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Judgment
P.K. Bhasin, J
Misc. Case Nos. 220 & 442 of 2018
The applicants/appellants have made a fresh prayer for release of the pre-deposit amount which this Tribunal had earlier declined for the reasons given in orders dated 4.3.2013 and 17.8.2017. Circumstance highlighted by learned Counsel for the applicants/appellants to maintain this fresh application in the disposal of appeal is that there has been a settlement now but the respondent ARC is not issuing formal sanction of the settlement and will be issued by the ARC only upon making some payment by applicants as upfront amount and that the appellant will make that upfront amount from the money which is lying deposited with this Tribunal (and which this Tribunal has already declined to be released in favour of the applicants). It is submitted by Counsel for the applicants that the amount now be released in favour of the ARC so that it issues a formal sanction letter of the OTS.
Learned Counsel for ARC has submitted that as far as the OTS is concerned, there has been a settlement but as per the settlement the applicants/appellants are supposed to make some upfront payment for which the last date of payment is 30.9.2018 and till date that payment has not been made. This Counsel says on instructions from Sh. Nitin Mahajan, Officer of ARC present in Court.
In my view, as far as this Tribunal is concerned it has got nothing to do with the alleged settlement between the parties. In case any settlement has been arrived at it is for the applicants/appellants to comply with the terms of the settlement and to make upfront payment if any from its own funds. This Tribunal vide order dated 17.8.2017 has already rejected the prayer of the applicants/appellants that they are entitled to return of the amount lying with this Tribunal on the basis of Supreme Court's judgment in Axis Bank v. SBC Organics, III (2016) SLT 341. That order, Counsel for the applicants submits, was not challenged before any higher Court. Therefore, in my view, there is no justification for reviewing that order. The part of the order dated 17.8.2017 passed by me is reproduced below:
"I have heard Counsel for the parties on the application moved by the applicant/appellant in the disposed of appeal for return of the pre-deposit made by it at the time of filing of the appeal.
After hearing Counsel for the parties I find that there is a serious controversy which is being examined by the DRT in different S.As, some of which stand filed by the applicant itself and some by the respondent ARC and some other Banks also against their borrowers including the applicant herein. The controversy is that loans had been got sanctioned and disbursed from different financial institutions/Banks by the borrowers including the present applicant by placing at the disposal of the Banks same properties. These contentions were raised on behalf of the respondent ARC before the Hon'ble Supreme Court, where the matter had reached after this Tribunal had earlier rejected the applicant's prayer for release of the pre-deposit money. When the applicant's SLP was pending before the Hon'ble Supreme Court, came to be pronounced a decision by the Apex Court in the case of Axis Bank v. SBS Organics wherein the Hon'ble Supreme Court held that amount of pre-deposit upon disposal of an appeal has to be returned to the depositor only. The Hon'ble Supreme Court however, in the case of the present applicant, while noticing the relevant observations in the SBS Organics judgment in the final order passed in the applicants SLP did not grant the relief of refund of the pre-deposit amount to the applicant herein but instead, after setting aside the order of Hon'ble High Court as well as of this Tribunal, remanded back the matter to this Tribunal for taking fresh decision after hearing both the parties and they were given liberty to raise all the contentions before this Tribunal.
It has been submitted by learned Counsel for the applicant that once the Supreme Court has laid down the law that pre-deposit has to be returned back to the depositor, nothing more needs to be looked into by this Tribunal now and only order which would require to be passed is for return of pre-deposit amount to the applicant/depositor.
On the other hand, learned Counsel that the respondent ARC has submitted that if the Hon'ble Supreme Court had not found any substance in the opposition raised by the respondent ARC that this was a case of multiple mortgages in favour of different Banks by playing fraud, the Hon'ble Supreme Court itself would have directed return of the pre-deposit amount to the applicant herein. It has also submitted that though at one stage respondent ARC itself was also claiming release of pre-deposit amount in its favour but now it has decided to wait the result of the investigation into the said claim made by it that this a case where loans had been got sanctioned/disbursed from different Banks by playing fraud and creating multiple mortgages in respect of the same properties and since all these controversies are still pending in the SAs which Banks have filed against each other also challenging the other Bank's right to sell the mortgaged properties claiming the same to have been validly mortgage in their favour.
In my view, these facts are sufficient enough which make the judgment of the Hon'ble Supreme Court in SBS Organics case not applicable to the facts and circumstances of this case and since the Supreme Court itself has remanded the matter to this Tribunal to examine all aspects of the matter, I have come to the prima facie conclusion that the amount of pre-deposit during the pending proceedings before DRT should not be released in favour of the applicant. Consequently, the application for refund is rejected. It is, however, made clear that the said amount will be subject to further orders which this Tribunal may pass after the DRT decides the SAs between the Banks and the borrowers/mortgagors, Once that is done all the parties concerned will be at liberty to revive this matter at that stage when again appropriate fresh orders will be passed in accordance with law."
Earlier to that my learned predecessor Chairperson had rejected the prayer of the ARC for release of the pre-deposit amount vide order dated 20.3.2015 which order is also reproduced below:
"The respondent Assets Reconstruction Company (India) Ltd. (ARCIL) has filed a Miscellaneous Case No. 790/2014 praying for issuing direction to the Registrar of this Tribunal to release the amount of Rs. 1,39,25,000 in favour of respondent ARCIL on the ground that the three out of four appeals filed by the appellants had been dismissed."
On 5.3.2015, order was pronounced in the open Court allowing the prayer in the application giving liberty to the applicant/respondent to move an application before the Registrar of this Tribunal to release the amount in favour of the respondent. While dictating the order, it was felt that the case would require further consideration as out of the four appeals one was allowed and the order passed by this Tribunal in two of the appeals had been challenged before the Hon'ble High Court of Delhi. This aspect that out of four appeals one was allowed and also the fact that appeals were directed against interim orders whereas the S.As. were pending adjudication of the Tribunal below had escaped notice of this Tribunal while pronouncing the order. A need therefore was felt for reconsidering the prayer made in the application for release of this amount in favour of respondent ARCIL during the pendency of the S.As, more so, when the orders passed by this Tribunal in two appeals were under challenge and sounder consideration by the High Court. Accordingly, the application was directed to be put up for rehearing under intimation to the Counsel.
The case was accordingly listed for hearing on 9.3.2015 on which date the Counsel for the parties appeared before this Tribunal and were apprised of the reasons for which the case was listed for rehearing even though the order had been pronounced on 5.3.2015. On request of the Counsel, the case was adjourned for 20.3.2015 for arguments. The Counsel have accordingly been heard today in this background.
In order to appreciate the controversy to bring out the need for rehearing of this application, it may be appropriate to take note of the factual background of the case leading to filing of this application by respondent.
Appellant herein had filed four separate S.As. i.e. S.A No. 525/2012, M/s. Kuaan International v. ARCIL; S.A. No. 527/2012, M/s. Kumar Aluminium v. ARCIL; S.A. No. 528/2012, M/s. Kuaan Enterprises v. ARCIL and S.A. No. 526/2012, Cookers India v. ARCIL. These four S.As. were filed to challenge the action of the respondent financial institution (FI) in respect of a common mortgage properties vide which physical possession was being taken by a Court Receiver appointed by ACMM, Delhi on 29.9.2012 and on 1.10.2012. The plea in the S.As. was that the appellant had made representation under Section 13(3A), but the erstwhile Oriental Bank of Commerce had not disposed of the same in accordance with law.
The applicant/respondent FI came forward to file reply before the Tribunal below to urge that Oriental Bank of Commerce had assigned debt to the ARCIL. The plea also was that the SA applications were barred by limitation as the challenge to the possession notice dated 14.5.2003 was not filed within the stipulated time of 45 days.
The Tribunal did not find any prima facie case to grant interim relief and rejected the same. All issues were left open to be decided.
This order was challenged before this Tribunal. To maintain this appeal, the appellant prayed for deposit of 25% of the claimed amount. The Tribunal allowed this prayer and accordingly heard the appeal on deposit of 25% of the amount claimed which was Rs. 5,56,60,345/-. Directions were issued to deposit this amount by way of FDRs in the name of Registrar of this Tribunal.
Later on, respondent FI filed an application for dismissal of the Miscellaneous Appeal No. 39/2013. This Tribunal found that the view formed by the Tribunal below that there was no prima facie case for interim relief, did not suffer from any infirmity. The appeal was accordingly dismissed. The respondent ARCIL has now filed an application for release an amount of Rs. 1,39,25,000/- which is lying deposited with the Registrar of this Tribunal
It may need a notice here that the appellant herein had filed four separate appeals against the order passed by the Tribunal below, declining interim relief in the four separate SAs. This Tribunal dismissed the Misc. Appeal No. 39/2013 titled M/s. Kumar Aluminium v. ARCIL (arising out of S.A. No. 527/2012) as premature on 22.2.2013. Inward (Appeal) No. 643/2012 titled Kuaan International v. ARCIL (arising out of S.A. No. 525/2012) was dismissed on 26.2.2013. Misc. Appeal No. 259/2013 titled Kuaan Enterprises v. ARCIL (arising out of S.A. No. 528/2012) was dismissed on merits on 22.11.2013. Misc. Appeal No. 260/2013 titled Cooker India Domestic Appliances (P) Ltd. v. ARCIL (arising out of S.A. No. 526/2012) was allowed on 23.7.2013.
The appellant had then filed a review application against order passed in Inward (Appeal) No. 643/2012 and Misc. Appeal No. 259/2013, which were also dismissed on 25.3.2014 and on 11.4.2014 respectively. The respondent ARCIL had also filed a review in Miscellaneous Appeal No. 260/2013, which was dismissed on 9.4.2014.
The application filed by the appellant for refund of the equivalent amount of 25% deposited in Miscellaneous Appeal No. 39/2013 was dismissed on 4.3.2013. Against this order, the appellant filed a writ petition before the High Court. The High Court dismissed the writ petition by observing that the statement/concession made/given by the Counsel for the appellant to pre-deposit 25% of the claimed amount as one consolidated amount with regard to all the appeals/accounts, which was accepted by this Tribunal, and so the appellant now cannot be permitted to resile from the statement/concession. The Court ultimately found that there was no segregation of the amount claimed against four accounts.
The respondent ARCIL has now filed this application for release of the amount of Rs. 1,39,25,000/- which was deposited by the appellant as consolidated sum to maintain all the four appeals.
The notice of the application was issued to the non-applicant/appellant. Reply has been filed, which was taken on record. The appellant would term this application filed by ARCIL to be in gross abuse of process of law which would merit outright rejection. The appellant would also rely upon judgment of the Hon'ble Gujarat High Court in the case of Babu Ganesh Singh Deepnarayan v. Union of India & Anr., 2009(3) Bankers' Journal 516, to plead that there is no provision in the statute to release amount of pre-deposit made under second proviso of Section 18 of the SARFAESI Act. The appellant would also point out that the order passed by the Delhi High Court is challenged before the Hon'ble Supreme Court in SLP filed by the appellant. The order passed in the appeals titled M/s. Kuaan International v. ARCIL and Kuaan Enterprises v. ARCIL as referred to above have also been challenged before the Delhi High Court and the High Court has issued notices. It is also pointed out that all the four S.As. are pending before the Tribunal below and that the appeal titled M/s. Cookers India v. ARCIL has been allowed. Plea therefore is that no amount can be released. The appellant has accordingly opposed the application filed in this case.
I have considered the stand taken by the non-applicant/appellant afresh and would find substance in this plea. This consolidated amount was deposited with the Registrar of this Tribunal to maintain the four appeals filed to challenge the orders passed in four separate S.As. where interim prayer made by the appellants had been declined. Three appeals may have been dismissed and thus the prayer for interim orders would stand declined. All the four S.As. are still pending. One of the appeals has been allowed. The liability of the appellant is yet to be determined on the basis of challenge raised in these S.As. Obviously it would not be fair to release the amount in favour of the respondent while the issue regarding liability is being adjudicated. In case the amount deposited by the appellants is released in favour of respondent ARCIL pending adjudication of this S.A. it may lead to unfair enrichment if S.As. are later allowed. The fair approach thus under the circumstances would be to allow the amount remain with the Registrar of this Tribunal. Appropriate order can always be passed for disbursement of this amount after the disposal of the S.As. Additional factor which has prompted me to take this view is the fact that the orders passed by this Tribunal are under challenge before the High Court. The orders dismissing the appeals have thus not attained finality. It would not sound fair to release the amount in favour of the respondent at this stage later to find that the respondent is not entitled to receive the same. The fair approach thus is to retain this amount lying with the Registrar of this Tribunal as it is which would be in the interest of equity, fair play and justice and would not result in any prejudice to any of the parties.
The prayer for release of the amount in favour of the respondent is, therefore, rejected. The amount deposited by the appellants shall remain deposited with the Registrar of this Tribunal till further orders. The Registrar to renew the FDR from time-to-time. Parties would be at liberty to approach this Tribunal for disbursement of this amount once the lis is finalized one way or the other."
These fresh applications for refund of the pre-deposit amount are also rejected.