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2018 Supreme(Mad) 3215
IN THE HIGH COURT OF JUDICATURE AT MADRAS
V.K. Tahilramani, M. Duraiswamy, JJ.
Sekar Stores Home Mart Rep by Its Partner S.V.S. Manivannan - Appellant
Vs.
Authorized Officer Pridhvi Asset Reconstruction & Securitisation Company Ltd -Respondent
W.P. Nos. 26230, 26249 of 2018; Writ Miscellaneous Petition No. 30471, 30659 of 2018
Decided On : 09-10-2018
Advocate Appeared:
Silambanan, J. Arun Prasad, Srinath Sridevan
The interpretation of the term 'debt' under the SARFAESI Act and the consideration of future interest in determining the pre-deposit amount under the 2nd proviso to Section 18(1) of the SARFAESI Act.
Headnote:
SARFAESI Act - Pre-deposit - Section 13(2) notices - [SARFAESI Act] - [Section 13(2)] - [Summary: The court discussed the interpretation of the term 'debt' and whether it includes future interest. The court referred to various judgments and held that the amount claimed in the notice under Section 13(2) includes future interest and should be considered for determining the pre-deposit amount under the 2nd proviso to Section 18(1) of the SARFAESI Act. The court also emphasized that the definition of 'debt' under the SARFAESI Act is wide and includes interest claimed as due from the borrower by the secured creditor. The court dismissed the Writ Petitions and upheld the orders passed by the Debt Recovery Appellate Tribunal, directing the petitioners to make a pre-deposit of 25% of the amount claimed in Section 13(2) notices.]
Fact of the Case:
The petitioners filed Writ Petitions to issue writs of certiorarified mandamus to quash the orders passed by the Debts Recovery Tribunal III, Chennai and to direct the 3rd respondent to take up the appeals filed by the petitioners without insisting on the mandatory deposit in terms of 2nd proviso to Section 18 of SARFAESI Act.
Finding of the Court:
The court upheld the orders passed by the Debt Recovery Appellate Tribunal, directing the petitioners to make a pre-deposit of 25% of the amount claimed in Section 13(2) notices.
Issues: Interpretation of the term 'debt' under the SARFAESI Act, consideration of future interest in determining the pre-deposit amount under the 2nd proviso to Section 18(1) of the SARFAESI Act.
Ratio Decidendi: The court held that the amount claimed in the notice under Section 13(2) includes future interest and should be considered for determining the pre-deposit amount under the 2nd proviso to Section 18(1) of the SARFAESI Act.
Final Decision: The court dismissed the Writ Petitions and upheld the orders passed by the Debt Recovery Appellate Tribunal, directing the petitioners to make a pre-deposit of 25% of the amount claimed in Section 13(2) notices.
M. Duraiswamy, J.
Since the issues involved in both the Writ Petitions are identical and between the same parties, the Writ Petitions are disposed of by this common order.
2. The petitioners have filed the Writ Petitions to issue writs of certiorarified mandamus to call for the records of the 2nd respondent made in AIR (SA).Nos.154 & 156 of 2018 dated 03.09.2018 and to quash the same and to direct the 3rd respondent to take up the appeals filed by the petitioners without insisting on the mandatory deposit in terms of 2nd proviso to Section 18 of SARFAESI Act and to decide the case on merits and in accordance with law.
3. Challenging the orders passed in S.A.Nos.115 & 116 of 2013 on the file of the Debts Recovery Tribunal III, Chennai, the petitioners filed appeals in AIR (SA).Nos.154 & 156 of 2018 respectively. In the said appeals, the petitioners filed I.A.No.483 of 2018 in AIR (SA).No.154 of 2018 and I.A.No.487 of 2018 in AIR (SA).No.156 of 2018 for waiver of pre-deposit. In both the appeals pending on the file of the Debt Recovery Appellate Tribunal, the petitioners have challenged the orders passed by the Debts Recovery Tribunal III, Chennai, which affirmed the possession notices issued by the respondent Bank. In AIR (SA).No.154 of 2018, the Debt Recovery Appellate Tribunal directed the petitioners to make a pre-deposit of Rs. 1 crore. While arriving at the sum of Rs. 1 crore, the Tribunal found that the petitioners are liable to pay a sum of Rs. 8 crores after giving credit to all the payments made by them. Similarly, in AIR (SA).No.156 of 2018, the Tribunal directed the petitioners to make a pre-deposit of Rs. 1.90 crores on the basis of the notice amount (i.e.) Rs. 7.60 crores.
4. Admittedly, a Section 13(2) notice dated 11.01.2013 was issued for a sum of Rs. 4.12 crores and another 13(2) notice dated 11.01.2013 for a sum of Rs. 7.60 crores.
5. It is also brought to the notice of this Court that the petitioners' property was sold in the auction for a sum of Rs. 7.2 crores and that the petitioners have challenged the sale before the Debts Recovery Tribunal. When the petitioners have challenged the sale of the property, they cannot now contend that the sale proceeds should be adjusted in the outstanding loan amount.
6. The learned senior counsel appearing for the petitioners submitted that the respondent Bank had issued two Section 13(2) notices dated 11.01.2013 claiming a total sum of Rs. 11.72 crores.
7. In paragraph 13 of the affidavit filed in support of the Writ Petitions, the petitioners have stated that the property was sold for a sum of Rs. 7 crores and an additional sum of Rs. 1.5 crores, in all, Rs. 8.5 crores was paid to the respondent on 13.09.2013 in both the accounts. Apart from the same, the petitioners had deposited a further sum of Rs. 60 lakhs as per the orders of the Tribunal and a further sum of Rs. 25 lakhs as per the directions of this Court in W.P.No.6313 of 2017 dated 15.03.2017. The learned senior counsel submitted that a sum of Rs. 9.35 crores, in both the accounts, has been paid by the petitioners so far to the respondent Bank.
8. From the averments stated in the affidavit filed in support of the Writ Petitions, it is clear that the petitioners have also included the sale proceeds in the total sum of Rs. 9.35 crores claimed to have been paid by them. When the petitioners have challenged the sale before the Debts Recovery Tribunal, the sale proceeds cannot be added to the payments made by the petitioners.
9. The learned senior counsel appearing for the petitioners submitted that the petitioners need not have to make any pre-deposit for the reason that they have almost cleared the entire outstanding amounts.
9.1. In support of his contention, the learned senior counsel relied upon the judgment [Sivakumar Textiles Vs. Debt Recovery Appellate Tribunal, Chennai and Others, (2012) AIR Madras 57] wherein the Division Bench of this Court held that "the amount of debt due from the borrower as claimed by
