IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL CIVIL CIVIL APPELLATE JURISDICTION APPELLATE JURISDICTION APPELLATE JURISDICTION REVIEW REVIEW REVIEW PETITION (ST) NO. 13634 OF 2008 PETITION (ST) NO. 13634 OF 2008 PETITION (ST) NO. 13634 OF 2008 IN IN IN WRIT WRIT WRIT PETITION NO. 7716 OF 2007 PETITION NO. 7716 OF 2007 PETITION NO. 7716 OF 2007 1. Gurpar Industries Limited & anr. ] .. Petitioners Versus 1. Debt Recovery Appellate Tribunal & ] 6 ors. ] .. Respondents Mr. Pradeep Sancheti, senior counsel with Mr. Ajay Khare i/b M/s.M.S. Bodhanwala & Co. for the petitioners. CORAM: S.B. MHASE & A.A. KUMBHAKONI, JJ. DATED: 13TH JUNE, 2008 P.C. : 1. Heard learned counsel for the petitioners. 2. The Debts Recovery Tribunal had passed an award against the petitioners. In execution of the Award, the property of the petitioners was attached and in second attempt was sold on 12th December, 2007. Thereafter, the petitioners approached the Debts Recovery Tribunal (for short "DRT") by way of an application No.11 of 2007 challenging the sale whereby a question was raised as to whether the compliance of provisions of Security Interest [Enforcement] Rules, : 2 : 2002 is required to be done when the property is put up for sale for second time. That application was rejected by the DRT by its order dated 22nd March, 2007. 3. As against the aforesaid order of DRT, the petitioners approached the Debts Recovery Appellate Tribunal (for short "DRAT") by filing an Appeal under section 18 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short "Securitization Act"). Alongwith the said Appeal, the petitioners filed an application seeking exemption from the compulsory deposit as provided by section 18. The Tribunal exercised its discretion in terms of the said section and ordered that instead of 50%, 25% amount be deposited. 4. That order of the DRAT was challenged before this court by filing Writ Petition No. 7716 of 2007. The said Petition was rejected by this court on 2nd June, 2008 by giving reasons and having found that the order has been properly passed by the DRAT. 5. Now, the petitioners have filed this Review Petition contending that inter alia the petitioners have challenged the said order passed by DRT directly in this court because the remedy provided under section 18 of : 3 : the Securitization Act is not an efficacious remedy on account of the onerous condition that without a deposit of certain amount under section 18 aforesaid, the appeal will not be entertained. 6. We are not impressed by the submission made by the learned counsel for the petitioners. 7. The object of the Securitization Act is to see that the money which is invested by Financial Institutions is recovered within a particular time-frame so that the Nation’s economic system is not be affected as a result of the blockage of finance with defaulters taking the loans. Therefore, even though the regular remedies by way of filing of suits, attachments and disposal of property were available, the Parliament in its wisdom found it necessary to provide more speedy and rigorous remedy for recovery of amount from defaulters. Hence, keeping in mind this object, various provisions have been enacted. More specifically, section 18 takes this object into consideration and provides for compulsory deposit. When an Appeal is filed under section 18 there is already an adjudication by one of the Tribunals as to what amount is due from the appellant and, therefore, in order to find out whether the appellant is interested in protraction of the : 4 : litigation or has a bonafide desire to pursue a genuine claim/case, the provision to deposit the amount of 50% has been made. Most importantly, in certain matters, after the Tribunal finds it appropriate in its discretion, it is empowered to relax the deposit to the extent of 25%. 8. Thus, to test the bonafides of the claims made in appeal is one of the objects and to make available the funds to the Financial Institutions is another object of the said provision. Therefore, by side-stepping and/or ignoring these provisions if the petitions filed under Article 226 of the Constitution as against the orders of the DRT are directly entertained, it will amount to not only over-reaching statutory provisions but also defeating the very object of the Securitization Act. The moment we start entertaining such petitions, we apprehend that this court will be flooded with such Petitions. It will amount to a mischief to nullify the statutory provisions of the Securitization Act and to frustrate its object. 9. In this regard, we may quote the observations made by the Supreme Court in the case of United Bank of United Bank of United Bank of India India India Vs. Debts Recovery Tribunal & Ors. Vs. Debts Recovery Tribunal & Ors. Vs. Debts Recovery Tribunal & Ors. reported in (1999) (1999) (1999) 4 SCC 69 4 SCC 69 4 SCC 69 which deals with the purpose and object : 5 : of the Legislature in enacting laws relating to recovery of debts due to banks and financial institutions. These observations read thus: "5. ........... Before we examine the two provisions referred to above, it is to be borne in mind that the procedure for recovery of debts due to the banks and financial institutions which was being followed, resulted in a significant portion of the funds being blocked. To remedy the locking up of huge funds, the Finance Minister introduced "the Recovery of Debts Due to Banks and Financial Institutions Bill, 1993", which was passed by Parliament and the Act has come into existence. The Statement of Objects and Reasons of the Act as reflected in the Bill introduced by the Minister in Parliament may be extracted hereunder in extenso; "Banks and financial institutions at present experience considerable difficulties in recovering loans and enforcement of securities charged with them. The existing procedure for recovery of debts due to the banks and financial institutions has blocked a significant portion of their funds in unproductive assets, the value of which deteriorates with the passage of time. The Committee on the Financial System headed by Shri M. Narasimham has considered the setting up of the Special Tribunals with special powers for adjudication of such matters and speedy recovery as critical to the successful implementation of the financial sector reforms. An urgent need was, therefore, felt to work out a suitable mechanism through which the dues to the banks and financial institutions could be realised without delay. In 1981, a Committee under the Chairmanship of Shri T. Tiwari had examined the legal and other difficulties faced by banks and financial institutions and suggested remedial measures including changes in law. The Tiwari Committee had also suggested setting up of Special Tribunals for recovery of dues of the banks : 6 : and financial institutions by following a summary procedure. The setting up of Special Tribunals will not only fulfil a long-felt need, but also, will be an important step in the implementation of the Report of the Narsimhan Committee. Whereas on 30th September, 1990 more than fifteen lakhs of cases filed by the public sector banks and about 304 cases filed by the financial institutions were pending in various courts, recovery of debts involved more than Rs. 5622 crores in dues of publi sector banks and about Rs.391 crores of dues of the financial institutions. The locking up of such huge amount of public money in litigation prevents proper utilisation and recycling of the funds for the development of the country. . The Bill seeks to provide for the establishment of Tribunals and Appellate Tribunals for expeditious adjudication and recovery of debts due to banks and financial institutions. Notes on clauses explain in detail the provisions of the Bill."â 6. The Act and the relevant provisions will have to be construed bearing in mind the objects for which Parliament passed the enactment. The prime object of the enactment appears to be to provide for the establishment of tribunals for expeditious adjudication and recovery of debts due to banks and financial institutions and for matters connected therewith or incidental thereto." 10. We have already observed in our order dated 2nd June, 2008, that the petitioners are not desirous of paying a single farthing either to the Financial Institutions and/or are also not desirous of depositing any amount in the court and that the petitioners are only interested in protracting the litigation. : 7 : Therefore, we have refused to entertain the Petition under Article 226 invoking Writ jurisdiction, in view of these gross facts of this case. 11. To permit the exercise of said jurisdiction by way of a Review will amount to not only setting aside of our own order, but allowing the petitioners and other similarly placed persons to indulge into aforesaid mischievous actions contrary of law. The inadequacies of the general law which the legislature attempted to fill in and the mischiefs which the parliament attempted to curb and avoid by enacting the Securitization Act will be frustrated by our order if we allow the Review Petition and entertain the original writ petition against the order of DRT directly. 12. We are aware that the Supreme Court considered the question raised before it in regard to section 17 of the Act, in the case of Mardia Chemicals Limited & ors. Mardia Chemicals Limited & ors. Mardia Chemicals Limited & ors. vs. vs. vs. Union of India & ors. Union of India & ors. Union of India & ors. reported in (2004) 4 SCC (2004) 4 SCC (2004) 4 SCC 311 311 311, the question considered by the Supreme Court is set out in paragraph 33 of this judgment as question No. (iii). The same reads thus: "(iii) Whether the remedy available under Section 17 of the Act is illusory for the : 8 : reason it is available only after the action is taken under Section 13(4) of the Act and the appeal would be entertainable only on deposit of 75% of the claim raised in the notice of demand.?" . While answering the said question, the Supreme Court has observed in paragraphs 59 & 60 of the said judgment thus: "59. We may like to observe that proceedings under Section 17 of the Act, in fact, are not appellate proceedings. It seems to be a misnomer. In fact it is the initial action which is brought before a forum as prescribed under the Act, raising grievance against the action or measures taken by one of the parties to the contract. It is the stage of initial proceeding like filing a suit in civil court. As a matter of fact proceedings under Section 17 of the Act are in lieu of a civil suit which remedy is ordinarily available but for the bar under Section 34 of the Act in the present case. 60. The requirement of pre-deposit of any amount at the first instance of proceedings is not to be found in any of the decisions cited on behalf of the respondent. All these cases relate to appeals. The amount of deposit of 75% of the demand, at the initial proceeding itself sounds unreasonable and oppressive, more particularly when the secured assets/the management thereof along with the right to transfer such interest has been taken over by the secured creditor or in some cases property is also sold. Requirement of deposit of such a heavy amount on the basis of a one-sided claim alone, cannot be said to be a reasonable condition at the first instance itself before start of adjudication of the dispute." 13. In contrast to the aforesaid observations of : 9 : the Supreme Court, in our case, the facts set out in our order dated 2nd June, 2008, will clearly demonstrate that after considering all the defences of the petitioners herein, the Tribunal has crystallized the amounts which are due and payable by the petitioner to the Bank. Thus, the liability of the petitioners to the Bank is now final, conclusive and binding on the petitioner. The petitioners cannot raise any dispute in that regard. In the present case, the issue involved is as to the method and manner in which such amount, which is finally due and payable by the petitioner to the Bank, can be recovered from the petitioners. Even in that regard, the limited issue which the petitioners wanted to raise has been set out by us hereinabove i.e. as to whether the same procedure is required to be followed when the property of the petitioners is put to sale in the recovery proceedings on second occasion, having failed to sell the same at the first instance. In view of these peculiar facts, it cannot be said that the aforesaid observations made by the Supreme Court in the case of Mardia Chemicals, in any manner at all can be of any assistance to the petitioners in furthering their case. 14. Therefore, we see no reason to entertain the Review Petition. There is no merit in the Review : 10 : Petition and it is, accordingly, rejected. Sd/- Sd/- [A.A. [A.A. [A.A. KUMBHAKONI, J.] KUMBHAKONI, J.] KUMBHAKONI, J.] [S.B. [S.B. [S.B. MHASE, J.] MHASE, J.] MHASE, J.]