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2013 (9) TMI 1289
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....assuming there are legal lapses and abuses, how long the statutory tribunals take to put the controversy to rest being oblivious of the fact that the concept of flexibility is insegragably associated with valuation of any asset? One is bound to give a wake up call and we so do by saying "Tasmat Uttistha Kaunteya"; "Awake, Arise, 'O' Partha". 3. The present appeal, by special leave, is directed against the judgment and order dated 16.7.2010 passed by the High Court of Delhi in Writ Petition (C) No. 4694 of 2010. 4. The facts which are essential to be stated are that the appellant-bank sanctioned home loan of Rs.12.00 lacs to the respondent No. 1 on 17.5.1999 payable in equal monthly instalments and in lieu of that the borrower mortgaged the property which was purchased from the developer, the respondent No. 2 herein. Since the respondent No. 1 failed to pay the instalments, the loan account was declared as "non performing asset" in terms of the NPA guidelines issued by the Reserve Bank of India. On 28.12.20012 the appellant-bank issued a notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for s....
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....sted to retain his property, he had to purchase it from her. The DRT by its order dated 25.10.2005 adverted to the facts, assertions made in the application filed by the borrower, reply filed by the bank and appreciating the evidence on record came to hold that there was no infirmity in the Statement of Accounts of the bank and thereafter taking into consideration the facts and circumstances granted 15 days time to the borrower to pay the entire amount to the bank and the developer, M/s. Unitech, and Rs.1.00 lac as compensation to the auction purchaser. Thereafter, the DRT directed as follows: - "In case the applicant/appellant fails to deposit this amount within 15 days, the appeal/application be treated as dismissed and respondent No. 1 is free to confirm the sale in favour of the auction purchaser. The amount deposited by the applicant herein during the pendency of present proceedings as per the order of Hon'ble High Court of Delhi be given due adjustment." 6. The borrower instead of complying with the said order, preferred appeal No. 267 of 2005 before the DRAT which, on 14.11.2005, admitted the appeal and passed the following interim order: - "Pending p....
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..... after the elapse of 45 days mentioned above. Stamp duty etc. will be paid by the appellant. The bank is further directed to furnish the statement of account minus the penal clause within ten days. The bank is further directed to return the amount deposited by the Auction Purchaser in the sum of Rs.25,60,000/- along with the normal interest @ 9% per annum simple without prejudice to his right against the bank. The matter stand disposed off. Auction Purchaser and the appellant are directed to sign this order." 8. Aggrieved by the aforesaid order the bank preferred writ petition and raised two contentions, namely (i) the DRAT had modified a reasonable and detailed order passed by DRT by a cryptic order, and (ii) that the DRAT erred in granting liberty to the third respondent to initiate any action against the bank for any omission. The High Court, by the impugned order, in the first paragraph dealt with the element of the claim of penal interest and opined that the grievance of the bank was baseless. Thereafter, adverting to the grant of 9% interest towards deposit made by the auction purchaser with the bank, observed that there was no error in the same as the money was ....
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....nancial difficulties. In essence, submission of learned counsel is that putting the clock back is likely to cause serious jeopardy to him. 11. Mr. Jatin, learned counsel appearing for the auction purchaser, submitted that on the basis of the liberty he had already filed a suit in the Delhi High Court and is entitled to pursue the remedy because of action was taken in hot haste in by the bank in putting the property into auction without indicating that litigation was going on between the borrower and the bank. It is urged by him had the said fact was made known the third respondent would not have participated in the auction. It is argued by him that his claim for damages cannot be nullified and hence, the decision of the High Court is absolutely defensible and does not require to be interfered with. 12. Before we dwell upon the jurisdiction of the DRAT to give such a liberty to the auction purchaser, we think that it is absolutely imperative, in the case at hand, to take note of the fact that though the appeal was filed before the DRAT on 7.11.2005 and admitted on 14.11.2005, yet the same was disposed of on 20.5.2010 almost after four and half years. We are at pains to say tha....
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.... general, namely, the depositors in the banks and public money at the disposal of the financial institutions. Therefore, wherever public interest to such a large extent is involved and it may become necessary to achieve an object which serves the public purposes, individual rights may have to give way. Public interest has always been considered to be above the private interest. Interest of an individual may, to some extent, be affected but it cannot have the potential of taking over the public interest having an impact on the socio-economic drive of the country. The two aspects are intertwined which are difficult to be separated." In the said case, it was further rules thus: - "81. In view of the discussion held in the judgment and the findings and directions contained in the preceding paragraphs, we hold that the borrowers would get a reasonably fair deal and opportunity to get the matter adjudicated upon before the Debts Recovery Tribunal. The effect of some of the provisions may be a bit harsh for some of the borrowers but on that ground the impugned provisions of the Act cannot be said to be unconstitutional in view of the fact that the object of the Act is to achie....
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....section (4) of Section 13 is in accordance with the provisions of the Act and the Rules made thereunder, then, notwithstanding anything contained in any other law for the time being in force, the secured creditor can take recourse to one or more of the measures specified in Section 13(4) for recovery of its secured debt. 24. Sub-section (5) of Section 17 prescribes the time-limit of sixty days within which an application made under Section 17 is required to be disposed of. The proviso to this sub-section envisages extension of time, but the outer limit for adjudication of an application is four months. If the Tribunal fails to decide the application within a maximum period of four months, then either party can move the Appellate Tribunal for issue of a direction to the Tribunal to dispose of the application expeditiously." 17. In Transcore v. Union of India and another (2008) 1 SCC 125, the Court, while discussing about the various provisions of the SARFAESI Act, expressed thus: - "60.Value of an asset in an inflationary economy is discounted by "time" factor. A right created in favour of the bank/FI involves corresponding obligation on the part of the bo....
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....t context, this Court observed that the RDB Act has been enacted in the backdrop that the banks and financial institutions had been experiencing considerable difficulties in recovering loans and enforcement of securities charged with them and the procedure for recovery of debts due to the banks and financial institutions which were being followed had resulted in a significant portion of the funds being blocked. Emphasis has been laid on blocking of funds in unproductive assets, the value of which deteriorates with the passage of time. That apart, the purpose of the RDB Act, as is evincible, is to provide for establishment of Tribunals and Appellate Tribunals for expeditious adjudication and recovery of debts due to banks and financial institutions and for matters connected therewith or incidental thereto. Section 17 of the RDB Act deals with jurisdiction, powers and authority of the Tribunals. It confers jurisdiction on the Tribunal to entertain and decide applications from the banks and financial institutions for recovery of debts due to such banks and financial institutions. 20. Thus, the intendment of this legislation is for speedy recovery of dues to the bank. In this backdrop,....
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..... We can only say that apart from the curative step the tribunal as well as the DRAT has to rise to the occasion, for delay in adjudication of these type of litigations brings a long term disaster. A cute slumber shall not do. 22. The grievance of the bank does not end here. On the contrary this is the beginning of the end. Accentuating the grievance, it is submitted by Mr. Jain, learned senior counsel for the appellant, that the DRAT travelled beyond the prayer made by the borrower inasmuch as the borrower in essentiality had prayed for grant of compensation and alternatively extension of time for sixty days. Due to the pendency of the appeal before the tribunal, submits Mr. Jain, the extension of time melted into total insignificance. Despite that, as the order would indicate, a consensus was arrived at between the auction purchaser and the borrower and the same is clear from the order, as the DRAT had directed that the auction purchaser and the borrower would sign the order. The bank was not a party to the said adjustment or consensus. The bank was only directed to refund the amount along with 9% interest and that has been done without recording a finding whether the bank was....
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....the payment of such compensation and costs as may be determined by such Tribunal or Court of District Judge or Appellate Tribunal or the High Court referred to in section 18B." 24. We have reproduced the aforesaid section to point out that the legislature has brought in this provision by way of substitution by Act 30 of 2004 with effect from 11.11.2004 to confer jurisdiction on the DRT and DRAT to entertain a plea of the borrower for grant of compensation and costs. 25. At this juncture, we may clarify that we do not intend to dwell upon the subtle distinction between the compensation and damages as canvassed at the Bar as that is not needed in this case. The thrust of the matter is whether DRAT has the jurisdiction to grant any liberty and, more so, in a case when the borrower and the auction purchaser have entered into a compromise. As has been stated earlier, the bank was not a party to the compromise. 26. Section 19 of the RDB Act, occurring in Chapter IV of the Act, deals with procedure of tribunals. Subsection (25) of Section 19 reads as follows: - "(25) The Tribunal may make such orders and give such directions as may be necessary or expedient to give effec....
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....e Code of Civil Procedure and the Evidence Act, requiring an elaborate procedure in decision making, tribunals generally regulate their own procedure applying the provisions of the Code of Civil Procedure only where it is required, and without being restricted by the strict rules of the Evidence Act." 29. From the principles that have been culled out by the Constitution Bench, it is perceptible that a tribunal is established under a statute to adjudicate upon disputes arising under the said statute. The tribunal under the RDB Act has been established with a specific purpose and we have already focused on the same. Its duty is to see that the disputes are disposed of quickly regard being had to the larger public interest. It is also graphically clear that the role of the tribunal has not been fettered by technicalities. The tribunal is required to bestow attention and give priority to the real controversy before it arising out of the special legislations. As has been stated earlier, it is really free from the shackles of procedural law and only guided by fair play and principles of natural justice and the regulations formed by it. The procedure of tribunals has been elaborately s....