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SIBA INTERNATIONAL vs UNION BANK OF INDIA & ANR.

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$~3
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 12406/2022 & CM APPL. 28058/2023

SIBA INTERNATIONAL ….. Petitioner
Through: Mr. Chetan Joshi, Advocate

versus

UNION BANK OF INDIA & ANR. ….. Respondents
Through: Mr. Divyank Dutt Dwivedi, Advocate (Through VC) for R-1
Mr. Kartik Sharma and Ms. Prashansa Sharma, Advocates for Mr. Santosh Kr. Tripathi, Standing Counsel for GNCTD

% Date of Decision: 23rd February, 2024

CORAM:
HON’BLE THE ACTING CHIEF JUSTICE
HON’BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA
JUDGMENT
MANMOHAN, ACJ: (ORAL)
1. Present petition has been filed under Article 226 of the Indian Constitution seeking to restrain the Respondent No.1-Bank from taking the physical possession of the two immovable properties which are in name of the Petitioner herein (‘secured assets’) and from taking further proceedings in pursuance of the Notice issued under Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’). In addition, a direction is sought to stay the order dated 13th May, 2022 passed by Debt Recovery Tribunal – III (‘DRT’) in S.A. No. 208/21 wherein the DRT dismissed the application of the Petitioner seeking an interim order to restrain the Court Receiver from taking physical possession of the secured assets and praying for extension of time to pay the balance amount due and payable to the Respondent No.1-Bank.
2. The Petitioner was duly served by the Respondent No.1-Bank with a demand notice dated 15th June, 2021 under Section 13(2) of the SARFAESI Act demanding an amount of Rs. 5,55,83,476.46/- along with interest from 01st June, 2021. The Petitioner filed an application bearing no. SA No. 208/2021 before DRT. In the meantime, Chief Metropolitan Magistrate (Central), Tis Hazari Courts, Delhi in MA No. 151/121 passed an order dated 17th December,2021 on an application filed by Respondent No. 1, Bank under Section 14 of the SARFAESI Act appointing Court Receivers and permitting the Respondent No.1-Bank to take over the physical possession of the secured asset.
3. The DRT initially vide order dated 04th February, 2022 dismissed the Petitioner’s interim application seeking to injunct the Court Receiver from taking physical possession of secured assets. However, upon a further application made by the Petitioner, DRT vide subsequent order dated 17th February, 2022 granted a conditional stay subject to the Petitioner making a deposit of Rs. 40 lakhs with the Respondent No.1-Bank. Finally, vide order dated 13th May, 2022, DRT dismissed the said interim application after taking note that as against the outstanding sum of Rs. 5.50 crores (approximately) the Petitioner had deposited a sum of Rs. 1.50 crores.
4. The Petitioner preferred an appeal bearing Misc. Appeal No. 131/2022 before the Debts Recovery Appellate Tribunal (‘DRAT’) against the order dated 13th May, 2022, without depositing the pre-deposit amount as required under Section 18 of the SARFAESI Act. Therefore, DRAT vide order dated 15th July, 2022 directed the Petitioner to make a pre-deposit of 50% of the remaining amount of Rs. 3,35,83,476.76/- and directed that the appeal will be heard after the said deposit.
5. In the aforesaid facts, the Petitioner without making the pre-deposit, approached this Court by way of the present writ petition. At the hearing dated 13th September, 2022, the Petitioner agreed to deposit a sum of Rs. 25 lakhs in two instalments by 04th October, 2022 and another sum of Rs. 3.65 crores within sixty days from the said order. The Petitioner was directed to file an undertaking in terms of the order, which was duly filed by him on 21st September, 2022. The said order dated 13th September, 2022 was passed with the consent of the parties and the matter was fixed for 19th December, 2022. The order dated 13th September, reads as under:

“The hearing has been conducted through hybrid mode (physical and virtual hearing).

1. The case was passed over for the learned counsel for the petitioner to obtain instructions. Having done so, the parties have agreed to the following:-

i) The learned counsel for the petitioner states that a sum of Rs.25 lakhs shall be paid to the R-1/Bank in two instalments by
04.10.2022, as under:-
a) Rs.10 lakhs will be paid on or before 30.09.2022 and;
b) the remaining amount of Rs.15 lakhs will be paid on or before 04.10.2022.

2. The learned counsel for the petitioner submits that an endeavour will be made to pay another sum of Rs.3.65 crores within 60 days from today.

3. The petitioner shall keep the bank informed of every development apropos the sale of his unencumbered industrial asset in Mumbai. The details of the industrial asset in Mumbai shall be furnished to the bank within a week.

4. An undertaking in terms of the above shall be filed within a week, with a copy of the same to the learned counsel for the Bank. In case of default in payment as noted herein above, it will be open to the bank to approach the court for proceeding with the auction.

5. As per office report, process fee was not filed by the petitioner. Issue notice to the un-served respondent through ordinary process, approved courier, Speed Post, WhatsApp, e-mail, SMS, Signal, and other viable modes of electronic service as well.

6. The above noted arrangement has been recorded with the consent of
the parties.

7. At joint request, re-notify on 19.12.2022.”

6. The Petitioner paid the amount of Rs. 25 lakhs, however, it failed to make the payment of the sum of Rs. 3.65 crores. The aforesaid default was brought to the notice of this Court by the Respondent No.-Bank on 24th November, 2022, by CM APPL. No. 50792/2022 and seeking permission to take possession of the secured assets through the Court Receivers. This Court issued notice in the said application for the date fixed i.e., 19th December, 2022. The Petitioner failed to appear on 19th December, 2022 and also failed to make a deposit of Rs. 3.65 crores with the Respondent No. 1, Bank. Therefore, in view of the wilful default of the undertaking dated 13th September, 2022 this Court permitted the Respondent No. 1, Bank to take possession of the secured assets.
7. The writ petition itself was dismissed in default for non-prosecution on 12th April, 2023. The Respondent No.1, Bank in accordance with provisions of the SARFAESI Act served the Petitioner with e-auction notice of the mortgage property scheduled for 25th May, 2023. In these facts, the Petitioner filed CM APPL. 27680/2023 praying for restoration of the writ petition. On 25th May, 2023 the Petitioner gave a fresh undertaking that it would pay a sum of Rs. 10 lakhs on the same day and further pay a sum of Rs. 2.4 crores on or before 30th June, 2023. The Petitioner was directed to file a fresh affidavit in terms of the undertaking given to the Court and this Court observed that in case of default of payment the Respondent No.1-Bank would be at liberty to recover its dues. The Petitioner filed an affidavit of undertaking dated 02nd June, 2023 and in this manner the Petitioner secured an injunction upon the aforesaid representations. The relevant portion of the order dated 25th May, 2023 reads as under:
“W.P.(C) 12406/2022

8. The learned counsel for the Bank submits that despite this court having granted opportunity to the petitioner vide order dated 13.09.2022 to pay the outstanding amount of Rs.3.9 crores within a time schedule specified therein, the petitioner has defaulted and has paid merely Rs.1.25 crores, therefore, the Bank would like to proceed with the matter. The Bank also does not have information as to what efforts have been made by the petitioner to sell off the property in Mumbai.

9. The learned Senior Advocate for the petitioner submits that to prove his bona fide, the petitioner is ready and willing to pay an amount of Rs.10 lacs as of today to the Bank by cheque bearing no.269903 dated 25.05.2023 drawn on Union Bank. The said cheque has been handed over to the learned counsel for the Bank. Another cheque of Rs.15 lacs bearing no.269905 dated 31.05.2023 drawn on Union Bank has also been handed over to the learned counsel for the Bank. He assures the court that the said cheques are good for encashment on the dates mentioned. He further submits that the petitioner would pay off the entire amount of Rs.2.4 crores on or before 30.06.2023. He would also file an undertaking to this effect within two working days of receipt of this order.

10. The learned counsel for the Bank submits that this is only an interim arrangement; that along with interest, the Bank claims amounts exceeding Rs.5.5 crores, in terms of the notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The Bank has a charge on the properties of the petitioner.

11. In view of the petitioner having paid Rs.1.25 crores and handed-over cheques of a value of Rs.25 lacs, with a proposal to pay their amounts in terms of para 9 above, the time is extended till the next date. In the event of the petitioner not making the payments as per today’s order, it would be open to the Bank to recover the dues from the secured assets, as per procedure.

12. A fresh affidavit in terms of the above be filed by the petitioner.

13. The learned Senior Advocate for the petitioner further submits that he reserves his right to advance arguments regarding the interest element claimed by the Bank.

14. The auction proceedings scheduled for today, have been conducted. Let the same not be confirmed till further orders.

15. At joint request, renotify on 10.07.2023.”

8. The Petitioner failed to make payment of Rs. 2.4 crores on or before 30th June, 2023. Thereafter, on 10th July, 2023 the Petitioner handed over to the Respondent, during Court proceedings, a cheque for the payment of the amount of Rs. 2.4 crores with a request that the same be presented for encashment on 20th August, 2023. The said cheque has since been dishonoured due to the ‘insufficiency of funds’.
9. Learned counsel for the Respondent No.1-Bank states that upon notifying the Petitioner about the dishonour by a written notice, the Petitioner has issued a reply to the said Notice disputing its liability and has failed to make the payment of Rs. 2.4 crores.
10. Learned counsel for the Petitioner does not dispute the fact of dishonour and seeks further time on behalf of the Petitioner to make payments in terms of the undertaking given before this Court on 25th May, 2023.
11. The Petitioner herein has acted in gross violation of the undertakings dated 21st September, 2022 and 02nd June, 2023 filed in the present petition. Further, as noted above, the Petitioner was served with a demand notice dated 15th June, 2021 under Section 13(2) of the SARFAESI Act. However, the Petitioner despite having failed to point out any illegality in the actions taken by the Respondent No.1-Bank under the SARFAESI Act, has succeeded in preventing the Respondent No.1-Bank from proceeding in law against taking physical possession of secured assets by making representations before DRT and this Court with respect to its intention to clear the dues. However, as is evident from the proceedings of the DRT and the orders passed in this petition, the Petitioner has failed to avail the extension of time granted by the Court as well as the Respondent No.1-Bank.
12. The prayer sought in this petition for seeking extension of time to make payments to Respondent No. 1, Bank stood satisfied with passing of the orders dated 13th September, 2022 and 25th May, 2023. However, the Petitioner having failed to avail the said extension of time is not entitled to the consequential relief of restraint against the Respondent No.1-Bank sought in prayers (a) and (b).
13. Accordingly, the present petition stands dismissed. Pending application is disposed of.

ACTING CHIEF JUSTICE

MANMEET PRITAM SINGH ARORA, J
FEBRUARY 23, 2024/msh/ms

W.P.(C) 12406/2022 Page 7 of 7