IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 3RD DAY OF DECEMBER 2019 PRESENT THE HON’BLE MR. JUSTICE ARAVIND KUMAR AND THE HON’BLE MR. JUSTICE SURAJ GOVINDARAJ W.P. NO.40829/2018 (GM-DRT) BETWEEN:
1 . SMT. SHAHEEN TAJ AGED ABOUT 54 YEARS.
2 . SMT. SARIA BANU @ SAJIDA AGED ABOUT 51 YEARS.
3 . SHRI. FEROZ KHAN AGED ABOUT 49 YEARS.
4 . SMT. ZOHRABI @ SURAIYA BANU AGED ABOUT 46 YEARS.
5 . SMT. AKHILA UZMA AGED ABOUT 44 YEARS.
6 . SMT. KAUSAR BANU @ KAUSAR BEGUM AGED ABOUT 42 YEARS.
7 . SMT. FATHIMABI AGED ABOUT 40 YEARS.
8 . SHRI. KHADER NAWAZ KHAN AGED ABOUT 38 YEARS.
ALL ARE CHILDREN OF LATE SHRI. MOHAMMED HAYATH.
ALL ARE RESIDING AT NO.14 APPAYANNA LANE DODDAMAVALLI BENGALURU – 560 004.
...PETITIONERS (BY SRI. ARAVIND M. NEGLUR, ADVOCATE) AND:
1 . KARNATAKA BANK LIMITED RAMANAGARA BRANCH RAMNAGAR – 571 511 REP. BY ITS MANAGER.
2 . ARMS, A DIVISION OF ASSET RECONSTRUCTION COMPANY (INDIA)LIMITED HAVING ITS REGISTERED OFFICE AT THE RUBY, 10TH FLOOR, 29 SENAPATI BAPAT, MARG DADAR (WEST) MUMBAI – 400 028 (REPRESENTED BY AUTHORISED OFFICER) 3 . SHRI. HABEEBULLA BAIG AGED ABOUT 60 YEARS PROP. M/S HUB ENTERPRISES NO.4560, MASJID MOHALLA RAMANAGAR.
SINCE DECEASED REP BY HIS LRS:
3(a). SMT. AKHILA UZMA AGED ABOUT 46 YEARS W/O LATE HABIBULLA BAIG.
3(b). RAHEEL UZMA AGED ABOUT 29 YEARS D/O LATE HABIBULLA BAIG.
3(c). MEERAZ UZMA AGED ABOUT 27 YEARS D/O LATE HABIBULLA BAIG.
3(d). KAREEM MOHAMMED AGED ABOUT 20YEARS S/O LATE HABIBULLA BAIG 3(e). HAZIRA KULSUM AGED ABOUT 14 YEARS MINOR, REPRESENTED BY MOTHER & GUARDIAN SMT. AKHILA UZMA ALL ARE RESIDING AT NO.4560 MASJID MOHALLA, RAMANAGARA.
4 . SHRI. ABDUL WAHAB KHAN AGED ABOUT 70 YEARS KNK SERVICE STATION B.M. ROAD, RAMANAGAR.
…RESPONDENTS (BY SRI. FRANCIS XAVIER, ADVOCATE FOR R-2;
R-1 SERVED AND UNREPRESENTED;
R-3(a-d) ARE SERVED AND UNREPRESENTED) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER TITLED PROCEEDINGS DATED:27.08.2018 PASSED BY THE DEBTS RECOVERY APPELLATE TRIBUNAL, CHENNAI ON IA.NO.561/2018 IN A.I.R. (SA) NO.248/2018 WHICH IS AT ANNEXURE-L TO THE WRIT PETITION.
THIS PETITION COMING ON FOR ORDERS THIS DAY, ARAVIND KUMAR J, MADE THE FOLLOWING:
O R D E R Since no prayer is sought for by petitioner insofar as respondents-3 & 4 are concerned, we are of the considered view that they are neither necessary nor proper parties to these proceedings. Hence, writ petition against respondents-3 and 4 stands dismissed.
2. Heard Sri Aravind M Neglur, learned Advocate appearing for petitioner and Sri Francis Xavier, learned Advocate appearing for respondent-2. Respondent-1 is duly served. Perused the records.
3. First respondent – Bank filed an application – O.A.No.119/2002 under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short ‘DRT Act’) before Debt Recovery Tribunal (Karnataka) at Bangalore (for short ‘Tribunal’) against Sriyuths Habibulla Baig, Abdul Wahab Khan and Mohammed Hayath - father of petitioners. Said O.A. came to be allowed by order dated 25.01.2007 (Annexure-B) directing defendants therein jointly and severally to pay a sum of Rs.11,07,206.50 along with cost of appellant and interest @ 18% p.a. compounded quarterly rests from the date of application till date of realization. Petitioners herein who had been brought on record before the Tribunal on account of death of Sri.Mohammed Hayath have been directed to discharge the liability through the assets succeeded by them from defendant No.3 – their father. By order of amendment dated 16.12.2002, second respondent herein was brought in place of applicant-Bank in O.A.No.119/2002.
4. Petitioners filed an appeal under Section 17(1) of the Securitisation And Reconstruction of Financial Assets and Enforcement of Security Interest Act (for short ‘SARFAESI Act’) before the Tribunal challenging the possession notice dated 27.09.2016 in I.R.No.5015/2016(S.R.No.1043/2017). On account of there being delay in filing said application, petitioners filed an application for condonation of delay. On 28.12.2016, Registry of the Tribunal raised objections on said appeal papers which was required to be complied by petitioners on 06.01.2017. By order dated 24.04.2017, Registrar of the Tribunal declined to register the appeal filed by petitioners on account of appellants i.e., petitioners herein having failed to comply with office objections. By order dated 27.09.2016 said proceedings came to be closed. Said order was appealed before the appellate Tribunal by preferring AORG No.7695/2017 calling in question closure of S.R.No.1043/2017. When the matter was set down for summoning of respondents, said S.R.No.1043/2017 was taken up and an order came to be passed on 02.04.2018 dismissing the same as not maintainable. Aggrieved by the said order, appeal under Section 18 of the SARFAESI Act in AIR (SA) 248/2018 came to be filed before Debt Recovery Appellate Tribunal, Chennai (for short ‘Appellate Tribunal’) and an application under Section 18(1) of the SARFAESI Act came to be filed for reduction of pre- hearing deposit. Appellate Tribunal, by order dated 27.08.2018 has directed petitioners to make pre-deposit of Rs.50 lakhs within a period of four weeks from the said date and peremptory order came to be passed that in the event of non-deposit of the amount, appeal would stand dismissed. Accordingly, interlocutory application which was filed for waiver of pre-deposit came to be disposed of. Hence, petitioners are before this Court.
5. It is the contention of learned Advocate appearing for petitioners that under second proviso to Section 18 of SARFAESI Act, expression used “amount of debt” determined by Tribunal was the amount which was required to be deposited by the petitioners and as could be seen from the order of Tribunal, amount so determined was a sum of Rs.11,07,206.50 and as such Appellate Tribunal could not have directed the petitioners to deposit 50% of the amount determined by it. He would elaborate his submission by contending when Tribunal determines the amount due from the borrower/secured creditor, it has to be read in conjunction with the expression “whichever is less” as indicated in second proviso and not 50% of the amount due and payable. As such, he seeks for writ petition being allowed.
6. Per contra, Sri Francis Xavier, learned Advocate appearing for respondent-2 would contend that petitioners ought to have filed an appeal under Section 21 of DRT Act against impugned order and without availing alternate remedy, petitioners cannot invoke extra ordinary jurisdiction of this Court. He would also contend that Section 21 of DRT Act provides for 50% of the amount of debt so due by the borrower as determined by the tribunal under Section 19 will have to be paid or deposited and amount due having been determined petitioners will have to comply with Section 21 of the Act. He would also draw attention of the Court to amount of Rs.30,000/- paid by petitioners at the time of presenting the appeal before Appellate Tribunal to contend that petitioners knew that amount which was required to be paid as determined by the Tribunal was Rs.1,36,20,225/- and accordingly, application fee of Rs.30,000/- has been paid on the appeal and as such, they cannot be heard to contend that 50% of the amount determined by Tribunal minus interest and cost has to be paid by them.
7. Having heard the learned Advocates appearing for petitioners, we notice that under the impugned order, Appellate Tribunal has directed the petitioners to make pre-deposit in a sum of Rs.50 lakhs. In the possession notice as well as recovery proceedings which have been initiated to recover the amounts due, secured creditor is seeking for recovery of Rs.1.36 Crores contending that said amount is due and payable which was inclusive of interest and costs. In fact, petitioners being aware or conscious of the fact that for entertaining the appeal under Section 18 of SARFAESI Act, condition precedent is to pre-deposit of 50% of the amount, had filed Interlocutory Application vide Annexure-K for waiver of pre-deposit amount. We have perused the affidavit supporting the said application and with regard to the extent of amount to be deposited by them for which waiver was sought for there is no whisper about said aspect or in other words, quantum of amount which they wanted to be waived has not been specified.
8. Be that as it may. Appellate Tribunal would not be empowered to entertain an appeal filed under Section 18 of SARFAESI Act unless 50% of the amount of debt due as claimed by secured creditor or determined by the Tribunal whichever is less, is deposited. In the instant case, learned Advocate appearing for petitioners, as noticed herein above, has contended that Tribunal has determined the debt due in a sum of Rs.11,07,206.50 and 50% of the same has to be deposited since this is the lesser amount than what was claimed by secured creditor. However, we are not impressed by said argument for the reason that appellants before Appellate Tribunal were required to deposit 50% of the amount of debt due from them or determined by Tribunal whichever is less. In the instant case, what has been determined is Rs.11,07,206.50 with interest @ 18% p.a. compounded quarterly rest from the date of application till date of realization. Interest component cannot sleep or it would not cease to operate . In the instant case, we have also noticed that original application filed by the secured creditor was in the year 2002 and as such, interest payable on the amount determined would definitely form part and parcel of the debt due payable by the applicants/appellants. As such, contention raised by petitioners cannot be accepted and it stands rejected. Consequently, writ petition stands dismissed.
9. At this juncture, Sri Aravind M Neglur, learned Advocate appearing for petitioners prays for four weeks time to deposit the amount as directed by the Appellate Tribunal.
We make it clear that in the event of an application being filed by petitioners before Appellate Tribunal along with pre-deposit ordered to be paid i.e., Rs.50 Lakhs within four weeks from today, Appellate Tribunal would examine the appeal on merits and in accordance with law. We also make it clear that outer limit of four weeks is granted to petitioners to file an application along with proof of deposit as ordered.
All pending applications stands consigned to records.
SD/- JUDGE SD/- JUDGE *sp