Itc Limited vs Blue Coast Hotels Ltd. .

6. On 18.06.2013, a notice was issued under Section 13 (4) whereby symbolic possession of the hotel property was taken over by the creditor. The debtor filed a securitization application 6 before the Debts Recovery Tribunal (hereinafter referred to as ‘the DRT’) against the taking over of the symbolic possession by the creditor. In the meanwhile, the creditor published the first auction sale notice 7 with a reserve price of Rs. 403 crores which came to be postponed in view of the negotiations between the parties for the repayment of the dues. Upon default in the repayment of the outstanding amount, a second sale notice was published on 09.01.2014 with the same reserve price. 5 Dated 27.05.2013 6 Dated 31.07.2013 7 On 04.09.2013 3 The DRT passed an interim order,8 directing the creditor to defer the acceptance of bids and not to take any further steps for sale of the property for the next 60 days. Subsequently, no bids were received and the auction failed.

9. The creditor filed an appeal to the order of the DRT 10 in the DRAT which came to be allowed11 and the validity of the notice issued under Section 13(2) was upheld. Against the order of the DRAT setting aside the order of the DRT, the debtor filed the Writ Petitions leading up to the present SLP, in the High Court.

12. On 30.12.2013, the debtor sought further time to repay the loan to which the creditor issued a notice taking over symbolic possession.

13. On 09.01.2014, the creditor published a second notice of sale at the same reserved price of Rs. 403 crores. The DRT14 passed an 12 Dated 19.09.2013 13 Dated 31.07.2013 14 Vide order dated 06.02.2014 5 interim order directing the creditor to defer the acceptance of the bids and not take any further steps with regard to the sale of the property for 60 days.

15. In the meanwhile, the debtor wrote to the creditor stating that the corporate loan will be taken over by Hyatt who were the operating service provider for the hotel. Hyatt in turn wrote to the creditor stating that they will not be responsible for the repayment of the loan. On 31.12.2014, a fourth and fresh notice for conducting the auction sale of the Goa Hotel was issued by the creditor setting the reserve price at Rs. 515.44 crores. This notice led to the sale of the Goa Hotel to ITC Ltd. (hereinafter referred to as ‘the auction purchaser’). Findings of the High Court 15 Vide order dated 11.11.2014 6

AIR 1961 SC 751 14 the other; the impact of other provisions whereby the necessity of complying with the provisions in question is avoided; the cir- cumstances, namely, that the statute provides for a contingency of the noncompliance with the provisions; the fact that the non-compliance with the provisions is or is not visited by some penalty; the serious or the trivial consequences, that flow therefrom; and above all, whether the object of the legislation will be defeated or furthered".

(vi) Following this the debtor sent a letter to the creditor on 19.09.2013 undertaking that it will repay all outstanding installments by 31.12.2013 and that the sale of assets be deferred up to the said date. The debtor further stated that it shall not proceed further in respect of their Securitization Application before the DRT.

(x) The creditor wrote to the debtor on 08.01.2014 informing the debtor that due to the default in repayment, the creditor is proceeding with steps to recover the dues and accordingly rejected the debtor’s request letter dated 30.12.2013 seeking further time to repay the outstanding dues.

34. In these circumstances, we have no doubt that the failure to furnish a reply to the representation is not of much significance since we are satisfied that the creditor has undoubtedly considered the representation and the proposal for repayment made therein and has in fact granted sufficient opportunity and time to the debtor to repay the debt without any avail. Therefore, in the fact and circumstances of this case, we are of the view that the debtor is not entitled to the discretionary relief under Article 226 of the Constitution which is indeed an equitable relief.

Transfer of Security Interest by IFCI to ITC

or

Findings of Fraud and Collusion by the High Court

57. Therefore, the debtor is not entitled for the discretionary equitable relief under Articles 226 and 136 of the Constitution of India in the present case.

58. We accordingly, set aside the impugned judgment of the High Court and direct the debtor and its agents to handover possession of the mortgaged properties to the auction purchaser within a period of six months from the date of this judgment along with the relevant accounts.

59. Appeals are allowed accordingly.