Bombay High Court holds DRAT's order

Bombay High Court holds DRAT's order

It is a setback for Nirvan Birla, the son of business tycoon Yash Birla

The Bombay High Court has stayed the order passed by the Debt Recovery Tribunal (DRT), Mumbai against Kotak Mahindra Bank.

The DRT had directed that symbolic possession of property mortgaged to the bank be handed over to Yash Birla's son Nirvan Birla.

A bench headed by Chief Justice Dipankar Datta stayed the order in view of the fact that the Debt Recovery Appellate Tribunal (DRAT) was not functional due to the post of the chairperson lying vacant. It, however, said that once the post was filled, the bank would have to pursue its appeal before DRAT.

The case pertained to Yash Birla, who took a home loan in 2012 from Kotak Mahindra Bank (earlier known as ING Vysya) for a property situated in Kemps Corner, Mumbai. On 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, 2002 for symbolic possession of the property.

In 2015, Nirvan approached the DRT challenging the right of the bank, the secured creditor, to create a mortgage of the property.

By way of its November 2021 order, DRT allowed Nirvan's application and directed Kotak to restore the possession to Nirvan to the extent of his share. Aggrieved, the bank approached the high court with a writ petition challenging the order.

Appearing for Kotak, senior advocate Janak Dwarkadas argued that since the position of the chairperson at DRAT was vacant, the bank was compelled to approach the high court directly.

The chief justice advised Kotak, "The position may be vacant, but an appeal can still be filed. We must be satisfied that the appellate remedy has been pursued."

Accordingly, Kotak informed the court that the appeal had been filed and sought a hearing of the writ petition. Dwarkadas argued, "The DRT ventured into an unknown territory by dealing with the question of the title of the property in question." He pointed out that the bank had a registered mortgage deed with Yash Birla. But that was overlooked by DRT.

Nirvan had also filed a civil suit that was pending in Mumbai's Civil Court since 2015. He had sought that the share certificates of the property be transferred in his name.

The bench held that in view of the Supreme Court's directions, they were bound to entertain the present petition. It maintained that Kotak had made "an arguable issue," entitling them to ad-interim relief.

The case has been listed for hearing on 17 February.

While Vikram Trivedi (managing partner) and Sachin Chandarana (partner) of Manilal Kher Ambalal & Co briefed Dwarkadas, TN Tripathi & Co's advocates Rafeeq Peermohindeen and Kalyani Wagle appeared for Nirvan Birla.