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Poddar Commodities Pvt. Ltd. & Another v/s Arms & Another

    G.A. No. 1259 of 2018 with A.P.O. No. 154 of 2018 & W.P. No. 128 of 2016
    Decided On, 14 January 2019
    At, High Court of Judicature at Calcutta
    For the Appellants: Saptansu Basu, Sr. Advocate, Debmalya Ghosal, Prosenjit Paul, Avirup Chatterjee, Advocates. For the Respondents: Rohit Das, Kishwar Rahman, Advocates.

Judgment Text
1. By consent of the parties the appeal is treated as on day’s list and taken up for consideration along with the application for stay.

2. The instant appeal arises out of a judgment and order dated 1st May, 2018 passed by a learned Single Judge in W.P. No. 128 of 2016, M/s. Poddar Commodities Pvt. Ltd. & Anr. v. Arms & Anr. By the impugned judgment and order the writ petition stood dismissed and the present appeal has been preferred by the writ petitioners.

3. The brief facts leading to filing of the writ petition are as follows :

The appellant No. 1 was declared as successful bidder in respect of certain movable and immovable properties of M/s. Sri Ganesh Lakshmi Agro Foods being secured assets which were put to sale by the respondent No. 1. The terms of the auction provided that payments have to be made in two phases within a timeframe. There was delay in making payment of the specified amounts by the appellant No. 1. Moreover, the movables according to the appellants could not be made over and as such the initial offer and acceptance stood modified by a subsequent agreement through exchange of letters restricted only to the immovable property. The appellant No. 1 made payment of the entire money along with interest for delayed payment. The respondent No. 1 wrongfully rescinded the contract and forfeited 25% of the entire amount deposited by the appellant No. 1. This 25% comes to Rs. 66,43,750.

4. The appellants seek refund of the said 25% money with interest alleging that the respondent No. 1 after condoning the delay accepted the balance 75% with interest on delayed payment and therefore could not have rescinded the contract. In any event even if it cancelled the contract the respondent No. 1 could not have forfeited 25% of the entire money paid by the appellant No. 1.

5. The respondents say that in view of the provisions of the Security (Enforcement) Interest Rules, 2002, they are entitled to cancel the contract and forfeit 25% of the sum. They also say that the appellants had deposited the entire consideration money but much out of time. Delayed payment was not approved and was therefore not accepted by them leading to cancellation and forfeiture. The respondents cite a judgment reported in I (2018) BC 3 (SC)=VIII (2017) SLT 528=2018(1) SCC 626, Agarwal Tracom Pvt. Ltd. v. Punjab National Bank and Ors. to contend that the issue of forfeiting the security deposit cannot be challenged in writ jurisdiction and the remedy of the appellants, if any, should be before the Tribunal under the provisions of Section 17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the said Act) as the sale concerned was conducted under the provisions of the said Act and the forfeiture took place in connection thereto.

6. The appellants, on the other hand, contend that there is no disputed question of fact which requires adducing of evidence. The respondents after condoning the delay had accepted the money and encashed the same. The cancellation is ex facie illegal and as such the appellants are entitled to the refund with interest inasmuch as the facts are admitted.

7. After considering the materials on record and the respective submissions made by the parties, we are of the view that some element of adducing evidence is at least necessary, particularly when the respondents by their e-mail dated 5th September, 2015 had contemporaneously asserted huge delay in payment as per the auction notice both for 25% and 75% of the consideration amount and that the proposal of the appellants for payment of the balance 75% at a delayed stage would be considered by the concerned authority for approval. This runs contrary to the appellants’ allegation that the facts are admitted. Neither the Writ Court nor the Appellate Forum therefrom is empowered to venture into disputed question of facts arising out of allegations and counter allegations. The issue therefore has to go before the Tribunal where parties can adduce evidence to bring the dispute into a logical conclusion.

8. In the circumstances as aforesaid, we modify the order impugned to the following extent:

(i) The appellants will be at liberty to approach the Tribunal under Section 17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 within a period of three weeks from date. In the event the appellants approach the Tribunal within the timeframe as indicated above, the Tribunal shall dispose of such application within the statutory timeframe as specified under Section 17(5) of the said Act.

(ii) Till disposal of the application to be filed by the appellants before the Tribunal, the respondents are directed to set apart the sum of Rs. 66,43,750/- in a separate interest bearing account which shall be dealt with by the Tribunal at the time of final disposal of the application to be filed by the appellants.

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/> (iii) In the event the appellants fail to file the application before the Tribunal within the timeframe provided, the respondent No. 1 will be at liberty to appropriate the said sum of Rs. 66,43,750/- with accrued interest, if any. 9. The appeal and the application for stay stand disposed of accordingly. We, however, make it clear that we have not gone into the merits of the case and the Tribunal, if approached, shall decide the case without being influenced by any of the comments made hereinabove. Appeal/Application disposed of.