V. Ravi Kumar, S/o v. Anantha Krishna, Aged about

Counsel for the Petitioner: SRI VEDULA VENKATA RAMANA, REPRESENTING M/s. BHARADWAJ ASSOCIATES Counsel for the Respondents: SRI METTU SRINIVAS REDDY, STANDING COUNSEL The Court made the following: ORDER ,- THD HON'BLE JUSTICE MOUSHUMI BHATTACHARYA AND THE HON'BLE JUSTICE B.R.MADHUSUDHAN RAO WRIT PETITION No.2245a OF 2024 Sn Vecluln Vcokata Ramana, M/s rihdr.r(l\ -1 ,\\s,), l:,1(: l,,t ll,,'nr'llll',r.,'l lcarncd Scnior Counsci l-eprcscnting Sri Mettu Srinivas Reddy, the lcarned Standrng Counsel appearing for the respondenl Bank ORDER: (Per Hon'bte. Justice Moushumi Bhattacharya) The petitioner has challenged an order daled 1O.05.2O24 passed by thc Debts Rccovery Appellate Tribunal, at Kolkata ('DRAT) in Miscellaneous Appeal No.35 of 2023 filed by the respondent Bank from an ordcr dated 05.O7.2023 passcd bv thc Debts Recovery l'ribunal - II, at I{yderabad ('DRT') in I.A.No.885 ol 2023 in S.A.No 425 oi 2019.

2. The DRT passed the order dated 05.07.2023 in I.A.No.BSS of 2023 in S.A.No.425 of 2019 filed by the petitioner for making payment of the outstanding amount mentioned in the Demand Notice dated O4.10.20i6 minus the payments made by the petitioner after receipt of the Demand Notice at the rate of 6%0 interest from the date of the Demald Notice till realization of thc amount mentioned thereof. By the impugncd order dated 1O.05.2024, whrch forms the subject matter in the present writ i l I I I I l i 2 petition, the I)IRAT set aside the order passed by the DRT,:]1d arlowed the Appeal fil,:d b7 the respondent Bank

3. The petrtioncr, represented by lcarncd Scnir)r Colllrjel, argues that the DRAI' crrecl ir..r interfering with the order passcd b), r-h(. DR.f since the latter has the porver to reduce the rate of interest under.tlre provisions of The Sectrritis;:rtion and Reconstruction of I.inancial Assets and Enforcemernt ol Security Interest AcL, 2OO2 (,SARI,-AESI r\ct,) as well as The Recovery Of Debts Due To Banks And FineLncial IrLstitutions Act, 1993 ('the 1993 Act,). Counsel submits that the intcrfercr.Lcc is arbitrary and unjus;tifiel sincc the borrou,er/ peti tioner is eagcr t.o pay ol1. the amount de ma,Lrlcd by the respondent Bank in thc Notice isslred un<Ier section 13 12) c f thc SARFAESI Acr and the discr,:tion exr:rcised by the DRT in rcducir p1 thc ratc of interest cannot bc sairl to br: 1:erverse under the law

4. Lcar.ed ,lr)unsc1 appearing for the respondent Bank: recounts the facts belbrr: tht: petitioner hled the S.A. in the DI?T, Clor.rnsel submits that the petitioner obtained a mortgage loan of Rs.77o Lerkhs from the respondent Banl< in 2O 15 for purchase of commercial pr operty which was to be rr:pairl in 1Og equated monthly insta-llme rts comrlencing from 2A.O8.2015 arrcl ending on O5.O9.2024. Counsel subn.rits that the ,L petitioner was irregular in payment of EMIs and breached several terms of the sanction letter. The petitioner issued 27 cheques amounting to Rs.40,50,O00/- towards repayment which were dishonoured leading to cases bcing Iiled under The Negotiable Instrumehts Act, 188 i petitioner paid an amounL of Rs.40,5O,000/- during trial of the criminal The proceedings. Counscl submits that other complaints are pending against the petilioner for subsequent dishonour of cheques'

5. Counsel further submits that the respondent Bank issued a DemandNoticeon04.l0'2orSundersectionl3(2)oftheSARFAtrSIAct and a Possession Notice on 26 12.2017 under section 13(4) of the SARFAESI Act rlespite which the petitioner leased the portions of the mortgaged property and has been collecting substantial rents as of January, 2025. The rcspondent Bank moved a petition undcr section 14 of the sARFAESI Act and obtained a warrant for delivery of possession of the secured property through an Advocate Commissioner and thereafter took physical possession of the secured property on 15'03'2018' Counsel submits Lhat thc petitioner's S A before the DRT challenging the sARFAtrSI action was dismissed on 17.o7.2019 and the Appeal before the DRA1' as well as the writ petition hled by the petitioner were also dismissed on 23.O9 -2019. Counsel submits that the petitioner has failed to repay the loan amount despite collecting rents from the secured -,rr&]:;:ir.r:.ritet :l*a - rlti€mt ::: 4 property 1nd assails the order passed by the DR.l.orr ti_re ground that section lZ of the SARFAtrSI Act does not pernril thc )RT to reduce pendente llle i;t terest_

6. We have heard the respective submisSions made on behalf of the pa-rties anrf cot.rsiclered the material placed before thc Court. 7 '11're poir': t for adjudication is whether the l.lR.l. * a s au thorized to reduce thr: fu tre f pend.ente lite interes. under thc pro,risions of the SARFAESI Act rrnd whether the DRAT should havc interl.ered with the discretion r:xercised by the DRT

8. Before we enter into the adjudication, it rs impcrtarl to l-rrst address tht: furr,lamental point of whether tl_rc petitio,,:r is entitled to invoke thc juris lLcrion ol this Court unclcr Article 2,.2(t of t.l.t< Constitution of India 9' The p,:titioner has invoked the juriscriction or. his court for issuing a Writ of Certiorari to call for the records of Miscellancous ,\ppeal No.35 of 2023 on the fik: of tl-re DRAT arising out of an ord<:r passerl by the DRT and for setting aside the impugned order of the DR_a.T datcd 10.O5.2024. It is undeniable that a Writ of Certiorari can be issued f there is a perceived illcgalirl in an order passed by a judicial authoritl. including a , 5 Tribunal which is Iower down in the hierarchy on the ground of irrationality and procedural impropriety. Upon hearing lhe competing contentions of thc partics, we do not have any doubt that the prescnt writ pctition is marntainable. Whether lhe impr.igrred order passed by the DRAT should be set aside is another matter which will be dealt with in the following part of this order. 1O. The contentions made on behalf of the respondent Bank show that the pelitioner may be a wily customer (literally, of the Balk) who has allegeclly led the liank to hle multiple legal proceedings for recovery of the loan 1o the pctitioner. l'his conduct is however not relevant for adjudication of the prcsent writ petition. The writ petition is only concerned with the order passed by the DRAT in setting aside the earlier order of thc I)RT by t'hich the pctitioner u'as allowed a certain amount of leeway in terms of a reduced rate future/p endente lile interest. The petitioner's conduct prior to the impugned order may be relevant to the respondent Bank lor initiating measures for recovery of loan but does not aflect thc law unclcr *,hich lht: DRT allowed the reduction of rate of interest. The only matter of concern before u s is the legality of the impugned order passed by the DRAT on 1O.O5.2O24. 6 1 1 . Scction 7 of the SARFAESI Act provides ior ar a pplication by a person, jnclu,ling a borrower, against measures taksn by a Secured creditor lbr recovery of a secured Debt. Sectron 17(1) aurthorises a person aggrieved or any othcr person under sectic,n 13(.4) initiated by the Secured credit,,r to makc an application to thc j u risclc i io:-rar DRT u,ithin the statutory lrmit provided under scction 17(1) of thc :IARFAtrSI Act. section I i'(7) r:rnfcrs the power on thc DRT to dis,pose cf thc application in accordilnce u,ith the provisions of Thc Recoverr ol Debr s Due To Banks anrl Pir-rancial Institutions Act, 1993 (RDI)B .\c.r) and the Rules thereunder.

12. Section 19(25) of the 1993 Act cmpowers ,r Trib,ur Lal. as defined under sect.ions 2(o) read with 3(i) of the said Aci, to pass sr-Lch orders and to givc sr- r:h directions as mav bc necessary or cx1:cdient to give eflect to itl; orct:rs, to prevent abuse of its process or to sccurc, the ends of justice (rcproduced vcrbatim from scction l(l(25)). Sccr-ion 19(1) provides for tlrr: procedure of rribunals where a l3anl< ,r a lrinancial Institution has filcd an application to recover a debt from arly pcrson.

13. The rtmn ltus power conferred on the Tribunal unc]er the 1993 Act and the rr andate of the DRT under the SARFA OSI Act to follow the /' 7 provisions of the 1993 Act would include the power to pass any ordcrs which may be necessary for the ends of justice.

14. The language of section 19(25) of the 1993 Act reflects exercise of discretion by the DRT for passing orders including for reduction of the rate of future fpendente lite interest. The power to reduce the interest would also be in line with section 34 of The Code of Civil Procedure, 1908 which confers a similar power on the decretal Collrt to order interest at a rate which the Court deems reasonable to be paid on the principal sum adjudged from the date of the Suit till thc date of thc decree, in addition to any interest adjudged on such principal sum for any period prior tcr the institution of the Suit. The power of the DRT to order reduction of pendente lfte interest has also been confirmed by the Courts.

15. ln Punjob and Sind Bank Vs. Allied Beuerage Compang Piuate Limitedt, the Supreme Court held that the award of interest pendente lite and post-decree is discretionary and is essentially governed by section 34 of the CPC dehars the contract between the parties. However, this discretion must be exercised judiciously ald not in ar-l arbitrary or farrciful manner: Central Bank of India Vs. Rauindra2. ln State Bank of ' 1zoto1 to scc oao ' (zooz) r scc go; t! L 8 Indict Vs. !''atturt [:otLndation Tntst3, a Division Bench of the Madhya Praclesh Hrllh CrourL relied on C.K. Sasankan Vs. Dhanalakshmi Bank Lirn.il.ed.a ai,d confirrned that the Tribunal has the discreti,rn to reduce thc rate of jnter:st analogous to the power under. section 3:l of the CpC even before the 'i'r-ibunal under the SARFAESI Act_

16. C)n tl.re otlrr-'r hand, Stale Bank of Indio Vs. yosanq/. V enkotesutara R,o'\ rclicd r-rpo'. bv the respondent Bank, involverl the ,r.e.s of section 21 A ofThe Ranking Regulation Act, 1949. The Supreme Ccurt set aside rh.) ju.lgr,lcr:lt of rht: High court which had hetd thzLt parriarnenl had no jurisdiction lo crrilci ser:tion 27-A of the 1949 Act. Thc juclqmer-rt of the DRA'|, Aliahabacl- iu Regular Appeal No.86 of 20lg is co,r rarJ to section 17(.-l) of tl.rt: SAil.rAilSI Act read v,'ith section lg (?.5) of ttre 1993 Act. 'I'hc dercisioi:i invclv:d a completely diflerent factual contr:x1 ancl in any eveni overlrrks t.]c inherent jurisdiction of the Tribu,al tr, reduce the penclett.te lll,:/fu rrrt: rate of intcrest, to give eflect to ,ts )rders or to Dre\.cn1 altu:rc ol J)rocess and secure the ends of justtce.

17. F-u.tht r, c()lnl.on sense dictates that the ultintate objr rctivr: of any ba,k, incluciing the respondent herein, is to ensur.e rep.y ment of the il;an given 1o tlrr: borrower. Therefore , the interferencc o: the DRAT 'ntR zota rutp tz o lzoos; rt scc oo '1rsss1 z scc:ts 9 setting aside reduction of the rate of pendente lite/ htlutrc interest for facilitating repayment of the loan is unreasonable from a practical standpoint. After all, the DRT merely reduced the rate of interest from

13.5% to 1O7o on the outstanding loan amounl of Rs.8,05,58,253 /-. This would be evident from the order passed by the DRT ot O5-o7.2023 as well as the order passed by the DRAT on 10.05.2O24, which is the subject matter of the present writ pelition.

18. It is evident that the DRAT set aside the DRT's order for reduction of the rate of pendente lite/f.u1'r;re intcrest on the ground of absence of reasons. The other reason given is that Pattua Foundatton Trust (supra) would not apply to the facts of the present case, as the borrower in Patuta Foundation Trust (supra) was an educational institution, as opposed to the loan being granted to the presellt pctitioner for a commercial purpose.

19. We are unable to see any justihcation for this view since the terms of repayment in a loan transaction are not governed by the nature or status of the borrower or the purpose for which the loal was given.

20. Moreover, contrary to the reason given by the DRAT for interference, we lind that the DRT in its order dated O5.07.2023 clearly articulated its reasons for reducing the rate of future interest from 10 a. 13 iJoozir to I o%, ,cr .*I.:rum. According to the DRT. thc .ltrmate aim of a seclrr.-ed ci:riitc,r is to recover the outstanding dues. Hr:nr.:e, easing the 1'aIe ol'irlt('.cst r"ourd only facilitate the repayment partic.r:rrly u,here the pctitiorr.r i:; kem Lc clear the dues. The DRT, accorrlinplll., cleemed it necessary l() giir3 sucll an opportunity to the petitioner. ,lhe DRT also reljed on Ptttucr. Fotntd.a.tion Trust (supra) and C.K. Sctsct n|.o.n (supra) to conclrrdc tr:ar trr,' DRT has the discretion to reduce the rate cf interest. 2t. W. also r.-ter.lte that the alleged conduct of rhc pclit.oner prior to lirc .ricr ..1 ,he i)Ri',/ DIRr{T is irrele.,,ant since the conducl c.omplained of car::ol lr..:t:,r anr. Derring on the iegality of the impu,Enecl orcler. The only issrrc :;cicr: us si ,..vhether the impugned order of the DRI\T is supported b."' t'n t' r'Clerrrirt 1:rr,.. 2):. 'i-iri ::,;.ve r:iis:t.iissiou lcads us to the lirm view th:l1 lJre impugned contrail,. to the SARF-AtrSl Act rr:ad rvith the -bcing ori.t:: ;s pi:j Jel'.i. k,i- l,liilr r1,ct as 'ell :rs tu ihe la\,v settled by the Courts. 2j. ,,V.ii.1.,..22,1.-:i1 i:1' 2C24 is accordingly aliowed by setti:rg asirle the impugncd or"ler' ,1atcrl 1o.os.2o24 passed by the DR{T. The order dated 05.{J7.202,1 passi:rl iry the DRT is accordingly restorerl. 11

24. All connected applications are disposed of. Interim orders, if any, sha1l stand vacated. There shall be no order as to costs //TRUE COPY// Sd/. A. SREENIVASA DY ASSISTANT REGI RAR SECTION FFICER . The Debts Recovery Tribunal - ll' HyderaUg9'.. . ii;; 6;bi; iiecor;r.i Appellate rribunal at Kolkata'.- . d; "cdi; 'ri,rG. ehi'rd,;rij'Aiiociates' Advoca-les toPucl ^' . ffi ;E i; d;i"t\I;ils*il4; E;ndt' Siandins counser [oPUC] . Two CD CoPies To, 1 2 3 4 5 TJ MP )/ I I HIGH COURT DATED:3010412025 \. '' ,,. -: .iE.,\ \ 1 4Le .-.,& .\ '\: \F (' ::" u.-tJ ORDER WP.No.22458 of 2024 ALLOWING THE WRIT PETITION WITHOUT COSTS g /-rs 2 /