1 wpl7.11.sxw ssm IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION (LODGING) NO. 7 OF 2011 Javs Engineering (India) Ltd. & Anr. .....Petitioners. Vs. Bank of Baroda & Anr. ......Respondents. Mr. Sanjay Jain i/by M/s. Kaikini Phadke & Associates for the Petitioners. Mr. Anant B. Shinde for Respondent No.1. CORAM : DR. D.Y. CHANDRACHUD AND ANOOP V. MOHTA, JJ. DATE : JANUARY 10, 2011. P.C.: Rule. By consent, the Rule is heard finally. 2 In these proceedings under Article 226 of the Constitution, the Petitioners have impugned an order of the Debts Recovery Appellate Tribunal dated 15 December 2010. The Appellate Tribunal confirmed the order of the Presiding Officer of the Debts Recovery Tribunal, declining to grant interim relief. 3 The First Petitioner had availed of financial facilities from the 2 wpl7.11.sxw ssm First Respondent. On 6 February 2006, the First Respondent issued a notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the SARFAESI Act). Initially, on 22 November 2006 a One Time Settlement (OTS) was arrived at between the Petitioners and the First Respondent for a sum of Rs.400 lacs. The Petitioners deposited an amount of Rs.1 crore. On 6 March 2009, the bank took possession of the factory belonging to the Petitioners in the District of Raigad. The Petitioners had impugned the action of the bank by filing S.A. No. 48 of 2009. The Debt Recovery Tribunal rejected the Application on 8 May 2009. 4 On 11 June 2009, a fresh OTS was arrived at between the Petitioners and the bank for an amount of Rs.3.25 crores. Admittedly, an amount of Rs.90 lacs was paid by the Petitioners. On 16 February 2010, a notice was issued for sale of the factory premises and a reserve price of Rs.2.62 crores was fixed. In the meantime, the Petitioners had approached SICOM to finance the OTS. On 24 February 2010, SICOM addressed a letter to the bank seeking information to fund the OTS payments due to the bank. SICOM sought details inter-alia, of the amount sanctioned under the OTS; of 3 wpl7.11.sxw ssm the balance amount payable as on 1 March 2010; and details of the mortgaged properties which would be handed over to SICOM against the OTS payments. By its letter dated 25 February 2010, the Respondent Bank informed SICOM that the dues under the OTS were Rs. 2.66 crores if settled in full before 3 March 2010. According to the Petitioners the letter of the First Respondent was posted on 2 March 2010 and was actually delivered to the SICOM on 8 March 2010. The time stipulated in the letter for the payment of Rs. 2.66 crores had already expired before receipt of the letter. On 17 March 2010, the First Respondent sold the factory premises for an amount of Rs. 2.64 crores. On 16 April 2010, the Petitioners filed an application before the Debts Recovery Tribunal in S.A.(L) No. 295 of 2010. In the meantime, the sale certificate was issued. In October 2010, the First Respondent issued a notice for taking possession of the residential premises belonging to the Directors of the First Petitioner. An application for interim relief before the Tribunal was dismissed and the order was confirmed in Appeal. 5 The only question which arises before the Court is whether the Petitioners have made out a case for the grant of interim relief before the Tribunal. The Tribunal noted in the course of its order dated 6 4 wpl7.11.sxw ssm October 2010 that the owners of the properties were not made a party to the Application. However, it has been pointed out before this Court that an Application was filed before the Tribunal for impleading the owners which is pending. The Tribunal also observed that the validity of the measures taken by the bank had already been decided in the order dated 8 May 2009. However, there is merit in the contention of the Petitioners that this aspect of the reasoning overlooks the fact that it was after the order of the Tribunal dated 8 May 2009 that a fresh OTS was arrived at between the parties on 11 June 2009. The OTS dated 11 June 2009 provided that the amount of Rs.3.25 crores would have to be paid within 60 days which period expired in the month of August 2009. However, even thereafter on 25 February 2010, the First Respondent informed SICOM that an amount of Rs. 2.66 crores be paid by 3 March 2010 towards the OTS. Evidently, therefore at least until 25 February 2010 the bank treated the OTS to be still valid. The letter dated 25 February 2010, was however, received on 8 March 2010, which was after the last date prescribed by the bank for the payment of the balance of Rs. 2.66 crores. The bank proceeded to sell the factory premises for a consideration of Rs. 2.64 crores in the month of March 2010. The submission of counsel appearing for the Petitioners is that they can be 5 wpl7.11.sxw ssm put on terms by requiring them to pay additional amount by way of interest on the balance amount of Rs.2 lacs. 6 For the above reasons, we find that a prima facie case is made out for grant of interim relief, pending the disposal of the Application before the Debts Recovery Tribunal. Both, the Tribunal and the Appellate Tribunal, have erred in dismissing the application for interim relief. To meet the ends of justice and having regard to the facts and circumstances of the case noted earlier, the Petitioners are directed to deposit an amount of Rs. 5 lacs before the Debts Recovery Tribunal within a period of two weeks from today. On condition of the aforesaid deposit, there shall be a direction to the effect that the bank shall maintain the status-quo in respect of the property adverted to in prayer clause (c) of the Petition, pending the disposal of S.A. (Lodging) No. 295 of 2010. However, it is clarified that all the observations made in this order are prima facie and confined to the disposal of the application for interim relief. The Debts Recovery Tribunal shall not be influenced by these observations while disposing of the Application. The Petition is accordingly disposed of. 7 We clarify that in this view of the matter, it is not necessary for 6 wpl7.11.sxw ssm this Court to consider prayer clause (b) of the Petition. On the request of the Bank, it is clarified that the Bank would be at liberty to withdraw the amount, subject to the final order that may be passed by the Tribunal. It would be open to the Bank to apply before the Tribunal for expeditious disposal of the application. 8 Rule is made absolute accordingly in the above terms. There shall be no order as to costs. (ANOOP V. MOHTA, J.) (DR. D.Y. CHANDRACHUD, J.)