When the main appeal was not decided by DRAT on Merit, HC has limited scope in the proceedings: SC

WHEN THE MAIN APPEAL WAS NOT DECIDED BY THE DRAT ON MERITS, THE HIGH COURT HAS LIMITED SCOPE AND AMBIT IN THE PROCEEDINGS: SC

Cause Title: SRS Advertising and Marketing Private Limited and Others v. Mr. Kamal Garg and Another

Case Number: Civil Appeal Nos. 1302-1303 of 2022

Quorum: Justice M.R. Shah and Justice B.V. Nagarathna

Judgment Date: 16/02/2022

Author: Pragash B, Advocate, Madurai Bench of Madras High Court

Background of the Case

The First Respondent purchased the properties which were auctioned in pursuance of Recovery Certificate No.6/2016 which was in favour of the Corporation Bank (Now merged with the Union Bank of India) for a sum of Rs. 85 Lakhs. The reserved price of the properties was fixed at Rs. 54 Lakhs. After making the highest bid of Rs. 85 Lakhs, he deposited 25% of the bid price i.e., Rs. 21,25,000/- and moved an application before the Recovery Officer seeking some clarity in the matter. The application was replied to by the Bank but thereafter the Recovery officer dismissed the application on 28.11.2019 and forfeited 10% of the amount deposited by him.

Aggrieved by the order of the Recovery Officer, the first respondent had preferred the Appeal No. 21 of 2019 before Debt Recovery Tribunal-II, Delhi on 19.12.2019. The appeal was dismissed by DRT-II through the order dated 18.03.2020. Then the respondent preferred an appeal bearing No. 91 of 2019 before the Debt Recovery Appellate Tribunal but the DRAT did not grant any interim relief to him and consequently the Respondent Bank herein sought to put the property to auction on 10.11.2021. The application to seek interim relief from the DRAT was renotified on 17.11.2021 i.e., after the date of the proposed auction and therefore apprehending that his interim relief application would become infructuous.

Subsequently, the first respondent had preferred the present writ petition in Writ Petition (Civil) No. 12530 of 2021 before the Honourable Delhi High Court. It is to be noted that the appeal before the DRAT was pending and the writ was challenging with regard to not granting any interim relief against the auction. The High Court disposed of the writ petition by granting one further opportunity to the first respondent to deposit the balance amount along with the damages quantified at Rs. 5 Lakhs through the order dated 22.11.2011. Subsequently, a Review Petition in Review Petition No. 197 of 2021 was filed which has been dismissed by the Honourable High Court which is the subject matter of the present appeal filed by the original borrower (Original Respondent No. 2 in the Writ Petition).

Findings of the Honourable Court

The Honourable Supreme Court of India observed that the High Court has not properly appreciated the fact that what was challenged before it was regarding non-grant of any interim relief pending the appeal before the DRAT. But the same has been decided and disposed off as if the High Court was considering the final decision of the DRAT. The order passed by the DRT confirming the order passed by the Recovery Officer forfeiting 10% amount deposited by the auction purchaser was yet to be decided by the DRAT. Therefore, the High Court as such has gone beyond the scope and ambit of the proceedings before it. (Para 3.2)

The Honourable Apex Court held that

“By passing the impugned judgment and order the High Court has as such made the proceedings before the DRAT infructuous, as after the impugned judgment and order nothing further is required to be decided by the DRAT. Therefore, the High Court has exceeded in its jurisdiction by passing the impugned judgment and order” (Para 3.3)

In view of the above and for the reasons stated above, the present appeals succeed. The impugned judgment and order passed by the High Court is/are hereby quashed and set aside. Now, the DRAT to finally decide and dispose of the Appeal No. 91 of 2019 in accordance with law and on its merits. DRAT is directed to finally decide and dispose of the said appeal at the earliest, preferably within a period of four months from the date of the receipt of the present order.

Present appeals are accordingly allowed to the aforesaid extent. No costs. (Para 4)

To view/Download Judgment: SRS Advertising and Marketing Private Limited and Others v. Mr. Kamal Garg and Another