Delhi High Court - Orders
Edelweiss Asset Reconstruction ... vs M/S. Tulip Data Services Pvt. Ltd. & Anr on 6 December, 2021
Author: Vipin Sanghi
Bench: Vipin Sanghi, Jasmeet Singh
$~30.
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 13795/2021
EDELWEISS ASSET RECONSTRUCTION
COMPANY LIMITED ..... Petitioner
Through: Mr. Rajeeve Mehra, Senior Advocate
with Mr. R.P. Agrawal, Ms. Manisha
Agrawal & Ms. Priyal Modi,
Advocate.
versus
M/S. TULIP DATA SERVICES PVT. LTD.
& ANR. ..... Respondents
Through: Mr. Manik Dogra, Ms. Priyadarshini
Dewan, Mr. Dhruv Pandae &
Ms.Aarohi Mikkilineni, Advocates
for respondents No.1 & 2.
CORAM:
HON'BLE MR. JUSTICE VIPIN SANGHI
HON'BLE MR. JUSTICE JASMEET SINGH
ORDER
% 06.12.2021 C.M. No.43523/2021
1. Exemption allowed, subject to all just exceptions.
2. The application stands disposed of.
W.P.(C) 13795/2021 and C.M. No.43524/2021
3. Issue notice. Learned counsel accepts notice on behalf of the respondents.
4. The petitioner is aggrieved by the orders dated 18.11.2021 and Signature Not Verified Digitally Signed By:BHUPINDER SINGH ROHELLA Signing Date:08.12.2021 18:58:06 22.11.2021 passed by the learned DRT, Jaipur in TSA 10/2021 titled as "Tulip Data Services & Anr. Vs. Edelweiss ARC Ltd. & Anr.". The respondents filed a Securitisation Application being TSA No.10/2021 before the DRT, Delhi. Since there is no Presiding Officer at any of the DRTs Delhi, the said application was transferred for hearing to DRT, Jaipur upon the respondents' petition preferred before this Court. That is how the DRT, Jaipur has dealt with the matter.
5. The petitioner - who is the respondent in the said SA, raised an issue of territorial jurisdiction of DRT, Delhi, and consequently, DRT, Jaipur to deal with the petitioner's Securitisation Application on the premise that the mortgaged property is situated at Bengaluru and the petitioner itself is situated in Mumbai.
6. The petitioner herein sought to place reliance on Section 17(1A) of The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI Act), which states that "An application under sub-section (1) shall be filed before the Debts Recovery Tribunal within the local limits of whose jurisdiction-- (a) the cause of action, wholly or in part, arises; (b) where the secured asset is located; or
(c) the branch or any other office of a bank or financial institution is maintaining an account in which debt claimed is outstanding for the time being."
7. On 15.11.2021, the petitioner informed the Tribunal and the respondent herein that the auction in respect of the property was successful and the auction purchaser had deposited 25% of the bid amount. The respondent required the petitioner bank to provide details of the auction purchaser so that the auction purchaser could also be impleaded in the Signature Not Verified Digitally Signed By:BHUPINDER SINGH ROHELLA Signing Date:08.12.2021 18:58:06 proceedings. As per the undertaking given, those details of the auction purchaser have been furnished to the respondent herein. Thereafter the matter was adjourned to 18.11.2021.
8. On 18.11.2021, the Tribunal noted the jurisdictional issue raised by the petitioner. The Tribunal heard arguments of learned counsels on the aspect of jurisdiction and directed that the order would be pronounced on 22.11.2021. It was directed that till the next date, the petitioner shall maintain status quo with regard to further proceedings related to the property at Bangaluru which was the subject matter of sale notice dated 19.10.2021 (noted as 19.10.2021 but the sale notice is stated to be dated 20.10.2021) and auction conducted on 11.11.2021.
9. On 22.11.2021, the DRT passed an order holding that it had territorial jurisdiction in the matter since the security was created at New Delhi and the predecessor-in-interest of the petitioner herein had preferred an Original Application at DRT, Delhi, after holding that the Tribunal had jurisdiction to deal with the Securitisation Application. The Tribunal went on to injunct the petitioner by observing:
"..... ..... .... As auction fixed on 19.10.2021 resulted successfully, so the Respondent FI is also herby directed to place on record material related to auction proceedings including name and addresses of successful Auction Purchasers, details of amount deposited, etc. Put up for further proceedings as directed above, on the next date of hearing i.e. 26.11.2021 and till then Respondent FI shall maintain statusquo with regard to further proceedings of sale, with regard to subject property situated at Banglore, put for sale in the light of Auction Notice dt. 19.10.2021 (Annexure- A/1) and further auction/sale conducted on 11.11.2021. Put up on 26.11.2021."
10. The petitioner is aggrieved by both - the order on the application Signature Not Verified Digitally Signed By:BHUPINDER SINGH ROHELLA Signing Date:08.12.2021 18:58:06 disputing the territorial jurisdiction of the Tribunal as well as the stay of the auction successfully held by the petitioner.
11. We have heard submissions of Mr. Mehra on both these aspects.
12. So far as the aspect of jurisdiction is concerned, Mr. Mehra submits that the respondent had already availed of the remedy under Section 17(1) of the SARFAESI Act by preferring a Securitisation Application at DRT, Bengaluru, which was dismissed; and the appeal was also dismissed by the DRAT, Chennai. Therefore, the challenge to the proceedings under Section 13(2) and 13(4) stood rejected.
13. The aspects relating to challenge to the demand notice under Section 13(2), taking of symbolic possession under Section 13(4) and taking of actual possession under Section 13(4) have attained finality and are not open to challenge by the petitioner. All that the respondent could have assailed in the fresh SA preferred before the Tribunal having jurisdiction was the latest action, namely the auction notice dated 20.10.2021 - if at all. Since the cause of action in relation to the said action arose either in Mumbai (from where the notice was issued), or at Bengaluru (where the property is situated), it was not open to the respondent to prefer the Securitisation Application before the DRT, Delhi.
14. He has also drawn our attention to the averments made in the respondents Securitisation Application which only states that the petitioner herein has contact address at Delhi. Thus, even requirements of clause (c) of Section 17(1A) are not satisfied.
15. So far as the grant of the restraint order is concerned - in relation to the auction conducted by the petitioner, he points out that there is absolutely no reason, or justification given by the Tribunal.
Signature Not Verified Digitally Signed By:BHUPINDER SINGH ROHELLA Signing Date:08.12.2021 18:58:0616. On the other hand, Mr. Dogra submits that the security was created at Delhi inasmuch, as, the title documents were deposited by the respondent at Delhi; and the predecessor-in-interest of the petitioner had also preferred an Original Application before the DRT, Delhi. Thus, it cannot be said that the Tribunal at Delhi did not have jurisdiction.
17. So far as the prima-facie case is concerned, Mr. Dogra has drawn our attention to the previous auctions attempted by the petitioner herein which show that the reserve price has been reduced successively. The tabulation showed to the court reads as follows:
"S.No. Date of Sale Notice issued by the Reserve Price Respondent No.1 ARC
1. 15.06.2019 Rs. 235.00 crores
2. 19.11.2019 Rs. 190 crores
3. 24.10.2020 Rs. 161.50 crores
4. 08.01.2021 Rs. 150.00 crores
5. 20.10.2021 Rs. 135.00 crores (Present impugned Notice of Sale) "
18. Mr. Dogra has submitted that on 25.01.2021, the DRT-II, Delhi was informed by the petitioner herein through counsel that in the then conducted auction process, one bid had been received. Mr. Dogra submits that there is no disclosure by the petitioner as to what transpired after receipt of the said bid. He has also drawn our attention to the minutes of the Joint Lenders Meeting held on 01.10.2021. He submits that the latest auction - which is challenged by the respondents, is contrary to the said joint minutes, according to which the fair market value was Rs.180 Crores and the distress sale value was Rs.125 Crores, as of September 2021.
19. A perusal of the impugned order dated 22.11.2021 shows that there is Signature Not Verified Digitally Signed By:BHUPINDER SINGH ROHELLA Signing Date:08.12.2021 18:58:06 no whisper in the said order as to what prompted the Tribunal to direct maintenance of status quo with regard to the proceedings of sale of the property at Bengaluru in pursuance of the auction notice dated 20.10.2021 (wrongly noted as 19.10.2021). The submissions now advanced by Mr.Dogra have also not been noticed.
20. Mr. Mehra, on instructions, states that in respect of the auction held earlier in the year - in relation to which the statement was made before the DRT on 25.01.2021, the sole bidder did not furnish EMD, and therefore, that auction process failed. This statement is made on advance instructions from the petitioner.
21. The repeated obstructions in conduct of the auction - at the behest of the petitioner itself, appear to be a factor which is discouraging the prospective bidders to bid for the property. The outstanding dues of the respondent, as of 30.09.2021, were to the tune of Rs.426 Crores. The respondent is not in a position to liquidate the said liability. The reserve price of the property has been fixed at Rs.135 Crores which is, in fact, higher than what is indicated as the distress sale value in the Joint Lenders Meeting dated 01.10.2021, referred to above. Moreover, the fixation of the reserve price does not lead to the conclusion that the property would be sold at the said price. Pertinently, the property was attempted to be sold at Rs.150 Crores. The sole bidder had not actually made a valid bid by submitting the EMD. On this occasion, the petitioner has received a serious bid inasmuch, as, the bidder has also deposited 25% of the bid amount as EMD.
22. In our view, therefore, the Tribunal was not justified in directing maintenance of status quo in relation to the said auction process. At the Signature Not Verified Digitally Signed By:BHUPINDER SINGH ROHELLA Signing Date:08.12.2021 18:58:06 highest, the Tribunal may have directed that the auction could be subject to the final determination of the Securitisation Application. We, therefore, stay the operation of the impugned order dated 22.11.2021 insofar, as, it directs maintenance of status quo in relation to the auction sale conducted vide notice dated 20.10.2021.
23. Let the respondent file their counter-affidavit within three weeks. Rejoinder, if any, be filed before the next date.
24. List on 03.02.2022.
VIPIN SANGHI, J JASMEET SINGH, J DECEMBER 06, 2021 B.S. Rohella Signature Not Verified Digitally Signed By:BHUPINDER SINGH ROHELLA Signing Date:08.12.2021 18:58:06