High courts differ on DRT jurisdiction - Enforce also through RDDB - Section 16 of CPC not applicable

                                                                   
             IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
                WRIT PETITION NO.73 OF 2014
GSL (India) Ltd.                                       ... Petitioner
         v/s
    Asset Reconstruction Co. (India) Ltd. ... Respondents

46. We have carefully perused the reasoning of the Full Bench of the Delhi High Court in the case of Amish Jain1 and with the great respect and utmost humility, we are unable to agree with the view expressed therein. Firstly, we are unable to agree with the finding of the Delhi High Court that the proceedings referred to in section 19(1) of the RDDB Act are merely proceedings for recovery of debt and not for enforcement of mortgage. According to us, this finding runs counter to the very definition of the word "debt" appearing in section 2(g) of the RDDB Act to inter alia mean any liability (inclusive of interest) which is claimed as due from any person by a Bank or a Financial Institution during the course of any business activity undertaken by it under any law for the time being in force, in cash or otherwise, whether secured or unsecured, or assigned, or whether payable under a decree or order of any civil court or any arbitration award or otherwise or under a mortgage and subsisting on, and legally recoverable on, the date of the Application. We are therefore clearly of the view that proceedings under section 19(1) of the RDDB Act are not merely proceedings for recovery of debt. In proceedings under section 19(1) of the RDDB Act, the Bank / Financial Institution can certainly seek reliefs for enforcement of its mortgage. This interpretation would 1 2013 (1) D.R.T.C. 70 (Delhi) VRD 50 of 53 WP 73 of 14.doc also be in consonance with the purpose and object of the RDDB Act.

Secondly, we are unable to agree with the reasoning of the Delhi High Court that under section 19(23) of the RDDB Act, the DRT is required to send a copy of the Recovery Certificate for execution to the DRT within whose jurisdiction the property is situated. As mentioned earlier, section 19(23) clearly stipulates that where the tribunal, which has issued a certificate of recovery, is satisfied that the property is situated within the local limits of the jurisdiction of two or more tribunals, it may send copies of the Recovery Certificate for execution to such other tribunals where the property is situated. The word "may" clearly indicates that this provision is discretionary and not mandatory in nature. Under section 19(23), discretion is given to the DRT to either itself execute the Recovery Certificate issued by it against a property not within its jurisdiction, or to send it to the concerned DRT where the property is situated.

This is a distinct departure from the provisions of the CPC and more particularly section 39 thereof. In fact, a Division Bench of this Court in the case of Tushar P. Shah3 has taken this view and we are in full agreement with the reasoning contained therein.

47. We are also unable to agree with the Delhi High Court 3 2012 (6) Bom.C.R. 200 VRD 51 of 53 WP 73 of 14.doc judgment that in the RDDB Act, there is no mention of mortgage and an application under section 19(1) thereof is required to only specify the properties required to be attthrough ached and which may not necessarily be the mortgaged property. Section 2(g) of the RDDB Act and which defines the word "debt" would certainly take within its sweep a relief for enforcement of mortgage. For the foregoing reasons and in view of what we have held earlier in this judgment, we are unable to agree with the view of the Full Bench of the Delhi High Court in the case of Amish Jain.1

48. In view of our discussion earlier in this judgment, we hold that the DRT whilst deciding whether it has territorial jurisdiction to entertain a Securitisation Application filed under section 17 of the SARFAESI Act would be guided by the principles enshrined in section 19(1) of the RDDB Act and not by section 16 of the Code of Civil Procedure, 1908. Rule is accordingly made absolute and the Petition is granted in terms of prayer clause (a).

Securitisation Application No.136 of 2011 is restored to the file of the DRT - III, Mumbai, to be decided on merits and in accordance with law. We would request the DRT to dispose of the Securitisation Application as expeditiously as possible and in any event, within a 1 2013 (1) D.R.T.C. 70 (Delhi) VRD 52 of 53 WP 73 of 14.doc period of three months from today. However, in the facts and circumstances of the case, we leave the parties to bear their own costs.