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Bank of India V/S Frontlines Fashion Exports (I) Pvt. Ltd.

    Appeal No. 169 of 2011

    Decided On, 18 September 2012

    At, Debt Recovery Appellate Tribunal At Delhi

    By, THE HONORABLE JUSTICE: S.N.H. ZAIDI
    By, (CHAIRPERSON)

    For Petitioner: Mr. Naveen Pushkarna, Advocate And For Respondents: Mr. Anil Panwar, Advocate



Judgment Text


1. This appeal impugns the judgment and order dated 23.2.2011 passed by the Presiding Officer of DRT-III. Delhi whereby S.A. No. 559/2010 has been disposed of with the direction to the applicant (respondent herein) to pay Rs. 2,68,38,491/- within six months together with simple interest @ 10% per annum on Rs. 3,16,86,491/- with effect from 1.4.2010. Briefly stated, the facts of the case are that the respondent company was granted various credit facilities by the appellant Bank in the year 2000 and were reviewed at the level of Rs. 683.77 lacs as per sanction letter dated 21.10.2008 which was duly accepted by the respondent. As the respondent could not maintain the financial discipline and failed to repay the loan, its loan accounts were classified as Non Performing Assets (NPA) and a demand of Rs. 6,85,07,921/- was made by the appellant through notice dated 26.6.2010 issued under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, the SARFAESI Act). Since the respondent failed to pay the dues within the stipulated period of 60 days, therefore, possession notice under Section 13(4) of the said Act was issued. The respondent filed application (S.A. No. 559/2010) under Section 17(1) of the SARFAESI Act challenging the actions of the Bank, which has been disposed of by the DRT by the order impugned, as mentioned above. Feeling aggrieved with that order, the Bank has tiled this appeal.

2. Mr. Navin Pushkarna, learned Counsel appearing for the appellant Bank, has submitted that the S.A. was listed for hearing before the DRT on 22.2.2011, but the hearing could not take place on that date due to the illness of the Bank's Counsel and it was adjourned to 23.2.2011. He further submitted that he remained present in the DRT along with the authorized officer of the Bank on 23.2.2011 for the whole day but the S.A. could not be taken up as the Presiding Officer remained occupied with other matters and the Counsel for the respondent company was also not present as he had gone out of station and had intimated him on phone in respect thereof, and after the Presiding Officer had left the Tribunal, the matter was adjourned to 24.2.2011 Mr. Pushkarna also submitted that the S.A. was, however, not listed on 24.2.2011 and on enquiry the Court Master informed that it had either been reserved for orders or had been disposed of by the Presiding Officer, whereupon he immediately appeared before the Chairperson of the Appellate Tribunal on that very day and complained about the irregularities in the functioning of the Presiding Officer of DRT-III. Delhi. He also submitted that the then Chairperson had ordered the Registrar of the DRAT to take possession of the files of all the cases listed before DRT-III, Delhi on 24.2.2011 as the Presiding Officer was going to retire on that date and accordingly the Registrar had seized the files of the cases, including the file of the concerned S.A., and brought them to his office and then he came to know that the S.A. had already been disposed of on 23.2.2011.

3. Mr. Pushkarna pointed out that this appeal was filed on 14.3.2011 without the certified copy of the order impugned, which could not be obtained as the file of the SA was lying with the Registrar of the Appellate Tribunal and when the office of this Tribunal had raised certain objections, including non-filing of the certified copy of the impugned order, then he had appeared before the Registrar on 24.3.2011 and all other objections except the non-filing of copy/certified copy of the impugned order were removed and in respect of that objection an application for waiver from filing the certified copy was filed on the aforesaid ground. He also pointed out that thereafter a copy of the impugned order was made available to this Tribunal by the office of DRT-III, Delhi on 25.3.2011 and the appeal was admitted on 28.3.2011.

4. Mr. Pushkarna has submitted that as per the demand notice dated 26.6.2010 issued under Section 13(2) of the SARFAESI Act, an amount of Rs. 6,85,07,921/was due on the respondent company, but the learned Tribunal below arbitrarily reduced the liability of the applicant/respondent company to Rs. 2,68,38.491/-without taking any evidence from any of the parties and without giving any reason therefor in the order impugned. He further submitted that the learned Presiding Officer has passed the impugned order only a day prior to his retirement without conforming to any established procedure for hearing of the application, as per Section 17(7) of the SARFAESI Act and as such the matter is required to be remanded back to the Tribunal below for deciding the SA afresh after affording the parties opportunity to adduce the evidence in support of its respective cases.

5. Mr. Anil Panwar, the learned Counsel for the respondent, however, submitted that Rule 11(1) of the DRAT (Procedure) Rules, 1994 mandates that a certified copy of the order of the Presiding Officer of DRT is to be accompanied with the memorandum of appeal and since in the instant appeal no certified copy of the order impugned was filed along with appeal memo, therefore, the appeal being not in accordance with the said rule is liable to be dismissed on this count alone. He further submitted that the appellant has deliberately suppressed the material facts and has given incorrect information as per the list of the dates submitted by it. He pointed out that as per the said list, after 24.12.2010 the SA was taken up on 25.1.2011, whereas in fact in-between these two dates, the matter was listed and heard on several dates and during this period various quires were raised and complied with by the applicant/respondent and the statements of account were filed by both the parties and pleadings were exchanged Mr. Panwar further submitted that in Para 4(iii) of his affidavit dated 13.12.2011, the appellant's Counsel has said that when on 28.3.2011 the appeal was listed for hearing before the Chairperson, then he came to know that the certified copy of the impugned order 24.3.2011 had already been obtained by the Registrar of this Tribunal at his own and the same was placed on the appeal file, which clearly establishes that the appellant had not complied with the mandatory requirement of Rule 11(1) of the DRAT (Procedure) Rule, 1994.

6. Mr. Panwar further submitted that the Bank's Counsel had not appeared before the Tribunal below on 23.2.2011 and the learned Presiding Officer in the presence of the applicant/respondent's Counsel had disposed of the application, which is also evident from the order impugned itself. He has pointed out to his own affidavit dated 10.10.2011 in this regard.

7. I have considered the submissions of the parties' learned Counsel and perused the record of the appeal as well as of the Tribunal below. A perusal of the summoned Cause List of DRT-III, Delhi dated 22.2.2011 and 23.2.2011 goes to show that S.A. No. 559/2010 was listed before the DRT on 22.2.2011 and was adjourned to the next day, i.e., 23.2.2011 and on that date though the said S.A. was listed, but against its entry '24.2.2011' was written, which was later scored off and 'disposed' was written. In my opinion, this circumstance supports the appellant's contention that on 23.2.2011, the next date of 24.2.2011 was given which was later cancelled and the S.A. was disposed of on that very day. There is dispute between the parties about the presence of the parties and their Counsel on 23.2.20100, as according to the appellant, its Counsel along with the authorized officer of the Bank remained present before the DRT throughout the day on that date but the respondent's Counsel did not appear as he was out of station, whereas according to the respondent, the appellant's Counsel or its authorized officer was not present on that date and applicant/respondent's Counsel Mr. Anil Panwar remained present on that day. The presence of Mr. Panwar has been mentioned by the Tribunal in the order impugned. However, it is not in dispute that the appellant or its Counsel was not heard on the S.A. before its disposal on 23.2.2010.

8. This Tribunal had, vide order dated 27.2.2012, called for a report from the Registrar qua the removal of objection about filing of the certified copy of the order impugned and the Registrar, in his report dated 19.3.2012, has submitted as under:

On a complaint made by the learned Counsel for the appellant in the matter viz., Shri Naveen Pushkarna in the open Court in the last week of February, 2011, the then Hon'ble Chairman directed me to call for the records of the S.A. No. 559/2010. The records were accordingly called for by the under-signed and was shown to the then Hon'ble Chairman. Thereafter, the records were kept in my chamber on the direction of the Hon'ble Chairman. Meanwhile, Mr. Naveen Pushkarna, the learned Counsel filed the appeal on 14.3.2011 Amongst other objections raised by the registry there was also the objection regarding non-filing of certified copy/or even a copy of the impugned order Shri Pushkarna appeared before the undersigned on 24.3.2011 and submitted that the copy/certified copy of the order can not be produced/submitted by him because of the fact that the records of S.A. No. 559/2010 were in the custody of the D.R.A.T., Delhi. He, however, moved an application praying for exemption from filing certified copy of the impugned order. On submission of this application the undersigned reported that the objection has been removed as I was under the impression that moving an application for exemption from filing certified copy would suffice. The undersigned is also under the impression that since the record of S.A. was in the custody of this office, the moving of such an application would suffice for removing the objection.

It is therefore, submitted that the report done by the undersigned regarding removal of objections was as per discussion with the then Hon'ble Chairman and also the fact that the undersigned had joined only 3 months prior to this date and was lacking the knowledge of judicial procedures being followed in this Tribunal. The mistake done by the undersigned was done inadvertently and will not be repeated in future.

9. The aforesaid report sufficiently explains the circumstances under which the certified copy of the order impugned could not be filed along with the appeal memo by the appellant. The record, however, shows that the copy of the order was received in this Tribunal on 25.3.2011 and the appeal was later admitted on 28.3.2011. In view of the aforesaid circumstances, I am satisfied that the requirement of Rule 11(1) of the DRAT (Procedure) Rules, 1994 was sufficiently complied with and as such the appeal does not suffer with any irregularity.

10. A perusal of the order impugned shows that the Tribunal below has accepted the claim of the applicant/respondent that as on 31.3.2010, when the loan accounts were classified as NPA, an amount of Rs. 3,16,86,491/- was due on it, whereas according to the notice of Section 13(2) of the SARFAESI Act, an amount of Rs. 6,85,07,921 /- was due on the said date. The Tribunal below has not given any reason for not accepting the aforesaid amount as due on the applicant/respondent as was crystallized in the said notice. No evidence has also been referred to in the judgment for accepting the applicant/respondents version that only Rs. 3,16,86,491/- was due on it on that date. The Tribunal below has also stated about deposit of Rs. 48,48,000/- by the applicant/respondent subsequent to the issuance of the said demand notice without reference to any evidence I am, therefore, satisfied that the DRT's adjudication of Rs. 2,68,38.491/- as the amount of debt due on

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the date of filing of OA cannot be allowed to sustain as the same is devoid of any evidence. Moreover, in exercise of jurisdiction under Section 17 of the SARFAESI Act, the DRT is required to see whether or not the actions/measures taken by the secured creditor are in accordance with the provisions of the said Act and the rules made thereunder and not to determine the amount of the debt due on the borrower. The order impugned is, therefore, suffering with jurisdictional infirmity. I am inclined to accept the contention of the appellant's Counsel that since the S.A. has been disposed of without giving due opportunity to the parties to adduce evidence in support of their respective case, therefore, the matter is liable to be remitted back to the DRT for deciding the S.A. afresh after setting aside the order impugned order. 11. In view of the above, the appeal is allowed and the order impugned is set aside. The matter is remanded to the DRT concerned for deciding the S.A. afresh after affording opportunity to the parties to adduce evidence. Panties to bear their own cost of the appeal and to appear before the DRT concerned on 1.10.2012. Let record of the Tribunal below be sent back. Copy of this order be furnished to the parties as per law and one copy be sent to the concerned DRT forthwith.
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