ORDER
Pratibha Upasani, J. (Chairperson)
1. This Misc. Appeal is filed by the appellant/original defendants being aggrieved by the order dated 20.1.2003 passed by the learned Presiding Officer of Debts Recovery Tribunal Pune on Exhibit No. 55 in Original Application No. 793-P/2001. By the impugned order, the learned Presiding Officer allowed the application made by applicant i.e. Indian Bank in terms of prayers made in the said application. It was prayed by the Indian Bank that they be allowed to appropriate to adjust amount of Rs. 28,37,000/- as also the future amounts to be received towards the suit account till realisation of the entire dues. This application was made by the applicant Bank as per Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Ordinance, 2002 (for the sake of brevity and convenience, hereinafter to be referred to as the “Securitization Act’)
2. To understand the controversy, few facts which are required to be stated, are as follows:
The applicant Bank had filed original application No. 793-P/2001 in Debts Recovery Tribunal, Pune for recovery of Rs. 20,95,300/- being balance outstanding at that time in the demand loan account of the defendants M/s. Nutan Warehousing Co. Pvt. Limited. The said demand loan was sanctioned on 2.1.1999 for the specific proposal and condition that the rental income from the godowns shall be deposited in the demand loan account and thus liquidated within a period of three years from the date of disbursal.
Initially the defendants had given power of attorney in favour of the applicant Bank to collect lease rents from respective lessees and accordingly the lessees were also paying the rent in the said D.L. account of the defendants with the applicant Bank. However, subsequently, the defendants had instructed the lessees to pay the rent directly to them and not to the applicant Bank without any intimation or information to, or any consent of the applicant Bank. The defendants, thus committed breach of the terms of the sanction of the loan. The defendants were not paying any interest on the outstanding amount for the last so many years and was thus causing loss to the applicant Bank. The applicant Bank was also entitled to receive the rental income from the properties. Under these circumstances, the application was made by the applicant Bank in the Debts Recovery Tribunal, Pune for appointment of Receiver for taking possession of the godowns and to deposit rents in the Debts Recovery Tribunal, Pune to be appreciated towards interest and principal amount due from the defendants.
This application came to be opposed by the defendants. However, after hearing both the sides and after going through the material on record, the learned Presiding Officer by his order dated 13.5.2002, appointed Branch Manager of the applicant as a Receiver to collect the rents of the godowns belonging to defendants. It was also directed by the learned Presiding Officer that the Receiver so appointed should file report and deposit the amount of rent by keeping separate account in the name “Court Receiver”.
Being aggrieved, the appellants preferred Misc. Appeal No. 241/2002 in this Appellate Tribunal. This Forum, however, by its order dated 3.9.2002 upheld the order of Debts recovery Tribunal, Pune and dismissed the appeal. Appointment of Receiver, thus, came to be confirmed. Being aggrieved the appellants carried the matter further in the Bombay High Court by filing Writ Petition No. 5514/02 under Articles 226 and 227 of the Constitutions of India. However, Division Bench of the High Court, by its order dated 1.10.2002 dismissed the said writ petition.
In the meantime the applicant Bank issued notice dated 4.9.2002 to the appellants under Section 13(2) of the Securitisation Act. After the stipulated period of 60 days was over and since, the defendants did not comply with the terms of the said notice by paying off their dues in respect of suit account, application dated 12.12.2002 came to be made by the applicant Bank in Debts Recovery Tribunal, Pune, in which it was prayed that the applicant Bank be allowed to appropriate and deposit the said amount of Rs. 28,37,000/- as also future amounts to be received towards the suit account till realisation of the entire dues. The amount mentioned in the notice was the amount collected by the Receiver who was appointed by the DRT by its order dated 13.5.2002 with specific direction to collect amount of rents by keeping separate account and which order was confirmed by the Appellate Tribunal and also by the Hon’ble High Court.
The appellants, however, opposed the said application submitting that the respondent Bank was not entitled for that amount. They also submitted that, they have filed Writ Petition No. 6368/2002 in the Bombay High Court challenging validity of the Securitisation Act on various grounds and that the said Writ Petition was admitted on 1.11.2002 by the Division Bench and was pending. It was also submitted inter alia that when the original application was pending, proceedings under the Securitisation Act, at the same time could not be initiated. On this ground, it was prayed by the appellants that the application made by the respondent Bank in DRT, be rejected. The learned Presiding Officer, however, after hearing both the sides and after going through the material before him including the order of the First Court in Writ Petition No. 6368/2002 allowed the said application of the applicant by his impugned order dated 20.1.2003. Being aggrieved, the present Misc. Appeal is filed before this Appellate Forum.
3. I have heard Mr. Warunjikar for the appellants and Mr. Sharma for the respondent Bank. I have also gone through the checkered history of the matter and various orders passed by DRT, Pune, this Appellate Tribunal and the High Court, and in my opinion, the learned Presiding Officer has correctly allowed the application of the applicant Bank allowing them to appropriate and adjust amount of Rs. 28,37,000/- as also the future amounts to be received towards suit account till realisation of entire dues.
4. It is to be noted that amount of which appropriation is prayed by the applicant Bank is the amount which is already collected by the Receiver appointed by the DRT by its order dated 13.5.2002. Challenge to this order by the appellants has failed all throughout. Amount to be paid to the Receiver was as per the Power of Attorney given by the appellants to the Bank. The power of attorney was with respect to collection of lease rental. Thus, amount is already collected. The receiver has been discharged on 28.1.2003 itself. The present application by the Bank is made as per the provisions of Section 13(4)(d) of the Securitisation Act. Section 13 of the Securitisation Act is with respect to enforcement of security interest, Sub-clause 4 thereof stales as follows:
Section 13. Enforcement of security interest–
(1) ……
(2) ……
(3) ……
(4) In case the borrower fails to discharge his liability in full within the period specified in Sub-section (2), the secured creditor may take recourse to one or more of the following measures to recover his secure debt, namely:
(a) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset;
(b) take over the management of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale and realise the secured asset;
(c) appoint any person (hereinafter referred to as the Manager), to manage the secured assets the possession of which has been taken over by the secured creditor;
(d) require at any time by notice in writing, any person, who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt.
5. Thus, Section 13(4)(d) gives power to the creditor to require the borrower to pay to the secured creditor so much of the money as is sufficient to pay the secured debt. Notice in the present case is given under Section 13(2) of the Securitisation Act and action contemplated is under Section 13(4)(d) of the said act.
6. As far as objection of the appellants about notice under Securitisation Act during the pendency of the original application is concerned, order of the Division Bench of the High Court dated 1.11.2002, has specifically made it clear in paragraphs 6 and 7, as follows:
6. “In our opinion, in light of the order of the Supreme Court in M/s. Mardia Chemicals Ltd., the relief which has been granted by the Supreme Court deserves to be granted in favour of the present petitioners also namely that it would be open to the secured creditors including the respondent No. 1 to proceed against the borrowers under Clauses (2) and (4) of Clause 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Second) Ordinance, 2002. However, they shall not part with the assets of the borrowers by way of lease, assignment or sale. It is made clear that this order will not preclude the respondents from taking any other proceedings provided under Clause 13(4) of the Ordinance.
7. We may clarify that since the matter is pending before the Debts Recovery Tribunal Pune, order passed by us and pendency of this petition will not come in the way of the Debt Recovery Tribunal in proceeding and dealing with the matter and disposing it of.”
Thus, it has been made clear by the High Court order that it has passed its order on the lines of order of Supreme Court in Transfer Petition (Civil) Nos. 724-727 of 2002 titled M/s. Mardia Chemicals Ltd. and Anr. v. Union of India and Ors. In Mardia Chemicals’ case, the Supreme Court has passed order and relevant portion thereof, can be reproduced below:
“Meanwhile, it would be open to the secured creditors to proceed against the borrowers under Sub-clauses (2) and (4) of Clause 13 of the Securilisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Second) Ordinance, 2002. However, they shall not part with the assets of the borrowers by way of lease, assignment or sale.
It is made clear that this order will not preclude the secured creditors from taking recourse to any other alternatives provided under Clause 13(4) of the Ordinance.”
7. In the present case at hand also, Hon’ble High Court has passed order on 1.11.2002 on these lines, clarifying that since the matter is pending in the Debts Recovery Tribunal, Pune, order passed by the High Court and pendency of the Writ Petition No. 6368 of 2002 will not come in the way of the Debts Recovery Tribunal in proceeding and dealing with the matter and disposing it of. On this background, contentions of the appellants fall to the ground. I, therefore, find no substance in this Misc. Appeal, which deserves to be dismissed. Hence, following order is passed:–
ORDER
Misc. Appeal No. 54 of 2003 is dismissed.