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Tuesday, May 17, 2022

HC stays DRT order asking Kotak to restore possession of property to Yash Birla’s son

"Prima facie, we are satisfied that an arguable issue is raised and that the petitioner is entitled to ad-interim relief," the HC noted.

Written by Omkar Gokhale | Mumbai |
Updated: January 22, 2022 6:14:38 pm
Yash Birla had taken a home loan from the bank which was then ANG Vyasa Bank, and due to default in repayment of loan, the bank had initiated steps under SARFAESI Act and took symbolic possession of the property.

The Bombay High Court on Friday stayed for a month the operation of an order passed by the Debt Recovery Tribunal (DRT), which had directed the Kotak Mahindra Bank to restore possession of a property, a secured asset, to Nirvan Birla, son of businessman Yashovardhan (Yash) Birla.

A division bench of Chief Justice Dipankar Datta and Justice Anil S Kilor was hearing a plea by the Kotak Mahindra Bank, the secured creditor, challenging a November 26, 2021 order passed by DRT-II, Mumbai on securitisation application of respondent Nirvan Birla under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002.

The DRT had directed the bank to restore possession of the disputed property, a row house at Kemps corner in the city, in favour of Nirvan Birla, to the extent of his shares in the same by January 22. Aggrieved by the order, the bank had filed an appeal before the Debts Recovery Appellate Tribunal (DRAT), Mumbai. However, prior to preferring such appeal, it had also filed a writ plea in HC seeking relief.

As per the plea, in 2012, Yash Birla had taken a home loan from the bank which was then ING Vysya Bank, and due to default in repayment of loan, the bank had initiated steps under SARFAESI Act and took symbolic possession of the property.

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In 2015, Nirvan Birla, who attained majority, moved the DRT with an application challenging the bank’s action and obtained an interim order in his favour that stayed any further proceedings by Kotak against Birla’s property.

Nirvan had claimed before DRT that his father Yash Birla was the co-owner of the subject property and even if the father had mortgaged it, it would have been only pertaining to father’s share in the property.

However, the bank claimed Yash Birla was the exclusive owner of the property, which Nirvan Birla had termed “manifestly incorrect and unsustainable.”

Subsequently, in November 2021, the DRT passed an order allowing Nirvan Birla’s plea, and declared him owner of the property, prompting the bank to seek reliefs before DRAT and HC.

Referring to a Supreme Court judgment in State Bar Council of Madhya Pradesh case, the HC bench noted it would entertain the bank’s writ plea as the office of chairperson, DRAT, Mumbai was vacant – posts in DRT had fallen vacant after its members retired, and no new appointment was made due to the Covid-19 pandemic.

Senior advocate Janak Dwarkadas, appearing for the bank, argued that the DRT-II had decided the question of title of the property by “transgressing its jurisdiction.”

“Prima facie, we are satisfied that an arguable issue is raised and that the petitioner is entitled to ad-interim relief,” the HC noted.

It further said that in another plea, a coordinate bench of HC had directed the central government to take appropriate steps for expeditious appointment of chairperson of DRAT, Mumbai and the same will be heard in the first week of February 2022.

“We are of the considered opinion that if the chairperson of the DRAT, Mumbai is appointed in the near future, the petitioner would have to pursue its appeal before its Chairperson. However, for the present, we consider it proper and in the interest of justice to direct that operation of a clause in the impugned order of November 26, 2022 shall remain stayed till February 21, or until further orders, whichever is earlier,” the bench noted in the order.

The court said it will hear the writ plea next on February 17, when depending on circumstances, an appropriate order will be passed.

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