JUDGMENT

MANMOHAN, ACJ: (ORAL)

W.P.(C) 8064/2023 and CM APPL. 5571/2024

1. Present petition filed under Article 226 of the Constitution of India seeks setting aside of the order dated 07th February, 2023 passed by Debt Recovery Appellate Tribunal (DRAT), New Delhi in Appeal No. 144/2022 arising out of order dated 22nd July, 2022 passed by Debt Recovery Tribunal (DRT)-III, New Delhi in S.A. No. 23/2021.

2. This Court vide interim order dated 01st August, 2023 while permitting the Petitioners to deposit a sum of Rs. 10 lakhs with the Registry of this Court had restrained the Respondent herein from taking any steps for auctioning the property bearing No. E-21-22, Diary Road, Adarsh Nagar, Near Adarsh Nagar Metro Station, Delhi (‘mortgaged property’). The Respondent has filed CM APPL. 5571/2024 seeking vacation of the said interim order. Since the pleadings in the writ petition are complete, the petition itself has been taken up for hearing.

3. The Petitioners admittedly applied for a loan facility from the Respondent in 2015, which was allowed in favour of the Petitioners vide Loan Agreement dated 26th September, 2015 (1st Loan). The Respondent disbursed an amount of Rs. 64,00,000/- on 30th September, 2015, which was repayable in 180 Equated Monthly Installments (EMIs). Further there was another loan allowed in favour of the Petitioners vide the Loan Agreement dated 10th November, 2015 (2nd Loan). In lieu of the said loan agreement the Respondent disbursed an amount of Rs. 4,25,000/- on 30th September, 2015, which was repayable in 62 EMIs.

4. The Petitioners defaulted in making payments of the EMIs and therefore, its loan accounts were declared as Non-Performing Asset (NPA) on 30th October, 2017. The Financial Institution (‘FI’) invoked arbitration and the Petitioners herein suffered an arbitral award for a sum of Rs. 90,39,196/- on 11th January, 2019, for which execution proceedings were filed by the FI.

5. The Petitioners state that though there were defaults in payment of EMIs, it continued to make payments and some installments towards EMIs were lastly paid on 26th August, 2019 and 31st July, 2019 qua 1st and 2nd Loan respectively.

6. The FI thereafter, initiated action under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), which was challenged by the Petitioners herein by filing an application before DRT-III, which was numbered as SA No.23/2021. The Petitioners filed an interim application I.A. No. 199/2021 in the said proceedings seeking a restraint against the FI for taking physical possession of the mortgage property. The said application was dismissed by DRT-III vide order dated 08th February, 2021. In the said order, DRT-III returned a finding that though the Petitioners herein have offered to regularize its loan accounts, the said offer is not bona fide.

7. The said order of DRT-III, Delhi was challenged by the Petitioners before the DRAT in Miscellaneous Appeal No. 47/2021. The Petitioners initially failed to make a pre-deposit of 25% and therefore, the appeal was dismissed vide order dated 26th February, 2021. Subsequently, in pursuance to the order passed by this Court in W.P.(C) No. 10786/2021, the Petitioners were granted liberty to approach the DRAT for revival of the said appeal by making a pre-deposit. It is stated by the Petitioners that it indeed deposited a sum of Rs. 30 lakhs with DRT-III thereafter, and filed an application for revival of its appeal. It appears from the record that the said appeal has not been revived.

8. In a second ground of litigation, the Petitioners filed I.A. No. 1022/2022 in S.A. No. 23/2021 before DRT-III seeking to restrain the Respondent from auctioning or selling the mortgage property and to open the seal of the said property. The said interim application as well as the S.A. No. 23/2021 has been dismissed by DRT-III vide order dated 22nd July, 2022 holding that the recourse taken by the FI under SARFAESI Act, 2002 is in