KUMAR ALUMINIUM LTD Vs. ASSET RECONSTRUCTION COMPANY INDIA LTD AND ANR

Supreme Court of India (Division Bench (DB)- Two Judge)

Appeal (Civil), 8258 of 2016, Judgment Date: Aug 23, 2016

                                                              NON-REPORTABLE
                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO.8258  OF 2016
                  (Arising out of SLP(C) No.34859 of 2014)


KUMAR ALUMINIUM LTD                                      .....APPELLANT
                                   VERSUS

ASSET RECONSTRUCTION COMPANY
INDIA LTD AND ANR                                       ....RESPONDENTS

                               J U D G M E N T

Kurian, J.

      Leave granted.
      The appellant is aggrieved by the impugned  judgment  dated  19.8.2014
passed by the High Court of Delhi in Writ Petition (Civil) No.3896 of  2013.

      As per the impugned judgment, the High  Court  declined  to  interfere
with the order passed by the Debt Recovery Appellate  Tribunal,  Delhi  (for
short, the 'DRAT'). The DRAT had turned down the  prayer  of  the  appellant
for refund of the amount deposited in compliance of the requirement  of  the
second proviso to section 18(1) of the Securitization and Reconstruction  of
Financial Assets  and  Enforcement  of  Security  Interest  Act,  2002,  for
maintaining an appeal.
      This Court has considered a similar issue in the  case  of  Axis  Bank
vs. SBS Organics Private Limited & Anr., in Civil  Appeal  No.4379  of  2016
and held as under :
“22.  The Appeal under section 18 of the Act  is  permissible  only  against
the order passed by the DRT under section 17 of the Act. Under  section  17,
the scope of enquiry is limited to  the  steps  taken  under  section  13(4)
against the secured assets. The partial deposit before the DRAT  as  a  pre-
condition for considering the appeal on merits in terms  of  section  18  of
the Act, is not a secured asset. It is not a secured debt either, since  the
borrower or the aggrieved person has not created any  security  interest  on
such pre-deposit in favour of the  secured  creditor.  If  that  be  so,  on
disposal of the appeal, either on merits  or  on  withdrawal,  or  on  being
rendered infructuous, in case, the appellant makes a prayer  for  refund  of
the pre-deposit, the same has to be allowed and the pre-deposit  has  to  be
returned to the appellant, unless the Appellate Tribunal, on the request  of
the secured creditor but with the consent of  the  depositors,  had  already
appropriated the pre-deposit towards the liability of the borrower, or  with
the consent, had adjusted the amount towards the dues, or if  there  be  any
attachment on the pre-deposit in any proceedings  under  section  13(10)  of
the Act read with Rule 11 of  the  Security  Interest  (Enforcement)  Rules,
2002, or if there be any attachment in any other proceedings known to  law.”

      Accordingly, we  dispose  of  this  appeal,  set  aside  the  impugned
judgment of the High Court as well as the order of the DRAT impugned  before
the High Court and remit the matter to DRAT for consideration afresh.
      Liberty is given to all parties to raise all contentions available  to
them before  the DRAT which may pass fresh orders in accordance with law.
      The parties before this Court shall appear before  the  Debt  Recovery
Appellate Tribunal, Delhi,             on 3.10.2016.

                                                        ...................J
                                                           [KURIAN JOSEPH]


                                                     ......................J
                                                   [ROHINTON FALI NARIMAN]

NEW DELHI;
AUGUST 23, 2016.