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Judgment
Ashok Menon, Chairperson
The common Appellants in these Appeals are aggrieved with the orders in S.As Nos. 207/2021 and 208/2021 on the files of Debts Recovery Tribunal, Pune (‘DRT’ for short) dated 28.02.2022, and hence in Appeal. The Ld. Presiding Officer had vide the impugned orders allowed the aforesaid S.As, and thereby quashed and set aside the Sarfaesi measures initiated by the Appellants against the Applicants in the S.As. The secured assets in both matters are properties situated in Pune and belong to the Applicants in the S.As. The possession of the secured assets with the secured creditors was also directed to be restored.
The Appellants have sought a stay and the suspension of the impugned judgments. The Appeals were heard at length and reserved for orders. The issues involved are complicated and require extensive consideration of their merits. Under the circumstances, the applications for stay are being taken for orders in the first instance.
S.A. No. 207/2021 was dismissed for reason that there was an ambiguity in the demand notice issued under Sec. 13(2) of the SARFAESI Act and the recall notice issued later. It was also held that the classification of the debts as non-performing assets (‘NPA’ for short) was not made correctly and that different dates are mentioned in different documents, indicating that the classification was flawed. It was also held that neither the principal amount nor the interest was overdue on the date of notice and that since the classification of the debt as NPA was the crux of issuing the demand notice under Sec. 13(2), the entire Sarfaesi measures fall to the ground.
The contentions and disputes in both Appeals are almost similar with differences in the amounts involved and the fact that S.A. No. 207/2021 has an additional party as the third Respondent therein namely, M/s Samaaash Enterprises Pvt. Ltd. The first Appellant in both the Appeals namely Catalyst Trusteeship Ltd. is a debenture trustee and claims the amounts payable as per the debenture trust deed executed by the parties.
Since I am concerned only with the applications for stay at the movement, I do not seek to delve deep into the merits of the Appeal in detail. Prima facie findings about the sustainability of the impugned judgments alone are relevant at this stage.
The prime point which appears to have been missed by the Ld. Presiding Officer while considering the S.As and finding fault with the classification of debts as NPA is the existence of the provisos (i) (ii) to Sec. 13(2) of the SARFAESI Act which read thus:
“Provided that -
(i) the requirement of classification of secured debt as non-performing asset under the sub-section shall not apply to the borrower who has raised funds through issue of debts securities; and
(ii) in the event of default, the debenture trustee shall be entitled to enforce security interest in the same manner as provided under this section with such modification as may be necessary and in accordance with the terms and conditions of security documents executed in favour of debenture trustee.”
That apart, the Ld. Presiding Officer has not considered the question of limitation raised by the Appellants.
The parties have been litigating at various forums, including the pendency of commercial litigation in the High Court of Bombay and matters before the NCLT and NCLAT.
The Ld. Presiding Officer seems to have given much importance to the discrepancy in the dates mentioning the classification of the NPA and also the date concerning the payment of dues in accordance with the agreement. When some date appearing in documents is apparently a typing error, much importance cannot be given to those errors in the documents. The facts and circumstances in their entirety will have to be considered to arrive at a conclusion. The impugned judgments, appear to be flawed, and there is a strong prima facie case suggesting the infirmities of the judgments.
Under the circumstances, I am inclined to issue orders of stay suspending the operation of the impugned judgments dated 28. 02.2022 in S.A. No. 207 & 208 of 2021 on the files of D.R.T., Pune.
The earlier orders directing maintaining status-quo by both sides, and extended from time to time shall stand modified to the above extent. The Appeals shall be taken up for hearing in the due course.
Post on 12.01.2023 for hearing