2017 (2) TMI 562 - HC - Indian Laws

Proceedings initiated by the Bank against the schedule property under the SARFAESI Act - whether no notice was given to the writ petitioner, under the SARFAESI Act, 2002, including the offer given to other owners, and release of the property, etc. - Contentions that the property was purchased for valuable consideration from Mr.V.Sampath, Managing Director of M/s.Blue Jaggers Estates Ltd, has been made - Held that - The main condition to be satisfied for preferring an application, under Section 17(1) of the SARFAESI Act, 2002, is that the applicant must be an aggrieved person. Expression any person employed in Section 17(1) of the Act and Rule 13(2) of the Security Interest (Enforcement) Rules, 2002, can have reference, only to the borrower or guarantor or any person aggrieved or affected by any action taken under Section 13(4) of the SARFAESI Act, 2002 and that law is not designed, enabling all the persons to challenge the proceedings of the SARFAESI Act, 2002. Therefore, with due respect, we are of the considered view that the interpretation that any person, not being a borrower, but owner of the property, totally unconnected with the debt, but his property at peril, would fall within the residuary clause (e) of Rule 13(2)(1) of the Rules, relatable to any other person, would not be a proper interpretation to the words, any person , occurring in Rule 13(2)(1)(e) of the Rules. Indisputably, the writ petitioner has filed an application, under Section 17 of the SARFAESI Act, 2002, challenging sale certificate and vide order, dated 14.03.2013, DRT-III, Chennai, has dismissed the same. As stated supra, the contention of the Bank that while preferring an application under Section 17(1) of the SARFAESI Act, 2002, the writ petitioner has paid the requisite court fee, has not been disputed. We have also extracted the heading, under which, the writ petitioner has pursued his further remedy, under Section 18 of the SARFAESI Act, which is an appeal. As per Rule 13 of the Rules, 2002, the amount of fee payable to an appeal to the appellate authority, against any order, passed by the DRT, the same has to be accompanied with the fees, provided at Clauses (a) to (d) to Rule 13(2)(1). In the light of the decisions and discussion, case of the writ petitioner would squarely falls under Rule 13(2)(1)(c) and (d) of the Rules, 2002. The writ petitioner is required to pay the prescribed Court fee. According to the 3rd respondent-Bank, the writ petitioner has to pay the maximum fee of ₹ 50,000/-, for entertaining the appeal, under Section 18 of the SARFAESI Act, 2002. As observed, the writ petitioner seemed to have paid deficit court fee and therefore, vide order, dated 10.09.2014, the DRAT, Chennai, has directed the writ petitioner to pay the balance court fee. At this juncture, the reasoning of the DRAT that waiver application has not been filed, may not arise. First, the petitioner has to pay the required court fee. The question, whether he is entitled to seek for waiver, is another issue, if any application is filed. But payment of court fee cannot be avoided by the writ petitioner, who claims to be the owner of the property and aggrieved by the action, under Section 13(4) of the SARFAESI Act, 2002. In the light of the discussion and decisions, we find no force in the contention of the petitioner.

Summary

Issues Involved:
1. Validity of the auction conducted by the bank.
2. Requirement for the petitioner to pay the deficit court fee.
3. Applicability of Rule 13(2)(1)(e) of the Security Interest (Enforcement) Rules, 2002.
4. Interpretation of "any person" under Section 17(1) and Rule 13(2) of the SARFAESI Act, 2002.
5. Entitlement to waiver of court fee.

Detailed Analysis:

1. Validity of the Auction Conducted by the Bank:
The petitioner claimed ownership of the property auctioned by the bank for dues of M/s. Blue Jaggers Estates Ltd. He argued that the property was never mortgaged by him, nor did the alleged mortgagor have the power to mortgage it. The Debt Recovery Tribunal (DRT) dismissed his application, stating that the petitioner was a subsequent purchaser during the subsistence of the mortgage, and the mortgage could be enforced despite the subsequent sale.

2. Requirement for the Petitioner to Pay the Deficit Court Fee:
The petitioner filed an appeal under Section 18 of the SARFAESI Act without paying the full court fee. The Debts Recovery Appellate Tribunal (DRAT) ordered the petitioner to pay the deficit court fee and file a waiver application. The petitioner contended that he was not a borrower and thus not required to pay the court fee as stipulated for borrowers.

3. Applicability of Rule 13(2)(1)(e) of the Security Interest (Enforcement) Rules, 2002:
The petitioner argued that as a third party, not a borrower, his case fell under Rule 13(2)(1)(e), which prescribes a court fee of ?200 for "any other application by any person." The court, however, interpreted that Rule 13(2)(1)(e) applies to applications other than the main application under Section 17 or appeal under Section 18 of the SARFAESI Act. The court fee for the main application or appeal depends on the amount of debt due, as specified in Rule 13(2)(1)(c) and (d).

4. Interpretation of "Any Person" under Section 17(1) and Rule 13(2) of the SARFAESI Act, 2002:
The court referred to the Supreme Court's interpretation in the case of United Bank of India v. Satyawati Tondon, which held that "any person" in Section 17(1) includes the borrower, guarantor, or any person affected by the measures under Section 13(4). The court concluded that the expression "any person" in Rule 13(2) should be interpreted similarly, meaning it includes the borrower, guarantor, or any aggrieved person, and not just any third party.

5. Entitlement to Waiver of Court Fee:
The court noted that the petitioner must first pay the required court fee before seeking a waiver. The DRAT's order for the petitioner to file a waiver application was deemed unnecessary at this stage. The court emphasized that payment of the court fee is a prerequisite for entertaining the appeal.

Conclusion:
The court dismissed the writ petition, holding that the petitioner is required to pay the court fee as prescribed under Rule 13(2)(1)(c) and (d) of the Security Interest (Enforcement) Rules, 2002, based on the amount of debt due. The court granted the petitioner two weeks to pay the deficit court fee and represent the appeal papers. On compliance, the Tribunal shall entertain the appeal subject to other requirements.

Post-Judgment:
The court granted the petitioner two weeks to pay the deficit court fee, considering the time initially granted by the Tribunal had expired and the petitioner had sought judicial review within the granted period. The Tribunal was directed to entertain the appeal upon payment and representation of the appeal papers.