TMI Blog2016 (3) TMI 382X X X X Extracts X X X X X X X X Extracts X X X X ..... the same in the loan account. Thereafter, one of the guarantors (viz. Mr K.P. Malkani) sold one of the mortgaged properties with the consent of the Respondent – Bank and the sale proceeds thereof to the tune of ₹ 1,18,00,000/- were deposited with the Respondent – Bank on 24th March, 2012. After giving due credit for the aforesaid amounts (Rs.5,29,441/- plus ₹ 1,18,00,000/-), the amount outstanding as on 24th March, 2012 was ₹ 52,24,200.16. Admittedly, no further payments were made by the Petitioner. The DRAT has taken into consideration this figure of ₹ 52,24,200/- for determining the amount that had to be deposited under the 2nd proviso to section 18(1) of the SARFAESI Act. It is pertinent to note that the appeal and the waiver application preferred by the Petitioner before the DRAT, were filed on 4th March, 2010. On the said date, the outstanding of the Respondent – Bank was in excess of ₹ 96,14,085/- as no payments were made by the Petitioner between the date when the section 13(2) notice was issued (14th August, 2007) and the date of filing of the appeal and waiver application (4th March, 2010). However, this waiver application was heard by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... four weeks with a direction that if the said amount of ₹ 20,00,000/-was not deposited in the aforesaid time, the appeal filed before the DRAT, Mumbai would stand dismissed. With this direction, the Writ Petition was disposed of. Thereafter, the learned counsel for the Petitioner appeared before us and submitted that this order may be reviewed as he was not heard before passing the said order. Since this order was passed in the morning session, we had stated that the Petitioner was at liberty to apply for review of this order by filing an appropriate application. It is in this light that the Review Petition has been filed before us. 2. Since the grievance of the Petitioner is that he was not heard before passing the order dated 10th June, 2015 and the issues raised by the Petitioner have not been dealt with by us in the said order, we have heard Mr. Shah, the learned counsel for the Petitioner, at length to examine whether the order dated 10th June, 2015 is required to be reviewed by us. 3. The learned counsel appearing on behalf of the Review Petitioner submitted that the order dated 30th June, 2014 passed by the DRAT, Mumbai in Miscellaneous Application No.237 of 2010 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (as on 31st July, 2007) together with interest thereon within 60 days of receipt of the said notice failing which the Respondent Bank would proceed to take measures under section 13(4) of the SARFAESI Act. As the Petitioner did not comply with the requisitions contained in the section 13(2) notice, the Respondent Bank proceeded to take possession of the mortgaged properties on 15th February, 2008 under section 13(4) of the SARFAESI Act. Being aggrieved by this action of the Respondent Bank, the Petitioner filed Securitisation Application No.28 of 2008 under section 17 before the Debt Recovery Tribunal (for short, the DRT ), Pune raising several grounds therein. To the aforesaid Securitisation Application, the Respondent Bank also filed its affidavit in reply inter alia contending that there was no merit in the Securitisation Application and that the same ought to be dismissed. After hearing the parties, the DRT, Pune, by its detailed reasoned order dated 13th January, 2010 dismissed the Securitisation Application filed by the Petitioner. 7. Being aggrieved by this order of the DRT, Pune, the Petitioner filed an appeal under section 18 of the SARFAESI Act before the DRAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ground before us that after 24th March, 2012 no amount has been deposited/paid by the Petitioner. In the affidavit in reply to this Review Petition, it is the case of the Respondent Bank that as on 17th July 2015, the total outstanding dues of the Petitioner (after giving credit of all amounts paid/deposited) are to the tune of ₹ 63,48,914.61. 10. Be that as it may, since the outstanding amounts as on 31st March, 2012 were ₹ 52,14,200.61, the DRAT, Mumbai took the aforesaid figure into consideration before ordering the Petitioner to deposit a sum of ₹ 20,00,000/- for the purposes of entertaining its appeal under section 18 of the SARFAESI Act. Needless to mention that this amount of ₹ 20,00,000/- is less than 50% of the figure of ₹ 52,24,200.61. 11. In this factual backdrop, Mr Shah, learned counsel appearing on behalf of the Petitioner, submitted that admittedly the Petitioner had deposited a sum of ₹ 1,23,29,441/- (Rs.5,29,441/ + ₹ 1,18,00,000/-) with the Respondent Bank against the amount claimed in the section 13(2) notice of ₹ 96,14,985.61. He therefore submitted that having deposited amounts with the Respondent Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Narayan Chandra Ghosh v/s UCO Bank and others. (2011) 4 SCC 548 : AIR 2011 SC 1913 12. The short but interesting question posed for our consideration is what sum (claimed by the secured creditor) is to be taken into consideration by the DRAT whilst determining the amount that ought to be deposited by the borrower under section 18 of the SARFAESI Act (before its appeal can be entertained). Would it be (i) on the basis of the amount claimed by the secured creditor in the section 13(2) notice alone or (ii) whether the DRAT also has to take into account the interest accrued on the said sum till the date of filing of the appeal. 13. To understand the present controversy, it would be necessary to refer to the provisions of section 18 of the SARFAESI Act. Section 18 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Debts Due to Banks and Financial Institutions Act 1993 (51 of 1993); 16. As can be seen from the definition, the word debt shall have the meaning assigned to it in clause (g) of section 2 of the RDDB Act. Section 2(g) of the RDDB Act reads thus:- (g) debt means any liability (inclusive of interest) which is claimed as due from any person by a bank or a financial institution or by a consortium of banks or financial institutions during the course of any business activity undertaken by the bank or the financial institution or the consortium under any law for the time being in force, in cash or otherwise, whether secured or unsecured, or assigned, or whether payable under a decree or order of any civil court or any arbitration award or otherwise or under a mortgage and subsisting on, and legally recoverable on, the date of the application; 17. On an ex-facie reading of the said definition, it is clear that the word debt has been given an extremely wide meaning and means any liability (inclusive of interest) which is claimed as due from any person by a bank or a financial institution during the course of any business activity undertaken by such bank or financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount to be deposited by the borrower [under the 2nd proviso to section 18(1)] would be only on the basis of the sum/figure as mentioned in the section 13(2) notice and not the interest accrued thereon after the date of the said notice, the same would be violating the plain language of the statute. To interpret the 2nd proviso to section 18(1) in this fashion, to our mind, would clearly violate the plain and unambiguous language of the said section. 19. We must mention here that after the issuance of the notice under section 13(2) and before the appeal is filed in the DRAT under section 18 of the SARFAESI Act, if the borrower has made any part payment of the debt due to the secured creditors, then credit for the same would have to be given to the borrower and for the purposes of deposit under the 2nd proviso to section 18(1), the reduced amount (after giving credit) would have to be taken into consideration for determining the amount required to be deposited by the borrower. This is simply because on the date of filing of the appeal, the debt due to the secured creditor would be reduced after giving credit for the amount already paid. 20. In the view that we have taken we are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner to the respondent No. 2. We have perused the judgment cited supra. 9. There is no dispute between the parties that the bank had issued notice under section 13(2) of the Act of 2002 on 11-5-2007. The petitioner-bank had also resorted to measures as prescribed under section 13(4) of the Act of 2002 by issuing a possession notice on 26-12-2009. The bank is entitled under section 13(4) of the Act of 2002 to take recourse to measures provided under the said provisions to recover the secured debt on failure of borrower to discharge his liability in full within the period specified in subsection (2) of the Act. 10. In the facts of the case and considering the notice issued under section 13(2) of the Act of 2002, we find that the petitioner bank had claimed as present outstanding, an amount of ₹ 24,61,985.54 Ps. and accordingly, the charge was kept upon the subject property by intimating public in general. The bank had described the immovable property over which the charge was kept in the notice issued under section 13(4) on 26-12-2009. Under the provisions of section 17 of the Act of 2002, any person aggrieved by any of the measures referred to in sub section 4 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ARFAESI Act. It is pertinent to note that the appeal and the waiver application preferred by the Petitioner before the DRAT, were filed on 4th March, 2010. On the said date, the outstanding of the Respondent Bank was in excess of ₹ 96,14,085/- as no payments were made by the Petitioner between the date when the section 13(2) notice was issued (14th August, 2007) and the date of filing of the appeal and waiver application (4th March, 2010). However, this waiver application was heard by the DRAT on 30th June 2014. By the time, the DRAT heard the waiver application, the Petitioner had made part payments of ₹ 1,23,00,000/- (approximately) towards its debt due to the Respondent - Bank. It is in this view of the matter that the DRAT whilst determining the amount to be deposited under the 2nd proviso to section 18(1) of the Act took into consideration the figure of ₹ 52,14,200/-. Looking to these facts and the clear language of the 2nd proviso to section 18(1) of the SARFAESI Act, we do not think that the DRAT committed any error in directing the Petitioner to deposit a sum of ₹ 20,00,000/- with the Registry of the Appellate Tribunal within a period of eight week ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or determined by the Debts Recovery Tribunal, whichever is less would have to be determined ignoring the interest component. On a close scrutiny of the aforesaid decision, we find no reference in the same to the definition of the word debt as defined under the provisions of the SARFAESI Act. As mentioned earlier, the word debt means any liability inclusive of interest claimed as due from any person by a bank or financial institution during the course of any business activity undertaken by the said bank or financial institution. When interest is specifically included in the definition of the word debt , we see no reason why the same ought to be excluded whilst determining the amount that is to be taken into consideration for the purpose of arriving at the figure to be deposited by the borrower under the 2nd proviso to section 18(1) of the SARFAESI Act. In fact, on a perusal of the said judgment, we do not find any reason given for making such an exclusion. We, therefore, with great respect to the Delhi High Court, are unable to agree with the ratio laid down in the aforesaid decision. 24. The last judgment relied upon by Mr Shah was a decision of the Supreme Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of pre-deposit under subsection (1) of Section 18 of the Act is mandatory and there is no reason whatsoever for not giving full effect to the provisions contained in Section 18 of the Act. In that view of the matter, no court, much less the Appellate Tribunal, a creature of the Act itself, can refuse to give full effect to the provisions of the statute. We have no hesitation in holding that deposit under the second proviso to Section 18(1) of the Act being a condition precedent for preferring an appeal under the said section, the Appellate Tribunal had erred in law in entertaining the appeal without directing the appellant to comply with the said mandatory requirement. 9. The argument of the learned counsel for the appellant that as the amount of debt due had not been determined by the Debts Recovery Tribunal, the appeal could be entertained by the Appellate Tribunal without insisting on pre-deposit, is equally fallacious. Under the second proviso to sub-section (1) of Section 18 of the Act the amount of fifty per cent, which is required to be deposited by the borrower, is computed either with reference to the debt due from him as claimed by the secured creditors or as d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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