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2017 Supreme(Bom) 1824
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
B.R. GAVAI, SANDEEP K.SHINDE, JJ.
Smt. Julie Amitabh Parekh & Ors. - Petitioners
Versus
Reliance Asset Reconstruction Company Limited & Ors. - Respondents
WRIT PETITION NO. 9659 OF 2015
Decided On : 14-11-2017
Advocate Appeared:
For the Petitioner: Mr. Zal Andhyarujina a/w Mr Simil Purohit, Ms. Nikita Vardhan i/b Kanga & Co.
For the Respondent: Mr. Gaurav Joshi, Senior Counsel a/w Ms. Neeta Jain and Mr. Nikhil Rajani i/b M/s V. Deshpande & Co.
Legal heirs are included as borrowers under the SARFAESI Act, and unchallenged assertions in affidavits hold weight in court proceedings.
Headnote:
SARFAESI Act - Legal Heirs - Section 13(2), Section 13(5A) - Summary of Acts and Sections: The court discussed the definition of 'borrower' under Section 2(f) of the SARFAESI Act and its applicability to legal heirs, as well as the provisions of Section 13(5A) regarding auction participation. The court interpreted the legislative intent, harmonious construction of provisions, and Heydons' rule to conclude that legal heirs are included as borrowers under the SARFAESI Act. The court also emphasized the unchallenged assertion by the respondent regarding participation in the auction. The judgment upheld the order of the Debt Recovery Appellate Tribunal, dismissing the petition.
Fact of the Case:
The petitioners challenged the order of the Debt Recovery Appellate Tribunal, which directed them to deposit 25% of the amount covered by notice issued under section 13(2) of the SARFAESI Act for allowing the waiver application. The petitioners, legal heirs of the deceased borrower, contended that the bank could not proceed against them under the SARFAESI Act.
Finding of the Court:
The court found that legal heirs are included as borrowers under the SARFAESI Act and upheld the order of the Debt Recovery Appellate Tribunal, dismissing the petition.
Issues: Interpretation of 'borrower' under Section 2(f) of the SARFAESI Act, applicability to legal heirs, and the participation of the respondent in the auction.
Ratio Decidendi: The legislative intent, harmonious construction of provisions, and Heydons' rule were applied to interpret the SARFAESI Act. The unchallenged assertion by the respondent regarding participation in the auction was considered in the decision.
Final Decision: The petition was found to be devoid of merit and dismissed. The court upheld the order of the Debt Recovery Appellate Tribunal, and the prayer for protection to approach the Supreme Court was rejected.
B.R. Gavai, J.
1. Petitioners, by way of present Petition, have assailed the order passed by the learned Chairperson of the Debt Recovery Appellate Tribunal, Mumbai (hereinafter referred to as “DRAT”), by which, while deciding the waiver application filed by the present Petitioners, learned Tribunal has directed the Petitioners to deposit 25% of the amount covered by notice issued under section 13(2), for allowing the waiver application.
2. Brief facts giving rise to the present Petition are as under:-
3. One Parekh Aluminex Limited was a principal borrower of the assigner Yes Bank. Late Amitabh Arun Parekh was a mortgagor and guarantor for the debt. Unfortunately, Mr. Amitabh Arun Parekh expired on 06/01/2013. Subsequently, notice under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as “the SARFAESI Act”) came to be issued to the Petitioners who are undisputedly legal heirs of the said deceased Amitabh.
4. After the notice was issued to the Petitioners under Section 13(2), Petitioners made a representation to the Yes Bank. The Bank invited the Petitioners to visit the Bank for conducting inspection of documents to satisfy themselves with regard to possession of the documents, creating security interest in favour of the said Bank. Subsequently, it appears that Yes Bank assigned the debt in favour of 1st Respondent on 29/06/2013. The 1st Respondent, on 30/07/2013, took symbolic possession. The same was published on 09/08/2013. The orders were passed under Section 14 of the SARFAESI Act on 8/10/2013 by the learned Magistrate regarding physical possession. The Petitioners, therefore, moved the securitization application before the learned DRT. The securitization application came to be rejected by the learned DRT. Being aggrieved thereby, Petitioners preferred an appeal before the learned DRAT alongwith the application for waiver of pre-deposit, as required under the provisions of the SARFAESI Act. The learned DRAT passed a conditional order on 19/08/2015, thereby directing the Petitioners to deposit 25% of the amount due, as precondition for waiver. It was also directed that, if Petitioners fail to deposit the amount within a prescribed period, appeal shall stand dismissed automatically. Being aggrieved thereby, the present Petition has been filed.
5. It appears that, initially, the matter was moved before the Division Bench of this Court on 15/10/2015 on the ground that the auction was to take place on 05/11/2015. However, the learned Judges of the Division Bench refused to grant urgent circulation. It appears that the Petitioners have challenged the said order of the Division Bench of this Court dated 05/11/2015 before Their Lordships of the Apex Court. Their Lordships on 27/11/2015 passed the order as under:-
“Upon hearing the counsel the Court made the following
ORDER
It has been submitted by the learned counsel appearing for the petitioners that on 05.11.2015, when the property was sought to be auctioned, there was no buyer and, therefore, ultimately respondent no.1 itself purchased the property which, according to the learned counsel for the petitioner, is improper.
In view of the fact that the petition is still pending in the High Court and the Petitioners have approached this Court at an interlocutory stage, we do not deem it fit to entertain the petition, which is disposed of as such. However, we direct respondent no.1 not to sell, dispose of, alienate or create any third party right, title or interest in the property till next date of hearing before the High Court.
A copy of this order shall be communicated to the respondents forthwith.
The special leave petition is disposed of in the aforesaid terms.”
6. It appears that the matter was thereafter listed before various Division Benches of this Court from time to time. Respondents thereafter moved the matter before this Court for urgent hearing and, as such, the matter was fi
