The court will not interfere with proceedings pending before the DRAT or give any direction to keep in abeyance the proceedings for dispossession of a secured asset until the appeal is decided, especially when the petitioners have been chronic defaulters and have sought adjournments in the DRAT proceedings.

Headnote:
SECURED ASSETS - DISPOSSESSION - STAY - [Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002]
Fact of the Case:

Petitioners sought to keep in abeyance proceedings for dispossession of their secured asset until their appeal and stay petition before the Debt Recovery Appellate Tribunal (DRAT) were decided. They argued that the respondents failed to follow due procedure under the Securitisation Act and that they would suffer irreparable loss if the Advocate Commissioner forcibly took over their asset before the DRAT considered their appeal.
Finding of the Court:

The court noted that the petitioners had been chronic defaulters and that over ₹1.5 Crore of public money was due from them. It also observed that the petitioners had sought adjournments in the DRAT proceedings and that the appeal was now posted to 21.12.2023.
Issues: Whether the court should interfere with the proceedings pending before the DRAT or give any direction to keep in abeyance the proceedings for dispossession of the petitioners' asset until the appeal was decided.
Ratio Decidendi: The court held that it would not be justified in interfering with the proceedings pending before the DRAT or in giving any direction to keep in abeyance the proceedings for dispossession of the petitioners' asset until the appeal was decided.
Final Decision: The court dismissed the petitioners' OP(DRT).

J U D G M E N T

~ ~ ~ ~ ~ ~ ~ ~ ~

The petitioners, who have availed financial assistance from the 1st respondent-Union Bank of India, seek to keep in abeyance proceedings for dispossession of the petitioners until Ext.P3 Miscellaneous Appeal filed before the Debt Recovery Appellate Tribunal, Chennai get listed and orders passed in Ext.P4 stay petition.

2. The petitioners state that they have availed a credit facility in the form of OCC at a limit of ₹1.2 Crores from the 1st respondent-Bank for doing cashew business. The petitioners were maintaining the account to the satisfaction of the respondents. However, when certain defaults occurred, the respondents illegally classified the account as NPA and initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

3. The respondents first issued a notice of demand for ₹1,34,37,725.18 as on 01.04.2021. Later, without serving demand notice on all the parties, the Bank issued possession notice on 28.09.2021. The respondents failed to make publication of possession notice.

4. The respondents filed application under Section

14 of the Securitisation Act before the Chief Judicial Magistrate's Court, Kollam. An Advocate Commissioner was appointed. The petitioners would state that the respondents failed to follow due procedure contemplated under Section

14(1).

5. Therefore, the petitioners filed SA No.222/2022 in the Debt Recovery Tribunal-II, Ernakulam. IA No.934/2022 was also filed seeking stay of the proceedings. The Debt Recovery Tribunal dismissed the stay petition as per Ext.P1 order dated 29.12.2022. Though the petitioner approached this Court filing OP(DRT) No.54/2023, this Court directed the petitioners to approach the Debt Recovery Appellate Tribunal, as per Ext.P2 judgment.

6. The petitioners state that they filed Ext.P3 Miscellaneous Appeal before the DRAT, Chennai. Ext.P4 stay petition was also filed. A waiver petition was also made along with a petition to condone delay.

7. The petitioners state that though the DRAT, Chennai considered the appeal and petition on various dates, no interim orders have been passed. The appeal now stands posted to 21.12.2023. In the meanwhile, Ext.P5 notice has been issued by the Advocate Commissioner. 8. The petitioners state that if the Advocate Commissioner forcibly takes over the petitioners' secured asset before the DRAT considers the appeal and stay petition filed by the petitioners, the petitioners will be put to irrecoverable loss and injury. Therefore, it is highly necessary that the respondent-Bank keep in abeyance the dispossession of the petitioner's property until the DRAT passes orders on Ext.P3 Miscellaneous Appeal and Ext.P4 stay petition.

9. The respondents filed a statement resisting the OP(DRT). The respondents pointed out that the appeal filed by the petitioners along with the stay petition was posted before the Appellate Tribunal on 01.08.2023. The Registrar of the DRAT recorded that the respondents have filed counter affidavit in the petition to condone delay and posted the case before the Chairperson on 01.09.2023. The petitioners sought adjournment of the case on 01.09.2023. The matter was adjourned to 31.10.2023. The counsel for the petitioners sought adjournment on 31.10.2023 and the case now stands posted to 21.12.2023. The petitioners are chronic defaulters and more than ₹1.5 Crore public money is due from the petitioners. The OP(DRT) is therefore liable to be dismissed with exemplary cost.

10. I have heard the learned counsel for the petitioners and the learned Standing Counsel representing the respondents.

11. The petitioners had availed a cash credit facility to the tune of ₹1.12 Crore from the 1st respondent-Bank. On the failure of the petitioners to maintain the loan account, proceedings were initiated under the Securitisation Act. The Chief Judicial Magistrate's Court, Kollam appointed an Advocate Commissioner to take possession of the secured asset.

Click Here to Read the rest of this document

2023 Supreme(Online)(KER) 14783

Login now and unlock premium legal research