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Judgment
Brijesh Sethi, Chairperson
Appellant has filed the present appeal aggrieved against the order dated 08.05.2023 passed by the learned DRT-II, Delhi in S.A. No.97/2023, whereby the learned DRT has refused to grant interim relief prayed for by the appellant. The order under challenge runs as under:-
"SA/97/2023 SANSKAR BHARTI FOUNDATION Vs ADITYA B1RLA FINANCE LTD.
08.05.2023
Present: Sh. C. S. Pasricha Advocate for the SA applicant.
Sh. Ravi Gupta Senior Advocate along with Sh. Maheep Datta and Sh. Karan Dev Ray Advocates for respondent Fl (Caveator).
This Securitisation Application has been filed under Section 17 (1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Heard on interim relief.
Sh. C.S. Pasricha Advocate for the applicant argued that the respondent Fl was to take possession of the property on 09.05.2023. It was further argued that the applicant was a lessee in whose favour registered lease deed was there before coming into existence of the mortgage in favour of the respondent FL On the other hand, Sh. Ravi Gupta, Senior Advocate for the respondent Fl argued that the quantum of loan in the account in question was around 112 crores and the applicant was also a co-borrower. It was further argued that before the Arbitrator, it was admitted by the applicant that the applicant owed money to the respondent Fl.
It was argued by Sh. C.S. Pasricha Advocate that the applicant was shown as a tenant in the revenue record and respondent No. 3 was shown as a borrower for an amount of about Rs. 6 crores. Learned Senior Advocate drew the attention of this Tribunal towards order dated 29.03.2022, passed by the Hon'ble Arbitrator mentioning therein, that Sh. Ma yank Aggarwal Advocate for respondent No. 3 (applicant herein) had received funds from the claimants, i.e. Aditya Birla Finance Limited and he further stated that he had no further information with respect to the same on that day and respondent No. 3 would file reply within 2 weeks.
It was argued by Sh. Ravi Gupta, Senior Advocate that till date, no affidavit was filed before the Hon'ble Arbitrator. Sh. C.S. Pasricha Advocate argued that in terms of order No. 6 dated 29.03.2023, the applicant herein had filed affidavit dated 08.04.2023, which was taken on record. There is merit in the argument advanced by Sh. C.S. Pasricha Advocate. It was further argued by Sh. C.S. Pasricha Advocate that applicant had sought deletion from the arbitration proceedings and in the alternative sought discovery of documents from the claimant and co-respondents. It was further argued by Sh. C.S. Pasricha Advocate that the statement made by Sh. Mayank Aggarwal Advocate before the Honible Arbitrator, was subsequently explained in the affidavit.
Sh. Ravi Gupta, Senior Advocate drew attention of this Tribunal towards sanction letter dated 08.06.2017 at page No. 10 whereby, there was no signature of the applicant but on 16.11.2018, the sanction letter was there, which was also issued in the name of present applicant in the capacity of a co-borrower and the same was duly signed on behalf of the applicant at page no.14. He further drew attention of this Tribunal towards deed of guarantee dated 16.11.2018 executed by one Sh. Ashok Kumar Gupta and argued that the said Sh. Ashok Kumar Gupta, was signatory of the present SA. It was further argued by Sh. Ravi Gupta, Senior Advocate that Sh. Ashok Kumar Gupta was a guarantor. It was further argued by Sh. Ravi Gupta, Senior Advocate that the irrevocable Power of Attorneys carried the seal of the applicant society. It was argued by Sh. C.S. Pasricha Advocate that Sh. Amit Rana had no authority with regard to DPS Ambala. This argument of Sh. C.S. Pasricha was scotched with the help of Resolution dated 20.11.2018, of the applicant society whereby, he was duly authorized with regard to the land of DPS at Ambala and this Resolution was also signed by Sh. Ashok Kumar Gupta and other office bearers of the Society. Faced with the above situation, Sh. C.S. Pasricha Advocate disputed the Resolution and said that it was a fake document. A document cannot be said to be fake merely because it is called so by a person against whom it is pitted.
It was further argued by Sh. Ravi Gupta, Senior Advocate that there was no reply to the notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, by the applicant, despite receipt of the same.
The filing of no reply to the notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, there being Resolution signed by Sh. Ashok Kumar Gupta and other office bearers of the Society including Sh. Ashok Kumar Gupta, the applicant herein, cannot be allowed to wriggle out of the liability of the same merely by branding the same as a fake document at this nascent stage. The candid statement made by Sh. Ma yank Aggarwal Advocate before the Nonlife Arbitrator with regard to the fact of portraying the applicant as a borrower of the respondent F1, cannot be lost sight of. Same is the position with regard to the issuance of sanction letter in favour of the applicant. In the facts and circumstances of the case, there is no prima facie case in favour of the applicant. Therefore, interim relief cannot be granted to the applicant. However, the observations recorded herein are for the purpose of interim relief and the same shall have no bearing upon the merits of the case.
Reply to the SA be filed within 30 days of receipt of the paper book. Thereafter, rejoinder be filed. To come up on 28.07.2023 for arguments.
Sd/-
(M.M. Dhonchak)
Presiding Officer DRT-2,
Chandigarh."
Facts of the case as narrated in the appeal and argued by the learned counsel for the appellant are as under:-
Appellant is a society registered under the Societies Registration Act on 09.02.2005 and formed in the name of "Sanskar Bharti Foundation" with seven persons, namely, Mr. Krishan Kumar Gupta (President), Mr. Ashok Kumar Gupta (General Secretary), Mr. Vijay Maingi (Vice President), Mr. Vijay Goal (Treasurer) and Mr. Madan Lal Goyal (Executive Member), Smt.Indra Gupta (Executive Member) and Smt. Poonam Goyal (Executive member) as its government body members. In the year 2005, Mr. Krishan Kumar Gupta and Mr. Ashok Kumar Gupta along with another person Mr. Somesh Goyal jointly purchased 34 Bigha 7 Biswa agricultural land vide two registered sale deeds.
The appellant is a tenant in the property in question since 2005 by virtue of irrevocable registered lease deed dated 10.08.2005.
It is further stated that appellant had taken franchise from The Delhi Public School Society, New Delhi for establishing a Senior Secondary School at DPS School at Ambala and the same was registered vide agreement dated 30.06.2005. Thereafter, Mr. Krishan Kumar Gupta, Mr. Ashok Kumar Gupta and Mr. Somesh Goyal leased out the aforesaid land to the Society i.e. Sanskar Bharti Foundation (Regd.) for a period of 99 years vide registered lease deed dated 10.08.2002 to run a school/educational institutes.
It is submitted that the appellant Society and the aforesaid owners of the land jointly applied for financial assistance from PNB for Rs.8.75 crores for construction of school building as well as running of the school, which was duly sanctioned. It is further stated that some members of the society kept their individual properties as collateral security including the subject land for obtaining the aforesaid facilities. Subsequently, the aforesaid facilities were taken over by different banks and lastly by HDFC bank. In the year 2019, the owner of the leased land vide registered sale deed dated 17.01.2019 sold the aforesaid land to the respondent no.3 subject to the registered lease deed with the appellant, which was accepted by the vendee/respondent no.3.
It is next submitted that the appellant came to know about the dispute between respondent no.3 and the respondent no.1 only when a notice of contempt was received by the appellant in the proceedings under the Arbitration and Conciliation Act 1996 initiated by Aditya Birla Finance Ltd vs. Sidhartha Educational and Welfare Society & Ors, wherein the appellant had been arrayed as respondent no.3. It is submitted that upon directions of the Ld. Sole Arbitrator, the appellant had filed detailed affidavit, but till date the respondent has not filed reply. Even on 23.04.2023 the respondents no.2 to 5 herein in their submissions before Ld. Arbitrator stated that appellant is "stranger" to the present proceedings. It is submitted that the appellant further came to know that Aditya Birla Finance Ltd. had resorted to proceeding before the Hon'ble Delhi High Court in OMP (Corn) No.398/2021 where the Hon'ble High Court had passed directions on 25.03.2022 against DPS School at Panipat and not against the appellant.
Ld. Counsel for appellant further submits that Ld. District Magistrate Ambala vide order dated 06.03.2023 had issued notice under Section 14 of the Act 2002 for taking over physical possession of the property of the appellant on 09.05.2023. Feeling aggrieved by the measures taken by the respondent Fl the appellant has filed the S.A. No.97/2023 before Ld. DRT-II, Chandigarh in which the respondent no.1, without filing any reply to the SA, has filed a bunch of documents containing 283 pages. It is further submitted that after going through the said documents, it has come to the knowledge of the appellant that the said documents were apparently forged/fabricated/manipulated and had even been suppressed from the authorities/Arbitral Tribunal. It is further submitted that the alleged sanction letter dated 08.06.2017, first document containing
10 pages was not signed by the authorized representative/signatory of the appellant Society. Moreover, the said documents has mentioned the appellant Society as "borrower (Ill) Delhi Public School, 77, Milestone, G.T. Road village Karhans, Panipat 132103", which was never the address of the appellant Society. It is submitted that the question of knowledge of the said sanction of loan, therefore, can never be with the appellant Society. It is also submitted that even otherwise the respondent Fl is not competent to sanction such a huge loan of Rs.110 crores against the ownership of the land worth of Rs.8.00 crores, that too, with the rider of the perpetual lease deed of 99 years.
It is next submitted that the Ld. DRT did not grant stay vide order dated 8.5.2023 and directed the respondent no.1 to file reply to the S.A. The appellant, therefore, are seriously aggrieved and have approached this Tribunal for setting aside the aforesaid order of the Ld. DRT.
The appellant has challenged the impugned order on the following grounds:
Ld. DRT has failed to appreciate that the respondent no.1 without filing any reply to SA, had filed a bunch of documents containing 283 pages, which was a surprise for the appellant herein and the appellant even could not go through the said bunch of documents on which the submissions were made by the senior counsel for the respondent no.1 herein. After going through the said documents, it is revealed to the appellant that the said documents were apparently forged/fabricated/manipulated and have been even suppressed from the authorities/Arbitral Tribunal where the proceedings are pending. The documents placed on record by the appellant in support of the SA can easily be compared with the signature of the authorized signatories of the appellant's society, the details of the society, sanction letter and other documents filed by the respondent no.1 on the first day of hearing. It is not out of place to mention here that the alleged sanction letter dated 8.6.2017, first document containing 10 pages, was not at all signed by the authorized representative/signatory of the appellant society. Moreover, the same has been mentioning the address of the appellant society as Borrower (Ill) "Delhi Public School, 77, Milestone, G.T. Road village Karhans, Panipat 132103", which was never the address of the appellant society, hence, the question of knowledge of the said sanction of loan can never be with the appellant society as the appellant society never ever applied for said loan nor even could be competent to have sanction such huge loan of Rs.110 crores as against the ownership of the land worth Rs.8 crores that too with the rider of the perpetual lease deed of 99 years. The whole story has been concocted by the respondent No.4 and 5 in connivance with the authorized officer of the respondent No.1, who has never visited the site of the appellant society for the purpose of verification etc. before granting/sanctioning of alleged loan.
The relationship of the appellant society and the respondent No.3 to 5, was firstly came in existence after the execution of sale deed dated 17.1.2019 only, where the owners of the said land i.e. some of the members of the society sold the land along with lease hold right to respondent No.3. The question of granting/sanctioning of alleged loan in the year 2017 by way of sanction letter dated 08.06.2017 to the appellant society does not arise because there is was no relation between the principal borrower and the appellant herein, nor the appellant Society had ever needed or applied for the said finance.
Ld. DRT failed to appreciate that the respondent No.4 was never ever involved with the appellant society nor even authorized by the society to sign on behalf of the appellant society which he had been projected as Authorised representative or secretary of the appellant society, when he had never been appointed as such.
Ld. DRT also failed to appreciate that entire documents were got signed by respondent No.4, who is the main culprit claiming either himself the AR and/or Secretary of the appellant Society which he was never and respondent No.1 had been entertaining him as such. Neither any authority and/or any resolution had been filed by the respondent in the entire documents filed till date including before the Ld. DRT.
Ld. DRT further failed to appreciate that the alleged loan of Rs.110 crores has nothing to do with the appellant society as the appellant Society is having no worth to the extent of Rs.110 crores, because if loan is to be sanctioned in its favour, the lender must have taken/given proper documents before sanctioning of the huge amount of loan which are missing.
Ld. DRT failed to appreciate that the appellant never admitted any amount of alleged loan being taken from any NBFC (respondent no.1) and as soon as the appellant came to know about its alleged involvement, the appellant immediately took the immediate steps.
Ld. DRT failed to appreciate that there was no question of receipt of any documents for NBFC as alleged address of appellant was shown of "Panipat" and not of "Ambala" where appellant had nothing. Thus the entire correspondence was manipulated.
Ld. DRT also failed to appreciate that the alleged Advocate Mr. Munish Gupta was never authorized/engaged by the appellant Society rather he was engaged by respondent No.4 and made a statement on behalf of the Society, which cannot bind the society as is clear from the vakalatnama filed before the Hon'ble High Court of Delhi in IMP No. 398/2021.
Ld. DRT failed to appreciate that the amount of Rs.4,89,67,187 dated 26.11.2018 came from NBFC in the account of Society was for release of title documents lying with the HDFC bank which were mortgaged and before that, property was mortgaged with PNB bank, Prashant Vihar, Delhi.
Ld. DRT failed to appreciate that alleged sanctioned letter was not signed by the Society or on its behalf but only addressed to Respondent No.2 that too on Panipat address not on Ambala address, .so question of knowledge of the letter does not arise. Moreover, in the year 2018, there was/is no connection of appellant for loan from respondent No.1 as it had never applied for the same.
Ld. DRT failed to appreciate that the same is the case with guarantee agreement, as Shri Ashok Kumar Gupta had never signed any such document. All his alleged signatures are forged and the same can be got compared from CFSL.
Ld. DRT failed to appreciate that the notice under Section 13(2) of the Act was never received, so question of its reply does not arise. Moreover, the appellant was/is having all legal permissible and genuine defence against the concocted story of the respondent No.1 in connivance with the respondent No.4, on the basis of which forged documents were procured for obtaining alleged loan, suppressing the true identity of the Society and by giving wrong information, details and members of society. The alleged letter head used by the respondent No.1 for admitting the alleged loan transaction is containing a phone No. 41687890, which belongs to some officer of respondent no.1. The appellant also reserve its right to initiate appropriate criminal proceedings against the respondents for fraud, cheating, forgery, perjury etc.
The Ld. DRT has failed to appreciate that the tenancy in favour of the appellant is on the basis of registered instrument. The lease is valid for a period of 99 years commencing w.e.f. 10.08.2005. The sale deed in favour of respondent no.3 clearly makes a mention of the same. Thus the respondent no.1, a financial institution having allegedly sanctioned the loan was admittedly well acquainted with the said lease which is evident from the sale deed.
The Ld. DRT failed consider that all documents were only signed by Amit Rana and not be any President/Secretary of the appellant society who had no authority as no such authority was ever given to him.
The Ld. DRT failed to consider that prior to January 2019 the appellant could not mortgage the land as the same was already mortgaged and title documents were with the HDFC bank, therefore, the sanctioning of the loan on 08.06.2017 is bad in law/illegal. It is matter of record that the appellant society had never applied for any such facility which is said to have been sanctioned by the appellant herein, thus, the action of the respondents are wholly illegal/without authority of law.
Ld. DRT failed to appreciate that the tenancy in favour of the appellant is much prior to the alleged mortgage which admittedly could be only after the sale deed which is of the year 2019 whereas the registered lease deed executed in favour of appellant is of 10.08.2005. At the time of execution and registration of lease deed dated 10.08.2005, the property in question was free from any loan, charge or encumbrance. The right in favour of the appellant is on the basis of registered lease deed dated 10.08.2005 by virtue of which, the appellant has become lessee in whose favour registered lease deed dated 10.08.2005 has been executed for 99 years, which is duly registered with the Sub Registrar. Consequently, the right in favour of the appellant to retain the premises as tenant existed since the year 2005 and subsequent mortgage will not have any effect upon the rights of the appellant in view of Section 48 of the Transfer of Property Act
"48. Priority of rights created by transfer. — Where a person purports to create by transfer at different times rights in or over the same immovable property, and such rights cannot all exist or be exercised to their full extent together, each later created right shall, in the absence of a special contract or reservation binding the earlier transferees, be subject to the rights previously created."
Ld. DRT failed to appreciate that once it is evident that the property is on lease with the appellant society, which is much prior to the alleged mortgage in favour of respondent no.1, the respondent no.1 cannot evict or proceed under the provisions of Securitization Act 2002 for dispossessing the appellant.
Ld. DRT failed to appreciate that the law in this regard is too well settled in Harshad Govardhan Sondagar Vs. International Asset Reconstruction Company Limited, 2014 (6) SCC 1, wherein para no.11 reads as under:-
"11.The first question that we have to decide is whether the provisions of the SARFAESI Act have in any way affected the right of a lessee to remain in possession of the secured asset during the period of a lease. A 'secured asset' has been defined in Section 2(zc) of the SARFAESI Act to mean the property on which the security interest is created. In case of an immovable property, a security interest is created in a secured asset by way of a mortgage in favour of the secured creditor There may be cases where before the mortgage is created in respect of an immovable property, the borrower had already leased out the immovable property in favour of a lessee either as the owner or as a person competent or authorized to transfer the immovable property in accordance with Section 7 of the Transfer of Property Act. If such a lease is made, by virtue of Section 8 fo the Transfer of Property Act, the lessee will have the right to enjoy the leased property in accordance with the terms and condition of the lease irrespective of whether a subsequent mortgagee of the immovable property has knowledge of such a lease or not.
A bare perusal of the same would reveal that it is clearly mentioned that in case if the tenancy is prior to mortgage, it is the tenant which will have the prior right upon the property, in question and the Respondent no.1 will not be entitled to evict the appellant from the property in question taking shelter of proceedings initiated under SARFAESI Act, irrespective of the fact whether the said Creditor is aware of the tenancy or not. However, in the case in hand, the lease in favour of appellant was well in the notice and knowledge of the respondent no.1 which is evident from the revenue record placed on record supra...
Ld. DRT failed to appreciate that the respondent no.1, being fully aware f the prior tenancy upon the property in question, which is evident from the sale deed and revenue record and even from the sale deed executed in favour of respondent no.3 which clearly makes a mention of existing tenancy, on the basis of which the respondent no.1 is claiming alleged mortgagee rights over the property in question, has accepted the same along with tenancy and thus now it cannot be made basis to claim any priority over the rights vested in the appellant being tenant/lessee.
Ld. DRT failed to appreciate that in the case Vishal N Kalsaria Vs. Bank of India, 2016 (3) SCC 762, wherein the right of the tenancy has been upheld. It is further stated that the property is covered under the provisions of the Haryana Urban (Control of Rent & Eviction) Act, 1973. As per the said enactment, the definition of tenant is provided u/s 2^(h) which reads as under:-
"2. Definitions — In this Act, unless there is anything repugnant in the subject or context, -
xxxxxx
h) "tenant" means any person by whom or on whose account rent is payable for a building or rented land and includes a tenant continuing in possession after the termination of his tenancy and in the event of such person's death, such of his heirs as are mentioned in the Schedule appended to this Act and who were ordinarily residing with him at the time of his death, but does not include a prson placed in occupation of a building or rented land by its tenant, except with the written consent of the landlord, or person to whom the collection of rent or fees in a public market, cart-stand or slaughter-house or of rents for shops has been framed out, or leased by a municipal, town or notified area committee;
A bare perusal of the above would reveal that a tenant is in the possession of the premises, even after termination of tenancy. However, in the case in hand, the tenancy is still continuing and is valid till 10.08.2014. Not only this, the appellant has been inducted as a tenant in the property by virtue of registered lease deed by owner/landlord. The property, in question, and the rights of the tenant are squarely covered by the Rent Act. As per the Judgment in the case of Vishal N Kalsaria (supra, the Securitization Act, 2002 does not override the Rent Act. Therefore, the appellant is a protected tenant. No eviction can be undertaken under the Securitization Act when the tenancy is well in notice of the respondent no.1 who has accepted the property alongwith tenancy in favour of appellant.
Ld. DRT failed to appreciate that even in the case of Bajarang Shyam Sunder Aggarwal Versus Central Bank of India 2020(1) AIR Bombary (BOMR) 297, it has been held that, in case if the tenancy is prior in time, no further action can be taken against such a tenant. The relevant except from the judgment reads as under:
"25. In our view, the objective of SARFAESI Act, coupled with the T.P. Act and the Rent Act are required to be reconciled herein in the following manner
a) If a valid tenant under law is in existence even prior to the creation of the mortgage, the tenant's possession cannot be disturbed by the secured creditor by taking possession of the property. The lease has to be determined in accordance with Section 111 of the TP Act for determination of leases. As the existence of a prior existing lease inevitably affects the risk undertaken by the bank while providing the loan, it is expected of Banks/Creditors to have conducted a standard due diligence in this regard. Where the bank has proceeded to accept such as property as mortgage, it will be presumed that it has consented that it has consented to the risk that comes as a consequence of the existing tenancy. In such a situation, the rights of a rightful tenant cannot be compromised under the SARFAESI Act proceedings.
b) If a tenancy under law comes into existence after the creation of a mortgage, but prior to the issuance of notice under Section 13(2) of the SARFAES1 Act, it has to satisfy the conditions Of Section 65A of the T. P. Act.
c) In any case, if any of the tenants claim that he is entitled to possession of a secured asset for a term of more than a year, it has to be supported by the execution of a registered instrument. In the absence of a registered instrument, if the tenant relies on an unregistered instrument or an oral agreement accompanied by delivery of possession, the tenant is not entitled to possession of the secured asset for more than the period prescribed under Section 107 of the T.P. Act."
Ld. DRT failed to appreciate that even otherwise the possession with the appellant is not at dispute rather is evidence from the documentary record placed (supra). The Act 2002 clearly provides that the respondent alleged secured creditor while proceeding against the secured asset would also required to serve all notices as required to be served upon the borrowers/mortgagor/ guarantors, to the person in possession of the property. Admittedly the possession is with the appellant since 2005 whereas the loan could only be after 2019 and the proceedings under Act 2002 are apparently much after 2019 and thus being the said proposition firstly the proceedings under Act 2002 are not available to respondent no.1 to evict the appellant from the property in question and secondly the appellant were not served with any notice u/s 13(2), 13(4) or even the order u/s 14. Thus in absence of service as mandated by law, the action is otherwise violative of the provisions of the Act 2002.
Ld. Tribunal has passed the impugned orders in haste and in mechanical manner upon misrepresentation and forged/fabricated documents filed by the appellant.
It is the case of the appellant that respondent no.2 to 5 have taken the said financial facilities from the respondent no.1 Aditya Birla Finance Ltd and are settling the same for which negotiation were held by the respondent No.4 Amit Rana with respondent no.1 only without any instruction from the appellant and the same clearly proves that the appellant has no role in the grant off financial facilities which neither of the party sought.
Learned counsel for the appellant states that the possession of the property situated at Ambala is going to be taken on 12.06.2023 and the same be, therefore, stayed in the interest of justice.
On the other hand, Ld. Sr. Advocate for respondent Fl submits that appellant along with respondents no.2 to 5 has been sanctioned a term loan facility of Rs.1,12,28,00,000 vide sanction letter dated 08.06.2017 and at the instance of the present appellant as the borrower, the respondent no.1 had issued a sanction letter in continuation of earlier sanction letter dated 08.06.2017 whereunder the appellant was classified as the borrower for the entire facility. It is further submitted that on 16.11.2018 the appellant had acknowledged the same and executed a demand promissory note and deed of guarantee by Mr.Ashok Kumar Gupta, Mr. Kishan Kumar Gupta and Mr. Somesh Goyal in favour of the respondent no.1. Ld. Sr. Advocate further submits that irrevocable power of attorney dated 22.11.2018 has been executed by Siddharth Educational Welfare Society, TKB Educational Initiatives Pvt. Ltd. and Mrs. Sheetal Rana for the facilities availed by the appellant along with Siddharth Educational Welfare Society and Saakar Educational Trust.
Ld. Sr. Advocate further submits that appellant has deliberately and intentionally concealed various facts before Ld. DRT and also before this Tribunal that property situated at DPS Ambala which was mortgaged with Aditya Birla Finance Limited was purchased by Mr. Ashok Kumar Gupta, Mr. Kishan Kumar Gupta and Mr. Somesh Goyal and all these three owners had executed lease deed in favour of the appellant Sanskar Bharti Foundation.
Ld Sr Advocate for respondent no.1 has drawn attention of this Tribunal at Annexure A-9, whereby a letter dated 19.11.2018 was issued by HDFC Bank to the appellant informing that the title documents of the property in question are presently held by the said bank as security for the credit facility availed by Sanskar Bharti Foundation.
It is further submitted that Mr. Ashok Kumar Gupta, Mr. Kishan Kumar Gupta and Mr. Somesh Goyal sold the property (DPS Ambala) to M/s TKB Educational Initiatives Pvt. Ltd. who happened to be the co-borrower along with Sanskar Bharti Foundation and respondent Fl continued to have their charge.
Regarding compliance of pre-deposit by the appellant before this Tribunal for entertaining the present appeal, learned Sr. Counsel for the respondent no.1 submits that it was never be the case of the appellant before the Hon'ble High Court that they did not avail any financial facility or never executed any document and there had been a fraud committed against them. It is further submitted that before the Arbitral Tribunal of Hontle Ms. Justice lndu Malhotra, the counsel for the appellant had admitted that the appellant had received funds from Aditya Birla Finance Ltd.
It is further submitted that the bank had issued notice dated 17.11.2022 under Section 13(2) of the SARFAESI Act, 2002 to the appellant along with respondents no.2 to 5, demanding an amount of Rs.111,82.62,942.80 and, therefore, for entertaining the appeal. the appellant has to deposit 50% of the outstanding amount.
Heard. I have given my thoughts to the rival submissions and have also perused the record. Perusal of record reveals that the respondent no.1 Fl has issued a notice dated 17.11.2022 under Section 13(2) of the SARFESI Act to appellant alongwith respondents 2 to 5, demanding an amount of Rs.111,82,62,942.80. Section 18 of the SARFAES1 Act is clear and unambiguous and states that appeal cannot be entertained without payment of predeposit. It runs as under:-
"18. Appeal to Appellate Tribunal- (1) Any person aggrieved, by any order made by the Debts Recovery Tribunal under Section 17, may prefer an appeal along with such fee, as may be prescribed to an Appellate Tribunal within thirty days from the date of receipt of the order of Debts Recovery Tribunal.
Provided that different fees may be prescribed for filing an appeal by the borrower or by the person other than borrower,-
Provided further that no appeal shall be entertained unless the borrower has deposited with the Appellate Tribunal fifty per cent of the amount of debt due from him, as claimed by the secured creditors or determined by the Debts Recovery Tribunal, whichever is less:
Provided also that the Appellate Tribunal may, for the reasons to be recorded in writing, reduce the amount to not less than twenty-five per cent of debt referred in the second proviso.
(2) Save as otherwise provided in this Act, the Appellate Tribunal shall, as far as may be, dispose of the appeal in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) and rules made there under.
Thus, unless and until the appellant complies with the condition of pre-deposit, this Tribunal cannot entertain the appeal. In this case, the respondent Fl herein has issued a notice dated 17.11.2022 under Section 13(2) of the SARFAESI Act, claiming an amount of Rs.111,82,62,942.80. The second proviso to Section 18 states that no appeal shall be entertained unless the borrower has deposited with the Appellate Tribunal fifty per cent of the amount due from him as claimed by the secured creditors or determined by the DRT, whichever is less. Since the respondent Fl has claimed certain amount through its demand notice dated 17.11.2022 under Section 13(2) of the SARFAESI Act, the appellant has to comply with the requirement of pre-deposit. This Tribunal has no power to waive the pre-deposit in its entirety.
What to speak of this Tribunal, the Hon'ble Supreme Court has in Kotak Mahindra Bank Pvt. Ltd. vs. Ambuj A Kasliwal & Ors, Civil Appeal No.538/2021, decided on 16.02.2021, has observed that even the Hon'ble High Court does not have the power to waive the pre-deposit in its entirety, nor can it exercise discretion, which is against the mandatory requirement of the statutory provisions: The relevant para of the said judgment is reproduced as under:-
"14. Therefore, in the facts and circumstances arising herein, when further amount is due and payable in discharge of the decree/recovery certificate issued by the DRT in favour of the appellant/Bank, the High Court does not have the power to waive the pre-deposit in its entirety, nor can it exercise discretion which is against the mandatory requirement of the statutory provision as contained in Section 21, which is extracted above. In all cases fifty per cent of the decretal amount i.e. the debt due is to be deposited before the DRTAT as a mandatory requirement, but in appropriate cases for reasons to be recorded the deposit of at least twenty-five per cent of the debt due would be permissible, but not entire waiver Therefore, any waiver of pre-deposit to the entire extent would be against the statutory provisions and, -therefore, not sustainable in law. The order of the High Court is, therefore, liable to be set aside.
It is noticed that this Court while considering an analogous provision contained in Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI for short) relating to pre-deposit in order to avail the remedy of appeal has expressed a similar opinion in the case of Narayan Chandra Ghosh vs. UCO Bank and Others (2011) 4 SCC 548, which reads as hereunder:-
Section 18(1) of the Act confers a statutory right on a person aggrieved by any order made by the Debts Recovery Tribunal under Section 17 of the Act to prefer an appeal to the Appellate Tribunal. However, the right conferred under Section 18(1) is subject to the condition laid down in the second proviso thereto. The second proviso postulates that no appeal shall be entertained unless the borrower has deposited with the Appellate Tribunal fifty per cent of the amount of debt due from him, as claimed by the secured creditors or determined by the Debts Recovery Tribunal, whichever is less. However, under the third proviso to the subsection, the Appellate Tribunal has the power to reduce the amount, for the reasons to be recorded in writing, to not less than twenty five per cent of the debt, referred to in the second proviso. Thus, there is an absolute bar to entertainment of an appeal under Section 18 of the Act unless the condition precedent, as stipulated, is fulfilled. Unless the borrower makes, with the Appellate Tribunal, a pre deposit of fifty per cent of the debt due from him or determined, an appeal under the said provision cannot be entertained by the Appellate Tribunal. The language of the said proviso is clear and admits of no ambiguity.
It is well settled that when a Statute confers a right of appeal, while granting the right, the Legislature can impose conditions for the exercise of such right, so long as the conditions are not so onerous as to amount to unreasonable restrictions, rendering the right almost illusory. Bearing in mind the object of the Act, the conditions hedged in the said proviso cannot be said to be onerous. Thus, we hold that the requirement of pre deposit under subsection (1) of Section 18 of the Act is mandatory and there is no reason whatsoever for not giving full effect to the provisions contained in Section 18 of the Act. in that view of the matter, no court, much less the Appellate Tribunal, a creature of the Act itself, can refuse to give full effect to the provisions of the Statute. We have no hesitation in holding that deposit under the second proviso to Section 18(1) of the Act being a condition precedent for preferring an appeal under the said Section, the Appellate Tribunal had erred in law in entertaining the appeal without directing the appellant to comply with the said mandatory requirement.
The argument of learned counsel for the appellant that as the amount of debt due had not been determined by the Debts Recovery Tribunal, appeal could be entertained by the Appellate Tribunal without insisting on pre deposit, is equally fallacious. Under the second proviso to sub section (1) of Section 18 of the Act the amount of fifty per cent, which is required to be deposited by the borrower, is computed either with reference to the debt due from him as claimed by the secured creditors or as determined by the Debts Recovery Tribunal, whichever is less. Obviously, where the amount of debt is yet to be determined by the Debts Recovery Tribunal, the borrower, while preferring appeal, would be liable to deposit fifty per cent of the debt due from him as claimed by the secured creditors. Therefore, the condition of pre deposit being mandatory, a complete waiver of deposit by the appellant with the Appellate Tribunal, was beyond the provisions of the Act, as is evident from the second and third provisos to the said Section. At best, the Appellate Tribunal could have, after recording the reasons, reduced the amount of deposit of fifty per cent to an amount not less than twenty five per cent of the debt referred to in the second proviso. We are convinced that the order of the Appellate Tribunal, entertaining appellant's appeal without insisting on pre-deposit was clearly unsustainable and, therefore, the decision of the High Court in setting aside the same cannot be flawed."
Perusal of the record reveals that as per sanction letter dated 08.06.2017 the appellant has been shown as co-borrower. The case of the appellant is that one Mr. Amit Rana has signed the documents on its behalf without its knowledge and has thus played fraud upon the appellant. Perusal of record further reveals that the appellant vide letter dated 16.11.2018 has acknowledged the sanction letter dated 08.06.20174 and executed a demand promissory note for Rs. 110 crores. The record further reveals that a resolution dated 20.11.2018 was passed by the Executive Board of appellant in favour of Mr. Amit Rana for availing credit facility. Ld. Counsel for appellant has, however, submitted that Mr. Amit Rana has played fraud upon it.
I have given my thoughts to the above submissions. However, in view of Section 18 of the SARFAESI Act, 2002 and law laid down by the Hon'ble Supreme Court all the above issues raised by the appellant can only be gone into and decided on merits once the appeal is entertained, for which the appellant has to cross the hurdle of pre-deposit. Since the appeal cannot be entertained for want of pre-deposit, no interim relief can be granted at this stage.
In view of the above discussion, since the appellant has not made any pre-deposit, the present appeal, therefore, cannot be entertained and the same is dismissed for want of pre-deposit under Section 18 of the SARFAESI Act, 2002.
It is ordered accordingly.
Announced on 06.06.2023.