Summary
A borrower whose 1980s loan, decreed by the Debts Recovery Tribunal in 2000 and assigned to Kotak Mahindra Bank, resisted SARFAESI measures for two decades. After the DRT dismissed his securitisation application and a Single Judge of the Gujarat High Court dismissed his writ petition against orders of the Recovery Officer, the Magistrate and the DRT with exemplary costs, a Division Bench granted him an ex parte stay in appeal. While the Bank's challenge to that stay was pending in the Supreme Court he withdrew the appeal, and the Division Bench, permitting withdrawal, extended the stay, reduced the costs and directed that the Single Judge's observations be ignored. The Supreme Court quashed those directions, vacated the stay and imposed costs of Rs. 1 lakh: a litigant cannot enjoy interim relief for years, invite an adverse decision and then withdraw the appeal to nullify it.
Issues
- Whether a Division Bench, while permitting withdrawal of a Letters Patent Appeal against a Single Judge's dismissal of a writ petition on merits with costs, may extend ex parte interim relief, reduce the costs and direct that the observations of the Single Judge and the DRT be ignored by the forum before which the litigant may next proceed.
- Whether a writ petition under Article 226 challenging orders of the Recovery Officer, the Chief Metropolitan Magistrate and the DRT in SARFAESI and RDB Act proceedings, filed to stall recovery, is an abuse of process when statutory remedies exist.
Provisions considered
- Sections 13(2), 13(4), 14 and 17 of the SARFAESI Act; recovery proceedings under the 1993 Act, Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and Recovery of Debts and Bankruptcy Act, 1993The borrower, decreed in 2000 and served with a demand notice in 2011, repeatedly invoked the DRT, the CMM and the High Court to stall recovery; the DRT dismissed his securitisation application with costs for concealing the death of a co-debtor and earlier recoveries, and a writ petition against SARFAESI proceedings and interim orders, bypassing statutory remedies, is not maintainable (State Bank of Travancore v. Mathew K.C.; Phoenix ARC v. Vishwa Bharati Vidya Mandir). (¶¶ 2.2, 2.3, 2.4, 2.5, 4, 4.1, 4.2, 4.7)
- Article 226; Letters Patent appeal, Constitution of IndiaThe Division Bench, having not interfered with the Single Judge's order on merits, could not permit withdrawal of the appeal while extending interim relief, reducing costs and nullifying the Single Judge's observations; such an order amounts to virtually allowing the appeal and setting aside the DRT's and the Single Judge's orders without adjudication. (¶¶ 4.3, 4.5, 4.8, 4.9, 5)
Held
- The proceedings begun in 2017 were an abuse of court process intended only to delay SARFAESI recovery of dues outstanding since 1986; despite the DRT's strong findings that the borrower concealed material facts and the Single Judge's finding that his sole agenda was to pay nothing for 21 years, the Division Bench was not justified in granting ex parte ad interim relief, let alone continuing it on withdrawal of the appeal. (¶¶ 4, 4.2, 4.3, 4.7)
- Withdrawing the Letters Patent Appeal while this Court was seized of the challenge to the ex parte stay, so as to render these proceedings infructuous and avoid adjudication on the correctness of that order, is wholly deplorable; and the borrower's appearing in one connected matter while deliberately not appearing in the other, though served, is not appreciated. (¶¶ 3, 4.6)
- A litigant who enjoys the fruits of interim orders for about four years, initiates a series of proceedings, invites an order on merits and, on losing, obtains an ex parte stay in appeal and then withdraws the appeal asking that the adverse observations be ignored, acts reprehensibly; permitting such a course would make litigation speculative and an abuse of process. Once the Division Bench did not interfere on merits it could not, while permitting withdrawal, extend interim relief, reduce costs or direct that the DRT's and Single Judge's observations be disregarded — that was beyond its ken. (¶¶ 4.8, 4.9, 5)
Result
Appeals allowed/disposed of: the appeal against the Gujarat High Court Division Bench's ex parte stay of 25.01.2022 in LPA No. 75 of 2022 disposed of as infructuous; its order of 04.03.2022 quashed insofar as it extended the interim relief, reduced the costs from Rs. 1,00,000 to Rs. 25,000 and directed the appropriate forum to disregard the Single Judge's observations; the ex parte interim order vacated; costs of Rs. 1,00,000 imposed on the borrower, payable to the Gujarat High Court Legal Services Committee within four weeks.