Allowed

Pegasus Assets Reconstruction Private Limited v. Instruments Techniques Private Limited

DRAT24 Apr 2025REGULAR APPEAL/4/2025

Case brief

AI extract

What is this about?

The Debt Recovery Appellate Tribunal allowed an appeal against an unreasoned order of the DRT-I Hyderabad that passed without assigning reasons for setting aside an ex parte decree. The Tribunal held that the lack of reasoning rendered the order arbitrary and a failed natural justice

What did the court decide?

Impugned order set aside; matter remanded to DRT-I Hyderabad to decide the application for setting aside ex parte decree by passing a reasoned order within eight weeks.

Pegasus Assets Reconstruction Private Limited… — Civil Procedure and Limitation | DRAT (2025)

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Reportable / not reportable

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IN THE DEBT RECOVERY APPELLATE TRIBUNAL - KOLKATA

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HON'BLE Justice Anil Kumar Srivastava, Chairperson

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REGULAR APPEAL No. 04 of 2025

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(Arising out of MA 46 OF 2024 in O.A. No. 72 of 2018 – DRT-I Hyderabad) 24.04.2025

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PEGASUS ASSETS RECONSTRUCTION PRIVATE LIMITED having registered office at Regus Business Centre, Level-4, 1.10.39 to 44, Gumidelli Towers, Begumpet, Hyderabad – 500016.

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... Appellant

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--Vs--

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INSTRUMENTS TECHNIQUES PRIVATE LIMITED having office at B 2 Co-Operative Industrial Estate, Bala Nagar, Hyderabad – 500037.

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2.SRI S RAVI residing at 301, KLK KSHETRA, 8-2-686/7/4, ROAD NO 12, BANJARA HILLS, HYDERABAD- 500034.

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3.RAVI ELECTRONICS PVT LTD at FLAT NO 1209, 11TH FLOOR, VASAVI MPM GRAND,YELLA REDDY GUDA ROAD, AMEERPET, Hyderabad – 500073.

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4.CATHOLICS SYRIAN BANK LTD at D NO 5-9-241, 1ST FLOOR, OPP GRAMMER SCHOOL, ABID ROAD, Hyderabad – 500001.

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... Respondents

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For Appellant : Mr. Nimish Mishra, Ld. Adv. Mr. Ankit Chatterjee, ld. Adv. For Respondent:Mr. Nimish Mishra, ld. adv. resp. no.1

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Mr. Rahul Verma, ld.a dv. Mr. Nemani Srinivas, ld. Adv.

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The Appellate Tribunal

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Instant appeal has arisen against the order dated

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20.11.2024 passed by learned DRT-I Hyderabad in M.A. No. 46 of

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2024 arising out of O.A. No. 72 of 2018 [M/s. Instruments

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Techniques Pvt. Ltd. Vs. M/s. Pegasus Assets Reconstruction P.

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Ltd.] whereby learned DRT allowed the M.A. 46 of 2024.

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It appears from the pleadings, O.A. 72 of 2018 was filed by

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the appellant herein against five defendants for certificate amount of Rs.1,04,97,697.79, which was allowed exparte on 15.08.2018. Thereafter, an application u/s 22(2)(g) of the Recovery of Debts & Bankruptcy Act, 1993 read with Section 5 Limitation Act being I.A. 1812 of 2022 and MAIR No. 918 of 2022 was filed for condonation of delay of 1539 days in preferring the application for setting aside the exparte decree. This was filed by defendants no.1, 3 and 4. This application was allowed by the learned DRT vide order dated 22.07.2024 and delay in filing M.A. was condoned. Order dated 22.07.2024 was not challenged by the secured creditor. Thereafter, learned DRT dispose of the M.A. filed u/s 22(2)(g) of the Act for setting aside the exparte decree by passing the impugned order, which is under challenge.

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A bare perusal of the impugned order would reflect that learned DRT has passed the order without assigning any reason.

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It is an unreasoned order. It appears that learned DRT was persuaded to allow the M.A. on the same ground application u/s 5 Limitation Act was allowed. However, learned DRT is expected to

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decide the M.A. on its own merits on the basis of the ground taken in application for setting aside the exparte decree as well

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as objection raised by the opposite party. It is a settled legal proposition that an order should always be a speaking order wherein it should reflect the grounds upon which the Learned DRT

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have arrived at a particular conclusion. The grounds taken by the Appellant should also be considered before accepting or rejecting

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the same. If reasons are not given in the order, it is an arbitrary

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exercise of power by the DRT.

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In Brijmani Devi -Vs- Pappu Kumar and Anr. , [(2022) 4

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SCC 497], Hon’ble Apex Court held as under:

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“22. On the aspect of the duty to accord reasons for a decision arrived at by a court, or for that matter, even a quasi-judicial authority, it would be useful to refer to a judgment of this Court in Kranti Associates (P) Ltd., v. Masood Ahmed Khan, (2010) 9 SCC 496 wherein after referring to a number of judgmentsthisCourt summari sed at para 47 the law on the point. The relevant principles for the purpose of this case are extracted as under:

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(a) Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well.

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(b) Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even administrative power.

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(c) Reasons reassure that discretion has been exercised bythe decision-maker on relevant grounds and by disregarding extraneous considerations.

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(d) Reasons have virtually become as indispensable a component of a decision making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies.

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(e) The ongoing judicial trend in all countries committed to rule of law and constitutional governance is in favour of reasoned decisions based on relevant facts. This is virtually the lifebloodof judicial decision-making justifying the principle that reason is the soul of justice.

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(f) Judicial or even quasi-judicial opinions these days can be as different as the Judges and authorities who deliver them. All these decisions serve one common purpose which is to demonstrate by reason that the relevant factors have been objectively considered. This is important for sustaining the litigants’ faith in the justice delivery system.

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(g) Insistence on reason is a requirement for both judicial countability and transparency.

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(h) If a Judge or a quasi-judicial authority is not candid enough about his/her decision-making process then it is impossible to know whether the person deciding is faithful to the doctrine of precedent or to principles of incrementalism.

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(i) Reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or "rubber-stamp reasons" is not to be equated with a valid decisionmaking process.

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(j). It cannot be doubted that transparency is the sine qua non of restraint on abuse of judicial powers. Transparency in decision-making not only makes the Judges and decision-makers less prone to errors but also makes them subject to broader scrutiny.

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(k) In all common law jurisdictions judgments play a vital rolein setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of "due process".

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“24. The Latin maxim “cessante ratione legiscessat lex” meaning “reason is the soul of the law, and when the reason of any particular law ceases, so does the law itself, is also apposite.”

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In a recent judgment in SBI -vs- Rajesh Agarwal (2023 6

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SCC 1) Hon’ble Chief Justice of India, placing reliance upon Kranti

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Associates Private Limited -vs- Masood Ahmed Khan (2010

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9 SCC 496) held that

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(i) A reasoned order allows an aggrieved party to administrate that the reasons which persuaded the authority topass an adverse order against the interests of the aggrieved party are extraneous or perverse;

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(ii) The obligation to record reasons acts as a check on the on the arbitrary exercise of the powers.”

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Order without reason is nothing but an arbitrary exercise of

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power. In the administrative actions also reasons are required to

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be mentioned. An order must contain reasons for arriving at a

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particular finding. In the present case learned Presiding Officer

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has not assigned any reason while allowing the M.A..Since the

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impugned order is an unreasoned one, I do not find any ground to sustain the same. Accordingly, I am of the considered view

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that matter be remanded back to learned DRT to decide the M.A.

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46 of 2024 strictly in accordance with law by passing a reasoned order.

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O R D E R

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Appeal is allowed. Impugned order dated 20.11.2024 is set

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aside. Matter is remanded back to the learned DRT to decide the

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same afresh. It is expected that learned DRT should decide the

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matter preferably within a period of eight weeks from the date of

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receiving copy of the order. Costs easy.

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File be consigned to record room.

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Copy of the order be supplied to the appellant and the respondents and a copy be also forwarded to the concerned DRT. Copy of the judgement/Final Order be uploaded in the Tribunal’s website.

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Order dictated, signed and pronounced by me in the open

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Court on this the 24^th day of April, 2024.

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(Anil Kumar Srivastava, J) Chairperson

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Dated : 24.04.2025 12/pkb

Pegasus Assets Reconstruction Private Limited v. Instruments Techniques Private Limited

Case brief

What is this about?

What did the court decide?

Pegasus Assets Reconstruction Private Limited v. Instruments Techniques Private Limited

Case brief

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