On
Brief Facts
Zoom Developers Pvt. Ltd. andZoom Vallabh Steel Ltd. (collectively referred as "Borrowers") had availed credit facilities / loan fromUnion Bank of India ("Bank"). To secure the credit facilities,Rajat Infrastructure Pvt. Ltd. ("Rajat") had mortgaged a property owned by it in favour of the Bank ("Secured Asset").- As the Borrowers failed to repay the credit facilities, the Bank initiated proceedings under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("SARFAESI Act") were initiated by the Bank. Thereafter various proceedings ensued between the Bank and Rajat and the Borrowers.
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Further, in the auction conducted by the Bank,
Sunview Assets Pvt. Ltd. ("Sunview") was declared as the highest bidder for an amount of INR 65,62,00,000 (Indian Rupeessixty five crore sixty two lakh) ("Total Sale Consideration"). -
Aggrieved by an observation passed by the
Bombay High Court in a writ petition filed by Rajat that that there was no requirement of a pre-deposit before theDebts Recovery Appellate Tribunal ("DRAT"), the Bank and Sunview filed their respective civil appeals. By way of a common order datedMarch 2, 2020 , the Supreme Court allowed the appeals and set aside the orders passed by theBombay High Court . In the common order, the Supreme Court extended the time given to Sunview to deposit the Total Sale Consideration tillMarch 20, 2020 . -
Thereafter, Sunview filed a Miscellaneous Application2 seeking extension of time to pay the balance Total Sale Consideration amounting to INR 49,21,50,000 (Indian Rupees
forty nine crore twenty one lakh fifty thousand), on the ground that, due to the impact of the Covid-19 pandemic, Sunview was unable to deposit the same. TheSupreme Court vide an order datedMarch 20, 2020 granted an extension to Sunview tillApril 30, 2020 and stated that no further extension would be granted. -
Sunview filed another Miscellaneous Application invoking powers of the Supreme Court under Article 142 of the
Constitution seeking extension of time to deposit the balance Total Sale Consideration amounting to INR 34,41,50,000 (Indian Rupeesthirty four crore forty one lakh fifty thousand). -
On
July 11, 2022 , the Supreme Court passed an interim order in the above applications wherein the Supreme Court refused to pass any order extending the time or any order refusing to extend the time for Sunview to make payment of the balance Total Sale Consideration. In the order, the Supreme Court recorded that it was open for Sunview to make the payment prior to the next date. Accordingly, onJuly 22, 2022 , Sunview deposited an amount of RS. 34,41,50,000 (Indian Rupees thirty four crore forty one lakh fifty thousand) after deducting 1% TDS of the Total Sale Consideration. Thereafter, Sunview made a payment ofRs. 7,17,02,859.45 (Indian Rupees seven crore seventeen lakh two thousand eighty fifty nine and paise forty five) towards interest amount, which was acknowledged by the Bank vide its letter datedAugust 26, 2022 .
Post the above and being aggrieved by the Bank's failure to confirm the sale of the Secured Asset in favour of Sunview, Sunview filed a Miscellaneous Application No. 1126 of 2022 under Article 142 of the
Issue
Whether the Supreme Court could invoke the provisions of Article 142 of the
Analysis and Findings of the Supreme Court
Whilst dismissing the Miscellaneous Application, the Supreme Court held as follows:
- The SARFAESI Act read with the SARFAESI Rules, more specifically Rule 9(4), requires the successful purchaser to pay the balance consideration to the authorised officer of the secured creditor within 3 (three) months from the date of confirmation of the sale. In the present case, taking into account the covid related extension granted to Sunview, the balance consideration was to be paid by
April 30, 2022 . However, Sunview failed to comply. -
Sunview's plea that the Supreme Court ought to extend the time limit for payment of balance consideration by invoking Article 142 of the
Constitution and/or Section 148 of the CPC was rejected by the Supreme Court. Whilst invoking Article 142 of theConstitution , the Supreme Court cannot ignore the substantive provisions of a statute. -
The inherent powers under Article 142 of the
Constitution must complement the powers which are specifically conferred on courts/tribunals by statute. Albeit the powers under Article 142 of theConstitution are of wide amplitude, such powers cannot be used to supplant substantive provisions of law. -
Reliance was placed on its decision in
Supreme Court Bar Association v.Union of India & Anr .3, wherein it was held that Article 142 of theConstitution cannot be used to introduce a new edifice in ignorance of express statutory provisions. What cannot be achieved directly, cannot be sought to be achieved indirectly by invoking Article 142 of theConstitution .
Conclusion
By way of the judgment, the Supreme Court has delineated the extent to which Article 142 of the
Whilst there has been an increasing trend by the Supreme Court in invoking Article 142 of the
Footnotes
1. Miscellaneous Application No. 1735 of 2022 in Civil Appeal No. 1902 OF 2020.
2. Miscellaneous Application No. 894 of 2020 in Civil Appeal No. 1902 of 2020
3. (1998) 4 SCC 409
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