On September 13, 2018, the Hon’ble High Court of Calcutta passed an order in the matter of Sabbam Hari v. The Authorised Officer wherein Sabbam Hari (“Petitioner”), an auction purchaser, had deposited the bid amount in terms of a sale notice issued in connection with a proceeding under section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
Upon deposit of the said amount, pursuant to a subsequent challenge, the sale was set aside by Debts Recovery Tribunal at Hyderabad (“DRT”). A challenge was taken out by the bank against the said order before the Debts Recovery Appellate Tribunal at Kolkata (“DRAT”), which was functioning as the appellate tribunal over the DRT at the relevant juncture. During pendency of such appeal, the Petitioner took out an application before the appellate forum for refund of the amount deposited by him, in view of the sale having been set aside by the tribunal. By the impugned order, the appellate tribunal postponed the hearing of such application along with all other proceedings in connection with the appeal, in view of a moratorium imposed on the owner of the property by the National Company Law Tribunal at Hyderabad Bench.
The Petitioner argued that the moratorium envisaged under section 14 of the Insolvency and Bankruptcy Code, 2016, excludes from its purview applications of the nature filed by the Petitioner.
The Court held as follows:
“As regards the effect of section 14 of the Insolvency and Bankruptcy Code, 2016, it is evident from the language of sub-section (1) and its sub-clauses of the said 2016 Code that the question of refund of bid amount to a proposed purchaser could not come within the purview of the rigour of such provision. The moratorium could not have the effect of preventing a proposed purchaser from getting refund of his bid amount, since none of the clauses of section 14(1) of the 2016 Code restrains the said purchaser from doing so. In the present case, as such, the appellate tribunal acted patently without jurisdiction in postponing the application filed by the petitioner for refund of the bid amount, although the postponement of other facets of the appeal was apparently justified.
As regards the argument advanced by the bank as to the operation of the order, setting aside the sale, being stayed, it is well settled that such stay of operation does not have the effect of setting aside the order of the DRT, but could, at best, be seen as keeping the said order in hibernation. Merely because stay was granted during pendency of the appeal, the operation of the order of the DRT, setting aside the same, could not be said to have revived such order. In any event, such argument might hold valid for the purpose of adjudicating the application for refund of the dues at best, and could not be a deterrent in the appellate tribunal taking up the application in question for hearing. Whatever might be the merits of the application either way, the appellate tribunal obviously acted without jurisdiction in postponing the said application and relegating the same till to the end of the moratorium.”
Download Pdf
7A, 7th Floor, Tower C, Max House,
Okhla Industrial Area, Phase 3,
New Delhi – 110020
The rules of the Bar Council of India do not permit advocates to solicit work or advertise in any manner. This website has been created only for informational purposes and is not intended to constitute solicitation, invitation, advertisement or inducement of any sort whatsoever from us or any of our members to solicit any work in any manner. By clicking on 'Agree' below, you acknowledge and confirm the following:
a) there has been no solicitation, invitation, advertisement or inducement of any sort whatsoever from us or any of our members to solicit any work through this website;
b) you are desirous of obtaining further information about us on your own accord and for your use;
c) no information or material provided on this website is to be construed as a legal opinion and use of this website will not create any lawyer-client relationship;
d) while reasonable care has been taken in ensuring the accuracy of the contents of the website, Argus Partners shall not be responsible for the results of any actions taken on the basis of information provided in this website or for any error or omission in the website; and
e) in cases where the user has any legal issues, the user must seek independent legal advice.