INDIAN BANK Vs. DEBT RECOVERY APPELLATE TRIBUNAL

JUDGEMENT

(1.) The legal question that is required to be answered by us in these matters is 'could there be any complete waiver of deposit amount to be made by the borrower/guarantor while preferring an appeal before the Debts Recovery Appellate Tribunal, as contemplated under Section 18(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the 'SARFAESI' Act) and whether credit could be given to the borrower/guarantor as against the amount deposited/paid by the auction purchaser towards the sale price?'

(2.) The writ petitioner/Bank is the creditor; the respondents 3 and 4 in the writ petition are the guarantors and the 5th respondent in the writ petition, who is the petitioner in the Civil Revision Petition is the auction purchaser. For the sake of convenience and easy reference, the parties are referred to as per their ranking in the writ petition.

(3.) One late G.Venkateswaran and his wife Mrs.Sujatha Venkateswaran were the shareholders of Sujatha Films Limited, Parsn Medicinal Plants Private Limited now renamed as Parsn Holiday Resorts (P) Limited and Coconut Groves Private Limited, now renamed as Coconut Groves Holiday Resorts (P) Limited. The said Sujatha Films Limited borrowed a sum of Rs.1.50 crores from the Bank and the respondents 3 and 4 mortgaged the properties of an extent of about 72.06 acres of vacant land at Mahabalipuram and also delivered the original title deeds of the property as security for the payment of the loan to the bank. Since the borrower/Sujatha Films Limited failed to repay the amount, the Bank filed an application in O.A.No.552 of 1997 before the Debts Recovery Tribunal No.II, Chennai and the same was subsequently re-numbered as O.A.No.2018 of 2001 and thereafter as O.A.No.81 of 2007 and is pending disposal before the Debts Recovery Tribunal No.III, Chennai. Pending disposal of the said application, the SARFAESI Act came into force and on 30.6.2004, the Bank issued a statutory demand notice under Section 13(2) of the SARFAESI Act to the borrower and guarantors calling upon them to pay the sum of Rs.32,47,05,634.76 together with further interest at the rate of 20.75% p.a. from 30.6.2004 till payment and as the borrower and the guarantors failed to pay the amount within sixty days from the date of receipt of notice, the Bank took possession of immovable property and statutory possession notice dated 4.12.2004 under Section 13(4) of the Act was issued and the statutory possession notice was published in the newspaper on 5.12.2004. On 23.9.2005, the notice of intended sale was sent by the petitioner Bank to the borrower and guarantors and sale notice was published in the newspaper on 2.10.2005. Thereafter, the respondents 3 and 4/guarantors filed an interlocutory application in I.A.No.640 of 2004 in O.A.No.2018 of 2001 before the DRT-II, contending that without withdrawing the original application, no action under the SARFAESI Act could be initiated and by an order dated 10.1.2006, the DRT-II, Chennai had dismissed the said application. Thereafter, the sale notice dated 22.1.2006 was published in the 'Indian Express' and 'Dinamani' and as against the said notice, the respondents 3 and 4/guarantors filed an application before the second respondent/Appellate Tribunal in M.A.No.332 of 2006,in which no stay was granted.