Supreme Court – Daily Orders
M/S Royal Traders vs Asset Reconstruction Company India Ltd on 22 January, 2025
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ITEM NO.44 COURT NO.14 SECTION IX
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
SPECIAL LEAVE PETITION (CIVIL) Diary No(s). 60048/2024
[Arising out of impugned final judgment and order dated 19-12-2024
in WPL No. 18722/2024 passed by the High Court of Judicature at
Bombay]
M/S ROYAL TRADERS Petitioner(s)
VERSUS
ASSET RECONSTRUCTION COMPANY INDIA LTD Respondent(s)
(IA No. 18005/2025 - CONDONATION OF DELAY IN REFILING SLP,
EXEMPTION FROM FILING C/C OF THE IMPUGNED JUDGMENT & IA No.
18007/2025 - PERMISSION TO FILE ADDITIONAL DOCUMENTS/
FACTS/ANNEXURES)
Date : 22-01-2025 This matter was called on for hearing today.
CORAM :
HON'BLE MR. JUSTICE J.B. PARDIWALA
HON'BLE MR. JUSTICE R. MAHADEVAN
For Petitioner(s) :
Mr. Rajiv Shakdhar, Sr. Adv.
Mr. Bishwajit Dubey, Adv.
Ms. Radhika Bishwajit Dubey, Adv.
Mr. Jagdish Chandra, Adv.
Mr. Karan Khetani, Adv.
Mr. Jonathan Ivan Rajan, Adv.
Mr. Niteen Kumar Sinha, AOR
For Respondent(s) :
Mr. Navin Pahwa, Sr. Adv.
Mr. Mahesh Agarwal, Adv.
Mr. Ankur Saigal, Adv.
Ms. S. Lakshmi Iyer, Adv.
Mr. Devansh Srivastava, Adv.
Mr. Naman Gupta, Adv.
Mr. E. C. Agrawala, AOR
UPON hearing the counsel the Court made the following
Signature Not Verified
O R D E R
Digitally signed by
VISHAL ANAND
Date: 2025.01.23
1.
17:46:26 IST
Reason: Delay condoned.
2. Exemption Application is allowed.
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3. This petition arises from the Judgment and Order passed by the
High Court of Judicature at Bombay dated 19-12-2024 in Writ
Petition L. No.18722/2024, by which the High Court rejected the
Writ Petition filed by the petitioner – herein seeking waiver of
50% of pre-deposit in terms of Section 18 of the Securitization and
Reconstruction of Financial Assets and Enforcement of Security
Interest Act (SARFAESI), as a consequence the Statutory Appeal
filed by the petitioner – herein against the order passed by the
DRT, Mumbai came to be dismissed.
4. We have heard Mr. Rajiv Shakdhar, the learned Senior counsel
appearing for the petitioner and Mr. Navin Pahwa, the learned
Senior counsel appearing for the respondent.
5. At this stage, it may not be out of place to state that the
Asset Reconstruction Company India Ltd. also preferred petitions
before the High Court of Bombay and they succeeded before the High
Court. The High Court disposed of all the Writ Petitions, i.e., one
filed by the petitioner – herein and the other petitions filed by
the ARCIL by a common Judgment.
6. The petitioner – herein is the original borrower. ARCIL is the
assignee of the debt.
7. According to ARCIL, the amount due and payable by the
petitioner – herein as on date and as determined by the High Court
is Rs.138 Crore.
8. The petitioner – herein has no idea as to what is the exact
amount due and payable by them as there are conflicting findings on
this issue.
9. Mr. Shakdhar would submit that the amount due and payable as
stated in the Notice issued under Section 13 (2) of the Act is
Rs.132 Crore. In fact, there are three demand notices under the
said Section because of three different loan transactions.
10. The DRAT in its impugned order has observed thus:-
“10. After having heard Mr Rohit Gupta and Mr Charles
D’Souza, the Ld. Counsel for the appellant, and Mr Nitin
Thakkar, the Ld. Senior Counsel for respondent No. 1,
I find that there are certain discrepancies concerning the
3amount demanded in the demand notices and the other
documents. The respondent had claimed that the amount due
on six different accounts concerning the appellant and the
sister concerns would add up to ₹142,17,39,819.41. However,
the breakups are not available. To get a waiver of 25% of
the pre-deposit amount, the appellant would have to satisfy
the existence of a prima facie case and also establish
financial strain in paying 50% of the amount due for
entertaining the appeal. The appellant has created some
doubts regarding the validity of the claim put forth by the
respondent which would, at best, be an arguable case and
cannot be said to be a strong prima facie case in favour of
the Appellant. The fact regarding the appellant not
challenging the measures and thus waiving its right is also
of concern. However, it is admitted that the OTS proposal
was not accepted. There is no evidence regarding any
financial strain. For the payment of pre-deposit, this
Tribunal relies on the demand notices for determining the
threshold amount.
11. In I.A. No. 246 of 2024, the amount demanded is
₹20,34,63,530.23. The appellant is directed to deposit a
sum of ₹10 crores as pre-deposit in that appeal. The said
amount shall be paid in two equal instalments of ₹5 crores
each within a gap of two weeks each as stated hereinunder.
Number of Instalments Payment on or before 1st Instalment
of ₹5.00 crores 18/06/2024 & 2nd Instalment of ₹5.00 crores
02/07/2024.
12. Concerning I.A. No. 247 of 2024, the amount demanded is
₹20,23,05,050.20 and therefore, the appellant is directed
to deposit ₹10 crores as pre-deposit in that appeal. The
said amount shall be paid in two equal instalments of ₹5
crores each within a gap of two weeks each as stated
hereinunder:-.
Number of Instalments Payment on or before
1st Instalment of ₹5.00 crores 18/06/2024
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2nd Instalment of ₹5.00 crores 02/07/2024
13. As regards I.A. No. 248 of 2024, the amount demanded is
₹32,58,68,775.79 and hence, the appellant is directed to
deposit a sum of ₹16 crores as pre-deposit for entertaining
that appeal. The said amount shall be paid in two equal
instalments of ₹8 crores each within a gap of two weeks
each as stated hereinunder:-
Number of Instalments Payment on or before
1st Instalment of ₹8.00 crores 18/06/2024
2nd Instalment of ₹8.00 crores 02/07/2024
11. The High Court in its impugned has observed thus:-
“53. Mr. Thakker handed in a calculation sheet stating that
the dues as of 10 May 2024 would be approximately Rs.130.42
crores. Ms. Anand disputed this. Ms. Anand handed in a
without prejudice calculation sheet under which the dues
would be Rs.103.86 crores as of 08 May 2021. The relevant
date in this case would be 01 April 2024, i.e., the date
the borrower filed the appeal before the DRAT. Therefore,
this figure of Rs.103.86 crores would be considerably
enhanced given the interest for the last three years. Mr
Thakker disputed this calculation sheet.
54. However, even if we go by the calculation sheet
submitted by Ms. Anand, without for a moment accepting that
the same reflects the position of debt due by the borrower
correctly, the borrower will still have to make a pre-
deposit of Rs.51.93 crores or Rs.52 crores before the DRAT
to have its appeal entertained. This amount would be
further enhanced because the appeal was instituted in April
2024.
55. However, now that the DRAT has already dismissed the
borrower’s appeal, there is no point in modifying the
impugned order and directing the borrower to deposit 50% of
the debt due by taking cognisance of the statutory
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definitions and the decisions of this Court in Sony Mony
Developers Pvt. Ltd (supra) and MRB Roaconst. Pvt. Ltd.
(supra). If the appeals were pending, we would surely have
modified the impugned order and directed a deposit of an
additional amount as a pre-condition for the
entertainability of the appeal.
56. Though it was not argued before us, we considered
whether we should order the restoration of the borrower’s
appeal and grant the borrower an opportunity to deposit
Rs.52 crores initially pending determination of the amount
due as of the date of filing of the appeal (which would be
more than Rs.52 crores). However, upon due consideration of
the material on record, we think such a course of action
would only prolong the proceedings.
57. The borrower does not appear to be interested in making
any pre-deposit, and the entire endeavour is to buy some
time, which makes it difficult for ARCL to recover its
dues. Therefore, even after considering the Rs.10 Crore
deposit made by the borrower in this court, we think that
no indulgence should be granted to the borrower, and the
loan recovery should not be protracted any further. This
deposit must be considered in the context of the dues,
which, even on a conservative estimate, is over Rs 110
crores.
58. The jurisdiction under Articles 226 and 227 of the
Constitution of India is discretionary and equitable. Such
extraordinary jurisdiction cannot be exercised to assist
the borrower who has no intention of repaying/clearing even
the admitted debt dues. This borrower appears to be
interested in taking disproportionate advantage of some
typographical error in one of the documents (loan
assignment document). In any event, now that we have upheld
the impugned order to the extent it had dismissed the
borrower’s application for waiver, there is no case made
out to interfere with the DRAT’s order dismissing the
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appeal for non-compliance with the directions for pre-
deposit. Ms Anand had submitted that dismissing the appeal
or the notices for taking possession of the borrower’s
properties were only consequential to the order impugned in
this petition.
59. For all the above reasons, we dismiss the Writ Petition
(L) No. 18722 of 2024 and dispose of the remaining three
Writ Petitions in terms of the observations made above. The
Rule is discharged in Writ Petition (L) No.18722 of 2024
and disposed of in the remaining three Writ Petitions.
60. The interim order, if any, is vacated. Interim
Applications, if any, do not survive and are disposed of.
12. Mr. Shakdhar, the learned Senior counsel made a fervent appeal
to this Court that his client may be given one opportunity to put
forward their case on merits before the DRAT. According to Mr.
Shakdhar, his plea of waiver of 50% deposit was wrongly rejected by
the DRAT.
13. Upon instructions, Mr. Shakdhar makes a statement that his
client is ready and willing to deposit Rs.36 Crore as a pre-deposit
before the DRAT for the purpose of getting the appeal heard on
merits.
14. He submitted that Rs.10 Crore has been deposited with the
ARCIL and the same can be adjusted in the amount of Rs.36 Crore and
the balance amount of Rs.26 Crore will be deposited by his client
within a period of three weeks from today with the DRAT. (See order
of the Bombay High Court passed in Writ Petition No.19722/2024
dated 10.7.2024).
15. He would submit that on deposit of Rs.36 Crore, the DRAT may
be directed to hear the appeal on merits and take a final call.
16. Mr. Pahwa, the learned Senior counsel, on the other hand,
vehemently opposed the request made by the learned Senior counsel
on behalf of the petitioner.
17. According to him, the principal amount even going by what has
been said by the High Court is about Rs.130 Crore. If 50% of that
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amount is to be determined, it comes to around Rs.65 Crore.
18. Therefore, according to Mr. Pahwa, the petitioner should be
asked to deposit Rs.65 Crore and not Rs.36 Crore.
19. Having heard the learned counsel appearing for the parties and
having gone through the materials on record, we are of the view
that there is no clarity as regards the actual amount due and
payable by the petitioner as on date, more particularly, the
principal amount. Different amounts are figuring on record. It is
difficult for us to determine what is due and payable. Of course,
the High Court has said something in this regard.
20. In the overall view of the matter, we are inclined to grant
one opportunity to the petitioner to make good his case on merits
before the DRAT and for that purpose, we direct the petitioner to
deposit Rs.36 Crore with an understanding that it shall be open for
the ARCIL to point out to the DRAT the exact amount due and payable
on the basis of which the amount of 50% can be determined.
21. At the same time, it will also be open for the petitioner –
herein to point out the DRAT that the amount due and payable is not
as demanded by the ARCIL but it is otherwise.
22. It will also be open for the petitioner to pray before the
DRAT that they may be given benefit of the third proviso to Section
18 of the Act. If the petitioner is able to make out a case for the
purpose of invoking the third proviso, the DRAT will look into it
and take an appropriate call.
23. We dispose of this Special Leave Petition with a direction to
the petitioner to deposit the amount of Rs.36 Crore with DRAT,
Mumbai within a period of three weeks from today. The amount of
Rs.10 Crore already lying with the ARCIL shall stand adjusted
accordingly to make it Rs.36 Crore.
24. Upon deposit of the amount of Rs.36 Crore, the DRAT shall hear
both the parties on the questions which we have discussed and
talked about in our order and take an appropriate decision within a
period of four weeks thereafter, without being influenced in any
manner by what has been observed by the High Court in its impugned
order.
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25. With the aforesaid, this petition stands disposed of.
26. It goes without saying that in view of this arrangement, the
ARCIL shall not proceed to take any coercive steps.
27. Pending applications, if any, shall also stand disposed of.
(VISHAL ANAND) (POOJA SHARMA) ASTT. REGISTRAR-cum-PS COURT MASTER (NSH)
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