DRT Dismisses Securitisation Application as Not Maintainable Following Withdrawal of Writ Petition Without Liberty [Read Order]

The Debts Recovery Tribunal,Chandigarh has dismissed the Securitisation Application (SA) on the ground that the borrowers were not entitled to approach the Tribunal under its jurisdiction after withdrawing the writ petition filed at the Jammu and Kashmir High Court without liberty.

Presiding Officer A S Narang held that the applicants who chose to challenge the SARFAESI action at the High Court and then withdrew the writ petition without liberty to approach the Tribunal under Section 17 of the SARFAESI Act cannot be allowed to do so. The Tribunal dismissed the application without going into the merits of the SARFAESI challenge.

Jammu and Kashmir Bank had sanctioned credit facilities to the applicants who had defaulted in repayment. The Bank resorted to the SARFAESI proceedings by issuing a notice under Section 13(2) and then obtaining an order under Section 14 from the Chief Judicial Magistrate for the Bank’s assistance.

The borrowers had filed a writ petition in the High Court questioning the SARFAESI action initiated by the Bank. The High Court had directed the borrowers to deposit 50% of the dues and granted interim relief. However, the borrowers chose not to do so and withdrew the writ petition and filed the present SA petition with the DRT.

The Tribunal noted that the applicants in the first instance had challenged the SARFAESI actions of the respondents before the Jammu and Kashmir High Court where the High Court directed the applicants to deposit 50% of the outstanding amount while granting interim relief. Instead of complying with the conditional order of the High Court the applicants withdrew the writ petition without permission to institute any other remedies.

The Tribunal based on the Supreme Court judgment in Satheesh V K v. Federal Bank Ltd. stated that once a litigant has chosen a forum and unconditionally withdrawn the proceedings any subsequent proceedings based on the same cause of action before another forum are barred.

The Presiding Officer noted that the High Court and the DRT can both exercise jurisdiction over SARFAESI actions under certain circumstances. However, a borrower cannot unconditionally withdraw proceedings before one forum for the sole reason of avoiding compliance with the direction of the forum and then institute proceedings before another forum without permission.

Accordingly, the Tribunal dismissed the Securitisation Application and as the matter was disposed of on maintainability the Tribunal did not go into the merits of the objections raised by the borrowers regarding the possession notice, defects in affidavit evidence and registration of CERSAI.

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