DRT Orders Document Admission Process in Debt Recovery Case Despite Final Order Stage [Read Order]

The Debts Recovery Tribunal (DRT) in Delhi has partly allowed an application seeking modification of a previous order and permission to file additional documents. The defendant contended that the mandatory process of admission, denial, and exhibition of documents under Section 19(5A) of the RDB Act was omitted before the matter was reserved for final order.

The applicant, CFM Assets Reconstruction Private Limited, the appellant bank seeking an urgent hearing for S.A. No. 53/2021, a case where borrowers had challenged the bank's actions under the SARFAESI Act, 2002. The tribunal observed that the core of the dispute stemmed from the borrowers' failure to inform the bank about a stay order passed on April 6, 2021.

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Unaware of this stay, the bank proceeded with the auction and sale of the mortgaged property. This non-communication led to further complications, including litigation by the auction purchaser who has been unable to take possession for over two years. They raised the issue of classification of account as Non-Performing Asset (NPA) for the reason that two different dates are given with regard to classification of account as NPA. They moved for stay of further proceedings. Learned Presiding Officer passed an order of staying further proceeding on 06.042021. This order was never communicated to the Appellant Bank by the Borrowers. Thereafter, Sale Notice was given, sale was held, Sale Certificate was issued.

Even during these sale measures, the stay order dated 06.04.2021 was not communicated to the Appellant Bank. Only when the Bank tried to take physical possession of the property, the stay order dated 06.04.2021 was informed to the Bank. Meanwhile the Auction Purchasers filed I.A. No. 337/2024 seeking direction for delivery of possession of the property. That application was ultimately rejected by the Presiding Officer after direction given by the High Court of Bombay in Writ Petition No. 12814/2024.

The order comes as a procedural correction despite the matter being reserved for final order. The DRT observed that the mandatory process under Section 19(5A) of the Recovery of Debts and Bankruptcy Act had been omitted, which constitutes an irregularity requiring rectification before pronouncement of the final order.

However, the Tribunal rejected other aspects of the application, including requests to file additional documents and reopen arguments, emphasizing that such steps would delay proceedings and contradict the principle of expeditious recovery of public dues under the RDB Act. The matter has been listed before the Registrar for completion of the document admission process.

The DRT observed that while the omission of the document process was an irregularity requiring rectification, allowing the filing of new documents or reopening the hearing would cause undue delay.

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