Dismissed

Aha Holding Pvt. Ltd. in the Mattercatalyst Trsuteeship Limited v. Aha Holdings Private Limited

DRAT21 Dec 2022IA/640/2022

Case brief

AI extract

What is this about?

The Tribunal dismissed applications by borrowers seeking to modify a prior order to maintain status quo on secured assets. Holding that the status quo was merely interim relief pending stay hearings, the court found no irreparable harm since Section 17 of the SARFAESI Act provides adequate remedy for flawed measures.

What did the court decide?

Debts Recovery Appellate Tribunal dismissed two interlocutory applications seeking to clarify, modify, or vary the order maintaining status quo on secured assets.

Aha Holding Pvt. Ltd. in the Mattercatalyst Trsuteeship… — Specific Performance | DRAT (2022)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr Justice Ashok Menon, Chairperson

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I.A. No. 641/2022 In Appeal No. 30/2022

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Between

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Sam Family Trust & Anr. … Applicants/ Orig. Res. Nos 1 & 2 In the matter between Catalyst Trusteeship Ltd & Ors. … Appellant/s V/s. Sam Family Trust & Ors. …Respondent/s And I.A. No. 640/2022 In Appeal No. 31/2022 Between Aha Holdings Pvt. Ltd. & Anr. … Applicants/ Orig. Res. Nos 1 & 2 In the matter between Catalyst Trusteeship Ltd & Ors. … Appellant/s V/s. Aha Holdings Pvt. Ltd. & Ors. …Respondent/s

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Mr Nitin Thakkar, Sr. Counsel and Mr Rohit Gupta along with Mr Sachin Chandrana, Mr Archit Shah and Mahek Naik, i/b M/s. M. K. Ambalal & Co., Advocate for Appellants.

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Mr Rafeeq Peermohideen along with Mr T. N. Tripathi, i/b M/s. T. N. Tripathi & Co., Advocate for Respondent Nos. 1 & 2 (Applicants)

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-: Common Order dated: 21/12/2022:-

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By a common order dated 11/11/2022, this Tribunal had allowed I.A. Nos. 110/2022 and 111/2022 in the aforesaid appeals and granted an order of stay suspending the operation of the impugned judgments in S.A. Nos. 207 and 208 of 2021 on the files of DRT Pune. During the hearing of the aforesaid I.As., ad interim orders of stay and directions to maintain the status quo were made, which were extended from time to time. Those orders were modified by the disposal of the interlocutory applications for a stay in favour of the Appellant in both appeals.

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The Respondents have filed the present applications seeking to clarify/modify/vary the order of this Tribunal dated 11/11/2022 to direct the Appellants to maintain the status quo in respect of the secured assets and not to proceed against those assets under the provisions of the SARFAESI Act, and for an injunction to restrain the Appellants and their officers/agents from dispossessing the Respondents of the secured assets or taking physical possession of those assets for the purpose of the Sarfaesi measures initiated by the Appellants, pending the hearing and final disposal of the appeals. 3. The Appellants/Respondents in these I.As., vehemently opposed the applications stating that the earlier order of status quo was modified with the disposal of the stay applications and therefore, the Respondents in the appeals are not entitled to any order of status quo pending the disposal of the appeals.

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Heard Mr. Rafeeq Peermohideen, the Ld. Counsel appearing for the Applicants in these applications/Respondents in the appeals and Mr Nitin Thakkar, the Ld. Sr. Counsel appearing for the Appellants.

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Mr Peermohideen submits that the Respondents herein had obtained favourable orders from the D.R.T in the Securitisation Applications filed by them and the entire Sarfaesi measures initiated by the Appellants were quashed and set aside. In view of the stay granted by this Tribunal, the Appellants are now attempting to proceed with the Sarfaesi measures which were found to be flawed and faulty. The Ld. Counsel submits that by considering the effect of an interim order staying the operation of the order under challenge, a distinction has to be made between quashing an order and staying of operation of an order. Quashing of order results in restoration of the position as it stood on the date of the passing of the order which has been quashed. The stay of operation of an order does not, however, lead to such a result. It only means that the order which has been stayed would not be operating from the date of passing of the stay order and it does not mean that the said order has been wiped out from existence. ( Shree Chamundi Mopeds Ltd. Vs. Church of South India Trust Association CSI Synod Secretariat, Madras (1992) 3 SCC 1 relied upon). The Ld. Counsel also relies upon another decision of the Hon’ble Apex Court reported in Zenith Mataplast Pvt. Ltd. vs. State of Maharashtra & Ors. (2009) 10 SCC 388 to argue that an interim order is passed on the basis of prima facie findings, which are tentative. Such an order is passed as a temporary arrangement to preserve the status quo till the matter is decided

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finally, to ensure that the matter does not become either infructuous or a fait accompli before the final hearing. The object of the interlocutory injunction is to protect the plaintiff against injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial. The Ld. Counsel for the Applicants would also rely on another decision of the Hon’ble Supreme Court reported in Ravi Prakash Agarwal & Ors vs. Rajesh Prasad Agarwal & Ors (2008) 12 SCC 144 wherein it was held that when the order of status quo continued for a considerable length of time, it would, therefore, be appropriate to direct maintenance of status quo as was originally granted. In yet another decision of the Hon’ble High Court of Bombay at Goa reported in Murlidhar Teckchand Gandhi vs. State of Maharashtra 2016 SCC OnLine Bom 152 relied upon by Mr Peermohideen, it was held that the mere grant of stay upon operation of declaration does not wipe out the very existence of such statutory declaration.

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The Ld. Senior Counsel Mr Thakkar submits that the order to maintain the status quo earlier in these appeals was granted as an ad interim relief. After hearing both sides in great detail this Tribunal had, vide order dated 11/11/2022 specifically observed that the findings of the Ld. P.O. quashing the Sarfaesi proceedings initiated by the Appellants appear to be flawed and there is a strong prima facie case suggesting the infirmities of the impugned Judgments. It is on such finding that this Tribunal not only granted a stay in both the appeals but also suspended the operation of those Judgments. Under the circumstances, granting of a status quo order now sought

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by the Applicants would be tantamount to undoing the order passed by this Tribunal. The only remedy available to the Applicants is to file a writ petition challenging the order of this Tribunal. And hence, the applications deserve to be dismissed, submits the Ld. Sr. Counsel.

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After perusing the decisions relied upon by the Ld. Counsel for the Applicants and on an anxious consideration of the arguments advanced by both sides, I find that the earlier orders of status quo extended from time to time for granted only as an ad interim measure pending the hearing of the stay applications. Once the applications for stay and suspension of the operation of the impugned orders were heard in detail, this Tribunal found that the impugned orders were not prima facie sustainable for the reasons stated. The argument of Mr Peermohideen that the Applicants had earned a favourable order in the Securitisation Applications from the D.R.T and were, therefore, entitled to a status quo order till the appeals are finally heard and disposed of because irreparable injury would be done to them, in case the Sarfaesi measures are proceeded against, is not acceptable. The averment that not granting an order of status quo or an interlocutory injunction to protect the Applicants would cause irreparable damage to them which could not be compensated is also not acceptable because the SARFAESI Act provides for such an eventuality. Sub-section (3) to section 17 provides that after examining the facts and circumstances of the case and evidence produced by the parties, if the Tribunal comes to the conclusion that any of the measures referred to in sub-section (4) of section 13, taken by the secured creditor are not in accordance

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with the provisions of this Act and the Rules made thereunder, and require restoration of the management or restoration of possession, of the secured assets to the borrower or other aggrieved person, it may by order declare the Sarfaesi measures to be invalid and restore possession of the secured assets to the borrower and also pass such other directions as it may consider appropriate and necessary in relation to any of the recourse taken by the secured creditor under sub-section (4) of section 13.

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It cannot, therefore, be said that the Applicants would sustain irreparable damages which cannot be compensated and therefore, a status quo order has to be made in their favour with regard to the Sarfaesi measures initiated by the Appellants.

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Hence, both applications are dismissed.

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mks-1 & 3

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Aha Holding Pvt. Ltd. in the Mattercatalyst Trsuteeship Limited v. Aha Holdings Private Limited

Case brief

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Aha Holding Pvt. Ltd. in the Mattercatalyst Trsuteeship Limited v. Aha Holdings Private Limited

Case brief

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