The Supreme Court has observed that a secured creditor cannot appropriate the amount deposited by the Debtor before the Registry of the High Court in pursuant to its order in the writ petition filed against SARFAESI Proceedings.
The bench comprising Justice Uday Umesh Lalit and Justice Vineet Saran were considering an appeal [Kut Energy Pvt. Ltd vs. The Authorized Officer, Punjab National Bank] against an order of the Bombay High Court. After the writ petition got dismissed, the debtor approached the High Court seeking refund of amount of Rs.40 crores deposited by its in pursuant to the order of the High Court. The bank also filed another application seeking to appropriate the said amount. The High Court accepted the bank's submission to let the amount of Rs.40 crores lying deposited with the bank 'without any lien' be deposited with Debt Recovery Tribunal.
Before the Apex Court, Senior Advocate P.S. Patwalia, on behalf of the debtor, contended that the debtor had deposited the said amount only to establish the bona fides in support of the offer made by them. Senior Advocate S. Guru Krishna Kumar, appearing for the Bank, contended that since the dues were far in excess of the value fetched by the sale of assets, the directions issued by the High Court not only secured the interest of the Bank but sub served public interest.
Referring to the judgment in Axis Bank vs. SBS Organics (P) Ltd., the bench observed:
Going by the law laid down by this Court in Axis Bank the 'secured creditor' would be entitled to proceed only against the 'secured assets' mentioned in the notice under Section 13(2) of the SARFAESI Act. In that case, the deposit was made to maintain an appeal before the DRAT and it was specifically held that the amount representing such deposit was neither a 'secured asset' nor a 'secured debt' which could be proceeded against and that the appellant before DRAT was entitled to refund of the amount so deposited. The submission that the bank had general lien over such deposit in terms of Section 171 of the Contract Act, 1872 was rejected as the money was not with the bank but with the DRAT. In the instant case also, the money was expressly to be treated to be with the Registry of the High Court.
Allowing the appeal, the bench said that the debtor is entitled to withdraw the sum deposited by them in terms of High Court order.
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