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TMI Blog2007 (8) TMI 768X X X X Extracts X X X X X X X X Extracts X X X X ..... hereinafter referred to as the 'Sarfaesi Act') issued on 9th May, 2003, the bank took measures under Section 13(4) of the Sarfaesi Act on 15th Dec., 2004. 3. O.A. No. 127/03 was filed by the Bank before DRT, Chennai, against the company and guarantors. On the other hand, a writ petition, W.P. No. 38331/03 was filed by the borrower-company and guarantors with a plea that the bank cannot take parallel action where original application has already been filed. The said case was not decided on merit and was disposed of along with batch of cases with observation that the DRT may decide such question whether the bank could take parallel proceeding where an original application has been filed by the bank. Another writ petition, W.P. No. 32830/05 was filed by borrower-company and guarantors challenging the action of the bank in proceeding without withdrawing the original petition. The said case was dismissed on 2nd March, 2007, liberty was given to the petitioner to approach the Debt Recovery Tribunal. A third writ petition, W.P. No. 11068/07 was preferred by borrower-company and guarantors challenging Section 17(3) and 17(4) of the Sarfaesi Act. Initially, the operation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a small fraction, when considering the huge amount payable by the first respondent to the petitioner-bank. 3. In the above circumstances, I am of the opinion that the auction posted today (i.e., 16.04.2007) may proceed with. But the auction sale shall not be confirmed until further orders of this Court. Therefore, the order of the DRT-II, Chennai, dated 10.04.2007 is stayed. 7. The borrower-company has been impleaded as party respondent to the civil revision petition as first respondent, but the guarantors, who were also applicants before the Tribunal, i.e., 2 to 5 writ petitioners of the analogous writ petition, having not been impleaded as party, they have intervened. It is alleged by the counsel appearing on behalf of borrower-company guarantors that the civil revision petition was moved on 16th April, 2007, during lunch motion and interim order, which is final in nature, was obtained without impleading the guarantors as respondents and without giving reference to the writ petition preferred by the parties. Learned Counsel appearing on behalf of the bank informed that they received copy of impugned order dated 9th April, 2007, passed by Tribunal in S.A. No. 158/07 on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ured creditor are in accordance with the provisions of the Act and rules. After examination of facts and circumstance and evidence produced by parties, if the DRT comes to a conclusion that any of the measures referred to in Sub-section (4) of Section 13 taken by secured creditor are not in accordance with the provisions of the Act and rules and require restoration of the management of the business to the borrower or restoration of possession of secured assets to the borrower, it may do so by declaring such action as invalid and may pass appropriate and necessary order. Under Sub-section (4) to Section 17, if the DRT declares the course taken by the secured creditor under Sub-section (4) to Section 13 is in accordance with the Act and the rules, in such case, the secured creditor is entitled to take recourse to one or more of the measures prescribed in Sub-section (4) to Section 13 to recover his secured debts. 10. Learned Counsel for the borrower guarantors relied on Sub-section (4) to Section 17 and submitted that the secured creditor is entitled to take recourse to one or more of the measures specified in Sub-section (4) to Section 13 to recover its secured debts only when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I Act, the Tribunal has been so empowered to pass interim order, as evident from the relevant portion and quoted hereunder: 19. Application to the Tribunal. - (1) * * * * * * * * (12) The Tribunal may make an interim order (whether by way of injunction or stay or attachment) against the defendant to debar him from transferring, alienating or otherwise dealing with, or disposing of, any property and assets belonging to him without the prior permission of the Tribunal. Rule 7 of the Debt Recovery Tribunal (Procedure) Rules, 1993, relates to 'application fee'. At serial No. 4 of the table attached to Rule 7, amount of fee payable along with 'application for interlocutory order' has been prescribed. If Sub-section (7) of Section 17 of Sarfaesi Act is read along with Sub-section (12) of Section 19 of the RDDB FI Act and Rule 7 framed thereunder (Debt Recovery Tribunal (Procedure) Rules, 1993), it will be evident that the DRT has also jurisdiction to pass interim order under Section 17 of the Sarfaesi Act in appropriate cases. 12. The Supreme Court in the Mardia Chemical's case (supra), while dealing with measures as may be taken under Section 13(4) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discussed in this judgment, we find that it will be open to maintain a civil suit in civil court, within the narrow scope and on the limited grounds on which they are permissible, in the matters relating to an English mortgage enforceable without intervention of the court. The finding of the Supreme Court at Clause (4) of paragraph-80 aforesaid, is the answer to the question raised by the writ petitioner, wherein the Supreme court held that the Tribunal, in exercise of its ancillary power, shall have jurisdiction to pass any stay/interim order, subject to the condition as it may deem fit and proper to impose. The corollary is that, there is no automatic stay or prohibition on the secured creditor to take recourse to one or more measures under Sub-section (4) to Section 13 of the Sarfaesi Act to recover its secured debts, till an interim order is passed by the Tribunal. 13. From a plain reading of Sub-section (1) to Section 17, it will be evident that a person, including borrower, could make an application under Section 17 to the DRT, if aggrieved by any of the measures referred to in Sub-section (4) to Section 13 as taken by the secured creditor. That means, only if one or o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mic to decide the question whether the order passed by the Tribunal on 10th April, 2007, was legal and proper. We have already held that the Tribunal has jurisdiction to pass appropriate interim order in the facts and circumstances of each case. In view of the aforesaid finding, the question of granting any relief against the order dated 10th April, 2007, as impugned in the writ petition, does not arise at this stage. Borrower-company Guarantors may pursue the application under Section 17, as pending before DRT-2, Chennai, and if any declaration is given that action taken by the bank under Sub-section (4) to Section 13 is not in accordance with the Acts and Rules framed thereunder, and thereby invalid, the borrower-company guarantors, may request for restoration of possession of the assets in question, as auction sale having been made during the pendency of such appeal (application) before DRT, which is always subject to the decision of the appeal. So far as the civil revision petition is concerned, even if we hold that there was no error of jurisdiction and the interim order passed by the Tribunal on 10th April, 2007, was well within its jurisdiction and not perverse, mere ..... X X X X Extracts X X X X X X X X Extracts X X X X
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