PML INDUSTRIES LIMITED Vs. DEBTS RECOVERY APPELLATE TRIBUNAL

JUDGEMENT

(1.) Aggrieved by the interim directions given by the Debts Recovery Tribunal (DRT) in an application for review of its decision passed its proceedings under Section 17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter called 'the Act'), the Asset Reconstruction Company (India) Ltd. (hereinafter referred as ARCIL) had preferred an appeal to the Debts Recovery Appellate Tribunal (DRAT). The interim directions of the DRT gave no more directions than advising the parties to explore the possibility of resolving the dispute and work out a scheme for repayment of loan. ARCIL wanted nothing of that and peeved at its inability to bring a denouement by taking possession of the property sought to contend before the DRAT that DRT was exceeding in its breadth of discretion by pushing an agenda for settlement against its will. The interim stay that had been granted by the DRT during the continuation of proceedings before it against dispossession was in the meanwhile running out and in the appeal filed by ARCIL, the debtor company had filed an application for stay, when the Appellate Tribunal, by interim order dated 25.11.2009, granted the stay against the order of possession and also directed as an interim measure Rs. 28 crores to be paid within a particular time and directed the matter to come up for hearing on 25.1.2010. The direction for payment of Rs. 28 crores seemed a trifle too harsh for the debtor company and it sought intervention of this Court in Civil Writ Petition No. 18912 of 2009. The learned Judge of this Court passed an order on 9.12.2009 disposing of the writ petition with a direction to prepone the hearing to 15.12.2009 before the Tribunal and dispose of the case before 23.12.2009. That the Appellate Tribunal did by its decision dated 23.12.2009, but it maintained its interim order dated 25.11.2009 and said that Rs. 2 crores will be paid before 29.12.2009 and the rest of the amount of the 50%.of the demand notice should be deposited before 7.1.2010 as a condition precedent for maintaining the possession. By the final order, the Appellate Tribunal afforded to the reconstruction company ARCIL liberty to withdraw the amount and directed the Debts Recovery Tribunal to dispose of the case as per law.

(2.) The order in challenge before this Court is the final order of disposal by the Appellate Tribunal. The grievance of the petitioner is that the Appellate Tribunal had literally choked the petitioner out of its resources and was pre-determining its issue by directing a large sum to be deposited to retain possession when the issue before the Debts Recovery Tribunal itself was the proceedings pursuant to a notice which was issued under Section 13(2) of the Act, was illegal and the subsequent proceedings relating to possession under Section 13(4) and the coercive steps that the reconstruction company was taking with the assistance of the Chief Judicial Magistrate was really an attempt to overawe the petitioner and make meaningless the point for adjudication before the Debts Recovery Tribunal. According to the learned Senior Counsel appearing on behalf of the petitioner, the Debts Recovery Tribunal had originally dismissed the appeal filed under Section 17 of the Act on 31.8.2009 holding that the appeal was premature, in brazen violation of the directions given by this Court in Civil Writ Petition No. 19406 of 2006 and the directions of the Hon'ble Supreme Court in Special Leave Petition No. 12989 of 2008. The final order of the Debts Recovery Tribunal on 30.8.2009 was itself challenged originally by means of a writ petition before this Court in Civil Writ Petition No. 13853 of 2009 but later the debtor company withdrew the writ petition with liberty to file a petition for review and it was in that review application that the Debts Recovery Tribunal had given some interim directions that had been made the subject of appeal before the Appellate Tribunal.

(3.) It could be noticed that the debtor company is really at its wits end trying to retain its possession, unable still as it is to match the expectations of the creditor and the reconstruction company of what is legitimately due to them. The claim in the notice under Section 13(2) of the Act was in the range of Rs. 56 crores plus but by the time when the possession was sought to be taken with the assistance of the Chief Judicial Magistrate, the claim had escalated to a sum of Rs. 300 crores by loading interest. The debtor company was looking for a settlement in the range of 13.5 crores which at one time in the year 2003 was a sum determined as OTS but the debtor company was not able to pay even that amount and the reconstruction company which had transferred the debt to itself was, therefore, looking for what according to it was just. The debtor company which had enjoyed a long leash by the pendency of proceedings before BIFR never used the reprieve to its advantage but was merely filebustering. The two extremes of the pendulum, therefore, consisted of one, the debtor company desiring to retain its possession even when it was unable to pay the amount for all these years on its own admitted proclaimed status that it was a sick company and when the rehabilitation scheme did not work. In its characterization, the reconstruction company made no attempt to reconstruct the company but was looking for the last bit of scrap, trying to feast on the last breath of a company as a hungry vulture would do. At the other hand of the pendulum is a vocal indignation of the reconstruction company of its inability to recover any substantial sums, although it had obtained a transfer of the credits of the financial institutions and has waited sufficiently long to take what is justifiably due to it in spite of obtaining favourable observations of this Court at one point of time in Civil Writ Petition No. 19406 of 2006, when this Court frowned upon the delaying tactics adopted by the petitioner in engaging the secured creditors in long drawn litigations. The Division Bench of this Court even held dispelling the contention raised by the debtor company that the notice under Section 13(2) of the Act was not competent, when it pointed out on that the reconstruction company held 33% of the total secured debts in value and in terms of Section 13(9) of the Act, it had the consent of IDBI which was holding 32% of the total secured debt and SBH which was holding 34% of the total debt. The Division Bench held that the reconstruction company was entitled to proceed for enforcement of security interest under Section 13(4) of the Act and the principles of estoppel invoked by the petitioner company against the reconstruction company would not come to its rescue.