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Judgment
P.K. Bhasin, J
The appellant Bank feeling aggrieved by an unreasoned and sketchy order passed by the learned Presiding Officer of DRT-II, Delhi on 18.10.2017 in a Securitisation Application (S.A.) filed by its defaulting borrower, respondent No. 1 herein, under Section 17(1) of SARFAESI Act, whereby the appellant Bank has been totally disabled from implementing its powers under SARFAESI Act for recovering public dues of a whopping amount of more than 13 crores of rupees. The impugned order passed by the learned Presiding Officer on 18.10.2017 after giving notice of the respondents' S.A. to the appellant Bank is as under :
"Heard both sides on interim relief. The Counsel for the applicant contended that the declaration of account as NPA is illegal and whereas the Counsel for the respondent No. 1 Bank sought time to file reply and submitted that they are intending to take possession by 21.10.2017.
For reply and hearing posted to 21.10.2017. Till then status quo be maintained.
Dasti."
Then on 21.10.2017 the learned Presiding Officer passed the following order:
"Today the Counsel for the respondent Bank requests time for filing reply. For filing reply by respondent No. 1 Bank time granted as last chance. Respondent Bank to file reply on or before 3.11.2017 as last chance, in default right to file reply shall stand closed. Thereafter applicant to file rejoinder to the reply.
For rejoinder and evidence by both parties post before Registrar on 20.11.2017 as last chance and for final hearing before this Tribunal on 27.11.2017. Till then maintain status quo, in respect of subject matter property, maintained."
The respondent company, which is into business of gold and silver jewellery, was granted loan by the appellant Bank against immovable property for Rs. 10 crores and cash credit limit of Rs. 5 crores in March, 2015. Directors of this company had allegedly stood guarantors for the repayment of these financial facilities. Smt. Radha Rani Goel, mother of one of the directors and wife of another director of this borrower company, had mortgaged her residential house in Civil Lines, Delhi. The loan of Rs. 10 crores was repayable in monthly instalments of Rs. 11,68,190/- for 180 months. The borrower company after getting crores from the Bank did not repay the instalments as per the re-payment schedule and because of that default the Bank re-called the entire loan facilities in 2016 after declaring its accounts as Non-Performing Accounts (NPA). Thereafter the borrower company approached the Bank with a payment of one crore for some re-scheduling of the instalments and the Bank in November, 2016 obliged it by reducing he instalment amount to Rs. 10,43,331/- p.m. The borrower company, however, again did not adhere to repayment schedule and the Bank once again declared the borrower's account as NPA in April, 2017 and sent second demand notice under Section 13(2) of SARFAESI Act. Since the borrower company did not clear the outstanding dues of Rs. 13,00,29,731.50 within the statutory period of 60 days the Bank invoked Section 14 of SARFAESI Act and got an order from the CMM for delivery of possession of the mortgaged house of Smt. Radha Rani Goel. At that time the respondent No. 1 borrower company approached DRT with a S.A. on 16.10.2017 and that application was taken up same day in view of the urgency as receiver was to take possession of mortgaged property on 21.10.2017. The DRT issued notice to the respondents in the S.A. for next day. On 17.10.2017 the DRT adjourned the matter to 18.10.2017 for reply and hearing on interim relief. The order passed on 18.10.2017 has already been reproduced. On that date after passing an order of status quo the DRT had adjourned the matter to 21.10.2017 and the order passed on 21.2017 has also been already reproduced by me.
Feeling aggrieved by the passing of unconditional blanket order of status quo by the DRT in favour of the defaulting borrower company in respect of the mortgaged property which had been mortgaged by Smt. Radha Rani Goel, who had strangely not approached the DRT with any grievance against the steps taken by the Bank for taking physical possession of her residential house, the Bank preferred this appeal. Besides praying for setting aside of impugned order dated 18.10.2017 passed by the CMM to proceed ahead for taking over physical possession of the mortgaged property of Smt. Radha Rani Goel.
This appeal was taken up for preliminary ex parte hearing on 2.11.2017 when this Tribunal passed the following order :
"Learned Counsel for the appellant has very strongly submitted that the way learned Presiding Officer of DRT-II, Delhi has granted interim relief to the respondent/defaulting borrower on 18.10.2017 and then extending that interim relief further is highly unjustified way of accepting the request of the defaulting borrower for grant of interim protection.
The order dated 18.10.2017 reads as under :
Heard both sides on interim relief. The Counsel for the applicant contended that the declaration of account as NPA is illegal and whereas the Counsel for the respondent No. 1 Bank sought time to file reply and submitted that they are intending to take possession by 21.10.2017.
For reply and hearing posted to 21.10.2017. Till then status quo be maintained.
Dasti.
Then order dated 21.10.2017 reads as under :
Today the Counsel for the respondent Bank requests time for filing reply. For filing reply by respondent No. 1 Bank time granted as last chance. Respondent Bank to file reply by on before 3.11.2017 as last chance, in default right to file reply shall stand closed. Thereafter applicant to file rejoinder to the reply.
For rejoinder and evidence by both parties posted before Registrar on 21.11.2017 as last chance and for final hearing before this Tribunal on 27.11.2017. Till then maintain status quo, in respect of subject matter property, be maintained.
Dasti.
Prima facie, I find substance in the submission of Counsel for the appellant that the way interim protection has been granted to respondents without even saying in any of the two orders that respondents had in prima facie case in their favour or that balance of convenience was in their favour for grant of interim protection otherwise they would be suffering reparable loss and injury. Prima facie, this order appears to be in the teeth of various judgments of the Hon'ble Apex Court which lay down the guidelines which have to be kept in mind while dealing with the cases of recovery of public money and in which public interest is of paramount importance rather than private interest of the litigants seeking stay of recovery of public money. It has also been held that in any event, grant of unconditional stay by Courts is highly improper and in fact under various judgments it has been held that in cases of recovery of public dues unconditional stay order should not be granted. In fact in one case arising out of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 in SLP (C) No. 10145 of 2017, ''United Bank of India v. Satywati Tondon & Ors." Hon'ble Supreme Court had expressed Its anguish over grant of stay orders against public moneys.
Issue notice to the respondents returnable on 20.11.2017. Appellant to ensure service upon the respondent. Operation of the impugned order noted above, as far as respondents have been granted interim protection, stands stayed."
On receipt of notice of this appeal the borrower company entered appearance through its Advocates Mr. Sanjeev Bhandari and Mr. Ravi Data on 20.11.2017. Before the date the respondent No. 1 had also moved one application for vacation/modification of the ex parte passed by this Tribunal on 2.11.2017. However, that application was ordered to be kept panding on 20.11.2017 as I had decided to hear the appeal itself on 21.11.2017.
Recently I had come across one order passed by DRT-I, Delhi granting interim relief in favour of a defaulting borrower against which order the Financial Institution had come up in appeal and which order was almost a blanket stay order (in the present case it is actually a blanket stay order) passed in favour of the defaulting borrower restraining the financial institution from taking any action against the defaulting borrower under SRAFAESI Act. That Misc. Appeal No. 286/2017, Fulleration India Credit Co. Ltd. v. Smt. Harpreet Kaur & Anr., was allowed by me vide order dated 26.10.2017. The impugned order in that appeal was as under:
"1. Considering the submissions of both the parties, since the applicant is ready to deposit the overdue amount, therefore, the applicant is hereby directed to deposit Rs. 5,00,000/- by 15.5.2017 and she is further directed to deposit Rs. 5,00,000/- within thirty days from today.
In case the applicant deposits the amount, the parties are directed to maintain status quo.
However in case the applicant fails to deposit the amount as directed herein above, the respondent may proceed and take possession of the property in question without any further direction of this Tribunal.
Respondent is hereby directed to file its reply.
List this matter before Registrar for reply on 20.7.2017 and thereafter before this Tribunal on 21.8.2017."
The observations made by me in that appeal and the reasons given for setting aside the said order of the DRT-I are as under :
"3. While granting this interim relief to the defaulting borrowers of the appellant the learned Presiding has neither examined the existence of any prima facie case in favour of the security applicants before the DRT nor the aspect of balance of convenience was considered while putting obstacle in the way of recovery of huge amount of public money and totally ignoring the public interest. It has also not been examined as to what irreparable loss the security applicants would be suffering in case the Financial Institution succeeds in recovering possession of the mortgaged asset after declaration of their account as NPA. This, in no manner, is the way to deal with prayer of stay against public dues. The DRT has granted stay, which is almost a blanket stay, interim injunction in the teeth of and contrary to the law laid down by Hon'ble Supreme Court in its various judgments involving public money.
Hon'ble Supreme Court in the case of United Bank of India v. Satyawati Tandon, III (2010) BC 495 (SC) : VI (2010) SLT 52 : AIR 2010 SC 3413, had after noticing the avowed objects behind the enactment of RDDBFI Act and SARFAESI Act had gone on to observe that Courts had been staying the recovery processes initiated by the Bank under SARFAESI Act which had the effect of defeating the object of speedy recoveries of Bank's dues from the defaulting borrowers. Hon'ble Supreme Court had expressed its displeasure against grant of interim injunctions against the Banks restraining them from availing of their remedies under the SARFAESI Act as under :
"18...........It must be remembered that stay of an action initiated by the State and/or its agencies/instrumentalities for recovery of taxes, cess, fees, etc. seriously impedes execution of projects of public importance and disables them from discharging their constitutional and legal obligations towards the citizens. In cases relating to recovery of the dues of Banks, financial institutions and secured creditors, stay granted by the High Court would have serious adverse impact on the financial health of such bodies/institutions, which ultimately prove detrimental to the economy of the nation. Therefore, the High Court should be extremely careful and circumspect in exercising its discretion to grant stay in such matters........".
(Emphasis laid by me)
It is not that the Apex Court had expressed its concern over the stalling of recoveries of public money by judicial orders only in Stayawati Tandon's case (supra) but way back in the year 1984 also same views were expressed in a judgment reported in its judgment reported in 1984 (SLT Soft) 384 : AIR 1985 SC 330 : 1985 SCR (2) 190, Assistant Collector of Central Excise, Chandan Nagar, West Bengal v. Dunlop India Ltd. & Ors. The relevant observations are re-produced below :
"It is indeed a great pity-and, we wish we did not have to say it but we are afraid, we will be signally failing in our duty if we do not do so - some Courts, of late, appear to have developed an unwarranted tendency to grant interim orders - interim orders with a great potential for public mischief- for the mere asking. We feel greatly disturbed. We find it more distressing that such interim orders, often ex-parte and non-speaking, are made even by the High Courts while entertaining writ petitions under Article 226 of the Constitution,.......... In several other cases,.....this Court was forced to point out how wrong it was to make interim orders so soon as an application was but presented, when a second thought (or a second's thought) would expose the impairment of the public interest..................
"we are constrained to make the observations which follows as we do feel dismayed at the tendency on the part of some of the High Courts to grant interlocutory orders for the mere asking. Normally, the High Court should not, as a rule, in proceedings under Article 226 of the Constitution grant any stay of recovery of tax save under very exceptional circumstances. The grant to stay in such matters, should be an exception and not a rule.
.............The Court has to show awareness of the fact that in a case like the present a municipality cannot function or meet its financial obligations if its source of revenue is blocked by an interim order restraining the municipality from recovering the taxes....... The
grant of an interlocutory order of this nature would paralyze the administration and dislocate the entire working of the municipality.......We can also take judicial notice of the fact that the vast majority of the petitions under Article 226 of the Constitution are filed solely for the purpose of obtaining interim orders........Where a plentitude of power is given under a statute, designed to meet a dire situation, it is no answer to say that the very nature of the power and the consequences which may ensue is itself a sufficient justification for the grant of a stay of that order, unless, of course, there are sufficient circumstances to justify a strong Prima facie inference that the order was made in abuse of the power.......To grant interim relief straightaway and leave it to the respondents to move the Court to vacate the interim order may jeopardise the public interest................We repeat and deprecate the practice of granting interim order which practically give the principal relief sought in the petition for no better reason than that a prima facie case has been made out, without being concerned about the balance of convenience, the public interest and a host of other relevant considerations................
..............But since the law presumes that public authorities function properly and bona fide with due regard to the public interest, a Court must be circumspect in granting interim orders of far reaching dimensions or orders causing administrative, burdensome inconvenience or orders preventing collection of public revenue for no better reason than that the parties shave come to the Court alleging prejudice, inconvenience or harm and that a prima facie case has been shown. There can be and there are no hard and fast rules. But prudence, discretion and circumspection are called for. There are several other vital considerations apart from the existence of a prima facie case. There is the question of balance of convenience. There is the question of the public interest there are many such factors worthy of consideration...........
We desire to add and as was said in Cassel and Co. Ltd. v. Broome(I) we hope it will never be necessary for us to say so again that 'in the hierarchical system of Courts' which exists in our country, 'it is necessary for each lower tier', including the High Court, 'to accept loyally the decisions of the higher tiers'.....................
We do not have the slightest doubt that the orders of the learned Single Judge as well as Division Bench are wholly unsustainable and should never have been made. Even assuming that the company had established a prima facie case, about which we do not express any opinion, we do not think that it was sufficient justification for granting the interim orders as was done by High Court. There was no question of any balance of convenience being in favour of the respondent-company. The balance of convenience was certainly in favour of the Government of India............. We consider that where matters of public revenue are concerned, it is of utmost importance to realise that interim orders ought not to be granted merely because a prima facie case has been shown. More is required. The balance of convenience must be clearly in favour of the making of an interim order and there should not be the slightest indication of a likelihood of prejudice to the public interest. We are very sorry to remark that these considerations have not been borne in mind by the High Court and interim order of this magnitude had been granted for the mere asking........."
(Emphasis supplied)
In another judgment in the case of Dwarikesh Sugar Industries Ltd. v. Prem Heavy Engineering Works, II (1997) CLT 468 (SC) : 1997 (SLT Soft) 1159 : (1997) 6 SCC 450, the Hon'ble Supreme Court had observed that:
"It is unfortunate that the High Court did not consider it necessary to refer to various judicial pronouncements of this Court in which the principles which have to be followed while examining an application for grant of interim relief have been clearly laid down. The observation of the High Court that reference to judicial decisions will not be of much importance was clear a method adopted by it in avoiding to follow and apply the law as laid down by this Court.........
We are constrained to make these observation with regard to the manner in which the High Court had dealt with this case because this is not an isolated case where the Courts, while disobeying or not complying with the law laid down by this Court, have at time been liberal in granting injunction restraining encashment of Bank guarantees. It is unfortunate, that notwithstanding the authoritative the pronouncements of this Court, the High Courts and the Courts subordinate thereto, still seem intent on affording to this Court innumerable opportunities for dealing with this area of law, thought by this Court to be well settled.
When a position, in law, is well settled as a result of judicial pronouncement of this Court, it would amount to judicial impropriety to say the least, for the subordinate Courts including the High Courts to ignore the settled decisions and then to pass a judicial order which is clearly contrary to the settled legal position. Such judicial adventurism cannot be permitted and we strongly deprecate the tendency of the subordinate Courts in not applying the settled principles and in passing whimsical orders which necessarily has the effect of granting wrongful and unwarranted relief to one of the parties. It is time that this tendency stops."
(Emphasis laid)
In East India Commercial Co. Ltd., Calcutta & Anr. v. The Collector of Customs, Calcutta, 1962 (SLT Soft) 202 : 1963 SCR (3) 338, Hon'ble Supreme Court had observed that:
"..........This raises the question whether an administrative Tribunal can ignore the law declared by the highest Court in the State............. It would be anomalous to suggest that a Tribunal over which the High Court has superintendence can ignore the law declared by that Court and start proceedings in direct violation of it. If a Tribunal can do so, all the subordinate Courts can equally do so, for there is no specific provision, just like in the case of Supreme Court making the law declared by the High Court binding........"
Thus, if the aforesaid are the views of the highest Court of the land it is not understandable and can certainly be not accepted by this Tribunal that the DRTs under the jurisdiction of this Appellate Tribunal can turn a blind eye to the judgments of the Apex Court. As was observed by the Apex Court two decades back the practice of Courts ignoring its binding judgments must stop. That mandate, however, does not appear to have percolated down to the DRTs. Without going into this aspect any further, it is now at least hoped that not only the DRT whose order was impugned in this appeal but all other DRTs will not be ignoring the authoritative pronouncements of the highest Court of the land and will do well in obeying the same to avoid the charge of the 'judicial impropriety' being levelled by the stakeholders in the Institution of Debts Recovery Tribunals.
Therefore, under no circumstances the impugned order, which is patently laconic, cannot stand scrutiny even for a moment. Accordingly this appeal is allowed and the impugned order is set aside."
The views of the Apex Court highlighted by me in the said appeal of Fulleration India Credit Co. Ltd. v. Smt. Harpreet Kaur (supra), apply with full force to the facts of the present case since the impugned order of the DRT is as laconic, unreasoned as was there in Fulleration's case and the learned Presiding Officer has very conveniently ignored the observations in that appeal, copy of which order had been circulated amongst all the DRTs. Same order was pressed into service by the learned Counsel for the appellant in the present case.
It was argued by Mr. Sanjeev Bhandari, learned Counsel for respondent company, that this appeal is liable to be dismissed only on the ground that false statements have been made in the grounds of appeal inasmuch as it has been claimed that on 18.10.2017, when for the first time order of status quo was passed by the DRT, the Presiding Officer had wrongly recorded that time was being sought on behalf of the Bank for filing reply while, in fact, no time was sought and appellant's Counsel was ready to argue the matter then and there. It was submitted that the proceedings recorded to that effect by the learned Presiding Officer cannot be challenged at all before this Tribunal as being incorrect. It was also argued that in this case the Counsel for the appellant is wrongly relying upon the order of this Tribunal rendered in the appeal of Fulleration India's case (supra) because in that case this Tribunal has not given any general direction to the DRTs not to grant any interim relief in any manner in view of the judgments of the Hon'ble Supreme Court referred to in that matter and, in fact, even in those judgments there is no direction that no Court/Tribunal can never grant interim injunction against recovery of public dues.
However, in my view, nothing turns around on the aforesaid submission very seriously pressed into service by Mr. Bhandari because this Tribunal had stayed the order of status quo granted by the DRT not on the ground that the DRT had wrongly mentioned in its order dated 18.10.2017 that time had been sought on behalf of the Bank for filing of reply. The operation of the impugned order was stayed for the reason that it was a totally unreasoned and cryptic order and was in the teeth of various judgments of the Hon'ble Supreme Court, including the one in Satywati Tandon's case, relevant portions from which judgment were quoted in this Tribunal's order. The orders passed on 18.10.2017 and 21.10.2017 do not show that the learned Presiding Officer had in mind the three requirements of law before granting any relief of interim injunction to a litigant. The learned Presiding Officer has not even found any prima facie case for grant of interim injunction against recovery of crores of rupees of public money, nor is there any satisfaction recorded that respondent herein would have suffered any irreparable loss in case stay against recovery of crores of rupees was not granted or that balance of convenience was also in its favour. In the facts and circumstances, by no stretch of imagination the relief of status quo granted to the defaulting borrower company, which has the effect of stalling the entire recovery proceedings initiated by the Bank under SARFAESI Act, can be sustained.
During the course of hearing it was repeatedly put to Mr. Sanjeev Bandari as to whether his client was willing to make any payment to the Bank, but the answer was that the appeal itself is liable to be dismissed because of appellant having concealed the fact from this Tribunal that on 17.10.2017 the DRT directed the Bank to file reply on 18.10.2017 and, therefore, it could not be stated that the DRT had passed an order of status quo on day one without even inviting reply from the Bank's side. This inclination on the part of the defaulting borrower also disentitles it showing any indulgence to it though this Tribunal finds that the respondent in any event has no prima facie case in its favour. There is no question of its suffering any irreparable loss in case the mortgaged asset, which does not even belong to it, is taken over by the Bank. The borrower company cannot fight a proxy war on behalf of the mortgagor who happens to be the wife of one of the Directors of the borrower company and mother of another Director and she is fighting an independent battle before a Civil Court in which she has till date not succeeded in getting any interim relief. For the aforesaid reasons, this appeal is allowed. The orders dated 18.10.2017 and 21.10.2017 are set aside and the benefit of status quo granted in favour of respondent borrower company by the DRT is recalled.