Dismissed

Sri K Prasad v. Authorised Officer

Karnataka HC18 Feb 2020WP/3886/2020

Case brief

AI extract

What is this about?

The High Court of Karnataka dismissed a writ petition challenging an DRAT order requiring a pre-deposit for an appeal. The petitioner claimed to be an agreement holder who stepped into the borrower's shoes. The Court held that such a person is treated as a borrower under Section 18 and cannot evade the pre-deposit mandate, distinguishing the cited Kerala precedent.

What did the court decide?

The writ petition was dismissed on the ground that the petitioner, stepping into the shoes of the borrower, is required to make the pre-deposit.

Sri K Prasad Vs Authorised Officer — Banking and Recovery | Karnataka HC (2020)

¶1

¶2

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

¶3

DATED THIS THE 18^TH DAY OF FEBRUARY, 2020

¶4

PRESENT

¶5

THE HON’BLE MR. JUSTICE ARAVIND KUMAR

¶6

AND

¶7

THE HON’BLE MR. JUSTICE E.S. INDIRESH

¶8

W.P. NO.3886/2020 (GM-DRT)

¶9

BETWEEN:

¶10

SRI. K. PRASAD AGED ABOUT 54 YEARS S/O LATE SRI. K. RAMANJANEYALU R/AT NO.8/9/123/1, 9^TH MAIN II BLOCK, JAYANAGAR BANGALORE - 560 011.

¶11

...PETITIONER

¶12

(BY SRI. RAJENDRA M.A, ADVOCATE)

¶13

AND:

¶14

AUTHORISED OFFICER RELIGARE FINVEST LTD., BRANCH OFFICE NO.3 SANGEETHA TOWERS 80 FEET ROAD, INDIRANAGAR BANGALORE - 560 038.

¶15

MR. SUDEEP SRINIVAS S/O SRI. M. SRINIVAS NO.969, 5^TH ‘C’ CROSS VIJAYA BANK LAYOUT, BEHIND IIM, BANNERGHATTA ROAD, BANGALORE.

¶16

…RESPONDENTS

¶17

¶18

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF CONSTITUTION OF INDIA PRAYING TO SET ASIDE THE ORDER DATED:31.01.2020 PASSED IN I.A.NO.895/2019 (APPLICATION FILED U/S 18 OF THE ACT FOR WAIVER OF PRE-DEPOSIT) IN AIR NO.281/2019 PASSED BY THE HON’BLE DEBT RECOVERY APPELLATE TRIBUNAL, CHENNAI, ONLY IN SO FAR IMPOSING CONDITION TO MAKE A PRE-DEPOSIT THE ENTIRE SALE AMOUNT OF RS.1.2 CRORES, VIDE ANNX-B AND THUS RENDER JUSTICE.

¶19

THIS PETITION COMING ON FOR PRELIMINARY HEARING THIS DAY, ARAVIND KUMAR J, MADE THE FOLLOWING:

¶20

O R D E R

¶21

Heard Sri.M.A.Rajendra, learned counsel appearing for petitioner. Perused the records.

¶22

Petitioner being aggrieved by the proceedings initiated by the secured creditor in selling the property which was alleged to have been mortgaged by the borrower had filed an application for setting aside the sale in S.R.No.5507/2017 before the Debt Recovery Tribunal- II, Karnataka at Bangalore (for short ‘DRT’). On account of there being delay of 20 days in filing said application, an interlocutory application in I.A.No.717/2017 came to be filed. Tribunal by order dated 26.12.2017- Annexure-C dismissed the application

¶23

¶24

for condonation of delay and consequently dismissed the petition also.

¶25

Being aggrieved by said order, an appeal under Section 18(1) of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short ‘SARFAESI Act’) along with an interlocutory application came to be filed by the appellant/petitioner before Debt Recovery Appellate Tribunal at Chennai (for short ‘DRAT’) in AIR (SA) No.281/2019 vide Annexure-A seeking waiver of predeposit. The DRAT by impugned order dated 13.01.2020Annexure-B has directed appellant to make pre-deposit of Rs.1.29 Crores with the Registrar of tribunal within a period of four weeks. Hence, this writ petition.

¶26

It is the contention of Sri.M.A.Rajendra, learned counsel appearing for petitioner that DRAT committed a serious error in calling upon the petitioner/appellant to deposit the amount as required under Section 18 without considering the expression or language found in second proviso to Section 18(1) of the

¶27

¶28

Act, which mandates that “ borrower ” if being aggrieved by an order passed by the DRT under Section 17 were to prefer an appeal then such “ borrower ” would be required to deposit and it excludes anyone otherwise than borrower for making pre-deposit. He would elaborate his submission by contending that petitioner being an agreement holder of the property which has been sold by way of private treaty between secured creditor and purchaser is empowered to challenge the same particularly when petitioner is having a registered agreement of sale in respect of said property vide agreement dated 17.06.2010-Annexure-D and as such he cannot be called upon to make pre-deposit as a condition precedent for entertaining the appeal particularly when he does not fall within the four corners of the expression “borrower” as indicated in second proviso to sub-Section (1) of Section 18 of SARFAESI Act and by placing reliance on the judgment in the matter of P.K.JEGDEV VS. INDIAN BANK & ANOTHER reported

¶29

in [2018 (2) D.R.T.C 438 (Ker.) ], he seeks for allowing the writ petition by quashing the impugned order.

¶30

¶31

Having heard the learned Advocate appearing

¶32

for petitioner and after bestowing our careful and anxious consideration to the contention raised at the bar, we are not inclined to accept the said contention for reasons more than one. Firstly, the expression which has been used in second proviso to sub-Section (1) of Section 18 of Act would clearly indicate that an appeal would not be entertained by the appellate Tribunal unless the “ borrower ” has deposited with the tribunal the debt due from him as claimed by the secured creditor or determined by the DRT, whichever is less and for the reasons to be recorded in writing it can be reduce the amount to not less than 25% of the said amount of debt referred to in the second proviso of Section 18(1) of the Act.

¶33

In the instant case, undisputedly, petitioner is claiming to be the agreement holder of the property which has been mortgaged by the borrower who is none other than the vendor of petitioner and the said registered agreement dated 17.06.2010- Annexure-D

¶34

¶35

which has come into existence subsequent to creation of mortgage which was in the year 2007. When petitioner is claiming a right over the subject property by virtue of an agreement of sale which has been mortgaged by the mortgagor in favour of the Bank, necessarily petitioner would step into the shoes of the mortgagor and his claim if any cannot be larger than the claim of his vendor. Thus, petitioner having stepped into the shoes of the borrower, he is required to be treated as a borrower for the purposes of Section 18 of the Act, as otherwise if any other interpretation is sought to be given to said expression, it would be contrary to the intention of law makers and would also amount to doing violence to said proviso. As such, we are not inclined to accept said contention. Secondly, judgment relied upon by the learned counsel appearing for petitioner as could be seen from the said judgment relates to the right of an applicant who have stepped into the shoes of borrower was not under consideration and as such the view taken by the learned Single Judge of the Kerala High Court though not binding on us and being persuasive, would

¶36

¶37

not applicable even otherwise to the facts of the present

¶38

case.

¶39

For reasons indicated hereinabove, we dismiss the

writ petition.

SD/JUDGE

SD/JUDGE

Sri K Prasad v. Authorised Officer

Case brief

What is this about?

What did the court decide?

Sri K Prasad v. Authorised Officer

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Jeethendra Kumar Rajan Vs Dr a S Deshpande

M/S Gurukiran Enterprises Vs Mr. Anil Kumar

Mr. P. Shivaram Bhat Vs Smt. Jyothi Lakshmi

Smt. Anuradha Vs the Housing Commissioner

Sri. J K Nagaraj Vs the Karnataka State Financial Corporation

Shri M K Yashvantha Alva Vs the Authorized Officer