TMI Blog2010 (9) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2010, passed by the Debts Recovery Appellate Tribunal, Delhi, made in Inward No. 293 of 2010. Quite apart from the above, a prayer has been made to recast the proviso to section 18. 2. The facts which are essentially to be stated for adjudication of this petition are that the petitioner No. 1 is the director of the petitioner No. 3, PRK Exports Private Limited, and the proprietor of the petitioner No. 4, Premier Overseas. A loan was granted to the petitioner No. 1 by the respondent No. 2, the HDFC Bank, under the LAP scheme to the tune of Rs. 25 lakhs for which he had mortgaged certain properties. 3. On 13 April, 2007, the respondent bank enhanced the loan granted after reviewing all the parameters of performance and timely repayment of the dues towards the loan from the earlier amount. On 22 December, 2007, the bank accepted a request for fresh loan to the petitioner No. 1 based upon the need of fund on account of business expansion. A security agreement was entered into on 1 January, 2008, between the petitioner No. 1 and the respondent No. 2 bank whereby an equitable mortgage was created in respect of secured asset by depositing the sale deed dated 14 October, 2005, of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le deed of the secured asset would be delivered to the respondent No. 3. Being grieved by the said order dated 18 May, 2010, the petitioners preferred an appeal under section 18 of the SARFAESI Act before the Debt Recovery Appellate Tribunal, Delhi (for short 'the appellate tribunal'). By order dated 28 June, 2010, the tribunal directed the petitioner-appellant to deposit a sum of 25% of the total principal amount within four weeks failing which the appeal would stand dismissed. The said order, as put forth, has been passed in terms of the third proviso to section 18 of the SARFAESI Act. It is contended that under these circumstances, the petitioners are compelled to challenge the constitutional validity of the aforesaid provision. 6. It is propounded in the petition that the provisions are unconstitutional as the Parliament has not taken into consideration the diverse kinds of appeals to be filed by the borrowers. The conditions of pre-deposit in all kinds of appeals are onerous and oppressive and, further, the same being arbitrary hits at the root of Article 14 of the Constitution of India. It is also urged that such kind of stipulations for pre-deposit in all kinds of appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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." 10 . The 3rd and 4th provisos to sub-section (1) were brought into the statute book by the Act of 30 of 2004 with effect from 11 November, 2004. On a perusal of the said provisions, it is luminescent that the appellate tribunal has been conferred with the power to reduce the amount not less than 25%. The submission of Mr. Bara, learned counsel for the petitioners, is that the aforesaid provision is unconstitutional as an onerous condition is imposed while providing a remedy for appeal and, secondly, the legislature has not visualised the various categories of appeals which could be preferred before the tribunal but has only provided that the borrower is required to deposit the amount. 11 . To appreciate the controversy, it is apposite to refer to section 17 of the SARFAESI Act. Section 17 prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the discussion in Mardia Chemicals Ltd., supra, wherein their Lordships referred to the decisions in Seth Nandlal v State of Haryan a AIR 1980 SC 2097, Vijay Prakash D. Mehta v Collector of Customs (Preventive), Bombay AIR 1988 SC 2010 and Shyam Kishore v Municipal Corporation of Delhi AIR 1992 SC 2279 wherein it has been held that the right of appeal is a creature of the statute and while granting the right, the legislature can impose conditions for the exercise of such right so long as the conditions are not so onerous as to amount to unreasonable restrictions rendering the right almost illusory. Their Lordships treated the appeal to the DRT, as provided under section 17, as an approach to the adjudicating authority in the first instance and not in appeal and, accordingly, held the imposition of conditions to be invalid and all other provisions of the SARFAESI Act were declared to be valid. 14. In view of the aforesaid enunciation of law, there can be no trace of doubt that section 18 which provides for appeal to the Debts Appellate Recovery Tribunal and is hedged by reasonable conditions cannot be treated to be ultra vires. 15. The learned counsel f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2010, requiring him to deposit a sum of 25% is totally unjustified. It is not in dispute that the appellants had preferred an appeal before the Debts Appellate Recovery Tribunal. The tribunal, while entertaining the application for waiving, has followed the language appearing in the second proviso to section 8. The said proviso clearly lays down that the appellate tribunal may, for reasons to be recorded in writing, reduce the amount to not less than twenty-five per cent of the debt referred to in the second proviso. On a bare reading of the aforesaid provision, it becomes clear that the tribunal has no jurisdiction to reduce the amount below 25% of the debt. Thus, the tribunal could not have travelled beyond the said provision as such travel would have clearly amounted to transgression of the provision. The tribunal is required to act within the statutory parameters. The prayer made by the learned counsel for the petitioners, in fact, requires the tribunal to go beyond the statutory command. The same is impermissible. Thus, we find no fallacy in the order of the tribunal. 20. Consequently, the inevitable result is dismissal of the writ petition which we direct. However, we ext ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
