$~26 * IN THE HIGH COURT OF DELHI AT NEW DELHI Date of Decision:
13. h November, 2019 + CM (M) 93/2019 BANK OF INDIA ........ Petitioner
Through: Ms. Shailly Dinkar and Mr. Vipin Jain, Advocates. (M:9873715747) versus PRADEEP JAIN & ORS. ........ RESPONDENTS
Through: Mr. S. L. Gupta and Mr. Aditya Vikram Gupta, Advocates for R-1 to 5. (M:8800732313) Ms. Jatinder Kaur, Court Receiver/R- 6 in person. (M:9773638523) CORAM: JUSTICE PRATHIBA M. SINGH Prathiba M. Singh, J.
(Oral) 1. The... Petitioner
– Bank of India has filed the instant petition under Article 227 of the Constitution of India praying for a clarification and for framing of general guidelines/rules in respect of the fee payable to Court Receivers.
2. The background of the petition is that the contesting Respondent Nos.1 & 2 availed credit facility from the Bank of India and UCO bank as a consortium. It is alleged that the said... RESPONDENTS
had defaulted and accordingly, proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (hereinafter the ‘SARFAESI Act’) were commenced.
3. An application under Section 14 of the SARFAESI Act was filed for appointment of a Court Receiver to take possession of the properties, which CM (M) 93/2019 Page 1 of 6 had secured the credit facility. Vide order dated 3rd November, 2017 in MCA No.128/2017, Ms. Jatinder Kaur was appointed as the Court Receiver to take physical possession of the properties. The fee of the Court Receiver was fixed at Rs.75,000/-, which was to be paid by the Bank within 10 days. The operative portion of the said order is set out herein below: “The expenses on this account shall be borne by the applicant company and photographs and negatives be enclosed with the report. Accompanying witnesses shall sign the proceedings. Moreover, Receiver to ensure that while executing the order there is no stay from any court in respect of the aforesaid property. The fee of the Receiver is fixed Rs.75,000/- (Rupees Seventy Five thousand only) to be paid by the applicant within 10 days from today. A copy of this order be given to the Receiver as well as to the applicant for compliance and one copy of order be sent to the SHO PS NFC. Intimation of this order be also sent to the receiver by the applicant bank positively within one week from today against due acknowledgment.” 4. Thereafter, the proceedings had terminated. The Receiver, except pasting of the notice, had not taken physical possession due to various developments, which had taken place. However, the Bank had again revived its application under Section 14 and the second order came to be passed by the ld. Chief Metropolitan Magistrate („CMM‟) directing that the Receiver would now take possession of the same premises on the same terms. The operative portion of the said order reads as under: the “Considering facts and circumstances and submissions made, the mandate of the Court Receiver earlier appointed vide order dated 03.11.2017 in MCA No.1
titled as Bank of India & Anr. V. Pradeep Jain & Ors. stands revived for a period of 60 days from today who shall take the possession of the CM (M) 93/2019 Page 2 of 6 5. premises on the same terms and conditions as mentioned in the aforesaid order dated 03.11.2017 SHO PS NFC is directed to provide the necessary police aid for execution of abovesaid order. The Court Receiver shall be paid her fees within 10 days from today. Petition stands disposed of. File be consigned to Record Room. Copy dasti.” The Bank took a position that it was not liable to pay the fee of the Receiver once again as in the first round the entire payment of Rs.75,000/- had been made to the Receiver, but the order had not been implemented due to developments in the litigation between the parties. The Bank sought clarification from the ld. CMM and the CMM passed the following order dated 25th October, 2018: the filed instant application “Court Receiver mentioning therein that the petitioner bank has not complied the order dated 10.09.2018 vide which the count receiver was directed to take the possession of the premises in question in terms of order dated 03.11.2017 subject to payment of fees to the Court Receiver afresh. The Court Receiver mentioned that the petitioner bank has not been paid her fees in compliance of the aforesaid order. Heard. Record perused. Perusal of order dated 10.09.2018, reveals that categorical direction has been given to the petitioner bank and Court Receiver to comply the order dated 10.09.2018 and the petitioner bank was directed to pay the fees afresh to the court receiver as fixed vide order dated 03.11.2017. Considering the facts and circumstances, petitioner bank is directed to comply the order dated 10.09.2018 immediately.” CM (M) 93/2019 Page 3 of 6 6. A reading of the above order along with the earlier order dated 10th September, 2018 clearly means that the Bank had to pay a sum of Rs.75,000/- once again to the Receiver. The grievance of the Bank is that in the first round, the entire fee having been paid, the Receiver having not rendered a substantial part of the service, the Bank ought not to be forced to pay the entire amount again.
7. Ld. counsel for the Bank has taken the Court through three orders passed by the ld. CMM. Ld. counsel appearing for Respondent Nos.1 to 5, states that no relief has been sought against the said... RESPONDENTS
in the present petition. However, as a counsel assisting the Court, he submits that the normal practice followed by the CMM Court is that even if the earlier fee is paid and a substantial portion of the services are not rendered by the Receiver, the fee would have to be paid once again.
8. While the matter was being heard, various members of the Bar including Senior counsel, intervened and submitted that in their experience, the process of appointment of Receivers, fees being paid to them and the manner in which Receivers are chosen, is not streamlined. Banks and other financial institutions are being made to repeatedly pay the fees even when services are not fully rendered or are even partially rendered. No adjustments are given and fees is directed to be paid once again.
9. This matter was initially listed before the Predecessor Bench on 21st January, 2019 on which date the petition was placed before the ld. Division Bench. Vide order dated 18th September, 2019, the ld. Division Bench has remitted the matter to this Court for being heard on merits. The order of the ld. Division Bench reads as under: “1. The Court Receiver who was impleaded as CM (M) 93/2019 Page 4 of 6 Respondent No.6 has appeared and made certain submissions as to what exactly transpired on the two occasions when she was asked to take possession of the property in question.
2. The Court would like the Respondent No.6 to file an affidavit setting out the complete facts within her knowledge, not later than two weeks from today, with advance copies to learned counsel for the... Petitioner
Bank and the other parties who are permitted to file their response thereto before the next date fixed before the Learned Single Judge.
3. Prima facie the Court is of the view that unless the circumstances of this case so warrant, there would be no occasion to frame any general guidelines. In the first instance, therefore, the Court would like the Learned Single Judge to examine the matter on merits.
4. The CM (M) now be again placed for the merits for further hearing before the Learned Single Judge on 13th November, 2019.” 10. Considering the above factual background, before passing any orders, it is deemed appropriate to call for a report from the Registrar General to collect data from District Judges of all Judges in respect of the following: i. What is the average amount of fee being paid to Receivers in proceedings under Section 14 of the SARFAESI Act?. ii. Whether the fee, which is to be paid to the Receiver, is paid at one go at inception or whether payments to Receivers are paid in instalments?. iii. Whether if substantial part of the services have not been rendered by the Receiver or availed by the Bank, the Receiver, appointed at the first stage, if appointed at a subsequent stage is to be paid the fee once again or is any adjustment given?. iv. Is any refund ordered from the Receiver, in case services are not CM (M) 93/2019 Page 5 of 6 being rendered?. v. Whether there is any panel of Receivers, if so, how are Receivers chosen and appointed?.
11. The ld. Registrar General, to also obtain information as to the number of applications under Section 14 of the SARFAESI Act or other proceedings under the said Act, in which Receivers have been appointed in the last three years i.e. 2017, 2018 and 2019 (till 30th September 2019) and the fee that has been paid to the Receivers in such applications.
12. Let the report be submitted within eight weeks.
13. List on 5th February, 2020. PRATHIBA M. SINGH JUDGE NOVEMBER13 2019/dk CM (M) 93/2019 Page 6 of 6