STCI Finance Ltd. vs H.S. Bedi And Ors

P.K. Bhasin, J

The respondent no. 1, a retired army officer, is the husband of respondent no. 2 and both of them have succeeded before the Tribunal below(DRT-II, Delhi) in getting a blanket interim stay order restraining the appellant, a Financial Institution, from taking over the possession of its secured asset being property no. 5, Paschim Marg, Vasant Vihar, New Delhi(hereinafter to be referred to as 'the property in question')for which purpose it has obtained an order from the Court of CMM, Delhi under Section 14 of SARFAESI Act. The appellant had approached the CMM in its capacity as a secured creditor of the respondents 1 and 2 claiming to be having a second charge over the aforesaid property in Vasant Vihar, the first and prime charge being that of HDFC Bank, respondent no. 3 herein, which had also lent money to the respondents 1 and 2. Second charge over the property in question was allegedly created by the respondents to secure the repayment of the loan of Rs. 15 crores granted to them in the year 2013 which the appellant claims to have given to respondents 1 and 2 though these respondents are denying having availed of any such loan from the appellant and are claiming that the alleged loan transaction was as a result of pressure exerted upon them and by misrepresentation of facts by the officials of the appellant FI to take loan of that much amount though it was not required to be taken. HDFC Bank, which had also lent money to the respondents 1 and 2 against the mortgage of the property in question, admits to having ceded second charge in favour of the appellant.

The case of the husband-wife duo before the DRT in their petition under Section 17(1) of SARFESI Act was that appellant no. 1 was a promoter director of two Companies by the names of Cedar Infonet Pvt. Ltd. and Sukhmani Technology Private Limited. Both these Companies had taken loan of Rs. 50 crores each from the appellant and to secure the repayment of those loans 2,81,25,000 shares of Tulip Telecom Pvt. Ltd.(now under liquidation), which was a sister concern of the two borrower Companies of which respondent no. 1 Lt. Col. H.S. Bedi was one of the promoter directors were pledged by respondent no. 1 and Cedar Infonet Pvt. Ltd. These borrower Companies as per the case of the appellant are part of Tulip Group of Companies. The respondents 1 and 2, security applicants before the DRT, pleaded that without informing them the appellant had invoked the pledged shares and so it became beneficial owner of the pledged shares and entitled to sell them and realize its dues by sale of those shares and to appropriate the proceeds in the accounts of the aforesaid two Companies to whom loan of 100 crores had been given. The respondents further claimed that with the invocation of the pledged shares, value of which at the time of invocation was much more than the recoverable loan amounts from the aforesaid two Companies, and getting the same transferred to its De-mat account, the appellant became owner thereof and entitled to sell them and the borrowers became entitled to the credit of the value of the those shares prevalent at the time of invocation of the pledge and so legally there remained no outstanding amounts in the two loan accounts irrespective of the fact whether those shares, value of which shares was to the tune of Rs. 1,57,13,07,650/- as on 30.03.2019, were in fact sold or not by the pledgee/FI. However, the appellant herein misrepresented to the respondents 1 and 2 that the two loan accounts were irregular and it would declare the loan accounts of Cedar and Sukhmani as NPAs and, therefore, to avoid the accounts becoming NPAs they should take a loan of Rs. 15 crores which would service the interest component in the two loan accounts. The officials of the appellant thus without disclosing that the right as pledgee of shares had already been invoked and the appellant had already become owner of those shares forced and lured the respondents 1 and 2 into taking additional loan of Rs. 15 crores against the security of their property in Vasant Vihar to avoid the two accounts of their Companies becoming NPAs and that loan amount could be utilized in the loan accounts of the two above named borrower Companies (Cedar and Sukhmani) towards re-payment of interest when in fact the entire liability in their accounts had stood wiped off with the invocation of the pledged shares. The respondents 1 and 2's further case as projected even before the DRT and even before this Tribunal was that immediately after credit of alleged loan amount of 15 crores in the their loan account the same amount was received back by the appellant and the appellant herein illegally transferred that amount in the loan accounts of Cedar and Sukhmani and that way the respondents could not be said to have availed of any loan from the appellant and consequently issuance of demand notice under Section 13(2) of SARAFESI Act and taking of further steps for taking over physical possession of the property in question, which is the only residence of the respondents, were all illegal and accepting this version of theirs the learned Presiding Officer of the DRT-II has rightly found a prima facie case in favour of the respondents 1 and 2/security applicants for grant of interim relief against their threatened dispossession from their residential property in Vasant Vihar.

The grievance of the appellant, as urged through its learned counsel Mr. Tanmay Mehta, is that the learned Presiding Officer of DRT has passed a totally perverse order restraining the appellant from enforcing its remedies under SARFAESI Act in respect of the property in Vasant Vihar over which it undisputedly has a second charge duly ceded by the first charge holder, HDFC Bank(which has to recover around fifty lacs odd while the appellant is fighting to recover around twenty six crores odd from respondents 1 and 2), thereby nullifying the very purpose of enactment of this statute which objective is the expeditious recovery of public monies without involvement of Courts/Tribunals. It was argued by the learned counsel for the appellant that grant of loans by the appellant to Cedar Infonet Pvt. Ltd.('Cedar') and Sukhmani Technology Private Limited('Sukhmani') and to the respondents 1 and 2 were all independent commercial loan transactions having nothing to do with each other and, therefore, the learned DRT was not justified in entertaining the case put forth by respondents 1 and 2 herein centering around the two loan accounts of their two Companies and invocation of the pledged shares in those accounts. In any case, submitted Mr. Tanmay Mehta that there is now already a money decree for over Rs. 80 crores against Cedar Infonet Pvt. Ltd. passed by the Hon'ble Delhi High Court on 28.05.2019 and, therefore, the alleged claim of the respondents 1 and 2 that there was nothing due to be paid by this Company with the invocation of pledged shares by the appellant falls flat on the ground. It was further argued by the learned counsel Mr. Mehta that the perversity in the impugned and non application of judicial mind and passing of the impugned order mechanically by the learned Presiding Officer is writ large considering the fact in the twenty-five page order first twenty-three pages deal with only the case of the respondents 1 and 2 regarding invocation of the pledged shares in the accounts of Cedar and Sukhmani which averments had been raised by these two Companies in their separate SAs which were also being tried by the same learned Presiding Officer and who simply transferred the paras from the orders passed in their cases into the present order in respect of the loan account of respondents 1 and 2. This, according to Mr. Mehta, is a classic case of mechanical 'cut and paste' by the learned Presiding Officer and which fact could be verified from the records of those SAs of Cedar and Sukhmani. It was submitted that with one last para in the impugned order the learned Presiding Officer had wrapped up the order simply observing that the appellant herein will not be prejudiced if it is not permitted to take physical possession of the mortgaged house since that security will always be there with the appellant to be used for liquidation of the debt of the respondents 1 and 2 herein in case they lose in their S.A. The learned Presiding Officer was, according to Mr. Mehta, not at all justified in passing the restrain order ignoring the 'public interest' element which is also a paramount consideration to be kept in mind by Courts/Tribunals while dealing with matters involving recoveries of public monies from defaulting borrowers and where interim injunctions against recoveries are made by the defaulters and has totally sidelined the judgments of Hon'ble Supreme Court in which the guidelines to be kept in mind by Judges of the inferior Courts/Tribunals while dealing with applications of interim reliefs against recoveries of public monies were laid down and which judgments this Tribunal has been bringing to the notice of the DRTs from time to time by exercising power of superintendence over the DRTs. In those judgments of the Apex Court it has been laid down that in cases of recoveries of public monies no stay should be granted simply on prima facie case being shown and that grant of interim injunction is such cases should be an exception. However, despite that position in law settled by the highest Court of the land the learned Presiding Officer has shown indulgence to the defaulters by restraining the appellant by a blanket order from recovering crores of public money from its mortgaged asset and thereby has showed least sensitivity towards the plight of financial institution who is struggling to recover its dues from its defaulting borrowers. Mr. Mehta also submitted that just because the proceedings in the S.A. have now been concluded and only pronouncement of final verdict remains the submission of learned counsel for the respondents 1 and 2 that impugned order should be continued for few days more till the pronouncement of the final verdict in the S.A. by the DRT should not be accepted as the impugned order being a perverse order cannot be permitted to stand even for a moment and the same must be aside with some strong observations the way it has been passed.

Learned counsel for the respondents 1 and 2, Mr. Ashim Vachher, on the other hand, argued that the learned Presiding Officer of DRT having found a prima facie case for grant of interim relief to the security applicants this Tribunal should not interfere with the discretion exercised in favour of the respondents by the DRT as exercise of the discretion by the DRT in the facts and circumstances cannot be said to have been exercised arbitrarily.

As far as HDFC Bank is concerned its learned counsel filed a sort reply and submitted that all that this Bank, which is the first charge holder, expects is that if the property in question over which the this Bank has the first charge and the appellant has the second charge, is permitted to be taken over and which the appellant is legally entitled irrespective of the fact that HDFC Bank has the first charge, it should be ensured the interest of HDFC Bank is fully protected since it has also to recover few lakhs from respondents 1 and 2 though their account with HDFC Bank is not irregular as on date.

Responding to the submissions advanced on behalf of respondents 1 and 2 that it is a case of patent fraud having been played upon these respondents by the officials of the appellant FI by forcing them to take loan of Rs. 15 crores which was released in two trenches and then fraudulently crediting the loan money in its own account and crediting the same in the loan accounts of Cedar and Sukhmani Mr. Tanmay Mehta submitted that that was simply a 'cock and bull' story being told to this Tribunal because the loan amount was transferred to the accounts of Cedar and Sukhmani by respondents themselves by authorizing the appellant in writing and by issuing cheques from their account with HDFC Bank where the loan amount was deposited by them and the appellant no way could get the money from their account with HDFC Bank.

The response of respondents' counsel in this regard was that all that was a result of fraud and coercion and misrepresentation on the part of the officials of the appellant.

Since very serious submissions have been made regarding the legality and propriety of the impugned order of the DRT by the learned counsel for the appellant FI I deem it appropriate to re-produce the impugned order extensively. The relevant portions of that order are reproduced below:-

"By filing the present Securitization Application under Section 17(1) of the SARFAESI Act, 2002, the security applicants have prayed for setting aside and quashing the notices under Section 13(2) & 13(4) of the SARFAESI Act dated 17th January and 18th August, 2017 respectively issued by respondent no. 1 Fl for taking possession of the property situated at 5, Pashimi Marg, Vasant Vihar, New Delhi (hereinafter referred to as the property in question) as well as the impugned order dated 22nd January, 2019 passed by the learned Chief Metropolitan Magistrate, Patiala House Courts, New Delhi and the Possession Notice dated 29th January, 2019 issued by the Receiver pursuant thereto. A prayer for quashing the entire proceedings initiated respondent no. 1 Fl under the SARFAESI Act against the properly in question and for restraining respondent no. 1 Fl from taking possession of the property in question has been made.

Factual matrix of the present case, as pleaded in the Securitization Application, is as under:

(i) The security applicants are residing in the property in question and the same is their only residential house. Respondents no. 1 & 2 are Financial Institution/Bank and are engaged in the business of providing loan against securities. Respondent no. 2 HDFC Bank had advanced loan to security applicants for purchasing the property in question. Respondent no. 3 Official Liquidator appointed by the Hon'ble High Court of Delhi in Winding up Petition against M/s. Tullip Telecom Ltd. has taken possession of a part of the property in question. Pursuant to the order dated 22nd January, 2019 passed by the learned Chief Metropolitan Magistrate, the Receiver has issued notice dated 29th January, 2019 for taking possession of the property in question. It is further pleaded that upon receipt of demand notice under Section 13(2) of the SARFAESI Act issued by respondent no. 1 Fl, the security applicant had issued reply dated 27th February, 2017 raising certain objections but the same was rejected by respondent no. 1 Fl in an illegal and malafide manner and thereafter a notice under Section 13(4) of the SARFAESI Act was issued by respondent no. 1 Fl for taking possession of the property in question.

(ii) As per the security applicants, respondent no. 1 Fl had advanced a loan of Rs. 15 crores to them and they had created second subservient charge over the property in question in its favour and respondent no. 2 HDFC Bank was holding 1st charge over the property in question and respondent no. 2 HDFC Bank ceded second subservient charge over the property in question vide its letter dated 30th September, 2013. The applicants did not make payment towards the said loan account which was declared as NPA on 1st September, 2014. There were two Companies, namely, M/s. Sukhmani Technology Private Limited (hereinafter referred to Sukhmani) and M/s. CederInfonet Pvt. Ltd.(for short, Cedar) in which security applicant no. 1 was one of the Promoter/Directors.

(iii) lt is further the case of the security applicants that respondent no. 1 Fl had granted facilities to the abovementioned two Companies, namely, Sukhmani and Cedar to the tune of Rs. 50 crores each. The security applicants are shareholders of M/s. Tullip Telecom Pvt. Ltd. and they pledged total shares 2,81,25,000 in favour of respondent no. 1 Fl and out of which respondent no. 1 invoked 1,41,59,000 shares as per Pledge Master Report and has already realized a sum of Rs. 157,13,07,650/-. It is further submitted that to realize its alleged outstanding dues, respondent no. 1 Fl had initiated arbitration proceedings against Sukhmani before the Sole Arbitrator Hon'ble Mr. Justice R.C. Chopra (Retd.) and the Sole Arbitrator passed a Nil Award dated 11th August, 2017 against Sukhmani. It is further pleaded that not only the shares which had been pledged were invoked by respondent no. 1 Fl, but large amount of other credits are also shown in the Statement of Account which were paid by Cedar and Sukhamni to and the same were adjusted towards interest. It is further the case of the security applicants that since the entire principal amount stood paid on various dates commencing from 24th November, 2011 there was no question of any interest being accrued in the account of either Cedar or on Sukhamni or security applicants. Further case of the security applicants is that despite having already received the entire outstanding dues, respondent no. 1 again approached and requested the security applicants for availing credit limits of Rs. 15 crores which were to be transferred in the accounts of Sukhamni and Cedar so that their accounts may not become NPA and the said amount of Rs. 15 crores never came in the hands of the security applicants and it was directly adjusted towards the alleged outstanding dues of Sukhamni and Cedar. It is submitted such adjustment was totally illegal. It is further pleaded that respondent no. 1 would have intimated the security applicants about the invocation of Tullip Telecom Ltd. shares on various dates. In view of the above facts and circumstances, it is submitted that there are no outstanding dues which the respondent no. 1 Fl is entitled to recover from them, but despite that respondent no. 1 Fl filed an application under Section 14 of the SARFAESI Act before the learned Chief Metropolitan Magistrate and got appointed Receiver to take possession of the property in question which, as per respondent no. 2 HDFC Bank, was mortgaged with it Respondent no. 2 HDFC Bank also issued notice under Section 13(2) of the SARFAESI Act and also approached the learned Chief Metropolitan Magistrate under Section 14 of the SARFAESI Act for taking possession of the property in question. However, a compromise was arrived at in between the security applicants and HDFC Bank Ltd.

(iv) The security applicants have challenged the impugned Possession Notice dated 29th January, 2019 issued by the Receiver pursuant to the order dated 22nd January, 2019 passed by learned CMM, Delhi being illegal and against the well settled principles of law as admittedly respondent no. 1 Fl has second subservient charge over the property in question and the 1st charge over it is of HDFC Bank/respondent no. 2 and further that respondent no. 1 Fl has invoked 1,41,59,000 shares out of the shares pledged by the security applicants and the value of the invoked shares is Rs. 157,13,07,650/- and the same has been adjusted against the total loan amount of Rs. 50 crores each advanced to Sukhmani and Cedar and there was no occasion for respondent no. 1 to have forced the applicants to obtain the alleged loan of Rs. 15 crores and that respondent no. 1 could not have adjusted the same in the accounts of Sukhmani and Cedar.

(v) The security applicants have, thus, prayed for restraining respondent no. 1 Fl from taking physical possession SA No. 31 of 2019 of the property in question as an interim relief till the decision of the present S.A.

Pursuant to the notice, respondent no 1 Fl has filed its reply resisting the present S.A. contending that the security applicants approached it for obtaining loan of Rs. 15 crores against the property in question and the same was sanctioned. It is further contended that respondent no. 2 HDFC Bank was having first charge over the property in question and vie its letter dated 27th September, 2013 apprised HDFC Bank Ltd. about sanctioning of the said loan and requested to cede second charge over the property in question and the HDFC Bank did so and pursuant to the terms and conditions of the sanction letter, the security applicants executed Loan Agreement. It is further contended that the loan amount of Rs. 15 crores was availed by the security applicants and after availing the same, they miserably failed to repay the same and the account was classified as NpA on 1st September, 2014 and recalled the loan vide recall notice dated 2nd September, 2014. It is further contended that the answering respondent no. 1 Fl also invoked the arbitration clause and one Hon'ble Mr. Justice R.C. Chopra (Retd.) was appointed as Sole Arbitrator who was pleased to give Award dated 14th September, 2018 allowing the claim of respondent no. 1 Fl to the tune of Rs. 24,26,02,127.09 and aggrieved by the said Award, the security applicants instituted a petition under Section 34 of the Arbitration & Conciliation Act, 1996 titled as Lt. Col. H.S. Bedi and another Vs STCI Finance Ltd., bearing OMP No. 427 of 2018 and the Hon'ble High Court vide its judgment dated 14th November, 2018 was pleased to set aside the Award dated 14th September, 2018 solely and exclusively on technical ground. It is further contended that as there is security interest over the property in questions and transactions of Sukhmani and Cedar are completely independent transactions, the contention of the security applicants that respondent no. 1 Fl had invoked shares from 24th November, 2011 till 30th March, 2012 and that respondent no. 1 Fl realized a sum of Rs. 157,13,07,650/- are ill founded and baseless. It is further contended that transaction with respect to Cedar is of the year 2010 and that of Sukmani is of the year 2912 and, thus, the transactions are separate, whereas grant of loan of Rs. 15 crores to the security applicants is a separate one. It is further the case of the answering respondent no. 1 that the allegations raised in the present S.A. are untenable and the security applicants are not entitled to proceed under the SARFAESI Act as they obtained a loan of Rs. 15 crores by creating security in respect of the property in question. It is further submitted that the provisions of Section 13(9) of the SARFAESI Act are not applicable to the facts of the case in hand as the claim of the 1st respondent is more than 60% of the loan granted by it and respondent no. 2 HDFC Bank and, as such, the respondent no. 1 Fl approached the learned Chief Metropolitan Magistrate for appointment of Receiver after following the due procedure under Sections 13(2) and 13(4) of the SARFAESI Act. The answering respondent no. 1 Fl further submit that there is no violation of any of the provisions of the SARFAESI Act and the Rules framed thereunder and, as such, the security applicants are not entitled for any relief and, as such, the present application is liable to be dismissed and the security applicants are not entitled to any interim relief.

I have learned counsel for the parties and have gone through the entire material on record including the written submissions filed by respondent no. 1 Fl filed vide Diary No. 2293 dated 16th February, 2019.

Now the points for consideration are; (i) whether the invocation of the pledged shares of M/s. Tullip Telecom Limited by respondent no. 1 Fl extinct the, liability of the security applicants for the amount as claimed by respondent no. 1 Fl under the SARFAESI Act and (ii) whether the measures initiated by respondent no. 1 Fl under Section 13(4) of the SARFAESI Act are untenable, as prayed for?

The contention of the security applicants is that respondent no. 1 Fl granted credit facilities to Sukhmani and Cedar to the tune of Rs. 50 crores each and security applicant no. 1 was one of the promoter/Director of Sukhmani & Cedar. Learned counsel for the security applicants further contended that the security applicants are the shareholders of TullipTelecom Limited and they had pledged 2,81,25,000 shares during the period from 24th November, 2011 to 3rd October, 2012 in favour of respondent no. 1 Fl and out of which respondent no. 1 invoked 1,41,59,000 shares as per the Pledge Master Report and has realized a sum of Rs. 157,13,07,650/-. The contention of the security applicants is that against the loan of Rs. 100 crores allegedly given to Sukhmani and Cedar, respondent no. 1 Fl has invoked the shares worth Rs. 1,57,13,07,650/- but did not give credit to the accounts of the aforesaid two Companies. Further contention of the security applicants is that respondent no. 1 Fl appropriated the credits paid by Sukhmani and Cedar towards interest. While so, Tullip Telecom Ltd. went in liquidation in February 2015 and respondent no. 1 Fl represented to the security applicants that there is default in the accounts of Sukhmani and Cedar and forced the security applicants to avail loan of Rs. 15 crores against the property in question so that the same may service the alleged overdue interest in the accounts of Sukhmani and Cedar Companies and the same is evident from the fact that a loan of Rs. 15 crores was credited in the accounts of the security applicants and the same was transferred back to respondent no. 1 Fl for adjustment in the accounts of Sukhmani and Cedar towards the alleged accrued interest. Learned counsel for the security applicants has further argued that respondent no. 1 Fl has second charge over the property in question and since the loan already stood paid by invocation of the shares, there is no amount payable to respondent no. 1 Fl, but respondent no. 1 Fl by exerting pressure on the security applicants managed the second charge over the property in question and respondent no. 1 Fl issued notice under Section 13(2) of the SARFAESI Act with illegal and malafide object and rejecting the objections raised by the security applicants in their reply dated 27th February, 2017 issued notice under Section 13(4) of the SARFAESI Act to take possession of the property in question. It is further the contention of the security applicants that respondent no. 1 Fl initiated arbitration proceedings against Sukhmani before Hon'ble Mr. Justice R.C. Chopra, the Sole Arbitrator who passed a Nil Award. While so, respondent no. 1 Fl had filed a Civil Suit (OS) (Comm.) No. 247 of 2016 under Order 37 CPC titled as STCI Finance Ltd. Vs Cedar lnfonet Pvt. Ltd. before the Hon'ble High Court and leave to defend was unconditionally allowed by the Hon'ble High Court and during the pendency of the suit respondent no. 1 Fl filed an application under Section 14 of the SARFAESI Act to take physical possession of the property in question and respondent no. 1 is only having second charge and the learned Chief Metropolitan Magistrate appointed a Receiver who issued notice to take possession of the property in question and if the respondent no. 1 gives to the value of the invoked shares, there would not have been any liability. It is further contended that respondent no. 1 without giving credit of invocation of the shares has suppressed the real facts and misrepresented that the accounts of Sukhmani and Cedar became NPA. It is further contended that due to that misrepresentation, the security applicants were lured to obtained loan of Rs. 15 crores which was appropriated to the loan accounts of Sukhmani and Cedar. Learned counsel for the security applicants has further argued that the Sole Arbitrator has given Nil Award against Sukhmani and the Hon'ble High Court of Delhi has given unconditional leave to the security applicants to defend themselves in the recovery proceedings as there are triable issues and if, at this stage, the respondent no. 1 Fl takes possession of the property in question, which is residential one, the security applicants would suffer irreparable loss and injury. It is further the contention of the learned counsel for the security applicants that they have got a prima-facie case and balance of convenience in their favour and pending disposal of the present S.A., respondent no. 1 Fl may be restrained from taking possession of the property in question.

On the other hand, learned counsel for respondent no. 1 Fl has argued that the security applicants had approached it for granting loan of Rs. 15 crores against the property in question and the same was sanctioned and by that time HDFC Bank was having charge over the property in question. It is further contended that vide its letter dated 27th September, 2013 respondent no. 1 Fl had informed HDFC Bank about sanction of loan of Rs. 15 crores to the security applicants and requested to cede second charge over the property in question and HDFC Bank did so and pursuant to the acceptance of the terms and conditions, loan agreement was executed. It is further contended that HDFC Bank confirmed and extended second subservient charge over the property in question to secure the additional loan of Rs. 15 crores availed by the security applicants and the said loan amount was disbursed. He has further argued that after availing the loan, the security applicants miserably failed to repay the same and the loan account of the security applicants was notified as NPA on 1st September, 2014 and Loan Recall Notice dated 2nd September, 2014 was issued and respondent no. 1 also invoked the arbitration clause and one Hon'ble Mr. Justice R.C. Chopra (Retd.) was appointed as Sole Arbitrator and the Sole Arbitrator was pleased to pass an Award dated 14th September, 2018 allowing the entire claim of answering respondent no. 1 to the tune of Rs. 24,26,02,127.09 and aggrieved by the said Award, the security applicants instituted original side of the Hon'ble High Court of Delhi, a petition under Section 34 of the Arbitration & Conciliation Act, 1996 titled as Ltd. Col. H.S. Bedi and another Vs STCI Finance Ltd. and the Hon'ble High court was pleased to set aside the Award solely and exclusively on technical grounds. It is further contended that as there is security interest over the property in question and the transactions of Cedar and Sukhman are completely independent transactions, the contention of the security applicant that respondent no. 1 had invoked 1,41,59,000 shares from 24th November, 2011 till 30th March, 2012 and realized a sum of Rs. 157,13,07,650/- is baseless. It is further contended that the transaction with respect to Cedar is of the year 2010, whereas that relating to Sukhmani pertains to the year 2012 and, as such, these are separate transactions whereas the grant of loan of Rs. 15 crores to the security applicants is a separate transaction and, as such, the allegations raised in the present S.A. are totally untenable and respondent no. 1 Fl is entitled to proceed under the SARFAESI Act as the security applicants obtained a loan of Rs. 15 crores by creating security in respect of the property in question. It is further contended that the provisions of Section 13(9) of the SARFAESI Act are not applicable to the facts of the case in hand as the claim of the first respondent is more than 60% of the loans granted by respondents no. 1 & 2 and, as such, respondent no. 1 rightly approached the learned Chief Metropolitan Magistrate for appointment of a Receiver after following the due procedure under Sections 13(2) & 13(4) of the SARFAESI Act and there are no merits in the present S.A. filed by the security applicants, who are also not entitled to any interim relief and, thus, a prayer has been made to dismiss the present Securitization Application with costs.

The main contention of the security applicants is that they pledged 2,81,25,000 shares in favour of respondent no. 1 Fl and out of which respondent no. 1 Fl had invoked 1,41,59,000 shares......................................... So far as the invocation of the shares by respondent no. 1 Fl is concerned, there is no dispute by it. However, it is the contest of respondent no. 1 Fl that it only became a beneficial owner of the shares, but the shares were not disposed of and sold and no amount is realized and further that the invocation of the shares would not amount to realization of the amount due and the security applicants were not absolved from the payment of the amount due under the loan transaction or Rs. 15 crores taken in this account.

On the other hand, refuting the above contention of respondent no. 1, learned counsel for the security applicant has relied upon a judgment of the Hon'ble High Court of Delhi in the matter of M/s. SICPA India Pvt. Ltd. Vs M/s. Brushman (India) Ltd., 203(2013) DLT 487......................................

Learned counsel for the security applicants has further vehemently contended that in the case of arbitration of Sukhmani, the Hon'ble Sole Arbitrator gave a nil award against Sukhmani whereas in the case of Cedar, the Hon'ble High Court gave blanket permission to the security applicants for defending summary suit as there are triable issues and respondent no. 1 Fl which had filed arbitration proceedings and a summary suit to obtain a decree, now has sought to enforce the security interest through SARFAESI Act, which is untenables the debt is doubtful and not crystallized as yet and, as such, it is a fit case to grant interim orders as on the date of invocation of the shares the first respondent became beneficial owner of the shares worth Rs. 157,13,07,650/-. Thus, as seen from the contentions raised by the learned counsel for the security applicants, there are triable issues in the proceeding spending before the Hon'ble High Court of Delhi as well as in this Securitization Application as to the liability of the security applicants.

As seen from the reply filed by the first respondent that the loan amount ultimately reached it in the accounts of Sukhmani and Cedar whose debts are disputed by the security applicants, who are pawners of the shares in favour of respondent no. 1 Fl. Thus, the crucial question to be determined the main case where invocation of the pledged shares by respondent no. 1 Fl wipes out the debts of Cedar and Sukhamni. Admittedly, the loan amount of Rs. 15 crores in this case has been utilized for repayment of the loan amounts in the accounts Sukhmani and Cedar. Moreover, the property in question is under the first charge of HDFC Bank and second charge of respondent no. 1 Fl. Respondent no. 1 Company has filed its reply and rejoinder to the same is yet to be filed by the security applicants and thereafter evidence is to be filed and documents are to be exhibited by the parties and then final verdict can be given in this case. Ltis not disputed that respondent no. 1 has invoked the shares worth Rs. 157,13,07,650/- belonging to the security applicants for the liability of Sukhmani and Cedar. Respondent no. 1 Fl also approached the Arbitration proceedings and obtained a nil award and when respondent no. 1 filed a summary suit for recovery, unconditional leave to defend was given to the security applicants on the ground that triable issues are there regarding the liability. In these facts and circumstances, it has to be decided whether the liability of the security applicant sexists or not.

Learned counsel for the respondent No. 1 Fl has also relied upon a judgment a judgment of the Hon'ble High Court of Delhi in the matter of Kannu Aditya India Ltd. Vs State Bank of India, wherein it has been laid down that the secured creditor shall consider the objection representation of the borrower within fifteen days as it is directory regarding the time limit of fifteen days. He has further relied upon SEBI (Depositories and Participants) Regulation, 1996 Sub-section (8) to Section 58 relating to Manner of creating pledge or hypothecation, it is provided that "Subject to the provisions of pledge document the pledge may invoke the pledge and on such invocation, the depository shall register the pledge as beneficial owner of such securities and amend its regards accordingly." Thus, the said regulation does not amount to realization of all the pledged shares by respondent no. 1 on merely become beneficial owner. The same has to be decided after both the parties adduce their evidence and on final arguments in the main S.A.

As the security is available with respondent no. 1 FI to take possession of the property in question even after adjudication of the dispute in the present S.A., I am of the considered opinion that no prejudice would be caused if this Tribunal grounds interim relief to the security applicants from taking physical possession of the property as prima-facie, respondent no. 1 Fl got Nil Award in the case of arbitration of Sukhmani and in case of Cedar, in summary suit, the security applicants got unconditional right to defend themselves in the suit as the Hon'ble High Court has held that there are triable issues. I am also of the considered opinion that the balance of convenience is in favour of the security applicants and no irreparable loss will be caused to respondent no. 1 Fl if they hold their hands till resolution of the dispute in the main S.A. Hence, interim relief is granted and respondent no. 1 Fl is restrained from taking physical possession of the property in question till disposal of the present S.A."

(highlighting is by me)

From the foregoing narration and submissions made at the Bar it appears that the appellant FI did disburse loan of 15 crores to respondents 1 and 2 in the year 2013 for business purposes and that loan money was credited in their account with HDFC Bank. It is also not in dispute that the same loan money came to be utilized by the respondents 1 and 2 by authorizing the appellant to credit that much money in the loan accounts of Cedar Infonet Pvt. Ltd. and Sukhmani Technology Pvt. Ltd. whose loan accounts according to the case of the appellant were running irregular while as per the case of the respondents the entire dues in the accounts of Cedar and Sukhmani stood cleared with the invocation of the pledged shares by the appellant.

The case of the respondents 1 and 2, however, before the DRT was that the entire loan transaction of Rs. 15 crores, release of that much money to these respondents by credit in their account with HDFC Bank and then utilization of the entire loan money in the loan accounts of Cedar and Sukhmani was not a real and genuine transaction and, in fact, the respondents 1 and 2 were forced/lured into entering into that loan transaction by the appellant herein by misrepresenting that the loan accounts of Cedar and Sukhmani were going to be declared as NPAs when in fact the entire dues recoverable from those Companies of respondent no. 1 had already stood wiped off/cleared with the invocation of the pledge shares of Tulip Telecom Company which had been pledged with it by respondent no. 1 herein and Cedar Infonet Pvt. Ltd. and since respondents 1 and 2 were kept in dark by the appellant at the time of invocation of the pledge they could not come to know that the accounts of Cedar and Sukhmani were already cleared. In fact, the appellant had realised excess money. So, respondents 1 and 2 in ignorance the factual status of the accounts of Cedar and Sukhmani had to agree for execution of documents of additional loan of 15 crores and due that reason even no objection was obtained from HDFC Bank also for the creation of second charge of the appellant over the property in question in Vasant Vihar which ceded to the second charge in favour of the appellant.

Thus the learned DRT before granting interim relief to the respondents 1 and 2 herein was expected to see whether the story of fraud/coercion etc. propounded by the security applicants before it, respondents 1 and 2 herein, regarding allegations of fraud etc. was prima facie acceptable or even probable which required trial and there was good justification for the grant of interim relief to respondents 1 and 2 herein. In this regard, I have already extracted in extenso the impugned order passed by the DRT. That order does not even deal with the story of fraud etc. raised in the S.A. by the security applicants in the final para no. 15 of the order. In fact, the order further shows that according to the learned Presiding Officer while noticing the points arising for his decision in para no. 5 the only point for his consideration if the accounts of Cedar and Sukhmani had stood cleared with the invocation of the shares pledged in those accounts and whether there was any violation of Sections 13(2) and 13(4) of SARFAESI Act. No issue was framed for consideration in respect of the real claim of respondents 1 and 2 herein that loan of Rs. 15 crores sanctioned by the appellant in their favour was granted by misrepresenting to them and playing fraud and resorting to coercion that the accounts of Cedar and Sukhmani were running irregular and were going to be declared as NPAs point and they had executed loan documents etc. only to serve interest component in the accounts of Cedar and Sukhmani to save their accounts in the names of Cedar and Sukhmani becoming NPAs. However, without framing any issue in respect of that case of the respondents 1 and 2 and entering into any discussion in respect of the allegations of fraud/coercion etc. made in the S.A. and returning a specific finding that those allegations appeared to be prima facie true/probable the learned Presiding Officer granted the relief of interim injunction against the recovery of crores of rupees, which undoubtedly is public money, by restraining the appellant herein from taking possession of its secured asset for which purpose it had already obtained an order from the CMM under Section 14 of SARFAESI Act and for the recovery of which public money the appellant was struggling hard. This circumstance strengthens the submission of Mr. Tanmay Mehta that the learned Presiding has simply cut and pasted relevant paras from the order which he passed while dealing with the grievances of Cedar and Sukhmani in their own SAs and the facts of the present case have not even been dealt with. Learned counsel for the respondents 1 and 2 did not dispute that the DRT-II was also dealing with the SAs of Cedar and Sukhmani.

The reason given by the learned Presiding Officer that the appellant herein will not suffer any prejudice in case the mortgaged asset is not permitted to be taken over by it(appellant herein) during the pendency of the S.A. and, therefore, the interim relief was being granted was not. a strong reason for grant of interim relief to respondents 1 and 2 herein. If these kind of reasons are accepted to be good enough for grant of injunction against recoveries of crores of public money then in every case which comes before DRTs under Section 17 of SARFAESI Act grant of interim injunction will become the rule. That way the judgment of the Hon'ble Supreme Court of India in the case of AIR 1985 SC 330 : 1985 SCR (2) 190, "Assistant Collector of Central Excise Chandan Nagar, West Bengal vs. Dunlop India Ltd. and Ors." wherein it has been held that stay of recoveries of public monies has to be an exception and not the rule and further that in such like cases where stay against recoveries of public monies is being sought even if the Court finds a prima facie case in favour of the litigant seeking interim injunction that will not be sufficient to grant interim injunction. The relevant observations are reproduced 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 public interest.......................

......................."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....................... 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 facie 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 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'...................................................................

............... 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 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 by me)

In another judgment in the case of "Dwarikesh Sugar Industries Ltd. Vs. Prem Heavy Engineering 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.........................

..........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 has besides not dealing with the real case of the respondents 1 and 2 that they were coerced to take loan of 15 crores also not referred to these judgments of the Hon'ble Supreme Court nor dealt with the law laid down therein.

The impugned order of the DRT restraining the appellant herein from taking physical possession of the property in dispute cannot be sustained and is hereby set aside. The DRT is directed to pass a fresh order, before proceeding further in the S.A., on the prayer of interim relief made by the two security applicants, respondents 1 and 2 herein, keeping in mind the facts of the present case pleaded by the security applicants in the S.A. and the judgments of the Hon'ble Supreme Court referred to in this order.

Nothing observed hereinabove will be treated as any expression of opinion on merits in respect of the rival cases. This order has been passed only taking a prima facie view of the matter. It is needles to state that if the parties want to address fresh arguments on the interim relief aspect of the matter they will be permitted to do so.