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2019 Supreme(Del) 2172
IN THE HIGH COURT OF DELHI AT NEW DELHI
S. Muralidhar, Talwant Singh, JJ.
M/s. Sheena Exports and Others – Appellants
Versus
M/s. Assets Care and Reconstruction Enterprises Ltd. and Others – Respondents
Writ Petition (Civil) Nos. 9554, 9563 of 2019, Civil Miscellaneous Application Nos. 39256, 39305 of 2019
Decided On : 12-09-2019
Advocate Appeared:
Tanmaya Mehta, Sameer Rohtagi, Pushpinder Singh, Akshit Pradhan, Rajeev Mehra, R.P. Agarwal, Nitish Kumar, Ratnesh Sharma.
The main legal point established in the judgment is the mandatory nature of the pre-deposit requirement under Section 18 of the SARFAESI Act for preferring an appeal, as emphasized by the court.
Headnote:
SARFAESI Act - Debt Recovery - Section 18 - Summary of Acts and Sections: The court discussed the mandatory pre-deposit requirement under Section 18 of the SARFAESI Act and its interpretation as a condition precedent for preferring an appeal. The court highlighted the mandatory nature of the provision and cited the Narayan Chandra Ghosh vs. UCO Bank case to emphasize the statutory right and conditions for appeal under Section 18.
Fact of the Case:
The petitions arose from challenges against orders of the Debt Recovery Appellate Tribunal (DRAT) dismissing appeals due to failure to comply with the pre-deposit condition. The petitioners sought restoration of the appeals and challenged the orders of the DRAT.
Finding of the Court:
The court found that the petitioners failed to comply with the pre-deposit requirement under Section 18 of the SARFAESI Act, and their appeals were rightly dismissed by the DRAT. The court also noted that the petitions were directed against the orders of the DRAT and not against the orders of the Debt Recovery Tribunal (DRT).
Issues: The main issue was the failure of the petitioners to make the mandatory pre-deposit as required under Section 18 of the SARFAESI Act for preferring an appeal before the DRAT.
Ratio Decidendi: The court emphasized the mandatory nature of the pre-deposit requirement under Section 18 of the SARFAESI Act, citing the Narayan Chandra Ghosh vs. UCO Bank case to support its decision. The court also highlighted that the petitions were directed against the orders of the DRAT and not against the orders of the DRT, and therefore, the statutory remedy against the orders of the DRT should be pursued.
Final Decision: The court found no merit in the petitions and dismissed them with no order as to costs.
JUDGMENT :
S. Muralidhar, J.
1. These two petitions arise out of similar set of facts and seek similar reliefs and are being disposed of by this common judgment.
2. W.P. (C) No. 9554/2019 by M/s. Sheena Exports and five others challenges an order dated 23rd July, 2019 passed by the Debt Recovery Appellate Tribunal, Delhi ("DRAT") rejecting the Petitioners' Appeal No. 64/2019 for failure to comply with the condition of pre-deposit. The said Appeal No. 64/2019 arose out of an order dated 14th November, 2017 passed by the Debt Recovery Tribunal-II, Delhi ("DRT-II") dismissing a Review Application filed by the present Petitioners against an order dated 27th October, 2016 passed by the DRT, allowing the aforementioned OA No. 475/2014 filed by is against M/s. Assets Care and Reconstruction Enterprises Limited ("ACRE") (Respondent No. 1).
3. As far as W.P. (C) No. 9563/2019 is concerned, it has again been filed by M/s. Sheena Exports and five others challenging a separate order dated 23rd July, 2019, rejecting Appeal No. 63 of 2019. The said appeal was directed against an order dated 14th November, 2017 passed by the DRT-II, dismissing the Petitioners' review application against an order dated 27th October, 2016 passed by the DRT, allowing OA No. 474/2014, filed by ACRE against the Petitioners.
4. The background facts, as stated by the Petitioners are that the Petitioner No. 1 is a partnership firm engaged in the manufacture and export of home furnishing items, such as towels, linen, etc. It secured various credit facilities from two banks i.e. Citi Bank (Proforma Respondent No. 2 in both petitions) and HSBC Bank (Proforma Respondent No. 3 in both petitions) for its business operations.
5. On account of the defaults committed by the Petitioner No. 1, a Memorandum of Understanding ("MoU") was entered into by the Petitioners, separately with HSBC and Citi Bank. In terms of the MoU dated 25th June, 2010, entered into between the Petitioners and HSBC, it was agreed that against HSBC's claim of Rs. 17,37,34,522.10, a settlement amount of Rs. 7.00 crores would be paid in the following manner:-
| (i) | At the execution of the MoU | Rs. 1.00 crore. |
| (ii) | On 31st August, 2010 | Rs. 1.00 crore. |
| (iii) | On 30th September, 2010 | Rs. 1.00 crore. |
| (iv) | On 31st December, 2010 | Rs. 4.00 crore. |
6. Likewise on 21st March, 2011, the Petitioners and Citi Bank executed an MoU. As against the outstanding claim of Rs. 19,72,30,405/- it was agreed that a settlement amount of Rs. 7.50 crores would be paid in the following manner:-
| (i) | At the execution of the MoU | Rs. 1.00 crore. |
| (ii) | On 21st March, 2011 | Rs. 3.50 crore. |
| (iii) | On or before 15th June, 2011 | Rs. 4.00 crores. |
7. According to the Petitioners, as far as the MoU with HSBC is concerned, it paid three instalments, but was unable to pay the last instalment of Rs. 4.00 crores. It accordingly approached ACRE for a loan. By a letter dated 11th June, 2011, the Petitioners informed HSBC that ACRE would be paying Rs. 3.00 crores towards the settlement amount. According to the Petitioners, unknown to them, by an assignment deed dated 10th October, 2011 arrived at between HSBC and ACRE, HSBC assigned the dues of the Petitioner No. 1 to ACRE.
8. As far as the monies owing to Citi Bank were concerned, again Petitioner No. 1 approached ACRE for a bridge loan. According to the Petitioners, Citi Bank confirmed by its letter dated 10th June, 2011, permitting ACRE to acquire the outstanding dues of Citi Bank, subject to a payment of Rs. 4.00 crores by 14th June, 2011, i.e. the date fixed in the MoU. According to the Petitioners, unknown to them, Citi Bank and ACRE entered into an assignment deed dated 13th June, 2011, whereby Citi Bank assigned the dues of the Petitioner No. 1 to ACRE.
9. According to the Petitioners, the
