M.M.KUMAR,J - (1.) THIS petition filed under Article 226 of the Constitution prays for quashing order dated 28.9.2007, passed by the Debt Recovery Appellate Tribunal, New Delhi (for brevity 'the DRAT'), while disposing of Miscellaneous Application No. 300 of 2007 and Miscellaneous Appeal No. 13 of 2007 on a Misc. Application in Misc. Appeal No. 13 of 2003 (Annexure P-21). Further quashing of notice dated 14.8.2003, issued by Industrial Finance Corporation of India (for short 'IFCI')-respondent No. 2 (Annexure P-1), under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for brevity, 'the Act') has been sought on the ground that the same was sent beyond the prescribed period of limitation, which is barred under Section 36 of the Act because it does not fulfill the pre-requisites of Sections 13(2), 13(3) and 13(12) of the Act. Still further a direction has been sought directing the IFCI not to take possession of the assets of the petitioner-company or restraining it from taking any other measure under Section 13(4) of the Act pursuant to notice dated 14.8.2003 (P-1).
(2.) BRIEF facts of the case are that on 6.6.1988, the petitioner-company was sanctioned a total term loan of Rs. 500 lacs by the IFCI in participation with the Industrial Development Bank of India Ltd. (for short 'IDBI Ltd.') and Industrial Credit and Investment Corporation of India Ltd. (for short 'ICICI Ltd.'), under the Project Finance Participation Scheme for modernization of its project of manufacture of E.R.W. Steel Tubes, situated at Derabassi, District Mohali (P-2). Rs. 200 lacs each were to be given by the IFCI and IDBI Ltd. and Rs. 100 lacs were to be given by the ICICI Ltd. The loan was to be repaid in 28 quarterly instalments of Rs. 7 lacs each, first instalment starting from 15.4.1990 and last instalment ending on 15.4.1997. As per the terms and conditions settled between the parties, interest at the rate of 11.5% for concessional loan and 14% for normal loan, which were Rs. 160 lacs and Rs. 40 lacs respectively was to be charged. On 28.7.1988, a bridge loan amounting to Rs. 180 lacs out of total loan of Rs. 500 lacs was disbursed to the petitioner-company. On 30.3.1990, a loan agreement and deed of hypothecation was executed between the petitioner- company and the aforementioned financial institutions (P-5). Subsequently, a mortgage deed dated 14.2.1991 (P-6) was also executed to secure the loans of Rs. 500 lacs. The petitioner-company could not adhere to the terms of repayment of loans and committed default even at the time of first instalment, which was due on 15.4.1990. After protracted correspondence between the parties when no result could be arrived, the aforementioned financial institutions i.e. IFCI, IDBI Ltd. and ICICI Ltd. recalled the entire loan granted to the petitioner-company and consequently an amount of Rs. 6,47,78,357/- each were demanded by the IFCI and IDBI Ltd. and an amount of Rs. 3,14,87,078/- was demanded by the ICICI Ltd. (P-15, P-16 and P-17 respectively). The matter was initially brought before the Debts Recovery Tribunal, Jaipur Bench, Jaipur by the financial institutions by filing OA No. 24 of 2000, which was subsequently transferred to Chandigarh Bench of the DRT being OA No. 920 of 2001, which is still pending adjudication there. On 6.1.2003, the Presiding Officer, DRT Chandigarh, passed an order, which reads as under : " Counsel for the defendants seeks adjournment on the ground that they have submitted one time settlement proposal with the applicant bank on 23.12.2002, however, they have not deposited any amount with their proposal to show their bona fide. It is a very old case and is being adjourned on one ground or other mostly by the defendants. Submissions of one time settlement proposal is not a ground for adjournment, however, 3 weeks time is granted to the defendants to settle the matter under the one time settlement. It is made clear that no further time will be granted for arguments unless the defendants establishes their bona fide by depositing 25% of the amount of one time settlement as per RBI guidelines. The liberty is given to the defendants to quantify the amount as per RBI guidelines and deposit the same with the applicant bank. All the misc. applications including application for production of documents will be heard and decided at the time of final judgment. If at the time of final arguments, these documents are required for the just and correct adjudication of the case, it shall be summoned. Fix 29.1.2003 for final arguments." The afore-mentioned order 6.1.2003 reflects that the counsel for the petitioner-company had sought adjournment from the DRT on the ground that the OTS proposal made by the petitioner-company, who had filed original application on 23.12.2002, was pending. It was noticed that no amount was deposited alongwith the proposal to show the bona-fide of the petitioner- company. The DRT noticing that it was an old case and has been repeatedly adjourned and the alleged proposal for OTS was not a ground for adjournment, yet it granted adjournment to settle the matter under OTS by observing that no further time was to be granted for arguments unless the petitioner-company establishes its bona-fide by depositing 25 percent of the amount of OTS as per Reserve Bank of India guidelines. The amount was to be quantified by the petitioner-company as per the RBI guide-lines. The deposit was to be made with the secured creditors-financial institutions.
(3.) FEELING aggrieved against the aforementioned order, the petitioner-company filed a Misc. Appeal bearing No. 13 of 2003 before the DRAT. The aforementioned appeal was listed for arguments before the DRAT for 13.8.2007. However, in the meanwhile one of the secured creditors i.e. IDBI Ltd. issued a notice dated 27.4.2007, under Section 13(2) of the Act to the petitioner- company. Against the afore-mentioned notice Misc. Application No. 146 of 2007 was filed for declaring the notice as non-est and to set it aside. A further prayer was made that the IDBI Ltd. be restrained from taking any further proceedings under Section 13(4) of the Act. It is appropriate to notice that the original application No. 920 of 2001 was filed before the DRT by the three financial institutions, namely, IFCI, IDBI Ltd. and ICICI Ltd. against the petitioner-company for recovery of aforementioned amounts. The IFCI is the lead financial institution authorised and empowered to initiate and file recovery proceedings against the petitioner-company. All the afore-mentioned financial institutions have advanced a loan of Rs. 5 Crores to the petitioner somewhere in 1988. A charge was also created on 14.2.1991 when the mortgage deed was executed. The first installment became due on 15.4.1990 for payment of which the petitioner-company committed default. When the order dated 6.1.2003 was passed directing the petitioner-company to deposit 25% of the amount of OTS as per the RBI guidelines, which was subject matter of challenge in Misc. Appeal No.13 of 2003, and it was posted for hearing on 13.8.2007. During the pendency of the appeal a notice dated 14.8.2003, under Section 13(2) of the Securitization Act was issued by the IDBI Ltd., which was questioned by the petitioner-company before the DRAT by moving Misc. Application No. 339 of 2003 in Appeal No. 13 of 2003. The DRAT stayed the notice dated 14.8.2003, under Section 13(2) of the Act, vide its order dated 10.10.2003, issued by the IFCI on the condition that the petitioner-company was to deposit a sum of Rs. 5 lakhs. The afore-mentioned stay order was passed by the DRAT before insertion of Section 13 (3A) of the Act and the judgment of Hon'ble the Supreme Court in the case of Mardia Chemicals Ltd. v. Union of India, 2004(2) RCR(Civil) 665 : JT 2004(4) SC 308. The law has undergone radical change after the stay order dated 10.10.2003 was passed. Earlier there was no bar on the borrower to prefer an application to the DRT at the stage of issuance of notice under Section 13(2) of the Act, whereas by virtue of insertion of Section 13(3A) that bar has been created. It is only after issuance of notice under Section 13(4) of the Act that Section 17 of the Act would come into play and the petitioner could approach the DRAT. The DRAT after noticing the afore-mentioned position in law dismissed the application of the petitioner-company holding that it was wholly premature. It rejected the argument that it was barred by the provisions of Section 36 of the Act and Article 62 of the Limitation Act, 1963.;