Tribunal has jurisdiction to restore possession of secured assets.

S.J. Mukhopadhaya, J.

In both these cases as common order dated 9th April, 2007, passed by the Debt Recovery Tribunal – II (hereinafter referred to as DRT), Chennai, in S.A. Application No.158/07 is under challenge, they were heard together and are disposed of by this common judgment.

2. The first petitioner of W.P. No.21096/07, M/s.Ramco Super Leathers Ltd., a company registered under the Companies Act, 1956, (hereinafter referred to as Company), is the borrower, who had taken loan from the first respondent, UCO Bank (hereinafter referred to as the Bank), who is the petitioner of connected CRP No.1184/07. Petitioners 2 to 5 of W.P. No.21096/07 are the guarantors before the bank for loans given in favour of the first petitioner-company. The account of the company with the bank was classified as non-performing asset. Therefore, after notice u/s 13 (2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (hereinafter referred to as the SARFAESI Act) issued on 9th May, 2003, the bank took measures u/s 13 (4) of the SARFAESI Act on 15th Dec., 2004.

3. O.A. No.127/03 was filed by the Bank before DRT, Chennai, against the company and guarantors. On the other hand, a writ petition, W.P. No.38331/03 was filed by the borrower-company and guarantors with a plea that the bank cannot take parallel action where original application has already been filed. The said case was not decided on merit and was disposed of along with batch of cases with observation that the DRT may decide such question whether the bank could take parallel proceeding where an original application has been filed by the bank. Another writ petition, W.P. No.32830/05 was filed by borrower-company and guarantors challenging the action of the bank in proceeding without withdrawing the original petition. The said case was dismissed on 2nd March, 2007, liberty was given to the petitioner to approach the Debt Recovery Tribunal.

A third writ petition, W.P. No.11068/07 was preferred by borrower-company and guarantors challenging Section 17 (3) and 17 (4) of the SARFAESI Act. Initially, the operation of Sections 17 (3) and (4) of the SARFAESI Act were stayed, but, subsequently, the writ petition was dismissed on 11th June, 2007.

4. In the meantime, the Bank, having taken possession of secured asset, issued sale notice on 24th Sept., 2005. It was not given effect due to interim stay, but stay having been vacated, the bank issued readvertisement on 13th March, 2007, fixing 16th April, 2007 as the date for re-auction. This time, the borrower preferred an application u/s 17 of the SARFAESI Act before the DRT, Chennai, registered as S.A. No.158/07. On the request of the borrower & guarantor – applicants, impugned conditional order was passed on 9th April, 2007. The Tribunal having noticed that there are two items for auction to the tune of Rs.8 Crores and 10% of such amount was fixed for depositing the earnest money, directed the borrower & guarantors – applicants to deposit a sum of Rs.60 lakhs to the bank within eight weeks and the bank was directed to defer the auction sale. Notice was also issued on the bank.

5. The borrower-company & guarantors have challenged the conditional order of stay dated 9th April, 2007, in their writ petition, mainly on two grounds:-

a) The Tribunal has no jurisdiction to pass conditional interim order ;

b) All proceedings u/s 13 (4) shall stand automatically stayed on filing of an application u/s 17 of the SARFAESI Act.

The Bank challenged the said order dated 9th April, 2007, by filing a civil revision application under Article 227 of the Constitution of India on the ground that the ex-parte conditional stay order is perverse; a meagre amount of Rs.60 Lakhs having been ordered to be deposited.

6. The civil revision petition was earlier taken up by the learned single Judge of this Court, who, vide interim order dated 16th April, 2007, considering the facts and circumstances of the ca