Bombay HC cancels DRT order and allows Usha Kiran’s apartment to be auctioned
In relief to Phoenix ARC, the Bombay High Court overturned the debt collection court’s order, allowing the auction of Usha Kiran’s apartment.
The Claimant, Phoenix ARC, is a securitization and asset reconstruction company and is an assignee of Oriental Bank of Commerce (OBC) under a valid and effective Deed of Assignment and has taken the place of said OBC and as such is the judgment creditor of the Respondent. and is continuing the recovery proceedings pending before the Debt Recovery Tribunal (DRT), Mumbai. Originally, OBC advanced various credit facilities to various entities viz. Beautiful Diamonds Ltd, Beautiful Realtors Pvt. Ltd., Beautiful Jewelers Pvt. Ltd., and Crystal Gems.
The Respondent is the Registrar of the Debt Collection Appeals Tribunal, while the Respondent is DRT’s collection agent. Respondent #5 is the borrower (in liquidation). Respondents are the mortgagors/guarantors of credit facilities granted, sanctioned and disbursed to the Respondent.
According to the petitioners in or around 2013, the promoters/guarantors of Beautiful Group approached the petitioners and indicated their desire to restructure its debts and take over the debts of Beautiful Group from OBC. Accordingly, the Deed of Assignment was signed between OBC and the Claimants pursuant to which the debts of Beautiful Group together with its underlying securities were assigned in favor of the Claimants. Pursuant to the said assignment, the petitioners and the respondent have reached a settlement and have executed the terms of consent which have been filed before the DRAT, Mumbai in the pending appeals.
The coram of Chief Justice Deepankar Dutta and Justice VGBisht said: “We are neither satisfied nor satisfied with the manner in which the recovery officer, DRT-I, has discharged his duties. That being the case, the plaintiffs also cannot take any comfort from the unlawful orders passed by Registrar, DRAT and as Collector, DRT, to say the least. We intuitively believe that the Registrar, DRT and the Collector, DRT were not correct in their reading of the order adopted by this Court in the Motion in Brief. These orders from the Registrar and Collector, DRT are certainly not viable in law.
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