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2022 Supreme(Online)(KER) 30824
HIGH COURT OF KERALA
S.MANIKUMAR, CJ, SHAJI P.CHALY, J
SENIOR MANAGER, UNION BANK OF INDIA, KOLLAM BRANCH, FATHIMA BUILDING, P.B.NO.182, BEACH ROAD, KOLLAM-691001. – Appellant
Versus
R. DHANALAKSHMI, PROPRIETRIX, M/S.SEEMATTI TEXTILES, REPRESENTED BY POA HOLDER R.ANANTH KUMAR – Respondent
WA NO. 233 OF 2020 | WA.NO.300/2020 | WA NO. 401 OF 2020
For the Appellants/Petitioners: ADV. SRI.A.S.P.KURUP, SC, UBI
For the Respondents: ADV. SRI.S.EASWARAN, ADV. SRI.MADHU RADHAKRISHNAN, ADV. SRI.M.R.SARIN, ADV. SRI.T.K.VIPINDAS
The statutory interpretation of Section 18 requires the inclusion of interest in the debt amount for pre-deposit under the SARFAESI Act, clarifying that appeals cannot be entertained without this compliance.
Headnote:(A) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Section 18 - Appeal to Appellate Tribunal - Requirement for pre-deposit of 50% of debt due from the borrower as claimed by secured creditor - Legitimacy of including interest in calculation - The Court held that the language of section clearly indicates that interest should be included in the amount to be deposited for the appeal to be entertained - The Court ruled that any interpretation to exclude future interest from the figure mentioned in section 13(2) notice contradicts the provisions. (Paras 12-44)
(B) Appeals - Scope of intervention - A court reviewing a decision should not interfere unless it finds that the lower court's decision is rendered unreasonable, arbitrary, or otherwise legally unsustainable. (Paras 21-23)
Facts of the case:
The appeal arose from a decision regarding necessitated pre-deposit under the SARFAESI Act before the Debts Recovery Appellate Tribunal, specifically debating the requirement for interest inclusion in the debt amount as calculated by the secured creditor.
Findings of Court:
The Appellate Tribunal was right in directing the borrowers to deposit an amount that includes interest as defined under the Act.
Issues: The central issues involve the interpretation of section 18 regarding whether the debt includes interest at the time of filing an appeal and the necessity of pre-deposit for debt recovery actions.
Ratio Decidendi: The Court reaffirmed that statutory language emphasizes the inclusion of interest in the debt amount for pre-deposit purposes under section 18 of the SARFAESI Act.
Result: W.A. No. 242/2020 allowed; W.A. No. 300/2020 allowed with limitations stated; W.A. No. 401/2020 disposed as specified.
JUDGMENT
Shaji P. Chaly, J Instant writ appeals are preferred by the rival parties against the common judgment of the learned single Judge in W.P.(C) Nos.9331 & 11506 of 2019 dated 18.12.2019.
2. The subject issue arises under the Securitisation & Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act, 2002, for short), more particularly, Section 18 dealing with appeal to the Appellate Tribunal and the pre-deposit to be made to entertain the appeal.
3. W.A. Nos.233/2020 and 242/2020 are filed by the Senior Manager, Union Bank of India and its Authorized Officer, against the judgment of the learned single Judge in W.P.(C) Nos. 9331/2019 and 11506/2019 dated 18.12.2019, whereas, W.A. Nos.300 & 401 of 2019 are filed by the debtors, as well as the auction purchasers respectively, against the judgment in W.P.(C) No.9331/2019 dated 18.12.2019.
4. In W.P.(C) No.9331/2019, challenge made by the petitioners therein is to the order passed by the Debt Recovery Appellate Tribunal dated 21.03.2019 in I.A. No.1218/2019 in AIR No.690/2018, which is filed against the order of Debt Recovery Tribunal in T.S.A No.10/2016. Whereas, in W.P.(C) No.11506/2019, the challenge made is to the order passed by the DRAT in AIR No.691/2018 against the order of the DRT in I.A. No.179/2016 in T.S.A No.10/2016 dated 29.09.2018.
5. The order passed by the DRAT in AIR No.690/2013 dated 21.03.2019 is extracted hereunder:
“Heard IA 1218/2018, which is an application for waiver.
The appellants have challenged the order dated 29.09.2018 passed by DRT-II, Ernakulam by which TSA 10/2016 was dismissed and SARFAESI steps right from demand notice to sale were affirmed.
The counsel for appellants submits that bank had issued demand notice on 31.05.2006 under Section 13(2) of SARFAESI Act for recovery of a sum of Rs.1.95 crores.
It is a fact that no amount has been paid by appellants from their own pocket and the amount of Rs.1.05 crores in the year 2006 have become Rs.6 crores in last 13 years.
In view of the fact that DRAT cannot entertain any Appeal unless and until the Appellant complies with the formalities on pre-deposit up to 50% of debt amount, which can be reduced to 25%, but not less than 25% in any case and in last thirteen years the amount has increased manifold, I hereby direct the Appellants to make pre-deposit of Rs.2 crores with the Registrar of this Tribunal within a period of four weeks from today.
In the event of failure in complying with the order on pre-deposit the Appeal shall stand dismissed automatically for want of mandatory compliance. IA is disposed of and closed.
List for confirmation of pre-deposit on 24.04.2019.”
6. The order passed by the DRAT in AIR No.691/2013 dated 21.03.2019 is extracted hereunder:
“Mr. S. Easwaran, Advocate appeared for counsel for appellants, Mr. S.S. Rajesh.
Mr. Sadchith P. Kurup, counsel appeared for R1 and R2 and filed vakalath of counsel Mr. A.S.P.Kurup.
Ms. Prem Rajakumari, counsel appeared for R3 to R5 and filed vakalath.
Proof of service filed.
The counsel for R1 and R2 filed counters in delay, waiver and stay petitions.
Heard IA 1220/2018, application to condone the delay of 35 days in filing the appeal. Considering the averments made in IA, delay appears to be unintentional, hence delay is condoned and IA is allowed and disposed of.
In view of the fact that order of pre-deposit has been passed in the connected appeal AIR:690/2018 no need to pass separate orders in this appeal.
The appellants are directed to supply type set of papers to the counsel for respondents.
List for analogous hearing with connected appeal AIR 690/2018 on 24.04.2019.”
7. From the above orders, it could be deduced that in AIR No.690/2018, taking note of the fact that no amount has been paid by the appellants/borrowers from their own pocket and the amount of Rs.1.05 Crores in the year 2006, which has become to Rs.6 Crores in last thirteen years, and other factors, directed the borrowers to make the pre-deposit of Rs.2 C
