W.P.(C) No.3421/2024

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR.JUSTICE N.NAGARESH** **TUESDAY, THE 2[ND] DAY OF APRIL 2024 / 13TH CHAITHRA, 1946 WP(C) NO. 3421 OF 2024** ## **PETITIONERS:** - **1 M/S GOLDEN AGENCIES AGED 47 YEARS SHOP NO. 111/771, GOLDEN COMPLEX, MAIN ROAD, KODUVAYUR,PALAKKAD-678501 REP. BY ITS' PROPRIETORIX SUMATHI K.S., PIN - 678501** - **2 SUMATHI K.S AGED 47 YEARS W/O LATE SWAMINATHAN RESIDING AT PUTHENVEEDU, KARNAKI NAGAR, KODUVAYUR POST, PALAKKAD-678501, PIN - 678501** - **3 ADARSH P S AGED 25 YEARS S/O SWAMINATHAN, RESIDING AT PUTHENVEEDU, KARNAKI NAGAR,KODUVAYUR POST, PALAKKAD-678501, PIN - 678501** - **4 AJU P S AGED 24 YEARS S/O SWAMINATHAN, RESIDING AT PUTHENVEEDU, KARNAKI NAGAR,KODUVAYUR POST, PALAKKAD-678501, PIN – 678501** **BY ADVS. LAL K.JOSEPH P.MURALEEDHARAN (THURAVOOR) T.A.LUXY SURESH SUKUMAR ANZIL SALIM SANJAY SELLEN SONIA SHIBU** ## **RESPONDENTS:** - **1 SOUTH IINDIAN BANK LTD KODUVAYUR BRANCH, CAV BUILDING, KODUVAYUR BYPASS, TRIPPALUR, (P.O, ERIMAYUR-I, KERALA 678546 REPRESENTED BY ITS CHIEF MANAGER, PIN - 678546** W.P.(C) No.3421/2024 : 2 : - **2 SASIKUMAR AUTHORIZED OFFICER, SOUTH INDIAN BANK,DOOR NO. 733/2, FIRST FLOOR,D& D ARCADE, CHITTOR ROAD, PALAKKAD-678013, PIN - 678013** - **3 DEBT RECOVERY TRIBUNAL, ERNAKULAM 5TH FLOOR, KERALA STATE HOUSING BOARD, PANAMPILLY NAGAR, ERNAKULAM, KERALA 682036 REPRESENTED BY ITS REGISTRAR, PIN - 682036** - **4 DEBT RECOVERY APPELLATE TRIBUNAL, CHENNAI SHASTRI BHAVAN, 7TH FLOOR, ADDITIONAL, HADDOWS RD, CHENNAI, 600 006, REPRESENTED BY ITS REGISTRAR, PIN – 600006** ## **BY ADV C.AJITH KUMAR** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 02.04.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.P.(C) No.3421/2024 : 3 : ## **N. NAGARESH, J.** ````````````````````````````````````````````````````````````` ## W.P.(C) No.3421 of 2024 ````````````````````````````````````````````````````````````` _Dated this the 2[nd] day of April, 2024_ ## **J U D G M E N T** ~ ~ ~ ~ ~ ~ ~ ~ ~ The 1[st] petitioner, a proprietary concern, along with petitioners 2 to 4 challenges Exts.P7, P9 and P11 orders of the Debts Recovery Tribunal and Debts Recovery Appellate Tribunal. 2. The 1[st] petitioner is a registered Micro, Small and Medium Enterprise. The 1[st] petitioner obtained financial advance from the 1[st] respondent-Bank. The petitioners submit that they have been doing business in compostable plastic bags. When the Government issued certain orders banning compostable plastic carry bags, their business was adversely affected which resulted in non-maintenance of loan account. The respondent-Bank invoked the provisions of the W.P.(C) No.3421/2024 : 4 : Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Ext.P4 possession notice was issued on 07.12.2022. 3. The Bank filed Section 14 application before the Chief Judicial Magistrate's Court, Palakkad. The petitioners challenged the proceedings filing SA No.330/2023. A stay petition IA No.2131/2023 was also filed challenging the procedural irregularities committed by the 1[st] respondentBank. According to the petitioners, the Bank filed counter affidavit admitting the procedural irregularities. However, the Debts Recovery Tribunal passed Ext.P9 order on 30.08.2023 dismissing the stay petition. 4. The petitioners challenged Ext.P9 in the Debts Recovery Appellate Tribunal. The petitioners also filed Ext.P10 application for waiver of statutory deposit to file appeal. The Debts Recovery Appellate Tribunal passed an order directing the petitioners to pay 40% of the outstanding as statutory deposit observing that the counsel has proposed to deposit 40%. The petitioners are aggrieved by Ext.P11 W.P.(C) No.3421/2024 : 5 : order of the Debts Recovery Appellate Tribunal. 5. The petitioners would urge that Exts.P3 and P4 notices were issued by the Bank without registering the mortgage with the Central Registry as contemplated under Section 23. The boundaries of the property were wrongly mentioned. The existence of buildings was omitted to be included in the notice. The date of lease deed was wrongly mentioned. Therefore, the petitioners have a very strong _prima facie_ case and the Debts Recovery Tribunal ought to have allowed the stay petition. The Debts Recovery Appellate Tribunal also committed a grave error in dismissing the appeal for want of pre-deposit. The Debts Recovery Appellate Tribunal omitted to note that what was challenged by the petitioners is only an order in an interim application and therefore ought not have insisted for pre-deposit. 6. The 1[st] respondent resisted the writ petition filing a counter affidavit. On behalf of the 1[st] respondent, it is submitted that for filing appeal, the petitioners have to necessarily deposit the requisite fee. The Appellate Tribunal W.P.(C) No.3421/2024 : 6 : may reduce the amount to 25% of the debt referred to in the second proviso to Section 18. 7. The Hon’ble Apex Court in _**Narayan Chandra Ghosh v. UCO Bank and others** [(2004) 11 SCC 548]_ has held that even if the debt amount has not been determined by the Debts Recovery Tribunal, the appeal could not be entertained by the Debts Recovery Appellate Tribunal without insisting on pre-deposit and that the Debts Recovery Appellate Tribunal at the best, after recording the reasons, can reduce the amount to 25%. The Debts Recovery Appellate Tribunal cannot totally waive the deposit. 8. In _**Union Bank of India v. Rajat Infrastructures Private Limited and others** [AIR 2020 SC 1172]_ , the Apex Court has held that no relief for exemption from condition of pre-deposit can be allowed, as it would be contrary to law. The grounds canvassed in the writ petition cannot call for interference of this Court, to grant the relief sought for, contended the 1[st] respondent. W.P.(C) No.3421/2024 : 7 : 9. I have heard the learned counsel for the petitioners and the learned Standing Counsel representing the respondents. 10. The short question arising in this case is whether the Debts Recovery Appellate Tribunal is justified in directing the petitioners to pay 40% of the dues as pre-deposit. 11. Ext.P7 is the order of the Chief Judicial Magistrate's Court, Palakkad, passed under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The said order is impugned by the petitioners in this writ petition. Ext.P7 order was challenged before the Debts Recovery Tribunal-I, Ernakulam. In SA No.330/2023, the petitioners filed IA No.2131/2023 to stay all further proceedings pursuant to Ext.P7 order passed by the Chief Judicial Magistrate's Court, Palakkad. The Debts Recovery Tribunal found no infirmity in the affidavit filed by the Bank and the order passed by the Chief Judicial Magistrate's Court, Palakkad. Consequently, the stay petition IA No.2131/2023 W.P.(C) No.3421/2024 : 8 : was dismissed as per Ext.P9 order. 12. The petitioners challenged the said order filing appeal before the Debts Recovery Appellate Tribunal. The petitioners filed IA No.471/2023 for waiver of pre-deposit. The Debts Recovery Tribunal considered the submission of Advocate for the petitioners for reduction of pre-deposit by 10%. On the basis of the submissions made by the counsel, the Appellate Tribunal directed to deposit 40% of notice amount as requested, for entertaining the appeal. The Appellate Tribunal found that admittedly the amount claimed under Section 13(2) notice is ₹3,63,50,905.46 and 40% of it comes to ₹1,45,40,362.18. The Appellate Tribunal directed the petitioners to deposit the said amount on or before 24.01.2024 failing which the appeal was to stand rejected. The case of the petitioners is that the counsel for the petitioners has not made any submission to reduce the predeposit by 10%. According to the petitioners, the petitioners had not given any instruction to the counsel agreeing for deposit of 40%. W.P.(C) No.3421/2024 : 9 : 13. The pleadings in the writ petition relating to this aspect as contained in paragraph 24 of the writ petition read as follows:- “The 4[th] respondent passed an order directing the petitioners to pay 40% of the outstanding as the statutory deposit observing that counsel has proposed to deposit 40% and the sale was misunderstood by the Tribunal as no such instruction was given by the petitioners and the waiver application itself would reveal the said fact.” 14. As the Tribunal has passed an order on the basis of submission made by the Advocate of the petitioners, the petitioners cannot ordinarily contend that they have not given such instruction. If that be so, the petitioners could have filed an affidavit of the counsel to that effect along with this writ petition. The petitioners have not filed any affidavit of the counsel. If the petitioners have a case that their counsel has made a wrong submission without the authorisation of the petitioners, the petitioners have to first appraise the said fact before the Appellate Tribunal. 15. The counsel for the petitioners relied on the judgment of the Madurai Bench of the Hon'ble High Court of W.P.(C) No.3421/2024 : 10 : Madras in W.P.(MD) No.10315/2017 and W.M.P.(MD) No.7892/2017 to urge that an appellant who has filed an appeal before the Debts Recovery Appellate Tribunal as against the interlocutory order passed by the Debts Recovery Tribunal, is not liable to make the pre-deposit if the liability is not determined by the Debts Recovery Tribunal in the interlocutory order. In Ext.P11 order, the Tribunal has held that admittedly the amount claimed under Section 13(2) notice is ₹3,63,50,905.46. The said amount cannot be described as determination of the amount of liability by the Tribunal. 16. In the facts of the case, I do not find any illegality in Ext.P11 order of the Debts Recovery Appellate Tribunal. The Tribunal has passed its order based on the materials available before it and the submissions made by the counsel. If the petitioners have a case that their counsel has not made any such submission or that the counsel has made the submission without instruction/authorisation by the petitioners, it is for the petitioners to appraise the Tribunal by W.P.(C) No.3421/2024 : 11 : appropriate petitions. A writ petition under Article 226 cannot be maintained under the circumstances. The writ petition is therefore dismissed granting liberty to the petitioners to approach the Appellate Tribunal by appropriate petition as is permissible under law to reconsider Ext.P9 order and review the same. If the petitioner moves the Appellate Tribunal, the Tribunal may consider the question of exclusion of the period during which the petitioners have been prosecuting this writ petition, for the purpose of computing the period of limitation. Sd/- **N. NAGARESH, JUDGE** aks/30.03.2024 W.P.(C) No.3421/2024 : 12 : ## **APPENDIX OF WP(C) 3421/2024** ## **PETITIONER'S EXHIBITS** |**Exhibit P1**|**THE TRUE COPY OF THE UDYAM**| |---|---| ||**REGISTRATION OF THE PETITIONERS**| ||**BEARING NUMBER 879978433542**| |**Exhibit P2**|**THE TRUE COPY OF THE JUDGMENT IN**| ||**W.P(C) 4291 OF 2020,WP(C) 4493 OF**| ||**2020, WP (C ) 4993 OF 2020, WP(C )**| ||**5107 OF 2020, WP(C) 5952 OF 2020 DATED**| ||**16.02.2020**| |**Exhibit P3**|**THE TRUE COPY OF THE 13(2) NOTICE**| ||**ISSUED BY THE BANK**| |**Exhibit P4**|**THE TRUE COPY OF THE POSSESSION NOTICE**| ||**ISSUED BY THE BANK DATED 07.12.2022**| |**Exhibit P5**|**THE TRUE COPY OF THE PETITION AND**| ||**AFFIDAVIT DATED 17.01.2023 IN THE**| ||**APPLICATION UNDER S.14 OF THE SARFAESI**| ||**ACT**| |**Exhibit P6**|**THE TRUE COPY OF THE VALUATION TAKEN**| ||**BY THE APPROVED VALUER OF THE 1ST**| ||**RESPONDENT BANK**| |**Exhibit P7**|**THE TRUE COPY OF ORDER IN MC 292 OF**| ||**2023 DATED 12.05.2023**| |**Exhibit P8**|**THE TRUE COPY OF THE COUNTER FILED BY**| ||**THE 1ST RESPONDENT BANK**| |**Exhibit P9**|**THE TRUE COPY OF THE ORDER OF 3RD**| ||**RESPONDENT DATED 30.08.2023**| |**Exhibit P10**|**THE TRUE COPY OF THE PETITION TO WAIVE**| ||**OF THE STATUTORY DEPOSIT**| |**Exhibit P11**|**THE TRUE COPY OF THE PROCEEDINGS OF**| ||**4TH RESPONDENT DATED 10.01.2024**| |**Exhibit P12**|**THE TRUE COPY OF THE SA 330 OF 2023**| ||**BEFORE THE DRT 1ERNAKULAM**| |**Exhibit P13**|**STAY PETITION BEFORE THE DRT 1**| ||**ERNAKULAM**| |**Exhibit P14**|**TRUE COPY OF THE OP (DRT) 364 OF 2023**| ||**( WITHOUT ANNEXURE)**|