The NPA Act and the DRT Act, 1993 provide cumulative remedies to secured creditors, allowing for independent recovery of debt without waiting for the determination of the claim by the Tribunal. The court upheld the validity of Section 18(1) of the NPA Act and clarified the conditions for preferring an appeal.

S.J. Mukhopadhaya, J.

Common question of law being involved, though the cases were heard separately, they are disposed of by this common judgment.

2. In both the cases, the borrowers, while raised question of Debts Recovery Appellate Tribunals (hereinafter referred to as Appellate Tribunal) jurisdiction to pass conditional interim orders, they have also challenged the validity of Section 18 (1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests Act (hereinafter referred to as NPA Act).

3. The borrower of the first set of cases, M/s.Hamosons Apparels Pvt. Ltd., filed a petition for condonation of delay along with an appeal u/s 18 of the NPA Act, wherein, by impugned orders dated 28th Jan., 2008, Appellate Tribunal passed conditional order on payment of Rs.2.5 Crores. The delay having condoned and interim order having passed, while bank preferred two writ petitions (W.P. Nos.3958 & 3959/08), against the conditional order of payment of Rs.2.5 Crores, M/s.Hamosons Apparels Pvt. Ltd., challenged the said order in W.P. No.5172/08.

Another borrower, Ms.S.Chitra, of the 2nd set of cases, has also challenged the conditional interim order and dismissal of the appeal by filing revision petition, C.R.P. (PD) No.1519/07 and also challenged the validity of Section 18 (1) of NPA Act in W.P. No.17009/07.

In original application, Ms. S. Chitra also prayed for cross-examination of the bank manager and to send the documents for experts opinion, but it having been negatived, she has preferred another revision petition, C.R.P. (PD) No.3301/07.

Stand of borrower – M/s.Hamsosons Apparels Pvt. Ltd. (in 1st set of cases):

4. Mr. V. Ramachandran, learned senior counsel appearing for the borrower submitted that pursuant to judgment of Supreme Court in Mardia Chemicals - Vs – Union of India (2004 (4) SCC 311), the Parliament amended NPA Act, but what was sought to be corrected by Supreme Court by striking down Section 17 (2) as onerous found itself once again under 2nd proviso to Section 18 (1) of the said Act. U/s 13 (2), a secured creditor makes claim for recovery of money due and payable by borrower by putting him on notice and on failure the secured creditor invokes Section 13 (4) for taking further course of action of one or more options or measures to recover the secured debt. The borrower can react under the provision of Section 13 (3-A), which also imposes condition upon the secured creditor to reply to the objections that may be received from the borrower within a week, stating the reasons for non-acceptance of the objections raised by the borrower. The further course of action as detailed u/s 13 (4) could be taken by the secured creditor while not accepting the objections. Section 13 (13) imposes a restraint upon the borrower from transferring the secured asset by way of sale, lease or otherwise without prior consent of the secured creditor. This would mean that, immediately on communication of notice u/s 13 (2), the borrower is restrained from liquidating his asset, which the secured creditors have included in their notice, this notwithstanding the fact that the said asset may not have been offered as security. According to learned senior counsel, Section 17 provides first opportunity to the borrower, which, however, is limited only to the extent to decide whether measures referred u/s 13 (4) taken by secured creditor for enforcement of security interest is in accordance with the provisions of the Act and the rules made therein. None of the sections confer the borrower any right to move the Debts Recovery Tribunal (hereinafter referred to as Tribunal) to question the quantum of money claimed by the secured creditor. The correctness of action u/s 13 (4), if upheld by the Tribunal, a right of appeal is provided u/s 18. At that stage, the assets of the borrower stands frozen with the secured creditor, in view of Section 13 (13). In this background, demand for payment of 50% of the debt c