The Bombay High Court has intervened to prevent the immediate enforcement of a secured creditor’s possession notice against a debtor who had fully complied with a pre-deposit order, despite administrative delays in the Debts Recovery Appellate Tribunal. The judgment underscores that procedural infirmities arising from judicial vacancies must not nullify rights secured through timely compliance.
Background & Facts
The Dispute
The petitioners, Dipen Dhirajlal Doshi and another, are the director and guarantor of a borrower entity that defaulted on a loan advanced by Bank of India. The Bank initiated proceedings under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, leading to an order by the Debts Recovery Tribunal (DRT) for recovery. The petitioners filed Miscellaneous Appeal (D) No. 2765 of 2024 before the Debts Recovery Appellate Tribunal, Mumbai (DRAT), challenging the DRT order.
Key Facts
- On 02.01.2025, the DRAT, Mumbai directed the petitioners to deposit Rs. 40,00,000 as a pre-deposit condition for hearing their appeal for waiver of dues.
- The DRAT ordered the deposit in installments and deferred physical possession of secured assets pending compliance.
- The petitioners deposited the full amount in three installments: 02.01.2025, 16.01.2025, and 30.01.2025, with proof submitted to the DRAT registry.
- Upon verification, the DRAT extended interim protection repeatedly, maintaining the stay on asset possession.
- The petitioners filed multiple communications with the DRAT registry confirming deposits and seeking continuance of protection.
- The Chairperson of DRAT, Mumbai, became vacant after January 2025, causing repeated adjournments of the appeal with interim protection continuing.
- The new Chairperson was appointed in February 2026, and the appeal was listed for hearing on 16.03.2026.
- The petitioners’ counsel was unaware of the Chairperson’s appointment and did not appear on 16.03.2026.
- The DRAT dismissed the appeal for default on 16.03.2026, vacating all interim protection.
- On 04.05.2026, a police constable informed the petitioners that the Bank intended to take physical possession of secured assets on 11.05.2026.
- On 07.05.2026, the petitioners attempted to file restoration applications before DRAT, Mumbai, but learned the Chairperson was unavailable until 15.05.2026.
- They approached DRAT, Chennai, on 07.05.2026, but the Chairperson there was also unavailable on 08.05.2026.
- Logistical constraints prevented timely filing before any DRAT bench before the 11.05.2026 deadline.
Procedural History
- 02.01.2025: DRAT, Mumbai orders Rs. 40 lakh pre-deposit and defers possession.
- 02.01.2025, 16.01.2025, 30.01.2025: Petitioners complete all installments.
- January 2025 - February 2026: DRAT appeal adjourned multiple times due to Chairperson vacancy; interim protection maintained.
- February 2026: New Chairperson appointed at DRAT, Mumbai.
- 16.03.2026: Appeal dismissed for default due to non-appearance of petitioners’ counsel.
- 04.05.2026: Police notice received regarding imminent possession on 11.05.2026.
- 07.05.2026: Petitioners file restoration application at DRAT, Mumbai; Chairperson unavailable.
- 07.05.2026: Petitioners approach DRAT, Chennai; case circulated for 08.05.2026.
- 08.05.2026: Chairperson, DRAT, Chennai unavailable.
- 08.05.2026: Writ petition filed before Bombay High Court.
Relief Sought
The petitioners sought immediate stay on the Bank’s proposed physical possession of secured assets scheduled for 11.05.2026, restoration of their dismissed appeal, and continuation of interim protection pending hearing before DRAT.
The Legal Issue
The central question was whether the dismissal of an appeal for default, due to non-appearance caused by the non-availability of the Chairperson of DRAT, can justify immediate enforcement of possession against a party that has fully complied with all pre-deposit conditions and acted diligently to restore the appeal.
Arguments Presented
For the Petitioner
The learned counsel argued that the petitioners had scrupulously complied with the DRAT’s pre-deposit order, submitting proof of all three installments. The dismissal of the appeal was purely procedural, arising from the unavailability of the Chairperson and the counsel’s lack of notice regarding the appointment. The petitioners acted promptly upon learning of the dismissal, approaching DRAT, Chennai, and filing this writ petition within days. The Bank’s attempt to enforce possession would render their compliance meaningless and violate principles of natural justice.
For the Respondent
No appearance was made on behalf of the respondents.
The Court's Analysis
The Court acknowledged that while the DRAT’s dismissal for default was procedurally valid, the circumstances surrounding it were extraordinary. The petitioners had not defaulted on their substantive obligations; they had fulfilled the pre-deposit condition in full and sought restoration immediately upon learning of the dismissal. The Court emphasized that the delay in hearing was not attributable to the petitioners but to the administrative vacuum in the DRAT.
"The non-availability of the Chairperson, DRAT, Mumbai, should not lead to applications filed on behalf of the petitioners being rendered infructuous."
The Court further noted that the petitioners had exhausted all available remedies within the DRAT system, including approaching a different bench in Chennai, and that logistical constraints made timely filing before any DRAT bench impossible before the 11.05.2026 deadline. The Court held that equity and the spirit of the Recovery of Debts Act required a pragmatic response to prevent irreparable harm to compliant litigants.
The Court declined to express any opinion on the merits of the appeal or the Bank’s claims, making clear that its order was purely interim and procedural.
The Verdict
The petitioners succeeded in obtaining interim relief. The Court directed that the Bank’s proposed physical possession of secured assets on 11.05.2026 be deferred until 20.05.2026. The petitioners are directed to immediately move the Chairperson, DRAT, Chennai, for restoration of their appeal and interim protection. If the Chairperson, DRAT, Mumbai, becomes available before 20.05.2026, the petitioners may file their applications there. The interim protection granted by this Court shall expire on 20.05.2026. The writ petition remains pending for further hearing on 16.06.2026.
What This Means For Similar Cases
Compliance Must Be Protected Despite Procedural Lapses
- Practitioners must document all compliance with tribunal orders (e.g., deposit receipts, registry acknowledgments) to establish good faith.
- A dismissal for default due to judicial vacancy or administrative delay does not automatically extinguish interim protection if the appellant has fulfilled substantive conditions.
Urgent Relief Is Available Against Unilateral Enforcement
- Where a secured creditor seeks to enforce possession after a dismissal for default, and the appellant has acted promptly to restore the appeal, a writ petition before the High Court is a viable remedy.
- Courts may grant temporary stays even without adjudicating merits, to preserve the status quo pending restoration.
Timeliness and Diligence Are Critical
- Delay in approaching the High Court after learning of dismissal may defeat relief; here, the petitioners acted within 72 hours.
- Applications must be filed at the next available bench if the designated one is unavailable, and proof of such attempts must be preserved.
