2016 (5) TMI 1233 - HC - Indian Laws

Calculation of arrears to the bank - SARFAESI Act - Held that - We vacate the direction that no other expenses like legal expenses, publication of notice in the newspaper will be added in calculating the arrears. In other words, it will be open to the Bank to include all the expenses, which it actually incurred as per law. The first installment is to be paid by the writ petitioners/respondents on or before 20.03.2016 in a sum of ₹ 25 Lakhs. We record the undertaking of the writ petitioners/respondents that they will not transfer the property consisting of plant, machinery and the building to anyone nor will they create any third party interest till the entire amount due to the appellants is cleared off. In case of default, we further direct that it will be open to the Bank to take possession as provided in law. The judgment of the learned Single Judge stands modified as above

Summary

Issues:
1. Proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) taken against the writ petitioners.
2. Relief granted by the learned Single Judge to the writ petitioners.
3. Appeal filed by the appellants against the Single Judge's order.
4. Arguments presented by the appellants' and respondents' counsels.
5. Modification of the judgment by the High Court.

Analysis:

1. Proceedings under SARFAESI Act:
- The writ petitioners, who were respondents in the appeal, faced proceedings under the SARFAESI Act initiated by the bank.

2. Relief Granted by Single Judge:
- The learned Single Judge acknowledged the writ petitioners' genuine intention to pay arrears to the bank in installments.
- The Single Judge issued orders for the bank to provide a breakup of arrears, allowing payment in six installments, and directing the removal of bank possession from the factory.

3. Appeal by Appellants:
- The appellants appealed against the Single Judge's decision, raising concerns about excluding expenses, potential property dealings by the writ petitioners, and the need for an initial substantial payment.

4. Arguments by Counsels:
- The appellants' counsel argued for the inclusion of all expenses incurred by the bank and the possibility of taking possession in case of non-compliance.
- The respondents' counsel assured that the writ petitioners would not transfer the property and proposed an initial installment payment of Rs. 25 Lakhs.

5. High Court's Modification:
- The High Court modified the judgment by allowing the bank to include all actual expenses incurred, setting an initial payment deadline of Rs. 25 Lakhs, and recording the writ petitioners' undertaking not to transfer the property.
- In case of default, the bank was granted the right to take possession as per the law, and the Single Judge's judgment was modified accordingly.

This detailed analysis covers the issues involved in the legal judgment, the relief granted by the Single Judge, the arguments presented by the counsels, and the subsequent modification made by the High Court, ensuring a comprehensive understanding of the case and its legal implications.