VINAY CONTAINER SERVICES PVT LTD Vs. AXIS BANK

JUDGEMENT

(1.) These proceedings under Article 226 of the Constitution of India arise out of an order passed by the Debts Recovery Appellate Tribunal at Mumbai on 29th October, 2010. By the order of the Appellate Tribunal, the petitioners have been directed to comply with the condition of pre-deposit under Section 18(1) of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, ("the Act") in an Appeal arising out of an interlocutory direction of the Debts Recovery Tribunal. The main issue which has been canvassed before the Court is whether the requirement of pre-deposit under Section 18(1) of the Act would be attracted where the order that is challenged in an Appeal before the Appellate Tribunal is not a final order under Section 17, but an interlocutory order.

(2.) The facts that are necessary to appreciate the background of the petition are that the first petitioner had availed of credit facilities from the respondent in 2008. The second and the third petitioners are guarantors and had created mortgages in favour of the Bank. The accounts had become irregular and were treated as non-performing assets in the books of the Bank as on 31 st December, 2009. The respondent invoked the provisions of Section 13(2) of the Act while issuing a notice on 12th March, 2010. Symbolic possession of the secured assets was taken over by the Bank on 18th August, 2010 by invoking the provisions of Section 13(4). Aggrieved by the action of the Bank, the petitioners filed an Appeal under Section 17 before the Presiding Officer of the Debts Recovery Tribunal at Mumbai on 17th September, 2010. An Application for an interim relief was moved before the Tribunal. By its order dated 1st October, 2010, the Tribunal directed the Bank not to take physical possession of the secured assets until the next date of hearing, but made its order conditional on a deposit of the sum of Rs.1.78 crores by the petitioners within four weeks. The Tribunal observed that the claim of the Bank was in excess of Rs. 17.18 crores with interest. Hence, while an order protecting the possession of the petitioners was warranted, this was made subject to a condition of deposit.

(3.) The petitioners have questioned the correctness of the order of the Tribunal in an Appeal before the Appellate Tribunal. By its order impugned in these proceedings, the Tribunal has held that the provisions of Section 18 have to be complied with even in the case of an interlocutory order. Accordingly, the first petitioner has been directed to deposit twenty-five per cent of the total claim of the Bank as a secured creditor in the amount of Rs.4,29,50,000/- of which an amount of Rs.1.50 crores was to be deposited by 16th November, 2010 and the balance by 16th December, 2010.