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TMI Blog2022 (2) TMI 1471X X X X Extracts X X X X X X X X Extracts X X X X ..... te for Respondent No.1 in Writ Petition No.2537 of 2021. JUDGMENT (PER V. G. BISHT, J.) 1 Rule. Rule made returnable forthwith. By consent, heard finally at the stage of admission. 2 The petitioners, by way of Writ Petition (L) No.46 of 2022 under Article 226 of the Constitution of India, seek to quash and set aside the impugned order dated 8th December 2021 passed by the respondent no.1 (Registrar, Debts Recovery Appellate Tribunal) and vacate the stay imposed on conducting public auction. 3 Writ Petition No.2537 of 2021 is at the instance of Prashant K. Mehta and others under Article 226 of the Constitution of India, seeking direction against respondent no.9 (Recovery Officer, Debts Recovery Tribunal-I) and respondent no.2 (Phoenix ARC Pvt. Ltd.) not to take any steps to alienate, encumber, transfer, value and/or auction the Flat No.37, 18th floor, Usha Kiran, Carmichael Road, Mumbai- 400026, belonging to petitioner no.2, until the Debt Recovery Appellate Tribunal, Mumbai is functional and decides the petitioner's appeal D No.369 of 2021. 4 The causes for inception of these petitions although have same echo, yet brief narratorial facts need to be outlined; (A) Writ Petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Pursuant to the said assignment, the petitioners and respondent nos.3 to 10 arrived at a settlement and executed consent terms dated 1st October 2013 which was filed before the DRAT, Mumbai in the pending appeals. They agreed to undertake that they would pay the petitioners a sum of Rs.27,31,04,000/- on or before 30th September 2014 (settlement amount). However, respondent nos.3 to 10 failed and neglected to pay the settlement amount as agreed and recorded under the consent terms. The petitioners, accordingly, approached the learned Recovery Officer seeking directions to proceed with the recovery proceedings. Despite agreeing and undertaking to not object in any manner for execution of the Recovery Certificates in case of defaults, the respondent nos.3 to 10 initiated series of vexatious litigation right up to the Supreme Court without any success. 7 According to the petitioners, despite undertaking, the respondent nos.3 and 4 did not hand over the possession of secured assets and instead challenged the order of this Court before the Supreme Court by way of Special Leave Petitions but the same stood dismissed. The respondent nos.3 and 4 were directed to hand over possession of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the respondent nos.5 to 10 jointly and severally liable to pay the petitioners a sum of Rs.36.58 crores. As far as the respondent nos.3 and 4 are concerned, the Recovery Certificate does not impose any personal liability on them and instead it only declares that outstanding to the extent of Rs.5 crores plus interest is secured by an equitable mortgage over a residential flat owned inter alia by the respondent nos.3 and 4. The respondent nos.3 and 4, however, do not dispute the consent terms dated 9th October 2013, but deny any default of the said consent terms. 12 According to them, the petitioners were paid an excess amount of Rs.16.51 crores and to substantiate that a copy of Chartered Accountant's Certificate (Exhibit N) dated 14th November 2020 is filed on record. 13 The respondents have also referred to the various proceedings taken out by them which is already noted by us from the petition itself, and there fore, needs no repetition. 14 Lastly, the respondents contended that in terms of general order dated 2nd December 2021 passed by this Court in Writ Petition (L) No.24293 of 2021, the respondent nos. 3 and 4 approached respondent no.1 on 8th December 2021 and deposited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submit that the only intention of the respondents was to somehow delay the auction proceedings. 18 Mr.Gautam Ankhad, learned counsel for the petitioners (Writ Petition No.2537 of 2021) and for the respondent nos.3 and 4 (Writ Petition (L) No.46 of 2022) submits that there is only one Recovery Certificate, issued on the basis of order dated 24th July 2006 passed in Original Application No.303 of 2002, which is not issued against the respondents/petitioners. In absence of Recovery Certificate issued against them, Recovery Officer DRT-1 lacks jurisdiction and therefore the order dated 5th March 2021 giving directions for continuing with recovery proceedings against is therefore, entirely without jurisdiction. According to the learned counsel, the order dated 24th July 2006 passed in Original Application No.303 of 2002, pursuant to which Presiding Officer, DRT has initiated recovery proceedings against the respondents/ petitioners expressly declare that the equitable mortgage in respect of the said flat is only to secure an amount of Rs.5 crores from the entire outstanding amount. The respondent no.2 / petitioner has already received an amount in excess of Rs.16.5 crores and also hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failed and neglected to pay the settlement amount as agreed and recorded under the consent terms despite giving undertaking that the respondents will not obstruct the execution of the Recovery Certificate in case of default. Paragraph "L" of the petition (Writ Petition (L) No.46 of 2022) demonstrates the various applications / appeals taken out right up to the Apex Court by the respondents. Because of this, the petitioners were required to approach the learned Recovery Officer seeking directions to proceed with the recovery proceedings by attaching the assets and appointing the Receiver on the assets of the respondent nos.3 to 10 and put up the same for sale as per the terms of the consent terms. 24 It appears from the compilation of the petitioners [Writ Petition (L) No.46 of 2022] that the respondent no.4, namely, Charu K. Mehta and Reshma R. Mehta filed two writ petitions being Writ Petition (L) No.1766 of 2017 and Writ Petition (L) No.1767 of 2017 challenging the order dated 15th June 2017 passed by the DRT and possession notice dated 21st June 2017 issued by the DRT for handing over of possession of their secured assets including Flat No.37, 18th Floor and Flat No.46, 23rd Fl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017 was pleased to dismiss the Special Leave Petition and rather granted time up to 31st October 2017 to vacate the premises subject to her submitting the usual undertaking before the Hon'ble Apex Court within seven days from 30th August 2017. 27 All these failed attempts will not stand the petitioner in good stead, if we may note so disturbingly. The petitioners' propensity to overlook the earlier attempted failures is quite lamentable. This is plainly evident from the record. 28 Ultimately and after various failed attempts as noted hereinabove, the petitioners handed over Flat No.37, 18th Floor to the Tribunal Receiver on 31st October 2017. The said flat was put for sale by way of auction by DRT after following due process. However, in the words of respondents, no bids were received because of the negativity and scare created in the minds of prospective purchasers under the garb of various litigation. 29 Meantime, it appears that the petitioners again filed Exhibit 618 and Exhibit 631 before the Recovery Officer, MRDT-I. By these applications, they claimed their outstanding dues to the extent of Rs.5 crores with interest and that the same are secured by equitable mortgag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or taking any steps towards sale of the said flat. The said writ petition came up for hearing on 2nd December 2021 when the Court was considering the issue of vacancy of seats of DRAT in another writ petition being Writ Petition (L) No.24293 of 2021. This Court, after noting the fact that all the five Debt Recovery Tribunals of the country were non-functional, to secure the interest of litigants, the Court held that if any party is desirous to challenge the order of the DRT, he shall be at liberty to present an appeal before the DRAT(M) with requisite fees and upon filing such appeal, the order under challenge shall remain stayed from the time the appellant makes a pre-deposit of atleast 25% of the debt due from him as claimed by the secured creditors or determined by DRT, whichever is less. It was further made clear that once such pre-deposit is made any secured creditor or a party in whose favour an order has been passed by the DRT for effecting recovery shall remain injuncted from taking any action adverse to the interest of such appellant. 33 Interestingly, by taking shelter of above order dated 2nd December 2021 passed in Writ Petition (L) No.24293 of 2021, the petitioners de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also Recovery Officer, DRT, to say the least. We intuitively feel that the Registrar, DRT and the Recovery Officer, DRT were not right in their reading of the order dated 2nd December 2021 passed by this Court in Writ Petition (L) No.24293 of 2021. These orders of the Registrar and Recovery Officer, DRT are certainly not sustainable in law. 38 During the course of arguments, the learned counsel for the petitioners tried to persuade us that in the Audit Report prepared by the Auditor on behalf of the petitioners, it is found that an astronomical sum of Rs.20.53 crores has been paid in excess to the respondents. 39 It would appear that caution and prudence demand that we should refrain and restrain ourselves from assuming the role of DRAT, something which lies in its domain, and take unto ourselves not being experts, to go into nitty-gritty and nuances of pending / outstanding dues. 40 What this leads to, it should need no stressing is that there is reason to ensure, therefore, that petitioners have not been able to establish and maintain their worth (cause). The petitioners are knowingly and deliberately flying against all the material on record. It appears to be no more than a ..... 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