The jurisdiction of the DRT for entertaining a Securitization Application under section 17 of the SARFAESI Act is to be determined on the basis of the principles enshrined in section 19(1) of the RDDB Act and not by section 16 of the Code of Civil Procedure, 1908.

[PER B.P.COLABAWALLA J. ] :-

1. Rule. Respondents waive service. By consent of parties, rule made returnable forthwith and heard finally.

2. By this Writ Petition under Article 226 of the Constitution of India, challenge is laid to the order passed by the Debt Recovery Appellate Tribunal, Mumbai (for short, the “DRAT”) dated 8th October, 2013 whereby the DRAT upheld the order of the Debt Recovery Tribunal – III, Mumbai (for short the “DRT – III, Mumbai”) dated 14th August 2011. The DRT – III Mumbai, held that it had no jurisdiction to entertain the Securitization Application filed by the Petitioner and ordered the return of the Securitization Application to the Petitioner so that the same could be filed in the competent DRT. In a nutshell, both the authorities below held that DRT – III, Mumbai would have no jurisdiction to entertain the Securitisation Application as the secured property was situated in the State of Gujarat and therefore the Securitization Application could be filed only within the jurisdiction of the DRT where the secured property was situated. To come to this conclusion, the DRT as well as the DRAT have both relied upon a decision of the Full Bench of the Delhi High Court in the case of Amish Jain and another v/s ICICI Bank Ltd., 2013 (1) D.R.T.C. 70 (Delhi)

3. The brief facts to decide the present controversy are really undisputed. In the present case, the Petitioner is a company incorporated under the provisions of the Companies Act, 1956 and was the Applicant in Securitization Application No.136 of 2012 before the DRT – III, Mumbai. Respondent No.1 is ARCIL which is an asset reconstruction and securitization company and registered with the Reserve Bank of India under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, the “SARFAESI Act”). Respondent No.2 – Company is the successful bidder at the auction sale conducted by Respondent No.1 of the secured assets belonging to the Petitioner. Respondent No.3 is a Company in whose favour the Sale Certificate was issued by Respondent No.1. This was done on the instructions of Respondent No.2.

4. It is the case of the Petitioner that it was incorporated in the year 1982 and is involved in the business of manufacturing synthetic yarns at its factory in adivasi dominated tribal area in Gujarat. According to the Petitioner, there are about 2,000 adivasi workers, out of which 700 are female workers employed by the Petitioner at its factory unit at Village Amletha, Taluka Rajpipla, District Narmada, Gujarat and about 10,000 villagers in the nearby area are dependent of their livelihood on the Petitioner. The Petitioner had approached certain Banks and Financial Institutions for financial assistance to implement its plan of business expansion and development. However, the Petitioner became a victim of unforeseen circumstances and underwent financial problems. In fact, it also made a reference to the BIFR which declared the Petitioner as a sick company under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985.

5. It appears that some of the Banks and Financial Institutions who had granted financial assistance to the Petitioner, transferred and assigned their security interest in favour of the Respondent No.1 – ARCIL. In view thereof and the fact that the Petitioner was unable to make payment of its dues, on 16th March 2009, Respondent No.1 issued a notice under section 13(2) of the SARFAESI Act. This notice was duly replied to by the Petitioner by their letter dated 23rd May 2009. The record indicates that on 4th November 2009, Respondent No.1 took possession of the assets of the Petitioner situated at its factory premises at Village Amletha, Taluka Rajpipla, District Narmada, Gujarat along with the plant and machinery (for short, the “secured property”) and allowed the Petitioner to continue its manufacturing activities.

6. Thereafter, on 19th April, 2011