DRAT non-functional due to vacancies: Bombay High Court stays DRT order on writ petition by Kotak Mahindra bank

An order passed by the Debt Recovery Tribunal, Mumbai (DRT) against Kotak Mahindra bank directing that symbolic possession of a property mortgaged to the bank be handed over to Yash Birla's son Nirvan Birla, was stayed by the Bombay High Court on Friday..A Bench headed by Chief Justice Dipankar Datta stayed the DRT order till February 21 in view of the fact that Debt Recovery Appellate Tribunal (DRAT) was not functional due to post of chairperson lying vacant. The Court however said that if the vacant posts at DRAT get filled up, the bank will have to pursue its appeal before the DRAT.The factual matrix in the case was that Yash Birla had taken a home loan in the year 2012 from the Kotak Mahindra Bank, earlier known as ING Vysya for a property situated in Kemps corner, Mumbai.When there was a default in repayment of the loan, the bank took measures under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act for symbolic possession of the property.In 2015, Nirvan Birla, Yash’s son, approached the DRT with an application under Section 17 challenging the right of the Bank, the secured creditor, to create a mortgage of the property.Eventually, by way of an order dated November 26, 2021, the DRT allowed Nirvan’s application and directed Kotak Mahindra to restore possession to Nirvan to the extent of his share within eight weeks of the order.Aggrieved by the order, Kotak approached the High Court with a writ petition challenging the order..When the matter was first heard on Thursday, Senior Advocate Janak Dwarkadas appearing for Kotak argued that since the Debt Recovery Appellate Tribunal (DRAT) was vacant, Kotak was compelled to approach the High Court directly.The Bench led by the Chief Justice then asked Kotak Mahindra to “at least file an appeal before the DRAT” before approaching the High Court.“The DRAT may be vacant, but an appeal can still be filed. We must be satisfied that the appellate remedy has been pursued,” CJ Datta said.Accordingly, on Friday, Kotak Mahindra informed the High Court that appeal has been filed before the DRAT and sought hearing of the writ petition.Dwarkadas argued that “the DRT ventured into an unknown territory by dealing with the question of title of the property in question”.He also pointed out that the bank had a registered mortgage deed with Yash Birla which was overlooked by the DRT.Further, Nirvan Birla had filed a civil suit which was still pending in the Mumbai City Civil Court since 2015, seeking that share certificates of the property be transferred in his name..The Bench recorded in its order that in view of the Supreme Court’s directions, they were bound to entertain the present petition.The Court, therefore, said that "an arguable issue" had been made out by Kotak entitling them to ad-interim relief. It, however, clarified that "if the chairperson of the DRAT(M) is appointed in the near future, the petitioner would have to pursue its appeal before the DRAT(M)."It, therefore, stayed the effect and operation of DRT's order of November till February 21 while listing the case for further hearing on February 17. .Dwarkadas was briefed by Vikram Trivedi (Managing Partner) and Sachin Chandarana (Partner) from Manilal Kher Ambalal & Co.Advocates Rafeeq Peermohindeen with Kalyani Wagle instructed by TN Tripathi & Co. appeared for Nirvan Birla.[Read Order]