Partly allowed

M/S Yashwanth Engineering Pvt. Ltd. v. the Authorised Officer, Canara Bank

Karnataka HC3 Jun 2020WP/6579/2020

Case brief

AI extract

What is this about?

The High Court held that alternate remedies under the SARFAESI Act preclude writ jurisdiction under Article 226. However, the Court relaxed the Tribunal's deposit conditions, condoned the petitioners' delay, and directed the Tribunal to consider their appeal expeditiously within three months.

What did the court decide?

Writ petition allowed in part. The Tribunal is directed to consider the appeal under Section 17 of the SARFAESI Act expeditiously and not later than 30.06.2020.

M/S Yashwanth Engineering Pvt. Ltd. Vs the Authorised… — Banking and Recovery | Karnataka HC (2020)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 3^RD DAY OF JUNE, 2020

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BEFORE

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THE HON’BLE MR. JUSTICE NATARAJ RANGASWAMY

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WRIT PETITION NO.6579 OF 2020 (GM-DRT)

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BETWEEN:

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M/S YASHWANTH ENGINEERING PVT. LTD., HAVING ITS OFFICE AT SY.NO.30, MACKHOHALLI GATE, VISHWANEEDAM POST, MAGADI MAIN ROAD, BENGALURU-560091.

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REPRESENTED BY ITS DIRECTOR SRI.L.G.NAGARAJAIAH

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M/S NERC SYSTEMS PRIVATE LTD., HAVING ITS OFFICE AT NO.1118, 1^ST MAIN, KENGERI UPANAGAR, BDA KENGERI, BENGALURU-560060.

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REPRESENTED BY ITS DIRECTOR, SRI. L.G.NAGARAJAIAH.

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...PETITIONERS

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(BY SRI. RAJENDRA M.A., ADVOCATE)

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AND:

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THE AUTHORISED OFFICER CANARA BANK, ASSET RECOVERY MANAGEMENT BRANCH, NO.83, SPENCER TOWERS,

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M.G.ROAD, BENGALURU-560001.

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... RESPONDENT

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(BY SRI. T.P.MUTHANNA, ADVOCATE FOR CAVEATOR RESPONDENT)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH/SET ASIDE THE IMPUGNED ORDER DATED 15.03.2019 PASSED BY THE HON’BLE DRT-1, BENGALURU ON IA NO.824/2019 IN SA.141/2019 ANNEXURE-A ONLY IN SO FAR AS IMPOSING CONDITION TO DEPOSIT THE AMOUNT AND ETC.

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THIS PETITION COMING ON FOR PRELIMINARY HEARING THROUGH VIDEO CONFERENCE THIS DAY, THE COURT PASSED THE FOLLOWING:-

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ORDER

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The learned counsel for petitioners after arguing the petition at length, contended that the auction of the secured asset that was scheduled on 27.03.2020 was not proceeded with in view of the prevalent pandemic. Therefore, he submitted that the Tribunal may be directed to dispose off the proceeding before it by accepting the belated deposit made by the petitioners. The petitioners submit that the delay in depositing the amount was due to various market forces that was not in their contemplation. He further stated that the petitioners had deposited a sum

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of Rs.1,40,81,164/- between 04.04.2019 and 29.08.2019 which was more than what was ordered by the Tribunal. The learned counsel therefore submits that he would not press the reliefs sought for in this petition if the Tribunal is directed to consider the appeal filed before it under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (for short, ‘the SARFAESI Act’ ). The submission of the learned counsel for petitioners is placed on record.

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Learned counsel for the respondent would not dispute the fact that the amounts as set out in page No.11 of the writ petition were deposited by the petitioners. He submitted that these deposits were made not pursuant to the Order of the Tribunal but pursuant to persistent one time settlements that were offered by the Bank at the request of the petitioners. He would however contend that this Court cannot interfere under Article 226 / 227 of the Constitution of India as there is an alternate remedy under Section 17 of the SARFAESI Act.

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It is seen from the order at Annexure ‘A’ that the petitioners were required to deposit a sum of

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Rs.20,00,000/- on or before 29.03.2019 and a sum of Rs.30,00,000/- on or before 16.04.2019. The petitioners have deposited a sum of Rs.20,00,000/- on 04.04.2019, but failed to deposit the sum of Rs.30,00,000/- within the time fixed by the Tribunal. At page No.11 of the writ petition, the petitioners have detailed the amounts paid subsequent to 06.05.2019.

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It is without doubt true that this Court cannot exercise jurisdiction under Article 226 of the Constitution of India when there is an alternate and an efficacious remedy under Section 17 of the SARFAESI Act. This Court would not venture to upset the Order passed by the Tribunal at Annexure ‘A’. This Court has noticed that the Tribunal had by Annexure ‘A’ stayed further proceedings subject to deposit of Rs.20,00,000/- by 29.03.2019 and Rs.30,00,000/- by 16.04.2019. The petitioners have deposited Rs.1,40,81,164/between 04.04.2019 to 29.08.2019 and have complied the Order though belatedly. Though the learned counsel for the respondent claimed that the payment was pursuant to one time settlement, the same is not forthcoming from the statement of objections filed. This cannot be ruled out as the petitioners

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have voluntarily deposited more than what was directed. Since Section 17 of the SARFAESI Act is in the nature of a revision to check the proper exercise of power by the Bank while seeking measures under Section 14 of the SARFAESI Act and entitles the petitioners to recover back possession of the secured asset in the event of proof of abusive exercise, the said remedy cannot be stymied but should be construed liberally. Merely because, the petitioners have not deposited the amount as directed by the Tribunal, that would not render the proceeding under Section 17 of the SARFAESI Act infructuous. In that view of the matter, the only relief that the petitioners would be entitled to is the enlargement of time to deposit the amount as directed by the Tribunal. Hence, the delay in depositing the amount by the petitioners is condoned and consequently the interim Order of stay granted by the Tribunal on 15.03.2019 is deemed to be in force till the conclusion of proceedings. The Tribunal shall decide the proceeding before it on merits and pass appropriate Orders.

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The condition imposed by the Tribunal

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requiring the petitioners to deposit Rs.20,00,000/- by 29.03.2019 and Rs.30,00,000/- by 16.04.2019 has to be

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relaxed favourably and the condition requiring the petitioners to deposit Rs.50,00,000/- by 16.04.2019 is to be treated as sufficiently complied.

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Now that the petitioners have deposited the amount as directed by the Tribunal, the respondent shall not take any precipitative action to auction the secured asset.

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Accordingly, the Petition is allowed in part. The Debts Recovery Tribunal-I, Bengaluru, is directed to consider the appeal filed by petitioners under Section 17 of the SARFAESI Act expeditiously and not later than

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30.06.2020.

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The petitioners are at liberty to urge all the

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contentions that are available to them under law.

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Sd/JUDGE

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sma

M/S Yashwanth Engineering Pvt. Ltd. v. the Authorised Officer, Canara Bank

Case brief

What is this about?

What did the court decide?

M/S Yashwanth Engineering Pvt. Ltd. v. the Authorised Officer, Canara Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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