M/S G.A. Industries vs. Bank Of Baroda, Authorised Officer

Held

The High Court held that the Debts Recovery Tribunal (DRT) had lost sight of the principles laid down by the Supreme Court in cases like Katiji and Ors., which emphasize a justice-oriented approach to condoning delays, particularly when the State or an entity representing collective causes is involved. The Court found that the DRT's rejection of the application solely on the ground of delay, without considering the merits or the circumstances of the petitioner (an MSME), was erroneous. The High Court, in its discretion, decided to quash and set aside the DRT's order dated 08.07.2019. The delay in filing the Securitisation Application (SA) was condoned, and the DRT was directed to hear SA No. 162 of 2019 on its merits as if the delay had been condoned. The request for a stay on this order was rejected.

Facts

The petitioners, M/s G.A. Industries, are a small enterprise that availed finance from Bank of Baroda. Due to demonetization and GST implementation, they faced difficulties in repaying loans. They requested the bank for restructuring their accounts as per RBI guidelines for MSMEs, but the bank refused. Subsequently, the bank initiated proceedings under Section 13(2) and 13(4) of the SARFAESI Act, declaring the account as NPA and issuing demand and possession notices. The petitioners challenged these actions before the Debts Recovery Tribunal (DRT) by filing Securitisation Application (SA) No. 162 of 2019 and Miscellaneous Application (IA) No. 576 of 2019. The DRT dismissed their application on 08.07.2019. The petitioners then filed a Special Civil Application before the High Court challenging the DRT's order.

Key Issues

1. Whether the Debts Recovery Tribunal erred in dismissing the petitioners' application by not adopting a justice-oriented approach, particularly concerning the condonation of delay in filing the Securitisation Application, despite the Supreme Court's guidance in cases like Katiji and Ors.? Petitioner's Argument: The petitioners argued that the DRT failed to consider the principles of natural justice and the spirit of the Supreme Court's pronouncements on condoning delays, especially when dealing with MSMEs facing financial distress due to external factors like demonetization and GST. They contended that the DRT should have adopted a justice-oriented approach and condoned the delay in filing the SA. Respondent's Argument: The respondent (Bank of Baroda) did not explicitly record arguments regarding the condonation of delay or the DRT's approach in the provided judgment excerpt. The judgment primarily focuses on the High Court's review of the DRT's decision.