The Delhi High Court in the case Mis Deco Industries India v. JM Financial Assets Reconstruction Company Ltd through its AO Kumar Gaurav and Ors observed and has held that an interim order granted by the Debts Recovery Appellate Tribunal, DRAT during the pendency of appeal was not required to be extended in pursuance of remand, without prima facie finding on the need for such an order.
The Division bench comprising of Justice Vibhu Bakhru and Justice Amit Mahajan in the case observed and has dismissed the present writ plea and has dispelled the contention raised by the petitioner-Deco’s that the interim order in its favor ought to have been extended.
The court observed that if the same is being accepted, the in every case where the Court decides to remand the matter to the Court of first instance or any Adjudicating Authority for consideration and till the time the matter is considered – the same would require continuation of the interim orders, even if, prima facie, a case for such orders has not been established.
Therefore, the genesis of the dispute lay in a loan obtained by Deco from respondent No.3 i.e., the Karnataka bank which was secured by creating equitable mortgages over two of its properties.
However, the Karnataka bank issued possession notices in respect of the mortgaged properties and the financial interest w.r.t. Deco was assigned by the Bank to respondent No.1 i.e., the JM Financial.
An appeal was preferred by the DRAT, when the Deco’s Securitization Applications were dismissed by the DRT.
The DRAT while allowing the appeal remanded the matter back to DRT for fresh consideration and observed that it had failed to decide if the transaction between JM Financial and Karnataka Bank was an outright sale of Deco’s properties or the assignment of debt under section 5 of the SARFAESI Act.
It being the case of Deco’s that the transaction was an outright sale of mortgaged properties, which required compliance with RBI guidelines as well as Rules 8 and 9 of the Security Interest, the Enforcement Rules, 2002, but the same had not been complied with.
Further, it has been contended before the court that the interim protection which is granted by DRAT w.r.t. the mortgaged properties ought to have continued at the time of remanding. The said court is of the opinion that the transaction between Karnataka Bank and JM Financial was not a sale of Deco’s properties.
The court also noted that the Deco can file an application wherein seeking interim relief before DRT, and being of the view that interim relief from DRAT was not warranted at the time of remand without prima facie finding in Deco’s favor.
Accordingly, the court dismissed the plea.
The counsel, Advocates Sangram Patnaik, Rajiv Gupta, Manish Kumar Mathur and Pushkar Anand appeared for petitioner-Deco Industries.
The counsel, Advocates Chitranshul A. Sinha & Jaskaran S. Bhatia
appeared represented the respondent No.1.