Bombay High Court: The Division Bench of Sunil B. Shukre and Anil S. Kilor, JJ., held that mandate of Section 34 leaves a party aggrieved by the action of the Bank taken under Section 13 of the SARFAESI Act with only one forum to raise its grievance before it. This would further underline the need for any Debts Recovery Tribunal to be careful in denying urgent hearings to the parties.
Petitioner was aggrieved by the notice issued under Section 32 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), whereby two mortgaged properties creating a security interest in favour of respondent 1/Bank towards repayment of a loan granted to petitioner 2/company were put on auction sale.
Petitioners had filed an application under Section 17 of the SARFAESI Act before the Debts Recovery Tribunal, Nagpur questioning the said sale notice.
As per the sale notice, the petitioner had to pay the outstanding dues amounting to Rs 5,87, 10,380.23 together with applicable interest and costs within15 days, failing which the notice informed that the respondent 1/bank would be constrained to sell the secured assets for realization of the dues.
Further, it was noted that the petitioners did not question the said notice for its validity immediately after its receipt and almost about 25 days thereafter, chose to knock at the doors of Debts Recovery Tribunal.
Petitioner’s request for an urgent hearing was also declined by the DRT.
Right of Hearing
Contention of the petitioners was that the petitioners were being denied the right of hearing by the Debts Recovery Tribunal, the only forum available for redressal of grievances arising from the measures taken under Section 12 of the SARFAESI Act which affected the fundamental rights of the petitioners.
There is a difference between refusal to hear a matter on a particular date and refusal to hear the matter at all.
In the present matter, DRT had not said that it would not hear the application and thus the request for grant of urgent hearing had not been altogether rejected by the DRT, Nagpur. Also, the rejection came from the Registrar of the DRT and not from the Presiding Officer of DRT.
High Court in view of the above facts and circumstances, stated that the Registrar of the Debts Recovery Tribunal, instead of taking a decision himself, ought to have placed the request for urgent hearing before the Presiding Officer of the Debts Recovery Tribunal and allowed the Presiding Officer to take appropriate decision in the matter.
Adding to the above, Bench noted that If the said auction sale was to go ahead and finalization of the sale of the properties in the auction had indeed taken place, it would have resulted into adversely affecting the rights of the petitioners even without hearing the petitioners and the further consequence would have been another grievance of violation of principles of natural justice.
High Court referred to the Supreme Court decision in Mardia Chemicals Ltd. Etc. v. Union of India, (2004) 4 SCC 311, wherein it was held that the central theme of the provisions made in the SARFAESI Act is of fairness and transparency in the procedure adopted while taking such drastic measures as taking over of the possession of the secured assets and they being sold in realization of the dues payable to the banks, without any intervention of any judicial authority.
Section 34 of the SARFAESI Act raises an embargo upon the power of the Civil Court to grant injunction in respect of any action. Taken or to be taken in pursuance of the powers conferred by under this Act or under the Recovery of Debts and Bankruptcy Act, 1993.
Opportunity of Hearing
Court expressed that the opportunity of hearing is an integral part of our constitutional philosophy and it is well embedded in Articles 14 and 21 of the Constitution of India.
Since the Registrar of the Debts Recovery Tribunal failed to perform his duty in the matter, therefore, the order passed by him denying the hearing would have to be held as illegal.
While partly allowing the petition, Court directed the Debts Recovery Tribunal to hold an urgent hearing. [Aruna DTS Moorthy v. UCO Bank, 2021 SCC OnLine Bom 1537, decided on 30-7-2021]
Advocates before the Court:
S.S.Sanyal, Advocate for the petitioners.
Sau. Supriya Puntambekar, Advocate for respondent 1. Shri C. Deopujari, Advocate h/f Aurangabadkar, ASGI for respondent 2.