2015 (3) TMI 194 - HC - Indian Laws

Refund of amount deposited in compliance with Section 18(1) of SARFAESI Act - Debt recovery tribunal reduced the penalty 50% to 25% - Held that - Having heard the learned counsel for the parties, we note that the order dated December 27, 2012 clearly reveals that the petitioner through his counsel had, keeping in view the fact that all the petitioner and its associate companies/firms, belong to one family and the counsel desired to deposit in total 25% of the total claimed amount; the Appellate Tribunal had passed the order on December 27, 2012. We note that the counsel for the petitioner had pleaded financial hardships as a reason to enable to deposit 50% of the claimed amount and requested the Appellate Tribunal to reduce the pre-deposit from 50% to 25%. A statement/concession made/given by the counsel for the petitioner to predeposit 25% of the claimed amount as one consolidated amount with regard to all the appeals/accounts, which has been accepted by the Appellate Tribunal, the petitioner cannot now resile out of the statement/concession. In other words, there was no segregation of the amount claimed against the four accounts. Further, we note, the Appellate Tribunal in the impugned order has given three reasons for dismissing the applications filed by the petitioner for refund. The cumulative effect of all three reasons having weighed with the Tribunal to dismiss the said applications keeping in view the peculiar facts of the present case, more particularly, when liability against two Accounts has been decided against associate companies/firms of the petitioner, we are of the view that this Court, in exercise of its power under Article 226 of the Constitution would not like to interfere with the impugned order. -Decided against the appellant.

Summary

Issues Involved:
1. Legality of the Debt Recovery Appellate Tribunal's order denying refund of the pre-deposit.
2. Compliance with Section 18(1) of the SARFAESI Act concerning pre-deposit for appeal.
3. Validity and implications of the pre-deposit requirement under the SARFAESI Act.
4. Applicability of precedents from higher courts on pre-deposit and refund issues.

Issue-wise Detailed Analysis:

1. Legality of the Debt Recovery Appellate Tribunal's order denying refund of the pre-deposit:
The petitioner challenged the Debt Recovery Appellate Tribunal's (DRAT) order dated March 04, 2013, which dismissed the application for a refund of the amount deposited as a pre-condition under the second proviso to Section 18(1) of the SARFAESI Act. The petitioner argued that since the appeal was treated as premature, the pre-deposit was not required, and thus, should be refunded. The DRAT, however, denied the refund, stating that the deposit was made as per the petitioner's own concession and the composite nature of the order related to multiple accounts.

2. Compliance with Section 18(1) of the SARFAESI Act concerning pre-deposit for appeal:
The petitioner had sought a waiver/reduction of the pre-deposit required under Section 18(1) of the SARFAESI Act. The DRAT reduced the pre-deposit from 50% to 25% of Rs. 5,56,60,345/- based on the petitioner's counsel's statement. The petitioner argued financial hardship and requested a reduction, which was granted. The court noted that the petitioner cannot now resile from the concession made to deposit 25% of the total claimed amount as one consolidated amount for all appeals/accounts.

3. Validity and implications of the pre-deposit requirement under the SARFAESI Act:
The court examined the validity of the pre-deposit requirement, referencing the Supreme Court's judgment in Mardia Chemicals Ltd. vs. Union of India, which held that a 75% pre-deposit requirement was unreasonable and oppressive. However, the court noted that the current case involved a reduced pre-deposit of 25% based on the petitioner's own request and the peculiar facts of the case, making the reliance on Mardia Chemicals Ltd. irrelevant.

4. Applicability of precedents from higher courts on pre-deposit and refund issues:
The petitioner cited several judgments to support their contention for a refund, including Mardia Chemicals Ltd., Babu Ganesh Singh Deepnarayan vs. Union of India, Suvidhe Ltd. vs. Union of India, and Nelco Limited vs. Union of India. The court found these precedents inapplicable to the present case due to the specific circumstances and the fact that the pre-deposit was made based on the petitioner's own concession and the composite nature of the order related to multiple accounts.

Conclusion:
The court upheld the DRAT's order, emphasizing that the pre-deposit was made as per the petitioner's own concession and that the peculiar facts of the case justified the DRAT's decision. The court also noted that the petitioner's reliance on various precedents was not relevant due to the specific circumstances of the case. The writ petition was dismissed with no costs.