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Judgment
The appellant is aggrieved by an order passed by the learned Presiding Officer of Debt Recovery Tribunal-III, Delhi whereby the SecuritisationApplication(S.A.) filed by the respondent herein under Section 17(1) of the SARFAESI Act was disposed of and which order according to the submission of Mr. Pallav Saxena, learned counsel for the appellant Bank, made at the time of admission of this appeal, was as cryptic as possibly it could be and which order was passed totally bye-passing the legal provisions which have to be kept in mind by the Presiding Officers while deciding S.As.
The respondent was granted loan by the appellant Bank but he failed to stick the terms of re-payment which led to the declaration of his account as Non-Performing Asset(NPA). Then notice of demand under Section 13(2) of the SARFAESI Act was given to the respondent. Despite that, the respondent did not clear the dues of the appellant Bank. Steps were then initiated by the Bank to auction the property which the respondent had mortgaged in favour of the Bank to secure re-payment of the loan money. To save his property being taken over and auctioned the respondent approached the DRT with an application under Section 17(1) of SARFAESI Act challenging the declaration of his account as NPA, issuance of demand notice and possession notice, etc. At that time almost two croresof rupees were due from the respondent. Therespondent's S.A. was taken up ex parte on 23.01.2017 when notice of the S.A. was directed to be issued for the next day. On 24.01.2017 the following order was passed by the learned Presiding Officer of DRT:-
Heard both sides on interim relief. It is submitted that the limit is Rs. 1.60 crores and now the balance outstanding amount is Rs. 1,73,08,071/- and that the security applicant intends to regularize the account. It is further submitted that the applicant is willing to deposit Rs. 4.00 lacs today itself and Rs. 2.00 lacs by tomorrow and undertake to regularize the account by paying the balance overdue amount. Whereas the counsel for the respondent bank submitted that the loan was already declared NPA and the borrower required to pay 60%. The counsel for the applicant submitted that if the respondent bank is not restrained the applicant will suffer losses. The counsel for the applicant submitted that today he is ready to pay Rs. 4.00 lacs and Rs. 2.00 lacs by tomorrow and the applicant will regularize the account provided he is granted some time. In the facts and circumstances of the case, the applicant is directed to deposit Rs. 4.00 lacsbefore taking possession and Rs 2.00 lacs by tomorrow and file affidavit undertaking by tomorrow to regularize the account. On this condition, the Receiver is restrained from taking possession of the property in question today, in default the respondent bank will be free to take possession of the property through the same Received without any specific order from this Tribunal.
According to the submission of the learned counsel for the appellant Bank the said order passed on 24.01.2017 was as good as an ex parte order inasmuch as the Bank was not even given breathing time to respond to the misconceived S.A. It was submitted by the counsel for the Bank that the Bank was restrained from proceeding ahead with its SARFAESI measures to recover crores of 'public money'totally ignoring the public interest and passing an order which as good as an unconditional stay order inasmuch as only a small amount of Rs. 6lacs was directed to be paid to the Bank as against the huge demand of almost two crores of rupees. Then on 28.02.2017, the following order was passed by the DRT:-
The counsel for the security applicant submits that as per order dated 24.01.2017 passed by this Tribunal he has deposited a sum of Rs. 6.00 lacs and further undertakes to pay the amount to get regularize has account.
In view of the above, the securitization applicant is further directed to deposit another sum of Rs. 16.00 lacs within 45 days with the bank; in default, the bank shall be at liberty to take physical possession of the property in question through the very same receiver without further intervention of this Tribunal.
The interim order already passed shall continue.
The respondent did not pay even that much meager amount to the Bank as directed by the DRT and instead, he moved an application(being I.A.No. 598/2017) for extension of time for making the payment in terms of the order dated 28.02.2017. The matter was then pre-poned for hearing from 18.05.2017 to13.04.2017 when the following final order was passed by the learned Presiding Officer disposing of the S.A. itself without even putting the S.A. to trial:-
"Heard both the sides, the counsel for applicant submits that applicant has already deposited a sum of Rs.16.00 lacs with the bank as per the direction of this Tribunal and thereafter met with an accident, therefore, could not pay the amount up-to-date and prayer that receiver may be restrained from taking possession of the property in question which is strongly opposed by other side.
In this facts and circumstances of the case, the applicant is hereby directed to pay Rs.5.00 lacs on or before taking the physical possession of the property in question and thereafter clear the entire amount due within three months; in default, the bank is at liberty to take the possession of the property in question through very same receiver.
Till then the court receiver is hereby restrained from taking the physical possession of the property in question.
With the above direction, nothing remains to be decided in the present matter. Hence, the present S.A., as well as I.A.,are disposed of.
The date already given in S.A. on 18.05.2017 is hereby cancelled.
File be consigned to record."
The appellant Bank then filed the present appeal challenging the legality of the said order of the DRT. At the time of final hearing of the appeal, none had appeared on behalf of the respondent and, therefore, only counsel for the appellant Bank was heard.
A perusal of the DRT's case file shows that in three hearings the S.A. was disposed of by the learned Presiding Officer of the Tribunal below. On 23.01.2017 notice of the S.A. was given to the Bank for next day when without even giving any time to the Bank to respond to the allegations made in the S.A. interim relief against the dispossession of the respondent herein from the mortgaged property was given to him. Though a condition of payment of Rs. six lacs to the Bank was imposed upon the security applicant but, as was rightly submitted by the learned counsel for the appellant, that was as good as an unconditional stay order considering the fact that the amount due from the borrower was almost two cores of rupees at that time. I am in full agreement with the submission of the learned counsel for the appellant that was no way of considering the prayer for interim relief by the learned Presiding Officer without even asking the Bank to come forward with its defence. The learned Presiding Officer was bound to examine whether there was any prima facie made out by the security applicant before him or whether balance of convenience was in favour of the security applicant or in favor of the Bank which was to recover crores of public money and the security applicant had not even pressed into service any of the grounds of challenge to the measures initiated by the Bank to recover public money. The learned Presiding Officer did not even examine as to who out of the two litigating parties before him would suffer irreparable loss if the interim relief being sought for by the defaulting borrower was declined. In these type of cases where recovery of huge public money is involved another aspect, which is of paramount importance i.e. 'public interest' was also not kept in mind by the learned Presiding Officer while granting almost blanket stay orders against the Bank and unconditional relief to the defaulting borrower.It was contended that this in various judgments of the Hon'ble Supreme Court guidelines were laid down which have to be kept in mind by Courts/Tribunals while dealing with prayers for grant of interim reliefs against recoveries of public monies but despite that the learned Presiding Officer in the present case had granted interim relief by orders which are totally in the teeth of those judgments of the Hon'ble Supreme Court.
Hon'ble Supreme Court in the case of "United Bank of India vsSatyawatiTandon", 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 Banks under SARFAESI Act which had the effect of defeating the object of speedy recoveries of Banks' 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 SatyawatiTandon's case(supra) but way back in the year 1984 also same views were expressed in a judgment reported in its judgment reported in AIR 1985 SC 330 : 1985 SCR (2) 190, "Assistant Collector of Central Excise ChandanNagar, West Bengal vs. Dunlop India Ltd. and 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 Art. 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 publicinterest................................................................................
..................."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 Art. 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 bonafide 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 have 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 facia case. There is the question of balance of convenience. There is the question of irreparable injury. 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(l) 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. Vs. Prem Heavy Engineeing Work", (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 and Another v. The Collector of Customs, Calcutta", 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....."
In the present case the learned Presiding Officer had not cared to keep in mind the aforesaid legal position settled by the Apex Court while disposing of the prayer of the defaulting borrowers for interim injunction restraining the appellant secured creditor from dispossessing it from the mortgaged asset. If the aforesaid are the views of the highest Court of the land wherein it has been categorically held that not keeping mind the law laid down by the Apex Court amounts to judicial impropriety, 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.
It was also rightly submitted by the learned counsel for the Bank that the learned DRT while granting huge relief to the defaulting borrower, respondent herein, did not even appreciate that the borrower/security applicant had failed to pay to the Bank even the fraction of the amount due from him which he was directed to pay on 28. 02.2017 while extending the ad interim relief already granted to him. Thus, there was no real disposal of the S.A. in accordance with law and the S.A. was decided as if only interim relief was the subject matter for consideration before the DRT. It was submitted by the counsel for appellant that disposal of the S.A. was also totally against the principles of natural justice as no opportunity was given to the Bank to oppose the S.A. . As far as the respondent is concerned he did not even bother to have his case put forth at the time of hearing of the present appeal. In fact, he had nothing to argue in favour of the impugned order and was simply happy with the blanket stay order passed in his favour and against the appellant Bank in his S.A.
The impugned order, thus, cannot be sustained at all. It has been passed in the teeth of various decisions of the Hon'ble Supreme Court's and without following the procedure contemplated under Section 17 of SARFAESI Act which provides that if after examining the material on record and evidence of the parties the DRT comes to the conclusion that the measures initiated by the secured creditor under SARFAESI Act for the recovery of its dues from its defaulting borrower were not in accordance with law then the measures will be quashed and order for restoration of possession of the mortgaged asset to the borrower can also be ordered in case where under Section 13(4) of SARFAESI Act the borrower had stood already dispossessed from the property which had been mortgaged in favour of the lending bank to secure the repayment of the loan money which is 'public money' and cannot be left unrecovered.
This appeal is accordingly allowed. The order dated 13.04.2017 passed by the DRT after pre-poning the date of hearing from already fixed 18th May,2019 is set aside and the S.A. No. 18/2017 would stand dismissed.
Record of the DRT be sent back with a copy of this order.