STANDARD CHARTERED BANKversusDHARMINDER BHOHI AND OTHERS

                        [2013] 9 S.C.R. 410


A                STANDARD CHARTERED BANK
                                  v.
               DHARMINDER BHOHI AND OTHERS
                 (Civil Appeal No. 8486 of 2013)
                      SEPTEMBER 13, 2013
B
            [ANIL R. DAVE AND DIPAK MISRA, JJ.]

     SEGUR/TISA TION AND RECONSTRUCTION OF
  FINANCIAL ASSETS AND ENFORCEMENT OF
C SECURITY INTEREST ACT, 2002:

          Delay in disposal of cases and granting of adjournments
    by ORT and DRAT - Object of the Act - Explained -- Held:
    Delay in disposal of application by DRT and appeal by DRAT
0 has the potentiality or creating a corrosion in the economic
    spine of the country - Grant of an adjournment should be an
    exception and not a routine and mechanical matter -
    Tribunals are expected to act in quite promptitude, so that an
  . ingenious litigant does not take recourse to dilatory toctics -
    In the case at hand, there was no reason for DRAT to keep
E on adjourning the matter and finally dispose it by passing an
    extremely laconic order -- A curative step is warranted and
    Chairman and Members of DRAT shall endeavour to remain
    alive to the obligations as expected of them by such special
    legislations, namely, SARFAES/ Act and ROB Act -
F Adjournments.

        RECOVERY OF DEBTS DUE TO BANKS AND
    FINANCIAL INSTITUTIONS ACT, 1993:

G        ss. 19 and 22 - Object of the Act and the procedure
    before Tribunal - Held: DRT and ORA T shall not be bound
    by the procedure laid down by the Code of Civil Procedure,
    but shall be guided by the principles of natural justice and
    subject to the rules framed -- They have been conferred
H                                410
 STANDARD CHARTERED BANK v. DHARMINDER                        411
                 BHOHI
powers to regulate their own procedure, as the very purpose           A
of their establishment is to expedite disposal of applications
and appeals preferred before them -- They have the character
of specialized institutions with expertise and have been
confeffed jurisdiction to decide the /is in speedy manner so
that the larger public interest, that is, the economy of the          B
country does not suffer.

     s.19(25) - Powers of Tribunal - Held: s.19(25) confers
limited powers -- Tribunal has been given power under the
statute to pass such other orders and give such directions as         C
to give effect to its orders or to prevent abuse of its process
or to secure the ends of justice -- Tribunal is required to
function within the statutory parameters - It does not have any
inherent powers - Tribunal cannot assume the role of a court
of different nature which can grant "liberty to initiate any action
against the bank" -- Taking note of a submission made at the          D
behest of auction purchaser and then proceed to say that he
is at liberty to file any action against bank for any omission
committed by it, has no sanction of law -- Therefore, the
observation, namely, "liberty is also given to the auction
purchaser to file action against the bank for any omission            E
committed by it", is deleted -- Judgment of High Court whereby
it has declined to interfere with the grant of liberty by ORA T
is also set aside.

    Respondent no. 1 obtained a home loan from· the                   F
appellant-Bank on 17.5.1999, and on his failure to repay
the same, the Bank proceeded to sell the mortgaged
property, which he had purchased from respondent no.
2- developer. Respondent no. 1 filed an application u/s
17(1) read with s.19 of the Securitisation and                        G
Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002(5ARFAESI Act). The matter
was taken to DRAT and then to High Court. Meanwhile
the property was sold and respondent no. 3, the auction
purchaser, deposited the required amount. However, the                H
    412      SUPREME COURT REPORTS                [2013] 9 S.C.R.


A ORT, by its order dated 25.10.2005 granted time to the
  borrower to deposit the entire amount with the bank and
  the developer, and Rs. 1 lakh to auction purchaser-
  respondent no. 3, as compensation. Respondent no. 1
  filed an appeal before the DRAT, which, by an interim
B order directed him to deposit Rs.7.55 lakhs with the Bank,
  and while disposing of the appeal, inter alia, directed the
  Bank to return Rs.25,60,000/- to auction-purchaser-
  respondent no. 3 and granted liberty to respondent no.
  3 to file action against appellant-Bank "for any omission
c committed by it". The writ petition filed by the B.mk was
  dismissed.
          Partly allowing the appeal, the Court
       HELD: 1.1. Delay in disposal of the application by the
D ORT and the appeal by DRAT has the potentiality of
  creating a corrosion in the economic spine of the country.
  It is significant to note that though the appeal was
  admitted by the DRAT on 14.11.2005, yet the same was
  disposed of on 20.5.2010 almost after four and half years.
E The DRAT has totally forgotten the obligation cast on it
  under the ROB Act and also has remained quite oblivious
  of the salient features and the seminal purpose of
  SARFAESI Act. [para 2 and 12] [416-H; 417-A; 423-C-D]

F       1.2. The intendment of SARFAESI Act is for speedy
   recovery of dues to the bank. In this backdrop, the
   tribunals are expected to act in quite promptitude regard
   being had to the nature of the tis and see to it that an
   ingenious litigant does not take recourse to dilatory
   tactics. Neither the ORT nor the appellate tribunal can
G afford to sit over matters as that would fundamentally
   frustrate the purpose of the legislation. A tribunal dealing
  ·With an appeal should not allow adjournments for the
   asking. It should be kept uppermost in mind by the
   Presiding Officer of the tribunal that grant of an
H
 STANDARD CHARTERED BANK v. DHARMINDER                 413
                 BHOHI
adjournment should be an exception and not a routine          A
and mechanical matter. [para 20] [429-B-E]

     Mardia Chemicals Ltd. And others v. Union of India and
Others 2004 (3) SCR 982 = 2004 (4) SCC 311; Authorised
Officer, Indian Overseas Bank and another v. Ashok Saw Mill   8
2009 (11) SCR 599 = 2009 (8) SCC 366; United Bank of
India v. Satyawati Tondon and others 2010 (9) SCR 1 = 2010
(8) sec 110; Transcore v. Union of India and another 2006
(9) Suppl. SCR 785 = 2008 (1) SCC 125' Official Liquidator,
Uttar Pradesh and Uttarakhand v. Allahabad Bank and others    C
(2013) 4 sec 381 - referred to.

      1.3. In the case at hand, there was no reason for the
DRAT to keep on adjourning the matter and finally
dispose it by passing an extremely laconic order. Such
a delineation by the DRAT only indicates its apathy and       D
indifference to the role ascribed to it under the enactment
and the trust bestowed on it by the legislature. A curative
step is warranted and the Chairman and the members of
the DRAT shall endeavour to remain alive to the
obligations as expected of them by such special               E
legislations, namely, the SARFAESI Act and the ROB Act.
Besides, the Tribunal as well as the DRAT has to rise to
the occasion, for delay in adjudication of these types of
litigations brings a long term disaster. [para 20-21] [429-
E-G; 430•C-D]                                                 F

     1.4. Be it noted, the principal purpose is to see that
recovery of dues which is essential function of any
banking institution does not get halted because of
procrastinated delineation by the tribunal. The legislature
by s. 22 of the ROB Act has provided that the ORT and         G
the appellate tribunal shall not be bound by the procedure
laid down by the Code of Civil Procedure, but shall be
guided by the principles of natural justice and subject to
the rules framed. They have been conferred powers to
regulate their own procedure as given to them, as the very    H
    414    SUPREME COURT REPORTS              [2013] 9 S.C.R.

A purpose of their establishment is to expedite disposal of
  the applications and the appeals preferred before them.
  They have the character of specialized institutions with
  expertise and conferred jurisdiction to decide the lis in
  speedy manner so that the larger public interest, that is,
B the economy of the country does not suffer. But in the
  case at hand the DRAT did not dispose of the appeal for
  four and a half years. [para 21) [429-G-H; 430-A-C]

       1.5. The procedure of tribunals has been elaborately
  stated in s.19 of the ROB Act. Sub-s.(25) of s.19 makes it
C quite clear that the tribunal has been given power under
  the statute to pass such other orders and give such
  directions to give effect to its orders or to prevent abuse
  of its process or to secure the ends of justice. Thus, the
  tribunal is required to function within the statutory
D parameters. The tribunal does not have any inherent
  powers and it is limpid that s.19(25) confers limit.ed
  powers. [para 27] [432-G-H; 433-A]

       Upper Doab Sugar Mills Ltd. v. Shahdara (Delhi)
E Saharanpur Light Rly. Co. Ltd. 1963 SCR 333 = Union of
  India v. Orient Paper and Industries Limited 2009 (16)
  SCC 286; Union of India v. R. Gandhi, President, Madras Bar
  Association 2010 (6) SCR 857 = 2010 (11) SCC 1; Harinagar
  Sugar Mills Ltd. v. Shyam Sunder Jhunjhunwala
F 1962 SCR 339 = 1961AIR1669; Jaswant Sugar Mills Ltd. v.
                                             =
  Lakshmi Chand 1963 Suppl. SCR 242 1963 AIR 677,
  Associated Cement Companies Ltd. v. P.N. Sharma 1965
  SCR 366 = 1965 AIR 1595; and Kihoto Hollohan v. Zachil/hu
  1992 (1) SCR 686 = 1992(2) Suppl. sec 651 - relied on.

G      1.6. The sacrosanct purpose with which the tribunals
  have been established is to put the controversy to rest
  between the banks and the borrowers and any third party
  who has acquired any interest. They have been conferred
  jurisdiction by special legislations to exercise a particular
H power in a particular manner as provided under the Act.
 STANDARD CHARTERED BANK v. DHARMINDER                  415
                 BHOHI
It cannot assume the role of a court of different nature        A
which really can grant "liberty to initiate any action
against the bank". It is only required to decide the lis that
comes within its own domain. If it does not fall within its
sphere of jurisdiction it is required to say so. Taking note
of a submission made at the behest of the auction               8
purchaser and then proceed to say that he is at liberty
to file any action against the bank for any omission
committed by it, has no sanction of law. The said
observation is wholly bereft of jurisdiction, and
indubitably is totally unwarranted in the obtaining factual     c
matrix. Therefore, the observation, namely, "liberty is also
given to the auction purchaser to file action against the
bank for any omission committed by it", is deleted. Such
grant of liberty was not within the domain of the tribunal
reg~rd being had to its limited jurisdiction under such         D
special legislation and further, especially, when the bank
was not a party to the compromise. The judgment of the
High Court whereby it has declined to interfere with the
grant of liberty by the DRAT is also set aside. [para 30-
31) [435-B-G]
                                                                E
    1. 7. DRAT is required to adjudicate the lis in an
apposite manner. It is hearing an appeal from an order
passed by the ORT. It cannot afford to pass a laconic
order. However, this Court refrains from remitting the
matter to the DRAT for the reasons, namely, (i) the auction     F
purchaser has not challenged the order passed by the
DRAT before the High Court nor has he come to this
Court and further, the grievance of the bank was only with
regard to grant of liberty; and (ii) with the efflux of time
the bank has realized its money and the property has            G
changed hands. In the circumstances, it is unnecessary
to direct the DRAT to proceed with the appeal de novo.
[para 32] [436-A, B-D]

                                                                H
    416      SUPREME COURT REPORTS                  [2013] 9 S.C.R.


A                          Case Law Reference:
          2004 {3) SCR 982            referred to        para 14
          2009 (11) SCR 599           referred to        para 15
          2010 (9) SCR 1              referred to        para 16
B
          2006 (9) Suppl. SCR 785 referred to            para 17
          (2013) 4 sec 381            referred to        para 19
          1963 SCR 333                relied on          para 27
c
          2009 (16) sec 286           relied on          para 27
          2010 (6) SCR 857            relied on          para 28
          1962 SCR 339                relied on          para 28
D         1963 Suppl. SCR 242         relied on          para 28
          1965 SCR 366                relied on          para 28
          1992 (1) SCR 686            relied on          para 28

E       CIVIL APPELLATE JURISDICTION : Civil Appeal No.
    8486 of 2013.

        From the Judgment & Order dated 16.07.2010 of the High
    Court of Delhi at New Delhi in Writ Petition (C) No. 4694 of
    2010.
F
        Sanjay Jain, Sanjeev Sagan, Chandra Bhushan Prasad,
    A. Ansari for the Appellant.
          Jatin, Krishan Kumar, Mohit D. Ram for the Respondents.
G
          The Judgment of the Court was delivered by

          DIPAK MISRA, J. 1. Leave granted.

     2. The present appeal depicts a factual score where this
H Court is constrained to say that delay in disposal of the
  STANDARD CHARTERED BANK v. DHARMINDER                       417
           BHOHI [DIPAK MISRA, J.]
application by the Debts Recovery Tribunal and the appeal by          A
Debt Recovery Appellate Tribunal have the effect potentiality
of creating a corrosion in the economic spine of the country. It
exposits a factual expose' which is not only perplexing but usher
in a sense of puzzlement which in the ultimate eventuate
compels one to ask: "How long can the financial institutions          B
would suffer such procrastination? How far the public interest
be put to hazard because of small, and sometimes contrived
individual interest? To what extent the defaulters be given
protection in the name of balancing the stringent powers vested
on the banks and the statutory safegurards prescribed in favour       c
of loanees? Even assuming there are legal lapses and abuses,
how long the statutory tribunals take to put the controversy to
rest being oblivious of the fact that the concept of flexibility is
insegragably associated with valuation of any asset? One is
bound to give a wake up call and we so do by saying "Tasmat           D
Uttistha Kaunteya"; "Awake, Arise, 'O' Partha".

    3. The present appeal, by special leave, is directed
against the judgment and order dated 16. 7.2010 passed by the
High Court of Delhi in Writ Petition (C) No. 4694 of 2010.
                                                                      E
      4. The facts which are essential to be stated are that the
 appellant-bank sanctioned home loan of Rs.12.00 lacs to the
 respondent No. 1 on 17.5.1999 payable in equal monthly
 instalments and in lieu of that the borrower mortgaged the
 property which was purchased from the developer, the                 F
 respondent No. 2 herein. Since the respondent No. 1 failed to
 pay the instalments, the loan account was declared as "non
 performing asset" in terms of the NPA guidelines issued by the
 Reserve Bank of India. On 28.12.20012 the appellant-bank
 issued a notice under Section 13(2) of the Securitisation and        G
·Reconstruction of Financial Assets and Enforcement of Security
 Interest Act, 2002 (for short "the SARFAESI Act) to the
 respondent No. 1 directing him to pay the amount due as on
 27.12.2002. Since the respondent No. 1 did not make any
 payment till 27 .11.2004, the Tehsildar, Gurgaon took                H
    418     SUPREME COURT REPORTS                  [2013] 9 S.C.R.


A   possession of the mortgaged property as per the order of the
    District Magistrate and handed over the same to the appellant-
    bank. On 10.3.2005 the appellant-bank in order to sell the said
    property published possession-cum-sale notice in the leading
    newspapers stating the terms and conditions of the public
B   auction .. In response to the said notice the respondent No. 3
    submitted its bid form dated 10.3.2005 for purchasing the said
    property by way of auction. The said action was challenged by
    filing an application under Section 17(1) read with Section 19
    of the SARFAESI Act before the Debt Recovery Tribunal (ORT).
c   The application was presented on 15.3.2005 before the ORT
    II, Delhi and the concerned Presiding Officer declined to pass
    any order and sought appropriate directions from the Debt
    Recovery Appellate Tribunal (DRAT) for transfer of the said
    application to some other ORT. As no order was passed by
    the DRAT, the matter was again placed before the ORT II on
0
    25.10.2005 and on that day the ORT was informed that the
    bank had already taken over possession of the property. in
    question and put the same into auction for sale. The borrower
    preferred a writ petition before the High Court on 17.5.2005
E   and the High Court directed the borrower to deposit certain
    amount with the bank and further directed status quo, as
    regards the property, to be maintained. Eventually, the High
    Court vide order dated 25.7.2005 only directed the ORT to
    dispose of the appeal within two months. While finally disposing
    of the writ petition the High Court opined that though no order
F   was passed by the ORT as the Presiding Officer was awaiting
    orders from the appellate forum, the bank ought not have
    decided to sell the property to render the appeal of the borrower
    to become infructuous and tried to non-suit him.

G      5. Be it noted, the DRAT vide its order dated 3.6.2005
  transferred the case to another Debt Recovery Tribunal. As the
  property was sold in auction, the auction purchaser, the third
  respondent herein, filed an application for impleadment which
  was allowed. Before the ORT her stand was that she had
H deposited the entire amount of Rs.25.60 lacs with the bank and
 STANDARD CHARTERED BANK v. DHARMINDER                        419
          BHOHI [DIPAK MISRA, J.]
if the borrower was still interested to retain his property, he had   A
to purchase it from her. The ORT by its order dated 25.10.2005
adverted to the facts, assertions made in the application filed
by the borrower, reply filed by the bank and appreciating the
evidence on record came to hold that there was no infirmity in
the Statement of Accounts of the bank and thereafter taking into      B
consideration the facts and circumstances granted 15 days
time to the borrower to pay the entire amount to the bank and
the developer, Mis. Unitech, and Rs.1.00 lac as compensation
to the auction purchaser. Thereafter, the ORT directed as
follows: -                                                            c
     "In case the applicant/appellant fails to deposit this amount
     within 15 days, the appeal/application be treated as
     dismissed and respondent No. 1 is free to confirm the sale
     in favour of the auction purchaser. The amount deposited
     by the applicant herein during the pendency of present           D
     proceedings as per the order of Hon'ble High Court of
     Delhi be given due adjustment."

     6. The borrower instead of complying with the said order,
preferred appeal No. 267 of 2005 before the ORAT which, on            E
14.11.2005, admitted the appeal and passed the following
interim order: -

     "Pending passing further orders, the appellant shall deposit
     a sum of Rs.7.55 lakhs directly to the 1st respondent-bank.
                                                                      F
     However, there shall be stay of implementation of the order
     in favour of the 2nd and 3rd respondent."

     7. It is apt to state here that the appeal was directed to be
posted on 7.12.2005. The bank filed a reply before the DRAT
highlighting the consistent default by the borrower. The auction      G
purchaser, the third respondent herein, did not file an appeal
before the DRAT but on 25.1.2006 filed an application under
Section 151 of the Code of Civil Procedure. The DRAT took
up the application on 7.9.2007 and observed that as the
p~rchaser had already been impleaded as a party to the                H
    420       SUPREME COURT REPORTS                   [2013] 9 S.C.R.


A   appeal, she would have the right to address the Court and,
    accordingly disposed of the application. As the factual narration
    would reveal the appeal was adjourned from time to time and,
    eventually on 20.5.2010, the DRAT passed the following order:

B
                 "Counsel for the parties present. I have heard them
          at length. Counsel for the appellant is ready to pay the
          entire amount up to date minus the penal interest for which
          no provision was made in that context. The column of
          penalty portion was left blank and no amount was
c         mentioned therein therefore I am of the considered view
          that the appellant has not to pay the penal interest. The
          residue amount be paid to the bank within 45 days from
          today as agreed.

D               The builder has already recovered the amount of
          Rs.7, 11,745/- from the bank. That amounfwill be paid by
          the appellant to the bank directly within 45 days as agreed.
          The appellant will also pay Simple Interest @ 9% from the
          date of payment to the builder till its realization within 45
E         days.

                As agreed by the Auction Purchaser he is ready to
          accept Rs.5 lacs as costs from the appellant and would
          not insist for auction sale and would surrender his rights
          in favour of the appellant.
F
                The said amount be deposited with the Registrar of
          this court within the period of 45 days failing which the
          appeal shall stand dismissed on this deposit as well as
          other deposits stated above. The auction purchaser can
G         withdraw this.

                 Liberty is also given to the Auction Purchaser to file
          action against the bank for any omission committed by it.
          Liberty is given to the appellant as well as to the builder
          to get the Registry executed in favour of the appellant within
H
 STANDARD CHARTERED BANK v. DHARMINDER 421
          BHOHI [DIPAK MISRA, i'J.]
    two months thereafter i.e. after. tpe elapse of 45 days         A
    mentioned above. Stamp duty etp. will be paid by the
    appellant.

          The bank is further directed to furnish the statement
    of account minus the penal clause within ten days.              8
          The bank is further directed to return the amount
    deposited by the Auction Purchaser in the sum of
    Rs.25,60,000/- along with the normal interest @ 9% per
    annum simple without prejudice to his right against the
    bank.                                                           C

          The matter stand disposed off. Auction Purchaser
    and the appellant are directed to sign this order."

      8. Aggrieved by the aforesaid order the bank preferred writ
petition and raised two contentions, namdly (i) the ORAT had        D
modified a reasonable and detailed order passed by ORT by
a cryptic order, and (ii) that the DRAT erred in granting liberty
to t.he third respondent to initiate any action against the bank
for any omission. The High Court, by the impugned order, in
the first paragraph dealt with the element of the claim of penal    E
interest and opined that the grievance of the bank was
baseless. Thereafter, adverting to the grant of 9% interest
towards deposit made by the auction purchaser with the bank,
observed that there was no error in the same as the money was
lying with the bank. Thereafter, the writ court proceeded to        F
observe as follows:-

    "Learned counsel for the auction purchaser points out that,
    in fact, this interest of 9 per cent is really not full
    compensation but only part compensation as liberty has          G
    been granted to the auction purchaser to pursue the
    remedy against the bank as according to the auction
    purchaser this property was auctioned by the petitioner
    bank without even disclosing the factum of the lis pending
    between the owner and the bank in the ORT. We see no            H
     422      SUPREME COURT REPORTS                   [2013] 9 S.C.R.


A          reason to exercise our extraordinary writ jurisdiction under
           Article 226 of the Constitution of India."

           9. Mr. Sanjay Jain, learned senior counsel appearing for
     the appellant, submitted that though two issues were raised
B    before the High Court, yet he would confine his relief to the
     second one, namely, grant of liberty to the third respondent to
     initiate any action against the bank for any omission. It is urged
     by him that the High Court has fallen into error by opining that
     there was no justification to exercise jurisdiction under Article
c·   226 of the Constitution of India whereas the factual matrix
     warranted deletion of such an observation by the DRAT as a
     tribunal has no jurisdiction to grant such liberty and, especially,
     when a settlement between the borrower and auction purchaser
     had been arrived at. Learned counsel would submit that the
     DRAT had really not addressed to any issue and, after
D    recording a settlement in a most laconic manner, recorded the
     observations which really deserved to be quashed by the High
     Court. It is further canvassed by Mr. Jain that the High Court
     should have taken note of the fact that the order passed by the
      DRAT had already been complied with and it was absolutely
E     unnecessary to drag the bank to a further litigation which is
      contrary to the spirit of SARFAESI Act and the purpose of
      Recovery of Debts due to Banks and Financial Institutions Act,
      1993 (for short "the ROB Act") It is also contended that the
      ORAT failed to take note of the prayer made by the appellant
F     therein and for no manifest reason the matter was kept pending
      for more than four and half years.

       10. Mr. Mohit Dham, learned counsel appearing for the
  respondent No. 1, contended that he had paid the dues of the
G bank within the time fixed by the DRAT and thereafter he had
  also transferred the property in favour of a third party due to
  financial difficulties. In essence, submission of learned counsel
  is that putting the clock back is likely to cause serious jeopardy
  to him.

H          11. Mr. Jatin, learned counsel appearing for the auction
 STANDARD CHARTERED BANK v. DHARMINDER                         423
          BHOHI [DIPAK MISRA, J.]
purchaser, submitted that on the basis of the liberty he had           A
already filed a suit in the Delhi High Court and is entitled to
pursue the remedy because of action was taken in hot haste
in by the bank in putting the property into auction without
indicating that litigation was going on between the borrower and
the bank. It is urged by him had the said fact was made known          B
the third respondent would not have participated in the auction.
It is argued by him that his claim for damages cannot be nullified
and hence, the decision of the High Court is absolutely
defensible and does not require to be interfered with.

     12. Before we dwell upon the jurisdiction of the DRAT to          C
give such a liberty to the auction purchaser, we think that it is
absolutely imperative, in the case at hand, to take note of the
fact that though the appeal was filed before the DRAT on
7 .11.2005 and admitted on 14.11.2005, yet the same was
disposed of on 20.5.2010 almost after four and half years. We          D
are at pains to say that the DRAT has totally forgotten the
obligation cast on it under the RDB Act and also has remained
quite oblivious of the salient features and the seminal purpose
of SARFAESI Act.
                                                                       E
     13. In this context, we may fruitfully refer to the Objects and
Reasons of the SARFAESI Act. The relevant part of it reads
as follows: -

     "The financial sector has been one of the key drivers in
     India's efforts to achieve success in rapidly developing its F
     economy. While the banking industry in India is
     progressively complying with international prudential norms
     and accounting practices there are certain areas in which
     the banking and financial sector do not have a level playing
     field as compared to other participants in the financial G
     markets in the world. There is no legal provision for
     facilitating securitisation of financial assets of banks and
   . financial institutions. Further, unlike international banks, the
     banks and financial institutions in India do not have power ·
     to take possession of securities and sell them. Our H
    424      SUPREME COURT REPORTS                    [2013] 9 S.C.R.


A         existing legal framework relating to commercial
          transactions has not kept pace with the changing
          commercial practices and financial sector reforms. This
          has resulted in slow place of recovery of defaulting loans
          and mounting levels of non-performing assets of banks
s         and financial institutions. Narasimham Committee I and II
          and Andhyarujina Committee constituted by the Central
          Government for the purpose of examining banking sector
          reforms have considered the need for changes in the legal
          system in respects of these areas."
c      14. In Mardia Chemicals Ltd. And Others v. Union of India
  and Others1, after referring to the Statement of Objects and
  Reasons this Court dealt with the submission that existing rights
  of private parties under a contract cannot be interfered with,
  more particularly, putting one party in an advantageous position
D over the other. In that context, the three-Judge Bench observed
  thus:-

          "As discussed earlier as well, it may be observed that
          though the transaction may have the character of a private
E         contract yet the question of great importance behind such
          transaction as a whole having far-reaching effect on the
          economy of the country cannot be ignored, purely
          restricting it to individual transactions, more particularly
          when financing is through banks and financial institutions
F         utilizing the money for the people in general, namely, the
          depositors in the banks and public money at the disposal
          of the financial institutions. Therefore, wherever public
          interest to such a large extent is involved and it may
          become necessary to achieve an object which serves the
          public purposes, individual rights may have to give way.
G
          Public interest has always been considered to be above
          the private interest. Interest of an individual may, to some
          extent, be affected but it cannot have the potential of taking
          over the public interest having an impact on the spcio-
H 1. (2004) 4 sec 311.
     STANDARD CHARTERED BANK v. DHARMINDER 425
              BHOHI [DIPAK MISRA, J.]
      economic drive of the country. The two aspects are                A
      intertwined which are difficult to be separated."

      In the said case, it was further rules thus: -

       "81. In view of the discussion held in the judgment and the
       findings and directions contained in the preceding               B
       paragraphs, we hold that the borrowers would get a
       reasonably fair deal and opportunity to get the matter
       adjudicated upon before the Debts Recovery Tribunal. The
      .effect of some of the provisions may be a bit harsh for
       some of the borrowers but on that ground the impugned            C
       provisions of the Act cannot be said to be unconstitutional
       in view of the fact that the object of the Act is to achieve
       speedier recovery of the dues declared as NPAs and
       better availability of capital liquidity and resources to help
       in growth of the economy of the country and welfare of the       D
       people in general which would subserve the public
       interest."

       15. In Authorised Officer, Indian Overseas Bank and
Another v. Ashok Saw Mi/12, though in a different context, the          E
Court has expressed thus: -

       "33. It is clear that while enacting the SARFAESI Act the
       legislature was concerned with measures to regulate
       securitization and reconstruction of financial assets and
       enforcement of security interest. The Act enables the banks      F
       and financial institutions to realize long-term assets,
       manage problems of liquidity, asset liability mismatches
       and improve recovery by exercising powers to take
       possession of securities, sell them and reduce non-
       performing assets by adopting measures for recovery 9f           G
       reconstruction."

       Thereafter, the Bench proceeded to state thus: ·

2.    c2oos) a sec 366.                                                 H
    426      SUPREME COURT REPORTS                    (2013) 9 S.C.R.


A         "36. The intention of the legislature is, therefore, clear that
          while the banks and financial institutions have been vested
          with stringent powers for recovery of their dues, safeguards
          have also been provided for rectifying any error or wrongful
          use of such powers by vesting the DRT with authority after
B         conducting an adjudication into the matter to declare any
          such action invalid and also to restore possession even
          though possession may have been made over to the
          transferee."

       · 16. In United Bank of India v. Satyawati Tandon and
C Others 3 , this Court restated the purpose of bringing the
  SARFAESI Act and in that context observed the role of the
  tribunal as under: -
          "23. Sub-section (2) of Section 17 casts a duty on the
D         Tribunal to consider whether the measures taken by the
          secured creditor for enforcement of security interest are
          in accordance with the provisions of the Act and the Rules
          made thereunder. If the Tribunal, after examining the facts
          and circumstances of the case and. evidence produced by
E         the parties, comes to the conclusion that the measures
          taken by the secured creditor are not in consonance with
          sub-section (4) of Section 13, then it can direct the secured
          creditor tq restore management of the business or
          possession of the secured assets to the borrower. On the
F         other hand, if the Tribunal finds that the recourse taken by
          the secured creditor under sub-section (4) of Section 13
          is in accordance with the provisions of the Act and the
          Rules made thereunder, then, notwithstanding anything
          contained in any other law for the time being in force, the
          secured creditor can take recourse to one or more of the
G
          measures specified in Section 13(4) for recovery of its
          secured debt.
          24. Sub-section (5) of Section 17 prescribes the time-limit

H 3. c2010) s sec 110.
  STANDARD CHARTERED BANK v. DHARMINDER                        427
           BHOHI [DIPAK MISRA, J.]
     of sixty days within which an application made under              A
     Section 17 is required to be disposed of. The proviso to
     this sub-section envisages extension of time, but the outer
     limit for adjudication of an application is four months. If the
     Tribunal fails to decide the application within a maximum
     period of four months, then either party can move the             s
     Appellate Tribunal for issue of a direction to the Tribunal
     to dispose of the application expeditiously."

     17. In Transcore v. Union of India and Another+, the Court,
while discussing about the various provisions of the SARFAESI          C
Act, expressed thus: -

     "60. Value of an asset in an inflationary economy is
     discounted by "time" factor. A right created in favour of the
     bank/Fl involves corresponding obligation on the part of the
     borrower to see that the value of the security does not           D
     depreciate with the passage of time which occurs due to
     his failure to repay the loan in time."

     We have referred to the aforesaid authorities to show that
     speedy disposal of the application and the appeal are             E
     fundament objects of the enactment and "time factor" has
     inextricable nexus with the sustenance of economy.

     18. Having discussed about the purpose and legislative
intendment of the SARFAESI Act we think it appropriate to refer
to the legislative purpose of the RDB Act. We are absolutely           F
conscious that this was an earlier legislation and because it
could not become that effective, the SARFAESI Act was
enacted. While dealing with the purpose of the said legislation
and how it works, this Court in Satyawati Tondon (supra) has
observed that an analysis of the provisions of the DRT Act             G
shows that primary object of that Act was to facilitate creation
of special machinery for speedy recovery of the dues of banks
and financial institutions. This is the reason why the DRT Act

4. ; c2ooa) 1 sec 12s.                                                 H
      428       SUPREME COURT REPORTS                 [2013] 9 S.C.R.


 A not only provides for establishment of the Tribunals and the
   Appellate Tribunals with the jurisdiction, powers and authority
   to make summary adjudication of applications made by banks
   or financial institutions and specifies the modes of recovery of
   the amount determined by the Tribunal or the Appellate Tribunal
 B but also bars the jurisdiction of all courts except the Supreme
   Court and the High Courts in relation to the matters specified
   in Section 17. Thereafter the Division Bench proceeded to state
   thus:-

            "7. For few years, the new dispensation worked well and
 c          the officers appointed to man the Tribunals worked with
            great zeal for ensuring that cases involving recovery of the
            dues of banks and financial institutions are decided
            expeditiously. However, with the passage of time, the
            proceedings before the Tribunals became synonymous
 D          with those of the regular courts and the lawyers
            representing the borrowers and defaulters used every
            possible mechanism and dilatory tactics to impede the
            expeditious adjudication of such cases. The flawed
            appointment procedure adopted by the Government
 E          greatly contributed to the malaise of delay in disposal of
            the cases instituted before the Tribunals."

         19. In Official Liquidator, Uttar Pradesh and Uttarakhand
   v. Allahabad Bank and Others5, though in a different context,
 F this Court observed that the RDB Act has been enacted in the
   backdrop that the banks and financial institutions had been
   experiencing considerable difficulties in recovering loans and
   enforcement of securities charged with them and the procedure
   for recovery of debts due to the banks and financial institutions
 G which were being followed had resulted in a significant portion
   of the funds being blocked. Emphasis has been laid on
   blocking of funds in unproductive assets, the value Qf which
   deteriorates with the passage of time. That apart, the purpose
   of the RDB Act, as is evincible, is to provide for establishment
. H   s.    (2013) 4 sec 3a1.
  STANDARD CHARTERED BANK v. DHARMINDER 429
           BHOHI [DIPAK MISRA, J.]
of Tribunals and Appellate Tribunals for expeditious                  A
adjudication and recovery of debts due to banks and financial
institutions and for matters connected therewith or incidental
thereto. Section 17 of the ROB Act deals with jurisdiction,
powers and authority of the Tribunals. It confers jurisdiction on
the Tribunal to entertain and decide applications from the banks      B
and financial institutions for recovery of debts due to such banks
and financial institutions.

      20. Thus, the intendment of this legislation is for speedy
recovery of dues to the bank. In this backdrop, the tribunals are     C
expected to act in quite promptitude regard being had to the
nature of the lis and see to it that an ingenious litigant does not
take recourse to dilatory tactics. It may be aptly noted that an
action taken by the bank under SARFAESI Act is subject to
assail before the ORT and a further appeal to the DRAT.
Neither the ORT nor the appellate tribunal can afford to sit over     D
matters as that would fundamentally frustrate the purpose of the
legislation. In the case at hand, we really fail to fathom what
impelled the ORAT to keep on adjourning the matter and finally
dispose it by passing an extremely laconic order. It is really
perplexing. A tribunal dealing with an appeal should not allow        E
adjournments for the asking. It should be kept uppermost in
mind of the Presiding Officer of the tribunal that grant of an
adjournment should be an exception and not to be granted in
a routine and mechanical matter. In the case at hand, such a
delineation by the DRAT only indicates its apathy and                 F
indifference to the role ascribed to it under the enactment and
the trust bestowed on it by the legislature. A curative step is
warranted and we expect the Chairman and the members of
the ORAT shall endeavour to remain alive to the obligations as
expected of them by such special legislations, namely, the            G
SARFAESI Act and the ROB Act.

    21. Be it noted, the principal purpose is to see that recovery
of dues which is essential function of any banking institution
does not get halted because of procrastinated delineation by          H
    430     SUPREME COURT REPORTS                   [2013] 9 S.C.R.


A the tribunal. It is worthy to note that the legislature by its wisdom
  under Section 22 of the ROB Act has provided that the ORT
  and the appellate tribunal shall not be bound by the pro,cedure
  laid down by the Code of Civil Procedure, but shall be guided
  by the principles of natural justice and subject to the rules
B framed. They have been conferred powers to regulate their
  own procedure as given to them. It is so, for the very purpose
  of their establishment is to expedite disposal of the applications
  and the appeals preferred before them. They have the character
  of specialized institutions with expertise and conferred
c jurisdiction to decide the lis in speedy manner so that the larger
  public interest, that is, the economy of the country does not
  suffer. But, a pregnant one, in the case at hand the DRAT did
   not dispose of the appeal for four and a half years. We can only
  say that apart from the curative step the tribunal as well as the
   DRAT has to rise to the occasion, for delay in adjudication of
0
  these type of litigations brings a long term disaster. A cute
  slumber shall not do.
         22. The grievance of the bank does not end here. On the
    contrary this is the beginning of the end. Accentuating the
E   grievance, it is submitted by Mr. Jain, learned senior counsel
    for the appellant, that the ORAT travelled beyond the prayer
    made by the borrower inasmuch as the borrower in essentiality
    had prayed for grant of compensation and alternatively
    extension of time for sixty days. Due to the pendency of the
F   appeal before the tribunal, submits Mr. Jain, the extension of
    time melted into total insignificance. Despite that, as the order
    would indicate, a ·consensus was arrived at between the
    auction purchaser and the borrower and the same is clear from
    the order, as the DRAT had directed that the auction purchaser
G   and the borrower would sign the order. The bank was not a
    party to the said adjustment or consensus. The bank was only
    directed to refund the amount along with 9% interest and that
    has been done witho-ut recording a finding whether the bank
    was really at fault or not and, more so, when the borrower had
H   exhibited a non-challant attitude not to pay back the money or
    to deposit the amount as directed by the High Court. Learned
 STANDARD CHARTERED BANK v. DHARMINDER                       431
          BHOHI [DIPAK MISRA, J.]
senior counsel is also critical of the order passed by the High      A
Court which has declined to address the core issue by stating
that there was no need to exercise the extraordinary writ
jurisdiction under Article 226 of the Constitution. Learned senior
counsel would submit that the High .Court has failed in its
constitutional duty to scrutinise whether a liberty of the present   B
nature could have been granted by the tribunal, clothed with
such special and restricted jurisdiction.

     23. Presently to the spectrum of jurisdiction. Section 17 of
the SARFAESI Act allows any person, including a borrower,
aggrieved by any of the measures referred to in sub-section          C
(4) of section 13 taken by secured creditor to submit an
application to the ORT having jurisdiction in the manner within
45 days from the date of such measures have been taken. Sub-
section (3) of Section 17 empowers the ORT to question the
action taken by the secured creditor and the transaction             D
entered into by virtue of Section 13(4) of the SARFAESI Act. It
has been held in Ashok Saw Mill (supra) that the legislature by
virtue of incorporation of sub-section (3) in Section 17 has gone
to the extent of vesting the DRAT with authority to set aside a
transaction including sale and to restore possession to the          E
borrower in appropriate cases. Section 18 of the SARFAESI
Act makes provision for an appeal to the appellate authority
from any order made by the Debts Recovery Tribunal. The
Debts Recovery Tribunal, needless to say, has the same
jurisdiction as conferred under Section 17 of the ROB Act. In        F
this context, Section 19 of the SARFAESI Act is worth
reproducing: -

    "19. Right of borrower to receive compensation and
    costs in certain cases. - If the Debts Recovery Tribunal         G
    or the Court of District Judge, on an application made
    under section 17 or section 17A or the Appellate Tribunal
    or the High Court on an appeal preferred under section 18
    or section 18A, holds that the possession of secured
    assets by the secured creditor is not in accordance with
                                                                     H
    432       SUPREME COURT REPORTS                  (2013] 9 S.C.R.


A         the provisions of this Act and rules made thereunder and
          directs the secured creditors to return such secured assets
          to the concerned borrowers, such borrower shall be
          entitled to the payment of such compensation and costs
          as may be determined by such Tribunal or Court of District
B         Judge or Appellate Tribunal or the High Court referred to
          in section 18B."

       24. We have reproduced the aforesaid section to point out
  that the legislature has brought in this provision by way of
  substitution by Act 30 of 2004 with effect from 11.11.2004 to
C confer jurisdiction on the ORT and DRAT to entertain a plea of
  the borrower for grant of compensation and costs.

       25. At this juncture, we may clarify that we do not intend to
  dwell upon the subtle distinction between the compensation and
o damages as canvassed at the Bar as that is not needed in this
  case. The thrust of the matter is whether DRAT has the
  jurisdiction to grant any liberty and, more so, in a case when
  the borrower and the auction purchaser have entered into a
  compromise. As has been stated earlier, the bank was not a
E party to the compromise.

         26. Section 19 of the ROB Act, occurring in Chapter IV of
    the Act, deals with procedure of tribunals. Sub-section (25) of
    Section 19 reads as follows: -

F         "(25) The Tribunal may make such orders and give such
          directions as may be necessary or expedient to give effect
          to its orders or to prevent abuse of its process or to secure
          the ends of justice."

G       27. The aforesaid provision makes it quite clear that the
  tribunal has been given power under the statute to pass such
  other orders and give such directions to give effect to its orders
  or to prevent abuse of its process or to secure the ends of
  justice. Thus, the tribunal is required to function within the
H statutory parameters. The tribunal does not have any inherent
     STANDARD CHARTERED BANK v. DHARMINDER                     433
              BHOHI [DIPAK MISRA, J.]
powers and it is limpid that Section 19(25) confers limited           A
powers. In this context, we may refer to a three-Judge Bench
decision in Upper Doab Sugar Mills Ltd. v. Shahdara (Delhi)
Saharanpur Light Rly. Co. Ltd. 6 wherein it has been held that
when the tribunal has not been conferred with the jurisdiction
to direct for refund, it cannot do so. The said principle has been    B
followed in Union of India v. Orient Paper and Industries
Limitecf'.

     28. In Union of India v. R. Gandhi, President, Madras Bar
Association8 , the Constitution Bench, after referring to the C
opinion of Hidayatullah, J. in Harinagar Sugar Mills Ltd. v.
Shyam Sunder Jhunjhunwala 9 , the pronouncements in Jaswant
Sugar Mills Ltd. v. Lakshmi Chand 10 , Associated Cement
Companies Ltd. v. P.N. Sharma 11 and Kihoto Hollohan v.
Zachillhu 12 , ruled thus: -
                                                               D
       "45. Though both courts and tribunals exercise judicial
       power and discharge similar functions, there are certain
       well-recognised differences between courts and tribunals.
       They are:
                                                                      E
        (i) Courts are established by the State arid are entrusted
        with the State's inherent judicial power for administration
        of justice in general. Tribunals are established under a
        statute to adjudicate upon disputes arising under the said
      · statute, or disputes of a specified nature. Therefore, all
                                                                      F
        courts are tribunals. But all tribunals are not courts.

       (ii) Courts are exclusively manned by Judges. Tribunals

6.    AIR 1963 SC 217.
1.    c2009) 16 sec 286.                                              G
8.    c2010) 11sec1.
9.    AIR 1961 SC 1669.
10. AIR 1963 SC 677.
11. AIR 1965 SC 1595.
12. 1992 Supp (2) sec 651 ..                                          H
    434      SUPREME COURT REPORTS                    [2013] 9 S.C.R.


A         can have a Judge as the sole member, or can have a
          combination of a judicial member and a technical member
          who is an "expert" in the field to which the tribunal relates.
          Some highly specialised fact-finding tribunals may have
          only technical members, but they are rare and are
B         exceptions.

          (iii) While courts are governed by detailed statutory
          procedural rules, in particular the Code of Civil Procedure
          and the Evidence Act, requiring an elaborate procedure
          in decision making, tribunals generally regulate their own
c         procedure applying the provisions of the Code of Civil
          Procedure only where it is required, and without being
          restricted by the strict rules of the Evidence Act."

        29. From the principles that have been culled out by the
D Constitution Bench, it is perceptible that a tribunal is
   established under a statute to adjudicate upon disputes arising
   under the said statute. The tribunal under the RDB Act has been
   established with a specific purpose and we have already
   focused on the same. Its duty is to see that the disputes are
E disposed of quickly regard being had to the larger public
   interest. It is also graphically clear that the role of the tribunal
   has not been fettered by technicalities. The tribunal is required
   to bestow attention and give priority to the -real controversy
   before it arising out of the special legislations. As has been
F' stated earlier, it is really free from the shackles of procedural
   law and only guided by fair play and principles of natural justice
   and the regulations formed by it. The procedure of tribunals has
   been elaborately stated in Section 19 of the ROB Act.

       30. It is apt to note here that Section 34 of the SARFAESI
G Act bars the jurisdiction of the civil court. It reads as follows: -

          "34. Civil court not to have jurisdiction. - No civil court
          shall have jurisdiction to entertain any suit or proceeding
          in respect of any matter which a Debts Recovery Tribunal
H         or the Appellate Tribunal is empowered by or under this
 STANDARD CHARTERED BANK v. DHARMINDER                        435
          BHOHI [DIPAK MISRA, J.]

      Act to determine and no injunction shall be granted by any      A
      court or other authority in respect of any action taken or to
      be taken in pursuance of any power conferred by or under
      this Act or under the Recovery of Debts Due to Banks and
      Financial Institutions Act, 1993 (51 of 1993)."
                                           '                          B
Section 34 of the ROB Act provides that the said Act would
have overriding effect. We have referred to the aforesaid
provisions to singularly highlight that the sacrosanct purpose
with which the tribunals have been established is to put the
controversy to rest between the banks and the borrowers and           C
any third party who has acquired any interest. They have been
conferred jurisdiction by special legislations to exercise a
particular power in a particular manner as provided under the
Act. It cannot assume the role of a court of different nature which
really can grant "liberty to initiate any action against the bank".
It is only required to decide the lis that comes within its own       D
domain. If it does not fall within its sphere of jurisdiction it is
required to say so. Taking note of a submission made at the
behest of the auction purchaser and then proceed to say that
he is at liberty to file any action against the bank for any
omission committed by it has no sanction of law. The said             E
observation is wholly bereft of jurisdiction, and indubitably is
totally unwarranted in the obtaining factual matrix. Therefore, we
have no hesitation in deleting the observation, namely, "liberty
is also given to the auction purchaser to file action against the
bank for any omission committed by it".                               F

      31. As we have directed for deletion for the same reasons
we also set aside the judgment of the High Court whereby it
has declined to interfere with the grant of liberty by the DRAT.
This being the only prayer by Mr. Jain, it is answered in the         G
affirmative in his favour by stating that such grant of liberty was
not within the domain of the tribunal regard being had to its
limited jurisdiction under such special legislation and further,
especially, when the bank was not a party to the com~romise.

     32. Before parting with the case, we are obliged to deal         H
    436     SUPREME COURT REPORTS                  [2013] 9 S.C.R.


A with another aspect. DRAT is required to adjudicate the lis in
  an apposite manner. It is hearing an appeal from an order
  passed by the ORT. It cannot afford to pass a laconic order.
  Learned counsel for the auction purchaser endeavoured hard
  to impress us that the order being a cryptic one this Court should
B set aside the same and remit the matter to the DRAT. The said
  prayer has been seriously opposed by Mr. Jain, learned senior
  counsel for the appellant-bank and Mr. Dham, learned counsel
  for the borrower. Two aspects weigh in our mind not to take
  recourse to such a mode, namely, (i) the auction purchaser has
c not challenged the order passed by the DRAT before the High
  Court nor has he come to this Court and further Mr. Jain has
  restricted his argument only with regard to grant of liberty; and
  (ii) with the efflux of time the bank has realized its money and
  the property has changed hands. It can be stated with certitude
  that it is absolutely unnecessary to direct the DRAT to proceed
0
  with the appeal de novo. Hence, we refrain from adopting the
  said course.

         33. Resultantly, the appeal is allowed to the extent
    indicated hereinabove. In the facts and circumstances of the
E   case there shall be no order as to costs.

    R.P.                                    Appeal partly allowed.