Misc. Appeal No. 305 of 2016. Case: James Hotel Ltd. Vs State Bank of India and Ors. Delhi DRAT DRAT (Delhi Debt Recovery Appellate Tribunals)

Case NumberMisc. Appeal No. 305 of 2016
CounselFor Appellant: Lakshay Sawhney, Pushkar Sood and Sanjiv Bhandari, Advocates and For Respondents: Haravtar Singh Arora, Managing Director and Monika Yadav, Advocate
JudgesP.K. Bhasin, J. (Chairperson)
IssueSecuritisation And Reconstruction Of Financial Assets And Enforcement Of Security Interest Act, 2002 - Sections 13(2), 13(4)(b), 14, 17, 18
Judgement DateSeptember 15, 2016
CourtDelhi DRAT DRAT (Delhi Debt Recovery Appellate Tribunals)

Order:

P.K. Bhasin, J. (Chairperson)

  1. The appellant Company is running a hotel in Chandigarh by the name of 'James Hotel' (earlier known as 'Park Plaza'). For the smooth running of the hotel the appellant had obtained financial assistance from three Banks acting as a 'consortium' with Punjab National Bank as the lead Bank (though the appellant is claiming that it was not a consortium loan). As per the case of the appellant in this appeal in the notice issued to the appellant Company under Section 13(2) of the SARFAESI Act, Punjab National Bank had claimed Rs. 33,49,85,830/-, United Bank of India had claimed in its notice under Section 13(2) a sum of Rs. 11,61,29,178.59 while State Bank of India which had assigned loan facility to ARCUIL, was claiming a sum of Rs. 58,02,66,291/- from the appellant under Section 13(2). The appellant/borrower having failed to adhere to the terms and conditions of loan facilities and repaying the stipulated installments and interest in time these Banks after declaring the accounts as NPAs sought to recover the physical possession of the hotel property which was mortgaged by the appellant Company in favour of these Banks to secure the repayment of the loan amount to the Banks/secured creditors. The Banks took necessary steps under the SARFAESI Act for taking over physical possession of the mortgaged property. The appellant Company in order to protect its hotel from being taken over and sold by the Banks approached the DRT-I in Chandigarh with a petition under Section 17 of the SARFAESI Act (being S.A.A.R. No. 2028/2016) and sought inter alia, the relief of quashing of the proceedings initiated by the Banks under this Act and for restraining the Banks from taking over of the physical possession of James Hotel. That petition was taken up by the DRT on 23rd August, 2016 when at the request on behalf of the Banks it was adjourned to 29th August, 2016 for filing of replies and hearing on the interim relief application. However, after getting the matter adjourned on 23rd August, 2016 the Punjab National Bank as the lead Bank got a public notice published in newspapers on 24th August, 2016 informing the general public that the possession of James Hotel shall be taken over on 26th August, 2016 with the assistance of police. The appellant immediately moved the DRT on 24th August, 2016 itself by filing an application for some interim relief against the said threatened action of the Banks. However, the DRT, as per the case of the appellant, simply kept the application on its file without passing any order. Feeling dissatisfied by the DRT not passing any order on the appellant's prayer for staying the taking over of the physical possession of James Hotel on 26th August, 2016 the appellant rushed to this Tribunal on 26th August, 2016 (25th being Sunday) with an appeal and the same was ordered to be listed same day in the post lunch session after it was mentioned by Mr. Sanjiv Bhandari, learned Counsel for the appellant around lunch break. When the appeal was taken up after lunch break the following order was passed after hearing the learned Counsel for the appellant:

    Present: Mr. Sanjiv Bhandari along with Mr. Lakshay Sawney, Counsel for the appellant.

    The appellant is aggrieved by the DRT not passing any effective order on its application seeking interim relief against the threatened action of the Bank to take over the physical possession of the hotel property which was mortgaged.

    The appellant approached the DRT (S.A.R.R. No. 2028 of 2016) with the prayer for restraining the Banks/financial institutions from proceeding further with the threatened action of taking over of the possession of the mortgaged property. The further grievance of the appellant is that when the said application was taken up by the DRT on 22.8.2016, it was ordered to be taken up next date in view of the urgency highlighted and when the Counsel for the Banks appeared on 23.8.2016, they sought time to file reply. The matter was then adjourned to 29.8.2016. It is also the grievance of the appellant that till 23.8.2016 no notice of any action had been issued by the Banks/financial institutions for taking over the physical possession of the hotel, but after getting time from the DRT for filing of reply and getting the matter adjourned to 29.8.2016, the authorized officer of Punjab National Bank whose total dues as per the demand notice under the SARFAESI Act were to the tune of around Rs. 33.50 crore, acted in mala fide haste and got a notice published in newspaper on 24.8.2016 fixing today's date for taking over the physical possession of James Hotel in Chandigarh. That action on the part of Punjab National Bank has necessitated urgent mentioning, listing and hearing of this appeal today itself.

    Considering the urgency urged in the matter, the appeal has been taken up for consideration in the post-lunch session.

    During the course of hearing, the learned Counsel for the appellant submitted that undisputedly the appellant owes money to Punjab National Bank, but recovery thereof cannot be effected in the manner in which it is threatened to be done and the entire action is mala fide for the aforesaid reason inasmuch as despite the fact that the DRT had at the request of the Banks' Counsel fixed the next hearing on 29.8.2016 to enable them to file reply to the application of the appellant and it was contended that no notice of date of taking over of possession was given till then, but Punjab National Bank went ahead with the publication of the notice in newspaper next day, as noted above, after getting the adjournment.

    The learned Counsel has submitted that the property sought to be taken over is a running hotel having a large number of guests staying there and the recovery officials have already started forcibly evicting those guests from the hotel premises and that is also one of the reasons for urgent hearing of the matter. It has also been submitted that the DRT can pass any order on 29.8.2016 after hearing the parties for which appellant's Counsel was ready on 23.8.2016 also, but Banks' Counsel were not ready. Despite the fact that there was extreme emergency and it had been brought to the notice of the learned Presiding Officer of DRT that after getting the time for filing of reply and the hearing adjourned for 29.8.2016, Punjab National Bank, with mala fide motive, got a public notice issued that physical possession of the hotel shall be taken over on 26.8.2016, but the learned, Presiding Officer simply kept that application also for 29.8.2016.

    The appellant has also moved an application under Section 18 of the SARFAESI Act, alleging that in the facts and circumstances of the case this provision does not get attracted and, therefore, this appeal may be entertained without requiring the appellant to comply with the condition of pre-deposit of 50% of the amount which the Bank had demanded, particularly, when there is no adjudication of appellant's liability as on date and Banks/financial institutions' O.As. are also pending. It has also been submitted that the value of the hotel property is much more than Rs. 500 crore.

    In support of his...

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