Dismissed

Kvs Textiles Proprietor v. Murugan v Union Bank of India

DRT20 Jun 2025SA/310/2025

Case brief

AI extract

What is this about?

This tribunal rejected an application for refund of court fees filed under Section 17 of the SARFAESI Act. The court held that the Debts Recovery Tribunals (Refund of Court Fee) Rules, 2013, apply only in cases settled prior to hearing or during proceedings, and ruled that a unilateral withdrawal on the day of the auction did not constitute a qualifying settlement.

What did the court decide?

The prayer for refund of court fees is rejected; the application under Section 17 is dismissed as withdrawn.

Kvs Textiles Proprietor v Murugan versus Union Bank of India — Banking and Recovery | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL – II AT CHENNAI

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Dated this 20^th day of June, 2025

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PRESENT: SHRI SHARANG DHAR UPADHYAY PRESIDING OFFICER

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SA No.310 of 2025

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1. M/s KVS Textile

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Proprietor : V. Murugan

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No.38, Harrish Road, Pudupet

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Chennai – 600 002

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M. Sumitha

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Proprietrix, Prasana Textiles

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Residing at

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No.30/59, Thulasingam Naicken Street Pudupet, Anna Salai

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Chennai – 600 002

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V. Murugan Residing at

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No.30/59, Thulasingam Naicken Street Pudupet, Anna Salai

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Chennai – 600 002

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V. Elumalai Residing at No.30/59, Thulasingam Naicken Street Pudupet, Anna Salai

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Chennai – 600 002

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Vasanthi

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Residing at No.37/77, Bangaru Naicken Street Anna Salai, Chennai – 600 002

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Angu Mani Residing at No.37/77, Bangaru Naicken Street Anna Salai, Chennai – 600 002

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V. Senniappan Residing at No.37/77, Bangaru Naicken Street Anna Salai, Chennai – 600 002

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Rajalaxmi. S Residing at No.37/77, Bangaru Naicken Street Anna Salai, Chennai – 600 002 …Applicants

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Versus

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The Authorised Officer / Chief Manager Union Bank of India Asset Recovery Branch No.9, Elcanso Complex Casa Major Road, Egmore Chennai – 600 008 …Respondent

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Counsel on Record / Appeared

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Applicant by : Ld. Counsel M/s A. Arokia Satheesh Respondent by : Ld. Counsel M/s Sarath Babu

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ORDERS ON REFUND OF COURT FEE AND SA

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This Application is filed under Section 17(1) of the SARFAESI Act challenging the Sale Notice dated 24.04.2025 for recovery of a sum of Rs.2,75,24,273/- issued by the respondent bank scheduling the sale to 15.05.2025.

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When the case was taken up for hearing on 15.05.2025, the counsel for both sides were present and the applicant filed a memo dated 13.05.2025 stating that the matter is listed on 15.05.2025 i.e., on the date of auction and therefore no useful purpose would be served by moving the case on 15.05.2025 and further that the applicant do not want to prosecute the case and prayed for refund of court fee being a sum of Rs.71,500/-. After considering the memo filed by the applicant and after hearing the parties, this Tribunal adjourned the matter to 03.06.2025 and from 03.06.2025, the matter stood till this day for passing orders on the prayer for refund of court fees.

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The prayer for refund of court fees is made by the applicant primarily based on the judgment of the Hon’ble High Court of Karnataka in W.P. No.11177 of

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2023 (GM-DRT), DD-19.11.2024 in the matter of Sri Narayana Murthy H M & Another Vs. The Registrar, Debts Recovery Tribunal, Bangalore & Ors , wherein

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the Hon‟ble High Court has held thus:

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“25. Therefore, when there is no formal adjudication of a dispute and more so, when a suit or as in this case securitization application made under Section 17 of the SARFAESI Act, 2002 challenging the recovery proceedings initiated by the Bank, has been disposed of as infructuous in light of the settlement arrived at between the applicant-borrower and the Bank, it is an inherent right of the applicant to receive a refund of the court fees, so deposited at the time of the filing of such application. Mere unavailability of an express provision for return / refund of court fees cannot deprive a litigant of the inherently equitable right of a refund of court fee where no order is made on the merits of the arguments canvassed and evidence adduced. Therefore, in concurrence with the ratio enunciated in „Progressive Aquatech‟ by the High Court of Telangana, I am of the view that by virtue of Section 37 of the SARFAESI Act, Debts Recovery Tribunals (Refund of Court Fee) Rules, 2013 are applicable to a proceeding before the Tribunal under the SARFAESI Act vis-a-vis refund of court fee”

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Before going into the prayer of the applicant for refund of court fees, it would be relevant to refer to the relevant provision under SARFAESI Act and the Rules made thereunder. While the SARFAESI Act and the Rules made thereunder do not contain explicit provision for refund of court fees, Section 37 of the SARFAESI Act clarifies that the provisions of the SARFAESI Act are supplementary to the RDB Act, 1993. Therefore, the relevant provision under which the Tribunal may consider the request of the applicant for refund of court fee is “The Debts Recovery Tribunals (Refund of Court Fee) Rules, 2013”. As per Rule 2 of the said Rules, these rules shall be applicable in all cases filed before the Tribunal which are settled prior to the commencement of the hearing before that Tribunal or at any stage of the proceedings before the final order is passed by the Presiding Officer. Rule 4 relates to „Amount of Refund‟ and the same reads as under: -

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“The Presiding Officer of the Tribunal before which any case is filed for settlement of the dues of the Banks and Financial Institutions may order refund of fee remitted at the time of filing the case at the following rates:

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(a) 50 per cent of the fee remitted in the cases which are settled prior to the commencement of the hearing before the Tribunal;

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(b) 25 per cent of the fee remitted in the cases which are settled at any stage of the proceedings before the final order by the Presiding Officer is passed”

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Therefore, the prayer for refund of court fee has been examined in the light of the provisions of the Debts Recovery Tribunals (Refund of Court Fee) Rules, 2013. As per Rule 4 the refund of court fee is admissible only in two situations viz., 50% of the fee remitted in the cases which are settled prior to the commencement of the hearing before the Tribunal and 25% of the fee remitted in the cases which are settled at any stage of the proceedings before the final order by the Presiding Officer is passed. From a reading of Rule 4, it is amply clear that the refund of court fee is admissible only in the event of settlement of the dues either prior to the commencement of the hearing before the Tribunal or it is settled at any stage of the proceedings before the final order by the Presiding Officer is passed.

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In the present case, there is no record of any settlement between the parties. The application was not withdrawn prior to hearing, but on the date of hearing itself. The withdrawal memo has been filed due to the auction being scheduled on the same date of hearing, and not as a voluntary or anticipatory withdrawal. As such, this Tribunal is of the view that the prayer of the applicant for refund of court fee does not fall within the ambit of either condition of Rule 4 to warrant refund.

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In so far as the reliance placed on the judgment of the Hon‟ble High Court of Karnataka referred supra, with utmost respect to said judgment, it is stated that the facts of the said case and the present case on hand are different. In the case before the Hon‟ble High Court of Karnataka the case was disposed of as having become infructuous in light of the settlement evidenced by the no dues certificate issued by the Bank. However, in the present case on hand the application is being withdrawn unilaterally by the applicant without any direction from the Tribunal or recorded

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settlement as part of the Tribunal‟s proceedings. Further, Courts have consistently held that where a party chooses to withdraw a case without adjudication, and without formal compromise recorded before the court, refund of court fees is generally not warranted.

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