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IN THE HIGH COURT OF KERALA AT ERNAKULAM
A.MUHAMED MUSTAQUE, A.C.J., S.MANU, J.
Ameena Salim, W/o Late P.A.Salim – Appellant
Versus
Presiding Officer Debt Recovery Tribunal -1 –Respondent
WA No.1376 of 2024
Decided on : 12-09-2024
Procedure - Debt Recovery Tribunal - SARFAESI Act, 2002, Sections 17 and 18 - The court emphasized the need for proper adjudication regarding fee structures based on party status, rather than treating it as a formal defect.
Fact of the Case:
The appellant challenged the fee structure imposed by the Debt Recovery Tribunal under the SARFAESI Act, claiming that the Registrar's decision regarding their status as a guarantor was incorrect.
Finding of the Court:
The court found that the issue of the appellant's status as a borrower or guarantor required formal adjudication rather than being treated as a mere procedural defect.
Issues: Whether the Debt Recovery Tribunal followed the correct procedure in determining the fee applicable to the appellant based on their status as a borrower or guarantor.
Ratio Decidendi: The court held that the determination of the appellant's status is a substantive issue that necessitates a judicial decision rather than a procedural one.
Result: The court set aside the learned Single Judge's order and directed the DRT to adjudicate the appellant's status.
JUDGMENT :
A.Muhamed Mustaque, Acg.C.J.
This appeal addresses an important issue regarding the procedure to be followed by the Debt Recovery Tribunal (DRT) while considering the challenge raised under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002. The Security Interest (Enforcement) Rules, 2002 (in short 'SIE Rules) prescribed different table of fees for challenge to be raised under Section 17 of the SARFAESI Act. It is appropriate to refer Rule 13 of SIE Rules, which reads as follows;
(1) Every application under sub-section (1) of section 17 or an appeal to the Appellate Tribunal under sub-section (1) of section 18 shall be accompanied by a fee provided in the sub-rule (2) and such fee may be remitted through a crossed demand draft drawn on a bank or Indian Postal Order in favour of the Registrar of the Tribunal or the Court as the case may be, payable at the place where the Tribunal or the Court is situated.
(2) The amount of fee payable shall be as follows:
| No. | Nature of Application | Amount of Fee payable |
| 1 | Application to a Debt Recovery Tribunal under sub-section (1) of section 17 against any of the measures referred to in sub-section (4) of section 13 |
|
| (a) | Where the applicant is a borrower and the amount of debt due is less than Rs. 10 lakhs | Rs.500 for every Rs. 1 lakh or part thereof |
| (b) | Where the applicant is a borrower and the amount of debt due is Rs. 10 lakhs and above | Rs.5,000+Rs. 250 for every Rs.1 lakh or part thereof in excess of Rs. 10 lakhs subject to a maximum of Rs. 1,00,000 |
| (c) | Where the applicant is an aggrieved party other than the borrower and where the amount of debt due is less than Rs. 10 lakhs | Rs.125 for every Rupees One lakh or part thereof |
| (d) | Where the applicant is an aggrieved party other than the borrower and where the amount of debt due is Rs. 10 lakhs and above | Rs.1250+Rs. 125 for every Rs.1 lakh or part thereof in excess of Rs. 10 lakhs subject to a maximum of Rs.50, 000 |
| (e) | Any other application by any | Rs.200 |
| 2 | Appeal to the Appellate Authority against any order passed by the Debt Recovery Tribunal under section 17 | Same fees as provided at clauses (a) to (e) of serial number 1 of this rule. |
2. The Registrar of the Tribunal noted that the appellant is guarantor and therefore, the appellant has to pay higher slab of the fees prescribed for entertaining such challenge under Section 17 of the SARFAESI Act. Aggrieved by that, the appellant herein invoked the remedy under Rule 5(5) of the Debt Recovery Tribunal Procedure Rules, 1993 before the Presiding Officer concerned. The Presiding Officer affirmed the order of the Registrar. The challenge has been made before the learned Single Judge. The learned Single Judge relegated the appellant to invoke appellate remedy under Section 18 of the SARFAESI Act before the Appellate Tribunal.
3. The Debt Recovery Tribunal Procedure Rules prescribes various procedures regarding filing scrutiny of application etc. In Rule 5, it is stipulated that if the Registrar raised an objection noting defects, an appeal would lie before the Presiding Officer and the Presiding Officer will take a decision in the chamber and that decision is final. It is appropriate to refer Rule 5 of the Debt Recovery Tribunal Procedure Rules, 1993, which reads as follows;
(1) The Registrar, or, as the case may be, the officer authorised by him under rule 4, shall endorse on every application the date on which it is presented or deemed to have been presented under that rule and shall sign endorsement.
(2) If on scrutiny, the application is found to be in order, it shall be duly registered and given a seria
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