2024 (11) TMI 483 - HC - IBC

Appropriate Forum - Maintainability of petition or remedy is to approach the Debt Recovery Tribunal (DRT) - petitioners raised the grievance that despite the debt of the corporate debtor having been restructured and resolution plan being approved by the CoC, of which the respondent no. 1/IOB was the signatory, the proceedings are still continuing before the learned DRT - HELD THAT - Unhesitatingly, the petitioner is approaching this Court for a relief which cannot be entertained since the matter is already pending before the learned DRT. The plea by the learned counsel for the petitioners that the decision by the Supreme Court in the case of Celir LLP v. Bafna Motors (Mumbai) Pvt. Ltd and Ors. 2023 (10) TMI 48 - SUPREME COURT , is binding on the right of redemption to the borrower requiring thirty days clear notice in terms of Section 13 (8) of the SARFAESI Act read with Rule 8 (6) of the Rules of 2002 and the publication of sale notice under Rule 9 (1) is an issue that must be addressed before the learned DRT. Likewise, whether the subject property/mortgaged property is agriculture in nature and thus exempted from the dragnet of the SARFAESI Act in terms of section 31 (i) is a plea that too be addressed before the learned DRT. There is some merit in the plea of the learned senior counsel for the petitioner that the decision in the case of Lalit Kumar Jain v. Union of India 2021 (5) TMI 743 - SUPREME COURT was one wherein it was held that the approval of the resolution plan under Section 31 of the IBC would not automatically discharge a guarantor from his obligations, and yet at the same time, in view of the fact that the resolution plan has been accepted by the NCLT vide vide judgment dated 11.06.2024, the issue that arises for consideration is since the entire debt of the borrower has been restructured in the resolution plan, and certain conditions are attached to the assenting and dissenting secured creditors, whether the respondent no. 1 bank can proceed under the SARFAESI Act considering the overriding effect of the proceedings under the IBC in terms of section 238 of the IBC. The bottom line is all the aforesaid issues should be addressed before the learned DRT, which is the competent forum for now. The present writ petitions are disposed of with a direction that the learned DRT, Delhi shall consider the aforesaid objections raised by the petitioners while deciding the securitisation application in accordance with law.

Summary

Issues:
1. Whether the writ petitions are maintainable or the appropriate remedy is to approach the Debt Recovery Tribunal (DRT).
2. Whether the Debt Recovery Tribunal (DRT) should address issues related to SARFAESI Act compliance, sale of mortgaged agricultural property, and discharge of guarantor obligations.
3. Whether the restructuring of debt under the Insolvency and Bankruptcy Code (IBC) affects proceedings under the SARFAESI Act.
4. Whether the High Court can entertain the petitions when the matter is pending before the DRT.

Detailed Analysis:

1. The High Court considered the maintainability of the writ petitions and whether the appropriate remedy for the petitioner was to approach the Debt Recovery Tribunal (DRT). The respondent argued that the writ petitions were not maintainable and that the petitioner should raise objections before the DRT. The Court noted that the petitioner had already raised objections before the DRT, which was yet to decide on the matter. Ultimately, the Court held that the petitions could not be entertained since the matter was pending before the DRT, emphasizing that the appropriate forum for the petitioner was the DRT.

2. The Court examined issues related to compliance with the SARFAESI Act, specifically whether the respondent bank had failed to comply with certain provisions of the Act during the proceedings. The petitioner alleged blemishes in the SARFAESI proceedings, including non-compliance with Section 13(8) of the SARFAESI Act and issuance of a sale proclamation for agricultural property, contrary to the Act. The Court highlighted the importance of addressing these issues before the DRT, which was the competent forum for such matters.

3. The judgment delved into the impact of debt restructuring under the Insolvency and Bankruptcy Code (IBC) on proceedings under the SARFAESI Act. The resolution plan approved by the National Company Law Tribunal (NCLT) under the IBC had restructured the debt of the corporate debtor. The Court considered whether the respondent bank could proceed under the SARFAESI Act in light of the debt restructuring and the conditions attached to the creditors under the resolution plan. It was emphasized that these issues should be addressed before the DRT, given the overriding effect of the IBC proceedings.

4. Lastly, the Court addressed the question of whether the High Court could entertain the petitions when the matter was already pending before the DRT. The petitioner sought relief from the High Court, citing relevant legal precedents. However, the Court reiterated that the issues raised should be considered by the DRT, as it was the appropriate forum to decide on matters related to the SARFAESI Act, debt restructuring under the IBC, and other legal contentions presented in the petitions. Consequently, the High Court disposed of the writ petitions with a direction for the DRT to consider the objections raised by the petitioners in accordance with the law.