Case Note & Summary
The petitioners, Mr. Dipak Digambar Naik and others, filed a writ petition in the Bombay High Court challenging an order dated 12th March 2015 passed by the Debts Recovery Appellate Tribunal (DRAT), Mumbai, in Appeal No.64 of 2014. The DRAT had set aside an earlier order dated 8th January 2014 passed by the Debts Recovery Tribunal (DRT), Pune, which allowed petitioner nos.1 and 2 to redeem a mortgaged property (Plot No.41, Ex-Servicemen Co-op. Society, Pune) for a sum of Rs.1,65,05,000/-. The Bank of Maharashtra, the respondent, had initiated recovery proceedings under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) for dues amounting to Rs.23,12,15,977.99 as on 18th February 2014. The DRT's order permitted redemption at a fraction of the outstanding debt, which the DRAT found to be patently unreasonable and an abuse of process. The High Court, in its judgment, noted that the petition was yet another attempt to stall the bank's recovery measures and dismissed it with heavy costs of Rs.5,00,000/- payable to the bank. The court held that the DRT's order was unsustainable and the DRAT had correctly interfered.
Headnote
A) SARFAESI Act - Redemption of Security - Abuse of Process - The DRT allowed redemption of mortgaged property for Rs.1,65,05,000/- despite admitted dues of Rs.23,12,15,977.99, which was patently unreasonable and an abuse of process. The DRAT rightly set aside the order. (Paras 1-2) B) Civil Procedure - Imposition of Costs - Frivolous Litigation - The High Court dismissed the writ petition with heavy costs of Rs.5,00,000/- to be paid to the Bank, as the petition was one more attempt to stall recovery under the SARFAESI Act. (Para 1, 17)
Issue of Consideration
Whether the DRT was justified in allowing redemption of the mortgaged property for a sum of Rs.1,65,05,000/- when the admitted dues of the Bank were over Rs.23 crores, and whether the DRAT correctly set aside that order.
Final Decision
Writ Petition dismissed with costs of Rs.5,00,000/- payable to the Bank of Maharashtra
Law Points
- Abuse of process of court
- Redemption of security under SARFAESI Act
- Discretion of DRT/DRAT
- Imposition of costs for frivolous litigation
