Litigant Enjoying Fruits Of Litigation For 21 Years, Inviting Orders On Merits That Are Against Him Is Reprehensible - SC

Upon enactment of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, the suit was transferred to the Debts Recovery Tribunal (DRT). The DRT ordered the Respondents and the guarantors to pay jointly and severally a sum of Rs. 44,01,159.47 with cost. The debts were later assigned to the Appellant bank under credit facility. Pursuant to the assignment of dues the bank issued demand notice on the Respondent under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) for a sum of Rs. 27,35,85,200.62 together with further interest and expenses and cost. Before any further action could be taken the respondent filed an application under section 17 of the SARFAESI Act before the DRT the Recovery Officer rejected the objections raised by respondent No. 1 and guarantors and dismissed the application.

The appellant took symbolic possession of the property under section 13(4) of the SARFAESI Act. The Appellant filed an application under Section 14 of the SARFAESI Act before the Chief Metropolitan Magistrate which was allowed giving the banks to take physical possession of the secured assets. Aggrieved by the order the Respondent approached the DRT with a securitization application. The appellant moved a special criminal application before the High Court challenging the order of the CMM only to the limited extent of not appointing a subordinate officer for the execution of the order. The High Court disposed of the application and pursuant to the order passed by the High Court CMM authorized the Registrar of that Court to take possession of the secured property in question. The Respondent filed an Interlocutory application before the DRT which came to be rejected. they also file a criminal application before the CMM which was also rejected.

The respondents approached the High Court in a repetition seeking compliance with the orders of the recovery officer against which an appeal was pending before the DRT. The Respondents also challenged the order passed by the CMM in the Criminal application and the order passed by DRT in the Securitisation Application. The appellant resisted the said Special Civil Application on the grounds stating that without exhausting alternative remedies available under the SARFAESI Act and Act, 1993, the writ petition under Article 226 of the Constitution of India would not be maintainable. It was also submitted that the writ petition under Article 226 of the Constitution of India against the orders passed by the DRT and the orders passed under the SARFAESI Act and Act, 1993, would not be maintainable. During the pendency of the writ petition before the High Court, the DRT dismissed the Securitisation Application with cost of Rs. 25,000/­. The Single Judge of the High Court subsequently dismissed the aforesaid Special Civil Application with a cost of Rs 1,00,000 observing that the said proceedings were only preferred to stall the recovery proceedings under the SARFAESI Act. The Single Judge of the High Court also noted that the respondent remained successful in not paying a single rupee for almost 21 years despite the decree passed by the DRT.

Aggrieved, the Respondent preferred an appeal before the Division Bench of the High Court. The Division Bench of the High Court by the impugned ex­-parte ad­-interim order granted stay in favour of respondent No. 1 of dispossession of the property till the next date of hearing and also stayed the payment of cost of Rs. 1,00,000/­ imposed by the learned Single Judge. Aggrieved by the order the appellant approached the Supreme Court. The Respondent when got to know of the appeal in Supreme Court withdrew the letters patent appeal with liberty to pursue appropriate remedy. The High Court ordered that impugned order was to continue and allowed the Respondents to withdraw and reduced the cost for 1,00,000 to 25,000. The High Court also ordered that the appropriate forum which was to hear the matter without any influence of the observation made by the Single Judge.

The Supreme Court observed that, "we deprecate the conduct on the part of respondent No. 1 in withdrawing the Letters Patent Appeal despite the fact that this Court was seized of matter in which the ex­parte ad­interim order dated 25.01.2022 passed by the Division Bench was under challenge and in which respondent No. 1 was appearing before this Court. He ought not to have withdrawn the Letters Patent Appeal and made the proceedings before this Court infructuous." The Court also noted that, "Even the observations made by the Division Bench that the appropriate forum, which is going to examine the order dated 19.04.2016 passed by the DRT­1, Ahmedabad in Case No. S.A. 171 of 2016, shall deal with the case independently and without being influenced by the observations made by learned Single Judge, vide order dated 07.10.2021 passed in Special Civil Application No. 2763 of 2017 and without being influenced by the order of cost imposed is also unsustainable. Such observations made while permitting withdrawal of the Letters Patent Appeal amounts to virtually allowing the appeal and setting aside the orders of the DRT as well as the learned Single Judge."

The Supreme Court while partly allowing the appeal observed that, "Once the Division Bench did not interfere with the order passed by the learned Single Judge on merits, thereafter, it was not open for the Division Bench to pass an order permitting the appellant – respondent No. 1 to withdraw the Letters Patent Appeal and also make observations that any of the observations made by the DRT as well as by learned Single Judge while dismissing the writ petition shall be ignored and/or shall not be taken into consideration was beyond the ken of the Division Bench. Allowing such a practice would tantamount to not only taking a chance before the court but would be indeed speculative and an abuse of the process of the court. The proceedings before the Court are not for taking the chance by the litigants. We fail to understand as to on what basis the Division Bench of the High Court permitted withdrawal of the Letters Patent Appeal on the one hand while simultaneously granting relief to the appellant."

The Supreme Court thus disposed of the appeal as infructuous but quashed part of the order which allowed the extension of the interim relief, reduced the cost imposed and suggested the appropriate forum to consider the matter independently without the influence of the observation of the single judge bench. The Supreme Court reimposed the cost of Rs. 1,00,000