referred as 1st, 2nd and 3rd proviso) to Section 18 inserted by Amendment Act 30 of 2004 following basic principles of interpretation of the statute viz. the Golden Rule of interpretation by construing the section and proviso by plain, simple and natural meaning of words contained therein and the `mischief rule' as commonly known and derived from Heyden's case, where for interpretation of statute, in general, four things are to be considered and taken note of viz. (i) the nature of the common law before making of the Act; (ii) the mischief and defect for which law had no provision; (iii) the remedy, the legislature as provided to resolve and cure the defect or lacuna; and (iv) the reason for the remedy and the above four factors are to be kept in mind in the context of three provisos to section 18 vis-a-vis the nature of statute, the Act, 2002. In the case of Municipal Corporation of City of Hubli v. Subha Rao Hanumantharao Prayag [AIR 1976 SC 1398], the Apex Court held that the statute must be read as a whole and every provision in the statute may not be construed with reference to the context and other clauses in the statute so as, as far as possible, to make a consistent enactment of the whole statute.
15. In the case of Shah Bhojraj Kuverji Oil Mills and Ginning Factory v. Subhash Chandra Yogurt Sinha [AIR 1961 SC 1596], the Apex Court held that as a general rule a proviso is added to an enactment to qualify or create an exception to what is in the enactment and ordinarily, a proviso is not interpreted as stating general rule. But provisos are often added not as exceptions for qualifications to the main enactment but as saving clauses, in which cases they will not be construed as controlled by the section.
16. In case of S.Sundram Pillai v. V.R.Pattabiraman [AIR 1985 SC 582] the Apex Court in para 42 summed up four different purposes, a proviso may serve:
(1) qualifying or excepting certain provisions from the main enactment;
(2) it may entirely change the very concept of the intendment of the enactment by insisting on certain mandatory conditions to be fulfilled in order to make the enactment workable;
(3) it may be so embedded in the Act itself s to become an integral part of the enactment and thus acquire the tenor and colour of the substantive enactment itself; and (4) it may be used merely to act as an optional addenda to the enactment with the sole object of explaining the real intendment of the statutory provision".
17. That, Apex Court in the case of Nagar Palika Nigam v. Krishi Upaj Mandi Samiti & Ors. [AIR 2009 SC 187] reiterated certain celebrated principles enunciated by the Apex Court in its earlier decisions with regard to interpretation of statutes in the context of proviso.
Ordinarily, the golden rule for interpretation of the statute and provisions contained therein is that the grammatical and ordinary plain sense of the words is to be adhered to unless that would lead to some absurdity or inconsistency. That, if the words are plain and unambiguous, they are to be construed as they are.
The Apex Court further discussed in brief two principles of constructions-one related to casus omissus and other in regard to reading the statute as a whole and held that under the first principle a casus omissus cannot be supplied by a Court except in a case of clear necessity and when reasons for it is found in the four corners of the statute itself, and at the same time a casus omissus should not be readily inferred and for that purpose all the part of the statute or section must be construed together and every clause of a section should be construed with reference to the context and other clauses thereof. The Apex Court sounded a note of caution that the courts are not entitled to obscure legislative function under the disguise of the interpretation.
However, with regard to proper function of a proviso in para 8, the Apex Court after considering earlier decisions held as under:
"8. The normal function of a proviso is to except something out of the enactment or to qualify something enacted therein which but for the proviso would be withing the purview of the enactment. As was stated in Mullins v. Treasurer of Survey (1880 (5) QBD 170), (referred to in Shah Bhojraj Kuverji Oil Mills and Ginning Factory v. Subhash Chandra Yograj Sinha (AIR 1961 SC 1596) and Calcutta Tramways Col. Ltd. v. Corporation of Calcutta (AIR 1965 SC 1728); when one finds a proviso to a section the natural presumption is that, but for the proviso, the enacting part of the section would have included the subject-matter of the proviso. The proper function of a proviso is to except and to deal with a case which would otherwise fall within the general language of the main enactment and its effect is confined to that case. It is a qualification of the preceding enactment which is expressed in terms too general to be quite accurate. As a general rule, a proviso is added to an enactment to qualify or create an exception to what is in the enactment and ordinarily, a proviso is not interpreted as stating a general rule. "If the language of the enacting part of the statute does not contain the provisions which are said to occur in it you cannot derive these provisions by implication from a proviso."
Said Lord Watson in West Derby Union v. Metropolitan Life Assurance Co. (1897 AC 647) (HL). Normally, a proviso does not travel beyond the provision to which it is a proviso. It carves out an exception to the main provision to which it has been enacted as a proviso and to no other. (See A.N. Sehgal and Ors. v. Raje Ram Sheoram and Ors. (AIR 1991 SC 1406), Tribhovandas Haribhai Tamoli v. Gujarat Revenue Tribunal and Ors. (AIR 1991 SC 1538) and Kerala State Housing Board and Ors. V. Ramapriya Hotels (P) Ltd. and Ors. (1994 (5) SCC 672)."
18. Considering the above principles enunciated by the Apex Court with regard to interpretation of the statute and specifically proviso, the Act 30 of 2004 by which the Act, 2002 came to be amended with effect from 11.11.2004, in the facts of the present case, particularly with regard to Sections 17 and 18 of the 2000 Act are to be considered.
19. In para 59 of the decision of Mardia Chemicals (supra) the Apex Court observed that proceedings under Section 17 of the Act are not appeal proceedings but it seems to be a misnomer and in fact it is the initial action which is brought before a forum as prescribed under the Act, raising grievance against the action or measure taken by one of the parties to the contract. It is the stage of initial proceedings like filing of a suit in civil court. Therefore, the word appeal in section 17 is about original and initial proceedings against the action of secured creditor and section 18 provides for an appeal against the order passed under Section 17 of the Act.
20. As per amended Act 30 of 2004, Section 18 of the Act, 2002 and Rule 13 of the Rules, 2002, amended with effect from 02.02.2007 read as under:
Section 18 of the Act, 2002 reads as under:
"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 then borrower:
Provided further that no appeal shall be entertained unless the borrower has deposited with the Appellate Tribunal fifty pr 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".
Rule 13 of Security Interest Enforcement Rules, 2002 provides for applications and appeals under sections 17 and 18 of the Act. Rule 13 reads as under:
"13. Fees for applications and appeals under sections 17 and 18 of the Act -
(1) Every application under sub-section (1) of section 17 or an appeal to the Appellate Tribunal under sub-section (1) of section 18 shall be accompanied by a fee provided in the sub-rule (2) and such fee may be remitted through a crossed demand draft drawn on a bank or Indian Postal Order in favour of the Registrar of the tribunal or the Court as the case may be, payable at the place where the Tribunal or the Court is situated.
(2) The amount of fee payable shall be as follows -
No. Nature of Application Amount of fee payable 1 Application to a Debt Recovery Tribunal under sub-section (1) of section 17 against any of the measures referred to in sub-section (4) of section 13
(a) Where the applicant is a borrower and the amount of debt due is less than Rs.10 lakhs Rs.500 for every Rs.1 lakh or part thereof
(b) Where the applicant is a borrower and the amount of debt due is Rs.10 lakhs and above Rs.500 + Rs.250 for every Rs.1 lakh or part thereof in excess of Rs.10 lakhs subject to a maximum of Rs.1,00,000
(c) Where the applicant is an aggrieved party other than the borrower and where the amount of debt due is less than Rs.10 lakhs Rs.125 for every rupees One Lakh or part thereof
(d) Where the applicant is an aggrieved party other than the borrower and where the amount of debt due is Rs.10 lakhs and above Rs.1250 + Rs.125 for every Rs.1 lakh or part thereof in excess of Rs.10 lakhs subject to a maximum of s.50,000/-
(e) Any other application by any person Rs.200
2. Appeal to the Appellate Authority against any order passed by the Debt Recovery Tribunal under Section 17 Same fees as provided at clauses (a) to (e) of Serial Number 1 of the rule
21. That after the decision of the Apex Court in the case of Mardia Chemicals (supra), the Legislature amended subsection (1) of Section 17 by adding a proviso and explanation, a remedy is provided to a person, including a borrower, who is aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by secured creditor for making an application along with prescribed fees within the prescribed time limit. Thus, erstwhile section 17 which was held onerous, nugatory and illusory, came to be rectified and requirement of deposit at initial stage of filing application under Section 17 of the Act was done away. Therefore, the remedy and access available to an aggrieved person, including the borrower against measure undertaken by the secured creditor under Section 13(4) of the Act came to be simplified by removing requirement of deposit of 75% of the debt amount.
22. That later on in the decision of Transcore (supra) the Apex Court in the context of challenge to section 19(1) (as amended in 2004) of RDDB Act, 1993 held that NPA Act, 2002 is an additional remedy to DRT Act, 1993 and they together constitute one remedy. That in the above Act, charging of fees for application under Section 17(1) of the NPA Act was was also held as valid. However, Rule 13 of the Rules, 2002 came to be inserted with effect from 02.02.2007.
23. That later on, in the case of Authorized Officer, Indian Overseas Bank v. Ashok Saw Mill [(2009)8 SCC 366], the Apex Court held that DRT can adjudicate upon or interfere with action taken by the secured creditor after the stage contemplated under Section 13(4) in exercise of powers under Section 17 of the Act. In the above decision, the Apex Court extensively referred Sections 13 and 17 of the Act, 2002 and in paras 36, 37 and 39 of the judgment, held as under :-
"36. The intention of the legislature is, therefore, clear that while the banks and financial institutions have been vested with stringent powers for recovery of their dues, safeguards have also been provided for rectifying any error or wrongful use of such powers by vesting the DRT with authority after conducting an adjudication into the matter to declare any such action invalid and also to restore possession even through possession may have been made over to the transferee.
37. The consequences of the authority vested in the DRT under sub-section (3) of Section 17 necessarily implies that the DRT is entitled to question the action taken by the secured creditor and the transactions entered into by virtue of Section 13(4) of the Act. The legislature by including sub-section (3) in Section 17 has gone to the extent of vesting the DRT with authority to even set aside a transaction including sale and to restore possession to the borrower in appropriate cases. Resultantly, the submissions advanced by Mr.Gopalan and Mr. Aftab Ahmed that the DRT has no jurisdiction to deal with a post-section 13(4) situation, cannot be accepted.
39. We are unable to agree with or accept the submissions made on behalf of the appellants that the DRT had no jurisdiction to interfere with the action taken by the secured creditor after the stage contemplated under Section 13(4) of the Act. On the other hand, the law is otherwise and it contemplates that the action taken by a secured creditor in terms of Section 13(4) is open to scrutinity and cannot only be set aside but even the status quo ante can be restored by the DRT".
24. Thus, now it is clear that jurisdiction of the Tribunal under Section 17 of the Act can be invoked by an aggrieved person against the action taken by the secured creditor after the stage contemplated under Section 13(4) of the Act. That in a given case, a person or a party may be other than the borrower aggrieved by such an action taken by the secured creditor after the stage contemplated under Section 13(4) of the Act, 2002. The above reasoning of the Apex Court is after considering the provisions of Section 17 of the Act which begins with a phrase "any person (including borrower) aggrieved by any of the measures taken by the secured creditor under Section 13 of the Act, meaning thereby, initial remedy under Section 17 of the Act, 2002 is available to any person (including the borrower) and section 18 also has reference to any person aggrieved, which includes the borrower. Ordinarily, a notice is given to the borrower by the secured creditor under Section 13(2) of the 2002 Act and after considering the reply / representation of the borrower, if any measure under Section 13(4) is taken, in such circumstances, an aggrieved person may be the borrower but considering the over all scheme of the 2002 Act and later stage is contemplated by Section 13(4) of the Act and even Rules of 2002, an aggrieved person may be other than the borrower also. It is equally true that in case if application filed by an aggrieved person (including borrower) under Section 17 of the Act 2000, is allowed by the DRT in exercise of powers under Section 17(4) of the Act by quashing and setting a measure taken under Section 13(4) of the Act, such an order can be challenged by an aggrieved person viz. secured creditor by filing appeal under Section 18 of the Act before the DRAT and such appellant cannot be subjected to rigour of second or third proviso of section 18(1) of the Act. That the amount of deposit has nexus with the borrower and debts mentioned in the order under Section 17 of the DRT, and therefore, the appellant like the secured creditor in the aforementioned circumstances is not to deposit such debt.
25. In juxtaposition to Section 18 of the Act, 2002 and Rule 13 of the Rules, 2002, provisions with regard to filing of application to the Tribunal under Section 19, appeal to the Tribunal under Section 20 and deposit of amount of debt due on filing appeal under Section 21 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short "RDDB Act, 1993") are necessary to be taken note of.
26. Section 19(1) of the RDDB Act provides for procedure for filing of application for recovery of any debt from any person to the DRT and sub-section (6) provides to file a written statement by defendant with claims to set off against the applicant's demand and such written statement has same effect as the plaint in cross suit as provided in section 19(7). Section 19(8) provides a defendant in addition to his right of pleading a set off under sub-section (6) , set up, by way of counter claim against claim of applicant and Section 19(9) makes a provision that a counter claim under sub-section (8) shall have same effect as a cross-suit so as to enable the Tribunal to pass a final order on the same application viz. on the original claim and on the counter claim.
27. The person aggrieved by an order made by the Tribunal under section 19 of the RDDB Act has a right of remedy of appeal to the Appellate Tribunal under section 20 subject to limitation which can be extended at the discretion of the Tribunal upon satisfaction about sufficient cause for the delay, if any. However, Section 21 of the RDDB Act, 1993 provides for the deposit of amount of debt due on filing an appeal and such deposit has to be 75% of the amount of debt so due from the appellant as determined by the Tribunal under Section 19 of the Act. However, proviso to above section 21 confers discretion upon the Appellate Tribunal to waive or reduce amount to be deposited under the section by recording reasons in writing.
28. That Rule 8 of the Debts Recovery Appellate Tribunal (Procedure) Rules, 1994 provides for fee structure for an appeal under section 20 of the Act and Rule 9 is about deposit of amount of debt due is based on provisions of section 21 of the Act, but again it confers discretion upon the Appellate Tribunal to waive or reduce the amount to be deposited under Section 21 of the Act. Therefore, under RDDB Act, 1993 and Rules, 1994, provision of waiver and reduction of amount of deposit on preferring an appeal are available.
29. So far as legality and validity of section 18 is concerned, as such there is no dispute about law laid down in the decision of the Division Bench of the Delhi High Court in the case of R.V.Saxena v. Union of India & Ors. [AIR 2006 DELHI 96] rendered after considering provisions of Section 18 of the Act, where the decision of Anant Mills Ltd. v. State of Gujarat [AIR 1975 SC 1234] about right of appeal which is statutory right and can be conditional or qualified was relied on and similar provisions of section 406 of the Bombay Municipal Corporation Act in the case of Gujarat Agro Industries Co. Ltd. v. Municipal Corporation of the City of Ahmedabad [AIR 1999 SC 1818] upholding constitutional validity of the above section was taken note of and finally held validity of section 18 of the Act, 2002. Even, our High Court in the case of Babu Ganesh Singh Deepnarayan v. Union of India [AIR 2009 GUJARAT 98] relied on the above decision of the Delhi High Court and held that imposing condition of deposit is neither discriminatory nor violative of Article 14 of the Constitution of India.
30. The exercise of powers under Section 18 of the DRAT, Mumbai vide impugned order is to be considered by keeping in mind the provision of section 18 itself. That the above section has two subsections viz. sub-section (1) and sub-section (2). That subsection (1) of Section 18 has three unnumbered provisos. Sub-section (1) confers a restrictive right upon any person aggrieved of any order made by DRT under section 17 of the Act, 2002 to prefer an appeal along with such fee, as may be prescribed to an appellate tribunal within 30 days from the date of receipt of the order of DRT. The provisos are not numbered, however, for the sake of convenience they are referred to as first, second and third provisos respectively. First unnumbered proviso is for different fees for filing appeal by the borrower or by the person other than borrower.
Second unnumbered proviso begins with a phrase that no appeal shall be entertained unless the borrower has deposited with the Appellate Tribunal fifty percent of the amount of of debt due from him, as claimed by the secured creditors or determined by the Debts Recovery Tribunal, whichever is less and third unnumbered proviso confers discretion upon Appellate Tribunal for the reasons to be recorded in writing to reduce the amount to not less than twenty-five percent of debt referred to in the second proviso.
31. That sub-rule (2) of Rule 13 provides for amount of fees payable on nature of application and in second column categories of the application as a borrower and the applicant as an aggrieved party other than the borrower are mentioned in clauses (a), (b), (c) and (d) and fees to be paid accordingly. It also provides application viz. any other application by any person and the above prescription of fees is mutatis mutandis applicable in case of appeal also under section 18 of the Act. Considering the provisions of sections 13, 14 and 15 of the Act, 2002 and law laid down by the Apex Court in Mardia Chemicals (supra) and Ashok Saw Mill (supra), an aggrieved person can be any person other than the borrower, as defined under Section 2(f) of the Act, 2002. If a person who is not a borrower as defined under Section 2(f) is aggrieved by any measure by secured creditor under Section 13(4) or subsequent stage of section 13(4) measure of the Act, such a person can file appeal under section 17 of the Act and further appeal to the Appellate Tribunal under Section 18 of the Act. Subsection (1) of Section 18 refers to an aggrieved person and confers a limited right to file an appeal subject to the period of limitation and payment of prescribed fees. Therefore, even if the deposit is returned on allowing the appeal, to burden or saddle an aggrieved person other than borrower with fifty percent of the amount of debt due as claimed by secured creditor or determined by DRT cannot be a purpose of the proviso and the Legislature could not have intended or envisaged such a situation and this court cannot introduce such a concept of pre-deposit in case of a person other than the borrower. Had the intention of the Legislature to include an aggrieved person other than borrower, the word "borrower" in second proviso would have been "any person aggrieved" as found in sub-section (1) of section 18 of the Act. But, while making provisions for appeal, the Legislature has thought it fit to provide at least two different types / classes of appellants and also provided fee structure accordingly as found in rule 13 of the Rules. Therefore, provision of pre-deposit of 50% as provided in second proviso or discretion as found in third proviso by the Appellate Tribunal to reduce such an amount to not less than twenty five percent of debt referred to in second proviso cannot be made applicable to an aggrieved person other than the borrower who is affected directly or indirectly by an order under Section 17 of the Act.
32. No doubt, Scheme of RDDB Act, 1993 and NPA Act, 2002 are different but object and reasons contained in the above Act is about speedy recovery of dues of the secured creditors and remedies under Act, 2002 and DRT Act are complimentary to each other and in certain cases the Act, 2002 is additional remedy to the DRT Act, 1993. That under RDDB Act initial action is of filing application under Section 19 of the Act may be by a bank or financial institution, but sub-sections (6), (8) and (9) of the Section 19 provides for set off or a counter claim and to be decided together with the main application. Any person aggrieved of the order as above passed under Section 19 has remedy under Section 20 of the Act and provision for pre-deposit as required under Section 21 and Rule 9 of Rules, 1993 also confers discretion upon the Appellate Tribunal to waive or reduce the amount to be deposited. Likewise, under Section 13(10) of the Act of 2002, secured creditor can file an application under Section 19 of the RDDB Act, 1993 for recovery of balance amount when a measure under Section 13(4) of the Act is found inadequate.
33. Though there is no express provision conferring total waiver of the deposit amount before filing the appeal in Section 18 or Rules framed in the 2002 Act, but considering the overall nature of the Act and what is found and discussed herein above on the basis of the decisions of the Apex Court, the contention of learned advocate for the petitioner that in all cases of appeal under Section 18 of the Act 2002 amount to be deposited as required under second or the third proviso as the case may be, cannot be accepted in view of two classes of aggrieved appellants as provided under Section 18 of the Act 2002 viz. (i) borrower and (ii) person other than the borrower and phrase that no appeal shall be entertained has nexus with the borrower to the secured creditor and not any aggrieved person other than borrower.
Therefore, what emerges broadly about Section 18 is summarized as under:
(a) Section 18 of the Act is a statutory remedy of appeal available to an aggrieved person against the order made by the DRT under Section 17 of the Act.
(b) That the appeal is to be filed within 30 days from the date of receipt of the order of the DRT.
The above statutory remedy of appeal is qualified and restrictive so far as borrower aggrieved by order made under Section 17 of the Act by the DRT.
(c) That an aggrieved person may be a borrower or any person other than borrower.
(d) That all three unnumbered provisions are qualifying to what is provided under Section 18(1) of the Act. That statutory remedy of appeal available to an aggrieved person against the order made by the DRT under Section 17 of the Act becomes restrictive and qualified in case of a borrower and mandates depositing the amount as specified in second or third provisos, as the case may be.
(e) That different fee structure is prescribed for filing an appeal by the borrower or by the person other than borrower as provided under Rule 13 of the Rules, 2002 as inserted with effect from 02.02.2007.
(f) As per second proviso, so far as the borrower-appellant is concerned, deposit of 50% of the amount of debt due as claimed by the creditor or determined by the DRT, whichever is less to be payable.
(g) However, the third proviso provides discretionary power upon the DRAT to reduce amount to not less than 25% of the debt referred to in second proviso after recording reasons in writing.
(h) That in case of the borrower, no waiver or relaxation can be granted by the DRAT other than what is provided in third proviso.
34. Therefore, this Court is of the opinion that requirement of depositing an amount as required under second proviso or third proviso as the case may be is applicable in case of the borrower as defined in Section 2(f) of the Act, 2002 and not to the aggrieved person other than borrower.
35. That the contention on behalf of the respondent No.1 that the respondent No.1 is neither guarantor nor borrower and no financial assistance was availed, and therefore, DRAT was justified in waiving pre-deposit is to be considered by the DRT.
Section 2(f) and (k) of the Act, 2002 reads as under:
"2(f) 'borrower' means who has been granted financial assistance by any bank or financial institution or who has given any guarantee or created any mortgage or pledge as security for the financial assistance granted by any bank or financial institution and includes a person who becomes borrower of a securitisation company or reconstruction company consequent upon acquisition by it of any rights or interest of any bank or financial institution in relation to such financial assistance"
2(k) `financial assistance' means any loan or advance granted or any debentures or bonds subscribed or any guarantees given or letters of credit established or any other credit facility extended by any bank or financial institution".
36. That whether sale and purchase of government securities between the bank and the Home Trade can be said to be forming a part of `financial assistance' as defined under Section 2(k) and legality and validity of alleged disputed deed of depositing titles and deed of guarantee can be construed so as to bring the case within the purview of `borrower' as defined in Section 2(f) of the Act, 2002 and whether a measure can be taken under Section 13(4) of the Act, all can be decided by the DRT, Ahmedabad where Appeal No.70 of 2007 under section 17 is pending. So is the case that whether DRT was justified in rejecting subsequent Appeal No.79 of 2007 on the ground that it was barred by limitation and decision of the Apex Court in the case of Ashok Saw Mill (supra) can be of any help to the respondent or not is again a subject of Appeal No.19 of 2009 before the DRAT and this Court would not like to discuss any aspect in this regard in exercise of powers under Articles 226 and 227 of the Constitution of India.
37. The dispute between the petitioner and respondent No.1 about applicability of section 2(f) and (k) of the Act as such is not to be examined in detail by this Court in exercise of jurisdiction under Article 226 and 227 of the Constitution of India, but to a limited extent only and in the context of prima facie observations made by learned DRAT, Mumbai while waiving pre-deposit in exercise of powers under Section 18 of the Act. That prime consideration of the DRAT, Mumbai, as observed earlier is based on paragraph 10 of the decision of the City Civil Court dated 06.09.2007 while deciding and rejecting applications below Exhs.6/7 and 55 in Civil Suit No.2176 of 2006. That observations in para 10 of the above order were made while dismissing Exh.6/7 for interim injunction preferred by the plaintiff in the above suit and Exh.55 in an application raising objections by the defendant about jurisdiction of the Civil Court to try the subject matter of the Act, 2002 and ultimately came to be dismissed. Even the above observations were of tentative in nature. Thereafter, the above order upon challenge by the bank before the High Court of Gujarat further proceedings of the suit came to be stayed vide order dated 20.07.2008 in Special Civil Application No.3019 of 2001. Therefore, any reliance placed on the above observation for waiver of deposit even for prima facie consideration by learned DRAT is uncalled for. Besides, the legality and validity of the equitable mortgage by deposit of title deeds and deed of guarantee of the subject property is to be decided by the DRT, Ahmedabad in Appeal No.70 of 2007 and to form any opinion on the basis of assertion of one party without considering material on record by the DRAT, Mumbai amounts considering merit of the case without adjudicating issues and allowing the subject matter of the appeal. That the status of the appellant before the DRAT, Mumbai as a borrower itself is in dispute and by referring to an order of the City Civil Court, Ahmedabad which is the subject matter of writ petition in the High Court of Gujarat where further proceedings are stayed would amount passing a judgment in the pending proceedings before the DRT, Ahmedabad.
38. Thus, the DRAT erred in prima facie holding that the appellant before the DRAT was not a borrower and waiver of deposit qua the respondent No.1 society viz. the appellant before the DRAT, solely on the basis of prima facie observations made in para 10 of the order dated 06.09.2007 passed by the City Civil Court, Ahmedabad and no independent conclusions were drawn. Admittedly, the above order of the Civil Court is under challenge before the High Court, where the proceedings have been stayed. Even otherwise, being aggrieved by the measure taken by the petitioner, the respondent No.1 has approached the DRT under Section 17 of the Act has filed application / appeal and the DRT has not finally concluded and adjudicated the contentions raised in the above appeal and the dispute whether the petitioner is empowered to take measure under Section 13(4) and status of respondent No.1 as borrower is yet to be decided, any finding of prima facie nature without considering material on record, will certainly prejudice the merit of the appeal. However, in a given case in its discretion, the DRAT viz. the appellate tribunal, on appreciation of material on record of appeal may prima facie come to the conclusion about status of the appellant whether the appellant is a borrower or an aggrieved person other than the borrower, but so far as facts of the case on hand is concerned, no such findings have been arrived or recorded independent of para 10 of the order dated 06.09.2007 passed by the City Civil Court, Ahmedabad.
In view of the discussion and what is held herein above, impugned order dated 30.03.2009 passed by the DRAT, Mumbai deserves to be quashed and set aside.
39. Mr. S.I. Nanavati, learned Senior Advocate appearing with Mrs.V.D.Nanavati for the petitioner of Special Civil Application No.4633 of 2009 submitted that respondent No.5 and the petitioner of Special Civil Application No.4555 of 2009 executed a sale deed in favour of the petitioner on 26.12.2007 pursuant to an auction sale held by respondent as per the provisions of the Act, 2002 and the said sale deed came to be registered with the office of the Sub-Registrar and the petitioner is a bonafide purchaser for value. The petitioner was also a party in the proceedings pending before the DRT-I and when order dated 22.05.2008 came to be passed by DRT-I, Ahmedabad rejecting the application of the petitioner for transfer of the matter appeal was preferred before the DRAT, Mumbai, which came to be allowed on 22.06.2008 and the matter was directed to be transferred to DRT-II.
40. Learned counsel further submitted that the learned DRAT committed an error by allowing the application for waiver being Mic. Application No.60 of 2009 and granted interim relief and erred by continuing interim orders from time to time which ultimately merged into final order. According to learned counsel, the petitioner has purchased the subject property by paying the consideration of Rs.6.75 crores and has been put into possession of the land, interim relief granted by the DRT in Application No.79 of 2009, which has been continued from time to time and finally by impugned order dated 30.03.2009 by the DRAT deserves to be quashed and set aside or in alternative to be vacated forthwith.
41. Learned counsel for the petitioner further submits that he would like to adopt all the other contentions and facts raised by learned counsel for the petitioner of Special Civil Application No.4555 of 2009.
42. Mr. Nitin Thakkar, learned advocate appearing for the respondent opposes the above submissions and prayer of the petition on the ground that the purchaser has no locus and cannot claim better title than the seller and submits that waiver of deposit as ordered by the DRAT is just and proper. Learned counsel for the respondent further placed reliance on two orders passed by the High Court of Judicature at Bombay and submitted that similar view can be taken in this case also and petition be dismissed.
43. Having herd learned counsels for the parties, on perusal of the record and what is discussed on various submissions made by the counsels in Special Civil Application No.4555 of 2009 and submissions made therein, no separate or different reasoning is necessary to deal with the contentions raised by the learned counsels for the parties in this petition. However, it is for the parties to raise all the above contentions before the DRAT since the impugned order is already quashed and set aside for the reasons stated herein above in this order, this petition also stands disposed of in terms of the order passed in Special Civil Application No.4555 of 2009.
44. In view of the above discussion, both these petitions succeed and the impugned order dated 30.03.2009 passed by the DRAT, Mumbai is hereby quashed and set aside. Now, the DRAT will consider the Misc. Application for waiver afresh along with application for interim relief filed in Appeal No.19 of 2009 in accordance with law. Rule issued in each petition is made absolute to the aforesaid extent only. However, there shall no order as to costs.
[Anant S. Dave, J.] *pvv Top