2009 (9) TMI 1046 - HC - Indian Laws

High Court quashes Tribunal decisions, allows DRT jurisdiction post Section 13(4)

The High Court ruled in favor of the Petitioner, quashing the decisions of the Tribunal and Appellate Tribunal. It held that the Debts Recovery Tribunal ... - Issues Involved:1. Jurisdiction of Debts Recovery Tribunal (DRT) to address post Section 13(4) situations.2. Validity of the sale conducted by the Respondent Bank.3. Amendment of the original securitisation application by the Petitioner.Summary:1. Jurisdiction of Debts Recovery Tribunal (DRT) to address post Section 13(4) situations:The High Court addressed whether the DRT has jurisdiction to consider and adjudicate post Section 13(4) events. The Tribunal and Appellate Tribunal had previously ruled that it was not open to the borrower to question the sale of the property post Section 13(4). However, the High Court referred to the Supreme Court's decision in the case of Authorized Officer, Indian Overseas Bank & Anr. vs. M/s. Ashok Saw Mill (2009(9) SCALE 649), which affirmed that the DRT has the authority to scrutinize and set aside actions taken by secured creditors under Section 13(4) and even restore possession to the borrower.2. Validity of the sale conducted by the Respondent Bank:The Petitioner challenged the sale of the mortgaged property conducted by the Respondent Bank on 12th October 2007, confirmed on 15th October 2007, arguing that it was conducted without notice and due procedure. The Petitioner sought to amend the original securitisation application to include a prayer to declare the sale by private treaty on 15th October 2007 as null and void. The Tribunal initially rejected this amendment, citing precedents like Mardia Chemicals and Transcore, which suggested that such relief could not be granted. However, the High Court found that the DRT has the jurisdiction to address such issues, as clarified by the Supreme Court.3. Amendment of the original securitisation application by the Petitioner:The Petitioner initially filed a securitisation application challenging the validity of the notice issued by the Bank and the subsequent sale of the property. An amendment application was filed on 5th November 2007 to introduce new averments and reliefs. A second amendment application was filed on 25th July 2008 to add further paragraphs and grounds. The Tribunal rejected this second amendment, and the Appellate Tribunal affirmed this decision, stating that the relief sought could not be granted and that the successive amendment was intended to delay the case. The High Court, however, allowed the second amendment, stating that the omission to ask for the relief was due to inadvertence and that the DRT has the power to grant such reliefs, including restoring status-quo ante.Conclusion:The High Court quashed the orders of the Tribunal and Appellate Tribunal, allowing the Petitioner's application for amendment. The Court ruled that the DRT has jurisdiction to address post Section 13(4) situations and that the Petitioner should be allowed to formally pray for the relief of declaring the sale by private treaty as null and void. The Petition was allowed, and the rule was made absolute with no order as to costs.