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Judgment
Heard the Learned Counsel for the parties and perused the record.
Instant Appeal is preferred against a judgment and order dated 29th July, 2022 passed by the Learned DRT-2 Kolkata allowing the S.A. No. 304 of 2016 (M/s. Karishma Enterprises and others versus Punjab & Sind Bank and another).
As per pleadings of the parties, the Respondents herein preferred a Securitisation Application under Section 17 of the SARFAESI Act, 2002 (hereinafter referred to as the ‘Act’) challenging the measures initiated by the Appellant Bank under Section 13(4) of the Act wherein the possession notice was affixed on the secured assets on 14.06.2016 and the relief was sought for setting aside the action taken by the Bank in pursuance of Notice under Section 13 (2) of the Act dated 01.01.2010 and Possession Notice dated 14.06.2016. As per the S.A. Application, the Respondent No. 2 namely Ajay Kumar Luharuwala approached the Bank for financial assistance on 03.04.2008 which was sanctioned. The other Respondents were the mortgagors. Loan Account became irregular and was classified as NPA. Thereafter, Securitisation action was initiated by the Bank which was challenged by the Respondents.
Opposition was filed by the Bank submitting that the financial assistance was allowed by the Bank in favour of the Respondents. Account became irregular and was rightly classified as NPA on 31.12.2009. Thereafter, Securitisation action was initiated by the Bank. Further, O.A. No. 75 of 2011 was filed before the DRT which was allowed on 30th April, 2015.
Learned DRT after hearing the Learned Counsel for the parties, observed that certain pleas were raised by the Securitisation Applicants as well as the Bank and framed two issues.
“(1)Does any mortgage is subsisting in favour of Bank as mentioned in Para 13(4) i.e. Ranigunj property
(2)if so whether the said mortgage is valid under law or not?”
Thereafter, Learned DRT went on to observe that despite passing of the specific order, the mortgage documents have not been produced by the Bank. Hence, the only option available to the Tribunal is to draw adverse inference that no equitable mortgage was created in favour of the Bank. Accordingly, allowed the S.A.
A bare perusal of the impugned judgment would show that it is an unreasoned, cryptic order passed by Learned DRT. Law is very well settled that the reasons are soul of a judicial order as has been observed by the Hon’ble Supreme Court in Brijmani Devi -vs- Pappu Kumar and Another, reported in (2022) 4 SCC 497, The Hon’ble Apex Court held as under:
“22.On the aspect of the duty to accord reasons for a decision arrived at by a court, or for that matter, even a quasi-judicial authority, it would be useful to refer to a judgment of this Court in Kranti Associates (P) Ltd., v. Masood Ahmed Khan, (2010) 9 SCC 496 wherein after referring to a number of judgments this Court summarised at para 47 the law on the point. The relevant principles for the purpose of this case are extracted as under:
(a)Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well.
(b)Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even administrative power.
(c)Reasons reassure that discretion has been exercised by the decision-maker on relevant grounds and by disregarding extraneous considerations.
(d)Reasons have virtually become as indispensable a component of a decision making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies.
(e)The ongoing judicial trend in all countries committed to rule of law and constitutional governance is in favour of reasoned decisions based on relevant facts. This is virtually the lifeblood of judicial decision-making justifying the principle that reason is the soul of justice.
(f)Judicial or even quasi-judicial opinions these days can be as different as the Judges and authorities who deliver them. All these decisions serve one common purpose which is to demonstrate by reason that the relevant factors have been objectively considered. This is important for sustaining the litigants’ faith in the justice delivery system.
(g)Insistence on reason is a requirement for both judicial accountability and transparency.
(h)If a Judge or a quasi-judicial authority is not candid enough about his/her decision-making process then it is impossible to know whether the person deciding is faithful to the doctrine of precedent or to principles of incrementalism.
(i)Reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or "rubber-stamp reasons" is not to be equated with a valid decision-making process.
(j). It cannot be doubted that transparency is the sine qua non of restraint on abuse of judicial powers. Transparency in decision-making not only makes the Judges and decision-makers less prone to errors but also makes them subject to broader scrutiny.
(k)In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of "due process".
“24.The Latin maxim “cessante ratione legiscessat lex” meaning “reason is the soul of the law, and when the reason of any particular law ceases, so does the law itself, is also apposite.”
Insistence on recording of reasons is meant to serve the wider principles of justice that justice must not only be done it but must also appear to be done as well. Insistence of reasons is a requirement for both judicial accountability and transparency. Transparency in decision making not only makes the Judges and decision makers less prone to errors
Learned DRT is performing its judicial function, principles of natural justice has to be followed by the DRTs, as provided under the SARFAESI Act 2002 as well as Recovery of Debts Due to Banks and Financial Institutions Act, 1993. One of the basic cardinal principles of natural justice that an opportunity of hearing should be given to the parties. Further, the findings recorded by the Tribunal must be supported with the reasoning to arrive at a particular finding. Merely recording the submission of the Learned Counsel of the parties and thereafter not recording its own view is nothing but arbitrary exercise of powers which could not be permissible under the law.
Bare perusal of the order would reflect that the Learned DRT has not considered even a single plea taken by both the parties in the S.A. proceedings. Simply by making observations in Para 6 (III) and (V), Learned DRT allowed the S.A. merely on the basis of surmises and conjectures which is not in accordance with law. In such circumstances, since the Learned DRT has not recorded any findings as issues raised by the parties, we are left with no option but to remand back the matter to the Learned DRT to decide it afresh after affording an opportunity of hearing to the parties in accordance with law.
ORDER
Appeal is allowed. Impugned order dated 29th July, 2022 passed by Learned DRT -2 Kolkata is set aside. Learned DRT-2 Kolkata is directed to decide the S.A. afresh after affording an opportunity of hearing to the parties in accordance with law. All the issues raised by the parties in their pleadings are kept open to be decided by Learned DRT. Since this is a matter of 2016, it is expected that the Learned DRT -2 Kolkata should make an endeavor to decide the S.A. expeditiously as per its own roster. However, if any action under the SARFAESI Act is initiated by the Bank/ the Respondents herein would be at liberty to approach the DRT for seeking appropriate relief which should be considered by the Learned DRT appropriately in accordance with law. Parties are directed to appear before the Learned DRT on 28th July 2026. It is expected that the Bank before initiating any action under the SARFAESI Act shall wait for the decision of the DRT in pending S.A. However, if any adjournment is being sought by the Securitisation Applications, Learned DRT would be at liberty to vacate this order.
No order as to costs.
File be consigned to Record room.
Copy of the Judgment/Final Order be uploaded in the Tribunal’s Website.
Order dictated, signed, and pronounced in open Court.