Delhi High Court Slaps ₹1 Lakh Cost On Litigant For Misusing Writ Jurisdiction To Stall DRT, NCLT Proceedings

The Delhi High Court recently imposed costs of Rs 1 lakh on a litigant while dismissing his writ petition that sought to halt proceedings pending before two Debts Recovery Tribunals and the National Company Law Tribunal.

The Court held that the petitioner, Sanjeev Krishan Sharma, had failed to show any violation of fundamental rights, statutory mandate or natural justice that could justify invoking the High Court's extraordinary writ jurisdiction.

The Division Bench of Justices Anil Kshetarpal and Harish Vaidyanathan Shankar reiterated the law that “Save in such exceptional cases, a writ petition impugning orders or seeking directions in respect of proceedings before statutory tribunals, including the DRT or NCLT, particularly in matters governed by the SARFAESI Act, RDB Act, or IBC, may not be maintainable.”

Sharma was the suspended director of KMG A to Z Systems Pvt. Ltd., which had availed credit facilities from a consortium of banks led by Punjab National Bank with Canara Bank as a participant lender. In connection with these facilities, he executed a personal guarantee and mortgaged Business Suite in Gurugram.

After the borrower defaulted, Punjab National Bank and Canara Bank initiated recovery proceedings before the DRTs. Sharma filed two interim applications before DRT seeking discharge from his personal guarantee and release of the mortgaged property, arguing that his liability stood extinguished in law.

During this period, Canara Bank also initiated personal insolvency proceedings against him under Section 95 of the Insolvency and Bankruptcy Code. Sharma claimed that the insolvency case and the DRT matters stemmed from the same debt and that simultaneous adjudication risked conflicting findings.

He further argued that his guarantee had been discharged because Punjab National Bank, the consortium leader, had entered into a settlement with a co-guarantor, Rajiv Mittal, for Rs 7.40 crore, which led to Mittal's complete release. He asserted that a unilateral release of one co-surety discharged the remaining surety under the provisions of the Contract Act.

The banks disputed this position, saying the settlement with Mittal was a lawful commercial decision that had no impact on Sharma's independent liability. The Court agreed that guarantees furnished by different sureties operate as separate and enforceable undertakings and that no legal right of the petitioner was impaired by the compromise. It also accepted that the insolvency proceedings under the IBC form an independent statutory mechanism distinct from the SARFAESI and RDB frameworks.

The court found that Sharma had made no effort before the tribunals to secure an expeditious hearing. An examination of DRT records showed several adjournments sought by him and even absences of counsel. The Bench held that a party who had shown no diligence before the statutory forum could not seek intervention from the High Court for relief that was never sought from the competent authority. It rejected his request for consolidation of the proceedings, noting that statutory mechanisms already exist for transfer and consolidation when justified, and that he had not invoked them.

The bench also criticised Sharma for filing an application seeking to move the case from the Division Bench to a Single Judge despite the roster clearly assigning DRT-related writ petitions to the Division Bench. The court characterised this conduct as an attempt at forum shopping and held it to be an abuse of process.

Finding the petition misconceived, the court dismissed it and directed Sharma to deposit a cost of Rs 1 lakh with the Poor Patients' Fund at AIIMS within two weeks.