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2016 Supreme(Mad) 2940
IN THE HIGH COURT OF JUDICATURE AT MADRAS
S. MANIKUMAR AND N.AUTHINATHAN.JJ.
M/s. Shana Auto Laser Pvt. Ltd. - Appellant
Vs.
The Presiding Officer Debts Recovery Tribunal-III - Respondents
WRIT PETITION No.20844 of 2016 And W.M.P.No.17858 and 24469 of 2016
Decided On : 12-09-2016
For the Appellant : Mr. R.Prabhakaran
For the Respondent: Mr. Benjamin George
The main legal point established in the judgment is the requirement for depositing a certain percentage of the debt due from the borrower as a condition for entertaining an appeal under Section 18 of the SARFAESI Act, 2002.
Headnote:
SARFAESI Act - Challenge to Demand and Possession Notices - Section 13(2) and Section 13(4) - Summary of Acts and Sections: The court discussed the provisions of Section 17 and Section 18 of the SARFAESI Act, 2002, which provide for the right to appeal and the procedure for appeal to the Appellate Tribunal. The court also highlighted the requirement for depositing a certain percentage of the debt due from the borrower as a condition for entertaining an appeal.
Fact of the Case:
The petitioner challenged demand and possession notices issued under Section 13(2) and Section 13(4) of the SARFAESI Act, 2002. The petitioner sought extension of time for remitting the balance amount and filed a petition to set aside the dismissal of the appeal and restore it on file. The Tribunal dismissed the petition, stating that the petitioner had been absent consistently and not made any progress since the matter was initiated.
Finding of the Court:
The court found that the Tribunal's dismissal of the petitioner's application was based solely on the non-payment of costs and did not consider the petitioner's prima facie case for setting aside the dismissal of the appeal. The court also noted the petitioner's compliance with the Tribunal's orders and the difficulties faced in adhering to the conditional order.
Issues: The issues involved the dismissal of the petitioner's application to set aside the dismissal of the appeal and restore it on file, the non-payment of costs, and the petitioner's compliance with the Tribunal's orders.
Ratio Decidendi: The court held that the Tribunal's dismissal of the petitioner's application without considering the prima facie case and solely on the basis of non-payment of costs was inappropriate. The court also emphasized the need to strike a balance between the parties and provide the petitioner with an opportunity to argue the appeal.
Final Decision: The court set aside the Tribunal's order and directed the petitioner to remit a sum of Rs.50.00 Lakhs to the loan account within a specified period. Upon compliance, the Tribunal was instructed to restore the appeal, hear it on merits, and pass orders in accordance with the law.
S.MANIKUMAR, J.
Challenge in this writ petition is to an order made in M.A.No.22 of 2016 in S.A.No.297 of 2015. Demand notice dated 28.2.2015 demanding a sum of Rs.2,40,65,758/- issued under Section 13(2) of the SARFAESI Act, 2002 and possession notice dated 25.6.2015 issued under Section 13(4) of the SARFAESI Act, 2002 have been challenged in S.A.No.297 of 2015, by the petitioner.
2. On 24.7.2015, the DRT-III, Chennai, was pleased to grant interim stay of all further proceedings pursuant to the possession notice dated 25.6.2015, subject to the condition that the petitioner remitting a sum of Rs.50,00,000/- to the credit of the loan account on or before 12.9.2015. The Tribunal further contended that in the event of the petitioner failing to comply with the above condition, interim stay granted, shall stand automatically vacated and the bank would be at liberty to proceed further, in accordance with law. Notice to the bank through Registry of the Tribunal and private notice has been ordered. S.A.No.297/2015 has been directed to be posted on 15.9.2015 for reporting compliance, by filing an affidavit by the writ petitioner, and for filing counter and typed set of papers by the bank.
3. Pursuant to the said order, the petitioner has remitted a sum of Rs.5,00,000/- on 31.8.2015, another sum of Rs.4,00,000/- on 4.9.2015, and a further sum of Rs.1,00,000/- on 14.9.2015. As the entire amount has not been paid, the petitioner has filed I.A.No.1194/2015 seeking for extension of time for remitting the balance amount.
4. Vide order dated 15.9.2015, the Tribunal has granted extension of time and directed the petitioner to deposit Rs.20,00,000/- on or before 28.9.2015 and further deposit of Rs.20,00,000/- on or before 17.10.2015 to the loan account. The petitioner has remitted the said amount within the extended time. To that effect, a Memo dated 19.10.2015 has been filed, reporting compliance.
5. Indian Overseas Bank, Hosur, respondent in S.A.No.297/2015, has filed their counter affidavit, wherein, they have stated that the petitioner has availed (a) cash credit for Rs.20.00 Lakhs, (b) Term loan SSI for Rs.1.65 Crores and (c) Term loan SSI for Rs.57.00 Lakhs, for which properties have been mortgaged, in addition to hypothecation of machineries. They have further stated that notwithstanding the compliance of the conditional order passed by the Tribunal, the petitioner has made payments of Rs.8.68 Lakhs, Rs.1.50 Lakhs and Rs.62,950/- only, as against the due of Rs.2.40 Crores.
6. Material on record further discloses that S.A.No.297/2015 was posted for hearing on 17.2.2016 and according to the petitioner, he could not give instructions to his counsel and the Tribunal, by order dated 17.2.2016, was pleased to order cost of Rs.3,000/-. Matter was directed to be listed on 8.3.2016. As there was no compliance, the Tribunal dismissed S.A.No.297/2015 for default in payment of costs. Thereafter, the petitioner has remitted the cost of Rs.3,000/- in favour of Tamil Nadu Kidney Research Foundation, Chennai - 17 and filed M.A.No.22/2016 to set aside the order of dismissal of the appeal dated 8.3.2016 and to restore S.A.No.297/2015, on file.
7. After hearing the learned counsel for the parties, DRT-III, Chennai, in M.A.No.22/2016 in S.A.No.297/2015 dated 31.5.2016, has passed the following order:
"Both sides are present. MA No.22/16 is taken up. This is an application filed to restore SA 297/2015 which was dismissed by the orders of this Tribunal dated 8.3.2016. It is reported in the earlier adjournment that substantial payments would be made. No development since last adjournment. It appears from the records that the petitioner/applicant has been absent consistently and not made any progress ever since the matter is initiated. It is also observed that despite posting the matter on terms, only a compliance memo is filed but hte matter is not argued. Even after dismissal of the matter, this MA seems to have been filed only for statistical purpose and toda
