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2019 Supreme(Del) 446
IN THE HIGH COURT OF DELHI AT NEW DELHI
VIPIN SANGHI, REKHA PALLI, JJ.
Udit Aggarwal and Another - Appellants
Versus
Authorised Officer, State Bank of India - Respondent
Writ Petition (Civil) No. 4733 of 2019, Civil Miscellaneous No. 21061 of 2019
Decided On : 09-05-2019
Seema Gupta, Adv., Sanjiv Kakra, Adv., Irfan Ahmed, Adv., Bheem Sain Jain, Adv.
The main legal point established is that the liability of a guarantor may be limited to the value of the mortgaged property, and the method of valuation of the property should be determined through a quasi-judicial process.
Headnote:
Guarantee - Dispossession from Property - SARFAESI Act - Section 13(2), Section 17(1) - The court discussed the terms of the deed of guarantee, the limited liability of the petitioner to the value of the mortgaged property, and the method of valuation of the property. The court directed the petitioner to deposit an amount with the DRAT and provided directions for the valuation and redemption of the property.
Fact of the Case:
The petitioner sought interim relief against dispossession from their property, which was mortgaged as collateral security. The court analyzed the terms of the deed of guarantee and the liability of the petitioner under the SARFAESI Act.
Finding of the Court:
The court found that the liability of the petitioner was limited to the value of the mortgaged property and directed the petitioner to deposit an amount with the DRAT to secure their possession.
Issues: The issues involved the interpretation of the deed of guarantee, the liability of the petitioner, and the method of valuation of the property.
Ratio Decidendi: The court held that the value of the property should be determined through a quasi-judicial process and directed the DRAT to undertake the valuation or require the DRT to do so.
Final Decision: The court directed the petitioner to deposit an amount with the DRAT, provided directions for the valuation of the property, and allowed the petitioner to redeem the mortgage at the value determined through the valuation process.
Vipin Sanghi, J.
The petitioner has preferred the present writ petition to assail the order dated 30.04.2019, passed by the Debts Recovery Appellate Tribunal, Delhi (DRAT) in Appeal No. 109/2019, arising out of SA No. 41/2017 (DRT-III, Delhi). The DRAT while passing the impugned order, has dismissed the petitioners' application to seek interim relief against dispossession of the petitioners from their property.
2. The respondent bank and some other banks constituted a consortium with the respondent bank being the lead bank. They sanctioned financial facilities to the tune of several crores in the year 2007 to M/s Aravali Infra Power Limited. The said company defaulted in repayment of loans and, consequently, its account was declared as NPA on 31.08.2012. The said company requested the bank for re-structuring of the loan. This request was acceded to on 25.09.2011. One of the conditions of the Corporate Debt Restructuring (CDR) was that the lender was obliged to raise guarantees for fulfillment of the terms and conditions of the CDR.
3. The petitioner stepped in to offer guarantee by mortgaging its property bearing Commercial Unit No. 201, Second Floor, Plot No. 6, Community Center, Sector 9, Rohini Delhi. The terms of the said deed of guarantee dated 14.03.2013 executed between the petitioner and the respondent bank are material, and we may take note of some of them:
a. "AND WHEREAS the Guarantors have given their property as described in Schedule III to the Lender as collateral security by way of equitable mortgage for the implementation of CDR Package by the Lenders. (Hereinafter referred to as collateral security)
b. NOW THE INDENTURE WITNESSETH that in consideration of the above premises it is hereby covenanted and agreed (the Guarantors covenanting and agreeing jointly and severally) as follows:
1. The Lenders have full right to dispose of collateral security and recover its dues in case of default by the borrower. In the event of failure of realization of collateral security, the undersigned hereby extend their personal guarantee only to the extent of value of collateral security [hereinafter referred to as Guarantee]. However, if the collateral security is realized by the Lenders, the liabilities of the Guarantors shall deem to be discharged.
2. The Guarantee shall be irrevocable and enforceable against the Guarantors notwithstanding any dispute between the Lenders and the Borrower for any reason whatsoever including variation in terms of loan agreement, security document, acknowledgment of debt by Borrower.
3 The Guarantors agree that notwithstanding of the Lenders for any reason whatsoever losing and/or parting with any of the securities given by the Borrower, the Guarantors shall not be released or discharged of their obligations under this Guarantee.
4. If the obligation under this Guarantee is discharged by the Guarantors, the collateral security given in favour of Lenders shall be released by the Lenders to the Guarantors immediately. Conversely, if the Lenders realize the collateral security, the guarantors shall deem to be discharged from all obligations under this Guarantee."
4. From the above, it would be seen that the liability of the petitioner guarantor was limited to the value of the property mortgaged, i.e. the property offered as the collateral security. Clause 4 in the aforesaid deed entitled the guarantor to redeem the mortgage by paying the realizable value of the collateral security.
5. The respondent claimed that the borrower defaulted in the implementation of the CDR package. Consequently, the respondent issued a notice under Section 13(2) of the SARFAESI Act, inter alia, to the petitioner reflecting the entire amount due and payable, which is in excess of Rs.202 Crores. Since the petitioner apprehended dispossession from the property in question, the petitioner preferred the securitization application under Section 17(1) of the SARFAESI Act before the DRT.
6. The petitioner sought stay of dispossessi
