Dismissed

M/s Vijeta Construction Company v. M/s Pegasus Asset Reconstruction Pvt. Ltd. (Pegasus)

Chhattisgarh HC12 Jul 2022WPC/2465/2022

Case brief

AI extract

What is this about?

The High Court dismissed the petitioners third writ petition challenging SARFAESI Act execution proceedings. The Court held it lacked jurisdiction as the matter was pending before the DRT and DRAT, and the petitioners had filed appeals which were in default.

What did the court decide?

The writ petition was held not maintainable and was dismissed.

M/s Vijeta Construction Company Vs M/s Pegasus… — Banking and Recovery | Chhattisgarh HC (2022)

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NAFR

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HIGH COURT OF CHHATTISGARH, BILASPUR

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W.P.(C). No. 2465 of 2022

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M/s Vijeta Construction Company Through Its Proprietor Shri Basant Bagde, S/o Late Shri Nathuji Bagde, Aged About 53 Years, Occupation Business, R/o C-177/5, Opp. Rest House, Tagore Nagar, Raipur- 492001 (Chhattisgarh)

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Shri Basant Bagde, S/o Late Shri Nathuji Bagde, Aged About 53 Years Occupation Business, R/o C-177/5, Opp. Rest House, Tagore Nagar, Raipur- 492001 (Chhattisgarh)

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Mrs. Vijaya Bagade, W/o Basant Bagde, Aged About 43 Years Occupation Business, R/o C-177/5, Opp. Rest House, Tagore Nagar, Raipur- 492001 (Chhattisgarh)

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Shri Naresh Dongre, S/o Shri Kushal Rao Dongre, Aged About 45 Years R/o Village Kondhali, Tahsil Katol, District Nagpur (Maharashtra), Present Address- R/o C-177/5, Opp. Rest House, Tagore Nagar, Raipur 492001 (Chhattisgarh)

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Vaibhav Bagde, S/o Shri Basant Bagde, Aged About 20 Years R/o- C- 177/5, Opp. Rest House, Tagore Nagar, Raipur- 492002 (Chhattisgarh)

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---- Petitioners

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Versus

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M/s Pegasus Asset Reconstruction Pvt Ltd (Pegasus) A Company Incorporated Under The Indian Companies Act, 1956 And Registered As A Securitization Company And Asset Reconstruction Company Pursuant To Section 3 Of The SARFAESI Act, 2002, Having Its Registered Office At 55/56, 5th Floor, Free Press House, Nariman Point, Mumbai 400021

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M/s AARA Properties OPC Private Limited, Through Director Regd. Address 93/94 Samta Colony, Near Krishna Talkies Raipur (Chhattisgarh) 492001

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Registrar, Debts Recovery Tribunal Jabalpur, Address- 797-II, Shantikunj, South Civil Lines, Jabalpur 482001 (M.P.)

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Recovery Officer, Debts Recovery Tribunal Jabalpur, Address- 797-II, Shantikunj, South Civil Lines, Jabalpur 482001 (M.P.)

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Allahabad Bank, Telibandha Branch, Gaurav Path, G.E. Road, Telibandha Chowk, Shyam Nagar, Telibandha, Raipur, District Raipur (Chhattisgarh) 492001

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State Of Chhattisgarh Through The Collector, District : Raipur, Chhattisgarh

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---- Respondents

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For Petitioners	: Mr. Rahul Shrivastava, Advocate with
	Mrs. Smita Jha, Advocate
For Respondent No.1	: Ms. Shalini Choudhari, Advocate with Mr. Harishankar Patel, Advocate
For Respondent No.2	: Mr. Anand Shukla, Advocate
For State-Respondent No.6	: Mr. Rahul Jha, Govt. Advocate

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Hon'ble Shri Justice P. Sam Koshy

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Order On Board

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12/07/2022

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The present is the third writ petition by the petitioners, before this Court in the recent past this year itself. The first writ petition was W.P. (C) No. 630 of 2022. The second being W.P.(C) No. 904 of 2022. The first writ petition was disposed off on 03.02.2022, wherein this Court made the following observations while disposing off the writ petition :-

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“4. Given the fact that the DRT, Jabalpur has already passed a compromise order and there is an apparent default on the part of the petitioners in honouring the compromise order, it would not be proper and justified for this Court to entertain the writ petition exercising its writ jurisdiction at this juncture. However, the right of the petitioners stands reserved if they so want for approaching the concerned DRAT having jurisdiction over the dispute by filing an appropriate application for ventilating their grievances. After availing the said remedy the petitioners can approach the concerned respondent herein for deferring the execution proceedings at least till their application is taken up for hearing on the

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interim application by the Appellate Tribunal.”

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Immediately thereafter, there was yet another writ petition filed by the petitioners being W.P.(C) No. 904 of 2022, which again came up for hearing on 18.02.2022. This Court again considering the factual scenario prevailing at that point of time, disposed off the writ petition making the following observations :-

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“It is a case where in the past also the Petitioners had entered into a Compromise Agreement in a proceeding that was pending before the DRT, vide Order dated 14.9.2012. The Petitioners had failed to honor the said Compromise Agreement and thereafter the recovery proceeding was also initiated against them. It is at that stage that the Petitioners had approached the DRT and since the DRT thereafter became non-functional because of non-availability of regular Presiding Officer, the Petitioners were not able to claim appropriate relief from the said Tribunal and they also did not get appropriate relief from the Appellate Tribunal as well, for the reason that the Appellate Tribunal also was not functional for want of regular Presiding Officer at the Appellate Tribunal, which has led to the filing of the present Writ Petition.

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Under these circumstances, purely as an interim measure, ensuring that the Petitioners do not go remediless for want of regular Presiding Officer both at the DRT and DRATs level, a conditional interim protection is being granted to the Petitioners.

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Subject to the Petitioners’ making a payment of Rs.20 Crore to the Respondent within a period of 30 days of which Rs.5 Crore, as intimated by the learned Senior Counsel for the Petitioners, shall be paid by

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the Petitioners within a period of 7 days from today, the Respondents are permitted to proceed further with the auction proceeding, however, the auction sale shall not be finalized without the leave of the Court.

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It is made clear that the interim protection given by this Court is only a conditional order. In the event the Petitioners’ commit default in honoring the Court order of making the payment as stated in the preceding paragraph, the interim protection granted by this Court would automatically lose its efficacy and the Respondent would be at liberty of proceeding further with the auction sale.”

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Today, when the matter is taken up for hearing on query being put to the learned counsel for the petitioners, he fairly concedes that the conditional order passed by this Court in so far making deposits are concerned was not honoured. The petitioners have now approached this Court alleging highhandedness on the part of the respondents in forcefully taking possession of the secured assets without following any due process of law or given any notice or notice period to the petitioners. The contention of the learned counsel for the petitioners is that in terms of the order of this Court in W.P.(C) No. 904 of 2022, decided on 18.02.2022, the petitioners had approached the DRAT by filing an appeal on 14.02.2022. Today, the learned counsel for the petitioners submits that when the appeal was filed by DRAT, the petitioners approached the Registrar of the Tribunal and the Registrar suggested the petitioners to approach DRT for redressal of their grievances. That in terms of the oral suggestion given by the Registrar of the DRAT, the petitioners have now gone to the DRT

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by moving application on 31^st of March, 2022. The said application was subsequently registered with Diary No. 1122 of 2022 on 26.05.2022 and thereafter the matter came up for hearing, before the Registrar of the Tribunal on 01.06.2022 in default for non-compliance of the statutory requirements as is enshrined in Section 30 (A) of the Recovery of Debts and Bankruptcy Act, 1993. Later on the matter was ordered to be listed before the Bench on 08.06.2022 on which date, since the Presiding Officer was on official tour, the next date of hearing has been provided on 19.10.2022. Meanwhile, the petitioners have approached this Court by filing present writ petition seeking for the following reliefs.

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“10.1 That, this Hon’ble Court may kindly be pleased to give the directional order for no coercive steps to be taken against the petitioner s and his family of dispossession in such pandemic situation from their residential property, in pursuance of the order dated 22.03.2022 passed in original application No. 227/2012 passed by Debts Recovery Tribunal Jabalpur till the case of the petitioner s be heard by the DRAT Allahabad as per the direction given by the Hon’ble High Court in W.P.(C) No.630 of 2022 dated 03.02.2022.

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10.2 That, this Hon’ble Court may kindly be pleased to give the directional order to the concerning respondents for no coercive steps or any further steps to be taken in auction proceedings regarding procedure of sale and registration in this regard.

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10.3 That, this Hon’ble Court may kindly be pleased to quash any other orders in this regard passed in OAEX

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No.223/2012 of original application no. 227/2012, passed by recovery officer, Debt Recovery Tribunal Jabalpur and the notice of E-auction no.9/2022, in the interest of justice.

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10.4 Any other relief or reliefs which this Hon’ble Court may think proper in view of the facts and circumstances of the case may also kindly be granted.”

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The plain perusal of the entire factual matrix of the case itself would go to show that admittedly the petitioners had taken loan from the respondents and thereafter, there has been a default in repayment of the said loan. Certain properties were kept in mortgage as secured assets. The respondents upon the default on the part of the petitioners, initiated proceeding under the SARFAESI Act. Notices under Section 13 (2) and 13 (4) and later Section 14 were drawn and concluded.

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The petitioners thereafter questioned the proceedings of the SARFAESEI Act by moving an original application, before the Debt Recovery Tribunal, Bench Jabalpur by O.A. No. 227 of 2012. The original application resulted in a compromise between the parties and on the basis of the compromise agreement, the original application was got disposed off on 14.09.2012. The order dated 14.09.2012 is as under :-

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“1. This OA is lodged on 19.07.2012 by the Applicant Allahabad Bank against defendants No.1 to 5 seeking Recovery Certificate for an amount of Rs.16,36,64,849.84p with future interest @ 16.50% p.a. from 10.07.2012 till the date of realization.

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During the pendency of this OA, the Applicant Bank along with the defendants filed a joint application seeking for issuance of consent order on the following terms and conditions as per undertaking executed by parties there to. The terms and conditions are as follows :-

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(1) That if the purchaser M/s. R.R. Iron & Steel Pvt. Ltd. pays of total sum of Rs.17.00 Crores in the matter stated below, the applicant Bank shall relinquish their balance claim. If the said amount is not paid as mentioned in letter dtd. 28.06.2012 & 29.06.2012, the settlement will stand withdrawn and the applicant Bank will proceed for the recovery of entire dues with interest.

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(2) The payment shall be made as under :-

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(a) Rs.5.00 Crore will be adjusted in the loan account immediately (i.e. Rs.3.25 Crores which is already deposit in the current account and Rs.1.75 Crores which will be paid on conveying the approval of the compromise-today.

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(b) Balance amount of Rs.12.00 Crores to be paid within 3 months or earlier in lumpsum.

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(c) Out of compromise amount of Rs.17.00 Crores outstanding BG amount of Rs.56.68 lacs will be kept aside (in sundry creditors) to meet the liability if arises in future.

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(d) Postdated cheques for Rs.12.00 Crores in respect of balance amount (stated in Clause-b above) will be issued by the buyer M/s. R.R. Iron & Steel Pvt. Ltd.

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(e) As the entire compromise is being paid by the buyer M/s. R.R. Iron & Steel Pvt. Ltd. on sale

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of all charged 3 collateral securities tripartite agreement between all the 3 interested parties (buyer, gurantor/mortgager and Bank) will be executed and the same will be filed with the relevant Court/Tribunal to seek further direction of the Court/Tribunal. If the purchaser M/s. R.R. Iron & Steel Pvt. Ltd, deposit the aforesaid amount in advance with the applicant Bank, the Bank shall release the mortgage property of the defendants to execute the sale deed in favour of the buyer M/s. R.R. Iron & Steel Pvt. Ltd. The present defendants/mortgager shall not create any objection before the Sub-Registrar.

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(f) Counter suit and other proceeding if any filed by the defendants shall be withdrawn.

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(g) In case of any default in payment of the compromise sum, or dishonour of any cheque, the concession/relief granted in the settlement will be treated as withdrawn and the Bank will be at liberty to proceed with the recovery of the entire outstanding dues with interest and other expenses as claimed in the original application.

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(h) On the payment of the entire settlement amount as per the terms herein given above, all charges mortgages held against the loan account shall be released and no dues certificate will be issued if so required.

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(3) It is agreed between the parties that in case the defendants and the purchasers commit default in payment of the compromise amount on any of the due dates/and or fail to pay the agreed amount within the stipulated time mentioned above, the applicant Bank shall be entitled to recover the entire dues as claimed in the OA with interest from 10.07.12 till the

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date of realization for which recovery certificate will also be issued.

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Hence, this consent RC is passed allowing the parties 1 to 3 to the undertaking to liquidate the dues of applicant Bank on or before 15.12.2012 as per the terms and conditions stated in Clauses (a) to (h) given in Para-2 above. If the dues are not liquidated as per the terms and condition given above, the RO shall on intimation by the applicant Bank execute the RC being issued in favour of the Bank as per Law so as to effect the recovery of dues from the defendants No.1 to 5. The tripartite agreement stipulated in Cl(e) is appended to this order.”

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However, the petitioners failed to honour the conditions to the compromise agreement and the order passed in the said OA, thus the compromise entered into between the parties has lost its efficacy. Thereafter, respondents initiated execution proceeding. It is at that point of time, the petitioners first questioned the execution proceeding, before this Court vide W.P. (C) No. 1505 of 2013. That at the first instance, there was initially an interim protection in favour of the petitioners in the said writ petition, however, subsequently in terms of the statutory provision, where the writ Court was not having the jurisdiction to decide the matter arising out of the SARFAESI Act, the said writ petition was withdrawn with liberty to approach the DRT. Meanwhile, the property was put to auction and it is said that the respondent No.2 has now purchased the property in auction that was held on 25.04.2022 and the sale deed also has since been executed. Later, the Recovery Officer also had issued notice to the

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petitioners for handing over the possession on 25.05.2022.

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Shri Anand Shukla, the learned counsel under the instruction of respondent No.2 submits that the property that he has purchased in auction he has also got the vacant possession of the same on 08.07.2022. Though this facts are disputed and denied by the counsel for the petitioners and contends that still the petitioners are in possession of the said property.

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All said and done what is apparent from the perusal of the orders that were passed by this Court all along was that the High Court in exercise of power under Article 226 of the Constitution of India would not have the jurisdiction to enter into the merits of the case so far deciding the veracity of action on the part of the respondents invoked under the provisions of SARFAESI Act. This Court was reluctant to entertain the writ petition at the first instance i.e. WP(C) No. 630 of 2022 as would be evident from the operative para of the said order. However, subsequently this Court entertained the another writ petition of the petitioners and granted conditional interim protection in the teeth of the order passed by the Supreme Court in case of State Bar Council M.P. Vs. Union of India to entertain the writ petition during the period the DRT and DRAT was not functional for want of regular presiding officer. Subsequently, DRT as also DRAT have become functional.

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It appears that the petitioners except for filing of the application/appeal, before the Tribunal, that too an incomplete

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application/appeal without complying with the statutory requirement as is required under Section 30 (A) of the Recovery of Debts and Bankruptcy Act, 1993, has not made any efforts by making any mention before the Bench for taking up of their matter on an earlier occasion in the given factual matrix of the case. Expect for the application that they have made with default, the petitioners have again come to this Court with yet another writ petition with the reliefs, which has been already reproduced in the preceding paragraph. From the submissions and the pleadings that have been filed by the petitioners, it appears that both the applications/appeals that the petitioners have preferred before DRAT as also before the DRT, are lying in default of nonmaking requisite deposits as is required under the Act. Now with the said defaults in both these proceedings the petitioners want this High Court to entertain this writ petition and grant interim protection to the petitioners.

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The learned counsel for the petitioners submits that even if those applications/appeals that he has preferred before DRAT and DRT, have been filed with default, the Tribunal nor the appellate Tribunal have rejected it holding it as not maintainable. Further that as long as the applications/appeals are not rejected, the petitioners have a hope that their matter would be taken up some day and they would be given a fair opportunity to defend their case.

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Taking into consideration the entire factual matrix of the case, this Court as has also been opined in the previous round of

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litigation is still not inclined to entertain the writ petition firstly on the ground that the writ Court does not have the jurisdiction first of all to entertain the writ petition, where the issue involved arises out of a proceeding drawn under SARFAESI Act. Secondly, for the reason that the petitioners have already approached the DRAT as also DRT by filing two separate appeals in respect of the issue that they have raised in the present writ petition. Thirdly for the reason that the two proceedings are still pending, before the appellate Tribunal as also before the Tribunal. Under the circumstances, the writ petition would not be maintainable. The proper course available for the petitioners would be to approach the respective bench hearing the matter and press on their interim application if it all they have moved any.

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The writ petition thus fails and is accordingly dismissed.

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Sd/- (P. Sam Koshy) Judge

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Balram

M/s Vijeta Construction Company v. M/s Pegasus Asset Reconstruction Pvt. Ltd. (Pegasus)

Case brief

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M/s Vijeta Construction Company v. M/s Pegasus Asset Reconstruction Pvt. Ltd. (Pegasus)

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