Back
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
S.C. Dharmadhikari & G.S.Patel, JJ.
Pan India Motors Pvt. Ltd. - Petitioner
Versus
Asset Reconstruction Company (India) Ltd., - Respondent
WRIT PETITION NO. 2648 OF 2014
Decided on : 22-4-2016
DRT - Sale - Cancellation - Jurisdiction - SARFAESI Act - DRT Act - Consent Terms - Estoppel - Limitation - Jurisdiction - Recovery Officer - Securitization Company - Sale Terms - Non-Disclosure - Workers' Agitation - Abuse of Process - Costs.
Fact of the Case:
Petitioner challenged an order dated 8th January 2014 passed by the Debt Recovery Appellate Tribunal ("DRAT") in Miscellaneous Appeal No. 58 of 2013. The Petitioner was the Appellant before the DRAT. The present Petitioner was the successful bidder in an auction sale conducted by the DRT Receiver. The sale was later set aside by the Recovery Officer on an application made by ARCIL. The Petitioner filed an appeal before the Presiding Officer of the DRT, which was dismissed. The Petitioner then filed a Second Appeal to the DRAT, which was also dismissed.
Finding of the Court:
The Court held that the DRT had jurisdiction to conduct the sale and to set it aside. The Court also held that the Consent Terms filed by the parties were binding and that the Petitioner was estopped from challenging the sale. The Court further held that the Petitioner's application to set aside the sale was barred by limitation. The Court also held that the Petitioner was in breach of the terms and conditions of the sale and that ARCIL was entitled to have the sale set aside. The Court also held that the Petitioner's conduct was an abuse of process and that it should be visited with costs.
Issues: 1. Whether the DRT had jurisdiction to conduct the sale and to set it aside? 2. Whether the Consent Terms filed by the parties were binding and whether the Petitioner was estopped from challenging the sale? 3. Whether the Petitioner's application to set aside the sale was barred by limitation? 4. Whether the Petitioner was in breach of the terms and conditions of the sale and whether ARCIL was entitled to have the sale set aside? 5. Whether the Petitioner's conduct was an abuse of process and whether it should be visited with costs?
Ratio Decidendi: 1. The DRT had jurisdiction to conduct the sale and to set it aside because the sale was conducted in execution of a Recovery Certificate obtained in proceedings properly brought by ICICI Bank. The Recovery Officer retained jurisdiction till the Recovery Certificate was satisfied. 2. The Consent Terms filed by the parties were binding and the Petitioner was estopped from challenging the sale because the Petitioner had accepted the terms and conditions of the sale and had sought time extensions to comply with those terms and conditions. 3. The Petitioner's application to set aside the sale was barred by limitation because it was not filed within 60 days of the date of possession. 4. The Petitioner was in breach of the terms and conditions of the sale because it failed to pay the balance sale consideration, to issue the debentures, to procure the no objection certificates from UPSIDC, to clear its claim, to exchange the debenture certificates with allotment letters within the stipulated time, to insure the fixed assets, and to register the debenture trust deeds. 5. The Petitioner's conduct was an abuse of process because it had repeatedly sought time extensions to comply with the terms and conditions of the sale, it had made false statements to the Court, and it had obstructed the inspection of the fixed assets.
Final Decision: The Petition was dismissed with costs of Rs. 10 lakhs payable to ARCIL and costs of Rs. 1,10,000 payable to Mr. Talekar, the Court Commissioner.
G.S. Patel, J.
1. By this Petition, filed under Articles 226 and 227 of the Constitution of India, the Petitioner seeks to challenge an order dated 8th January 2014 passed by the Debt Recovery Appellate Tribunal (“DRAT”) in Miscellaneous Appeal No. 58 of 2013. The present Petitioner was the Appellant before the DRAT. Although Ms. Sethna for the Petitioner says that this is the limited challenge in the Writ Petition, we find that in actuality, there are two other orders that are implicitly under challenge. The first of these is an order dated 22nd November 2012 passed by the Recovery Officer on an application made by the 1st Respondent pursuant to which a certain sale of property, to which we will refer hereafter, in favour of the Petitioner was ordered to be cancelled and was set aside. The second is an order dated 30th January 2013 passed by the Presiding Officer of the Debt Recovery Tribunal in a First Appeal filed by the Petitioner.
2. We have heard Ms. Sethna for the Petitioner and Mr. Cooper for the 1st Respondent, the Asset Reconstruction Company (India) Limited (“ARCIL”), at considerable length. The record before us includes the Petition in two volumes, running to about 500 pages, a substantial Affidavit in Reply, a copy of the written submissions filed before the Debt Recovery Appellate Tribunal, a four volume compilation of documents filed by the 1st Respondent, the Petitioner’s written submissions and authorities along with an accompanying compilation and the 1st Respondent’s written submissions and compilation of judgments. There are also two Receiver’s reports, as also two compilations in support of the report of a site commissioner appointed by the Debt Recovery Appellate Tribunal. We have considered all this material.
3. In order to more properly appreciate the controversy before us, it is necessary to set out briefly the facts that led to the filing of this Petition.
(a) On 26th April 2002, ICICI Bank Ltd. filed Original Application No. 162 of 2002 before the Mumbai Debt Recovery Tribunal (“DRT”). It sought recovery of Rs.511,02,86,697/-, said to be due as on 31st March 2002, jointly and severally from Daewoo Motors Private Limited (“Daewoo”), by then in liquidation, and Daewoo Corporation, a holding company (Respondents Nos. 2 and 3 before us). ICICI Bank also sought further interest at an contractual rate with quarterly rests from 1st April 2002, and sought realization and enforcement of its security over the mortgaged and hypothecated properties as set out in the O.A.
(b) On 9th May 2002, on ICICI Bank’s application, the DRT appointed its Receiver of the suit property, without, however, a power of sale. On 23rd July 2002, the DRT rejected ICICI Bank’s application for a direction to the DRT Receiver to sell the unit properties. ICICI Bank filed an Appeal before the DRAT. By its order dated 8th August 2002, the DRAT directed the DRT Receiver to sell the suit properties by public auction or private treaty.
(c) The fixed assets of Daewoo included most importantly a large plot of leasehold land. This was Plot No. A-1, Surajpur Industrial Area, Greater Noida, Gautam Buddha Nagar, Tahasil-Dadri, District Gaziabad, Uttar Pradesh. The plot measures 204 acres. There are several structures standing on this land along with plant and machinery. This was once a motor car manufacturing and assembly plant.
(d) Following the order of 9th May 2002 read with the DRT’s order of 31st March 2003, the DRT Receiver took possession of the suit properties. This included the land at Surajpur Industrial Estate.
(e) It seems that the DRT Receiver then made several attempts to sell the suit properties including the public auctions. These attempts were unsuccessful.
(f) In the meantime, on 31st August 2004, the ICICI Bank’s O.A. was finally allowed. On 11th October 2004, a Recovery Certificate was issued in favour of ICICI Bank.
(g) By an Assignment Agreement dated 29th March 2005, ICICI Bank assigned, transferred and sold all loans
AI
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
