Muraleedharan vs Authorised Officer,Karanataka Bank Ltd

Gopinath P., J

Petitioners have approached this Court, being aggrieved by the fact that a Securitisation Application filed by the petitioners before the Debts Recovery Tribunal, challenging the proceedings initiated by the respondent bank under the provisions of the SARFAESI Act, has not been numbered by the registry on the ground that the petitioners have not remitted sufficient court fees.

Learned counsel appearing for the petitioners would submit that fee on Securitisation Applications is to be paid in terms of Rule 13 of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as ‘the Rules’). It is submitted that the Rules contemplate an application under Section 17 of the SARFAESI Act by the borrower (including the mortgagor, co-obligant etc.,) and any other person. It is submitted that a reading of Rule 13(2) of the Rules indicate that the fee to be paid by an aggrieved person, other than the borrower, is that under Rule 13(2)1(c) and (d) of the Rules and not under Rule 13(2)1(a) and (b) of the Rules. It is submitted that the failure to consider the case of the petitioners as one falling under Rule 13(2)1(c) and (d) of the Rules, is illegal and unsustainable.  It is submitted that the petitioners are complete strangers to the transaction and the petitioners are neither mortgagors nor co-obligants in respect of loans extended to respondent Nos.3 to 5.

Learned counsel appearing for the respondent bank vehemently opposes the grant of any relief. He submits that the documents available with the respondent bank indicate that the petitioners are co-obligants as well as mortgagors in respect of the loan availed by respondent Nos.3 to 5. It is submitted that the petitioners have affixed their signatures on the loan documents and have also deposited a title deeds in respect of their properties for the purposes of creating a mortgage by deposit of title deeds. It is submitted that in such situation, any Securitisation Application filed by the petitioners under Section 17 of the SARFAESI Act can be entertained only if court fees is paid in terms of Rule 13(2)1(a) and (b) of the Rules and not in terms of Rule 13(2)1(c) and (d) of the Rules.

Learned counsel appearing for the petitioners would submit that it is the case of the petitioners that they have never executed any loan document and they have not mortgaged their properties with the respondent bank as security for loans advanced to respondent Nos.3 to 5. It is submitted that the question as to whether the petitioners are liable to pay court fees under Rule 13(2)1(a) and (b) of the Rules or whether the petitioners are only liable to pay court fees under Rule 13(2)1(c) and (d) of the Rules , will depend on the factual determination to be made by the Tribunal regarding the claim put forth by the petitioners. It is submitted that the petitioners are entitled to their day in court on the basis of assertion that they are not borrowers, guarantors or mortgagors and therefore, the application filed by the petitioners under Section 17 of the SARFAESI Act will have to be considered on merits on the petitioners paying court fees as contemplated by Rule 13(2)1(c) and (d) of the Rules. He also places reliance on the judgment of the Madras High Court in Shah A.L V. Authorised Officer, State Bank of Hyderabad and Others [2016 KHC 3204] and the judgment of the Karnataka High Court in Kumaraswamy K.L. V. Dhanalaxmi Bank Ltd., Bangalore and Others [2016 KHC 2538], to contend that he is entitled to succeed.

Learned counsel appearing for the respondent bank would then point out that if the petitioners are aggrieved by the decision of the registry, they have to first file an appeal before the Debts Recovery Tribunal as contemplated by Rule 5(5) of the Debts Recovery Tribunal (Procedure) Rules and there is no cause of action to file this Original Petition under Article 227 of the Constitution of India. It is pointed out with reference to Ext.P3 that such an appeal has already been filed by the petitioners and the same is pending consideration before the Debts Recovery Tribunal.

Having heard the learned counsel appearing for the petitioners and the learned counsel appearing for the respondent bank, I am of the opinion that notwithstanding the fact that Ext.P3 appeal filed under Section 5(5)of the Debts Recovery Tribunal (Procedure) Rules is pending consideration before the Debts Recovery Tribunal, petitioners can be granted relief in this Original Petition. If the proceedings under the SARFAESI Act are continued against the properties of the petitioners, without the petitioners being given an opportunity to raise their contentions before the Tribunal, the same will cause serious prejudice to the petitioners. The petitioners cannot therefore wait for a disposal of Ext.P3 appeal and it is necessary that their Securitisation Application to be considered on merits. The question as to whether they are liable to pay fee under Rule 13(2)1(a) and (b) of the Rules or under Rule 13(2)1(c) and (d) of the Rules would depend on the findings to be rendered by the Tribunal on the contentions taken by the petitioners before the Tribunal. I am therefore of the opinion that this Original Petition can be disposed of in the following manner:-

(i) Ext.P2 is quashed. On the petitioners satisfying the fee payable in terms of Rule 13(2)1(c) or (d), as the case may be, the Securitisation Application filed by the petitioners shall be numbered and shall be placed before the Tribunal for adjudication, in accordance with law;

(ii) If the Tribunal finds that the case of the petitioners that they are not borrowers/co-obligants/guarantors or mortgagors is incorrect in any manner, the petitioner will be liable to pay the court fees payable in terms of Rule 13(2)1(a) or (b), as the case may be and if the petitioners fail to pay the said amount, the said amount may also be recovered from the petitioners, in accordance with law.

The Original Petition is disposed of as above.