Allowed

Bank of Baroda v. Hbs View Pvt. Ltd.

DRAT30 Jun 2023MISC APPEAL/152/2022

Case brief

AI extract

What is this about?

The Debts Recovery Appellate Tribunal allowed the Bank of Baroda's appeal against an order granting an injunction barring the bank from taking physical possession of secured office premises before auction confirmation. The Tribunal held the injunction was unjustified and directed the lower tribunal to expedite the hearing.

What did the court decide?

Misc. Appeal allowed; injunction vacated; impugned order set aside; I.A. No. 2110 of 2022 dismissed; main security application directed to be disposed on merits.

Bank of Baroda versus Hbs View Pvt. Ltd. — Company and Corporate | DRAT (2023)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr Justice Ashok Menon, Chairperson Misc. Appeal No. 152/2022

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Between

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Bank of Baroda … Appellant/s V/s.

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HBS View Pvt. Ltd. & Ors. …Respondent/s Mr Rajesh Dubey, i/b M/s.Rajesh Law & Associates, Advocate for Appellant Bank.

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Mr Rajesh Nagory, i/b M/s. Prakash Shah & Co., Advocate for Respondents.

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-: Order dated: 30/06/2023:-

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The Appellant Bank of Baroda is in appeal impugning the order dated 20.09.2022 in I.A. No. 2110 of 2022 in Securitisation Application (S.A.) No. 314 of 2019 on the files of the Debts Recovery Tribunal No.-II, Mumbai (D.R.T.) granting an injunction in terms with the prayer clauses 41(a) & (b) of the S.A. The Appellant is aggrieved and hence in appeal.

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The aforesaid S.A. was filed by the Respondents challenging the Sarfaesi measures initiated by the Appellant Bank for recovery of the debt due to it. The main objection taken up in the application is with regard to the orders passed by the Chief Metropolitan Magistrate (CMM) under Sec 14 of the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’ for short).

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A demand notice under Sec. 13(2) was issued on 16.10.2018

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demanding a sum of ₹47.62 crores. The property claimed to be the secured asset is Office No. 505, Ceejay House, Dr Annie Basant Road, Worli, Mumbai-400018. On 09.01.2019, the Applicants/borrowers gave an undertaking to pay the entire amount in instalments on stipulated dates and the Appellant Bank undertook not to take immediate possession of the secured asset. Accordingly, an order was passed by the D.R.T. on 17.09.2019.

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₹4.25 crores was agreed to be paid on 15.01.2019. ₹10 crores was undertaken to pay by 31.01.2019 and ₹29 crores was to be paid by 20.02.2019. The Appellant Bank had attempted to sell the secured asset five times after taking symbolic possession of the property but the auction failed for want of bidders. Vide the undertaking dated 09.01.2019, the Respondents agreed and permitted the Appellant Bank to proceed with the auction sale and undertook that in case of failure on their part to pay the entire amount as agreed, the sale could be confirmed and the physical possession of the asset would be handed over without any demure directly to the auction purchaser. The Respondents paid the first two instalments but defaulted payment of the third instalment. It is contended by the Respondents that in violation of the orders of the D.R.T. dated 12.09.2019 and 17.09.2019, the Appellant clandestinely obtained a modified order from the CMM with the direction to replace the Advocate Commissioner with the Assistant Registrar and accordingly, a notice was issued for taking over physical possession. The argument of the Respondents was that the order of the D.R.T. was never revealed before the CMM to obtain

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an order of physical possession.

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The fact that the amount as claimed by the Appellant is due to be paid by the Respondents is not a dispute. They have also agreed for the sale with regard to the secured asset to proceed. The only contention is that the Respondents agreed not to be dispossessed from the office premises prior to the sale. It is admitted that the Respondents had defaulted in payment of the entire amount. Yet they insist that the possession shall not be taken over from them.

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The Ld. Presiding Officer has in the impugned order granted an interlocutory order of injunction in terms with the prayer 41(a) of the S.A. which reads thus:

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“....... any further action of the Respondent Bank including physical possession scheduled on 20.09.2022 in respect of the subject property of the Applicants.”

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The injunction granted by the Ld. Presiding Officer would thus act as a total embargo in handing over possession. The undertaking does not contemplate that. An undertaking has to be read as a whole. According to the Respondents, default in payment of the amount would only entail in handing over possession of the secured asset directly by the Respondents to the auction purchaser without any demure. The Respondents state that they are even now willing to do so. Hence, the Applicant Bank cannot insist on possession prior to the confirmation of the auction sale.

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The Appellant would contend that the Bank attempted the sale of the secured asset five times on the basis of symbolic

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possession. It failed all five times. Hence, there is no substance in the submission of the Respondents to clinch on to the possession despite having defaulted payment of ₹29 crores as agreed. The said amount was to be paid on 20.02.2019 and more than four and half years have elapsed. There is no gainsaying in protracting the matter further on the grounds of the undertaking. Attempting a sale without physical possession of the property would definitely not attract many buyers. The failure of the five attempted auctions stands testimony to that. The Ld. Counsel appearing for the Appellant submits that granting a blanket injunction with terms with the relief sought would be not justifiable in view of the decision of the Hon’ble High Court of Bombay in ASREC (India) Ltd. vs. Fastgrowth Hospitality LLP & Ors. 2023 SCC OnLine Bom 174 .

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After having heard the rival submissions, this Tribunal is of the considered view that the Ld. Presiding Officer was not justified in granting a blanket and unconditional injunction against the handing over of the possession of the secured asset. The injunction is, therefore, to be vacated.

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The Misc. Appeal is allowed and the impugned order of the D.R.T. dated 20.09.2022 is set aside and I.A. No. 2110 of 2022 in S.A. No. 314 of 2019 stands dismissed. The Ld. Presiding Officer

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is directed to expedite hearing of the S.A. No. 314 of 2019 and dispose of the same on merits. I.A. No. 597 of 2022 for stay is disposed of as infructuous.

Sd/-

Chairperson

mks-01

Bank of Baroda v. Hbs View Pvt. Ltd.

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Bank of Baroda v. Hbs View Pvt. Ltd.

Case brief

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