2007 (5) TMI 644 - HC - Companies Law

Summary

Issues Involved:
1. Jurisdiction of the Tribunal to pass the impugned order.
2. Availability of alternative remedy.
3. Compliance with statutory provisions and procedural requirements.

Summary:

1. Jurisdiction of the Tribunal to pass the impugned order:
The petitioner, a nationalized bank, challenged the order of the Debt Recovery Tribunal (DRT), Bangalore, dated 22.12.2006, which directed redelivery of possession of the property in question. The bank argued that the order was without jurisdiction since the respondent did not comply with the notice u/s 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ('the Act'). The bank had taken possession of the secured assets on 30.11.2004 and issued a sale notice on 14.3.2005. The Tribunal's order to redeliver possession was contested on the grounds that u/s 17(3) of the Act, possession can only be restored if the Tribunal concludes that the measures taken were not in accordance with the Act. The Tribunal's order was passed without considering the bank's objections and was not a speaking order, thus rendering it unsustainable.

2. Availability of alternative remedy:
The respondent argued that the impugned order was appealable u/s 18 of the Act, and hence, the writ petition should be dismissed on the grounds of alternative remedy. However, the court held that the rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not compulsion. The Tribunal's failure to pass a speaking order and consider the bank's objections justified the High Court's intervention despite the availability of an alternative remedy.

3. Compliance with statutory provisions and procedural requirements:
The court examined whether the Tribunal had jurisdiction to direct redelivery of possession during the pendency of the appeal. U/s 13(4) of the Act, if the borrower fails to discharge his liability, the secured creditor may take measures to recover the debt. U/s 17(3), the Tribunal can restore possession only if it finds the measures taken were not in accordance with the Act. The Tribunal's order was found to be without jurisdiction as it did not follow the statutory provisions. The bank's action of engaging a security personnel to guard the property was in accordance with Rule 8(4) of the Security Interest (Enforcement) Rules, 2002, and Section 13(7) of the Act, which allows recovery of such expenses from the borrower.

Conclusion:
The writ petition was allowed, and the Tribunal's order dated 22.12.2006 was quashed. The Tribunal was directed to dispose of the main matter on its merits within two months. No costs were awarded.