N. MADHAVAN Vs. UNION OF INDIA

JUDGEMENT

(1.) The Petitioner is admittedly a guarantor of his brother-in-law, Mr.P.K.Selvaraj, who availed credit facilities, including overdraft facilities, from the Indian Bank, the 6th Respondent herein. As security for such credit facilities, the Petitioner admittedly mortgaged the property at New S.F. No.47/5A, Plot No.23, Old Door No.4/A/23, New Door No.5/14 NGGO's Colony, Chinnamudalaipatti Village, Namakkal Taluk and District, ad-measuring about 2400 sq.ft. The Petitioner states that, upon default by the principal debtor, he did not receive the notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the SARFAESI Act). Eventually, he came to know about the proceedings under the SARFAESI Act only upon receipt of communication dated 12.12.2010 from the 4th Respondent Bank stating that the property had been sold to the 5th Respondent herein by taking action under Section 13(4) of the SARFAESI Act. The said sale was challenged by filing SA.SR.No.558 of 2010 before the Debts Recovery Tribunal, Madurai (the DRT Madurai), which was dismissed for default. Subsequently, a restoration petition in I.A. Nos.1209 to 1212 of 2015 were filed, which were dismissed for non prosecution on 05.05.2015.

(2.) Meanwhile, proceedings had been initiated by the Indian Bank under Section 14 of the SARFAESI Act to obtain vacant possession of the property from the Petitioner and orders were passed in the said Section 14 proceeding by the District Magistrate and District Collector, Namakkal, on 27.04.2011. The said order dated 27.04.2011 was challenged by filing W.P. No.25758 of 2012, which was disposed of by order dated 03.04.2018 by a Division Bench of this Court granting liberty to the Petitioner herein to challenge the order dated 27.04.2011 by initiating action in a manner known to law. Pursuant thereto, SA.SR.No.8187 of 2018 was filed before the DRT Madurai along with an application to condone delay. The said application to condone delay was dismissed by order dated 08.07.2019. An appeal was filed as against the order dated 08.07.2019 before the Debts Recovery Appellate Tribunal (the DRAT) under Section 18 of the SARFAESI Act on 18.07.2019. An application to waive the pre-deposit was filed by way of I.A. No.754 of 2019. The said waiver application was disposed of by holding that not less than 25% of the debt due should be pre-deposited and by directing the Appellant therein, who is the Petitioner herein, to deposit a sum of Rs.1.51 lakhs with the Registrar of the DRAT within four weeks from 30.09.2019.

(3.) The DRAT order dated 18.7.2019 was challenged in W.P. No.30324 of 2019 on the ground that the requirement of pre-deposit is not applicable because the appeal before the DRAT is against an order under Section 5 of the Limitation Act, 1963 (the Limitation Act), and not under Section 17 of the SARFAESI Act. The decision of the Hon'ble Supreme Court in Mardia Chemicals Limited v. Union of India, 2004 4 SCC 311 (Mardia Chemicals) was relied upon in support of the above contention. This writ petition was disposed of by a Division Bench of this Court on 23.10.2019 by directing the DRAT to pass appropriate orders in accordance with law. Pursuant thereto, by order dated 17.12.2019, the DRAT concluded that the Appellant therein/Petitioner herein should be treated at par with the borrower and therefore directed that a pre-deposit of Rs.1.51 lakhs should be made. A writ petition, W.P. No. 519 of 2020, was filed challenging the order dated 17.12.2019 of the DRAT directing pre-deposit of Rs.1.51 lakhs by, once again, contending that the DRAT erroneously treated it as an appeal against an order under Section 17 of the SARFEASI Act and that the second proviso to Section 18 of the SARFAESI Act is inapplicable as per the judgment in Mardia Chemicals. By a detailed order dated 20.01.2020, the Division Bench of this Court discussed the chronology of events extensively and concluded that the impugned order of the DRAT, in exercise of its discretion under Section 18 of the SARFAESI Act, does not warrant interference by this Court except to the limited extent of granting two weeks' time from the date of receipt of the order to make the pre-deposit of Rs.1.51 lakhs. After making the pre-deposit, the present writ petition challenging the constitutional validity of the Section 18(1) of the SARFAESI Act and the second proviso thereto has been filed in these facts and circumstances.